Filed electronically with the Securities and Exchange Commission on May 1, 2009

                                                               File No. 33-11802
                                                               File No. 811-5002

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D. C. 20549

                                    FORM N-1A


            REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933         |__|

                          Pre-Effective Amendment No.                       |__|
                         Post-Effective Amendment No. 73                    |X|
                                                      --
                                     and/or
                        REGISTRATION STATEMENT UNDER THE
                         INVESTMENT COMPANY ACT OF 1940                     |__|

                                Amendment No. 74                            |X|
                                              --

                             DWS Variable Series II
                             ----------------------
               (Exact Name of Registrant as Specified in Charter)

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

       Registrant's Telephone Number, including Area Code: (617) 295-1000
                                                           --------------

                      Caroline Pearson, Assistant Secretary
                             DWS VARIABLE SERIES II
                             ----------------------
                                One Beacon Street
                                Boston, MA 02108
                     (Name and Address of Agent for Service)

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

|__|     Immediately upon filing pursuant to paragraph (b)
|__|     On ________________pursuant to paragraph (b)
|__|     60 days after filing pursuant to paragraph (a)(1)
|__|     On _______________ pursuant to paragraph (a)(1)
|__|     75 days after filing pursuant to paragraph (a)(2)
|__|     On _______________ pursuant to paragraph (a)(2) of Rule 485
|X|      On May 1, 2009 pursuant to paragraph (a)(3) of Rule 485

         If appropriate, check the following box:

|__|     This post-effective amendment designates a new effective date for a
         previously filed post-effective amendment




                                       1
<PAGE>

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

This post-effective amendment contains the prospectuses and statements of
additional information relating to the classes of the following series of the
registrant:

o        DWS Alternative Asset Allocation Plus VIP - Classes A and B
o        DWS Balanced VIP - Class A
o        DWS Blue Chip VIP - Classes A and B
o        DWS Conservative Allocation VIP - Class B
o        DWS Core Fixed Income VIP - Classes A and B
o        DWS Diversified International Equity VIP (formerly DWS
         International Select Equity VIP) - Class A
o        DWS Dreman Small Mid Cap Value VIP - Classes A and B
o        DWS Global Thematic VIP - Classes A and B
o        DWS Government & Agency Securities VIP - Classes A and B
o        DWS Growth Allocation VIP - Class B
o        DWS High Income VIP - Classes A and B
o        DWS Large Cap Value VIP - Classes A and B
o        DWS Mid Cap Growth VIP - Class A
o        DWS Moderate Allocation VIP - Class B
o        DWS Money Market VIP - Class A
o        DWS Small Cap Growth VIP - Class A
o        DWS Strategic Income VIP - Class A
o        DWS Strategic Value VIP (formerly DWS Dreman High Return Equity
         VIP) - Classes A and B
o        DWS Technology VIP - Classes A and B
o        DWS Turner Mid Cap Growth VIP - Class A




                                       2
<PAGE>


                             DWS VARIABLE SERIES II

   SUPPLEMENT TO THE CURRENTLY EFFECTIVE PROSPECTUSES OF THE LISTED PORTFOLIO:

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

                             DWS Strategic Value VIP

Until on or about the close of business on June 1, 2009 (the "Transition Date"),
the name of the portfolio is DWS Dreman High Return Equity VIP.

Until on or about the Transition Date, "The Portfolio's Main Investment
Strategy" section of the portfolio's prospectuses shall read as follows:

The portfolio seeks to achieve a high rate of total return.

Under normal circumstances, the portfolio invests at least 80% of net assets,
plus the amount of any borrowings for investment purposes, in common stocks and
other equity securities. The portfolio focuses on stocks of large US companies
that are similar in size to the companies in the S&P 500 Index (as of February
28, 2009, the S&P 500 Index had a median market capitalization of $5 billion)
and that the portfolio managers believe are undervalued. The portfolio intends
to invest primarily in companies whose market capitalizations fall within the
normal range of the Index. Although the portfolio can invest in stocks of any
economic sector, at times it may emphasize the financial services sector or
other sectors. In fact, it may invest more than 25% of total assets in a single
sector.

The portfolio's equity investments are mainly common stocks, but may also
include other types of equities such as preferred or convertible stocks. In
addition, the portfolio may invest in initial public offerings.

The portfolio managers begin by screening for stocks whose price-to-earnings
ratios are below the average for the S&P 500 Index. The managers then compare a
company's stock price to its book value, cash flow and yield, and analyze
individual companies to identify those that are financially sound and appear to
have strong potential for long-term growth and income.

The managers assemble the portfolio from among the most attractive stocks,
drawing on analysis of economic outlooks for various sectors and industries.

The managers normally will sell a stock when it reaches a target price, its
fundamental factors have changed or when other investments offer better
opportunities.

Securities Lending. The portfolio may lend its investment securities in an
amount up to 33(1)/3% of its total assets to approved institutional borrowers
who need to borrow securities in order to complete certain transactions.

Although major changes tend to be infrequent, the Board of Trustees could change
the portfolio's investment objective without seeking shareholder approval.
However, the Board will provide shareholders with at least 60 days' notice prior
to making any changes to the portfolio's 80% investment policy.

Other Investments

The portfolio may invest up to 20% of net assets in US dollar-denominated
American Depository Receipts and in securities of foreign companies traded
principally in securities markets outside the US.

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


May 1, 2009                                               [DWS INVESTMENTS LOGO]
VSSV-36XX                                                    Deutsche Bank Group
<PAGE>

As a temporary defensive measure, the portfolio could shift up to 100% of assets
into investments such as money market securities. This measure could prevent
losses, but, while engaged in a temporary defensive position, the portfolio will
not be pursuing its investment objective. However, the portfolio managers may
choose not to use these strategies for various reasons, even in very volatile
market conditions.

Until on or about the Transition Date, the "Portfolio management" section of the
portfolio's prospectuses shall read as follows:

The portfolio's subadvisor is Dreman Value Management L.L.C. The portfolio is
managed by a team of investment professionals who collaborate to develop and
implement the portfolio's investment strategy. Each portfolio manager on the
team has authority over all aspects of the portfolio's investment portfolio,
including but not limited to, purchases and sales of individual securities,
portfolio construction techniques, portfolio risk assessment and the management
of daily cash flows in accordance with portfolio holdings.

The following people handle the day-to-day management of the portfolio:

<TABLE>
<S>     <C>    <C>    <C>    <C>    <C>    <C>
  David N. Dreman                                                   E. Clifton Hoover, Jr.
  Chairman and Chief Investment Officer of Dreman Value             Co-Chief Investment Officer and Portfolio Manager.
  Management, L.L.C. and Lead Portfolio Manager.                     o Joined Dreman Value Management, L.L.C. in 2006
   o Began investment career in 1957.                                  as a Managing Director and Co-Chief Investment
   o Joined the portfolio team in 1998.                                Officer of Large Cap Value Strategy.
   o Founder, Dreman Value Management, L.L.C.                        o Prior to joining Dreman Value Management, L.L.C., Managing
                                                                       Director and a Portfolio Manager at NFJ Investment Group
  F. James Hutchinson                                                  since 1997; Vice President -- Corporate Finance at Credit
  President and Portfolio Manager.                                     Lyonnais, 1992-1997; Financial Analyst at Citibank,
   o Managing Director of Dreman Value Management, L.L.C.              1990-1992; and Credit Analyst/Corporate Loan Officer for
   o Joined Dreman Value Management, L.L.C. in 2000.                   RepublicBank (now Bank of America), 1985-1990.
   o Began investment career in 1986.                                o Over 20 years of investment industry experience.
   o Joined the portfolio team in 2002.                              o Joined the portfolio team in 2006.
   o Prior to joining Dreman Value Management, L.L.C., 30 years      o MS, Texas Tech University.
     of experience in finance and trust/investment management
     with The Bank of New York.
</TABLE>

Until on or about the Transition Date, the "Portfolio Subadvisors" section of
the portfolio's prospectuses shall read as follows:

Subadvisor for DWS Dreman High Return Equity VIP

The subadvisor for DWS Dreman High Return Equity VIP is Dreman Value Management,
L.L.C. ("DVM"), 520 East Cooper Avenue, Suite 230-4, Aspen, CO 81611. DVM was
founded in 1977 and currently manages over $7.9 billion in assets, which is
primarily comprised of investment companies. Pursuant to a subadvisory agreement
with DIMA, DVM performs some of the functions of the Advisor, including making
the portfolio's investment decisions and buying and selling securities for the
portfolio.








               Please Retain This Supplement for Future Reference


May 1, 2009
VSSV-36XX


<PAGE>

                             DWS VARIABLE SERIES II

   SUPPLEMENT TO THE CURRENTLY EFFECTIVE PROSPECTUSES OF THE LISTED PORTFOLIO:

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

                              DWS Money Market VIP

Important Information Regarding the Portfolio

The Portfolio listed above is participating in the U.S. Treasury Department's
(the "Treasury") Temporary Guarantee Program for Money Market Funds (the
"Program").

The Program is designed to protect the value of accounts in the Portfolio as of
the close of business on September 19, 2008. According to the terms of the
Program, any investment made by a shareholder after September 19, 2008 in excess
of the amount held in the account as of the close of business on that date will
not be covered by the Program. Any purchase of shares of the Portfolio for an
account opened after September 19, 2008 will also not be covered under the
Program. The Program guarantee will apply to the lesser of (i) the number of
shares held in an account as of the close of business on September 19, 2008, or
(ii) the number of shares held in the account on the date the Program guarantee
is triggered. Subject to certain conditions and limitations, the Program
guarantee is triggered if the Portfolio's net asset value per share falls below
$0.995 -- which is commonly referred to as "breaking the buck" -- and the
Portfolio is liquidated. Guarantee payments under the Program will not exceed
the amount available within the Treasury's Exchange Stabilization Fund ("ESF")
on the date of payment. As of February 28, 2009, ESF assets were approximately
$49.4 billion. The Treasury and the Secretary of the Treasury have the authority
to use assets from the ESF for purposes other than those of the Program.

The Program had an initial three-month term after which the Treasury had the
option to renew the Program up to September 18, 2009. The Program was initially
in effect until December 18, 2008, was extended on November 24, 2008 until April
30, 2009, and was extended again on March 31, 2009 until September 18, 2009. The
Board of the Portfolio listed above approved continued participation in the
Program. The Treasury is not expected to extend the Program beyond September 18,
2009.

The Portfolio will bear the expense of participating in the Program. The expense
born by a share class of the Portfolio is determined by the product of: (i) the
total shares outstanding of that particular share class as of September 19, 2008
valued at $1.00; and (ii) the applicable Program participation fee rate, which
is based upon the market-based net asset value of the outstanding shares of the
applicable share class as of September 19, 2008. For the initial period ending
December 18, 2008, the Program participation fee rate was equal to either 0.01%
or 0.015%. For the Program extension from December 19, 2008 and ending on April
30, 2009, the Program participation fee rate was equal to either 0.015% or
0.022%. For continued coverage under the Program beginning on May 1, 2009 and
ending on September 18, 2009, the Program participation fee rate is equal to
either 0.015% or 0.023%.

Neither this prospectus supplement, the above-referenced prospectus, DWS Funds
nor Deutsche Investment Management Americas Inc., the investment advisor, are in
any manner approved, endorsed, sponsored or authorized by the Treasury. As of
the date of this prospectus supplement, additional information about the
Program, including the consequences of the Portfolio's triggering the Program
guarantee, is available at http://www.ustreas.gov.

               Please Retain This Supplement for Future Reference


May 1, 2009                                               [DWS INVESTMENTS LOGO]
VSMONEY-3602                                                 Deutsche Bank Group

<PAGE>


                                  MAY 1, 2009




                                   PROSPECTUS


                             DWS VARIABLE SERIES II
                                    CLASS A



DWS ALTERNATIVE ASSET ALLOCATION PLUS VIP

DWS BALANCED VIP


DWS BLUE CHIP VIP


DWS CORE FIXED INCOME VIP


DWS DIVERSIFIED INTERNATIONAL EQUITY VIP
(formerly DWS International Select Equity VIP)


DWS DREMAN SMALL MID CAP VALUE VIP


DWS GLOBAL THEMATIC VIP


DWS GOVERNMENT & AGENCY SECURITIES VIP


DWS HIGH INCOME VIP

DWS LARGE CAP VALUE VIP


DWS MID CAP GROWTH VIP


DWS MONEY MARKET VIP


DWS SMALL CAP GROWTH VIP


DWS STRATEGIC INCOME VIP


DWS STRATEGIC VALUE VIP
(formerly DWS Dreman High Return Equity VIP)


DWS TECHNOLOGY VIP


DWS TURNER MID CAP GROWTH VIP



This prospectus should be read in conjunction with the variable life insurance
or variable annuity contract prospectus and plan documents for tax-qualified
plans. These shares are available and are being marketed exclusively as a
pooled funding vehicle for life insurance companies writing all types of
variable life insurance policies and variable annuity contracts.


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


                                     RESHAPING INVESTING. [DWS INVESTMENTS LOGO]
                                                             Deutsche Bank Group






<PAGE>

--------------------------------------------------------------------------------
TABLE OF CONTENTS

HOW EACH PORTFOLIO WORKS

Each portfolio is designed to serve as an investment option for certain
variable annuity contracts, variable life insurance policies and tax-qualified
plans. Your investment in a portfolio is made in conjunction with one of these
contracts or policies. Each portfolio has its own investment objective and
strategy.

Remember that each portfolio is not a bank deposit. Each portfolio is not
insured or guaranteed by the Federal Deposit Insurance Corporation or any other
government agency. Share prices will go up and down and you could lose money by
investing.

Please read this prospectus in conjunction with the prospectus for your
variable life insurance policy or variable annuity contract or plan documents
for tax-qualified plans. HOW EACH PORTFOLIO WORKS





<TABLE>
<S>        <C>
  3        DWS Alternative Asset
           Allocation Plus VIP
 14        DWS Balanced VIP
 25        DWS Blue Chip VIP
 32        DWS Core Fixed Income VIP
 40        DWS Diversified International
           Equity VIP
 47        DWS Dreman Small Mid Cap
           Value VIP
 54        DWS Global Thematic VIP
 62        DWS Government & Agency
           Securities VIP
 69        DWS High Income VIP
 76        DWS Large Cap Value VIP


</TABLE>
<TABLE>
<S>        <C>
 82        DWS Mid Cap Growth VIP
 90        DWS Money Market VIP
 96        DWS Small Cap Growth VIP
104        DWS Strategic Income VIP
113        DWS Strategic Value VIP
120        DWS Technology VIP
127        DWS Turner Mid Cap Growth
           VIP
133        Other Policies and Risks
133        The Investment Advisor
135        Portfolio Subadvisors
</TABLE>





YOUR INVESTMENT IN THE PORTFOLIOS




<TABLE>
<S>        <C>
137        Buying and Selling Shares
140        How each Portfolio Calculates
           Share Price
141        Distributions
141        Taxes
</TABLE>


<PAGE>


DWS ALTERNATIVE ASSET ALLOCATION PLUS VIP


THE PORTFOLIO'S MAIN INVESTMENT STRATEGY
The portfolio seeks capital appreciation. The portfolio seeks to achieve its
objective by investing in alternative (or non-traditional) asset categories and
investment strategies. The portfolio intends to allocate its assets among the
following strategies and/or asset categories: market neutral,
inflation-protection, floating rate securities, commodities, real estate,
infrastructure and emerging markets.

Investments may be made in other DWS funds or directly in the securities and
derivative investments in which such DWS funds could invest. The portfolio may
also invest in securities of exchange traded funds ("ETFs") when a particular
asset category or investment strategy is not available through a DWS fund. The
portfolio's allocations among direct investments and other DWS funds may vary
over time. At times, the entire portfolio may be invested in other DWS funds or
directly in other investments. The portfolio may also be invested in some
combination thereof. To the extent the portfolio directly invests in other
investments rather than DWS funds, the allocated portions of the portfolio will
be managed by the same advisor, subadvisor or sub-subadvisor, as applicable, as
the corresponding DWS fund, following the same general investment strategies.

The portfolio may make allocations ranging from approximately 0% to 30% of its
assets in a particular strategy or asset category. Based on portfolio
management's assessment of market conditions, the portfolio will be rebalanced
periodically to maintain the desired asset allocation among alternative asset
categories and investment strategies. The portfolio's allocations among the
asset categories and investment strategies will change over time and there
should be no expectation that current or past positions will be maintained in
the future. The portfolio intends to invest in the following DWS Funds or
directly in such securities and derivative investments in which such DWS Funds
can invest:

o DWS Commodity Securities Fund. The fund's investment objective is capital
  appreciation. The fund seeks to achieve its investment objective by focusing
  on commodities-related securities and equity-related securities, including
  commodities-related structured notes and similar instruments, that the
  fund's Advisor believes are undervalued but have favorable prospects for
  appreciation.

o DWS Disciplined Market Neutral Fund. The fund seeks capital appreciation
  independent of stock market direction. It pursues its objective by
  investing, under normal circumstances, in long and short positions of common
  stock of large US companies. The managers buy, or take, long positions in
  common stock that the managers believe are undervalued and sell, or take,
  short positions in common stock that the managers believe are overvalued.
  The fund's investment strategy is designed to maintain approximately equal
  dollar amounts invested in long and short positions under normal
  circumstances. By employing this market neutral strategy, the fund seeks to
  limit the fund's volatility relative to movements in the overall stock
  market (that is, the fund's price movements are not expected to correlate
  closely with the market's price movements). The managers attempt to achieve
  returns for the fund that exceed the return on an investment in 3-month US
  Treasury Bills.

o DWS Emerging Markets Equity Fund. The fund seeks long-term growth of capital.
  Under normal circumstances, the fund invests at least 80% of net assets,
  plus the amount of any borrowings for investment purposes, in emerging
  market equities (equities traded mainly in emerging markets or issued by
  companies that are organized in emerging markets or have more than half of
  their business in emerging markets). The fund invests primarily in common
  stocks. The fund considers "emerging markets" to include any country that is
  defined as an emerging or developing economy by any one of the following:
  The International Bank for Reconstruction and Development (i.e., the World
  Bank), the International Finance Corporation or the United Nations or its
  authorities.


DWS VARIABLE SERIES II - CLASS A SHARES       DWS ALTERNATIVE ASSET ALLOCATION
                                              PLUS VIP   3
<PAGE>


o DWS Emerging Markets Fixed Income Fund. The fund seeks to provide high
  current income and, secondarily, long-term capital appreciation. Under
  normal circumstances, the fund invests at least 80% of net assets, plus the
  amount of any borrowings for investment purposes, in high yield bonds (also
  known as "junk bonds") and other debt securities issued by governments and
  corporations in emerging market countries (i.e., the issuer's securities are
  traded mainly in an emerging market, the issuer is organized under the laws
  of an emerging market country or is a company with more than half of its
  business in emerging markets) or the return on which is derived primarily
  from emerging markets. The fund considers "emerging markets" to include any
  country that is defined as an emerging or developing economy by any one of
  the following: The International Bank for Reconstruction and Development
  (i.e., the World Bank), the International Finance Corporation or the United
  Nations or its authorities.

o DWS Floating Rate Plus Fund. The fund seeks to provide high current income.
  The fund invests, under normal market conditions, at least 80% of its total
  assets in adjustable rate loans that have a senior right to payment ("Senior
  Loans") and other floating rate debt securities. The fund may also borrow
  money in an amount up to 33 1-3% of the fund's total assets for a range of
  purposes, including to create investment leverage. In an attempt to enhance
  return, the fund also employs the iGAP strategy (discussed below).

o DWS Gold & Precious Metals Fund. The fund seeks maximum return (principal
  change and income). The fund invests at least 80% of net assets, plus the
  amount of any borrowings for investment purposes, in common stocks and other
  equities of US and foreign companies engaged in activities related to gold,
  silver, platinum or other precious metals, and in gold coin and bullion
  directly. These companies may be involved in activities such as exploration,
  mining, fabrication, processing and distribution.

o DWS Inflation Protected Plus Fund. The fund seeks to provide maximum
  inflation-adjusted return, consistent with preservation of capital. Under
  normal circumstances, the fund will invest at least 80% of its net assets,
  plus any borrowings for investment purposes, in inflation-indexed bonds of
  varying maturities issued by the US government, non-US governments, their
  agencies or instrumentalities, and corporations, and in derivatives related
  to these securities. The fund may invest the remaining portion of its assets
 in other types of fixed-income securities, cash or cash equivalents. In an
 attempt to enhance return, the fund also employs the iGAP strategy (discussed
 below).

o DWS RREEF Global Infrastructure Fund. The fund seeks total return from both
  capital appreciation and current income through investment in a global
  portfolio of securities of infrastructure-related companies. Under normal
  circumstances, the fund invests at least 80% of its net assets in the
  securities of US and non-US infrastructure-related companies. The fund
  considers a company to be an infrastructure-related company if at least 50%
  of its non-cash assets are infrastructure assets or 50% of its gross income
  or net profits are derived, directly or indirectly, from the ownership,
  management, construction, operation, utilization or financing of
  infrastructure assets. Under normal circumstances, the fund invests
  primarily in equity securities, though the fund may also invest in
  fixed-income securities without limitation.

o DWS RREEF Global Real Estate Securities Fund. The fund's investment objective
  is to seek total return through a combination of current income and
  long-term capital appreciation. The fund seeks to achieve this objective by
  investing primarily in publicly listed real estate investment trusts (REITs)
  and real estate operating companies on a global basis. Under normal
  circumstances, the fund will invest at least 80% of its net assets, plus the
  amount of any borrowing for investment purposes, in the equity securities of
  REITs and real estate operating companies listed on recognized stock
  exchanges around the world.

On an ongoing basis, the DWS funds in which the portfolio may invest will be
evaluated on their continued ability to deliver strong performance. To maintain
the investment integrity of the portfolio, alternate DWS funds may be added to
obtain exposure to new asset categories or strategies, to replace
underperforming DWS funds or to enhance returns. Alternatively, the portfolio
may invest in certain ETFs if the desired exposure is not available by
investing in DWS funds.

In addition to the portfolio's main investment strategy, the Advisor seeks to
enhance returns by employing a global tactical asset allocation overlay
strategy. This strategy, which the Advisor calls iGAP (integrated Global Alpha
Platform), attempts to take advantage of short- and medium-term mispricings
within global equity, bond and currency markets. The iGAP strategy is
implemented through the use of derivatives, which are contracts or other
instruments whose value is based on, for example, indices, currencies or
securities. The iGAP strategy primarily uses exchange-traded futures contracts
on global equities, bonds and currencies and over-the-counter



4   DWS ALTERNATIVE ASSET ALLOCATION PLUS VIP        DWS VARIABLE SERIES II -
                                                     CLASS A SHARES
<PAGE>


forward currency contracts, and is expected to have a low correlation with the
portfolio's securities holdings. The iGAP strategy, with respect to the
portfolio, will not be used until assets of the portfolio exceed $50 million;
however, the portfolio may have indirect exposure to the iGAP strategy through
other DWS funds.

While the portfolio and the DWS funds in which it invests may use derivatives
or similar instruments and techniques to hedge existing positions, derivatives
and currency transactions, when used by the portfolio as part of the iGAP
strategy, generally will be used to seek return and not be used for hedging
purposes. Certain DWS funds in which the portfolio invests may also use the
iGAP strategy.

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

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



OTHER INVESTMENTS

As a temporary defensive measure, the portfolio could shift up to 100% of its
assets into investments such as money market securities. This measure could
prevent losses, but, while engaged in a temporary defensive position, the
portfolio will not be pursuing its investment objective. However, the Advisor
may choose not to use this strategy for various reasons, even in very volatile
market conditions.



THE MAIN RISKS OF INVESTING IN THE PORTFOLIO

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

The portfolio's allocations among the asset categories and investment
strategies will change over time, causing corresponding changes in the
portfolio's risk profile.

ASSET ALLOCATION RISK. Although asset allocation among different asset
categories and investment strategies generally reduces risk and exposure to any
one category or strategy, the risk remains that the Advisor may favor an asset
category or investment strategy that performs poorly relative to other asset
categories or investment strategies. To the extent that alternative asset
categories underperform the general stock market, the portfolio would perform
poorly relative to a portfolio invested primarily in the general stock market.

UNDERLYING FUND INVESTMENT RISK. The portfolio invests in underlying funds, so
the portfolio's investment performance is directly related to the performance
of the underlying funds. To the extent the particular underlying funds in which
the portfolio invests underperform their benchmarks and/or other funds
investing in the same asset class, the portfolio would perform poorly relative
to other asset allocation funds investing in alternative asset categories and
investment strategies. In addition, the portfolio indirectly pays a portion of
the expenses incurred by the underlying funds. As the underlying funds or the
portfolio's allocations among the underlying funds change from time to time, or
to the extent that the expense ratios of the underlying funds change, the
weighted average operating expenses borne by the portfolio may increase or
decrease.



INVESTMENT RISKS OF THE PORTFOLIO AND THE UNDERLYING FUNDS

DWS Alternative Asset Allocation Plus VIP may be subject to the risks discussed
below either through its investment in the DWS funds or through its direct
investment in other securities. Therefore, in the sections below, the term
"portfolio" refers to DWS Alternative Asset Allocation Plus VIP and the
underlying funds.

STOCK MARKET RISK. The portfolio is affected by how the stock market performs.
To the extent the portfolio invests in a particular capitalization or market
sector, the portfolio's performance may be proportionately affected by that
segment's general performance. When stock prices fall, you should expect the
value of your investment to fall as well. Because a stock represents ownership
in its issuer, stock prices can be hurt by poor management, shrinking product
demand and other business risks. These factors may affect single companies as
well as groups of companies. In addition, movements in financial markets may
adversely affect a stock's price, regardless of how well the company performs.
The market as a whole may not favor the types of investments the portfolio
makes, which could affect the portfolio's ability to sell them at an attractive
price.



DWS VARIABLE SERIES II - CLASS A SHARES       DWS ALTERNATIVE ASSET ALLOCATION
                                              PLUS VIP   5
<PAGE>


SECURITY SELECTION RISK. A risk that pervades all investing is the risk that
the securities in the portfolio's portfolio may decline in value.

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

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

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

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

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

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

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

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

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

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

Some governments exercise substantial influence over the private economic
sector and the social and political uncertainties that exist for many
developing countries is significant. In adverse social and political
circumstances, governments have been involved in policies of expropriation,
confiscatory taxation, nationalization, intervention in the securities markets
and trade settlement, and imposition of foreign investment restrictions and
exchange controls.

NON-DIVERSIFICATION RISK. This risk information applies to DWS Commodity
Securities Fund, DWS Gold & Precious Metals Fund, DWS RREEF Global
Infrastructure Fund and DWS RREEF Global Real Estate Securities Fund. The noted
DWS funds are classified as non-diversified under the Investment Company Act of
1940, as amended. This means that these DWS funds may invest in securities of
relatively few issuers. Thus, the performance of one or a small number of
portfolio holdings can affect overall performance more than if these DWS funds
invested in a larger number of issuers.



6   DWS ALTERNATIVE ASSET ALLOCATION PLUS VIP        DWS VARIABLE SERIES II -
                                                     CLASS A SHARES
<PAGE>


PRICING RISK. At times, market conditions may make it difficult to value some
investments, and the portfolio may use certain valuation methodologies for some
of its investments, such as fair value pricing. Given the subjective nature of
such valuation methodologies, it is possible that the value determined for an
investment may be different than the value realized upon such investment's
sale. If the portfolio has valued its securities too highly, you may pay too
much for portfolio shares when you buy into the portfolio. If the portfolio has
underestimated the price of its securities, you may not receive the full market
value when you sell your portfolio shares.

COMMODITY RISK. The portfolio may invest in equity securities issued by
companies in commodity-related industries and other securities related to such
companies. Such investments are subject to the risks associated with
concentration in securities of issuers in commodity-related industries. The
stocks of companies in commodity-related industries may underperform the stock
market as a whole. The stock prices of companies in commodity-related
industries may also experience greater price volatility than other types of
common stocks. Securities issued by companies in commodity-related industries
are sensitive to changes in the prices of, and in supply and demand for,
commodities. The value of securities issued by companies in commodity-related
industries may be affected by changes in overall market movements, changes in
interest rates, or factors affecting a particular industry or commodity, such
as drought, floods, weather, livestock disease, changes in storage costs,
embargoes, tariffs, policies of commodity cartels and international economic,
political and regulatory developments. The Advisor's judgments about trends in
the prices of these securities and commodities may prove to be incorrect.

TAX RISK. The treatment of commodity-linked notes, futures and certain other
derivative instruments for purposes of the portfolio qualifying as a regulated
investment company ("RIC") under the Internal Revenue Code of 1986, as amended
(the "Code") is not certain. DWS Commodity Securities Fund has obtained private
letter rulings from the Internal Revenue Service ("IRS") confirming that the
income and gain arising from certain types of commodity-linked notes in which
DWS Commodity Securities Fund invests constitute "qualifying income" under the
Code. Generally, if the commodity-linked instruments in which the portfolio
invests are not regarded as producing qualifying income, the portfolio may fail
to qualify as a RIC. If the portfolio fails to qualify as a RIC, the portfolio
will be subject to federal income tax on its ordinary income and capital gains
at regular corporate rates (without a deduction for distributions to
shareholders) which will reduce net asset value per share. When distributed,
that income would also be taxable to shareholders who are subject to current
federal income taxation with respect to their investment in the portfolio as a
dividend to the extent attributable to the portfolio's earnings and profits. In
addition, if DWS Alternative Asset Allocation Plus VIP fails to qualify as a
RIC, a separate account underlying a variable life insurance or variable
annuity contract that invests in shares of the portfolio will be required to
treat the portfolio (or if an underlying fund fails to qualify as a RIC, the
portfolio's investment in the underlying fund) as a single investment for
purposes of the diversification requirements of section 817(h) of the Code. If
a separate account fails to satisfy the diversification requirements of Code
section 817(h), income allocable to the contracts associated with the separate
account will be taxed currently for federal income tax purposes to the holders
of such contracts and income from prior periods with respect to such contracts
also could be taxable, most likely in the year of the failure.

COUNTERPARTY RISK. The portfolio will be subject to credit risk of the
counterparty with respect to derivative contracts entered into by the portfolio
or held by special purpose or structured vehicles in which the portfolio
invests. If a counterparty becomes bankrupt or otherwise fails to perform its
obligations due to financial difficulties, the portfolio may experience
significant delays in obtaining any recovery in a bankruptcy or other
reorganization proceeding. The portfolio may obtain only a limited recovery or
may obtain no recovery in such circumstances.

INFLATION-INDEXED BOND RISK. Although inflation-indexed bonds are expected to
be protected from long-term inflationary trends, short-term increases in
inflation may lead to a decline in the portfolio's value. If interest rates
rise due to reasons other than inflation, the portfolio's investment in these
securities may not be protected to the extent that the increase is not
reflected in the bond's inflation measure. Moreover, if the portfolio purchases
inflation-indexed bonds offered by foreign issuers, the rate of inflation
measured by the foreign index may not be correlated to the rate of inflation in
the US. Such foreign investments would, in that case, not provide protection
against inflation in the US. There can be no assurance that the portfolio's
returns will match or exceed the real rate of inflation.

INTEREST RATE RISK. Generally, debt securities will decrease in value when
interest rates rise. The longer the duration of the portfolio's debt
securities, the more sensitive the portfolio will be to interest rate changes.
(As a general rule, a 1% rise in interest rates means a 1% fall in value for
every year of duration.) As interest rates



DWS VARIABLE SERIES II - CLASS A SHARES       DWS ALTERNATIVE ASSET ALLOCATION
                                              PLUS VIP   7
<PAGE>


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

INDUSTRY RISK. While the portfolio does not concentrate in any industry, to the
extent that the portfolio has exposure to a given industry or sector, any
factors affecting that industry or sector could affect the value of portfolio
investments. For example, the real estate sector could be hurt by rising
interest rates or the commodities sector could be hurt by factors affecting a
particular industry or commodity such as drought, floods, weather or changes in
storage costs.

CREDIT RISK. The portfolio will be subject to the risk that the
creditworthiness of a debt security's issuer may decline, causing the value of
the debt security to decline. In addition, an issuer may not be able to make
timely payments on the interest and principal on the debt securities it has
issued. In some cases, debt securities may decline in credit quality or go into
default.

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

SENIOR LOANS RISK. Senior Loans may not be rated by a rating agency, registered
with the Securities and Exchange Commission or any state securities commission
or listed on any national securities exchange. The amount of public information
available with respect to Senior Loans may be less extensive than that
available for registered or exchange-listed securities. In evaluating the
creditworthiness of borrowers, the Advisor relies on its own evaluation of
borrowers; but will consider, and may rely in part on, analyses performed by
others. As a result, the portfolio is particularly dependent on the analytical
abilities of the Advisor. In addition, Senior Loans involve certain special
risks, including:

o CONFLICT OF INTEREST RISK. Affiliates of the Advisor may participate in the
  primary and secondary market for Senior Loans. Because of limitations
  imposed by applicable law, the presence of the Advisor's affiliates in the
  Senior Loan market may restrict the portfolio's ability to acquire some
  Senior Loans, affect the timing of such acquisition or affect the price at
  which a Senior Loan is acquired. The Advisor does not believe that this will
  materially affect the portfolio's ability to achieve its investment
  objectives. Also, because the Advisor may wish to invest in the publicly
  traded securities of a borrower, it may not have access to material
  non-public information regarding the borrower to which other lenders have
  access.

o CREDIT RISK. A portfolio purchasing Senior Loans faces the risk that the
  creditworthiness of the borrower may decline, causing the value of the loans
  to decline. In addition, a borrower may not be able to make timely payments
  on the interest and principal on the debt obligations it has outstanding.
  Any such non-payment could result in a reduction of income to the portfolio,
  a reduction in the value of the Senior Loan and a reduction in the
  portfolio's net asset value. There can be no assurance that the liquidation
  of any collateral securing a Senior Loan would satisfy the borrower's
  obligation in the event of non-payment of scheduled interest or principal
  payments, or that such collateral could be readily liquidated. In the event
  of bankruptcy of a borrower, the portfolio could experience delays or
  limitations with respect to its ability to realize the benefits of the
  collateral securing a Senior Loan. The portfolio may principally invest in
  below investment grade floating rate loans which are considered speculative
  because of the credit risk of their issuers. Such issuers may be more likely
  to default on payments of interest and principal in response to changes in
  economic conditions or circumstances.


8   DWS ALTERNATIVE ASSET ALLOCATION PLUS VIP        DWS VARIABLE SERIES II -
                                                        CLASS A SHARES
<PAGE>


o INTEREST RATE RISK. The value of debt securities will change in response to
  interest rate changes. As interest rates decline, a Senior Loan in which the
  fund invests may be prepaid sooner than scheduled, forcing the portfolio to
  reinvest in lower-yielding securities. The value of Senior Loans with
  adjustable interest rates will fluctuate less in response to interest rate
  changes than will fixed-rate debt securities. This could result in less
  volatility than would be expected for a portfolio that invests primarily in
  fixed-rate debt securities. However, because floating rates on Senior Loans
  only reset periodically, changes in prevailing interest rates may cause a
  fluctuation in the portfolio's value. In addition, extreme increases in
  prevailing interest rates may cause an increase in Senior Loan defaults
  which may cause a decline in the portfolio's value. Finally, a decrease in
  interest rates could adversely affect the income earned by the portfolio
  from its Senior Loans.

o LIQUIDITY RISK. Liquidity risk is the risk that a security cannot be sold
  quickly at a price that reflects the portfolio's estimate of its value. No
  active trading market may exist for some Senior Loans and certain Senior
  Loans may be subject to restrictions on resale. The inability to dispose of
  Senior Loans in a timely fashion could result in losses to the portfolio.

o MARKET RISK. Deteriorating market conditions might cause a general weakness
  in the market that reduces the overall level of securities prices in that
  market. In addition, an increase in demand for floating rate loans may
  adversely affect the rate of interest payable on Senior Loans acquired by
  the portfolio, thus reducing portfolio returns. During periods of limited
  supply of Senior Loans, the portfolio's yield may be lower.

o PREPAYMENT RISK. If a Senior Loan in which the portfolio invests is paid off
  sooner than scheduled, and interest rates are falling, the portfolio may be
  forced to reinvest the payments at lower yields.

BORROWING/LEVERAGE RISK. Because the portfolio may borrow money for investment
purposes, commonly referred to as "leveraging," its exposure to fluctuations in
the prices of its assets will be increased as compared to its exposure if the
portfolio did not borrow. Borrowing activities by the portfolio will amplify
any increase or decrease in the net asset value of the portfolio. In addition,
the interest which the portfolio pays on borrowed money, together with the
additional costs of maintaining a borrowing facility, are additional costs
borne by the portfolio and could reduce or eliminate any net investment
profits. Unless profits on assets acquired with borrowed funds exceed the costs
of borrowing, the use of borrowing will diminish the investment performance of
the portfolio compared with what it would have been without borrowing. When the
portfolio borrows money it must comply with certain asset coverage
requirements, which at times may require the portfolio to dispose of some of
its portfolio holdings even though it may be disadvantageous to do so at that
time.

ETF RISK. An ETF is a fund that holds a portfolio of common stocks or bonds
designed to track the performance of a securities index or industry sector.
ETFs trade on a securities exchange and their shares may, at times, trade at a
premium or discount to their net asset value. In addition, an ETF may not
replicate exactly the performance of the index it seeks to track for a number
of reasons, including transaction costs incurred by the ETF. ETFs incur fees
and expenses, such as operating expenses, licensing fees, trustee fees and
marketing expenses, which are borne proportionately by ETF shareholders, such
as the portfolio. The portfolio will also incur brokerage costs when purchasing
and selling shares of ETFs.

IGAP RISK. The success of the iGAP strategy depends, in part, on the Advisor's
ability to analyze the correlation between various global markets and asset
classes. If the Advisor's correlation analysis proves to be incorrect, losses
to the portfolio may be significant and may substantially exceed the intended
level of market exposure for the iGAP strategy.

SMALL COMPANY CAPITALIZATION RISK. Small company stocks tend to experience
steeper price fluctuations than the stocks of larger companies. A shortage of
reliable information can also pose added risk to small company stocks.
Industry-wide reversals may have a greater impact on small companies, since
they lack the financial resources of larger companies. Small company stocks are
typically less liquid than large company stocks. Accordingly, it may be harder
to find buyers for small company shares.

SHORT SALE RISK. Short sales involve the risk that the portfolio will incur a
loss by subsequently buying a security at a higher price than the price at
which the portfolio previously sold the security short. Any loss will be
increased by the amount of compensation, interest or dividends and transaction
costs the portfolio must pay to a lender of the security. In addition, because
a loss incurred by the portfolio on a short sale stems from increases in the
value of the security sold short, the extent of such loss, like the price of
the security sold short, is theoretically unlimited. By contrast, a loss
incurred by the portfolio on a long position arises from decreases in the value
of the security held by the portfolio and therefore is limited by the fact that
a security's value cannot drop below zero.



DWS VARIABLE SERIES II - CLASS A SHARES       DWS ALTERNATIVE ASSET ALLOCATION
                                              PLUS VIP   9
<PAGE>


The portfolio may not always be able to close out a short position at a
particular time or at an acceptable price. A lender may request that borrowed
securities be returned to it on short notice, and the portfolio may have to buy
the borrowed securities at an unfavorable price. If this occurs at a time that
other short sellers of the same security also want to close out their
positions, it is more likely that the portfolio will have to cover its short
sale at an unfavorable price and potentially reduce or eliminate any gain, or
cause a loss, as a result of the short sale.

The use of short sales - in effect, leveraging the portfolio - could increase
the exposure of the portfolio to the market, increase losses and increase the
volatility of returns.

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



THE PORTFOLIO'S PERFORMANCE HISTORY

Since the portfolio is newly offered, past performance information is not
available.


10   DWS ALTERNATIVE ASSET ALLOCATION PLUS VIP       DWS VARIABLE SERIES II -
                                                     CLASS A SHARES
<PAGE>


HOW MUCH INVESTORS PAY

This table describes the fees and expenses that you may pay if you buy and hold
portfolio shares. The portfolio's shareholders directly bear the fees and
expenses of the portfolio, subject to the Advisor's contractual obligations to
waive fees or reimburse expenses to maintain the portfolio's operating expenses
at a specified level (see "Net Annual Fund and Acquired Funds (Underlying
Funds) Operating Expenses" in the table below). The portfolio will indirectly
bear its proportionate share of fees and expenses incurred by the other DWS
funds and exchange-traded funds in which the portfolio is invested (see
"Acquired Funds (Underlying Funds) Fees and Expenses" in the table below). The
information in the table does not reflect charges and fees associated with the
separate account that invests in the portfolio or any variable life insurance
policy or variable annuity contract for which the portfolio is an investment
option. These charges and fees will increase expenses.





<TABLE>
<CAPTION>
FEE TABLE                                                           CLASS A
<S>                                                          <C>
ANNUAL OPERATING EXPENSES, deducted from portfolio assets
________________________________________________________________________________________
Management Fee 1                                                       0.20%
Distribution/Service (12b-1) Fee                                     None
Acquired Funds (Underlying Funds) Fees and Expenses 2,3                1.35
Other Expenses 4                                                       0.33
TOTAL ANNUAL OPERATING EXPENSES                                       1.88
Less Expense Waiver/Reimbursement                                     0.32
NET ANNUAL FUND AND ACQUIRED FUNDS (UNDERLYING FUNDS)
OPERATING EXPENSES5                                                   1.56
</TABLE>



1   Management fee has two components: (i) a fee on assets invested in other
    DWS funds; and (ii) a fee on assets not invested in other DWS funds
    ("Other Assets"). The Advisor currently intends to invest substantially
    all the assets of the portfolio in other DWS funds. However, in the
    future, the portfolio may invest a larger portion, or all, of its assets
    in Other Assets. If the portfolio's assets are entirely invested in Other
    Assets, the management fee would be 1.20% of average daily net assets.
    However, in such a situation, the Acquired Fund (Underlying Fund) Fees and
    Expense are expected to decrease. The Advisor will waive 0.15% of the
    management fee until the portfolio reaches $50 million in assets and the
    iGAP strategy is implemented.

2   The portfolio's shareholders bear indirectly the expenses of the shares of
    other DWS funds or ETFs in which the portfolio invests. Acquired Fund
    (Underlying Fund) Fees and Expenses for the initial fiscal year are based
    on the expected initial allocation of the portfolio's assets. The Total
    Annual Operating Expenses will vary with changes in allocations to, and
    operating expenses of, the other DWS funds or ETFs in which the portfolio
    invests.

3   "Acquired Funds (Underlying Funds) Fees and Expenses" includes the impact
    of dividends on short sales for investments in DWS Market Neutral Fund.
    "Acquired Funds (Underlying Funds) Fees and Expenses" would be 1.20%
    excluding these dividends on short sales and the "Total Annual Operating
    Expenses" would be 1.73%, without these dividends on short sales.

4   "Other Expenses" are based on estimated amounts for the current fiscal
    year, including 0.05% organizational and offering expenses expected to be
    incurred over the next twelve months only. Actual expenses may be
    different. "Other Expenses" include an administrative services fee paid to
    the Advisor in the amount of 0.10% of average daily net assets.

5   Through April 30, 2010, the Advisor has contractually agreed to waive all
    or a portion of its management fee and reimburse or pay operating expenses
    to the extent necessary to maintain "Total Annual Operating Expenses" at
    0.21% for Class A shares, excluding certain expenses such as extraordinary
    expenses, taxes, brokerage, interest, and acquired funds (underlying
    funds) fees and expenses (estimated at 1.35%).


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





<TABLE>
<CAPTION>
EXAMPLE                1 YEAR        3 YEARS
<S>                   <C>           <C>
Class A shares          $159           $549
</TABLE>




DWS VARIABLE SERIES II - CLASS A SHARES       DWS ALTERNATIVE ASSET ALLOCATION
                                              PLUS VIP   11

<PAGE>


PORTFOLIO MANAGEMENT

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

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

Robert Wang
Managing Director of Deutsche Asset Management and Portfolio Manager of the
portfolio.
   o Joined Deutsche Asset Management in 1995 as portfolio manager for asset
     allocation after 13 years of experience of trading fixed income, foreign
     exchange and derivative products at J.P. Morgan.
   o Global Head of Quantitative Strategies Portfolio Management: New York.
   o Joined the portfolio in 2009.
   o BS, The Wharton School, University of Pennsylvania.

Inna Okounkova
Director of Deutsche Asset Management and Portfolio Manager of the portfolio.
   o Joined Deutsche Asset Management in 1999 as a quantitative analyst,
     becoming an associate Portfolio Manager in 2001.
   o Global Asset Allocation Portfolio Manager: New York.
   o Joined the portfolio in 2009.
   o BS, MS, Moscow State University; MBA, University of Chicago.

Thomas Picciochi
Director of Deutsche Asset Management and Portfolio Manager of the portfolio.
   o Joined Deutsche Asset Management in 1999, formerly serving as portfolio
     manager for Absolute Return Strategies, after 13 years of experience in
     various research and analysis positions at State Street Global Advisors,
     FPL Energy, Barnett Bank, Trade Finance Corporation and Reserve Financial
     Management.
   o Global Asset Allocation Portfolio Manager: New York.
   o Joined the portfolio in 2009.
   o BA and MBA, University of Miami.

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



FINANCIAL HIGHLIGHTS

Since the portfolio is newly offered, financial highlights information is not
available.


12   DWS ALTERNATIVE ASSET ALLOCATION PLUS VIP       DWS VARIABLE SERIES II -
                                                     CLASS A SHARES
<PAGE>


HYPOTHETICAL EXPENSE SUMMARY

Using the annual portfolio operating expense ratios presented in the fee tables
in the portfolio prospectus, the Hypothetical Expense Summary shows the
estimated fees and expenses, in actual dollars, that would be charged on a
hypothetical investment of $10,000 in the portfolio held for the next 10 years
and the impact of such fees and expenses on portfolio returns for each year and
cumulatively, assuming a 5% return for each year. The historical rate of return
for the portfolio may be higher or lower than 5% and, for money funds, is
typically less than 5%. The tables also assume that all dividends and
distributions are reinvested. The annual portfolio expense ratios shown are net
of any contractual fee waivers or expense reimbursements, if any, for the
period of the contractual commitment. Also, please note that if you are
investing through a third party provider, that provider may have fees and
expenses separate from those of the portfolio that are not reflected here.
Mutual fund fees and expenses fluctuate over time and actual expenses may be
higher or lower than those shown.

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



DWS ALTERNATIVE ASSET ALLOCATION PLUS VIP - CLASS A





<TABLE>
<CAPTION>
                MAXIMUM                  INITIAL HYPOTHETICAL                          ASSUMED RATE
             SALES CHARGE:                   INVESTMENT:                                OF RETURN:
                 0.00%                         $10,000                                      5%
               CUMULATIVE                                CUMULATIVE           HYPOTHETICAL
             RETURN BEFORE                              RETURN AFTER        YEAR-END BALANCE          ANNUAL
                FEES AND            ANNUAL FUND           FEES AND           AFTER FEES AND          FEES AND
YEAR            EXPENSES          EXPENSE RATIOS          EXPENSES              EXPENSES             EXPENSES
<S>         <C>                  <C>                   <C>                 <C>                     <C>
   1              5.00%                 1.56%                3.44%            $ 10,344.00          $   158.68
   2             10.25%                 1.83%                6.72%            $ 10,671.90          $   192.30
   3             15.76%                 1.83%               10.10%            $ 11,010.20          $   198.39
   4             21.55%                 1.83%               13.59%            $ 11,359.23          $   204.68
   5             27.63%                 1.83%               17.19%            $ 11,719.32          $   211.17
   6             34.01%                 1.83%               20.91%            $ 12,090.82          $   217.86
   7             40.71%                 1.83%               24.74%            $ 12,474.10          $   224.77
   8             47.75%                 1.83%               28.70%            $ 12,869.53          $   231.89
   9             55.13%                 1.83%               32.77%            $ 13,277.49          $   239.25
  10             62.89%                 1.83%               36.98%            $ 13,698.39          $   246.83
TOTAL                                                                                              $ 2,125.82
</TABLE>




DWS VARIABLE SERIES II - CLASS A SHARES       DWS ALTERNATIVE ASSET ALLOCATION
                                              PLUS VIP   13

<PAGE>

DWS BALANCED VIP


THE PORTFOLIO'S MAIN INVESTMENT STRATEGY
The portfolio seeks high total return, a combination of income and capital
appreciation.


The portfolio can buy many types of securities, among them common stocks,
convertible securities, corporate bonds, government bonds, mortgage- and
asset-backed securities and certain derivatives. The portfolio can invest in
securities of any size and from any country. The portfolio normally invests
approximately 60% of its net assets in common stocks and other equity
securities and approximately 40% of its net assets in fixed-income securities,
including lower-quality, high-yield debt securities. These percentages may
fluctuate in response to changing market conditions, but the portfolio will at
all times invest at least 25% of net assets in fixed-income senior securities.
The portfolio may also invest in Exchange Traded Funds ("ETFs").


The Advisor allocates the portfolio's assets among various asset categories,
such as US and foreign equity of any size and style (including emerging market
equity), and US and foreign fixed income of any credit quality (including
emerging market bonds and inflation-indexed bonds). The Advisor reviews the
portfolio's allocation among the various asset categories periodically and may
adjust the portfolio's allocation among various asset categories based on
current or expected market conditions or to manage risk as is consistent with
the portfolio's overall investment strategy.

The Advisor uses one or more strategies within each asset category for
selecting equity and debt securities for the portfolio. Each strategy is
managed by a portfolio management team that specializes in a particular asset
category. The strategies that the Advisor may implement utilize a variety of
quantitative and qualitative techniques. Some asset categories may be
represented by ETFs.


IGAP STRATEGY. In addition to the portfolio's main investment strategy, the
Advisor seeks to enhance returns by employing a global tactical asset
allocation overlay strategy. This strategy, which the Advisor calls iGAP
(integrated Global Alpha Platform), attempts to take advantage of short-term
and medium-term mispricings within global bond, equity and currency markets.
The iGAP strategy is implemented through the use of derivatives, which are
contracts or other instruments whose value is based on, for example, indices,
currencies or securities. The iGAP strategy primarily uses exchange-traded
futures contracts on global bonds and equity indices and over-the-counter
forward currency contracts, and is expected to have a low correlation to the
portfolio's other securities holdings.


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


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



DERIVATIVES AND OTHER INVESTMENTS

In addition to derivatives utilized within the iGAP strategy, portfolio
management may, but is not required to, also use various types of derivatives.
Derivatives may be used for hedging and for risk management or non-hedging
purposes to enhance potential gains. The portfolio may use derivatives in
circumstances where portfolio management believes they offer a more efficient
or economical means of gaining exposure to a particular asset class or market
or to maintain a high level of liquidity to meet shareholder redemptions or
other needs while maintaining exposure to the market. In particular, portfolio
management may use futures, options, forward currency transactions and swaps.


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


14   DWS BALANCED VIP                                DWS VARIABLE SERIES II -
                                                     CLASS A SHARES
<PAGE>

THE MAIN RISKS OF INVESTING IN THE PORTFOLIO

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

ASSET ALLOCATION RISK. Although asset allocation among different asset
categories generally reduces risk and exposure to any one category, the risk
remains that the Advisor may favor an asset category that performs poorly
relative to the other asset categories. Because the portfolio may employ more
than one team of portfolio managers to manage each strategy within the asset
categories in which the portfolio's assets are allocated, it is possible that
different portfolio management teams could be purchasing or selling the same
security at the same time which could affect the price at which the portfolio
pays, or receives, for a particular security. In addition, it is possible that
as one team of portfolio managers is purchasing a security another team of
portfolio managers could be selling the same security resulting in no
significant change in the overall assets of the portfolio but incurring
additional costs for the portfolio. Further, because the Advisor may
periodically adjust the portfolio's allocation among various asset categories,
the portfolio may incur additional costs associated with portfolio turnover.

STOCK MARKET RISK. The portfolio is affected by how the stock market performs.
To the extent the portfolio invests in a particular capitalization or market
sector, the portfolio's performance may be proportionately affected by that
segment's general performance. When stock prices fall, you should expect the
value of your investment to fall as well. Because a stock represents ownership
in its issuer, stock prices can be hurt by poor management, shrinking product
demand and other business risks. These factors may affect single companies as
well as groups of companies. In addition, movements in financial markets may
adversely affect a stock's price, regardless of how well the company performs.
The market as a whole may not favor the types of investments the portfolio
makes, which could affect the portfolio's ability to sell them at an attractive
price.

INDUSTRY RISK. While the portfolio does not concentrate in any industry, to the
extent that the portfolio has exposure to a given industry or sector, any
factors affecting that industry or sector could affect the value of portfolio
securities. For example, manufacturers of consumer goods could be hurt by a
rise in unemployment or technology companies could be hurt by such factors as
market saturation, price competition and rapid obsolescence.

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

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

IGAP RISK. The success of the iGAP strategy depends, in part, on the Advisor's
ability to analyze the correlation between various global markets and asset
classes. If the Advisor's correlation analysis proves to be incorrect, losses
to the portfolio may be significant and may substantially exceed the intended
level of market exposure for the iGAP strategy.


ETF RISK. An ETF is a fund that holds a portfolio of common stocks or bonds
designed to track the performance of a securities index or industry sector.
ETFs trade on a securities exchange and their shares may, at times, trade at a
premium or discount to their net asset value. In addition, an ETF may not
replicate exactly the performance of the index it seeks to track for a number
of reasons, including transaction costs incurred by the



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<PAGE>

ETF. ETFs incur fees and expenses, such as operating expenses, licensing fees,
trustee fees and marketing expenses, which are borne proportionately by ETF
shareholders, such as the portfolio. The portfolio will also incur brokerage
costs when purchasing and selling shares of ETFs.

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

SMALL COMPANY CAPITALIZATION RISK. Small company stocks tend to experience
steeper price fluctuations than the stocks of larger companies. A shortage of
reliable information can also pose added risk to small company stocks.
Industry-wide reversals may have a greater impact on small companies, since
they lack the financial resources of larger companies. Small company stocks are
typically less liquid than large company stocks. Accordingly, it may be harder
to find buyers for small company shares.

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

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

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

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

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

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

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

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

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


EMERGING MARKET RISK. All of the risks of investing in foreign securities are
increased in connection with investments in emerging markets securities. In
addition, profound social changes and business practices that depart from norms
in developed countries' economies have hindered the orderly growth of emerging
economies and their markets in the past and have caused instability. High
levels of debt tend to make emerging economies heavily reliant on foreign
capital and vulnerable to capital flight. Countries with emerging economies



16   DWS BALANCED VIP                                DWS VARIABLE SERIES II -
                                                     CLASS A SHARES
<PAGE>


can be dependent upon exports, are vulnerable to falling demand from developed
countries, and are more likely to experience high levels of inflation,
deflation or currency devaluation, which could hurt their economies and
securities markets. For these and other reasons, investments in emerging
markets are often considered speculative.

Some governments exercise substantial influence over the private economic
sector and the social and political uncertainties that exist for many
developing countries is significant. In adverse social and political
circumstances, governments have been involved in policies of expropriation,
confiscatory taxation, nationalization, intervention in the securities markets
and trade settlement, and imposition of foreign investment restrictions and
exchange controls.


INFLATION-INDEXED BOND RISK. Although inflation-indexed bonds are expected to
be protected from long-term inflationary trends, short-term increases in
inflation may lead to a decline in the portfolio's value. If interest rates
rise due to reasons other than inflation, the portfolio's investment in these
securities may not be protected to the extent that the increase is not
reflected in the bond's inflation measure. Moreover, if the portfolio purchases
inflation-indexed bonds offered by foreign issuers, the rate of inflation
measured by the foreign index may not be correlated to the rate of inflation in
the US. Such foreign investments would, in that case, not provide protection
against inflation in the US. There can be no assurance that the portfolio's
returns will match or exceed the real rate of inflation.

PRICING RISK. At times, market conditions may make it difficult to value some
investments, and the portfolio may use certain valuation methodologies for some
of its investments, such as fair value pricing. Given the subjective nature of
such valuation methodologies, it is possible that the value determined for an
investment may be different than the value realized upon such investment's
sale. If the portfolio has valued its securities too highly, you may pay too
much for portfolio shares when you buy into the portfolio. If the portfolio has
underestimated the price of its securities, you may not receive the full market
value when you sell your portfolio shares.

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

SECURITY SELECTION RISK. A risk that pervades all investing is the risk that
the securities in the portfolio's portfolio may decline in value.


Another factor that could affect performance is:



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


This portfolio is designed for investors interested in asset class
diversification in a single portfolio that invests in a mix of stocks and
bonds.



PERFORMANCE - CLASS A

While a portfolio's past performance isn't necessarily a sign of how it will do
in the future, it can be valuable for an investor to know.

The bar chart shows how the returns for the portfolio's Class A shares have
varied from year to year, which may give some idea of risk. The table shows
average annual returns for the portfolio and comparable index information
(which, unlike the portfolio, does not have any fees or expenses). The
performance of both the portfolio and the comparable index information varies
over time. All figures assume reinvestment of dividends and distributions.

This information doesn't reflect charges and fees associated with the separate
account that invests in the portfolio or any variable life insurance policy or
variable annuity contract for which the portfolio is an investment option.
These charges and fees will reduce returns.


DWS VARIABLE SERIES II - CLASS A SHARES                       DWS BALANCED
                                                              VIP   17
<PAGE>

ANNUAL TOTAL RETURN (%) as of 12/31 each year - CLASS A
[[BAR GRAPHIC OMITTED HERE]

[BAR GRAPHIC DATA]





<TABLE>
<S>          <C>        <C>        <C>         <C>        <C>       <C>       <C>        <C>       <C>
  14.81       -2.63      -6.09      -15.17     18.10       6.64      4.30     10.24      4.84       -27.33
  1999       2000       2001        2002       2003       2004      2005      2006        2007     2008
</TABLE>




<TABLE>
<CAPTION>
                FOR THE PERIODS INCLUDED IN THE BAR CHART:
<S>                                        <C>
BEST QUARTER: 10.72%, Q4 1999              WORST QUARTER: -15.19%, Q4 2008
2009 TOTAL RETURN AS OF MARCH 31: -5.08%
</TABLE>

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



<TABLE>
<CAPTION>
                                            1 YEAR         5 YEARS        10 YEARS
<S>                                      <C>              <C>            <C>
Portfolio - Class A                          -27.33          -1.35          -0.18
Russell 1000 Index                           -37.60          -2.04          -1.09
Barclays Capital U.S. Aggregate
Index                                         5.24           4.65           5.63
Blended Index                                -25.12          1.17           2.61
Russell 2000 Index                           -33.79          -0.93          3.02
Standard & Poor's (S&P) 500 Index            -37.00          -2.19          -1.38
MSCI EAFE Index                              -43.38          1.66           0.80
Credit Suisse High Yield Index               -26.17          -0.59          2.87
Merrill Lynch 3-Month US Treasury
Bill Index                                    2.06           3.25           3.45
</TABLE>

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


On April 1, 2009, the Blended Index replaced the Russell 2000 (Reg. TM) Index,
Standard & Poor's (S&P) 500 Index, MSCI EAFE (Reg. TM) Index, Credit Suisse
High Yield Index and Merrill Lynch 3-Month US Treasury Bill Index as one of the
portfolio's benchmark indices because the Advisor believes that it more
accurately reflects the portfolio's investment strategy.


RUSSELL 1000 (Reg. TM) INDEX is an unmanaged price-only index of the 1,000
largest capitalized companies that are domiciled in the US and whose common
stocks are traded.

BARCLAYS CAPITAL U.S. AGGREGATE INDEX (name changed from Lehman Brothers U.S.
Aggregate Index effective November 3, 2008) is an unmanaged market
value-weighted measure of Treasury issues, agency issues, corporate bond issues
and mortgage securities.

The BLENDED INDEX consists of the Russell 1000 (Reg. TM) Growth Index (20%),
Russell 1000 (Reg. TM) Value Index (20%), Russell 2000 (Reg. TM) Index (6%),
Morgan Stanley Capital International Europe, Australasia and the Far East (MSCI
EAFE (Reg. TM)) Small Cap Index (3%), MSCI EAFE (Reg. TM) Index (8%), MSCI
Emerging Markets Free Index (3%), Barclays Capital U.S. Aggregate Index (27%),
Credit Suisse High Yield Index (3%), Barclays Capital Global TIPS Index
unhedged (5%) and Merrill Lynch 3-Month US Treasury Bill Index (5%). The
Advisor believes this blended benchmark more accurately reflects typical
portfolio asset allocations and represents the overall investment process.

RUSSELL 2000 (Reg. TM) INDEX is an unmanaged capitalization-weighted measure of
approximately 2,000 small US stocks.

STANDARD & POOR'S 500 INDEX (S&P 500) is an unmanaged, capitalization-weighted
index of 500 stocks. The index is designed to measure performance of the broad
domestic economy through changes in the aggregate market value of 500 stocks
representing all major industries.

MORGAN STANLEY CAPITAL INTERNATIONAL EUROPE, AUSTRALASIA AND THE FAR EAST (MSCI
EAFE (Reg. TM)) INDEX is an unmanaged index that tracks international stock
performance in the 21 developed markets of Europe, Australasia and the Far
East.

CREDIT SUISSE HIGH YIELD INDEX is an unmanaged trader-priced portfolio,
constructed to mirror the global high-yield debt market.

MERRILL LYNCH 3-MONTH US TREASURY BILL INDEX is an unmanaged index capturing
the performance of a single issue maturing closest to, but not exceeding, three
months from the re-balancing date.


18   DWS BALANCED VIP                                DWS VARIABLE SERIES II -
                                                     CLASS A SHARES
<PAGE>

Current performance information may be higher or lower than the performance
data quoted above. For more recent performance information, contact your
participating insurance company.





HOW MUCH INVESTORS PAY

This table describes the fees and expenses that you may pay if you buy and hold
portfolio shares. The information in the table does not reflect charges and
fees associated with the separate account that invests in the portfolio or any
variable life insurance policy or variable annuity contract for which the
portfolio is an investment option. These charges and fees will increase
expenses.



<TABLE>
<CAPTION>
FEE TABLE                                     CLASS A
<S>                                    <C>
ANNUAL OPERATING EXPENSES, deducted from portfolio assets
__________________________________________________________________
Management Fee 1                                0.36%
Distribution/Service (12b-1) Fee               None
Other Expenses 2                                0.25
TOTAL ANNUAL OPERATING EXPENSES 3                0.61
</TABLE>

1   Restated on an annualized basis to reflect approved fee changes that took
    effect on May 1, 2008.


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



3   Except as otherwise noted, the information in the table is based on amounts
    incurred during the portfolio's most recent fiscal year. It is important
    for you to understand that a decline in the portfolio's average net assets
    during the current fiscal year due to recent unprecedented market
    volatility or other factors could cause the portfolio's expense ratios for
    the portfolio's current fiscal year to be higher than the expense
    information presented. Based on asset levels as of December 31, 2008, the
    gross annualized expense ratio of Class A shares is estimated at 0.66%.
    For more current expense information, see "Financial Highlights" in the
    portfolio's future annual or semi-annual reports.



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



<TABLE>
<CAPTION>
EXAMPLE                1 YEAR        3 YEARS        5 YEARS        10 YEARS
<S>                   <C>           <C>            <C>            <C>
Class A shares           $62           $195           $340           $762
</TABLE>


DWS VARIABLE SERIES II - CLASS A SHARES                       DWS BALANCED
                                                              VIP   19
<PAGE>

PORTFOLIO MANAGEMENT

The portfolio is managed by separate teams of investment professionals who
develop and implement each strategy within a particular asset category which
together make up the portfolio's overall investment strategy. Each portfolio
management team has authority over all aspects of the portion of the portfolio
allocated to it, including, but not limited to, purchases and sales of
individual securities, portfolio construction techniques, portfolio risk
assessment and the management of daily cash flows in accordance with portfolio
holdings.

The following people handle the day-to-day management of the portfolio:

Robert Wang
Managing Director of Deutsche Asset Management and Portfolio Manager of the
portfolio.
   o  Global Head of Quantitative Strategies Portfolio Management: New York.
   o  Joined Deutsche Asset Management in 1995 as portfolio manager for asset
     allocation after 13 years of experience of trading fixed income, foreign
     exchange and derivative products at J.P. Morgan.
   o  Joined the portfolio in 2005.
   o  BS, The Wharton School, University of Pennsylvania.

Julie Abbett
Director of Deutsche Asset Management and Portfolio Manager of the portfolio.
   o  Senior portfolio manager for Global Quantitative Equity: New York.
   o  Joined Deutsche Asset Management in 2000 after four years of combined
     experience as a consultant with equity trading services for BARRA, Inc.
     and a product developer for FactSet Research.
   o  Joined the portfolio in 2007.
   o  BA, University of Connecticut.

James B. Francis, CFA
Director of Deutsche Asset Management and Portfolio Manager of the portfolio.
   o  Head of Active Quantitative Equity Portfolio Management: New York.
   o  Joined Deutsche Asset Management and the portfolio in 2008 after 20
     years of experience as senior quantitative global equity portfolio manager
     at State Street Global Advisors, and most recently, Northern Trust Global
     Investments.
   o  BS in Applied Mathematics from University of Massachusetts, Amherst.

Inna Okounkova
Director of Deutsche Asset Management and Portfolio Manager of the portfolio.
   o  Global Asset Allocation Portfolio Manager: New York.
   o  Joined Deutsche Asset Management in 1999 as a quantitative analyst,
     becoming an associate Portfolio Manager in 2001.
   o  Joined the portfolio in 2005.
   o  BS, MS, Moscow State University; MBA, University of Chicago Graduate
     School of Business.

Thomas Picciochi
Director of Deutsche Asset Management and Portfolio Manager of the portfolio.
Senior portfolio manager for Quantitative Strategies: New York.
   o  Joined Deutsche Asset Management in 1999, formerly serving as portfolio
     manager for Absolute Return Strategies, after 13 years of experience in
     various research and analysis positions at State Street Global Advisors,
     FPL Energy, Barnett Bank, Trade Finance Corporation and Reserve Financial
     Management.
   o  Joined the portfolio in 2007.
   o  BA and MBA, University of Miami.

Joseph Axtell, CFA
Managing Director of Deutsche Asset Management and Portfolio Manager of the
portfolio.
   o  Joined Deutsche Asset Management in 2001 and the portfolio in 2008.
   o  Senior analyst at Merrill Lynch Investment Managers for the
     international equity portion of a global balanced portfolio (1996-2001).
   o  Director, International Research at PCM International (1989-1996).
   o  Associate manager, structured debt and equity group at Prudential
     Capital Corporation (1988-1989).
   o  Analyst at Prudential-Bache Capital Funding in London (1987-1988).
   o  Equity analyst in the healthcare sector at Prudential Equity Management
     Associates (1985-1987).
   o  BS, Carlson School of Management, University of Minnesota.

John Brennan
Director of Deutsche Asset Management and Portfolio Manager of the portfolio.
   o  Joined Deutsche Asset Management and the portfolio in 2007 after 14
     years of experience at INVESCO and Freddie Mac. Previously, was head of
     Structured Securities sector team at INVESCO and before that was senior
     fixed income portfolio manager at Freddie Mac specializing in MBS, CMBS,
     collateralized mortgage obligations, ARMS, mortgage derivatives, US
     Treasuries and agency debt.
   o  Portfolio Manager for Structured Finance: Louisville.
   o  Joined the portfolio in 2009.
   o  BS, University of Maryland; MBA William & Mary.

William Chepolis, CFA
Managing Director of Deutsche Asset Management and Portfolio Manager of the
portfolio.
   o  Joined Deutsche Asset Management in 1998 after 13 years of experience as
     vice president and portfolio manager for Norwest Bank, where he managed
     the bank's fixed income and foreign exchange portfolios.
   o  Portfolio Manager for Retail Mortgage Backed Securities: New York.
   o  Joined the portfolio in 2005.
   o  BIS, University of Minnesota.

20   DWS BALANCED VIP                                DWS VARIABLE SERIES II -
                                                        CLASS A SHARES
<PAGE>

Owen Fitzpatrick, CFA
Managing Director of Deutsche Asset Management and Portfolio Manager of the
portfolio.
   o  Joined Deutsche Asset Management and the portfolio in 2009.
   o  Prior to joining Deutsche Asset Management, he was Managing Director of
     Deutsche Bank Private Wealth Management and served as head of US Equity
     Strategy and manager of the US large cap core, value and growth portfolios
     and member of the US Investment Committee and head of the Equity Strategy
     Group.
   o  Previous experience includes over 21 years of experience in trust and
     investment management. Prior to joining Deutsche Bank in 1995, managed an
     equity income fund, trust and advisory relationships for Princeton Bank &
     Trust Company, where he was also responsible for research coverage of the
     consumer cyclical sector. Previously served as a portfolio manager at
     Manufacturer's Hanover Trust Company.
   o  BA and MBA, Fordham University.

Matthew F. MacDonald, CFA
Director of Deutsche Asset Management and Portfolio Manager of the portfolio.
   o  Joined Deutsche Asset Management and the portfolio in 2006 after 14
     years of fixed income experience at Bank of America Global Structured
     Products and PPM America, Inc., where he was portfolio manager for public
     fixed income, including MBS, ABS, CDOs and corporate bonds; earlier, as an
     analyst for MBS, ABS and money markets; and originally, at Duff & Phelps
     Credit Rating Company.
   o  Portfolio Manager for Retail Mortgage Backed Securities: New York.
   o  BA, Harvard University; MBA, University of Chicago Graduate School of
     Business.

J. Richard Robben, CFA
Director of Deutsche Asset Management and Portfolio Manager of the portfolio.
   o  Joined Deutsche Asset Management and the portfolio in 2007 after 11
     years of experience at INVESCO Institutional, most recently as senior
     portfolio manager for LIBOR-related strategies and head of portfolio
     construction group for North American Fixed Income.
   o  Portfolio Manager for Institutional Fixed Income: Louisville.
   o  Joined the portfolio in 2009.
   o  BA, Bellarmine University.

Thomas Schuessler, PhD
Managing Director of Deutsche Asset Management and Portfolio Manager of the
portfolio.
   o  Joined Deutsche Asset Management in 2001 after five years at Deutsche
     Bank where he managed various projects and worked in the office of the
     Chairman of the Management Board.
   o  US and Global Fund Management: Frankfurt.
   o  Joined the portfolio in 2008.
   o  PhD, University of Heidelberg, studies in physics and economics at
     University of Heidelberg and University of Utah.

Richard Shepley
Managing Director of Deutsche Asset Management and Portfolio Manager of the
portfolio.
   o  Joined Deutsche Asset Management in 1998 and the portfolio in 2009.
   o  Previous experience includes eight years of investment industry
     experience as research analyst for global beverage and media sectors at
     Newton Investment Management and assistant manager in corporate tax and
     corporate insolvency department at PriceWaterhouse, London.
   o  MA, Oxford University.

Gary Sullivan, CFA
Managing Director of Deutsche Asset Management and Portfolio Manager of the
portfolio.
   o  Joined Deutsche Asset Management in 1996 and the portfolio in 2006.
     Served as the head of the High Yield group in Europe and as an Emerging
     Markets portfolio manager.
   o  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.
   o  BS, United States Military Academy (West Point); MBA, New York
     University, Stern School of Business.

DWS VARIABLE SERIES II - CLASS A SHARES                       DWS BALANCED
                                                              VIP   21
<PAGE>

The following individual has been named consultant to the portfolio's advisor:

Michael Sieghart, CFA
Managing Director of DWS Investment GmbH: Frankfurt and consultant to the
Advisor.
   o Joined DWS Investment GmbH: Frankfurt in 1997.
   o Senior fund manager of global and European equities: Frankfurt.
   o Master's degree in finance and economics from the University of Economics
     and Business Administration, Vienna.

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


22   DWS BALANCED VIP                                DWS VARIABLE SERIES II -
                                                     CLASS A SHARES
<PAGE>

FINANCIAL HIGHLIGHTS

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

This information doesn't reflect charges and fees associated with the separate
account that invests in the portfolio or any variable life insurance policy or
variable annuity contract for which the portfolio is an investment option.
These charges and fees will reduce returns.



DWS BALANCED VIP - CLASS A



<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,                               2008         2007          2006          2005         2004
<S>                                               <C>           <C>          <C>            <C>          <C>
SELECTED PER SHARE DATA
--------------------------------------------------------------------------------------------------------         -
NET ASSET VALUE, BEGINNING OF PERIOD                $  24.81      $  24.46     $   22.75      $  22.37    $  21.32
-------------------------------------------------   --------      --------     ---------      --------    --------
Income (loss) from investment operations:
 Net investment income a                                  .61           .74        .69c             .59         .47
_________________________________________________   ________      ________     _________      ________    ________
 Net realized and unrealized gain (loss)              ( 7.20)          .42          1.60           .34         .93
-------------------------------------------------   --------      --------     ---------      --------    --------
 TOTAL FROM INVESTMENT OPERATIONS                     ( 6.59)         1.16          2.29           .93        1.40
-------------------------------------------------   --------      --------     ---------      --------    --------
Less distributions from:
 Net investment income                                (  .87)       (  .81)       (  .58)       (  .55)     (  .35)
_________________________________________________   ________      ________     _________      ________    ________
NET ASSET VALUE, END OF PERIOD                      $  17.35      $  24.81     $   24.46      $  22.75    $  22.37
-------------------------------------------------   --------      --------     ---------      --------    --------
Total Return (%)                                      (27.33)b     4.84b        10.24b,c       4.30b          6.64
_________________________________________________   ________      ________     _________      ________    ________
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
---------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ millions)                   307           528           600           653         622
_________________________________________________   ________      ________     _________      ________    ________
Ratio of expenses before expense reductions (%)          .64           .52           .55           .55         .59
_________________________________________________   ________      ________     _________      ________    ________
Ratio of expenses after expense reductions (%)           .62           .51           .51           .53         .59
_________________________________________________   ________      ________     _________      ________    ________
Ratio of net investment income (%)                      2.83          3.00       2.99c            2.66        2.18
_________________________________________________   ________      ________     _________      ________    ________
Portfolio turnover rate (%)                              263           199           108           122         140
-------------------------------------------------   --------      --------     ---------      --------    --------
</TABLE>

a   Based on average shares outstanding during the period.

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

c   Includes non-recurring income from the Advisor recorded as a result of an
    administrative proceeding regarding disclosure of brokerage allocation
    practices in connection with sales of DWS Funds. The non-recurring income
    resulted in an increase in net investment income of $0.024 per share and
    an increase in the ratio of net investment income of 0.10%. Excluding this
    non-recurring income, total return would have been 0.10% lower.


DWS VARIABLE SERIES II - CLASS A SHARES                       DWS BALANCED
                                                              VIP   23
<PAGE>

HYPOTHETICAL EXPENSE SUMMARY

Using the annual portfolio operating expense ratios presented in the fee tables
in the portfolio prospectus, the Hypothetical Expense Summary shows the
estimated fees and expenses, in actual dollars, that would be charged on a
hypothetical investment of $10,000 in the portfolio held for the next 10 years
and the impact of such fees and expenses on portfolio returns for each year and
cumulatively, assuming a 5% return for each year. The historical rate of return
for the portfolio may be higher or lower than 5% and, for money funds, is
typically less than 5%. The tables also assume that all dividends and
distributions are reinvested. The annual portfolio expense ratios shown are net
of any contractual fee waivers or expense reimbursements, if any, for the
period of the contractual commitment. Also, please note that if you are
investing through a third party provider, that provider may have fees and
expenses separate from those of the portfolio that are not reflected here.
Mutual fund fees and expenses fluctuate over time and actual expenses may be
higher or lower than those shown.

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



DWS BALANCED VIP - CLASS A



<TABLE>
<CAPTION>
                MAXIMUM                  INITIAL HYPOTHETICAL                         ASSUMED RATE
             SALES CHARGE:                   INVESTMENT:                               OF RETURN:
                 0.00%                         $10,000                                     5%
               CUMULATIVE                                CUMULATIVE           HYPOTHETICAL
             RETURN BEFORE                              RETURN AFTER        YEAR-END BALANCE          ANNUAL
                FEES AND            ANNUAL FUND           FEES AND           AFTER FEES AND          FEES AND
YEAR            EXPENSES          EXPENSE RATIOS          EXPENSES              EXPENSES             EXPENSES
<S>         <C>                  <C>                   <C>                 <C>                     <C>
   1              5.00%                 0.61%                4.39%            $ 10,439.00           $  62.34
   2             10.25%                 0.61%                8.97%            $ 10,897.27           $  65.08
   3             15.76%                 0.61%               13.76%            $ 11,375.66           $  67.93
   4             21.55%                 0.61%               18.75%            $ 11,875.05           $  70.91
   5             27.63%                 0.61%               23.96%            $ 12,396.37           $  74.03
   6             34.01%                 0.61%               29.41%            $ 12,940.57           $  77.28
   7             40.71%                 0.61%               35.09%            $ 13,508.66           $  80.67
   8             47.75%                 0.61%               41.02%            $ 14,101.69           $  84.21
   9             55.13%                 0.61%               47.21%            $ 14,720.75           $  87.91
  10             62.89%                 0.61%               53.67%            $ 15,367.00           $  91.77
TOTAL                                                                                               $ 762.13
</TABLE>


24   DWS BALANCED VIP                                DWS VARIABLE SERIES II -
                                                     CLASS A SHARES
<PAGE>

DWS BLUE CHIP VIP


THE PORTFOLIO'S MAIN INVESTMENT STRATEGY
The portfolio seeks growth of capital and income.

Under normal circumstances, the portfolio invests at least 80% of its net
assets, plus the amount of any borrowings for investment purposes, in common
stocks of large US companies that are similar in size to the companies in the
S&P 500 Index (as of February 28, 2009, the S&P 500 Index had a median market
capitalization of $5 billion) and that portfolio management considers to be
"blue chip" companies. Blue chip companies are large, well-known companies that
typically have an established earnings and dividends history, easy access to
credit, solid positions in their industry and strong management.


While the portfolio invests mainly in US common stocks, it could invest up to
20% of its net assets in foreign securities. The portfolio may also invest in
other types of equity securities such as preferred stocks or convertible
securities.


Portfolio management looks for "blue chip" companies whose stock price is
attractive relative to potential growth. Portfolio management uses quantitative
stock techniques and fundamental equity analysis to evaluate each company's
stock price relative to the company's earnings, operating trends, market
outlook and other measures of performance potential.

Portfolio management will normally sell a stock when portfolio management
believes its fundamental factors have changed, other investments offer better
opportunities or in the case of adjusting the portfolio's emphasis on or within
a given industry.

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

Although major changes tend to be infrequent, the Board of Trustees could
change the portfolio's investment objective without seeking shareholder
approval. However, the Board will provide shareholders with at least 60 days'
notice prior to making any changes to the portfolio's 80% investment policy.




DERIVATIVES AND OTHER INVESTMENTS


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

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



THE MAIN RISKS OF INVESTING IN THE PORTFOLIO

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

STOCK MARKET RISK. The portfolio is affected by how the stock market performs.
To the extent the portfolio invests in a particular capitalization or market
sector, the portfolio's performance may be proportionately affected by that
segment's general performance. When stock prices fall, you should expect the
value of your investment to fall as well. Because a stock represents ownership
in its issuer, stock prices can be hurt by poor management, shrinking product
demand and other business risks. These factors may affect single companies as


DWS VARIABLE SERIES II - CLASS A SHARES                       DWS BLUE CHIP
                                                              VIP   25
<PAGE>

well as groups of companies. In addition, movements in financial markets may
adversely affect a stock's price, regardless of how well the company performs.
The market as a whole may not favor the types of investments the portfolio
makes, which could affect the portfolio's ability to sell them at an attractive
price.

GROWTH INVESTING RISK. Since growth stocks usually reinvest a large portion of
earnings in their own businesses, they may lack the dividends associated with
value stocks that might otherwise cushion their decline in a falling market.
Earnings disappointments in growth stocks often result in sharp price declines
because investors buy these stocks for their potential superior earnings
growth. Growth stocks may also be out of favor for certain periods in relation
to value stocks.

VALUE INVESTING RISK. At times, "value" investing may perform better than or
worse than other investment styles and the overall market. If portfolio
management overestimates the value or return potential of one or more
securities, the portfolio may underperform the general equity market. Value
stocks may also be out of favor for certain periods in relation to growth
stocks.

INDUSTRY RISK. While the portfolio does not concentrate in any industry, to the
extent that the portfolio has exposure to a given industry or sector, any
factors affecting that industry or sector could affect the value of portfolio
securities. For example, manufacturers of consumer goods could be hurt by a
rise in unemployment or technology companies could be hurt by such factors as
market saturation, price competition and rapid obsolescence.

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

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

PRICING RISK. At times, market conditions may make it difficult to value some
investments, and the portfolio may use certain valuation methodologies for some
of its investments, such as fair value pricing. Given the subjective nature of
such valuation methodologies, it is possible that the value determined for an
investment may be different than the value realized upon such investment's
sale. If the portfolio has valued its securities too highly, you may pay too
much for portfolio shares when you buy into the portfolio. If the portfolio has
underestimated the price of its securities, you may not receive the full market
value when you sell your portfolio shares.

SECURITY SELECTION RISK. A risk that pervades all investing is the risk that
the securities in the portfolio's portfolio may decline in value.

Other factors that could affect performance include:

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

o foreign securities may be more volatile than their US counterparts, for
  reasons such as currency fluctuations and political and economic
  uncertainty.

Investors with long-term goals who are interested in a core stock investment
 may be interested in this portfolio.

26   DWS BLUE CHIP VIP                               DWS VARIABLE SERIES II -
                                                     CLASS A SHARES
<PAGE>

PERFORMANCE - CLASS A

While a portfolio's past performance isn't necessarily a sign of how it will do
in the future, it can be valuable for an investor to know.

The bar chart shows how the returns for the portfolio's Class A shares have
varied from year to year, which may give some idea of risk. The table shows
average annual returns for the portfolio and comparable index information
(which, unlike the portfolio, does not have any fees or expenses). The
performance of both the portfolio and the comparable index information varies
over time. All figures assume reinvestment of dividends and distributions.

This information doesn't reflect charges and fees associated with the separate
account that invests in the portfolio or any variable life insurance policy or
variable annuity contract for which the portfolio is an investment option.
These charges and fees will reduce returns.


ANNUAL TOTAL RETURN (%) as of 12/31 each year - CLASS A
[BAR GRAPHIC OMITTED HERE]

[BAR GRAPHIC DATA]





<TABLE>
<S>          <C>        <C>         <C>         <C>        <C>        <C>        <C>        <C>     <C>
  25.24       -7.84      -15.81      -22.11     27.25      16.04      10.06      15.65      3.50     -38.49
  1999       2000        2001        2002       2003       2004       2005       2006       2007    2008
</TABLE>




<TABLE>
<CAPTION>
                FOR THE PERIODS INCLUDED IN THE BAR CHART:
<S>                                        <C>
BEST QUARTER: 17.50%, Q4 1999              WORST QUARTER: -21.79%, Q4 2008
2009 TOTAL RETURN AS OF MARCH 31: -7.82%
</TABLE>

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



<TABLE>
<CAPTION>
                              1 YEAR         5 YEARS        10 YEARS
<S>                        <C>              <C>            <C>
Portfolio - Class A            -38.49          -1.23          -0.99
Russell 1000 Index             -37.60          -2.04          -1.09
</TABLE>

RUSSELL 1000 (Reg. TM) INDEX is an unmanaged price-only index of the 1,000
largest capitalized companies that are domiciled in the US and whose common
stocks are traded.

Current performance information may be higher or lower than the performance
data quoted above. For more recent performance information, contact your
participating insurance company.


DWS VARIABLE SERIES II - CLASS A SHARES                       DWS BLUE CHIP
                                                              VIP   27
<PAGE>

HOW MUCH INVESTORS PAY

This table describes the fees and expenses that you may pay if you buy and hold
portfolio shares. The information in the table does not reflect charges and
fees associated with the separate account that invests in the portfolio or any
variable life insurance policy or variable annuity contract for which the
portfolio is an investment option. These charges and fees will increase
expenses.



<TABLE>
<CAPTION>
FEE TABLE                                              CLASS A
<S>                                    <C>
ANNUAL OPERATING EXPENSES, deducted from portfolio assets
___________________________________________________________________________________
Management Fee 1                                          0.55%
Distribution/Service (12b-1) Fee                        None
Other Expenses 2                                          0.16
TOTAL ANNUAL OPERATING EXPENSES 3                         0.71
</TABLE>

1     Restated on an annualized basis to reflect approved fee changes that took
    effect on May 1, 2008.


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



3     Except as otherwise noted, the information in the table is based on
    amounts incurred during the portfolio's most recent fiscal year. It is
    important for you to understand that a decline in the portfolio's average
    net assets during the current fiscal year due to recent unprecedented
    market volatility or other factors could cause the portfolio's expense
    ratios for the portfolio's current fiscal year to be higher than the
    expense information presented. Based on asset levels as of December 31,
    2008, the gross annualized expense ratio of Class A shares is estimated at
    0.78%. For more current expense information, see "Financial Highlights" in
    the portfolio's future annual or semi-annual reports.



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



<TABLE>
<CAPTION>
EXAMPLE               1 YEAR        3 YEARS        5 YEARS        10 YEARS
<S>                  <C>           <C>            <C>            <C>
Class A shares       $73           $227           $395           $883
</TABLE>

PORTFOLIO MANAGEMENT

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

The following people handle the day-to-day management of the portfolio:

Robert Wang
Managing Director of Deutsche Asset Management and Portfolio Manager of the
portfolio.
   o  Joined Deutsche Asset Management in 1995 as portfolio manager for asset
     allocation after 13 years of experience of trading fixed income and
     derivative securities at J.P. Morgan.
   o  Global Head of Quantitative Strategies Portfolio Management: New York.
   o  Joined the portfolio in 2003.
   o  BS, The Wharton School, University of Pennsylvania.

James B. Francis, CFA
Director of Deutsche Asset Management and Portfolio Manager of the portfolio.
   o  Head of Active Quantitative Equity Portfolio Management: New York.
   o  Joined Deutsche Asset Management and the portfolio in 2008 after 20
     years of experience as senior quantitative global equity portfolio manager
     at State Street Global Advisors, and most recently, Northern Trust Global
     Investments.
   o  BS in Applied Mathematics from University of Massachusetts, Amherst.

Julie Abbett
Director of Deutsche Asset Management and Portfolio Manager of the portfolio.
   o  Senior portfolio manager for Global Quantitative Equity: New York.
   o  Joined Deutsche Asset Management in 2000 after four years of combined
     experience as a consultant with equity trading services for BARRA, Inc.
     and a product developer for FactSet Research.
   o  Joined the portfolio in 2006.
   o  BA, University of Connecticut.

28   DWS BLUE CHIP VIP                               DWS VARIABLE SERIES II -
                                                        CLASS A SHARES
<PAGE>

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


DWS VARIABLE SERIES II - CLASS A SHARES                       DWS BLUE CHIP
                                                              VIP   29
<PAGE>

FINANCIAL HIGHLIGHTS

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

This information doesn't reflect charges and fees associated with the separate
account that invests in the portfolio or any variable life insurance policy or
variable annuity contract for which the portfolio is an investment option.
These charges and fees will reduce returns.



DWS BLUE CHIP VIP - CLASS A



<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,                               2008         2007         2006         2005        2004
<S>                                               <C>           <C>         <C>           <C>         <C>
SELECTED PER SHARE DATA
------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD                $  14.65     $  16.17     $  14.88    $ 13.65     $ 11.84
-------------------------------------------------   --------     --------     --------    -------     -------
Income (loss) from investment operations:
 Net investment income a                                 .12          .17       .17c         .14         .13
_________________________________________________   ________     ________     ________    _______     _______
 Net realized and unrealized gain (loss)              ( 4.97)         .36         2.07      1.22        1.76
-------------------------------------------------   --------     --------     --------    -------     -------
 TOTAL FROM INVESTMENT OPERATIONS                     ( 4.85)         .53         2.24      1.36        1.89
-------------------------------------------------   --------     --------     --------    -------     -------
Less distributions from:
 Net investment income                                (  .21)      (  .18)      (  .14)   (  .13)     (  .08)
_________________________________________________   ________     ________     ________    _______     _______
 Net realized gains                                   ( 2.34)      ( 1.87)      (  .81)        -           -
-------------------------------------------------   --------     --------     --------    -------     -------
 TOTAL DISTRIBUTIONS                                  ( 2.55)      ( 2.05)      (  .95)   (  .13)     (  .08)
-------------------------------------------------   --------     --------     --------    -------     -------
NET ASSET VALUE, END OF PERIOD                      $   7.25     $  14.65     $  16.17    $ 14.88     $ 13.65
-------------------------------------------------   --------     --------     --------    -------     -------
Total Return (%)                                      (38.49)b       3.50      15.65c      10.06       16.04
_________________________________________________   ________     ________     ________    _______     _______
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ millions)                   106          242          314       294         283
_________________________________________________   ________     ________     ________    _______     _______
Ratio of expenses before expense reductions (%)          .76          .71          .71       .70         .70
_________________________________________________   ________     ________     ________    _______     _______
Ratio of expenses after expense reductions (%)           .76          .71          .71       .70         .70
_________________________________________________   ________     ________     ________    _______     _______
Ratio of net investment income (%)                      1.12         1.13       1.12c       1.00        1.08
_________________________________________________   ________     ________     ________    _______     _______
Portfolio turnover rate (%)                              127          275          226       288         249
-------------------------------------------------   --------     --------     --------    -------     -------
</TABLE>

a   Based on average shares outstanding during the period.

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

c   Includes non-recurring income from the Advisor recorded as a result of an
    administrative proceeding regarding disclosure of brokerage allocation
    practices in connection with sales of DWS Funds. The non-recurring income
    resulted in an increase in net investment income of $0.003 per share and
    an increase in the ratio of net investment income of 0.02%. Excluding this
    non-recurring income, total return would have been 0.02% lower.


30   DWS BLUE CHIP VIP                               DWS VARIABLE SERIES II -
                                                        CLASS A SHARES
<PAGE>

HYPOTHETICAL EXPENSE SUMMARY

Using the annual portfolio operating expense ratios presented in the fee tables
in the portfolio prospectus, the Hypothetical Expense Summary shows the
estimated fees and expenses, in actual dollars, that would be charged on a
hypothetical investment of $10,000 in the portfolio held for the next 10 years
and the impact of such fees and expenses on portfolio returns for each year and
cumulatively, assuming a 5% return for each year. The historical rate of return
for the portfolio may be higher or lower than 5% and, for money funds, is
typically less than 5%. The tables also assume that all dividends and
distributions are reinvested. The annual portfolio expense ratios shown are net
of any contractual fee waivers or expense reimbursements, if any, for the
period of the contractual commitment. Also, please note that if you are
investing through a third party provider, that provider may have fees and
expenses separate from those of the portfolio that are not reflected here.
Mutual fund fees and expenses fluctuate over time and actual expenses may be
higher or lower than those shown.

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



DWS BLUE CHIP VIP - CLASS A



<TABLE>
<CAPTION>
                MAXIMUM                  INITIAL HYPOTHETICAL                         ASSUMED RATE
             SALES CHARGE:                   INVESTMENT:                               OF RETURN:
                 0.00%                         $10,000                                     5%
               CUMULATIVE                                CUMULATIVE           HYPOTHETICAL
             RETURN BEFORE                              RETURN AFTER        YEAR-END BALANCE          ANNUAL
                FEES AND            ANNUAL FUND           FEES AND           AFTER FEES AND          FEES AND
YEAR            EXPENSES          EXPENSE RATIOS          EXPENSES              EXPENSES             EXPENSES
<S>         <C>                  <C>                   <C>                 <C>                     <C>
   1              5.00%                 0.71%                4.29%            $ 10,429.00           $  72.52
   2             10.25%                 0.71%                8.76%            $ 10,876.40           $  75.63
   3             15.76%                 0.71%               13.43%            $ 11,343.00           $  78.88
   4             21.55%                 0.71%               18.30%            $ 11,829.62           $  82.26
   5             27.63%                 0.71%               23.37%            $ 12,337.11           $  85.79
   6             34.01%                 0.71%               28.66%            $ 12,866.37           $  89.47
   7             40.71%                 0.71%               34.18%            $ 13,418.34           $  93.31
   8             47.75%                 0.71%               39.94%            $ 13,993.98           $  97.31
   9             55.13%                 0.71%               45.94%            $ 14,594.32           $ 101.49
  10             62.89%                 0.71%               52.20%            $ 15,220.42           $ 105.84
TOTAL                                                                                               $ 882.50
</TABLE>


DWS VARIABLE SERIES II - CLASS A SHARES                       DWS BLUE CHIP
                                                              VIP   31
<PAGE>

DWS CORE FIXED INCOME VIP


THE PORTFOLIO'S MAIN INVESTMENT STRATEGY
The portfolio seeks high current income.

The portfolio invests for current income, not capital appreciation. Under
normal circumstances, the portfolio invests at least 80% of its assets, plus
the amount of any borrowings for investment purposes, determined at the time of
purchase, in fixed income securities. Fixed income securities include those of
the US Treasury, as well as US government agencies and instrumentalities,
corporate, mortgage-backed and asset-backed securities, taxable municipal and
tax-exempt municipal bonds and liquid Rule 144A securities.

The portfolio invests primarily in investment-grade fixed income securities
rated within the top four credit rating categories. The portfolio may invest up
to 25% of its total assets in US dollar-denominated securities of foreign
issuers and governments. The portfolio may hold up to 20% of its total assets
in cash or money market instruments in order to maintain liquidity, or in the
event portfolio management determines that securities meeting the portfolio's
investment objective are not readily available for purchase. The portfolio's
investments in foreign issuers are limited to US dollar-denominated securities
to avoid currency risk.

Portfolio management utilizes a core US fixed income strategy that seeks to add
incremental returns to the Barclays Capital US Aggregate Index. In managing the
portfolio, portfolio management uses a balanced "top-down" and "bottom-up"
approach.

Portfolio management seeks pricing changes in a broad range of securities and
sectors in order to achieve the portfolio's investment objective.

Company research is a very important part of the investment process. In
selecting individual securities for investment, portfolio management:

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

o determines the intrinsic value of each issue by examining credit, structure,
  option value and liquidity risks. Portfolio management looks to exploit any
  inefficiencies between intrinsic value and market trading price;

o uses credit analysis to determine the issuer's ability to pay interest and
  repay principal on its bonds; and

o subordinates sector weightings to individual bonds that may add above-market
  value.

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

Although major changes tend to be infrequent, the Board of Trustees could
change the portfolio's investment objective without seeking shareholder
approval. However, the Board will provide shareholders with at least 60 days'
notice prior to making any changes to the portfolio's 80% investment policy.




DERIVATIVES AND OTHER INVESTMENTS


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

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


32   DWS CORE FIXED INCOME VIP                       DWS VARIABLE SERIES II -
                                                     CLASS A SHARES
<PAGE>

THE MAIN RISKS OF INVESTING IN THE PORTFOLIO

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

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

CREDIT RISK. A portfolio purchasing bonds faces the risk that the
creditworthiness of the issuer may decline, causing the value of its bonds to
decline. In addition, an issuer may be unable or unwilling to make timely
payments on the interest and principal on the bonds it has issued. Because the
issuers of bonds rated below the top three rating categories may be in
uncertain financial health, the prices of their bonds can be more vulnerable to
bad economic news or even the expectation of bad news, than investment-grade
bonds. In some cases, bonds may decline in credit quality or go into default.
Because this portfolio may invest in securities not paying current interest or
in securities already in default, these risks may be more pronounced.

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


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



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



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



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

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

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

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

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



DWS VARIABLE SERIES II - CLASS A SHARES                 DWS CORE FIXED INCOME
                                                        VIP   33
<PAGE>

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

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

PRICING RISK. At times, market conditions may make it difficult to value some
investments, and the portfolio may use certain valuation methodologies for some
of its investments, such as fair value pricing. Given the subjective nature of
such valuation methodologies, it is possible that the value determined for an
investment may be different than the value realized upon such investment's
sale. If the portfolio has valued its securities too highly, you may pay too
much for portfolio shares when you buy into the portfolio. If the portfolio has
underestimated the price of its securities, you may not receive the full market
value when you sell your portfolio shares.

SECURITY SELECTION RISK. A risk that pervades all investing is the risk that
the securities in the portfolio's portfolio may decline in value.

Another factor that could affect performance is:

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

This portfolio is designed for individuals who are seeking to earn higher
current income than an investment in money market funds may provide.


34   DWS CORE FIXED INCOME VIP                       DWS VARIABLE SERIES II -
                                                     CLASS A SHARES
<PAGE>

PERFORMANCE - CLASS A

While a portfolio's past performance isn't necessarily a sign of how it will do
in the future, it can be valuable for an investor to know.

The bar chart shows how the returns for the portfolio's Class A shares have
varied from year to year, which may give some idea of risk. The table shows
average annual returns for the portfolio and comparable index information
(which, unlike the portfolio, does not have any fees or expenses). The
performance of both the portfolio and the comparable index information varies
over time. All figures assume reinvestment of dividends and distributions.

This information doesn't reflect charges and fees associated with the separate
account that invests in the portfolio or any variable life insurance policy or
variable annuity contract for which the portfolio is an investment option.
These charges and fees will reduce returns.


From December 2, 2005 through February 27, 2009, Aberdeen Asset Management Inc.
served as the portfolio's subadvisor and was primarily responsible for the day
to day management of the portfolio. Performance would have been different if
the portfolio's current investment strategy had been in effect.



ANNUAL TOTAL RETURN (%) as of 12/31 each year - CLASS A
[BAR GRAPHIC OMITTED HERE]

[BAR GRAPHIC DATA]




<TABLE>
<S>          <C>       <C>       <C>       <C>       <C>       <C>       <C>       <C>       <C>
  -2.06       9.90      5.71      8.01      5.13      4.53      2.25      4.26     4.17       -19.33
  1999       2000      2001      2002      2003      2004      2005      2006      2007      2008
</TABLE>




<TABLE>
<CAPTION>
                FOR THE PERIODS INCLUDED IN THE BAR CHART:
<S>                                       <C>
BEST QUARTER: 4.14%, Q3 2002              WORST QUARTER: -12.83%, Q4 2008
2009 TOTAL RETURN AS OF MARCH 31: 0.22%
</TABLE>

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



<TABLE>
<CAPTION>
                                         1 YEAR         5 YEARS        10 YEARS
<S>                                   <C>              <C>            <C>
Portfolio - Class A                       -19.33          -1.31           1.92
Barclays Capital U.S. Aggregate
Index                                      5.24           4.65            5.63
</TABLE>

BARCLAYS CAPITAL U.S. AGGREGATE INDEX (name changed from Lehman Brothers U.S.
Aggregate Index effective November 3, 2008) is an unmanaged market
value-weighted measure of Treasury issues, agency issues, corporate bond issues
and mortgage securities.

Current performance information may be higher or lower than the performance
data quoted above. For more recent performance information, contact your
participating insurance company.


DWS VARIABLE SERIES II - CLASS A SHARES                 DWS CORE FIXED INCOME
                                                        VIP   35
<PAGE>

HOW MUCH INVESTORS PAY

This table describes the fees and expenses that you may pay if you buy and hold
portfolio shares. The information in the table does not reflect charges and
fees associated with the separate account that invests in the portfolio or any
variable life insurance policy or variable annuity contract for which the
portfolio is an investment option. These charges and fees will increase
expenses.




<TABLE>
<CAPTION>
FEE TABLE                                     CLASS A
<S>                                    <C>
ANNUAL OPERATING EXPENSES, deducted from portfolio assets
__________________________________________________________________
Management Fee 1                                 0.50%
Distribution/Service (12b-1) Fee               None
Other Expenses 2                                 0.17
TOTAL ANNUAL OPERATING EXPENSES 3                0.67
</TABLE>


1   Restated on an annualized basis to reflect approved fee changes that took
    effect on May 1, 2008.


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

3   Except as otherwise noted, the information in the table is based on amounts
    incurred during the portfolio's most recent fiscal year. It is important
    for you to understand that a decline in the portfolio's average net assets
    during the current fiscal year due to recent unprecedented market
    volatility or other factors could cause the portfolio's expense ratios for
    the portfolio's current fiscal year to be higher than the expense
    information presented. Based on asset levels as of December 31, 2008, the
    gross annualized expense ratio of Class A shares is estimated at 0.75%.
    For more current expense information, see "Financial Highlights" in the
    portfolio's future annual or semi-annual reports.



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



<TABLE>
<CAPTION>
EXAMPLE                1 YEAR        3 YEARS        5 YEARS        10 YEARS
<S>                   <C>           <C>            <C>            <C>
Class A shares           $68           $214           $373           $835
</TABLE>


36   DWS CORE FIXED INCOME VIP                       DWS VARIABLE SERIES II -
                                                        CLASS A SHARES
<PAGE>

PORTFOLIO MANAGEMENT

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

Kenneth R. Bowling, CFA
Managing Director of Deutsche Asset Management and Portfolio Manager of the
portfolio.
   o  Joined Deutsche Asset Management in 2007 after 14 years of experience at
     INVESCO where he was most recently director of US fixed Income.
   o  Head of Institutional Fixed Income Investments, Americas: Louisville.
   o  Joined the portfolio in 2009.
   o  BS and MEng from University of Louisville.

Jamie Guenther, CFA
Managing Director of Deutsche Asset Management and Portfolio Manager of the
portfolio.
   o  Joined Deutsche Asset Management in 2007 after 25 years of experience,
     most recently as head of Credit Research and CDO/CSO Credit for INVESCO.
     Prior to that he was head of financial institution investment research at
     Duff & Phelps Investment Research. Before that he was a global security
     analyst for Alexander & Alexander. He began his career in 1982 at Touche
     Ross Financial Consulting.
   o  Head of Institutional Credit: Louisville.
   o  Joined the portfolio in 2009.
   o  BBA from Western Michigan University.

John Brennan
Director of Deutsche Asset Management and Portfolio Manager of the portfolio.
   o  Joined Deutsche Asset Management in 2007 after 14 years of experience at
     INVESCO and Freddie Mac. Prior to joining was head of Structured
     Securities sector team for INVESCO and before that was senior fixed income
     portfolio manager at Freddie Mac specializing in MBS, CMBS, collateralized
     mortgage obligations, ARMS, mortgage derivatives, US Treasuries and agency
     debt.
   o  Portfolio and Sector Manager for Institutional Fixed Income: Louisville.
   o  Joined the portfolio in 2009.
   o  BS from University of Maryland; MBA from William & Mary.

Bruce Harley, CFA, CEBS
Director of Deutsche Asset Management and Portfolio Manager of the portfolio.
   o  Joined Deutsche Asset Management in 2007 after 18 years of experience at
     INVESCO where he was head of Governments and Derivatives, responsible for
     positioning for US duration and term structure; Government and futures
     trading.
   o  Portfolio and Sector Manager for Institutional Fixed Income: Louisville.
   o  Joined the portfolio in 2009.
   o  BS in Economics from University of Louisville.

J. Richard Robben, CFA
Director of Deutsche Asset Management and Portfolio Manager of the portfolio.
   o  Joined Deutsche Asset Management in 2007 after 11 years of experience at
     INVESCO Institutional, most recently as senior portfolio manager for
      LIBOR-related strategies and head of portfolio construction group for
      North American Fixed Income.
   o  Portfolio Manager for Institutional Fixed Income: Louisville.
   o  Joined the portfolio in 2009.
   o  BA from Bellarmine University.

David Vignolo, CFA
Vice President of Deutsche Asset Management and Portfolio Manager of the
portfolio.
   o  Joined Deutsche Asset Management in 2007 after 20 years of experience
     that included head of corporate bond trading and portfolio manager for
     INVESCO and Conning Asset Management Co., and corporate bond trader and
     portfolio manager for ANB Investment Management Co.
   o  Portfolio and Sector Manager for Institutional Fixed Income: Louisville.
   o  Joined the portfolio in 2009.
   o  BS from Indiana University; MBA from Case Western Reserve University.

J. Kevin Horsley, CFA, CPA
Director of Deutsche Asset Management and Portfolio Manager of the portfolio.
   o  Joined Deutsche Asset Management in 2007 after 13 years of experience,
     of which 11 were at INVESCO as senior analyst for a variety of credit
     sectors. He also has experience in the structured securities market
      (asset-backed and commercial mortgage-backed securities), and in research
      coverage of foreign exchange markets, corporate finance, market planning
      in the telecom sector, and in public accounting.
   o  Credit Analyst for Institutional Fixed Income: Louisville.
   o  Joined the portfolio in 2009.
   o  BA from Transylvania University; MBA from Owen Graduate School of
     Management, Vanderbilt University.

Stephen Willer, CFA
Vice President of Deutsche Asset Management and Portfolio Manager of the
portfolio.
   o  Joined Deutsche Asset Management in 2007 after 13 years of experience,
     11 of which were at AMVESCAP, INVESCO Institutional, where he was CDO
     portfolio manager responsible for structuring, pricing and managing
     corporate credit CSOs, developing CDS based trading strategies and
     vehicles, and Alpha decisions for CDS index trading. He started his career
     as a financial analyst at Providian Capital Management.
   o  Portfolio manager for Institutional Fixed Income: Louisville.
   o  Joined the portfolio in 2009.
   o  BS in Finance/Economics from the University of Richmond.

DWS VARIABLE SERIES II - CLASS A SHARES                 DWS CORE FIXED INCOME
                                                        VIP   37
<PAGE>

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



FINANCIAL HIGHLIGHTS

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

This information doesn't reflect charges and fees associated with the separate
account that invests in the portfolio or any variable life insurance policy or
variable annuity contract for which the portfolio is an investment option.
These charges and fees will reduce returns.


From December 2, 2005 through February 27, 2009, Aberdeen Asset Management Inc.
served as the portfolio's subadvisor and was primarily responsible for the day
to day management of the portfolio. Performance would have been different if
the portfolio's current investment strategy had been in effect.




DWS CORE FIXED INCOME VIP - CLASS A



<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,                               2008         2007        2006        2005        2004
<S>                                               <C>           <C>         <C>         <C>         <C>
SELECTED PER SHARE DATE
----------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD                $  11.82     $  11.86     $ 11.81    $  12.07    $  12.16
-------------------------------------------------   --------     --------     -------    --------    --------
Income (loss) from investment operations:
 Net investment income a                                 .57          .56         .53         .47         .50
_________________________________________________   ________     ________     _______    ________    ________
 Net realized and unrealized gain (loss)              ( 2.72)      (  .08)     (  .05)     (  .21)        .05
-------------------------------------------------   --------     --------     -------    --------    --------
 TOTAL FROM INVESTMENT OPERATIONS                     ( 2.15)         .48         .48         .26         .55
-------------------------------------------------   --------     --------     -------    --------    --------
Less distributions from:
 Net investment income                                (  .77)      (  .52)     (  .43)     (  .41)     (  .43)
_________________________________________________   ________     ________     _______    ________    ________
 Net realized gains                                        -            -      (  .00)*    (  .11)     (  .21)
-------------------------------------------------   --------     --------     -------    --------    --------
 TOTAL DISTRIBUTIONS                                  (  .77)      (  .52)     (  .43)     (  .52)     (  .64)
-------------------------------------------------   --------     --------     -------    --------    --------
NET ASSET VALUE, END OF PERIOD                      $   8.90     $  11.82     $ 11.86    $  11.81    $  12.07
-------------------------------------------------   --------     --------     -------    --------    --------
Total Return (%)                                      (19.33)b       4.17        4.26        2.25        4.53
_________________________________________________   ________     ________     _______    ________    ________
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
----------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ millions)                   110          186         277         252         210
_________________________________________________   ________     ________     _______    ________    ________
Ratio of expenses before expense reductions (%)          .70          .66         .68         .67         .66
_________________________________________________   ________     ________     _______    ________    ________
Ratio of expenses after expense reductions (%)           .70          .66         .68         .67         .66
_________________________________________________   ________     ________     _______    ________    ________
Ratio of net investment income (loss) (%)               5.36         4.78        4.56        3.96        4.18
_________________________________________________   ________     ________     _______    ________    ________
Portfolio turnover rate (%)                              215          209         198         241         176
-------------------------------------------------   --------     --------     -------    --------    --------
</TABLE>

a   Based on average shares outstanding during the period.

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

*   Amount is less than $.005

38   DWS CORE FIXED INCOME VIP                       DWS VARIABLE SERIES II -
                                                     CLASS A SHARES
<PAGE>

HYPOTHETICAL EXPENSE SUMMARY

Using the annual portfolio operating expense ratios presented in the fee tables
in the portfolio prospectus, the Hypothetical Expense Summary shows the
estimated fees and expenses, in actual dollars, that would be charged on a
hypothetical investment of $10,000 in the portfolio held for the next 10 years
and the impact of such fees and expenses on portfolio returns for each year and
cumulatively, assuming a 5% return for each year. The historical rate of return
for the portfolio may be higher or lower than 5% and, for money funds, is
typically less than 5%. The tables also assume that all dividends and
distributions are reinvested. The annual portfolio expense ratios shown are net
of any contractual fee waivers or expense reimbursements, if any, for the
period of the contractual commitment. Also, please note that if you are
investing through a third party provider, that provider may have fees and
expenses separate from those of the portfolio that are not reflected here.
Mutual fund fees and expenses fluctuate over time and actual expenses may be
higher or lower than those shown.

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



DWS CORE FIXED INCOME VIP - CLASS A



<TABLE>
<CAPTION>
                MAXIMUM                  INITIAL HYPOTHETICAL                         ASSUMED RATE
             SALES CHARGE:                   INVESTMENT:                               OF RETURN:
                 0.00%                         $10,000                                     5%
               CUMULATIVE                                CUMULATIVE           HYPOTHETICAL
             RETURN BEFORE                              RETURN AFTER        YEAR-END BALANCE          ANNUAL
                FEES AND            ANNUAL FUND           FEES AND           AFTER FEES AND          FEES AND
YEAR            EXPENSES          EXPENSE RATIOS          EXPENSES              EXPENSES             EXPENSES
<S>         <C>                  <C>                   <C>                 <C>                     <C>
   1              5.00%                 0.67%                4.33%            $ 10,433.00           $  68.45
   2             10.25%                 0.67%                8.85%            $ 10,884.75           $  71.41
   3             15.76%                 0.67%               13.56%            $ 11,356.06           $  74.51
   4             21.55%                 0.67%               18.48%            $ 11,847.78           $  77.73
   5             27.63%                 0.67%               23.61%            $ 12,360.78           $  81.10
   6             34.01%                 0.67%               28.96%            $ 12,896.01           $  84.61
   7             40.71%                 0.67%               34.54%            $ 13,454.40           $  88.27
   8             47.75%                 0.67%               40.37%            $ 14,036.98           $  92.10
   9             55.13%                 0.67%               46.45%            $ 14,644.78           $  96.08
  10             62.89%                 0.67%               52.79%            $ 15,278.90           $ 100.24
TOTAL                                                                                               $ 834.50
</TABLE>


DWS VARIABLE SERIES II - CLASS A SHARES                 DWS CORE FIXED INCOME
                                                        VIP   39
<PAGE>

DWS DIVERSIFIED INTERNATIONAL EQUITY VIP


THE PORTFOLIO'S MAIN INVESTMENT STRATEGY
The portfolio seeks capital appreciation.

Under normal circumstances, the portfolio invests at least 80% of its assets,
determined at the time of purchase, in equity securities and other securities
with equity characteristics.

Although the portfolio can invest in companies of any size and from any
country, it invests mainly in common stocks of established companies in
countries with developed economies (other than the United States).

At least 50% of the portfolio's assets will be invested in securities that are
represented in the MSCI EAFE (Reg. TM) Index. The MSCI EAFE (Reg. TM) Index
tracks stocks in Australia, Austria, Belgium, Denmark, Finland, France,
Germany, Hong Kong, Ireland, Italy, Japan, Malaysia, the Netherlands, New
Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland and the United
Kingdom. In addition, the portfolio may invest in Canada.

In choosing securities, portfolio management considers various countries and
sectors. Portfolio management reviews the portfolio's allocation among
countries and sectors periodically and may adjust the allocation based on
current or expected market conditions or to manage risk consistent with the
portfolio's investment objective.

The portfolio's equity investments are mainly common stocks, but may also
include preferred stocks and other securities with equity characteristics, such
as convertible securities, warrants and exchange-traded funds ("ETFs").

The portfolio may also invest up to 20% of its assets in cash equivalents, US
investment-grade fixed-income securities, and US stocks and other equities.

The portfolio may invest a portion of its assets in companies located in
countries with emerging markets. These countries are generally located in Latin
America, the Middle East, Eastern Europe, Asia and Africa. Typically, the
portfolio will not hold more than 35% of its net assets in securities of
emerging markets issuers.

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

Although major changes tend to be infrequent, the Board of Trustees could
change the portfolio's investment objective without seeking shareholder
approval. However, the Board will provide shareholders with at least 60 days'
notice prior to making any changes to the portfolio's 80% investment policy.




DERIVATIVES AND OTHER INVESTMENTS


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

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



THE MAIN RISKS OF INVESTING IN THE PORTFOLIO

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


40   DWS DIVERSIFIED INTERNATIONAL EQUITY VIP        DWS VARIABLE SERIES II -
                                                     CLASS A SHARES
<PAGE>

STOCK MARKET RISK. As with most stock funds, an important factor with this
portfolio is how stock markets perform - in this case, foreign markets. When
foreign stock prices fall, you should expect the value of your investment to
fall as well. Because a stock represents ownership in its issuer, stock prices
can be hurt by poor management, shrinking product demand and other business
risks. These may affect single companies as well as groups of companies. In
addition, movements in financial markets may adversely affect a stock's price,
regardless of how well the company performs. The market as a whole may not
favor the types of investments the portfolio makes and the portfolio may not be
able to get attractive prices for them.

SECURITY SELECTION RISK. A risk that pervades all investing is the risk that
the securities in the portfolio's portfolio may decline in value.

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

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

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

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

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

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

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

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

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


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



DWS VARIABLE SERIES II - CLASS A SHARES        DWS DIVERSIFIED INTERNATIONAL
                                               EQUITY VIP   41
<PAGE>

Some governments exercise substantial influence over the private economic
sector and the social and political uncertainties that exist for many
developing countries is significant. In adverse social and political
circumstances, governments have been involved in policies of expropriation,
confiscatory taxation, nationalization, intervention in the securities markets
and trade settlement, and imposition of foreign investment restrictions and
exchange controls.

ETF RISK. An ETF is a fund that holds a portfolio of common stocks or bonds
designed to track the performance of a securities index or industry sector.
ETFs trade on a securities exchange and their shares may, at times, trade at a
premium or discount to their net asset value. In addition, an ETF may not
replicate exactly the performance of the index it seeks to track for a number
of reasons, including transaction costs incurred by the ETF. ETFs incur fees
and expenses, such as operating expenses, licensing fees, trustee fees and
marketing expenses, which are borne proportionately by ETF shareholders, such
as the portfolio. The portfolio will also incur brokerage costs when purchasing
and selling shares of ETFs.

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

PRICING RISK. At times, market conditions may make it difficult to value some
investments, and the portfolio may use certain valuation methodologies for some
of its investments, such as fair value pricing. Given the subjective nature of
such valuation methodologies, it is possible that the value determined for an
investment may be different than the value realized upon such investment's
sale. If the portfolio has valued its securities too highly, you may pay too
much for portfolio shares when you buy into the portfolio. If the portfolio has
underestimated the price of its securities, you may not receive the full market
value when you sell your portfolio shares.

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

Another factor that could affect performance is:

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

This portfolio may appeal to investors who are seeking high capital
appreciation and are willing to accept the risks of investing in the stocks of
foreign companies.


42   DWS DIVERSIFIED INTERNATIONAL EQUITY VIP        DWS VARIABLE SERIES II -
                                                     CLASS A SHARES
<PAGE>

PERFORMANCE - CLASS A

While a portfolio's past performance isn't necessarily a sign of how it will do
in the future, it can be valuable for an investor to know.

The bar chart shows how the returns for the portfolio's Class A shares have
varied from year to year, which may give some idea of risk. The table shows
average annual returns for the portfolio and comparable index information
(which, unlike the portfolio, does not have any fees or expenses). The
performance of both the portfolio and the comparable index information varies
over time. All figures assume reinvestment of dividends and distributions.

This information doesn't reflect charges and fees associated with the separate
account that invests in the portfolio or any variable life insurance policy or
variable annuity contract for which the portfolio is an investment option.
These charges and fees will reduce returns.


Prior to May 1, 2001, the portfolio was named Kemper International Portfolio
and operated with a different objective and investment strategy than the
portfolio or Scudder International Research Portfolio. Prior to May 1, 2002,
the portfolio was named Scudder International Research Portfolio and operated
with a different objective and investment strategy. Prior to May 1, 2009, the
portfolio was named DWS International Select Equity VIP and operated with a
different investment strategy. Performance may have been different if the
portfolio's current policies had been in effect.



ANNUAL TOTAL RETURN (%) as of 12/31 each year - CLASS A
[BAR GRAPHIC OMITTED HERE]

[BAR GRAPHIC DATA]



<TABLE>
<S>          <C>         <C>         <C>         <C>        <C>        <C>        <C>        <C>        <C>
  45.71       -20.49      -24.43      -13.48     29.83      18.25      14.51      25.56      16.71       -48.81
  1999        2000        2001        2002       2003       2004       2005       2006       2007        2008
</TABLE>




<TABLE>
<CAPTION>
                FOR THE PERIODS INCLUDED IN THE BAR CHART:
<S>                                        <C>
BEST QUARTER: 31.03%, Q4 1999              WORST QUARTER: -27.50%, Q3 2008
2009 TOTAL RETURN AS OF MARCH 31: -12.31%
</TABLE>

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



<TABLE>
<CAPTION>
                                1 YEAR         5 YEARS        10 YEARS
<S>                          <C>              <C>            <C>
Portfolio - Class A              -48.81           0.31          -0.01
MSCI EAFE + EMF Index            -45.24           2.81          1.98
MSCI EAFE Index                  -43.38           1.66          0.80
</TABLE>

MORGAN STANLEY CAPITAL INTERNATIONAL (MSCI) EUROPE, AUSTRALASIA, FAR EAST
(EAFE) AND EMERGING MARKETS FREE INDEX is an unmanaged index generally accepted
as a benchmark for performance of major overseas markets, plus emerging
markets.

MORGAN STANLEY CAPITAL INTERNATIONAL EUROPE, AUSTRALASIA AND THE FAR EAST (MSCI
EAFE (Reg. TM)) INDEX is an unmanaged index that tracks international stock
performance in the 21 developed markets of Europe, Australasia and the Far
East.

Current performance information may be higher or lower than the performance
data quoted above. For more recent performance information, contact your
participating insurance company.


DWS VARIABLE SERIES II - CLASS A SHARES        DWS DIVERSIFIED INTERNATIONAL
                                               EQUITY VIP   43
<PAGE>

HOW MUCH INVESTORS PAY

This table describes the fees and expenses that you may pay if you buy and hold
portfolio shares. The information in the table does not reflect charges and
fees associated with the separate account that invests in the portfolio or any
variable life insurance policy or variable annuity contract for which the
portfolio is an investment option. These charges and fees will increase
expenses.



<TABLE>
<CAPTION>
FEE TABLE                                     CLASS A
<S>                                    <C>
ANNUAL OPERATING EXPENSES, deducted from portfolio assets
__________________________________________________________________
Management Fee 1                                 0.65%
Distribution/Service (12b-1) Fee               None
Other Expenses 2                                 0.34
TOTAL ANNUAL OPERATING EXPENSES 3                0.99
</TABLE>

1   Restated on an annualized basis to reflect approved fee changes that took
    effect on May 1, 2008.


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



3   Except as otherwise noted, the information in the table is based on amounts
    incurred during the portfolio's most recent fiscal year. It is important
    for you to understand that a decline in the portfolio's average net assets
    during the current fiscal year due to recent unprecedented market
    volatility or other factors could cause the portfolio's expense ratios for
    the portfolio's current fiscal year to be higher than the expense
    information presented. Based on asset levels as of December 31, 2008, the
    gross annualized expense ratio of Class A shares is estimated at 1.05%.
    For more current expense information, see "Financial Highlights" in the
    portfolio's future annual or semi-annual reports.



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



<TABLE>
<CAPTION>
EXAMPLE                1 YEAR        3 YEARS        5 YEARS        10 YEARS
<S>                   <C>           <C>            <C>            <C>
Class A shares          $101           $315           $547         $1,213
</TABLE>

PORTFOLIO MANAGEMENT

The following people handle the day-to-day management of the portfolio:

Robert Wang
Managing Director of Deutsche Asset Management and Portfolio Manager of
portfolio.
   o Joined Deutsche Asset Management in 1995 as portfolio manager for asset
     allocation after 13 years of experience of trading fixed income, foreign
     exchange and derivative products at J.P. Morgan.
   o Global Head of Quantitative Strategies Portfolio Management: New York.
   o Joined the portfolio in 2009.
   o BS, The Wharton School, University of Pennsylvania.

Russell Shtern, CFA
Vice President of Deutsche Asset Management and Portfolio Manager of portfolio.

   o Joined Deutsche Asset Management in 1999, previously serving as trader's
     assistant supporting program, options and equity swaps trading desks.
   o Portfolio manager for GrOWE and Tax Managed Equity: New York.
   o Joined the portfolio in 2009.
   o BBA, Pace University.

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


44   DWS DIVERSIFIED INTERNATIONAL EQUITY VIP        DWS VARIABLE SERIES II -
                                                     CLASS A SHARES
<PAGE>

FINANCIAL HIGHLIGHTS

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

This information doesn't reflect charges and fees associated with the separate
account that invests in the portfolio or any variable life insurance policy or
variable annuity contract for which the portfolio is an investment option.
These charges and fees will reduce returns.


Prior to May 1, 2009, the portfolio was named DWS International Select Equity
VIP and operated with a different investment strategy. Performance may have
been different if the portfolio's current policies had been in effect.




DWS DIVERSIFIED INTERNATIONAL EQUITY VIP - CLASS A



<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,                                 2008           2007        2006         2005        2004
<S>                                               <C>               <C>         <C>          <C>         <C>
SELECTED PER SHARE DATA
---------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD                 $   16.76       $  16.31     $  13.25    $  11.91    $  10.18
-------------------------------------------------    ---------       --------     --------    --------    --------
Income (loss) from investment operations:
 Net investment income a                               .33d               .25       .24b           .20         .17
_________________________________________________    _________       ________     ________    ________    ________
 Net realized and unrealized gain (loss)                ( 6.67)          2.24         3.11        1.48        1.67
-------------------------------------------------    ---------       --------     --------    --------    --------
 TOTAL FROM INVESTMENT OPERATIONS                       ( 6.34)          2.49         3.35        1.68        1.84
-------------------------------------------------    ---------       --------     --------    --------    --------
Less distributions from:
 Net investment income                                  (  .13)        (  .46)      (  .29)     (  .34)     (  .11)
_________________________________________________    _________       ________     ________    ________    ________
 Net realized gains                                     ( 4.07)        ( 1.58)           -           -           -
_________________________________________________    _________       ________     ________    ________    ________
 TOTAL DISTRIBUTIONS                                    ( 4.20)        ( 2.04)      (  .29)     (  .34)     (  .11)
-------------------------------------------------    ---------       --------     --------    --------    --------
NET ASSET VALUE, END OF PERIOD                       $    6.22       $  16.76     $  16.31    $  13.25    $  11.91
-------------------------------------------------    ---------       --------     --------    --------    --------
Total Return (%)                                        (48.81)c,e      16.71        25.56       14.51       18.25
_________________________________________________    _________       ________     ________    ________    ________
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
---------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ millions)                      91            236          223         196         184
_________________________________________________    _________       ________     ________    ________    ________
Ratio of expenses before expense reductions (%)           1.02            .93          .88         .87         .89
_________________________________________________    _________       ________     ________    ________    ________
Ratio of expenses after expense reductions (%)            1.01            .93          .88         .87         .89
_________________________________________________    _________       ________     ________    ________    ________
Ratio of net investment income (%)                    3.04d              1.53      1.65b          1.59        1.58
_________________________________________________    _________       ________     ________    ________    ________
Portfolio turnover rate (%)                                132            117          122          93          88
-------------------------------------------------    ---------       --------     --------    --------    --------
</TABLE>

a   Based on average shares outstanding during the period.

b   Net investment income per share and the ratio of net investment income
    without non-recurring dividend income amounting to $0.20 per share and
    1.39% of average daily net assets, respectively.

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

d   Net investment income per share and ratio of net investment income include
    non-recurring dividend income amounting to $0.16 per share and 1.49% of
    average daily net assets, respectively.

e   Includes a reimbursement from the Advisor to reimburse the effect of losses
    incurred as the result of certain operation errors during the period.
    Excluding this reimbursement, total return would have been 0.14% lower.


DWS VARIABLE SERIES II - CLASS A SHARES        DWS DIVERSIFIED INTERNATIONAL
                                               EQUITY VIP   45
<PAGE>

HYPOTHETICAL EXPENSE SUMMARY

Using the annual portfolio operating expense ratios presented in the fee tables
in the portfolio prospectus, the Hypothetical Expense Summary shows the
estimated fees and expenses, in actual dollars, that would be charged on a
hypothetical investment of $10,000 in the portfolio held for the next 10 years
and the impact of such fees and expenses on portfolio returns for each year and
cumulatively, assuming a 5% return for each year. The historical rate of return
for the portfolio may be higher or lower than 5% and, for money funds, is
typically less than 5%. The tables also assume that all dividends and
distributions are reinvested. The annual portfolio expense ratios shown are net
of any contractual fee waivers or expense reimbursements, if any, for the
period of the contractual commitment. Also, please note that if you are
investing through a third party provider, that provider may have fees and
expenses separate from those of the portfolio that are not reflected here.
Mutual fund fees and expenses fluctuate over time and actual expenses may be
higher or lower than those shown.

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



DWS DIVERSIFIED INTERNATIONAL EQUITY VIP - CLASS A



<TABLE>
<CAPTION>
                MAXIMUM                  INITIAL HYPOTHETICAL                          ASSUMED RATE
             SALES CHARGE:                   INVESTMENT:                                OF RETURN:
                 0.00%                         $10,000                                      5%
               CUMULATIVE                                CUMULATIVE           HYPOTHETICAL
             RETURN BEFORE                              RETURN AFTER        YEAR-END BALANCE          ANNUAL
                FEES AND            ANNUAL FUND           FEES AND           AFTER FEES AND          FEES AND
YEAR            EXPENSES          EXPENSE RATIOS          EXPENSES              EXPENSES             EXPENSES
<S>         <C>                  <C>                   <C>                 <C>                     <C>
   1              5.00%                 0.99%                4.01%            $ 10,401.00          $   100.98
   2             10.25%                 0.99%                8.18%            $ 10,818.08          $   105.03
   3             15.76%                 0.99%               12.52%            $ 11,251.89          $   109.25
   4             21.55%                 0.99%               17.03%            $ 11,703.09          $   113.63
   5             27.63%                 0.99%               21.72%            $ 12,172.38          $   118.18
   6             34.01%                 0.99%               26.60%            $ 12,660.49          $   122.92
   7             40.71%                 0.99%               31.68%            $ 13,168.18          $   127.85
   8             47.75%                 0.99%               36.96%            $ 13,696.22          $   132.98
   9             55.13%                 0.99%               42.45%            $ 14,245.44          $   138.31
  10             62.89%                 0.99%               48.17%            $ 14,816.68          $   143.86
TOTAL                                                                                              $ 1,212.99
</TABLE>


46   DWS DIVERSIFIED INTERNATIONAL EQUITY VIP        DWS VARIABLE SERIES II -
                                                     CLASS A SHARES
<PAGE>

DWS DREMAN SMALL MID CAP VALUE VIP


THE PORTFOLIO'S MAIN INVESTMENT STRATEGY
The portfolio seeks long-term capital appreciation.

Under normal circumstances, the portfolio invests at least 80% of net assets,
plus the amount of any borrowings for investment purposes, in undervalued
common stocks of small and mid-size US companies. The portfolio defines small
companies as those that are similar in market value to those in the Russell
2000 (Reg. TM) Value Index (as of February 28, 2009, the Russell 2000 (Reg. TM)
Value Index had a median market capitalization of $231 million). The portfolio
defines mid-size companies as those that are similar in market value to those
in the Russell Midcap (Reg. TM) Value Index (as of February 28, 2009, the
Russell Midcap (Reg. TM) Value Index had a median market capitalization of $1.8
billion). The portfolio intends to invest primarily in companies whose market
capitalizations fall within the normal range of each Index.


While the portfolio invests mainly in US stocks, it could invest up to 20% of
net assets in foreign securities.


The portfolio's equity investments are mainly common stocks, but may also
include other types of equities such as preferred or convertible stocks. The
portfolio may also invest in initial public offerings.


Portfolio management begins its stock selection process by screening stocks of
small and mid-size companies with below market price-to-earnings (P/E) ratios.
Portfolio management then seeks companies with a low price compared to the book
value, cash flow and yield and analyze individual companies to identify those
that are fundamentally sound and appear to have strong potential for earnings
and dividend growth over the Index.

From the remaining group, portfolio management then completes its fundamental
analysis and makes its buy decisions from a group of the most attractive
stocks, drawing on analysis of economic outlooks for various industries.


Portfolio management will normally sell a stock when it no longer qualifies as
a small or mid-size company, when its P/E rises above that of the Index, its
fundamentals change or other investments offer better opportunities.

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

Although major changes tend to be infrequent, the Board of Trustees could
change the portfolio's investment objective without seeking shareholder
approval. However, the Board will provide shareholders with at least 60 days'
notice prior to making any changes to the portfolio's 80% investment policy.




DERIVATIVES AND OTHER INVESTMENTS

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


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



THE MAIN RISKS OF INVESTING IN THE PORTFOLIO

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


DWS VARIABLE SERIES II - CLASS A SHARES          DWS DREMAN SMALL MID CAP VALUE
                                                 VIP   47
<PAGE>

STOCK MARKET RISK. The portfolio is affected by how the stock market performs.
To the extent the portfolio invests in a particular capitalization or market
sector, the portfolio's performance may be proportionately affected by that
segment's general performance. When stock prices fall, you should expect the
value of your investment to fall as well. Because a stock represents ownership
in its issuer, stock prices can be hurt by poor management, shrinking product
demand and other business risks. These factors may affect single companies as
well as groups of companies. In addition, movements in financial markets may
adversely affect a stock's price, regardless of how well the company performs.
The market as a whole may not favor the types of investments the portfolio
makes, which could affect the portfolio's ability to sell them at an attractive
price.

VALUE INVESTING RISK. At times, "value" investing may perform better than or
worse than other investment styles and the overall market. If portfolio
management overestimates the value or return potential of one or more
securities, the portfolio may underperform the general equity market. Value
stocks may also be out of favor for certain periods in relation to growth
stocks.

SMALL COMPANY CAPITALIZATION RISK. Small company stocks tend to experience
steeper price fluctuations than the stocks of larger companies. A shortage of
reliable information can also pose added risk to small company stocks.
Industry-wide reversals may have a greater impact on small companies, since
they lack the financial resources of larger companies. Small company stocks are
typically less liquid than large company stocks. Accordingly, it may be harder
to find buyers for small company shares.

MEDIUM-SIZED COMPANY RISK. Medium-sized company stocks tend to experience
steeper price fluctuations than stocks of larger companies. A shortage of
reliable information can also pose added risk to stocks of medium-sized
companies. Industry-wide reversals may have a greater impact on medium-sized
companies, since they usually lack the financial resources of larger companies.
Medium-sized company stocks are typically less liquid than large company
stocks. Accordingly, it may be harder to find buyers for medium-sized company
shares.

INDUSTRY RISK. While the portfolio does not concentrate in any industry, to the
extent that the portfolio has exposure to a given industry or sector, any
factors affecting that industry or sector could affect the value of portfolio
securities. For example, manufacturers of consumer goods could be hurt by a
rise in unemployment or technology companies could be hurt by such factors as
market saturation, price competition and rapid obsolescence.

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

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

PRICING RISK. At times, market conditions may make it difficult to value some
investments, and the portfolio may use certain valuation methodologies for some
of its investments, such as fair value pricing. Given the subjective nature of
such valuation methodologies, it is possible that the value determined for an
investment may be different than the value realized upon such investment's
sale. If the portfolio has valued its securities too highly, you may pay too
much for portfolio shares when you buy into the portfolio. If the portfolio has
underestimated the price of its securities, you may not receive the full market
value when you sell your portfolio shares.

SECURITY SELECTION RISK. A risk that pervades all investing is the risk that
the securities in the portfolio's portfolio may decline in value.


48   DWS DREMAN SMALL MID CAP VALUE VIP              DWS VARIABLE SERIES II -
                                                     CLASS A SHARES
<PAGE>

Other factors that could affect performance include:

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

o foreign securities may be more volatile than their US counterparts, for
  reasons such as currency fluctuations and political and economic
  uncertainty.

This portfolio is designed for value-oriented investors who are interested in
small-cap and mid-cap market exposure.



PERFORMANCE - CLASS A

While a portfolio's past performance isn't necessarily a sign of how it will do
in the future, it can be valuable for an investor to know.

The bar chart shows how the returns for the portfolio's Class A shares have
varied from year to year, which may give some idea of risk. The table shows
average annual returns for the portfolio and comparable index information
(which, unlike the portfolio, does not have any fees or expenses). The
performance of both the portfolio and the comparable index information varies
over time. All figures assume reinvestment of dividends and distributions.

This information doesn't reflect charges and fees associated with the separate
account that invests in the portfolio or any variable life insurance policy or
variable annuity contract for which the portfolio is an investment option.
These charges and fees will reduce returns.


Prior to January 18, 2002, the portfolio was named Scudder Small Cap Value
Portfolio, operated with a different investment strategy and a different
advisor managed the portfolio. Performance would have been different if the
portfolio's current policies and advisory agreement had been in effect. Prior
to November 3, 2006, the portfolio was named DWS Dreman Small Cap Value VIP and
operated with a different investment strategy. Performance would have been
different if the portfolio's current policies had been in effect.



ANNUAL TOTAL RETURN (%) as of 12/31 each year - CLASS A
[BAR GRAPHIC OMITTED HERE]

[BAR GRAPHIC DATA]





<TABLE>
<S>         <C>       <C>        <C>         <C>        <C>        <C>        <C>        <C>       <C>
   2.80      4.05     17.63       -11.43     42.15      26.03      10.25      25.06      3.06       -33.42
  1999      2000      2001        2002       2003       2004       2005       2006       2007      2008
</TABLE>




<TABLE>
<CAPTION>
                 FOR THE PERIODS INCLUDED IN THE BAR CHART:
<S>                                         <C>
BEST QUARTER: 21.84%, Q2 2003               WORST QUARTER: -20.14%, Q4 2008
2009 TOTAL RETURN AS OF MARCH 31: -16.29%
</TABLE>

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



<TABLE>
<CAPTION>
                                   1 YEAR         5 YEARS        10 YEARS
<S>                             <C>              <C>            <C>
Portfolio - Class A                 -33.42          3.58            6.57
Russell 2500 Value Index            -31.99          -0.15           5.72
Russell 2000 Value Index            -28.92          0.27            6.11
</TABLE>

RUSSELL 2500(TM) VALUE INDEX is an unmanaged index measuring the small- to
mid-cap US equity value market.

DWS VARIABLE SERIES II - CLASS A SHARES          DWS DREMAN SMALL MID CAP VALUE
                                                 VIP   49
<PAGE>

RUSSELL 2000 (Reg. TM) VALUE INDEX is an unmanaged index measuring the
performance of those Russell 2000 companies with lower price-to-book ratios and
lower forecasted growth values.

Current performance information may be higher or lower than the performance
data quoted above. For more recent performance information, contact your
participating insurance company.





HOW MUCH INVESTORS PAY

This table describes the fees and expenses that you may pay if you buy and hold
portfolio shares. The information in the table does not reflect charges and
fees associated with the separate account that invests in the portfolio or any
variable life insurance policy or variable annuity contract for which the
portfolio is an investment option. These charges and fees will increase
expenses.



<TABLE>
<CAPTION>
FEE TABLE                                     CLASS A
<S>                                    <C>
ANNUAL OPERATING EXPENSES, deducted from portfolio assets
__________________________________________________________________
Management Fee 1                                 0.64%
Distribution/Service (12b-1) Fee               None
Other Expenses 2                                 0.15
TOTAL ANNUAL OPERATING EXPENSES 3                0.79
</TABLE>

1   Restated on an annualized basis to reflect approved fee changes that took
    effect on May 1, 2008.


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



3   Except as otherwise noted, the information in the table is based on amounts
    incurred during the portfolio's most recent fiscal year. It is important
    for you to understand that a decline in the portfolio's average net assets
    during the current fiscal year due to recent unprecedented market
    volatility or other factors could cause the portfolio's expense ratios for
    the portfolio's current fiscal year to be higher than the expense
    information presented. Based on asset levels as of December 31, 2008, the
    gross annualized expense ratio of Class A shares is estimated at 0.83%.
    For more current expense information, see "Financial Highlights" in the
    portfolio's future annual or semi-annual reports.



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



<TABLE>
<CAPTION>
EXAMPLE                1 YEAR        3 YEARS        5 YEARS        10 YEARS
<S>                   <C>           <C>            <C>            <C>
Class A shares           $81           $252           $439           $978
</TABLE>


50   DWS DREMAN SMALL MID CAP VALUE VIP              DWS VARIABLE SERIES II -
                                                        CLASS A SHARES
<PAGE>

PORTFOLIO MANAGEMENT

The portfolio's subadvisor is Dreman Value Management, L.L.C. The portfolio is
managed by a team of investment professionals who collaborate to develop and
implement the portfolio's investment strategy. Each portfolio manager on the
team has authority over all aspects of the portfolio's investment portfolio,
including but not limited to, purchases and sales of individual securities,
portfolio construction techniques, portfolio risk assessment and the management
of daily cash flows in accordance with portfolio holdings.

The following people handle the day-to-day management of the portfolio:

David N. Dreman
Chairman and Chief Investment Officer of Dreman Value Management, L.L.C. and
Lead Portfolio Manager of the portfolio.
   o Began investment career in 1957.
   o Joined the portfolio in 2002.
   o Founder, Dreman Value Management, L.L.C.

E. Clifton Hoover, Jr.
Co-Chief Investment Officer and Managing Director of Dreman Value Management,
L.L.C. and Portfolio Manager of the portfolio.
   o Joined Dreman Value Management L.L.C. in 2006.
   o Joined the portfolio in 2006.
   o Prior to joining Dreman Value Management, L.L.C., Managing Director and a
     Portfolio Manager at NFJ Investment Group since 1997.
   o Over 20 years of investment industry experience.
   o MS, Texas Tech University.

Mark Roach
Managing Director of Dreman Value Management, L.L.C. and Portfolio Manager of
the portfolio.
   o Joined Dreman Value Management, L.L.C. in 2006.
   o Joined the portfolio in 2006.
   o Prior to that, Portfolio Manager at Vaughan Nelson Investment Management
     since 2002.
   o Over 14 years of investment industry experience.
   o BS, Baldwin Wallace College; MBA, University of Chicago.

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


DWS VARIABLE SERIES II - CLASS A SHARES          DWS DREMAN SMALL MID CAP VALUE
                                                 VIP   51
<PAGE>

FINANCIAL HIGHLIGHTS

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

This information doesn't reflect charges and fees associated with the separate
account that invests in the portfolio or any variable life insurance policy or
variable annuity contract for which the portfolio is an investment option.
These charges and fees will reduce returns.

Prior to November 3, 2006, the portfolio was named DWS Dreman Small Cap Value
VIP and operated with a different investment strategy. Performance may have
been different if the portfolio's current policies had been in effect.



DWS DREMAN SMALL MID CAP VALUE VIP - CLASS A



<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,                               2008         2007        2006        2005        2004
<S>                                               <C>           <C>         <C>         <C>         <C>
SELECTED PER SHARE DATA
----------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD                $  20.12     $  22.93    $  19.98    $  20.05   $ 16.06
-------------------------------------------------   --------     --------    --------    --------   -------
Income (loss) from investment operations:
 Net investment income (loss)a                           .13          .18         .15         .19      .17
_________________________________________________   ________     ________    ________    ________   _______
 Net realized and unrealized gain (loss)              ( 4.92)         .54        4.69        1.67     3.98
-------------------------------------------------   --------     --------    --------    --------   -------
 TOTAL FROM INVESTMENT OPERATIONS                     ( 4.79)         .72        4.84        1.86     4.15
-------------------------------------------------   --------     --------    --------    --------   -------
Less distributions from:
 Net investment income                                (  .29)      (  .23)     (  .18)     (  .15)  (  .16)
_________________________________________________   ________     ________    ________    ________   _______
 Net realized gains                                   ( 7.11)      ( 3.30)     ( 1.71)     ( 1.78)       -
-------------------------------------------------   --------     --------    --------    --------   -------
 TOTAL DISTRIBUTIONS                                  ( 7.40)      ( 3.53)     ( 1.89)     ( 1.93)  (  .16)
-------------------------------------------------   --------     --------    --------    --------   -------
NET ASSET VALUE, END OF PERIOD                      $   7.93     $  20.12    $  22.93    $  19.98   $ 20.05
-------------------------------------------------   --------     --------    --------    --------   -------
Total Return (%)                                      (33.42)b       3.06       25.06       10.25    26.03
_________________________________________________   ________     ________    ________    ________   _______
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
----------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ millions)                   223          468         562         493      467
_________________________________________________   ________     ________    ________    ________   _______
Ratio of expenses before expense reductions (%)          .83          .78         .79         .79      .79
_________________________________________________   ________     ________    ________    ________   _______
Ratio of expenses after expense reductions (%)           .82          .78         .79         .79      .79
_________________________________________________   ________     ________    ________    ________   _______
Ratio of net investment income (%)                      1.13          .85         .71         .96      .96
_________________________________________________   ________     ________    ________    ________   _______
Portfolio turnover rate (%)                               49          110          52          61       73
-------------------------------------------------   --------     --------    --------    --------   -------
</TABLE>

a   Based on average shares outstanding during the period.

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

52   DWS DREMAN SMALL MID CAP VALUE VIP              DWS VARIABLE SERIES II -
                                                     CLASS A SHARES
<PAGE>

HYPOTHETICAL EXPENSE SUMMARY

Using the annual portfolio operating expense ratios presented in the fee tables
in the portfolio prospectus, the Hypothetical Expense Summary shows the
estimated fees and expenses, in actual dollars, that would be charged on a
hypothetical investment of $10,000 in the portfolio held for the next 10 years
and the impact of such fees and expenses on portfolio returns for each year and
cumulatively, assuming a 5% return for each year. The historical rate of return
for the portfolio may be higher or lower than 5% and, for money funds, is
typically less than 5%. The tables also assume that all dividends and
distributions are reinvested. The annual portfolio expense ratios shown are net
of any contractual fee waivers or expense reimbursements, if any, for the
period of the contractual commitment. Also, please note that if you are
investing through a third party provider, that provider may have fees and
expenses separate from those of the portfolio that are not reflected here.
Mutual fund fees and expenses fluctuate over time and actual expenses may be
higher or lower than those shown.

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



DWS DREMAN SMALL MID CAP VALUE VIP - CLASS A



<TABLE>
<CAPTION>
                MAXIMUM                  INITIAL HYPOTHETICAL                         ASSUMED RATE
             SALES CHARGE:                   INVESTMENT:                               OF RETURN:
                 0.00%                         $10,000                                     5%
               CUMULATIVE                                CUMULATIVE           HYPOTHETICAL
             RETURN BEFORE                              RETURN AFTER        YEAR-END BALANCE          ANNUAL
                FEES AND            ANNUAL FUND           FEES AND           AFTER FEES AND          FEES AND
YEAR            EXPENSES          EXPENSE RATIOS          EXPENSES              EXPENSES             EXPENSES
<S>         <C>                  <C>                   <C>                 <C>                     <C>
   1              5.00%                 0.79%                4.21%            $ 10,421.00           $  80.66
   2             10.25%                 0.79%                8.60%            $ 10,859.72           $  84.06
   3             15.76%                 0.79%               13.17%            $ 11,316.92           $  87.60
   4             21.55%                 0.79%               17.93%            $ 11,793.36           $  91.29
   5             27.63%                 0.79%               22.90%            $ 12,289.86           $  95.13
   6             34.01%                 0.79%               28.07%            $ 12,807.26           $  99.13
   7             40.71%                 0.79%               33.46%            $ 13,346.45           $ 103.31
   8             47.75%                 0.79%               39.08%            $ 13,908.34           $ 107.66
   9             55.13%                 0.79%               44.94%            $ 14,493.88           $ 112.19
  10             62.89%                 0.79%               51.04%            $ 15,104.07           $ 116.91
TOTAL                                                                                               $ 977.94
</TABLE>


DWS VARIABLE SERIES II - CLASS A SHARES          DWS DREMAN SMALL MID CAP VALUE
                                                 VIP   53
<PAGE>

DWS GLOBAL THEMATIC VIP


THE PORTFOLIO'S MAIN INVESTMENT STRATEGY
The portfolio seeks long-term capital growth.

Under normal circumstances, the portfolio invests at least 80% of net assets,
plus the amount of any borrowings for investment purposes, in common stocks and
other equities of companies throughout the world that portfolio management
considers to be "blue chip" companies. Blue chip companies are large, well
known companies that typically have an established earnings and dividends
history, easy access to credit, solid positions in their industries and strong
management.

In choosing stocks, portfolio management uses a combination of three analytical
disciplines:

BOTTOM-UP RESEARCH. Portfolio management looks for individual companies with a
history of above-average growth, strong competitive positioning, attractive
prices relative to potential growth, sound financial strength and effective
management, among other factors.

GROWTH ORIENTATION. Portfolio management generally looks for companies that
portfolio management believes have above-average potential for sustainable
growth of revenue or earnings and whose market value appears reasonable in
light of their business prospects.

ANALYSIS OF GLOBAL THEMES. Portfolio management considers global economic
outlooks, seeking to identify industries and companies that are likely to
benefit from social, political and economic changes.

Portfolio management may favor different types of securities from different
industries and companies at different times, while still maintaining variety in
terms of the types of securities, issuers and countries represented.

Portfolio management will normally sell a stock when portfolio management
believes its price is unlikely to go much higher, its fundamentals have
deteriorated, other investments offer better opportunities or in the course of
adjusting the fund's exposure to a given country.

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

Although major changes tend to be infrequent, the Board of Trustees could
change the portfolio's investment objective without seeking shareholder
approval. However, the Board will provide shareholders with at least 60 days'
notice prior to making any changes to the portfolio's 80% policy.




DERIVATIVES AND OTHER INVESTMENTS


While most of the portfolio's equities are common stocks, some may be other
types of equities, such as convertible stocks or preferred stocks. The
portfolio may also invest up to 5% of total assets in junk bonds, (i.e., grade
BB/Ba and below). Compared to investment grade bonds, junk bonds may pay higher
yields and have higher volatility and risk of default.

Although not one of its principal investment strategies, the portfolio is
permitted, but not required, to use various types of derivatives (contracts
whose value is based on, for example, indices, currencies or securities). The
portfolio may use derivatives in circumstances where portfolio management
believes they offer an economical means of gaining exposure to a particular
asset class or to keep cash on hand to meet shareholder redemptions or other
needs while maintaining exposure to the market. In particular, the portfolio
may use futures, currency options and forward currency transactions.

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


54   DWS GLOBAL THEMATIC VIP                         DWS VARIABLE SERIES II -
                                                     CLASS A SHARES
<PAGE>

THE MAIN RISKS OF INVESTING IN THE PORTFOLIO

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

STOCK MARKET RISK. An important factor with the portfolio is how the stock
markets perform - in this case US and foreign stock markets. When US and
foreign stock prices fall, you should expect the value of your investment to
fall as well. Compared to large company stocks, small company stocks tend to be
more volatile, in part because these companies tend to be less established and
the valuation of their stocks often depends on future expectations. Because a
stock represents ownership in its issuer, stock prices can be hurt by poor
management, shrinking product demand and other business risks. These risk
factors may affect single companies as well as groups of companies. In
addition, movements in financial markets may adversely affect a stock's price,
regardless of how well the company performs. The market as a whole may not
favor the types of investments the portfolio makes and the portfolio may not be
able to get attractive prices for them.

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

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

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

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

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

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

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

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

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


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



DWS VARIABLE SERIES II - CLASS A SHARES                  DWS GLOBAL THEMATIC
                                                         VIP   55
<PAGE>

Some governments exercise substantial influence over the private economic
sector and the social and political uncertainties that exist for many
developing countries is significant. In adverse social and political
circumstances, governments have been involved in policies of expropriation,
confiscatory taxation, nationalization, intervention in the securities markets
and trade settlement, and imposition of foreign investment restrictions and
exchange controls.

PRICING RISK. At times, market conditions may make it difficult to value some
investments, and the portfolio may use certain valuation methodologies for some
of its investments, such as fair value pricing. Given the subjective nature of
such valuation methodologies, it is possible that the value determined for an
investment may be different than the value realized upon such investment's
sale. If the portfolio has valued its securities too highly, you may pay too
much for portfolio shares when you buy into the portfolio. If the portfolio has
underestimated the price of its securities, you may not receive the full market
value when you sell your portfolio shares.

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

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

SECURITY SELECTION RISK. A risk that pervades all investing is the risk that
the securities in the portfolio's portfolio may decline in value.

Another factor that could affect performance is:

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

If you are interested in large-cap stocks and want to look beyond US markets,
this portfolio may be appropriate for you.


56   DWS GLOBAL THEMATIC VIP                         DWS VARIABLE SERIES II -
                                                     CLASS A SHARES
<PAGE>

PERFORMANCE - CLASS A

While a portfolio's past performance isn't necessarily a sign of how it will do
in the future, it can be valuable for an investor to know.

The bar chart shows how the returns for the portfolio's Class A shares have
varied from year to year, which may give some idea of risk. The table shows
average annual returns for the portfolio and comparable index information
(which, unlike the portfolio, does not have any fees or expenses). The
performance of both the portfolio and the comparable index information varies
over time. All figures assume reinvestment of dividends and distributions.

This information doesn't reflect charges and fees associated with the separate
account that invests in the portfolio or any variable life insurance policy or
variable annuity contract for which the portfolio is an investment option.
These charges and fees will reduce returns.


ANNUAL TOTAL RETURN (%) as of 12/31 each year - CLASS A
[BAR GRAPHIC OMITTED HERE]

[BAR GRAPHIC DATA]





<TABLE>
<S>          <C>        <C>         <C>         <C>        <C>        <C>        <C>        <C>       <C>
  26.70       -3.36      -15.48      -15.77     29.13      14.76      22.94      30.14      6.29       -47.75
  1999       2000        2001        2002       2003       2004       2005       2006       2007      2008
</TABLE>




<TABLE>
<CAPTION>
                FOR THE PERIODS INCLUDED IN THE BAR CHART:
<S>                                        <C>
BEST QUARTER: 18.36%, Q4 1999              WORST QUARTER: -24.65%, Q4 2008
2009 TOTAL RETURN AS OF MARCH 31: -8.71%
</TABLE>

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



<TABLE>
<CAPTION>
                              1 YEAR         5 YEARS        10 YEARS
<S>                        <C>              <C>            <C>
Portfolio - Class A            -47.75          0.39           1.39
MSCI World Index               -40.71          -0.51          -0.64
</TABLE>

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

MSCI WORLD INDEX is an unmanaged capitalization-weighted measure of stock
markets around the world, including North America, Europe, Australia and Asia.

Current performance information may be higher or lower than the performance
data quoted above. For more recent performance information, contact your
participating insurance company.


DWS VARIABLE SERIES II - CLASS A SHARES                  DWS GLOBAL THEMATIC
                                                         VIP   57
<PAGE>

HOW MUCH INVESTORS PAY

This table describes the fees and expenses that you may pay if you buy and hold
portfolio shares. The information in the table does not reflect charges and
fees associated with the separate account that invests in the portfolio or any
variable life insurance policy or variable annuity contract for which the
portfolio is an investment option. These charges and fees will increase
expenses.



<TABLE>
<CAPTION>
FEE TABLE                                       CLASS A
<S>                                      <C>
ANNUAL OPERATING EXPENSES, deducted from portfolio assets
____________________________________________________________________
Management Fee 1                                   0.90%
Distribution/Service (12b-1) Fee                 None
Other Expenses 2                                   0.52
TOTAL ANNUAL OPERATING EXPENSES 3                  1.42
Less Expense Waiver/Reimbursement 4                0.17
NET ANNUAL OPERATING EXPENSES 4                    1.25
</TABLE>

1   Restated on an annualized basis to reflect approved fee changes that took
    effect on May 1, 2008.


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



3   Except as otherwise noted, the information in the table is based on amounts
    incurred during the portfolio's most recent fiscal year. It is important
    for you to understand that a decline in the portfolio's average net assets
    during the current fiscal year due to recent unprecedented market
    volatility or other factors could cause the portfolio's expense ratios for
    the portfolio's current fiscal year to be higher than the expense
    information presented. Based on asset levels as of December 31, 2008, the
    gross annualized expense ratio of Class A shares is estimated at 1.46%.
    For more current expense information, see "Financial Highlights" in the
    portfolio's future annual or semi-annual reports.


4   Through September 30, 2009, the Advisor has contractually agreed to waive
    all or a portion of its management fee and reimburse or pay certain
    operating expenses of the portfolio to the extent necessary to maintain
    the portfolio's total operating expenses at 1.07% for Class A shares,
    excluding certain expenses such as extraordinary expenses, taxes,
    brokerage and interest. Effective October 1, 2009 through April 30, 2010,
    the Advisor has contractually agreed to waive all or a portion of its
    management fee and reimburse or pay certain operating expenses of the
    portfolio to the extent necessary to maintain the portfolio's total
    operating expenses at ratios no higher than 1.25% for Class A shares,
    excluding certain expenses such as extraordinary expenses, taxes,
    brokerage and interest.


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



<TABLE>
<CAPTION>
EXAMPLE                1 YEAR        3 YEARS        5 YEARS        10 YEARS
<S>                   <C>           <C>            <C>            <C>
Class A shares          $127           $433           $760         $1,687
</TABLE>


58   DWS GLOBAL THEMATIC VIP                         DWS VARIABLE SERIES II -
                                                        CLASS A SHARES
<PAGE>

PORTFOLIO MANAGEMENT

The following person handles the day-to-day management of the portfolio:

Oliver Kratz
Managing Director of Deutsche Asset Management and Portfolio Manager of the
portfolio.
   o Joined Deutsche Asset Management in 1996 and the portfolio in 2003.
   o Head of global portfolio selection team for Alpha Emerging Markets
     Equity: New York.
   o Prior to that, two years of experience at Merrill Lynch, Brown Brothers
     Harriman and McKinsey & Co.; authored Frontier Emerging Markets Securities
     Price Behavior and Valuation; Kluwers Academic Publishers, 1999.
   o BA, Tufts University and Karlova University; MALD and Ph.D, The Fletcher
     School, administered jointly by Harvard University and Tufts University.

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


DWS VARIABLE SERIES II - CLASS A SHARES                  DWS GLOBAL THEMATIC
                                                         VIP   59
<PAGE>

FINANCIAL HIGHLIGHTS

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

This information doesn't reflect charges and fees associated with the separate
account that invests in the portfolio or any variable life insurance policy or
variable annuity contract for which the portfolio is an investment option.
These charges and fees will reduce returns.



DWS GLOBAL THEMATIC VIP - CLASS A



<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,                              2008        2007         2006         2005        2004
<S>                                               <C>         <C>         <C>           <C>         <C>
SELECTED PER SHARE DATA
----------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD               $  15.66    $  17.39     $  14.44    $ 11.78     $ 10.39
-------------------------------------------------  --------    --------     --------    -------     -------
Income (loss) from investment operations:
 Net investment income (loss)a                          .11         .14       .15c         .12         .04
_________________________________________________  ________    ________     ________    _______     _______
 Net realized and unrealized gain (loss)             ( 5.83)        .88         4.02      2.58        1.48
-------------------------------------------------  --------    --------     --------    -------     -------
 TOTAL FROM INVESTMENT OPERATIONS                    ( 5.72)       1.02         4.17      2.70        1.52
-------------------------------------------------  --------    --------     --------    -------     -------
Less distributions from:
 Net investment income                               (  .19)     (  .11)      (  .09)   (  .04)     (  .13)
_________________________________________________  ________    ________     ________    _______     _______
 Net realized gains                                  ( 3.91)     ( 2.64)      ( 1.13)        -           -
-------------------------------------------------  --------    --------     --------    -------     -------
 TOTAL DISTRIBUTIONS                                 ( 4.10)     ( 2.75)      ( 1.22)   (  .04)     (  .13)
-------------------------------------------------  --------    --------     --------    -------     -------
NET ASSET VALUE, END OF PERIOD                     $   5.84    $  15.66     $  17.39    $ 14.44     $ 11.78
-------------------------------------------------  --------    --------     --------    -------     -------
Total Return (%)b                                    (47.75)       6.29      30.14c      22.94       14.76
_________________________________________________  ________    ________     ________    _______     _______
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
----------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ millions)                   59         151          143        85          63
_________________________________________________  ________    ________     ________    _______     _______
Ratio of expenses before expense reductions (%)        1.47        1.44         1.38      1.41        1.44
_________________________________________________  ________    ________     ________    _______     _______
Ratio of expenses after expense reductions (%)         1.09        1.11         1.04      1.28        1.43
_________________________________________________  ________    ________     ________    _______     _______
Ratio of net investment income (%)                     1.09         .82       .92c         .98         .38
_________________________________________________  ________    ________     ________    _______     _______
Portfolio turnover rate (%)                             229         191          136        95          81
-------------------------------------------------  --------    --------     --------    -------     -------
</TABLE>

a   Based on average shares outstanding during the period.

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

c   Includes non-recurring income from the Advisor recorded as a result of an
    administrative proceeding regarding disclosure of brokerage allocation
    practices in connection with sales of DWS Funds. The non-recurring income
    resulted in an increase in net investment income of $0.004 per share and
    an increase in the ratio of net investment income of 0.03%. Excluding this
    non-recurring income, total return would have been 0.02% lower.


60   DWS GLOBAL THEMATIC VIP                         DWS VARIABLE SERIES II -
                                                        CLASS A SHARES
<PAGE>

HYPOTHETICAL EXPENSE SUMMARY

Using the annual portfolio operating expense ratios presented in the fee tables
in the portfolio prospectus, the Hypothetical Expense Summary shows the
estimated fees and expenses, in actual dollars, that would be charged on a
hypothetical investment of $10,000 in the portfolio held for the next 10 years
and the impact of such fees and expenses on portfolio returns for each year and
cumulatively, assuming a 5% return for each year. The historical rate of return
for the portfolio may be higher or lower than 5% and, for money funds, is
typically less than 5%. The tables also assume that all dividends and
distributions are reinvested. The annual portfolio expense ratios shown are net
of any contractual fee waivers or expense reimbursements, if any, for the
period of the contractual commitment. Also, please note that if you are
investing through a third party provider, that provider may have fees and
expenses separate from those of the portfolio that are not reflected here.
Mutual fund fees and expenses fluctuate over time and actual expenses may be
higher or lower than those shown.

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



DWS GLOBAL THEMATIC VIP - CLASS A



<TABLE>
<CAPTION>
                MAXIMUM                  INITIAL HYPOTHETICAL                          ASSUMED RATE
             SALES CHARGE:                   INVESTMENT:                                OF RETURN:
                 0.00%                         $10,000                                      5%
               CUMULATIVE                                CUMULATIVE           HYPOTHETICAL
             RETURN BEFORE                              RETURN AFTER        YEAR-END BALANCE          ANNUAL
                FEES AND            ANNUAL FUND           FEES AND           AFTER FEES AND          FEES AND
YEAR            EXPENSES          EXPENSE RATIOS          EXPENSES              EXPENSES             EXPENSES
<S>         <C>                  <C>                   <C>                 <C>                     <C>
   1              5.00%                 1.25%                3.75%            $ 10,375.00          $   127.34
   2             10.25%                 1.42%                7.46%            $ 10,746.43          $   149.96
   3             15.76%                 1.42%               11.31%            $ 11,131.15          $   155.33
   4             21.55%                 1.42%               15.30%            $ 11,529.64          $   160.89
   5             27.63%                 1.42%               19.42%            $ 11,942.40          $   166.65
   6             34.01%                 1.42%               23.70%            $ 12,369.94          $   172.62
   7             40.71%                 1.42%               28.13%            $ 12,812.79          $   178.80
   8             47.75%                 1.42%               32.71%            $ 13,271.48          $   185.20
   9             55.13%                 1.42%               37.47%            $ 13,746.60          $   191.83
  10             62.89%                 1.42%               42.39%            $ 14,238.73          $   198.70
TOTAL                                                                                              $ 1,687.32
</TABLE>


DWS VARIABLE SERIES II - CLASS A SHARES                  DWS GLOBAL THEMATIC
                                                         VIP   61
<PAGE>

DWS GOVERNMENT & AGENCY SECURITIES VIP


THE PORTFOLIO'S MAIN INVESTMENT STRATEGY
The portfolio seeks high current income consistent with preservation of
capital.

Under normal circumstances, the portfolio invests at least 80% of net assets,
plus the amount of any borrowings for investment purposes, in US government
securities and repurchase agreements of US government securities. US
government-related debt instruments in which the portfolio may invest include:

o direct obligations of the US Treasury;

o securities such as Ginnie Maes which are mortgage-backed securities issued
  and guaranteed by the Government National Mortgage Association (GNMA) and
  supported by the full faith and credit of the United States; and

o securities issued or guaranteed, as to their payment of principal and
  interest, by US government agencies or government sponsored entities, some
  of which may be supported only by the credit of the issuer.

The portfolio normally invests all of its assets in securities issued or
guaranteed by the US government, its agencies or instrumentalities, except the
portfolio may invest up to 10% of its net assets in cash equivalents, such as
money market funds, and short-term bond funds. These securities may not be
issued or guaranteed by the US government, its agencies or instrumentalities.
The portfolio may use derivative instruments as described in "Other
Investments."

In deciding which types of government bonds to buy and sell, portfolio
management first considers the relative attractiveness of Treasuries compared
to other US government and agency securities and determines allocations for
each. Portfolio management's decisions are generally based on a number of
factors, including interest rate outlooks and changes in supply and demand
within the bond market.

In choosing individual bonds, portfolio management reviews each bond's
fundamentals, compare the yields of shorter maturity bonds to those of longer
maturity bonds and use specialized analysis to project prepayment rates and
other factors that could affect a bond's attractiveness.


Portfolio management may adjust the duration (a measure of sensitivity to
interest rate movements) of the portfolio, depending on its outlook for
interest rates.


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

Although major changes tend to be infrequent, the Board of Trustees could
change the portfolio's investment objective without seeking shareholder
approval. However, the Board will provide shareholders with at least 60 days'
notice prior to making any changes to the portfolio's 80% investment policy.



CREDIT QUALITY POLICIES

This portfolio normally invests substantially all of its assets in securities
issued or guaranteed by the US government, its agencies or instrumentalities.
These securities are generally considered to be among the very highest quality
securities.




DERIVATIVES AND OTHER INVESTMENTS


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


62   DWS GOVERNMENT & AGENCY SECURITIES VIP          DWS VARIABLE SERIES II -
                                                     CLASS A SHARES
<PAGE>

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



THE MAIN RISKS OF INVESTING IN THE PORTFOLIO

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

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

AGENCY RISK. Some securities issued by US government agencies or
instrumentalities are supported only by the credit of that agency or
instrumentality while other government securities have an additional line of
credit with the US Treasury. There is no guarantee that the US government will
provide support to such agencies or instrumentalities and such securities may
involve risk of loss of principal and interest. The full faith and credit
guarantee of the US government for certain securities doesn't protect the
portfolio against market-driven declines in the prices or yields of these
securities, nor does it apply to shares of the portfolio itself.

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

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

SECURITY SELECTION RISK. A risk that pervades all investing is the risk that
the securities in the portfolio's portfolio may decline in value.

Another factor that could affect performance is:

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

This portfolio may appeal to investors who want a portfolio that searches for
attractive yields generated by US government securities.


DWS VARIABLE SERIES II - CLASS A SHARES        DWS GOVERNMENT & AGENCY
                                               SECURITIES VIP   63
<PAGE>

PERFORMANCE - CLASS A

While a portfolio's past performance isn't necessarily a sign of how it will do
in the future, it can be valuable for an investor to know.

The bar chart shows how the returns for the portfolio's Class A shares have
varied from year to year, which may give some idea of risk. The table shows
average annual returns for the portfolio and comparable index information
(which, unlike the portfolio, does not have any fees or expenses). The
performance of both the portfolio and the comparable index information varies
over time. All figures assume reinvestment of dividends and distributions.

This information doesn't reflect charges and fees associated with the separate
account that invests in the portfolio or any variable life insurance policy or
variable annuity contract for which the portfolio is an investment option.
These charges and fees will reduce returns.


ANNUAL TOTAL RETURN (%) as of 12/31 each year - CLASS A
[BAR GRAPHIC OMITTED HERE]

[BAR GRAPHIC DATA]




<TABLE>
<S>         <C>        <C>       <C>       <C>       <C>       <C>       <C>       <C>       <C>
   0.68     10.93       7.48      8.05      2.26      3.75      2.57      4.16     5.95       4.93
  1999      2000       2001      2002      2003      2004      2005      2006      2007      2008
</TABLE>




<TABLE>
<CAPTION>
               FOR THE PERIODS INCLUDED IN THE BAR CHART:
<S>                                       <C>
BEST QUARTER: 4.13%, Q3 2001              WORST QUARTER: -0.98%, Q2 2004
2009 TOTAL RETURN AS OF MARCH 31: 2.75%
</TABLE>

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



<TABLE>
<CAPTION>
                                    1 YEAR        5 YEARS        10 YEARS
<S>                                <C>           <C>            <C>
Portfolio - Class A                   4.93           4.27           5.04
Barclays Capital GNMA Index           7.87           5.39           5.94
</TABLE>

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

BARCLAYS CAPITAL GNMA INDEX (name changed from Lehman Brothers GNMA Index
effective November 3, 2008) is an unmanaged market value-weighted measure of
all fixed-rate securities backed by mortgage pools of the Government National
Mortgage Association.

Current performance information may be higher or lower than the performance
data quoted above. For more recent performance information, contact your
participating insurance company.


64   DWS GOVERNMENT & AGENCY SECURITIES VIP          DWS VARIABLE SERIES II -
                                                     CLASS A SHARES
<PAGE>

HOW MUCH INVESTORS PAY

This table describes the fees and expenses that you may pay if you buy and hold
portfolio shares. The information in the table does not reflect charges and
fees associated with the separate account that invests in the portfolio or any
variable life insurance policy or variable annuity contract for which the
portfolio is an investment option. These charges and fees will increase
expenses.



<TABLE>
<CAPTION>
FEE TABLE                                     CLASS A
<S>                                    <C>
ANNUAL OPERATING EXPENSES, deducted from portfolio assets
__________________________________________________________________
Management Fee 1                                 0.45%
Distribution/Service (12b-1) Fee               None
Other Expenses 2                                 0.18
TOTAL ANNUAL OPERATING EXPENSES 3                0.63
</TABLE>

1   Restated on an annualized basis to reflect approved fee changes that took
    effect on May 1, 2008.


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


3   Through September 30, 2009, the Advisor has contractually agreed to waive
    all or a portion of its management fee and reimburse or pay certain
    operating expenses of the portfolio to the extent necessary to maintain
    the portfolio's total operating expenses at 0.65% for Class A shares,
    excluding certain expenses such as extraordinary expenses, taxes,
    brokerage and interest. Although there can be no assurance that the
    current waiver/expense reimbursement arrangement will be maintained beyond
    September 30, 2009, the Advisor has committed to review the continuance of
    waiver/expense reimbursement arrangements by September 30, 2009.


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



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


DWS VARIABLE SERIES II - CLASS A SHARES        DWS GOVERNMENT & AGENCY
                                               SECURITIES VIP   65
<PAGE>

PORTFOLIO MANAGEMENT

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

The following people handle the day-to-day management of the portfolio:

William Chepolis, CFA
Managing Director of Deutsche Asset Management and Co-Manager of the portfolio.
   o Joined Deutsche Asset Management in 1998 after 13 years of experience as
     vice president and portfolio manager for Norwest Bank, where he managed
     the bank's fixed income and foreign exchange portfolios.
   o Portfolio Manager for Retail Fixed Income: New York.
   o Joined the portfolio in 2002.
   o BIS, University of Minnesota.

Matthew F. MacDonald, CFA
Director of Deutsche Asset Management and Co-Manager of the portfolio.
   o Joined Deutsche Asset Management and the portfolio in 2006 after 14 years
     of fixed income experience at Bank of America Global Structured Products
     and PPM America, Inc., where he was portfolio manager for public fixed
     income, including MBS, ABS, CDOs and corporate bonds; earlier, as an
     analyst for MBS, ABS and money markets; and originally, at Duff & Phelps
     Credit Rating Company.
   o Portfolio Manager for Retail Fixed Income: New York.
   o BA, Harvard University; MBA, University of Chicago Graduate School of
     Business.

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


66   DWS GOVERNMENT & AGENCY SECURITIES VIP          DWS VARIABLE SERIES II -
                                                     CLASS A SHARES
<PAGE>

FINANCIAL HIGHLIGHTS

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

This information doesn't reflect charges and fees associated with the separate
account that invests in the portfolio or any variable life insurance policy or
variable annuity contract for which the portfolio is an investment option.
These charges and fees will reduce returns.



DWS GOVERNMENT & AGENCY SECURITIES VIP - CLASS A



<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,                              2008         2007         2006        2005        2004
<S>                                               <C>          <C>          <C>         <C>         <C>
SELECTED PER SHARE DATA
----------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD                $  12.38     $  12.28   $ 12.26      $  12.55    $  12.54
-------------------------------------------------   --------     --------   -------      --------    --------
Income (loss) from investment operations:
 Net investment income a                                  .56          .58      .55            .51         .44
_________________________________________________   ________     ________   _______      ________    ________
 Net realized and unrealized gain (loss)                 .04          .12   (  .06)        (  .20)        .03
-------------------------------------------------   --------     --------   -------      --------    --------
 TOTAL FROM INVESTMENT OPERATIONS                        .60          .70      .49            .31         .47
-------------------------------------------------   --------     --------   -------      --------    --------
Less distributions from:
 Net investment income                                (  .58)      (  .60)  (  .47)        (  .50)     (  .35)
_________________________________________________   ________     ________   _______      ________    ________
 Net realized gains                                        -            -        -         (  .10)     (  .11)
-------------------------------------------------   --------     --------   -------      --------    --------
 TOTAL DISTRIBUTIONS                                  (  .58)      (  .60)  (  .47)        (  .60)     (  .46)
-------------------------------------------------   --------     --------   -------      --------    --------
NET ASSET VALUE, END OF PERIOD                      $  12.40     $  12.38   $ 12.28      $  12.26    $  12.55
-------------------------------------------------   --------     --------   -------      --------    --------
Total Return (%)                                     4.93b        5.95b       4.16           2.57        3.75
_________________________________________________   ________     ________   _______      ________    ________
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
----------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ millions)                   211          199      211            243         280
_________________________________________________   ________     ________   _______      ________    ________
Ratio of expenses before expense reductions (%)          .66          .66      .67            .63         .61
_________________________________________________   ________     ________   _______      ________    ________
Ratio of expenses after expense reductions (%)           .65          .63      .67            .63         .61
_________________________________________________   ________     ________   _______      ________    ________
Ratio of net investment income (loss) (%)               4.58         4.77     4.56           4.17        3.59
_________________________________________________   ________     ________   _______      ________    ________
Portfolio turnover rate (%)                              543          465      241            191         226
-------------------------------------------------   --------     --------   -------      --------    --------
</TABLE>

a   Based on average shares outstanding during the period.


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


DWS VARIABLE SERIES II - CLASS A SHARES        DWS GOVERNMENT & AGENCY
                                               SECURITIES VIP   67
<PAGE>

HYPOTHETICAL EXPENSE SUMMARY

Using the annual portfolio operating expense ratios presented in the fee tables
in the portfolio prospectus, the Hypothetical Expense Summary shows the
estimated fees and expenses, in actual dollars, that would be charged on a
hypothetical investment of $10,000 in the portfolio held for the next 10 years
and the impact of such fees and expenses on portfolio returns for each year and
cumulatively, assuming a 5% return for each year. The historical rate of return
for the portfolio may be higher or lower than 5% and, for money funds, is
typically less than 5%. The tables also assume that all dividends and
distributions are reinvested. The annual portfolio expense ratios shown are net
of any contractual fee waivers or expense reimbursements, if any, for the
period of the contractual commitment. Also, please note that if you are
investing through a third party provider, that provider may have fees and
expenses separate from those of the portfolio that are not reflected here.
Mutual fund fees and expenses fluctuate over time and actual expenses may be
higher or lower than those shown.

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



DWS GOVERNMENT & AGENCY SECURITIES VIP - CLASS A



<TABLE>
<CAPTION>
                MAXIMUM                  INITIAL HYPOTHETICAL                         ASSUMED RATE
             SALES CHARGE:                   INVESTMENT:                               OF RETURN:
                 0.00%                         $10,000                                     5%
               CUMULATIVE                                CUMULATIVE           HYPOTHETICAL
             RETURN BEFORE                              RETURN AFTER        YEAR-END BALANCE          ANNUAL
                FEES AND            ANNUAL FUND           FEES AND           AFTER FEES AND          FEES AND
YEAR            EXPENSES          EXPENSE RATIOS          EXPENSES              EXPENSES             EXPENSES
<S>         <C>                  <C>                   <C>                 <C>                     <C>
   1              5.00%                 0.63%                4.37%            $ 10,437.00           $  64.38
   2             10.25%                 0.63%                8.93%            $ 10,893.10           $  67.19
   3             15.76%                 0.63%               13.69%            $ 11,369.13           $  70.13
   4             21.55%                 0.63%               18.66%            $ 11,865.96           $  73.19
   5             27.63%                 0.63%               23.84%            $ 12,384.50           $  76.39
   6             34.01%                 0.63%               29.26%            $ 12,295.70           $  79.73
   7             40.71%                 0.63%               34.91%            $ 13,490.55           $  83.21
   8             47.75%                 0.63%               40.80%            $ 14,080.09           $  86.85
   9             55.13%                 0.63%               46.95%            $ 14,695.39           $  90.64
  10             62.89%                 0.63%               53.38%            $ 15,337.58           $  94.60
TOTAL                                                                                               $ 786.31
</TABLE>


68   DWS GOVERNMENT & AGENCY SECURITIES VIP          DWS VARIABLE SERIES II -
                                                     CLASS A SHARES
<PAGE>

DWS HIGH INCOME VIP


THE PORTFOLIO'S MAIN INVESTMENT STRATEGY
The portfolio seeks to provide a high level of current income.

Under normal circumstances, this portfolio generally invests at least 65% of
net assets, plus the amount of any borrowings for investment purposes, in junk
bonds, which are those rated below the fourth highest credit rating category
(i.e., grade BB/Ba and below). Compared to investment-grade bonds, junk bonds
may pay higher yields, have higher volatility and higher risk of default on
payments of interest or principal. The portfolio may invest up to 50% of total
assets in bonds denominated in US dollars or foreign currencies from foreign
issuers.

Portfolio management focuses on cash flow and total return analysis, and broad
diversification among countries, sectors, industries and individual issuers and
maturities. Portfolio management uses an active process which emphasizes
relative value in a global environment, managing on a total return basis, and
using intensive research to identify stable to improving credit situations that
may provide yield compensation for the risk of investing in below investment
grade fixed income securities (junk bonds).

The investment process involves using primarily a "bottom-up" approach by using
relative value and fundamental analysis to select the best securities within
each industry, and a top-down approach to assess the overall risk and return in
the market and which considers macro trends in the economy. To select
securities or investments, portfolio management:

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

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

o assesses new offerings versus secondary market opportunities; and

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

PORTFOLIO MATURITY. Portfolio management intends to maintain a dollar-weighted
effective average portfolio maturity of seven to ten years. The portfolio's
average portfolio maturity may vary and may be shortened by certain of the
portfolio's securities which have floating or variable interest rates or
include put features that provide the portfolio the right to sell the security
at face value prior to maturity. Subject to its portfolio maturity policy, the
portfolio may purchase individual securities with any stated maturity.

The dollar-weighted effective average portfolio maturity may be shorter than
the stated maturity due to several factors, including but not limited to,
prepayment patterns, call dates and put features.

In implementing this strategy, the portfolio may experience a high portfolio
turnover rate.

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

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




DERIVATIVES AND OTHER INVESTMENTS


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


DWS VARIABLE SERIES II - CLASS A SHARES                     DWS HIGH INCOME
                                                            VIP   69
<PAGE>

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



THE MAIN RISKS OF INVESTING IN THE PORTFOLIO

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

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

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

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

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

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

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

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

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

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

70   DWS HIGH INCOME VIP                             DWS VARIABLE SERIES II -
                                                        CLASS A SHARES
<PAGE>

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

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

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


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


Some governments exercise substantial influence over the private economic
sector and the social and political uncertainties that exist for many
developing countries is significant. In adverse social and political
circumstances, governments have been involved in policies of expropriation,
confiscatory taxation, nationalization, intervention in the securities markets
and trade settlement, and imposition of foreign investment restrictions and
exchange controls.

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

PRICING RISK. At times, market conditions may make it difficult to value some
investments, and the portfolio may use certain valuation methodologies for some
of its investments, such as fair value pricing. Given the subjective nature of
such valuation methodologies, it is possible that the value determined for an
investment may be different than the value realized upon such investment's
sale. If the portfolio has valued its securities too highly, you may pay too
much for portfolio shares when you buy into the portfolio. If the portfolio has
underestimated the price of its securities, you may not receive the full market
value when you sell your portfolio shares.

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

SECURITY SELECTION RISK. A risk that pervades all investing is the risk that
the securities in the portfolio's portfolio may decline in value.

Another factor that could affect performance is:

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

Investors who seek high current income and can accept risk of loss of principal
may be interested in this portfolio.


DWS VARIABLE SERIES II - CLASS A SHARES                     DWS HIGH INCOME
                                                            VIP   71
<PAGE>

PERFORMANCE - CLASS A

While a portfolio's past performance isn't necessarily a sign of how it will do
in the future, it can be valuable for an investor to know.

The bar chart shows how the returns for the portfolio's Class A shares have
varied from year to year, which may give some idea of risk. The table shows
average annual returns for the portfolio and comparable index information
(which, unlike the portfolio, does not have any fees or expenses). The
performance of both the portfolio and the comparable index information varies
over time. All figures assume reinvestment of dividends and distributions.

This information doesn't reflect charges and fees associated with the separate
account that invests in the portfolio or any variable life insurance policy or
variable annuity contract for which the portfolio is an investment option.
These charges and fees will reduce returns.


ANNUAL TOTAL RETURN (%) as of 12/31 each year - CLASS A
[BAR GRAPHIC OMITTED HERE]

[BAR GRAPHIC DATA]




<TABLE>
<S>         <C>        <C>       <C>        <C>        <C>        <C>       <C>        <C>       <C>
   2.15      -8.68      2.63      -0.30     24.62      12.42       3.89     10.47      0.96       -23.94
  1999      2000       2001      2002       2003       2004       2005      2006       2007       2008
</TABLE>




<TABLE>
<CAPTION>
                FOR THE PERIODS INCLUDED IN THE BAR CHART:
<S>                                       <C>
BEST QUARTER: 8.59%, Q2 2003              WORST QUARTER: -16.35%, Q4 2008
2009 TOTAL RETURN AS OF MARCH 31: 3.65%
</TABLE>

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



<TABLE>
<CAPTION>
                                         1 YEAR         5 YEARS        10 YEARS
<S>                                   <C>              <C>            <C>
Portfolio - Class A                       -23.94          -0.19           1.66
Credit Suisse High Yield Index            -26.17          -0.59           2.87
</TABLE>

CREDIT SUISSE HIGH YIELD INDEX is an unmanaged trader-priced portfolio,
constructed to mirror the global high-yield debt market.

Current performance information may be higher or lower than the performance
data quoted above. For more recent performance information, contact your
participating insurance company.


72   DWS HIGH INCOME VIP                             DWS VARIABLE SERIES II -
                                                     CLASS A SHARES
<PAGE>

HOW MUCH INVESTORS PAY

This table describes the fees and expenses that you may pay if you buy and hold
portfolio shares. The information in the table does not reflect charges and
fees associated with the separate account that invests in the portfolio or any
variable life insurance policy or variable annuity contract for which the
portfolio is an investment option. These charges and fees will increase
expenses.




<TABLE>
<CAPTION>
FEE TABLE                                     CLASS A
<S>                                    <C>
ANNUAL OPERATING EXPENSES, deducted from portfolio assets
__________________________________________________________________
Management Fee 1                                 0.50%
Distribution/Service (12b-1) Fee               None
Other Expenses 2                                 0.21
TOTAL ANNUAL OPERATING EXPENSES 3                0.71
</TABLE>


1   Restated on an annualized basis to reflect approved fee changes that took
    effect on May 1, 2008.


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

3   Except as otherwise noted, the information in the table is based on amounts
    incurred during the portfolio's most recent fiscal year. It is important
    for you to understand that a decline in the portfolio's average net assets
    during the current fiscal year due to recent unprecedented market
    volatility or other factors could cause the portfolio's expense ratios for
    the portfolio's current fiscal year to be higher than the expense
    information presented. Based on asset levels as of December 31, 2008, the
    gross annualized expense ratio of Class A shares is estimated at 0.79%.
    For more current expense information, see "Financial Highlights" in the
    portfolio's future annual or semi-annual reports.



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



<TABLE>
<CAPTION>
EXAMPLE                1 YEAR        3 YEARS        5 YEARS        10 YEARS
<S>                   <C>           <C>            <C>            <C>
Class A shares           $73           $227           $395           $883
</TABLE>

PORTFOLIO MANAGEMENT

The following person handles the day-to-day management of the portfolio:

Gary Sullivan, CFA
Managing Director of Deutsche Asset Management and Portfolio Manager of the
portfolio.
   o Joined Deutsche Asset Management in 1996 and the portfolio in 2006.
     Served as the head of the High Yield group in Europe and as an Emerging
     Markets portfolio manager.
   o 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.
   o BS, United States Military Academy (West Point); MBA, New York
     University, Stern School of Business

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


DWS VARIABLE SERIES II - CLASS A SHARES                     DWS HIGH INCOME
                                                            VIP   73
<PAGE>

FINANCIAL HIGHLIGHTS

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

This information doesn't reflect charges and fees associated with the separate
account that invests in the portfolio or any variable life insurance policy or
variable annuity contract for which the portfolio is an investment option.
These charges and fees will reduce returns.



DWS HIGH INCOME VIP - CLASS A



<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,                               2008        2007       2006       2005       2004
<S>                                               <C>           <C>        <C>        <C>        <C>
SELECTED PER SHARE DATA
------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD                $   7.81     $  8.38    $  8.23    $  8.78    $  8.43
-------------------------------------------------   --------     -------    -------    -------    -------
Income (loss) from investment operations:
 Net investment income a                                 .57         .63        .62        .68        .67
_________________________________________________   ________     _______    _______    _______    _______
 Net realized and unrealized gain (loss)              ( 2.29)      ( .54)       .19      ( .38)       .31
-------------------------------------------------   --------     -------    -------    -------    -------
 TOTAL FROM INVESTMENT OPERATIONS                     ( 1.72)        .09        .81        .30        .98
-------------------------------------------------   --------     -------    -------    -------    -------
Less distributions from:
 Net investment income                                (  .79)      ( .66)     ( .66)     ( .85)     ( .63)
_________________________________________________   ________     _______    _______    _______    _______
NET ASSET VALUE, END OF PERIOD                      $   5.30     $  7.81    $  8.38    $  8.23    $  8.78
-------------------------------------------------   --------     -------    -------    -------    -------
Total Return (%)                                      (23.94)b       .96      10.47       3.89      12.42
_________________________________________________   ________     _______    _______    _______    _______
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ millions)                   154         248        322        344        393
_________________________________________________   ________     _______    _______    _______    _______
Ratio of expenses before expense reductions (%)          .80         .69        .71        .70        .66
_________________________________________________   ________     _______    _______    _______    _______
Ratio of expenses after expense reductions (%)           .79         .69        .71        .70        .66
_________________________________________________   ________     _______    _______    _______    _______
Ratio of net investment income (%)                      8.42        7.84       7.73       8.27       8.11
_________________________________________________   ________     _______    _______    _______    _______
Portfolio turnover rate (%)                               38          61         93        100        162
-------------------------------------------------   --------     -------    -------    -------    -------
</TABLE>

a   Based on average shares outstanding during the period.

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

74   DWS HIGH INCOME VIP                             DWS VARIABLE SERIES II -
                                                     CLASS A SHARES
<PAGE>

HYPOTHETICAL EXPENSE SUMMARY

Using the annual portfolio operating expense ratios presented in the fee tables
in the portfolio prospectus, the Hypothetical Expense Summary shows the
estimated fees and expenses, in actual dollars, that would be charged on a
hypothetical investment of $10,000 in the portfolio held for the next 10 years
and the impact of such fees and expenses on portfolio returns for each year and
cumulatively, assuming a 5% return for each year. The historical rate of return
for the portfolio may be higher or lower than 5% and, for money funds, is
typically less than 5%. The tables also assume that all dividends and
distributions are reinvested. The annual portfolio expense ratios shown are net
of any contractual fee waivers or expense reimbursements, if any, for the
period of the contractual commitment. Also, please note that if you are
investing through a third party provider, that provider may have fees and
expenses separate from those of the portfolio that are not reflected here.
Mutual fund fees and expenses fluctuate over time and actual expenses may be
higher or lower than those shown.

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



DWS HIGH INCOME VIP - CLASS A



<TABLE>
<CAPTION>
                MAXIMUM                  INITIAL HYPOTHETICAL                         ASSUMED RATE
             SALES CHARGE:                   INVESTMENT:                               OF RETURN:
                 0.00%                         $10,000                                     5%
               CUMULATIVE                                CUMULATIVE           HYPOTHETICAL
             RETURN BEFORE                              RETURN AFTER        YEAR-END BALANCE          ANNUAL
                FEES AND            ANNUAL FUND           FEES AND           AFTER FEES AND          FEES AND
YEAR            EXPENSES          EXPENSE RATIOS          EXPENSES              EXPENSES             EXPENSES
<S>         <C>                  <C>                   <C>                 <C>                     <C>
   1              5.00%                 0.71%                4.29%            $ 10,429.00           $  72.52
   2             10.25%                 0.71%                8.76%            $ 10,876.40           $  75.63
   3             15.76%                 0.71%               13.43%            $ 11,343.00           $  78.88
   4             21.55%                 0.71%               18.30%            $ 11,829.62           $  82.26
   5             27.63%                 0.71%               23.37%            $ 12,337.11           $  85.79
   6             34.01%                 0.71%               28.66%            $ 12,866.37           $  89.47
   7             40.71%                 0.71%               34.18%            $ 13,418.34           $  93.31
   8             47.75%                 0.71%               39.94%            $ 13,993.98           $  97.31
   9             55.13%                 0.71%               45.94%            $ 14,594.32           $ 101.49
  10             62.89%                 0.71%               52.20%            $ 15,220.42           $ 105.84
TOTAL                                                                                               $ 882.50
</TABLE>


DWS VARIABLE SERIES II - CLASS A SHARES                     DWS HIGH INCOME
                                                            VIP   75
<PAGE>

DWS LARGE CAP VALUE VIP


THE PORTFOLIO'S MAIN INVESTMENT STRATEGY
The portfolio seeks to achieve a high rate of total return.


Under normal circumstances, the portfolio invests at least 80% of net assets,
plus the amount of any borrowings for investment purposes, in common stocks and
other equity securities of large US companies that are similar in size to the
companies in the Russell 1000 (Reg. TM) Value Index (as of February 28, 2009,
the Russell 1000 (Reg. TM) Value Index had a median market capitalization of
$2.1 billion) and that portfolio management believes are undervalued. These are
typically companies that have been sound historically but are temporarily out
of favor. The portfolio intends to invest primarily in companies whose market
capitalizations fall within the normal range of the Index. Although the
portfolio can invest in stocks of any economic sector (which is comprised of
two or more industries), at times the portfolio may emphasize certain sectors,
even investing more than 25% of its portfolio in any one sector.

The portfolio may invest up to 20% of total assets in foreign securities.


The portfolio's equity investments are mainly common stocks, but may also
include other types of equities such as preferred or convertible stocks.

Portfolio management begins by screening for stocks whose price-to-earnings
ratios are below the average for the S&P 500 Index. Portfolio management then
compares a company's stock price to its book value, cash flow and yield, and
analyze individual companies to identify those that are financially sound and
appear to have strong potential for long-term growth.

Portfolio management assembles the portfolio from among the most attractive
stocks, drawing on analysis of economic outlooks for various sectors and
industries.

Portfolio management will normally sell a stock when it believes the stock's
price is unlikely to go higher, its fundamental factors have changed, other
investments offer better opportunities or in the course of adjusting the
portfolio's emphasis on a given sector.

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

Although major changes tend to be infrequent, the Board of Trustees could
change the portfolio's investment objective without seeking shareholder
approval. However, the Board will provide shareholders with at least 60 days'
notice prior to making any changes to the portfolio's 80% investment policy.




DERIVATIVES AND OTHER INVESTMENTS

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


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



THE MAIN RISKS OF INVESTING IN THE PORTFOLIO

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


76   DWS LARGE CAP VALUE VIP                         DWS VARIABLE SERIES II -
                                                     CLASS A SHARES
<PAGE>

STOCK MARKET RISK. The portfolio is affected by how the stock market performs.
To the extent the portfolio invests in a particular market sector, the
portfolio's performance may be proportionately affected by that segment's
general performance. When stock prices fall, you should expect the value of
your investment to fall as well. Because a stock represents ownership in its
issuer, stock prices can be hurt by poor management, shrinking product demand
and other business risks. These may affect single companies as well as groups
of companies. In addition, movements in financial markets may adversely affect
a stock's price, regardless of how well the company performs. The market as a
whole may not favor the types of investments the portfolio makes and the
portfolio may not be able to get an attractive price for them.

VALUE INVESTING RISK. At times, "value" investing may perform better than or
worse than other investment styles and the overall market. If portfolio
management overestimates the value or return potential of one or more
securities, the portfolio may underperform the general equity market. Value
stocks may also be out of favor for certain periods in relation to growth
stocks.

INDUSTRY RISK. While the portfolio does not concentrate in any industry, to the
extent that the portfolio has exposure to a given industry or sector, any
factors affecting that industry or sector could affect the value of portfolio
securities. For example, manufacturers of consumer goods could be hurt by a
rise in unemployment or technology companies could be hurt by such factors as
market saturation, price competition and rapid obsolescence.

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

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

PRICING RISK. At times, market conditions may make it difficult to value some
investments, and the portfolio may use certain valuation methodologies for some
of its investments, such as fair value pricing. Given the subjective nature of
such valuation methodologies, it is possible that the value determined for an
investment may be different than the value realized upon such investment's
sale. If the portfolio has valued its securities too highly, you may pay too
much for portfolio shares when you buy into the portfolio. If the portfolio has
underestimated the price of its securities, you may not receive the full market
value when you sell your portfolio shares.

SECURITY SELECTION RISK. A risk that pervades all investing is the risk that
the securities in the portfolio's portfolio may decline in value.

Other factors that could affect performance include:

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

o foreign securities may be more volatile than their US counterparts, for
  reasons such as currency fluctuations and political and economic
  uncertainty.

Investors seeking to diversify a growth-oriented portfolio or add a core
holding to a value-oriented portfolio may want to consider this portfolio.


DWS VARIABLE SERIES II - CLASS A SHARES                  DWS LARGE CAP VALUE
                                                         VIP   77
<PAGE>

PERFORMANCE - CLASS A

While a portfolio's past performance isn't necessarily a sign of how it will do
in the future, it can be valuable for an investor to know.

The bar chart shows how the returns for the portfolio's Class A shares have
varied from year to year, which may give some idea of risk. The table shows
average annual returns for the portfolio and comparable index information
(which, unlike the portfolio, does not have any fees or expenses). The
performance of both the portfolio and the comparable index information varies
over time. All figures assume reinvestment of dividends and distributions.

This information doesn't reflect charges and fees associated with the separate
account that invests in the portfolio or any variable life insurance policy or
variable annuity contract for which the portfolio is an investment option.
These charges and fees will reduce returns.


ANNUAL TOTAL RETURN (%) as of 12/31 each year - CLASS A
[BAR GRAPHIC OMITTED HERE]

[BAR GRAPHIC DATA]





<TABLE>
<S>           <C>        <C>       <C>         <C>        <C>        <C>       <C>        <C>        <C>
  -10.21      16.13       1.87      -14.98     32.60      10.07       1.97     15.41      13.15      -36.40
   1999       2000       2001       2002       2003       2004       2005      2006       2007       2008
</TABLE>




<TABLE>
<CAPTION>
                FOR THE PERIODS INCLUDED IN THE BAR CHART:
<S>                                        <C>
BEST QUARTER: 18.86%, Q2 2003              WORST QUARTER: -22.50%, Q4 2008
2009 TOTAL RETURN AS OF MARCH 31: -7.53%
</TABLE>

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



<TABLE>
<CAPTION>
                                   1 YEAR         5 YEARS        10 YEARS
<S>                             <C>              <C>            <C>
Portfolio - Class A                 -36.40          -1.39           1.10
Russell 1000 Value Index            -36.85          -0.79           1.36
</TABLE>

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

RUSSELL 1000 (Reg. TM) VALUE INDEX is an unmanaged index that consists of those
stocks in the Russell 1000 Index with less-than-average growth orientation.
Russell 1000 (Reg. TM) Index is an unmanaged price-only index of the 1,000
largest capitalized companies that are domiciled in the US and whose common
stocks are traded.

Current performance information may be higher or lower than the performance
data quoted above. For more recent performance information, contact your
participating insurance company.


78   DWS LARGE CAP VALUE VIP                         DWS VARIABLE SERIES II -
                                                     CLASS A SHARES
<PAGE>

HOW MUCH INVESTORS PAY

This table describes the fees and expenses that you may pay if you buy and hold
portfolio shares. The information in the table does not reflect charges and
fees associated with the separate account that invests in the portfolio or any
variable life insurance policy or variable annuity contract for which the
portfolio is an investment option. These charges and fees will increase
expenses.



<TABLE>
<CAPTION>
FEE TABLE                                     CLASS A
<S>                                    <C>
ANNUAL OPERATING EXPENSES, deducted from portfolio assets
__________________________________________________________________
Management Fee                                  0.65%
Distribution/Service (12b-1) Fee               None
Other Expenses1                                 0.19
TOTAL ANNUAL OPERATING EXPENSES 2                0.84
</TABLE>

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


2   Except as otherwise noted, the information in the table is based on amounts
    incurred during the portfolio's most recent fiscal year. It is important
    for you to understand that a decline in the portfolio's average net assets
    during the current fiscal year due to recent unprecedented market
    volatility or other factors could cause the portfolio's expense ratios for
    the portfolio's current fiscal year to be higher than the expense
    information presented. Based on asset levels as of December 31, 2008, the
    gross annualized expense ratio of Class A shares is estimated at 0.89%.
    For more current expense information, see "Financial Highlights" in the
    portfolio's future annual or semi-annual reports.



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



<TABLE>
<CAPTION>
EXAMPLE                1 YEAR        3 YEARS        5 YEARS        10 YEARS
<S>                   <C>           <C>            <C>            <C>
Class A shares           $86           $268           $466         $1,037
</TABLE>

PORTFOLIO MANAGEMENT

Deutsche Asset Management International GmbH, Mainzer Landstrasse 178-190,
Frankfurt am Main, Germany, is the subadvisor for the portfolio.

The following person handles the day-to-day management of the portfolio:

Thomas Schuessler, PhD
Managing Director of Deutsche Asset Management and Portfolio Manager of the
portfolio.
   o Joined Deutsche Asset Management in 2001 after 5 years at Deutsche Bank
     where he managed various projects and worked in the office of the Chairman
     of the Management Board.
   o US and Global Fund Management: Frankfurt.
   o Joined the portfolio in 2007.
   o PhD, University of Heidelberg, studies in physics and economics at
     University of Heidelberg and University of Utah.

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


DWS VARIABLE SERIES II - CLASS A SHARES                  DWS LARGE CAP VALUE
                                                         VIP   79
<PAGE>

FINANCIAL HIGHLIGHTS

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

This information doesn't reflect charges and fees associated with the separate
account that invests in the portfolio or any variable life insurance policy or
variable annuity contract for which the portfolio is an investment option.
These charges and fees will reduce returns.



DWS LARGE CAP VALUE VIP - CLASS A



<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,                               2008          2007          2006         2005         2004
<S>                                               <C>           <C>            <C>          <C>          <C>
SELECTED PER SHARE DATA
---------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD                $  19.21      $   17.96      $  15.81     $  15.79    $  14.57
-------------------------------------------------   --------      ---------      --------     --------    --------
Income (loss) from investment operations:
 Net investment income (loss)a                           .21            .26        .29c            .26         .27
_________________________________________________   ________      _________      ________     ________    ________
 Net realized and unrealized gain (loss)              ( 5.68)          1.98          2.12          .04        1.18
-------------------------------------------------   --------      ---------      --------     --------    --------
 TOTAL FROM INVESTMENT OPERATIONS                     ( 5.47)          2.24          2.41          .30        1.45
-------------------------------------------------   --------      ---------      --------     --------    --------
Less distributions from:
 Net investment income                                (  .34)        (  .32)       (  .26)      (  .28)     (  .23)
_________________________________________________   ________      _________      ________     ________    ________
 Net realized gains                                   ( 4.48)        (  .67)            -            -           -
_________________________________________________   ________      _________      ________     ________    ________
 TOTAL DISTRIBUTIONS                                  ( 4.82)        (  .99)       (  .26)      (  .28)     (  .23)
-------------------------------------------------   --------      ---------      --------     --------    --------
NET ASSET VALUE, END OF PERIOD                      $   8.92      $   19.21      $  17.96     $  15.81    $  15.79
-------------------------------------------------   --------      ---------      --------     --------    --------
Total Return (%)                                      (36.40)b     13.15b,d       15.41c       1.97b         10.07
_________________________________________________   ________      _________      ________     ________    ________
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
---------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ millions)                   118            229           275          268         274
_________________________________________________   ________      _________      ________     ________    ________
Ratio of expenses before expense reductions (%)          .87            .83           .83          .80         .80
_________________________________________________   ________      _________      ________     ________    ________
Ratio of expenses after expense reductions (%)           .86            .82           .83          .80         .80
_________________________________________________   ________      _________      ________     ________    ________
Ratio of net investment income (loss) (%)               1.59           1.43       1.73c           1.64        1.84
_________________________________________________   ________      _________      ________     ________    ________
Portfolio turnover rate (%)                               97            103            76           64          40
-------------------------------------------------   --------      ---------      --------     --------    --------
</TABLE>

a   Based on average shares outstanding during the period.

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

c   Includes non-recurring income from the Advisor recorded as a result of an
    administrative proceeding regarding disclosure of brokerage allocation
    practices in connection with sales of DWS Funds. The non-recurring income
    resulted in an increase in net investment income of $0.008 per share and
    an increase in the ratio of net investment income of 0.04%. Excluding this
    non-recurring income, total return would have been 0.04% lower.

d   Includes a reimbursement from the Advisor to reimburse the effect of losses
    incurred as the result of certain operation errors during the period.
    Excluding this reimbursement, total return would have been 0.04% lower.


80   DWS LARGE CAP VALUE VIP                         DWS VARIABLE SERIES II -
                                                        CLASS A SHARES
<PAGE>

HYPOTHETICAL EXPENSE SUMMARY

Using the annual portfolio operating expense ratios presented in the fee tables
in the portfolio prospectus, the Hypothetical Expense Summary shows the
estimated fees and expenses, in actual dollars, that would be charged on a
hypothetical investment of $10,000 in the portfolio held for the next 10 years
and the impact of such fees and expenses on portfolio returns for each year and
cumulatively, assuming a 5% return for each year. The historical rate of return
for the portfolio may be higher or lower than 5% and, for money funds, is
typically less than 5%. The tables also assume that all dividends and
distributions are reinvested. The annual portfolio expense ratios shown are net
of any contractual fee waivers or expense reimbursements, if any, for the
period of the contractual commitment. Also, please note that if you are
investing through a third party provider, that provider may have fees and
expenses separate from those of the portfolio that are not reflected here.
Mutual fund fees and expenses fluctuate over time and actual expenses may be
higher or lower than those shown.

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



DWS LARGE CAP VALUE VIP - CLASS A



<TABLE>
<CAPTION>
                MAXIMUM                  INITIAL HYPOTHETICAL                          ASSUMED RATE
             SALES CHARGE:                   INVESTMENT:                                OF RETURN:
                 0.00%                         $10,000                                      5%
               CUMULATIVE                                CUMULATIVE           HYPOTHETICAL
             RETURN BEFORE                              RETURN AFTER        YEAR-END BALANCE           ANNUAL
                FEES AND            ANNUAL FUND           FEES AND           AFTER FEES AND           FEES AND
YEAR            EXPENSES          EXPENSE RATIOS          EXPENSES              EXPENSES              EXPENSES
<S>         <C>                  <C>                   <C>                 <C>                     <C>
   1              5.00%                 0.84%                4.16%            $ 10,416.00           $    85.75
   2             10.25%                 0.84%                8.49%            $ 10,849.31           $    89.31
   3             15.76%                 0.84%               13.01%            $ 11,300.64           $    93.03
   4             21.55%                 0.84%               17.71%            $ 11,770.74           $    96.90
   5             27.63%                 0.84%               22.60%            $ 12,260.41           $   100.93
   6             34.01%                 0.84%               27.70%            $ 12,770.44           $   105.13
   7             40.71%                 0.84%               33.02%            $ 13,301.69           $   109.50
   8             47.75%                 0.84%               38.55%            $ 13,855.04           $   114.06
   9             55.13%                 0.84%               44.31%            $ 14,431.41           $   118.80
  10             62.89%                 0.84%               50.32%            $ 15,031.76           $   123.75
TOTAL                                                                                               $ 1,037.16
</TABLE>


DWS VARIABLE SERIES II - CLASS A SHARES                  DWS LARGE CAP VALUE
                                                         VIP   81
<PAGE>

DWS MID CAP GROWTH VIP


THE PORTFOLIO'S MAIN INVESTMENT STRATEGY
The portfolio seeks long-term capital growth.

Under normal circumstances, the portfolio invests at least 80% of its net
assets, plus the amount of any borrowings for investment purposes, determined
at the time of purchase, in companies with market capitalizations within the
market capitalization range of the Russell Midcap(TM) Growth Index (as of
February 28, 2009, the Russell Midcap (Reg. TM) Growth Index had a median
market capitalization of $2.2 billion) or securities with equity
characteristics that provide exposure to those companies. The portfolio's
equity investments are mainly common stocks, but may also include other types
of equity securities such as preferred stocks or convertible securities.

The portfolio invests primarily in equity securities of medium-sized
growth-oriented US companies. Portfolio management focuses on individual
security selection rather than industry selection. Portfolio management uses an
active process which combines financial analysis with company visits to
evaluate management and strategies.

Company research lies at the heart of the investment process. Portfolio
management uses a "bottom-up" approach to picking securities.

o Portfolio management focuses on undervalued stocks with fast growing earnings
     and superior near-to-intermediate term performance potential.

o Portfolio management emphasizes individual selection of medium sized stocks
  across all economic sectors, early in their growth cycles and with the
  potential to be the blue chips of the future.

o Portfolio management generally seeks companies with a leading or dominant
  position in their niche markets, a high rate of return on invested capital
  and the ability to finance a major part of future growth from internal
  sources.

The portfolio follows a disciplined selling process in order to lessen risk. A
security may be sold if one or more of the following conditions are met:

o the stock price reaches portfolio management's expectations;

o there is a material change in the company's fundamentals;

o portfolio management believes other investments offer better opportunities;
  or

o the market capitalization of a stock distorts the weighted average market
  capitalization of the portfolio.

The portfolio may also invest up to 20% of its assets in stocks and other
securities of companies based outside the US.

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

Although major changes tend to be infrequent, the Board could change the
portfolio's investment objective without seeking shareholder approval. However,
the Board will provide shareholders with at least 60 days' notice prior to
making any changes to the portfolio's 80% investment policy.




DERIVATIVES AND OTHER INVESTMENTS


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


82   DWS MID CAP GROWTH VIP                          DWS VARIABLE SERIES II -
                                                     CLASS A SHARES
<PAGE>

As a temporary defensive measure, the portfolio could shift up to 100% of
assets into investments such as money market investments or other short-term
bonds that offer comparable safety. In addition, as a temporary defensive
position, the portfolio may invest up to 100% of assets in the common stock of
larger companies or in fixed-income securities. This could prevent losses, but,
while engaged in a temporary defensive position, the portfolio may not achieve
its investment objective. However, portfolio management may choose not to use
these strategies for various reasons, even in very volatile market conditions.



THE MAIN RISKS OF INVESTING IN THE PORTFOLIO

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

STOCK MARKET RISK. The portfolio is affected by how the stock market performs.
To the extent the portfolio invests in a particular market sector, the
portfolio's performance may be proportionately affected by that segment's
general performance. When stock prices fall, you should expect the value of
your investment to fall as well. Because a stock represents ownership in its
issuer, stock prices can be hurt by poor management, shrinking product demand
and other business risks. These may affect single companies as well as groups
of companies. In addition, movements in financial markets may adversely affect
a stock's price, regardless of how well the company performs. The market as a
whole may not favor the types of investments the portfolio makes and the
portfolio may not be able to get an attractive price for them.

MEDIUM-SIZED COMPANY RISK. Medium-sized company stocks tend to experience
steeper price fluctuations than stocks of larger companies. A shortage of
reliable information can also pose added risk to stocks of medium-sized
companies. Industry-wide reversals may have a greater impact on medium-sized
companies, since they usually lack the financial resources of larger companies.
Medium-sized company stocks are typically less liquid than large company
stocks. Accordingly, it may be harder to find buyers for medium-sized company
shares.


GROWTH INVESTING RISK. Since growth stocks usually reinvest a large portion of
earnings in their own businesses, they may lack the dividends associated with
value stocks that might otherwise cushion their decline in a falling market.
Earnings disappointments in growth stocks often result in sharp price declines
because investors buy these stocks for their potential superior earnings
growth. Growth stocks may also be out of favor for certain periods in relation
to value stocks.

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

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

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

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

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

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


DWS VARIABLE SERIES II - CLASS A SHARES                  DWS MID CAP GROWTH
                                                         VIP   83
<PAGE>


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

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

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


INDUSTRY RISK. While the portfolio does not concentrate in any industry, to the
extent that the portfolio has exposure to a given industry or sector, any
factors affecting that industry or sector could affect the value of portfolio
securities. For example, manufacturers of consumer goods could be hurt by a
rise in unemployment or technology companies could be hurt by such factors as
market saturation, price competition and rapid obsolescence.

PRICING RISK. At times, market conditions may make it difficult to value some
investments, and the portfolio may use certain valuation methodologies for some
of its investments, such as fair value pricing. Given the subjective nature of
such valuation methodologies, it is possible that the value determined for an
investment may be different than the value realized upon such investment's
sale. If the portfolio has valued its securities too highly, you may pay too
much for portfolio shares when you buy into the portfolio. If the portfolio has
underestimated the price of its securities, you may not receive the full market
value when you sell your portfolio shares.

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

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

SECURITY SELECTION RISK. A risk that pervades all investing is the risk that
the securities in the portfolio's portfolio may decline in value.


Another factor that could affect performance is:



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


This portfolio is designed for investors with long-term goals who can tolerate
capital fluctuation in pursuit of long-term capital growth.



PERFORMANCE - CLASS A

While a portfolio's past performance isn't necessarily a sign of how it will do
in the future, it can be valuable for an investor to know.

The bar chart shows how the returns for the portfolio's Class A shares have
varied from year to year, which may give some idea of risk. The table shows
average annual returns for the portfolio and comparable index information
(which, unlike the portfolio, does not have any fees or expenses). The
performance of both the portfolio and the comparable index information varies
over time. All figures assume reinvestment of dividends and distributions.


84   DWS MID CAP GROWTH VIP                          DWS VARIABLE SERIES II -
                                                     CLASS A SHARES
<PAGE>

This information doesn't reflect charges and fees associated with the separate
account that invests in the portfolio or any variable life insurance policy or
variable annuity contract for which the portfolio is an investment option.
These charges and fees will reduce returns.


Prior to October 28, 2005, the portfolio was named Scudder Aggressive Growth
Portfolio and operated with a different objective and investment strategy.
Performance may have been different if the portfolio's current policies had
been in effect.



ANNUAL TOTAL RETURN (%) as of 12/31 each year - CLASS A
[BAR GRAPHIC OMITTED HERE]

[BAR GRAPHIC DATA]




<TABLE>
<S>          <C>         <C>         <C>        <C>       <C>        <C>        <C>       <C>
  -4.96       -21.76      -30.66     33.99       4.02     15.04      10.95      8.36       -50.04
  2000        2001        2002       2003       2004      2005       2006       2007      2008
</TABLE>




<TABLE>
<CAPTION>
                FOR THE PERIODS INCLUDED IN THE BAR CHART:
<S>                                        <C>
BEST QUARTER: 23.43%, Q4 2001              WORST QUARTER: -32.47%, Q4 2008
2009 TOTAL RETURN AS OF MARCH 31: -4.71%
</TABLE>

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



<TABLE>
<CAPTION>
                                            1 YEAR         5 YEARS        SINCE INCEPTION*
<S>                                      <C>              <C>            <C>
Portfolio - Class A                          -50.04          -6.41              -3.70
Russell Midcap Growth Index                  -44.32          -2.33              -1.00
Russell 3000 Growth Index                    -38.44          -3.33              -4.77
Standard & Poor's (S&P) 500 Index            -37.00          -2.19              -2.31
</TABLE>

*   Since 5/1/99. Index comparisons begin 4/30/99.

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

RUSSELL MIDCAP (Reg. TM) GROWTH INDEX is an unmanaged capitalization-weighted
index of medium and medium/small companies in the Russell 1000 (Reg. TM) Index
chosen for their growth orientation. Russell 1000 (Reg. TM) Index is an
unmanaged price-only index of the 1,000 largest capitalized companies that are
domiciled in the US and whose common stocks are traded.

RUSSELL 3000 (Reg. TM) GROWTH INDEX is an unmanaged capitalization-weighted
index containing the growth stocks in the Russell 3000 (Reg. TM) Index.

STANDARD & POOR'S 500 INDEX (S&P 500) is an unmanaged, capitalization-weighted
index of 500 stocks. The index is designed to measure performance of the broad
domestic economy through changes in the aggregate market value of 500 stocks
representing all major industries.

Current performance information may be higher or lower than the performance
data quoted above. For more recent performance information, contact your
participating insurance company.


DWS VARIABLE SERIES II - CLASS A SHARES                  DWS MID CAP GROWTH
                                                         VIP   85
<PAGE>

HOW MUCH INVESTORS PAY

This table describes the fees and expenses that you may pay if you buy and hold
portfolio shares. The information in the table does not reflect charges and
fees associated with the separate account that invests in the portfolio or any
variable life insurance policy or variable annuity contract for which the
portfolio is an investment option. These charges and fees will increase
expenses.



<TABLE>
<CAPTION>
FEE TABLE                                        CLASS A
<S>                                       <C>
ANNUAL OPERATING EXPENSES, deducted from portfolio assets
_____________________________________________________________________
Management Fee 1                                    0.66%
Distribution/Service (12b-1) Fee                  None
Other Expenses 2                                    0.42
TOTAL ANNUAL OPERATING EXPENSES 3, 4                1.08
</TABLE>

1   Restated on an annualized basis to reflect approved fee changes that took
    effect on May 1, 2008.


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


3   Through September 30, 2009, the Advisor has contractually agreed to waive
    all or a portion of its management fee and reimburse or pay certain
    operating expenses of the portfolio to the extent necessary to maintain
    the portfolio's total operating expenses at 0.94% for Class A shares,
    excluding certain expenses such as extraordinary expenses, taxes,
    brokerage and interest. Effective October 1, 2009 through April 30, 2010,
    the Advisor has contractually agreed to waive all or a portion of its
    management fee and reimburse or pay certain expense of portfolio to the
    extent necessary to maintain the portfolio's total operating expenses at
    ratios no higher 1.10% for Class A shares, excluding certain expenses such
    as extraordinary expenses, taxes, brokerage and interest.


4   Except as otherwise noted, the information in the table is based on amounts
    incurred during the portfolio's most recent fiscal year. It is important
    for you to understand that a decline in the portfolio's average net assets
    during the current fiscal year due to recent unprecedented market
    volatility or other factors could cause the portfolio's expense ratios for
    the portfolio's current fiscal year to be higher than the expense
    information presented. Based on asset levels as of December 31, 2008, the
    gross annualized expense ratio of Class A shares is estimated at 1.32%.
    For more current expense information, see "Financial Highlights" in the
    portfolio's future annual or semi-annual reports.



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



<TABLE>
<CAPTION>
EXAMPLE                1 YEAR        3 YEARS        5 YEARS        10 YEARS
<S>                   <C>           <C>            <C>            <C>
Class A shares          $110           $343           $595         $1,317
</TABLE>


86   DWS MID CAP GROWTH VIP                          DWS VARIABLE SERIES II -
                                                        CLASS A SHARES
<PAGE>

PORTFOLIO MANAGEMENT

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

The following people handle the day-to-day management of the portfolio:

Joseph Axtell, CFA
Managing Director of Deutsche Asset Management and Portfolio Manager of the
portfolio.
   o Joined Deutsche Asset Management in 2001 and the portfolio in 2006.
   o Senior analyst at Merrill Lynch Investment Managers for the international
     equity portion of a global balanced portfolio (1996-2001).
     o Director, International Research at PCM International (1989-1996).
   o Associate manager, structured debt and equity group at Prudential Capital
     Corporation (1988-1989).
     o Analyst at Prudential-Bache Capital Funding in London (1987-1988).
   o Equity analyst in the healthcare sector at Prudential Equity Management
     Associates (1985-1987).
   o BS, Carlson School of Management, University of Minnesota.

Rafaelina M. Lee
Director of Deutsche Asset Management and Portfolio Manager of the portfolio.
   o Joined Deutsche Asset Management in 1999 and the portfolio in 2008.
   o Research analyst for US Micro, Small and Mid Cap Equity: New York.
   o Over 20 years of investment industry experience in US portfolio strategy,
     Latin America market strategy and US equity research at JP Morgan
     Securities, UBS Securities and Goldman Sachs & Co.
   o BA, Columbia University; MBA, Stern School of Business, New York
     University.

Jeffrey Saeger, CFA
Director of Deutsche Asset Management and Portfolio Manager of the portfolio.
   o Joined Deutsche Asset Management in 1996 and the portfolio in 2009.
   o Over 14 years of investment industry experience.
   o BS, State University of New York at Fredonia.

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


DWS VARIABLE SERIES II - CLASS A SHARES                  DWS MID CAP GROWTH
                                                         VIP   87
<PAGE>

FINANCIAL HIGHLIGHTS

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

This information doesn't reflect charges and fees associated with the separate
account that invests in the portfolio or any variable life insurance policy or
variable annuity contract for which the portfolio is an investment option.
These charges and fees will reduce returns.


Prior to October 28, 2005, the portfolio was named Scudder Aggressive Growth
Portfolio and operated with a different objective and investment strategy.
Performance may have been different if the portfolio's current policies had
been in effect.




DWS MID CAP GROWTH VIP - CLASS A



<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,                              2008        2007         2006        2005       2004
<S>                                               <C>         <C>         <C>           <C>        <C>
SELECTED PER SHARE DATA
--------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD               $  13.61    $  12.56      $ 11.32     $  9.84    $  9.46
-------------------------------------------------  --------    --------      -------     -------    -------
Income (loss) from investment operations:
 Net investment income (loss)a                       (  .02)     (  .05)      (  .06)c    (  .05)     ( .01)
_________________________________________________  ________    ________      _______     _______    _______
 Net realized and unrealized gain (loss)             ( 6.79)       1.10         1.30        1.53        .39
-------------------------------------------------  --------    --------      -------     -------    -------
 TOTAL FROM INVESTMENT OPERATIONS                    ( 6.81)       1.05         1.24        1.48        .38
-------------------------------------------------  --------    --------      -------     -------    -------
NET ASSET VALUE, END OF PERIOD                     $   6.80    $  13.61      $ 12.56     $ 11.32    $  9.84
-------------------------------------------------  --------    --------      -------     -------    -------
Total Return (%)b                                    (50.04)       8.36      10.95c        15.04       4.02
_________________________________________________  ________    ________      _______     _______    _______
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
--------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ millions)                   18          51           53          57         53
_________________________________________________  ________    ________      _______     _______    _______
Ratio of expenses before expense reductions (%)        1.17        1.05         1.03        1.01       1.02
_________________________________________________  ________    ________      _______     _______    _______
Ratio of expenses after expense reductions (%)         1.02         .90          .93         .95        .95
_________________________________________________  ________    ________      _______     _______    _______
Ratio of net investment income (loss) (%)            (  .19)     (  .38)      (  .51)c    (  .45)     ( .11)
_________________________________________________  ________    ________      _______     _______    _______
Portfolio turnover rate (%)                              82          68           46         104        103
-------------------------------------------------  --------    --------      -------     -------    -------
</TABLE>

a   Based on average shares outstanding during the period.

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

c   Includes non-recurring income from the Advisor recorded as a result of an
    administrative proceeding regarding disclosure of brokerage allocation
    practices in connection with sales of DWS Funds. The non-recurring income
    resulted in an increase in net investment income of $0.003 per share and
    an increase in the ratio of net investment income of 0.03%. Excluding this
    non-recurring income, total return would have been 0.03% lower.


88   DWS MID CAP GROWTH VIP                          DWS VARIABLE SERIES II -
                                                        CLASS A SHARES
<PAGE>

HYPOTHETICAL EXPENSE SUMMARY

Using the annual portfolio operating expense ratios presented in the fee tables
in the portfolio prospectus, the Hypothetical Expense Summary shows the
estimated fees and expenses, in actual dollars, that would be charged on a
hypothetical investment of $10,000 in the portfolio held for the next 10 years
and the impact of such fees and expenses on portfolio returns for each year and
cumulatively, assuming a 5% return for each year. The historical rate of return
for the portfolio may be higher or lower than 5% and, for money funds, is
typically less than 5%. The tables also assume that all dividends and
distributions are reinvested. The annual portfolio expense ratios shown are net
of any contractual fee waivers or expense reimbursements, if any, for the
period of the contractual commitment. Also, please note that if you are
investing through a third party provider, that provider may have fees and
expenses separate from those of the portfolio that are not reflected here.
Mutual fund fees and expenses fluctuate over time and actual expenses may be
higher or lower than those shown.

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



DWS MID CAP GROWTH VIP - CLASS A



<TABLE>
<CAPTION>
                MAXIMUM                  INITIAL HYPOTHETICAL                          ASSUMED RATE
             SALES CHARGE:                   INVESTMENT:                                OF RETURN:
                 0.00%                         $10,000                                      5%
               CUMULATIVE                                CUMULATIVE           HYPOTHETICAL
             RETURN BEFORE                              RETURN AFTER        YEAR-END BALANCE          ANNUAL
                FEES AND            ANNUAL FUND           FEES AND           AFTER FEES AND          FEES AND
YEAR            EXPENSES          EXPENSE RATIOS          EXPENSES              EXPENSES             EXPENSES
<S>         <C>                  <C>                   <C>                 <C>                     <C>
   1              5.00%                 1.08%                3.92%            $ 10,392.00          $   110.12
   2             10.25%                 1.08%                7.99%            $ 10,799.37          $   114.43
   3             15.76%                 1.08%               12.23%            $ 11,222.70          $   118.92
   4             21.55%                 1.08%               16.63%            $ 11,662.63          $   123.58
   5             27.63%                 1.08%               21.20%            $ 12,119.81          $   128.43
   6             34.01%                 1.08%               25.95%            $ 12,594.90          $   133.46
   7             40.71%                 1.08%               30.89%            $ 13,088.62          $   138.69
   8             47.75%                 1.08%               36.02%            $ 13,601.70          $   144.13
   9             55.13%                 1.08%               41.35%            $ 14,134.88          $   149.78
  10             62.89%                 1.08%               46.89%            $ 14,688.97          $   155.65
TOTAL                                                                                              $ 1,317.19
</TABLE>


DWS VARIABLE SERIES II - CLASS A SHARES                  DWS MID CAP GROWTH
                                                         VIP   89
<PAGE>

DWS MONEY MARKET VIP


THE PORTFOLIO'S MAIN INVESTMENT STRATEGY
The portfolio seeks maximum current income to the extent consistent with
stability of principal.

The portfolio pursues its goal by investing exclusively in high quality
short-term securities, as well as certain repurchase agreements that are backed
by high-quality securities.


Although the portfolio seeks to maintain a share price of $1.00 per share, it
is possible to lose money by investing in the portfolio. All money market
instruments, including US Government obligations, can change in value when
interest rates change or an issuer's creditworthiness changes.


The portfolio seeks to achieve its goal of current income by investing in high
quality money market securities and maintaining a dollar-weighted average
maturity of 90 days or less. The portfolio follows two policies designed to
maintain a stable share price:


o Portfolio securities are denominated in US dollars and generally have
  remaining maturities of 397 days (about 13 months) or less at the time of
  purchase. The portfolio may also invest in securities that have features
  that reduce their maturities to 397 days or less at the time of purchase.


o The portfolio buys US Government debt obligations, money market instruments
  and other debt obligations that at the time of purchase:


 - have received one of the two highest short-term ratings from two nationally
   recognized statistical rating organizations (NRSROs) or one NRSRO if that
   NRSRO is the only NRSRO that rates such obligation;

 - are unrated, but are deemed by the Advisor to be of comparable quality to
     one of the two highest short-term ratings; or



 - have no short-term rating, but are rated in one of the top three highest
   long-term rating categories, or are deemed by the Advisor to be of
   comparable quality.


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



PRINCIPAL INVESTMENTS

The portfolio primarily invests in the following types of investments:

The portfolio may invest in high quality, short-term, US dollar denominated
money market instruments paying a fixed, variable or floating interest rate.

These include:

o Debt obligations issued by US and foreign banks, financial institutions,
  corporations or other entities, including certificates of deposit, euro-time
  deposits, commercial paper (including asset-backed commercial paper) and
  notes. Securities that do not satisfy the maturity restrictions for a money
  market portfolio may be specifically structured so that they are eligible
  investments for money market portfolios. For example, some securities have
  features which have the effect of shortening the security's maturity.

o US Government securities that are issued or guaranteed by the US Treasury, or
  by agencies or instrumentalities of the US Government.

o Repurchase agreements, which are agreements to buy securities at one price,
  with a simultaneous agreement to sell back the securities at a future date
  at an agreed-upon price.

o Asset-backed securities, which are generally participations in a pool of
  assets whose payment is derived from the payments generated by the
  underlying assets. Payments on the asset-backed security generally consist
  of interest and/or principal.


The portfolio may buy securities from many types of issuers, including the US
government, corporations and municipalities. The portfolio will invest more
than 25% of its total assets in obligations of banks and other financial
institutions that meet the portfolio's eligibility requirements.



90   DWS MONEY MARKET VIP                            DWS VARIABLE SERIES II -
                                                     CLASS A SHARES
<PAGE>

The portfolio may invest up to 10% of its total assets in other money market
portfolios in accordance with applicable regulations.

Working in conjunction with a credit team, portfolio management screens
potential securities and develop a list of those that the portfolio may buy.
Portfolio management, looking for attractive yield and weighing considerations
such as credit quality, economic outlooks and possible interest rate movements,
then decide which securities on this list to buy. Portfolio management may
adjust the portfolio's exposure to interest rate risk, typically seeking to
take advantage of possible rises in interest rates and to preserve yield when
interest rates appear likely to fall.



THE MAIN RISKS OF INVESTING IN THE PORTFOLIO

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


MONEY MARKET FUND RISK. An investment in the portfolio is not insured or
guaranteed by the FDIC or any other government agency. Although the portfolio
seeks to preserve the value of your investment at $1.00 per share, this share
price isn't guaranteed and you could lose money by investing in the portfolio.
The share price of money market funds can fall below the $1.00 share price. You
should not rely on or expect the Advisor to enter into support agreements or
take other actions to maintain the portfolio's $1.00 share price. The credit
quality of the portfolio's holdings can change rapidly in certain markets, and
the default of a single holding could have an adverse impact on the portfolio's
share price. The portfolio's share price can also be negatively affected during
periods of high redemption pressures and/or illiquid markets. The actions of a
few large investors in the portfolio may have a significant adverse effect on
the share price of the portfolio.

INTEREST RATE RISK. Money market instruments, like all debt securities, face
the risk that the securities will decline in value because of changes in
interest rates. Generally, investments subject to interest rate risk will
decrease in value when interest rates rise and increase in value when interest
rates decline. To reduce such price fluctuations, the portfolio limits the
dollar-weighted average maturity of the securities held by the portfolio to 90
days or less. Generally, the price of short-term investments fluctuates less
than longer-term investments. Income earned on floating or variable rate
securities may vary as interest rates decrease or increase.


CREDIT RISK. A money market instrument's credit quality depends on the issuer's
ability to pay interest on the security and repay the debt; the lower the
credit rating, the greater the risk that the security's issuer will default, or
fail to meet its payment obligations. The credit risk of a security may also
depend on the credit quality of any bank or financial institution that provides
credit enhancement for it. To reduce credit risk, the portfolio only buys high
quality securities. Also, the portfolio only buys securities with remaining
maturities of 397 days (approximately 13 months) or less. This reduces the risk
that the issuer's creditworthiness will change, or that the issuer will default
on the principal and interest payments of the obligation. Additionally, some
securities issued by US government agencies or instrumentalities are supported
only by the credit of that agency or instrumentality. There is no guarantee
that the US government will provide support to such agencies or
instrumentalities and such securities may involve risk of loss of principal and
interest. Securities that rely on third party guarantors to raise their credit
quality could fall in price or go into default if the financial condition of
the guarantor deteriorates.

MARKET RISK. Although individual securities may outperform the market, the
entire market may decline as a result of rising interest rates, regulatory
developments or deteriorating economic conditions.

SECURITY SELECTION RISK. While the portfolio invests in short-term securities,
which by their nature are relatively stable investments, the risk remains that
the securities in which the portfolio invests will not perform as expected.
This could cause the portfolio's returns to lag behind those of similar money
market mutual funds.

REPURCHASE AGREEMENT RISK. A repurchase agreement exposes the portfolio to the
risk that the party that sells the securities may default on its obligation to
repurchase them. In this circumstance, the portfolio can lose money because:

o it cannot sell the securities at the agreed-upon time and price; or

o the securities lose value before they can be sold.

DWS VARIABLE SERIES II - CLASS A SHARES                   DWS MONEY MARKET
                                                          VIP   91
<PAGE>

The portfolio seeks to reduce this risk by monitoring the creditworthiness of
the sellers with whom it enters into repurchase agreements. The portfolio also
monitors the value of the securities to ensure that they are at least equal to
the total amount of the repurchase obligations, including interest and accrued
interest.

CONCENTRATION RISK. Because the portfolio will invest more than 25% of its
total assets in the obligations of banks and other financial institutions, it
may be vulnerable to setbacks in that industry. Banks and other financial
institutions are highly dependent on short-term interest rates and can be
adversely affected by downturns in the US and foreign economies or changes in
banking regulations.


FOREIGN INVESTMENT RISK. The portfolio may invest in money market instruments
of foreign issuers that are denominated in US dollars. Foreign investments
involve certain special risks, such as unfavorable political and legal
developments, limited financial information, regulatory risk and economic and
financial instability.


PREPAYMENT RISK. A bond issuer, such as an issuer of asset-backed securities,
may retain the right to pay off a high yielding bond before it comes due. In
that event, the portfolio may have to reinvest the proceeds at lower interest
rates. Thus, prepayment may reduce the portfolio's income. It may also create a
capital gains tax liability, because bond issuers usually pay a premium for the
right to pay off bonds early.

An investment in the portfolio is not insured or guaranteed by the FDIC or any
other government agency. Although the portfolio seeks to preserve the value of
your investment at $1.00 per share, this share price isn't guaranteed and you
could lose money by investing in the portfolio.

This portfolio may be of interest to investors who want a broadly diversified
money market fund.



PERFORMANCE - CLASS A

While a portfolio's past performance isn't necessarily a sign of how it will do
in the future, it can be valuable for an investor to know.

The bar chart shows how the returns for the portfolio's Class A shares have
varied from year to year, which may give some idea of risk. The table shows
average annual returns for the portfolio and comparable index information
(which, unlike the portfolio, does not have any fees or expenses). The
performance of both the portfolio and the comparable index information varies
over time. All figures assume reinvestment of dividends and distributions.

This information doesn't reflect charges and fees associated with the separate
account that invests in the portfolio or any variable life insurance policy or
variable annuity contract for which the portfolio is an investment option.
These charges and fees will reduce returns.


ANNUAL TOTAL RETURN (%) as of 12/31 each year - CLASS A
[BAR GRAPHIC OMITTED HERE]

[BAR GRAPHIC DATA]




<TABLE>
<S>         <C>       <C>       <C>       <C>       <C>       <C>       <C>       <C>       <C>       <C>
   5.15      4.84      6.10      3.75      1.35      0.72      0.91      2.80      4.65     5.00      2.64
  1998      1999      2000      2001      2002      2003      2004      2005      2006      2007      2008
</TABLE>




<TABLE>
<CAPTION>
               FOR THE PERIODS INCLUDED IN THE BAR CHART:
<S>                                       <C>
BEST QUARTER: 1.56%, Q3 2000              WORST QUARTER: 0.14%, Q3 2003
2009 TOTAL RETURN AS OF MARCH 31: 0.23%
</TABLE>

92   DWS MONEY MARKET VIP                            DWS VARIABLE SERIES II -
                                                        CLASS A SHARES
<PAGE>

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



<TABLE>
<CAPTION>
                            1 YEAR        5 YEARS        10 YEARS
<S>                        <C>           <C>            <C>
Portfolio - Class A           2.64           3.19           3.26
</TABLE>

7-day yield as of December 31, 2008: 1.59%

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

Current performance information may be higher or lower than the performance
data quoted above. For more recent performance information, contact your
participating insurance company.





HOW MUCH INVESTORS PAY

This table describes the fees and expenses that you may pay if you buy and hold
portfolio shares. The information in the table does not reflect charges and
fees associated with the separate account that invests in the portfolio or any
variable life insurance policy or variable annuity contract for which the
portfolio is an investment option. These charges and fees will increase
expenses.



<TABLE>
<CAPTION>
FEE TABLE                                       CLASS A
<S>                                      <C>
ANNUAL OPERATING EXPENSES, deducted from portfolio assets
____________________________________________________________________
Management Fee 1                                   0.29%
Distribution/Service (12b-1) Fee                 None
Other Expenses 2                                   0.17
TOTAL ANNUAL OPERATING EXPENSES                   0.46
Less Expense Waiver/Reimbursements                0.02
NET ANNUAL OPERATING EXPENSES 3                    0.44
</TABLE>

1   Restated on an annualized basis to reflect approved fee changes that took
    effect on May 1, 2008.


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


3   Through April 30, 2010, the Advisor has contractually agreed to waive all
    or a portion of its management fee and reimburse or pay certain operating
    expenses of the portfolio to the extent necessary to maintain the
    portfolio's total operating expenses at 0.44% for Class A shares,
    excluding certain expenses such as extraordinary expenses, taxes,
    brokerage and interest.


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



<TABLE>
<CAPTION>
EXAMPLE                1 YEAR        3 YEARS        5 YEARS        10 YEARS
<S>                   <C>           <C>            <C>            <C>
Class A shares           $45           $146           $256           $577
</TABLE>

PORTFOLIO MANAGEMENT

A group of investment professionals is responsible for the day-to-day
management of the portfolio. These investment professionals have a broad range
of experience managing money market portfolios.


DWS VARIABLE SERIES II - CLASS A SHARES                   DWS MONEY MARKET
                                                          VIP   93
<PAGE>

FINANCIAL HIGHLIGHTS

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

This information doesn't reflect charges and fees associated with the separate
account that invests in the portfolio or any variable life insurance policy or
variable annuity contract for which the portfolio is an investment option.
These charges and fees will reduce returns.



DWS MONEY MARKET VIP - CLASS A



<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,                              2008         2007         2006         2005        2004
<S>                                               <C>          <C>          <C>          <C>         <C>
SELECTED PER SHARE DATA
-----------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD                $  1.000     $  1.000     $  1.000    $  1.000    $  1.000
-------------------------------------------------   --------     --------     --------    --------    --------
Income from investment operations:
 Net investment income                                  .026         .049         .046        .028        .009
_________________________________________________   ________     ________     ________    ________    ________
 TOTAL FROM INVESTMENT OPERATIONS                       .026         .049         .046        .028        .009
-------------------------------------------------   --------     --------     --------    --------    --------
Less distributions from:
 Net investment income                                ( .026)      ( .049)      ( .046)     ( .028)     ( .009)
_________________________________________________   ________     ________     ________    ________    ________
NET ASSET VALUE, END OF PERIOD                      $  1.000     $  1.000     $  1.000    $  1.000    $  1.000
-------------------------------------------------   --------     --------     --------    --------    --------
Total Return (%)                                     2.64a        5.00a        4.65a         2.80         .91
_________________________________________________   ________     ________     ________    ________    ________
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
-----------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ millions)                   398          355          294         235         241
_________________________________________________   ________     ________     ________    ________    ________
Ratio of expenses before expense reductions (%)         .52          .46          .52         .52         .53
_________________________________________________   ________     ________     ________    ________    ________
Ratio of expenses after expense reductions (%)          .50          .45          .51         .52         .53
_________________________________________________   ________     ________     ________    ________    ________
Ratio of net investment income (%)                     2.56         4.88         4.58        2.77         .88
-------------------------------------------------   --------     --------     --------    --------    --------
</TABLE>

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

94   DWS MONEY MARKET VIP                            DWS VARIABLE SERIES II -
                                                     CLASS A SHARES
<PAGE>

HYPOTHETICAL EXPENSE SUMMARY

Using the annual portfolio operating expense ratios presented in the fee tables
in the portfolio prospectus, the Hypothetical Expense Summary shows the
estimated fees and expenses, in actual dollars, that would be charged on a
hypothetical investment of $10,000 in the portfolio held for the next 10 years
and the impact of such fees and expenses on portfolio returns for each year and
cumulatively, assuming a 5% return for each year. The historical rate of return
for the portfolio may be higher or lower than 5% and, for money funds, is
typically less than 5%. The tables also assume that all dividends and
distributions are reinvested. The annual portfolio expense ratios shown are net
of any contractual fee waivers or expense reimbursements, if any, for the
period of the contractual commitment. Also, please note that if you are
investing through a third party provider, that provider may have fees and
expenses separate from those of the portfolio that are not reflected here.
Mutual fund fees and expenses fluctuate over time and actual expenses may be
higher or lower than those shown.

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



DWS MONEY MARKET VIP - CLASS A



<TABLE>
<CAPTION>
                MAXIMUM                  INITIAL HYPOTHETICAL                         ASSUMED RATE
             SALES CHARGE:                   INVESTMENT:                               OF RETURN:
                 0.00%                         $10,000                                     5%
               CUMULATIVE                                CUMULATIVE           HYPOTHETICAL
             RETURN BEFORE                              RETURN AFTER        YEAR-END BALANCE          ANNUAL
                FEES AND            ANNUAL FUND           FEES AND           AFTER FEES AND          FEES AND
YEAR            EXPENSES          EXPENSE RATIOS          EXPENSES              EXPENSES             EXPENSES
<S>         <C>                  <C>                   <C>                 <C>                     <C>
   1              5.00%                 0.44%                4.56%            $ 10,456.00           $  45.00
   2             10.25%                 0.46%                9.33%            $ 10,930.70           $  49.19
   3             15.76%                 0.46%               14.29%            $ 11,426.96           $  51.42
   4             21.55%                 0.46%               19.48%            $ 11,945.74           $  53.76
   5             27.63%                 0.46%               24.90%            $ 12,488.08           $  56.20
   6             34.01%                 0.46%               30.58%            $ 13,055.04           $  58.75
   7             40.71%                 0.46%               36.50%            $ 13,647.73           $  61.42
   8             47.75%                 0.46%               42.70%            $ 14,915.08           $  64.20
   9             55.13%                 0.46%               49.18%            $ 14,917.93           $  67.12
  10             62.89%                 0.46%               55.95%            $ 15,592.22           $  70.17
TOTAL                                                                                               $ 577.23
</TABLE>


DWS VARIABLE SERIES II - CLASS A SHARES                   DWS MONEY MARKET
                                                          VIP   95
<PAGE>

DWS SMALL CAP GROWTH VIP


THE PORTFOLIO'S MAIN INVESTMENT STRATEGY
The portfolio seeks maximum appreciation of investors' capital.


Under normal circumstances, the portfolio invests at least 80% of net assets,
plus the amount of any borrowings for investment purposes, in small
capitalization stocks similar in size to those comprising the Russell 2000
(Reg. TM) Growth Index (as of February 28, 2009, the Russell 2000 (Reg. TM)
Growth Index had a median market capitalization of $257 million). The portfolio
intends to invest primarily in companies whose market capitalizations fall
within the normal range of the Index. The portfolio may invest in initial
public offerings. The portfolio may also invest in other types of equity
securities such as preferred stocks or convertible securities.


The portfolio invests primarily in equity securities of US smaller
capitalization companies. Portfolio management focuses on individual security
selection rather than industry selection. Portfolio management uses an active
process which combines financial analysis with company visits to evaluate
management and strategies.

Company research lies at the heart of our investment process. Portfolio
management uses a "bottom-up" approach to picking securities.

o Portfolio management focuses on stocks with superior growth prospects and
     above average near-to-intermediate term performance potential.

o Portfolio management emphasizes individual selection of small company stocks
  across all economic sectors, early in their growth cycles and with the
  potential to be the blue chips of the future.

o Portfolio management generally seeks companies with a leading or dominant
  position in their niche markets, a high rate of return on invested capital
  and the ability to finance a major part of future growth from internal
  sources.

Portfolio management looks primarily for financial attributes that set these
 companies apart:

o estimated above-average growth in revenues and earnings; and

o a balance sheet that can support this growth potential with sufficient
  working capital and manageable levels of debt.

The portfolio follows a disciplined selling process in order to lessen risk. A
security may be sold if one or more of the following conditions are met:

o the stock price reaches portfolio management's expectations;

o there is a material change in the company's fundamentals;

o portfolio management believes other investments offer better opportunities;
  or

o the market capitalization of a stock distorts the weighted average market
  capitalization of the portfolio.


While the portfolio invests mainly in US stocks, it could invest up to 25% of
total assets in foreign securities.


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

Although major changes tend to be infrequent, the Board of Trustees could
change the portfolio's investment objective without seeking shareholder
approval. However, the Board will provide shareholders with at least 60 days'
notice prior to making any changes to the portfolio's 80% investment policy.




DERIVATIVES AND OTHER INVESTMENTS

The portfolio is permitted, but not required, to use various types of
derivatives (contracts whose value is based on, for example, indices,
currencies or securities). Derivatives may be used for hedging and for risk
management or for non-hedging purposes to seek to enhance potential gains. The
portfolio may use derivatives



96   DWS SMALL CAP GROWTH VIP                        DWS VARIABLE SERIES II -
                                                     CLASS A SHARES
<PAGE>


in circumstances where portfolio management believes they offer an economical
means of gaining exposure to a particular asset class or to keep cash on hand
to meet shareholder redemptions or other needs while maintaining exposure to
the market.


In particular, the portfolio may use futures, options and covered call options.

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



THE MAIN RISKS OF INVESTING IN THE PORTFOLIO

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

STOCK MARKET RISK. The portfolio is affected by how the stock market performs.
To the extent the portfolio invests in a particular market sector, the
portfolio's performance may be proportionately affected by that segment's
general performance. When stock prices fall, you should expect the value of
your investment to fall as well. Because a stock represents ownership in its
issuer, stock prices can be hurt by poor management, shrinking product demand
and other business risks. These may affect single companies as well as groups
of companies. In addition, movements in financial markets may adversely affect
a stock's price, regardless of how well the company performs. The market as a
whole may not favor the types of investments the portfolio makes and the
portfolio may not be able to get an attractive price for them.


SMALL COMPANY CAPITALIZATION RISK. Small company stocks tend to experience
steeper price fluctuations than the stocks of larger companies. A shortage of
reliable information can also pose added risk to small company stocks.
Industry-wide reversals may have a greater impact on small companies, since
they lack the financial resources of larger companies. Small company stocks are
typically less liquid than large company stocks. Accordingly, it may be harder
to find buyers for small company shares.


GROWTH INVESTING RISK. Since growth stocks usually reinvest a large portion of
earnings in their own businesses, they may lack the dividends associated with
value stocks that might otherwise cushion their decline in a falling market.
Earnings disappointments in growth stocks often result in sharp price declines
because investors buy these stocks for their potential superior earnings
growth. Growth stocks may also be out of favor for certain periods in relation
to value stocks.


SECURITY SELECTION RISK. A risk that pervades all investing is the risk that
the securities in the portfolio's portfolio may decline in value.

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



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



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



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



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


DWS VARIABLE SERIES II - CLASS A SHARES                 DWS SMALL CAP GROWTH
                                                        VIP   97
<PAGE>


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



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



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



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

INDUSTRY RISK. While the portfolio does not concentrate in any industry, to the
extent that the portfolio has exposure to a given industry or sector, any
factors affecting that industry or sector could affect the value of portfolio
securities. For example, manufacturers of consumer goods could be hurt by a
rise in unemployment or technology companies could be hurt by such factors as
market saturation, price competition and rapid obsolescence.

PRICING RISK. At times, market conditions may make it difficult to value some
investments, and the portfolio may use certain valuation methodologies for some
of its investments, such as fair value pricing. Given the subjective nature of
such valuation methodologies, it is possible that the value determined for an
investment may be different than the value realized upon such investment's
sale. If the portfolio has valued its securities too highly, you may pay too
much for portfolio shares when you buy into the portfolio. If the portfolio has
underestimated the price of its securities, you may not receive the full market
value when you sell your portfolio shares.

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

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

Another factor that could affect performance is:



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


Investors who are looking to add the growth potential of small companies or to
diversify a large-cap growth portfolio may want to consider this portfolio.



PERFORMANCE - CLASS A

While a portfolio's past performance isn't necessarily a sign of how it will do
in the future, it can be valuable for an investor to know.


98   DWS SMALL CAP GROWTH VIP                        DWS VARIABLE SERIES II -
                                                     CLASS A SHARES
<PAGE>

The bar chart shows how the returns for the portfolio's Class A shares have
varied from year to year, which may give some idea of risk. The table shows
average annual returns for the portfolio and comparable index information
(which, unlike the portfolio, does not have any fees or expenses). The
performance of both the portfolio and the comparable index information varies
over time. All figures assume reinvestment of dividends and distributions.

This information doesn't reflect charges and fees associated with the separate
account that invests in the portfolio or any variable life insurance policy or
variable annuity contract for which the portfolio is an investment option.
These charges and fees will reduce returns.


ANNUAL TOTAL RETURN (%) as of 12/31 each year - CLASS A
[BAR GRAPHIC OMITTED HERE]

[BAR GRAPHIC DATA]




<TABLE>
<S>          <C>         <C>         <C>         <C>        <C>        <C>       <C>       <C>       <C>
  34.56       -10.71      -28.91      -33.36     32.94      11.02       7.07      5.27     6.20       -49.50
  1999        2000        2001        2002       2003       2004       2005      2006      2007       2008
</TABLE>




<TABLE>
<CAPTION>
                 FOR THE PERIODS INCLUDED IN THE BAR CHART:
<S>                                         <C>
BEST QUARTER: 30.96%, Q4 1999               WORST QUARTER: -32.48%, Q4 2008
2009 TOTAL RETURN AS OF MARCH 31: -11.04%
</TABLE>

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



<TABLE>
<CAPTION>
                                    1 YEAR         5 YEARS        10 YEARS
<S>                              <C>              <C>            <C>
Portfolio - Class A                  -49.50          -7.67          -6.55
Russell 2000 Growth Index            -38.54          -2.35          -0.76
</TABLE>

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

RUSSELL 2000 (Reg. TM) GROWTH INDEX is an unmanaged capitalization-weighted
measure of 2,000 of the smallest capitalized US companies with a
greater-than-average growth orientation and whose common stocks trade on the
NYSE, NYSE Alternext US (formerly known as "AMEX") and Nasdaq.

Current performance information may be higher or lower than the performance
data quoted above. For more recent performance information, contact your
participating insurance company.


DWS VARIABLE SERIES II - CLASS A SHARES                 DWS SMALL CAP GROWTH
                                                        VIP   99
<PAGE>

HOW MUCH INVESTORS PAY

This table describes the fees and expenses that you may pay if you buy and hold
portfolio shares. The information in the table does not reflect charges and
fees associated with the separate account that invests in the portfolio or any
variable life insurance policy or variable annuity contract for which the
portfolio is an investment option. These charges and fees will increase
expenses.



<TABLE>
<CAPTION>
FEE TABLE                                     CLASS A
<S>                                    <C>
ANNUAL OPERATING EXPENSES, deducted from portfolio assets
__________________________________________________________________
Management Fee 1                                 0.55%
Distribution/Service (12b-1) Fee               None
Other Expenses 2                                 0.24
TOTAL ANNUAL OPERATING EXPENSES 3                0.79
</TABLE>

1   Restated on an annualized basis to reflect approved fee changes that took
    effect on May 1, 2008.


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



3   Except as otherwise noted, the information in the table is based on amounts
    incurred during the portfolio's most recent fiscal year. It is important
    for you to understand that a decline in the portfolio's average net assets
    during the current fiscal year due to recent unprecedented market
    volatility or other factors could cause the portfolio's expense ratios for
    the portfolio's current fiscal year to be higher than the expense
    information presented. Based on asset levels as of December 31, 2008, the
    gross annualized expense ratio of Class A shares is estimated at 0.89%.
    For more current expense information, see "Financial Highlights" in the
    portfolio's future annual or semi-annual reports.



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



<TABLE>
<CAPTION>
EXAMPLE                1 YEAR        3 YEARS        5 YEARS        10 YEARS
<S>                   <C>           <C>            <C>            <C>
Class A shares           $81           $252           $439           $978
</TABLE>


100   DWS SMALL CAP GROWTH VIP                       DWS VARIABLE SERIES II -
                                                        CLASS A SHARES
<PAGE>

PORTFOLIO MANAGEMENT

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

The following people handle the day-to-day management of the portfolio:

Joseph Axtell, CFA
Managing Director of Deutsche Asset Management and Portfolio Manager of the
portfolio.
   o Joined Deutsche Asset Management in 2001 and the portfolio in 2006.
   o Senior analyst at Merrill Lynch Investment Managers for the international
     equity portion of a global balanced portfolio (1996-2001).
     o Director, International Research at PCM International (1989-1996).
   o Associate manager, structured debt and equity group at Prudential Capital
     Corporation (1988-1989).
     o Analyst at Prudential-Bache Capital Funding in London (1987-1988).
   o Equity analyst in the healthcare sector at Prudential Equity Management
     Associates (1985-1987).
   o BS, Carlson School of Management, University of Minnesota.

Rafaelina M. Lee
Director of Deutsche Asset Management and Portfolio Manager of the portfolio.
   o Joined Deutsche Asset Management in 1999 and the portfolio in 2008.
   o Research analyst for US Micro, Small and Mid Cap Equity: New York.
   o Over 20 years of investment industry experience in US portfolio strategy,
     Latin America market strategy and US equity research at JP Morgan
     Securities, UBS Securities and Goldman Sachs & Co.
   o BA, Columbia University; MBA, Stern School of Business, New York
     University.

Jeffrey Saeger, CFA
Director of Deutsche Asset Management and Portfolio Manager of the portfolio.
   o Joined Deutsche Asset Management in 1996 and the portfolio in 2009.
   o Over 14 years of investment industry experience.
   o BS, State University of New York at Fredonia.

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


DWS VARIABLE SERIES II - CLASS A SHARES                DWS SMALL CAP GROWTH
                                                       VIP   101
<PAGE>

FINANCIAL HIGHLIGHTS

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

This information doesn't reflect charges and fees associated with the separate
account that invests in the portfolio or any variable life insurance policy or
variable annuity contract for which the portfolio is an investment option.
These charges and fees will reduce returns.



DWS SMALL CAP GROWTH VIP - CLASS A



<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,                               2008         2007          2006         2005         2004
<S>                                               <C>           <C>          <C>           <C>          <C>
SELECTED PER SHARE DATA
--------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD                $  15.07      $  14.19      $ 13.48      $  12.59    $  11.34
-------------------------------------------------   --------      --------      -------      --------    --------
Income (loss) from investment operations:
 Net investment income (loss)a                        (  .01)       (  .01)      (  .04)d      (  .06)     (  .05)
_________________________________________________   ________      ________      _______      ________    ________
 Net realized and unrealized gain (loss)              ( 7.45)          .89          .75           .95        1.30
-------------------------------------------------   --------      --------      -------      --------    --------
 TOTAL FROM INVESTMENT OPERATIONS                     ( 7.46)          .88          .71           .89        1.25
-------------------------------------------------   --------      --------      -------      --------    --------
NET ASSET VALUE, END OF PERIOD                      $   7.61      $  15.07      $ 14.19      $  13.48    $  12.59
-------------------------------------------------   --------      --------      -------      --------    --------
Total Return (%)                                      (49.50)b     6.20b       5.27b,d        7.07c         11.02
_________________________________________________   ________      ________     ________      ________    ________
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
--------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ millions)                    69           174          208           243         210
_________________________________________________   ________      ________     ________      ________    ________
Ratio of expenses before expense reductions (%)          .88           .75          .73           .72         .71
_________________________________________________   ________      ________     ________      ________    ________
Ratio of expenses after expense reductions (%)           .85           .72          .72           .72         .71
_________________________________________________   ________      ________     ________      ________    ________
Ratio of net investment income (loss) (%)             (  .04)       (  .09)      (  .32)d      (  .47)     (  .47)
_________________________________________________   ________      ________     ________      ________    ________
Portfolio turnover rate (%)                               67            67           73            94         117
-------------------------------------------------   --------      --------     --------      --------    --------
</TABLE>

a   Based on average shares outstanding during the period.

b   Total return would have been lower had certain expenses been reduced.

c   In 2005, the Portfolio realized a gain of $49,496 on the disposal of an
    investment not meeting the Portfolio's investment restrictions. This had
    no negative impact on the total return.

d   Includes non-recurring income from the Advisor recorded as a result of an
    administrative proceeding regarding disclosure of brokerage allocation
    practices in connection with sales of DWS Funds. The non-recurring income
    resulted in an increase in net investment income of $0.008 per share and
    an increase in the ratio of net investment income of 0.06%. Excluding this
    non-recurring income, total return would have been 0.06% lower.


102   DWS SMALL CAP GROWTH VIP                       DWS VARIABLE SERIES II -
                                                         CLASS A SHARES
<PAGE>

HYPOTHETICAL EXPENSE SUMMARY

Using the annual portfolio operating expense ratios presented in the fee tables
in the portfolio prospectus, the Hypothetical Expense Summary shows the
estimated fees and expenses, in actual dollars, that would be charged on a
hypothetical investment of $10,000 in the portfolio held for the next 10 years
and the impact of such fees and expenses on portfolio returns for each year and
cumulatively, assuming a 5% return for each year. The historical rate of return
for the portfolio may be higher or lower than 5% and, for money funds, is
typically less than 5%. The tables also assume that all dividends and
distributions are reinvested. The annual portfolio expense ratios shown are net
of any contractual fee waivers or expense reimbursements, if any, for the
period of the contractual commitment. Also, please note that if you are
investing through a third party provider, that provider may have fees and
expenses separate from those of the portfolio that are not reflected here.
Mutual fund fees and expenses fluctuate over time and actual expenses may be
higher or lower than those shown.

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



DWS SMALL CAP GROWTH VIP - CLASS A



<TABLE>
<CAPTION>
                MAXIMUM                  INITIAL HYPOTHETICAL                         ASSUMED RATE
             SALES CHARGE:                   INVESTMENT:                               OF RETURN:
                 0.00%                         $10,000                                     5%
               CUMULATIVE                                CUMULATIVE           HYPOTHETICAL
             RETURN BEFORE                              RETURN AFTER        YEAR-END BALANCE          ANNUAL
                FEES AND            ANNUAL FUND           FEES AND           AFTER FEES AND          FEES AND
YEAR            EXPENSES          EXPENSE RATIOS          EXPENSES              EXPENSES             EXPENSES
<S>         <C>                  <C>                   <C>                 <C>                     <C>
   1              5.00%                 0.79%                4.21%            $ 10,421.00           $  80.66
   2             10.25%                 0.79%                8.60%            $ 10,859.72           $  84.06
   3             15.76%                 0.79%               13.17%            $ 11,316.92           $  87.60
   4             21.55%                 0.79%               17.93%            $ 11,793.36           $  91.29
   5             27.63%                 0.79%               22.90%            $ 12,289.86           $  95.13
   6             34.01%                 0.79%               28.07%            $ 12,807.26           $  99.13
   7             40.71%                 0.79%               33.46%            $ 13,346.45           $ 103.31
   8             47.75%                 0.79%               39.08%            $ 13,908.34           $ 107.66
   9             55.13%                 0.79%               44.94%            $ 14,493.88           $ 112.19
  10             62.89%                 0.79%               51.04%            $ 15,104.07           $ 116.91
TOTAL                                                                                               $ 977.94
</TABLE>


DWS VARIABLE SERIES II - CLASS A SHARES                DWS SMALL CAP GROWTH
                                                       VIP   103
<PAGE>

DWS STRATEGIC INCOME VIP


THE PORTFOLIO'S MAIN INVESTMENT STRATEGY
The portfolio seeks a high current return.


The portfolio invests mainly in bonds issued by both US and foreign
corporations and governments. The credit quality of the portfolio's investments
may vary; the portfolio may invest up to 100% of total assets in either
investment-grade bonds (i.e., grade BBB/Baa or above) or in junk bonds, which
are those below the fourth highest credit rating category (i.e., below grade
BBB/Baa). Compared to investment-grade bonds, junk bonds may pay higher yields
and have higher volatility and higher risk of default on payments of interest
or principal. The portfolio may invest up to 50% of total assets in foreign
bonds. The portfolio may also invest in emerging markets securities and
dividend-paying common stocks.


In deciding which types of securities to buy and sell, portfolio management
typically weighs a number of factors against each other, from economic outlooks
and possible interest rate movements to changes in supply and demand within the
bond market. In choosing individual bonds, portfolio management considers how
they are structured and use independent analysis of issuers' creditworthiness.

Portfolio management may adjust the duration (a measure of sensitivity to
interest rates) of the portfolio, depending on their outlook for interest
rates.

IGAP STRATEGY. In addition to the portfolio's main investment strategy, the
Advisor seeks to enhance returns by employing a global tactical asset
allocation overlay strategy. This strategy, which the Advisor calls iGAP
(integrated Global Alpha Platform), attempts to take advantage of short- and
medium-term mispricings within global equity, bond and currency markets. The
iGAP strategy is implemented through the use of derivatives, which are
contracts or other instruments whose value is based on, for example, indices,
currencies or securities. The iGAP strategy primarily uses exchange-traded
futures contracts on global bonds, equities and currencies and over-the-counter
forward currency contracts, and is expected to have a low correlation with the
portfolio's securities holdings.

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

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




DERIVATIVES AND OTHER INVESTMENTS


The portfolio may invest in affiliated mutual funds. The portfolio may invest
up to 5% of net assets in shares of DWS Floating Rate Plus Fund, which invests
primarily in adjustable rate loans that have a senior right to payment ("Senior
Loans"). By investing in DWS Floating Rate Plus Fund, the portfolio may achieve
greater diversification within the Senior Loan asset class (through indirect
exposure to more Senior Loan securities of varying sizes and risks) than it
could gain buying Senior Loan securities directly.

In addition to derivatives utilized within the iGAP strategy, portfolio
management may, but is not required to, also use various types of derivatives.
Derivatives may be used for hedging and for risk management or for non-hedging
purposes to enhance potential gains. The portfolio may use derivatives in
circumstances where portfolio management believes they offer a more efficient
or economical means of gaining exposure to a particular asset class or market
or to maintain a high level of liquidity to meet shareholder redemptions or
other needs while maintaining exposure to the market. In particular, portfolio
management may use futures, options, forward currency transactions and swaps.

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


104   DWS STRATEGIC INCOME VIP                       DWS VARIABLE SERIES II -
                                                     CLASS A SHARES
<PAGE>

THE MAIN RISKS OF INVESTING IN THE PORTFOLIO

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

INTEREST RATE RISK. Generally, debt securities will decrease in value when
interest rates rise. The longer the duration of the portfolio's debt
securities, the more sensitive the portfolio will be to interest rate changes.
(As a general rule, a 1% rise in interest rates means a 1% fall in value for
every year of duration.) As interest rates decline, the issuers of debt
securities held by the portfolio may prepay principal earlier than scheduled,
forcing the portfolio to reinvest in lower-yielding debt securities and may
reduce the portfolio's income. As interest rates increase, slower than expected
principal payments may extend the average life of debt securities. This will
have the effect of locking in a below-market interest rate, thereby further
reducing the value of such a debt security.

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

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

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

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

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

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

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

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

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

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

DWS VARIABLE SERIES II - CLASS A SHARES                 DWS STRATEGIC INCOME
                                                        VIP   105
<PAGE>

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


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


Some governments exercise substantial influence over the private economic
sector and the social and political uncertainties that exist for many
developing countries is significant. In adverse social and political
circumstances, governments have been involved in policies of expropriation,
confiscatory taxation, nationalization, intervention in the securities markets
and trade settlement, and imposition of foreign investment restrictions and
exchange controls.

PRICING RISK. At times, market conditions may make it difficult to value some
investments, and the portfolio may use certain valuation methodologies for some
of its investments, such as fair value pricing. Given the subjective nature of
such valuation methodologies, it is possible that the value determined for an
investment may be different than the value realized upon such investment's
sale. If the portfolio has valued its securities too highly, you may pay too
much for portfolio shares when you buy into the portfolio. If the portfolio has
underestimated the price of its securities, you may not receive the full market
value when you sell your portfolio shares.

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

IGAP RISK. The success of the iGAP strategy depends, in part, on the Advisor's
ability to analyze the correlation between various global markets and asset
classes. If the Advisor's correlation analysis proves to be incorrect, losses
to the portfolio may be significant and may substantially exceed the intended
level of market exposure for the iGAP strategy.

As part of the iGAP strategy, the portfolio will be exposed to the risks of
non-US currency markets and global equity and bond markets. Foreign currency
rates may fluctuate significantly over short periods of time for a number of
reasons, including changes in interest rates and economic or political
developments in the US or abroad. Global equity and bond markets may also
fluctuate for the same or similar reasons. As a result, the portfolio's
exposure to foreign currencies and global equity and bond markets could cause
lower returns or even losses to the portfolio. Although the Advisor seeks to
limit these risks through the aggregation of various long and short positions,
there can be no assurance that the Advisor will be able to do so.

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

SECURITY SELECTION RISK. A risk that pervades all investing is the risk that
the securities in the portfolio's portfolio may decline in value.


106   DWS STRATEGIC INCOME VIP                       DWS VARIABLE SERIES II -
                                                     CLASS A SHARES
<PAGE>

Another factor that could affect performance is:

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

This portfolio is designed for investors who are interested in a bond portfolio
that emphasizes different types of bonds depending on market and economic
outlooks.



PERFORMANCE - CLASS A

While a portfolio's past performance isn't necessarily a sign of how it will do
in the future, it can be valuable for an investor to know.

The bar chart shows how the returns for the portfolio's Class A shares have
varied from year to year, which may give some idea of risk. The table shows
average annual returns for the portfolio and comparable index information
(which, unlike the portfolio, does not have any fees or expenses). The
performance of both the portfolio and the comparable index information varies
over time. All figures assume reinvestment of dividends and distributions.

This information doesn't reflect charges and fees associated with the separate
account that invests in the portfolio or any variable life insurance policy or
variable annuity contract for which the portfolio is an investment option.
These charges and fees will reduce returns.


Prior to May 1, 2000, the portfolio was named Kemper Global Income Portfolio
and operated with a different objective and investment strategy. Performance
may have been different if the portfolio's current policies were in effect.



ANNUAL TOTAL RETURN (%) as of 12/31 each year - CLASS A
[BAR GRAPHIC OMITTED HERE]

[BAR GRAPHIC DATA]




<TABLE>
<S>          <C>       <C>       <C>        <C>       <C>       <C>       <C>       <C>       <C>
  -5.85       2.57      5.23     11.30       7.85      8.60      2.38      8.98      5.43     -7.75
  1999       2000      2001      2002       2003      2004      2005      2006      2007      2008
</TABLE>




<TABLE>
<CAPTION>
                FOR THE PERIODS INCLUDED IN THE BAR CHART:
<S>                                        <C>
BEST QUARTER: 5.42%, Q4 2004               WORST QUARTER: -5.06%, Q3 2008
2009 TOTAL RETURN AS OF MARCH 31: -0.21%
</TABLE>

DWS VARIABLE SERIES II - CLASS A SHARES                 DWS STRATEGIC INCOME
                                                        VIP   107
<PAGE>

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



<TABLE>
<CAPTION>
                                            1 YEAR         5 YEARS        10 YEARS
<S>                                       <C>             <C>            <C>
Portfolio - Class A                           -7.75          3.34            3.70
Barclays Capital US Government/
Credit Index                                  5.70           4.64            5.64
Blended Index                                 -6.37          3.57            5.60
Citigroup World Government Bond
Index                                        10.89           6.05            5.90
JP Morgan Emerging Markets Bond
Index Plus                                    -9.70          5.83           10.94
Merrill Lynch High Yield Master
Cash Pay Only Index                          -26.21          -0.84           2.27
Barclays Capital US Treasury Index           13.74           6.35            6.26
</TABLE>

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

On May 1, 2009, Barclays Capital US Government/Credit Index and the Blended
Index replaced Citigroup World Government Bond Index, JP Morgan Emerging
Markets Bond Index Plus, Merrill Lynch High Yield Master Cash Pay Only Index
and Barclays Capital US Treasury Index as the portfolio's benchmark indices
because the Advisor believes that they more accurately reflect the portfolio's
investment strategy.

The BARCLAYS CAPITAL US GOVERNMENT/CREDIT INDEX (name changed from Lehman
Brothers US Government/Credit Index effective November 3, 2008) is an unmanaged
index comprising intermediate- and long-term government and investment-grade
corporate debt securities.

The BLENDED INDEX consists of the Credit Suisse High Yield Index (35%),
Barclays Capital US Government/Credit Index (35%), J.P. Morgan Emerging Markets
Bond Index Global Diversified (15%) and Citigroup Non US Hedged WBGI (15%). The
Advisor believes this blended benchmark, which is a secondary benchmark, more
accurately reflects typical portfolio asset allocations and represents the
overall investment process.

CITIGROUP WORLD GOVERNMENT BOND INDEX is an unmanaged index that consists of
worldwide fixed-rate government bonds with remaining maturities greater than
one year.

J.P. MORGAN EMERGING MARKETS BOND INDEX PLUS (EMBI+) is an unmanaged index that
tracks total returns for emerging market debt instruments that trade outside
the country of issue.

MERRILL LYNCH HIGH YIELD MASTER CASH PAY ONLY INDEX is an unmanaged index which
tracks the performance of below investment grade US dollar-denominated
corporate bonds publicly issued in the US domestic market.

BARCLAYS CAPITAL US TREASURY INDEX (name changed from Lehman Brothers US
Treasury Index effective November 3, 2008) is an unmanaged index reflecting the
performance of all public obligations and does not focus on one particular
segment of the Treasury market.

Current performance information may be higher or lower than the performance
data quoted above. For more recent performance information, contact your
participating insurance company.





HOW MUCH INVESTORS PAY

This table describes the fees and expenses that you may pay if you buy and hold
portfolio shares. The information in the table does not reflect charges and
fees associated with the separate account that invests in the portfolio or any
variable life insurance policy or variable annuity contract for which the
portfolio is an investment option. These charges and fees will increase
expenses.




<TABLE>
<CAPTION>
FEE TABLE                                        CLASS A
<S>                                       <C>
ANNUAL OPERATING EXPENSES, deducted from portfolio assets
_____________________________________________________________________
Management Fee1, 2                                 0.55%
Distribution/Service (12b-1) Fee                  None
Other Expenses 3                                    0.29
TOTAL ANNUAL OPERATING EXPENSES 4, 5                0.84
</TABLE>


1   To the extent the portfolio invests in other mutual funds advised by the
    Advisor and its affiliates ("affiliated mutual funds"), the Advisor has
    agreed to waive its management fee by an amount equal to the amount of
    management fees borne by the portfolio as a shareholder of such other
    affiliated mutual funds. In the case of an investment in DWS Floating Rate
    Plus Fund, the Advisor has also agreed to apply


108   DWS STRATEGIC INCOME VIP                       DWS VARIABLE SERIES II -
                                                         CLASS A SHARES
<PAGE>

  a management fee credit to the portfolio equal to the difference between DWS
  Floating Rate Plus Fund's management fee and the portfolio's management fee,
  if positive, as applied to the amount of assets invested by the portfolio in
  DWS Floating Rate Plus Fund.

2   Restated on an annualized basis to reflect approved fee changes that took
    effect on May 1, 2008.


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


4   Through September 30, 2009, the Advisor has contractually agreed to waive
    all or a portion of its management fee and reimburse or pay certain
    operating expenses of the portfolio to the extent necessary to maintain
    the portfolio's total operating expenses at 0.82% for Class A shares,
    excluding certain expenses such as extraordinary expenses, taxes,
    brokerage and interest. Although there can be no assurance that the
    current waiver/expense reimbursement arrangement will be maintained beyond
    September 30, 2009, the Advisor has committed to review the continuance of
    waiver/expense reimbursement arrangements by September 30, 2009.


5   Except as otherwise noted, the information in the table is based on amounts
    incurred during the portfolio's most recent fiscal year. It is important
    for you to understand that a decline in the portfolio's average net assets
    during the current fiscal year due to recent unprecedented market
    volatility or other factors could cause the portfolio's expense ratios for
    the portfolio's current fiscal year to be higher than the expense
    information presented. Based on asset levels as of December 31, 2008, the
    gross annualized expense ratio of Class A shares is estimated at 0.90%.
    For more current expense information, see "Financial Highlights" in the
    portfolio's future annual or semi-annual reports.



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



<TABLE>
<CAPTION>
EXAMPLE                1 YEAR        3 YEARS        5 YEARS        10 YEARS
<S>                   <C>           <C>            <C>            <C>
Class A shares           $86           $268           $466         $1,037
</TABLE>


DWS VARIABLE SERIES II - CLASS A SHARES                 DWS STRATEGIC INCOME
                                                        VIP   109
<PAGE>

PORTFOLIO MANAGEMENT

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

The following people handle the day-to-day management of the portfolio:

Gary Sullivan, CFA
Managing Director of Deutsche Asset Management and Portfolio Manager of the
portfolio.
   o Joined Deutsche Asset Management in 1996 and the portfolio in 2006.
     Served as head of the High Yield group in Europe and as an Emerging
     Markets portfolio manager.
   o 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.
   o BS, United States Military Academy (West Point); MBA, New York
     University, Stern School of Business.

William Chepolis, CFA
Managing Director of Deutsche Asset Management and Portfolio Manager of the
portfolio.
   o Joined Deutsche Asset Management in 1998 after 13 years of experience as
     vice president and portfolio manager for Norwest Bank, where he managed
     the bank's fixed income and foreign exchange portfolios.
   o Portfolio Manager for Retail Fixed Income: New York.
   o Joined the portfolio in 2005.
   o BIS, University of Minnesota.

Robert Wang
Managing Director of Deutsche Asset Management and Portfolio Manager of the
portfolio.
   o Joined Deutsche Asset Management in 1995 as portfolio manager for asset
     allocation after 13 years of experience of trading fixed income, foreign
     exchange and derivative products at J.P. Morgan.
   o Global Head of Quantitative Strategies Portfolio Management: New York.
   o Joined the portfolio in 2007.
   o BS, The Wharton School, University of Pennsylvania.

Matthew F. MacDonald, CFA
Director of Deutsche Asset Management and Portfolio Manager of the portfolio.
   o Joined Deutsche Asset Management and the portfolio in 2006 after 14 years
     of fixed income experience at Bank of America Global Structured Products
     and PPM America, Inc., where he was portfolio manager for public fixed
     income, including MBS, ABS, CDOs and corporate bonds; earlier, as an
     analyst for MBS, ABS and money markets; and originally, at Duff & Phelps
     Credit Rating Company.
   o Portfolio Manager for Retail Fixed Income: New York.
   o BA, Harvard University; MBA, University of Chicago Graduate School of
     Business.

Thomas Picciochi
Director of Deutsche Asset Management and Portfolio Manager of the portfolio.
   o Senior portfolio manager for Quantitative Strategies: New York.
   o Joined Deutsche Asset Management in 1999, formerly serving as portfolio
     manager for Absolute Return Strategies, after 13 years of experience in
     various research and analysis positions at State Street Global Advisors,
     FPL Energy, Barnett Bank, Trade Finance Corporation and Reserve Financial
     Management.
   o Joined the portfolio in 2007.
   o BA and MBA, University of Miami.

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


110   DWS STRATEGIC INCOME VIP                       DWS VARIABLE SERIES II -
                                                     CLASS A SHARES
<PAGE>

FINANCIAL HIGHLIGHTS

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


This information doesn't reflect charges and fees associated with the separate
account that invests in the portfolio or any variable life insurance policy or
variable annuity contract for which the portfolio is an investment option.
These charges and fees will reduce returns.




DWS STRATEGIC INCOME VIP - CLASS A



<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,                              2008        2007         2006        2005        2004
<S>                                               <C>         <C>          <C>         <C>         <C>
SELECTED PER SHARE DATA
---------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD                $ 11.70     $  11.80    $  11.50    $  12.25    $  11.82
-------------------------------------------------   -------     --------    --------    --------    --------
Income (loss) from investment operations:
 Net investment income a                                 .55          .63         .62         .65         .58
_________________________________________________   _______     ________    ________    ________    ________
 Net realized and unrealized gain (loss)             ( 1.38)      (  .01)        .36      (  .39)        .39
-------------------------------------------------   -------     --------    --------    --------    --------
 TOTAL FROM INVESTMENT OPERATIONS                    (  .83)         .62         .98         .26         .97
-------------------------------------------------   -------     --------    --------    --------    --------
Less distributions from:
 Net investment income                               (  .69)      (  .72)     (  .57)     (  .98)          -
_________________________________________________   _______     ________    ________    ________    ________
 Net realized gains                                  (  .15)           -      (  .11)     (  .03)     (  .54)
-------------------------------------------------   -------     --------    --------    --------    --------
 TOTAL DISTRIBUTIONS                                 (  .84)      (  .72)     (  .68)     ( 1.01)     (  .54)
-------------------------------------------------   -------     --------    --------    --------    --------
NET ASSET VALUE, END OF PERIOD                      $ 10.03     $  11.70    $  11.80    $  11.50    $  12.25
-------------------------------------------------   -------     --------    --------    --------    --------
Total Return (%)                                     ( 7.75)b    5.43b          8.98        2.38        8.60
_________________________________________________   _______     ________    ________    ________    ________
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
---------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ millions)                   73          100          86          71          62
_________________________________________________   _______     ________    ________    ________    ________
Ratio of expenses before expense reductions (%)         .89          .84         .85         .88         .84
_________________________________________________   _______     ________    ________    ________    ________
Ratio of expenses after expense reductions (%)          .87          .83         .85         .88         .84
_________________________________________________   _______     ________    ________    ________    ________
Ratio of net investment income (loss) (%)              5.06         5.50        5.47        5.61        4.99
_________________________________________________   _______     ________    ________    ________    ________
Portfolio turnover rate (%)                             234          147         143         120         210
-------------------------------------------------   -------     --------    --------    --------    --------
</TABLE>

a   Based on average shares outstanding during the period.

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

DWS VARIABLE SERIES II - CLASS A SHARES                 DWS STRATEGIC INCOME
                                                        VIP   111
<PAGE>

HYPOTHETICAL EXPENSE SUMMARY

Using the annual portfolio operating expense ratios presented in the fee tables
in the portfolio prospectus, the Hypothetical Expense Summary shows the
estimated fees and expenses, in actual dollars, that would be charged on a
hypothetical investment of $10,000 in the portfolio held for the next 10 years
and the impact of such fees and expenses on portfolio returns for each year and
cumulatively, assuming a 5% return for each year. The historical rate of return
for the portfolio may be higher or lower than 5% and, for money funds, is
typically less than 5%. The tables also assume that all dividends and
distributions are reinvested. The annual portfolio expense ratios shown are net
of any contractual fee waivers or expense reimbursements, if any, for the
period of the contractual commitment. Also, please note that if you are
investing through a third party provider, that provider may have fees and
expenses separate from those of the portfolio that are not reflected here.
Mutual fund fees and expenses fluctuate over time and actual expenses may be
higher or lower than those shown.

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



DWS STRATEGIC INCOME VIP - CLASS A



<TABLE>
<CAPTION>
                MAXIMUM                  INITIAL HYPOTHETICAL                          ASSUMED RATE
             SALES CHARGE:                   INVESTMENT:                                OF RETURN:
                 0.00%                         $10,000                                      5%
               CUMULATIVE                                CUMULATIVE           HYPOTHETICAL
             RETURN BEFORE                              RETURN AFTER        YEAR-END BALANCE           ANNUAL
                FEES AND            ANNUAL FUND           FEES AND           AFTER FEES AND           FEES AND
YEAR            EXPENSES          EXPENSE RATIOS          EXPENSES              EXPENSES              EXPENSES
<S>         <C>                  <C>                   <C>                 <C>                     <C>
   1              5.00%                 0.84%                4.16%            $ 10,416.00           $    85.75
   2             10.25%                 0.84%                8.49%            $ 10,849.31           $    89.31
   3             15.76%                 0.84%               13.01%            $ 11,300.64           $    93.03
   4             21.55%                 0.84%               17.71%            $ 11,770.74           $    96.90
   5             27.63%                 0.84%               22.60%            $ 12,260.41           $   100.93
   6             34.01%                 0.84%               27.70%            $ 12,770.44           $   105.13
   7             40.71%                 0.84%               33.02%            $ 13,301.69           $   109.50
   8             47.75%                 0.84%               38.55%            $ 13,855.04           $   114.06
   9             55.13%                 0.84%               44.31%            $ 14,431.41           $   118.80
  10             62.89%                 0.84%               50.32%            $ 15,301.76           $   123.75
TOTAL                                                                                               $ 1,037.16
</TABLE>


112   DWS STRATEGIC INCOME VIP                       DWS VARIABLE SERIES II -
                                                     CLASS A SHARES
<PAGE>

DWS STRATEGIC VALUE VIP


THE PORTFOLIO'S MAIN INVESTMENT STRATEGY
The portfolio seeks to achieve a high rate of total return.

Under normal circumstances, the portfolio invests at least 80% of net assets,
plus the amount of any borrowings for investment purposes, in common stocks and
other equity securities. The portfolio focuses on stocks of large US companies
that are similar in size to the companies in the S&P 500 Index (as of February
28, 2009, the S&P 500 Index had a median market capitalization of $5 billion)
and that portfolio management believes are undervalued. The portfolio intends
to invest primarily in companies whose market capitalizations fall within the
normal range of the S&P 500 Index. Although the portfolio can invest in stocks
of any economic sector (which is comprised of two or more industries), at times
it may emphasize one or more sectors. In fact, it may invest more than 25% of
total assets in a single sector.

The portfolio may invest up to 20% of net assets in foreign securities
including US dollar-denominated American Depository Receipts.

The portfolio's equity investments are mainly common stocks, but may also
include other types of equities such as preferred or convertible stocks.
Portfolio management seeks to invest in a diversified portfolio normally
consisting of approximately 60-80 stocks.

Portfolio management begins by comparing a company's stock price to its book
value, cash flow, earnings and sales and analyzing individual companies to
identify those that are financially sound and appear to have strong potential
for long-term growth and income.

Portfolio management assembles the portfolio from among the most attractive
stocks, drawing on analysis of economic outlooks for various sectors and
industries.

Portfolio management employs a disciplined sell strategy and will normally sell
a stock when it reaches a target price, its fundamental factors have changed or
when other investments offer better opportunities.


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

Although major changes tend to be infrequent, the Board of Trustees could
change the portfolio's investment objective without seeking shareholder
approval. However, the Board will provide shareholders with at least 60 days'
notice prior to making any changes to the portfolio's 80% investment policy.



DERIVATIVES AND OTHER INVESTMENTS

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


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



THE MAIN RISKS OF INVESTING IN THE PORTFOLIO

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


DWS VARIABLE SERIES II - CLASS A SHARES                  DWS STRATEGIC VALUE
                                                         VIP   113
<PAGE>

STOCK MARKET RISK. The portfolio is affected by how the stock market performs.
To the extent the portfolio invests in a particular capitalization or market
sector, the portfolio's performance may be proportionately affected by that
segment's general performance. When stock prices fall, you should expect the
value of your investment to fall as well. Because a stock represents ownership
in its issuer, stock prices can be hurt by poor management, shrinking product
demand and other business risks. These factors may affect single companies as
well as groups of companies. In addition, movements in financial markets may
adversely affect a stock's price, regardless of how well the company performs.
The market as a whole may not favor the types of investments the portfolio
makes, which could affect the portfolio's ability to sell them at an attractive
price.

VALUE INVESTING RISK. At times, "value" investing may perform better than or
worse than other investment styles and the overall market. If portfolio
management overestimates the value or return potential of one or more
securities, the portfolio may underperform the general equity market. Value
stocks may also be out of favor for certain periods in relation to growth
stocks.

INDUSTRY RISK. While the portfolio does not concentrate in any industry, to the
extent that the portfolio has exposure to a given industry or sector, any
factors affecting that industry or sector could affect the value of portfolio
securities. For example, manufacturers of consumer goods could be hurt by a
rise in unemployment or technology companies could be hurt by such factors as
market saturation, price competition and rapid obsolescence.

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

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

PRICING RISK. At times, market conditions may make it difficult to value some
investments, and the portfolio may use certain valuation methodologies for some
of its investments, such as fair value pricing. Given the subjective nature of
such valuation methodologies, it is possible that the value determined for an
investment may be different than the value realized upon such investment's
sale. If the portfolio has valued its securities too highly, you may pay too
much for portfolio shares when you buy into the portfolio. If the portfolio has
underestimated the price of its securities, you may not receive the full market
value when you sell your portfolio shares.

SECURITY SELECTION RISK. A risk that pervades all investing is the risk that
the securities in the portfolio's portfolio may decline in value.

Other factors that could affect performance include:

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

o foreign securities may be more volatile than their US counterparts, for
  reasons such as currency fluctuations and political and economic
  uncertainty.

This portfolio may serve investors with long-term goals who are interested in a
large-cap value portfolio that may focus on certain sectors of the economy.



PERFORMANCE - CLASS A

While a portfolio's past performance isn't necessarily a sign of how it will do
in the future, it can be valuable for an investor to know.


114   DWS STRATEGIC VALUE VIP                        DWS VARIABLE SERIES II -
                                                     CLASS A SHARES
<PAGE>

The bar chart shows how the returns for the portfolio's Class A shares have
varied from year to year, which may give some idea of risk. The table shows
average annual returns for the portfolio and comparable index information
(which, unlike the portfolio, does not have any fees or expenses). The
performance of both the portfolio and the comparable index information varies
over time. All figures assume reinvestment of dividends and distributions.

This information doesn't reflect charges and fees associated with the separate
account that invests in the portfolio or any variable life insurance policy or
variable annuity contract for which the portfolio is an investment option.
These charges and fees will reduce returns.


For the periods shown, Dreman Value Management, L.L.C. served as the
portfolio's subadvisor and was primarily responsible for the day-to-day
management of the portfolio. Performance would have been different if the
portfolio's current investment strategy had been in effect.



ANNUAL TOTAL RETURN (%) as of 12/31 each year - CLASS A
[BAR GRAPHIC OMITTED HERE]

[BAR GRAPHIC DATA]




<TABLE>
<S>           <C>        <C>       <C>         <C>        <C>        <C>       <C>        <C>      <C>
  -11.16      30.52       1.69      -18.03     32.04      13.95       7.92     18.74      -1.86     -45.98
   1999       2000       2001       2002       2003       2004       2005      2006       2007     2008
</TABLE>




<TABLE>
<CAPTION>
                 FOR THE PERIODS INCLUDED IN THE BAR CHART:
<S>                                         <C>
BEST QUARTER: 20.80%, Q2 2003               WORST QUARTER: -23.05%, Q4 2008
2009 TOTAL RETURN AS OF MARCH 31: -15.56%
</TABLE>

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



<TABLE>
<CAPTION>
                                            1 YEAR         5 YEARS        10 YEARS
<S>                                      <C>              <C>            <C>
Portfolio - Class A                          -45.98          -4.99          -0.12
Standard & Poor's (S&P) 500 Index            -37.00          -2.19          -1.38
</TABLE>

STANDARD & POOR'S 500 INDEX (S&P 500) is an unmanaged, capitalization-weighted
index of 500 stocks. The index is designed to measure performance of the broad
domestic economy through changes in the aggregate market value of 500 stocks
representing all major industries.

Current performance information may be higher or lower than the performance
data quoted above. For more recent performance information, contact your
participating insurance company.


DWS VARIABLE SERIES II - CLASS A SHARES                  DWS STRATEGIC VALUE
                                                         VIP   115
<PAGE>

HOW MUCH INVESTORS PAY

This table describes the fees and expenses that you may pay if you buy and hold
portfolio shares. The information in the table does not reflect charges and
fees associated with the separate account that invests in the portfolio or any
variable life insurance policy or variable annuity contract for which the
portfolio is an investment option. These charges and fees will increase
expenses.



<TABLE>
<CAPTION>
FEE TABLE                                        CLASS A
<S>                                       <C>
ANNUAL OPERATING EXPENSES, deducted from portfolio assets
_____________________________________________________________________
Management Fee 1                                    0.64%
Distribution/Service (12b-1) Fee                  None
Other Expenses 2                                    0.13
TOTAL ANNUAL OPERATING EXPENSES 3, 4                0.77
</TABLE>

1   Restated on an annualized basis to reflect approved fee changes that took
    effect on May 1, 2008.


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


3   Through April 30, 2010, the Advisor has contractually agreed to waive all
    or a portion of its management fee and reimburse or pay certain operating
    expenses so that the total annual operating expenses of the portfolio will
    not exceed 0.78% for Class A shares, excluding certain expenses such as
    extraordinary expenses, taxes, brokerage and interest.


4   Except as otherwise noted, the information in the table is based on amounts
    incurred during the portfolio's most recent fiscal year. It is important
    for you to understand that a decline in the portfolio's average net assets
    during the current fiscal year due to recent unprecedented market
    volatility or other factors could cause the portfolio's expense ratios for
    the portfolio's current fiscal year to be higher than the expense
    information presented. Based on asset levels as of December 31, 2008, the
    gross annualized expense ratio of Class A shares is estimated at 0.82%.
    For more current expense information, see "Financial Highlights" in the
    portfolio's future annual or semi-annual reports.



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



<TABLE>
<CAPTION>
EXAMPLE                1 YEAR        3 YEARS        5 YEARS        10 YEARS
<S>                   <C>           <C>            <C>            <C>
Class A shares           $79           $246           $428           $954
</TABLE>


116   DWS STRATEGIC VALUE VIP                        DWS VARIABLE SERIES II -
                                                        CLASS A SHARES
<PAGE>

PORTFOLIO MANAGEMENT

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

The following people handle the day-to-day management of the portfolio:

Volker Dosch
Managing Director of Deutsche Asset Management and Portfolio Manager of the
portfolio.
   o Joined Deutsche Asset Management in 1989 and the portfolio in 2009.
   o Fund Manager of US and global equity funds; Head of US Equities; Deputy
     Head of Fund Management International Equities; Head of Sector-Funds:
     Frankfurt.
   o Master's degree in Economics ("Diplom-Volkswirt") from the University of
     Frankfurt, Germany.

Oliver Pfeil, PhD
Vice President of Deutsche Asset Management and Portfolio Manager of the
portfolio.
   o Joined Deutsche Asset Management in 2006 after 3 years as Executive
     Assistant to the Management Board of Deutsche Bank. Previously, Research
     Fellow at the Swiss Institute of Banking and Finance at the University of
   St. Gallen (2000-2002); Visiting Scholar in Capital Markets Research at MIT
   Sloan School of Management (2002-2003). Also, serves as part-time Lecturer
   in Finance at the University of St. Gallen in Switzerland.
   o Joined the portfolio in 2009.
   o Portfolio manager for US and global value equity: Frankfurt.
   o PhD in finance and accounting and Master's degree in Business
     Administration from the University of St. Gallen; CEMS Master in
     International Management from University of St. Gallen & ESADE, Barcelona;
     completed bank training program ("Bankkaufmann") at Sal. Oppenheim jr. &
     Cie. KGaA, Cologne.

Thomas Schuessler, PhD
Managing Director of Deutsche Asset Management and Portfolio Manager of the
portfolio.
   o Joined Deutsche Asset Management in 2001 after 5 years at Deutsche Bank
     where he managed various products and worked in the office of the Chairman
     of the Management Board.
   o US and Global Fund Management: Frankfurt.
   o Joined the portfolio in 2009.
   o PhD, University of Heidelberg, studies in physics and economics at
     University of Heidelberg and University of Utah.

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


DWS VARIABLE SERIES II - CLASS A SHARES                  DWS STRATEGIC VALUE
                                                         VIP   117
<PAGE>

FINANCIAL HIGHLIGHTS

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

This information doesn't reflect charges and fees associated with the separate
account that invests in the portfolio or any variable life insurance policy or
variable annuity contract for which the portfolio is an investment option.
These charges and fees will reduce returns.


For the periods shown, Dreman Value Management, L.L.C. served as the
portfolio's subadvisor and was primarily responsible for the day-to-day
management of the portfolio. Performance would have been different if the
portfolio's current investment strategy had been in effect.




DWS STRATEGIC VALUE VIP - CLASS A



<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,                               2008         2007        2006        2005        2004
<S>                                               <C>           <C>         <C>         <C>         <C>
SELECTED PER SHARE DATA
----------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD                $  14.40     $  15.02    $  13.41   $ 12.65     $ 11.29
-------------------------------------------------   --------     --------    --------   -------     -------
Income (loss) from investment operations:
 Net investment income (loss)a                           .22          .29         .27      .24         .23
_________________________________________________   ________     ________    ________   _______     _______
 Net realized and unrealized gain (loss)              ( 5.80)      (  .56)       2.21      .75        1.32
-------------------------------------------------   --------     --------    --------   -------     -------
 TOTAL FROM INVESTMENT OPERATIONS                     ( 5.58)      (  .27)       2.48      .99        1.55
-------------------------------------------------   --------     --------    --------   -------     -------
Less distributions from:
 Net investment income                                (  .36)      (  .22)     (  .28)  (  .23)     (  .19)
_________________________________________________   ________     ________    ________   _______     _______
 Net realized gains                                   ( 2.25)      (  .13)     (  .59)       -           -
-------------------------------------------------   --------     --------    --------   -------     -------
 TOTAL DISTRIBUTIONS                                  ( 2.61)      (  .35)     (  .87)  (  .23)     (  .19)
-------------------------------------------------   --------     --------    --------   -------     -------
NET ASSET VALUE, END OF PERIOD                      $   6.21     $  14.40    $  15.02   $ 13.41     $ 12.65
-------------------------------------------------   --------     --------    --------   -------     -------
Total Return (%)                                      (45.98)b     ( 1.86)      18.74     7.92       13.95
_________________________________________________   ________     ________    ________   _______     _______
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
----------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ millions)                   308          792         992      785         747
_________________________________________________   ________     ________    ________   _______     _______
Ratio of expenses before expense reductions (%)          .81          .78         .77      .78         .78
_________________________________________________   ________     ________    ________   _______     _______
Ratio of expenses after expense reductions (%)           .80          .78         .77      .78         .78
_________________________________________________   ________     ________    ________   _______     _______
Ratio of net investment income (%)                      2.21         1.94        1.87     1.84        1.96
_________________________________________________   ________     ________    ________   _______     _______
Portfolio turnover rate (%)                               28           27          20       10           9
-------------------------------------------------   --------     --------    --------   -------     -------
</TABLE>

a   Based on average shares outstanding during the period.

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

118   DWS STRATEGIC VALUE VIP                        DWS VARIABLE SERIES II -
                                                     CLASS A SHARES
<PAGE>

HYPOTHETICAL EXPENSE SUMMARY

Using the annual portfolio operating expense ratios presented in the fee tables
in the portfolio prospectus, the Hypothetical Expense Summary shows the
estimated fees and expenses, in actual dollars, that would be charged on a
hypothetical investment of $10,000 in the portfolio held for the next 10 years
and the impact of such fees and expenses on portfolio returns for each year and
cumulatively, assuming a 5% return for each year. The historical rate of return
for the portfolio may be higher or lower than 5% and, for money funds, is
typically less than 5%. The tables also assume that all dividends and
distributions are reinvested. The annual portfolio expense ratios shown are net
of any contractual fee waivers or expense reimbursements, if any, for the
period of the contractual commitment. Also, please note that if you are
investing through a third party provider, that provider may have fees and
expenses separate from those of the portfolio that are not reflected here.
Mutual fund fees and expenses fluctuate over time and actual expenses may be
higher or lower than those shown.

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



DWS STRATEGIC VALUE VIP - CLASS A



<TABLE>
<CAPTION>
                MAXIMUM                  INITIAL HYPOTHETICAL                         ASSUMED RATE
             SALES CHARGE:                   INVESTMENT:                               OF RETURN:
                 0.00%                         $10,000                                     5%
               CUMULATIVE                                CUMULATIVE           HYPOTHETICAL
             RETURN BEFORE                              RETURN AFTER        YEAR-END BALANCE          ANNUAL
                FEES AND            ANNUAL FUND           FEES AND           AFTER FEES AND          FEES AND
YEAR            EXPENSES          EXPENSE RATIOS          EXPENSES              EXPENSES             EXPENSES
<S>         <C>                  <C>                   <C>                 <C>                     <C>
   1              5.00%                 0.77%                4.23%            $ 10,423.00           $  78.63
   2             10.25%                 0.77%                8.64%            $ 10,863.89           $  81.95
   3             15.76%                 0.77%               13.23%            $ 11,323.44           $  85.42
   4             21.55%                 0.77%               18.02%            $ 11,802.42           $  89.03
   5             27.63%                 0.77%               23.02%            $ 12,301.66           $  92.80
   6             34.01%                 0.77%               28.22%            $ 12,822.02           $  96.73
   7             40.71%                 0.77%               33.64%            $ 13,364.39           $ 100.82
   8             47.75%                 0.77%               39.30%            $ 13,929.70           $ 105.08
   9             55.13%                 0.77%               45.19%            $ 14,518.93           $ 109.53
  10             62.89%                 0.77%               51.33%            $ 15,133.08           $ 114.16
TOTAL                                                                                               $ 954.15
</TABLE>


DWS VARIABLE SERIES II - CLASS A SHARES                  DWS STRATEGIC VALUE
                                                         VIP   119
<PAGE>

DWS TECHNOLOGY VIP


THE PORTFOLIO'S MAIN INVESTMENT STRATEGY
The portfolio seeks growth of capital.

Under normal circumstances, the portfolio invests at least 80% of net assets,
plus the amount of any borrowings for investment purposes, in common stocks of
companies in the technology sector. For purposes of the portfolio's 80%
investment policy, companies in the technology sector must commit at least half
of their assets to the technology sector or derive at least half of their
revenues or net income from that sector. Examples of industries within the
technology sector are semiconductors, software, telecom equipment,
computer/hardware, IT services, the Internet and health technology. The
portfolio may invest in companies of any size. In addition, the portfolio may
invest in initial public offerings. While the portfolio invests mainly in US
stocks, it could invest up to 35% of net assets in foreign securities.

The portfolio's equity investments are mainly common stocks, but may also
include other types of equities such as preferred or convertible stocks.

In choosing stocks, portfolio management uses a combination of three analytical
disciplines:

BOTTOM-UP RESEARCH. Portfolio management looks for individual companies with a
history of above-average growth, strong competitive positioning, attractive
prices relative to potential growth, innovative products and services, sound
financial strength and effective management, among other factors.

GROWTH ORIENTATION. Portfolio management generally looks for companies that
portfolio management believes have above-average potential for sustainable
growth of revenue or earnings and whose market value appears reasonable in
light of their business prospects.

TOP-DOWN ANALYSIS. Portfolio management considers the economic outlooks for
various industries within the technology sector and looks for those industries
that may benefit from changes in the overall business environment.

In addition, portfolio management uses the support of a quantitative analytic
group and its tools to attempt to actively manage the forecasted volatility
risk of the portfolio as a whole as compared to funds with a similar investment
objective, as well as appropriate benchmarks and peer groups. Portfolio
management may favor securities from various industries and companies within
the technology sector at different times.

Portfolio management will normally sell a stock when portfolio management
believes its price is unlikely to go higher, its fundamental factors have
changed, other investments offer better opportunities or in adjusting emphasis
on a given technology industry.

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

Although major changes tend to be infrequent, the Board of Trustees could
change the portfolio's investment objective without seeking shareholder
approval. However, the Board will provide shareholders with at least 60 days'
notice prior to making any changes to the portfolio's 80% investment policy.




DERIVATIVES AND OTHER INVESTMENTS


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


120   DWS TECHNOLOGY VIP                             DWS VARIABLE SERIES II -
                                                     CLASS A SHARES
<PAGE>

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



THE MAIN RISKS OF INVESTING IN THE PORTFOLIO

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

STOCK MARKET RISK. The portfolio is affected by how the stock market performs.
To the extent the portfolio invests in a particular capitalization, the
portfolio's performance may be proportionately affected by that segment's
general performance. When stock prices fall, you should expect the value of
your investment to fall as well. Because a stock represents ownership in its
issuer, stock prices can be hurt by poor management, shrinking product demand
and other business risks. These factors may affect single companies as well as
groups of companies. In addition, movements in financial markets may adversely
affect a stock's price, regardless of how well the company performs. The market
as a whole may not favor the types of investments the portfolio makes, which
could affect the portfolio's ability to sell them at an attractive price.

CONCENTRATION RISK. The portfolio concentrates its investments in the group of
industries constituting the technology sector. As a result, factors affecting
this sector, such as market price movements, market saturation and rapid
product obsolescence will have a significant impact on the portfolio's
performance. Additionally, many technology companies are smaller companies that
may have limited business lines and limited financial resources, making them
highly vulnerable to business and economic risks.

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

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

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

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

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

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

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

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

DWS VARIABLE SERIES II - CLASS A SHARES                     DWS TECHNOLOGY
                                                            VIP   121
<PAGE>

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

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


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


Some governments exercise substantial influence over the private economic
sector and the social and political uncertainties that exist for many
developing countries is significant. In adverse social and political
circumstances, governments have been involved in policies of expropriation,
confiscatory taxation, nationalization, intervention in the securities markets
and trade settlement, and imposition of foreign investment restrictions and
exchange controls.

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

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


SMALL COMPANY CAPITALIZATION RISK. Small company stocks tend to experience
steeper price fluctuations than the stocks of larger companies. A shortage of
reliable information can also pose added risk to small company stocks.
Industry-wide reversals may have a greater impact on small companies, since
they lack the financial resources of larger companies. Small company stocks are
typically less liquid than large company stocks. Accordingly, it may be harder
to find buyers for small company shares.


PRICING RISK. At times, market conditions may make it difficult to value some
investments, and the portfolio may use certain valuation methodologies for some
of its investments, such as fair value pricing. Given the subjective nature of
such valuation methodologies, it is possible that the value determined for an
investment may be different than the value realized upon such investment's
sale. If the portfolio has valued its securities too highly, you may pay too
much for portfolio shares when you buy into the portfolio. If the portfolio has
underestimated the price of its securities, you may not receive the full market
value when you sell your portfolio shares.

SECURITY SELECTION RISK. A risk that pervades all investing is the risk that
the securities in the portfolio's portfolio may decline in value.

Other factors that could affect performance include:

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


122   DWS TECHNOLOGY VIP                             DWS VARIABLE SERIES II -
                                                          CLASS A SHARES
<PAGE>

o growth stocks may be out of favor for certain periods.

This portfolio is designed for investors who can accept above-average risks and
are interested in exposure to a sector that offers attractive long-term growth
potential.



PERFORMANCE - CLASS A

While a portfolio's past performance isn't necessarily a sign of how it will do
in the future, it can be valuable for an investor to know.

The bar chart shows how the returns for the portfolio's Class A shares have
varied from year to year, which may give some idea of risk. The table shows
average annual returns for the portfolio and comparable index information
(which, unlike the portfolio, does not have any fees or expenses). The
performance of both the portfolio and the comparable index information varies
over time. All figures assume reinvestment of dividends and distributions.

This information doesn't reflect charges and fees associated with the separate
account that invests in the portfolio or any variable life insurance policy or
variable annuity contract for which the portfolio is an investment option.
These charges and fees will reduce returns.


ANNUAL TOTAL RETURN (%) as of 12/31 each year - CLASS A
[BAR GRAPHIC OMITTED HERE]

[BAR GRAPHIC DATA]





<TABLE>
<S>           <C>         <C>         <C>        <C>       <C>       <C>       <C>        <C>
  -21.57       -32.39      -35.52     46.84       1.92      3.74      0.75     14.30       -46.22
   2000        2001        2002       2003       2004      2005      2006      2007       2008
</TABLE>




<TABLE>
<CAPTION>
                FOR THE PERIODS INCLUDED IN THE BAR CHART:
<S>                                       <C>
BEST QUARTER: 28.57%, Q4 2001             WORST QUARTER: -33.64%, Q3 2001
2009 TOTAL RETURN AS OF MARCH 31: 3.82%
</TABLE>

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



<TABLE>
<CAPTION>
                                      1 YEAR         5 YEARS        SINCE INCEPTION*
<S>                                <C>              <C>            <C>
Portfolio - Class A                    -46.22          -8.12              -5.42
Russell 1000 Growth Index              -38.44          -3.42              -5.04
S&P Goldman Sachs Technology
Index                                  -43.33          -5.38              -6.69
</TABLE>

*   Since 5/1/99. Index comparisons begin 4/30/99.

RUSSELL 1000 (Reg. TM) GROWTH INDEX is an unmanaged index that consists of
those stocks in the Russell 1000 (Reg. TM) Index that have higher price-to-book
ratios and higher forecasted growth values. Russell 1000 (Reg. TM) Index is an
unmanaged price-only index of the 1,000 largest capitalized companies that are
domiciled in the US and whose common stocks are traded.

S&P GOLDMAN SACHS TECHNOLOGY INDEX is an unmanaged capitalization-weighted
index based on a universe of technology-related stocks.

Current performance information may be higher or lower than the performance
data quoted above. For more recent performance information, contact your
participating insurance company.


DWS VARIABLE SERIES II - CLASS A SHARES                     DWS TECHNOLOGY
                                                            VIP   123
<PAGE>

HOW MUCH INVESTORS PAY

This table describes the fees and expenses that you may pay if you buy and hold
portfolio shares. The information in the table does not reflect charges and
fees associated with the separate account that invests in the portfolio or any
variable life insurance policy or variable annuity contract for which the
portfolio is an investment option. These charges and fees will increase
expenses.



<TABLE>
<CAPTION>
FEE TABLE                                     CLASS A
<S>                                    <C>
ANNUAL OPERATING EXPENSES, deducted from portfolio assets
__________________________________________________________________
Management Fee 1                                 0.66%
Distribution/Service (12b-1) Fee               None
Other Expenses 2                                 0.29
TOTAL ANNUAL OPERATING EXPENSES 3                0.95
</TABLE>

1   Restated on an annualized basis to reflect approved fee changes that took
    effect on May 1, 2008.


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



3   Except as otherwise noted, the information in the table is based on amounts
    incurred during the portfolio's most recent fiscal year. It is important
    for you to understand that a decline in the portfolio's average net assets
    during the current fiscal year due to recent unprecedented market
    volatility or other factors could cause the portfolio's expense ratios for
    the portfolio's current fiscal year to be higher than the expense
    information presented. Based on asset levels as of December 31, 2008, the
    gross annualized expense ratio of Class A shares is estimated at 1.04%.
    For more current expense information, see "Financial Highlights" in the
    portfolio's future annual or semi-annual reports.



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



<TABLE>
<CAPTION>
EXAMPLE                1 YEAR        3 YEARS        5 YEARS        10 YEARS
<S>                   <C>           <C>            <C>            <C>
Class A shares           $97           $303           $525         $1,166
</TABLE>

PORTFOLIO MANAGEMENT

The following person handles the day-to-day management of the portfolio:

Clark Chang
Director of Deutsche Asset Management and Portfolio Manager of the portfolio.
   o Global Equity analyst for Technology Fund: New York.
   o Joined Deutsche Asset Management in 2007 after seven years of experience
     as senior analyst for technology sector for Firsthand Capital Management,
     Nollenberger Capital Partners and Fulcrum Global Partners.
   o Joined the portfolio in 2008.
   o BS in Computer Science from University of California, Los Angeles (UCLA);
     MBA with Finance concentration from Anderson School of Management, UCLA.

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


124   DWS TECHNOLOGY VIP                             DWS VARIABLE SERIES II -
                                                     CLASS A SHARES
<PAGE>

FINANCIAL HIGHLIGHTS

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

This information doesn't reflect charges and fees associated with the separate
account that invests in the portfolio or any variable life insurance policy or
variable annuity contract for which the portfolio is an investment option.
These charges and fees will reduce returns.



DWS TECHNOLOGY VIP - CLASS A



<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,                               2008        2007        2006       2005       2004
<S>                                               <C>           <C>        <C>         <C>        <C>
SELECTED PER SHARE DATA
-------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD                $  10.71     $  9.37     $ 9.30     $  9.01    $  8.84
-------------------------------------------------   --------     -------     ------     -------    -------
Income (loss) from investment operations:
 Net investment income (loss)a                        (  .00)*    (  .02)     ( .01)c     ( .03)       .04
_________________________________________________   ________     _______     ______     _______    _______
 Net realized and unrealized gain (loss)              ( 4.95)       1.36        .08         .36        .13
-------------------------------------------------   --------     -------     ------     -------    -------
 TOTAL FROM INVESTMENT OPERATIONS                     ( 4.95)       1.34        .07         .33        .17
-------------------------------------------------   --------     -------     ------     -------    -------
Less distributions from:
 Net investment income                                     -           -          -       ( .04)         -
_________________________________________________   ________     _______     ______     _______    _______
NET ASSET VALUE, END OF PERIOD                      $   5.76     $ 10.71     $ 9.37     $  9.30    $  9.01
-------------------------------------------------   --------     -------     ------     -------    -------
Total Return (%)                                      (46.22)b     14.30      .75c         3.74       1.92
_________________________________________________   ________     _______     ______     _______    _______
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
-------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ millions)                    60         153        165         199        230
_________________________________________________   ________     _______     ______     _______    _______
Ratio of expenses before expense reductions (%)         1.01         .91        .89         .86        .83
_________________________________________________   ________     _______     ______     _______    _______
Ratio of expenses after expense reductions (%)          1.00         .91        .89         .86        .83
_________________________________________________   ________     _______     ______     _______    _______
Ratio of net investment income (loss) (%)             (  .01)     (  .15)     ( .12)c     ( .36)       .43
_________________________________________________   ________     _______     ______     _______    _______
Portfolio turnover rate (%)                               71          91         49         135        112
-------------------------------------------------   --------     -------     ------     -------    -------
</TABLE>

a   Based on average shares outstanding during the period.

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

c   Includes non-recurring income from the Advisor recorded as a result of an
    administrative proceeding regarding disclosure of brokerage allocation
    practices in connection with sales of DWS Funds. The non-recurring income
    resulted in an increase in net investment income of $0.017 per share and
    an increase in the ratio of net investment income of 0.18%. Excluding this
    non-recurring income, total return would have been 0.19% lower.

*   Amount is less than $0.005.

DWS VARIABLE SERIES II - CLASS A SHARES                     DWS TECHNOLOGY
                                                            VIP   125
<PAGE>

HYPOTHETICAL EXPENSE SUMMARY

Using the annual portfolio operating expense ratios presented in the fee tables
in the portfolio prospectus, the Hypothetical Expense Summary shows the
estimated fees and expenses, in actual dollars, that would be charged on a
hypothetical investment of $10,000 in the portfolio held for the next 10 years
and the impact of such fees and expenses on portfolio returns for each year and
cumulatively, assuming a 5% return for each year. The historical rate of return
for the portfolio may be higher or lower than 5% and, for money funds, is
typically less than 5%. The tables also assume that all dividends and
distributions are reinvested. The annual portfolio expense ratios shown are net
of any contractual fee waivers or expense reimbursements, if any, for the
period of the contractual commitment. Also, please note that if you are
investing through a third party provider, that provider may have fees and
expenses separate from those of the portfolio that are not reflected here.
Mutual fund fees and expenses fluctuate over time and actual expenses may be
higher or lower than those shown.

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



DWS TECHNOLOGY VIP - CLASS A



<TABLE>
<CAPTION>
                MAXIMUM                  INITIAL HYPOTHETICAL                          ASSUMED RATE
             SALES CHARGE:                   INVESTMENT:                                OF RETURN:
                 0.00%                         $10,000                                      5%
               CUMULATIVE                                CUMULATIVE           HYPOTHETICAL
             RETURN BEFORE                              RETURN AFTER        YEAR-END BALANCE           ANNUAL
                FEES AND            ANNUAL FUND           FEES AND           AFTER FEES AND           FEES AND
YEAR            EXPENSES          EXPENSE RATIOS          EXPENSES              EXPENSES              EXPENSES
<S>         <C>                  <C>                   <C>                 <C>                     <C>
   1              5.00%                 0.95%                4.05%            $ 10,405.00           $    96.92
   2             10.25%                 0.95%                8.26%            $ 10,826.40           $   100.85
   3             15.76%                 0.95%               12.65%            $ 11,264.87           $   104.93
   4             21.55%                 0.95%               17.21%            $ 11,721.10           $   109.18
   5             27.63%                 0.95%               21.96%            $ 12,195.80           $   113.61
   6             34.01%                 0.95%               26.90%            $ 12,689.73           $   118.21
   7             40.71%                 0.95%               32.04%            $ 13,203.67           $   122.99
   8             47.75%                 0.95%               37.38%            $ 13,738.42           $   127.97
   9             55.13%                 0.95%               42.95%            $ 14,294.82           $   133.16
  10             62.89%                 0.95%               48.74%            $ 14,873.76           $   138.55
TOTAL                                                                                               $ 1,166.37
</TABLE>


126   DWS TECHNOLOGY VIP                             DWS VARIABLE SERIES II -
                                                     CLASS A SHARES
<PAGE>

DWS TURNER MID CAP GROWTH VIP


THE PORTFOLIO'S MAIN INVESTMENT STRATEGY
The portfolio seeks capital appreciation.

The portfolio pursues its objective by investing in common stocks and other
equity securities of US companies with medium market capitalizations that
portfolio management believes have strong earnings growth potential. The
portfolio will invest in securities of companies that are diversified across
economic sectors, and will attempt to maintain sector concentrations that
approximate those of the Russell Midcap (Reg. TM) Growth Index (as of February
28, 2009, the Russell Midcap (Reg. TM) Growth Index had a median market
capitalization of $2.2 billion). The portfolio intends to invest primarily in
companies whose market capitalizations fall within the normal range of the
Index. Portfolio exposure is generally limited to 5% in any single issuer,
subject to exceptions for the most heavily weighted securities in the Index.

Under normal circumstances, at least 80% of the portfolio's net assets, plus
the amount of any borrowings for investment purposes, will be invested in
stocks of mid-cap companies, which are defined for this purpose as companies
with market capitalizations at the time of purchase in the range of market
capitalizations of those companies included in the Index. Portfolio management
generally looks for medium market capitalization companies with strong
histories of earnings growth that are likely to continue to grow their
earnings. The portfolio's investments in common stocks may include initial
public offerings. A stock becomes a sell candidate if there is deterioration in
the company's earnings growth potential. Moreover, positions will be trimmed to
adhere to capitalization or capacity constraints, to maintain sector neutrality
or to adjust stock position size relative to the Index.

In focusing on companies with strong earnings growth potential, portfolio
management engages in a relatively high level of trading activity so as to
respond to changes in earnings forecasts and economic developments.

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

Although major changes tend to be infrequent, the Board of Trustees could
change the portfolio's investment objective without seeking shareholder
approval. However, the Board will provide shareholders with at least 60 days'
notice prior to making any changes to the portfolio's 80% investment policy.




DERIVATIVES AND OTHER INVESTMENTS


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

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



THE MAIN RISKS OF INVESTING IN THE PORTFOLIO

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

STOCK MARKET RISK. The portfolio is affected by how the stock market performs.
To the extent the portfolio invests in a particular market sector, the
portfolio's performance may be proportionately affected by that segment's
general performance. When stock prices fall, you should expect the value of
your investment to fall as well. Because a stock represents ownership in its
issuer, stock prices can be hurt by poor management, shrinking product demand
and other business risks. These may affect single companies as well as groups
of


DWS VARIABLE SERIES II - CLASS A SHARES             DWS TURNER MID CAP GROWTH
                                                    VIP   127
<PAGE>

companies. In addition, movements in financial markets may adversely affect a
stock's price, regardless of how well the company performs. The market as a
whole may not favor the types of investments the portfolio makes and the
portfolio may not be able to get an attractive price for them.

MEDIUM-SIZED COMPANY RISK. Medium-sized company stocks tend to experience
steeper price fluctuations than stocks of larger companies. A shortage of
reliable information can also pose added risk to stocks of medium-sized
companies. Industry-wide reversals may have a greater impact on medium-sized
companies, since they usually lack the financial resources of larger companies.
Medium-sized company stocks are typically less liquid than large company
stocks. Accordingly, it may be harder to find buyers for medium-sized company
shares.

GROWTH INVESTING RISK. Since growth stocks usually reinvest a large portion of
earnings in their own businesses, they may lack the dividends associated with
value stocks that might otherwise cushion their decline in a falling market.
Earnings disappointments in growth stocks often result in sharp price declines
because investors buy these stocks for their potential superior earnings
growth. Growth stocks may also be out of favor for certain periods in relation
to value stocks.

INDUSTRY RISK. While the portfolio does not concentrate in any industry, to the
extent that the portfolio has exposure to a given industry or sector, any
factors affecting that industry or sector could affect the value of portfolio
securities. For example, manufacturers of consumer goods could be hurt by a
rise in unemployment or technology companies could be hurt by such factors as
market saturation, price competition and rapid obsolescence.

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

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

PRICING RISK. At times, market conditions may make it difficult to value some
investments, and the portfolio may use certain valuation methodologies for some
of its investments, such as fair value pricing. Given the subjective nature of
such valuation methodologies, it is possible that the value determined for an
investment may be different than the value realized upon such investment's
sale. If the portfolio has valued its securities too highly, you may pay too
much for portfolio shares when you buy into the portfolio. If the portfolio has
underestimated the price of its securities, you may not receive the full market
value when you sell your portfolio shares.

SECURITY SELECTION RISK. A risk that pervades all investing is the risk that
the securities in the portfolio's portfolio may decline in value.

Another factor that could affect performance is:

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



PERFORMANCE - CLASS A

While a portfolio's past performance isn't necessarily a sign of how it will do
in the future, it can be valuable for an investor to know.


128   DWS TURNER MID CAP GROWTH VIP                  DWS VARIABLE SERIES II -
                                                     CLASS A SHARES
<PAGE>

The bar chart shows how the returns for the portfolio's Class A shares have
varied from year to year, which may give some idea of risk. The table shows
average annual returns for the portfolio and comparable index information
(which, unlike the portfolio, does not have any fees or expenses). The
performance of both the portfolio and the comparable index information varies
over time. All figures assume reinvestment of dividends and distributions.

This information doesn't reflect charges and fees associated with the separate
account that invests in the portfolio or any variable life insurance policy or
variable annuity contract for which the portfolio is an investment option.
These charges and fees will reduce returns.


ANNUAL TOTAL RETURN (%) as of 12/31 each year - CLASS A
[BAR GRAPHIC OMITTED HERE]

[BAR GRAPHIC DATA]




<TABLE>
<S>           <C>        <C>        <C>        <C>       <C>      <C>
  -32.20      48.49      11.04      11.76       6.52     25.75     -49.49
   2002       2003       2004       2005       2006      2007     2008
</TABLE>




<TABLE>
<CAPTION>
                FOR THE PERIODS INCLUDED IN THE BAR CHART:
<S>                                        <C>
BEST QUARTER: 19.37%, Q2 2003              WORST QUARTER: -29.53%, Q4 2008
2009 TOTAL RETURN AS OF MARCH 31: -3.95%
</TABLE>

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



<TABLE>
<CAPTION>
                                      1 YEAR         5 YEARS        SINCE INCEPTION*
<S>                                <C>              <C>            <C>
Portfolio - Class A                    -49.49          -3.44              -3.76
Russell Midcap Growth Index            -44.32          -2.33              -2.23
</TABLE>

*   Since 5/1/01. Index comparison begins 4/30/01.

RUSSELL MIDCAP (Reg. TM) GROWTH INDEX is an unmanaged capitalization-weighted
index of medium and medium/small companies in the Russell 1000 (Reg. TM) Index
chosen for their growth orientation. Russell 1000 (Reg. TM) Index is an
unmanaged price-only index of the 1,000 largest capitalized companies that are
domiciled in the US and whose common stocks are traded.

Current performance information may be higher or lower than the performance
data quoted above. For more recent performance information, contact your
participating insurance company.


DWS VARIABLE SERIES II - CLASS A SHARES             DWS TURNER MID CAP GROWTH
                                                    VIP   129
<PAGE>

HOW MUCH INVESTORS PAY

This table describes the fees and expenses that you may pay if you buy and hold
portfolio shares. The information in the table does not reflect charges and
fees associated with the separate account that invests in the portfolio or any
variable life insurance policy or variable annuity contract for which the
portfolio is an investment option. These charges and fees will increase
expenses.



<TABLE>
<CAPTION>
FEE TABLE                                     CLASS A
<S>                                    <C>
ANNUAL OPERATING EXPENSES, deducted from portfolio assets
__________________________________________________________________
Management Fee 1                                 0.61%
Distribution/Service (12b-1) Fee               None
Other Expenses 2                                 0.37
TOTAL ANNUAL OPERATING EXPENSES 3                0.98
</TABLE>

1   Restated on an annualized basis to reflect approved fee changes that took
    effect on May 1, 2008.


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



3   Except as otherwise noted, the information in the table is based on amounts
    incurred during the portfolio's most recent fiscal year. It is important
    for you to understand that a decline in the portfolio's average net assets
    during the current fiscal year due to recent unprecedented market
    volatility or other factors could cause the portfolio's expense ratios for
    the portfolio's current fiscal year to be higher than the expense
    information presented. Based on asset levels as of December 31, 2008, the
    gross annualized expense ratio of Class A shares is estimated at 1.06%.
    For more current expense information, see "Financial Highlights" in the
    portfolio's future annual or semi-annual reports.



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



<TABLE>
<CAPTION>
EXAMPLE                1 YEAR        3 YEARS        5 YEARS        10 YEARS
<S>                   <C>           <C>            <C>            <C>
Class A shares          $100           $312           $542         $1,201
</TABLE>

PORTFOLIO MANAGEMENT

The portfolio's subadvisor is Turner Investment Partners, Inc. ("Turner"). The
portfolio is managed by a team of investment professionals who collaborate to
develop and implement the portfolio's investment strategy. The lead manager on
the team has authority over all aspects of the portfolio's investment
portfolio, including but not limited to, purchases and sales of individual
securities, portfolio construction techniques, portfolio risk assessment and
the management of daily cash flows in accordance with portfolio holdings.


The portfolio managers are Christopher K. McHugh (Lead Manager), Tara Hedlund,
CFA and Jason Schrotberger, CFA. Mr. McHugh has managed the portfolio since its
inception; Ms. Hedlund and Mr. Schrotberger joined the portfolio in 2006. Mr.
McHugh began his investment career in 1986 and joined the subadvisor when it
was founded in 1990. Mr. McHugh is a principal at Turner. Ms. Hedlund joined
Turner in 2000, has 14 years of investment industry experience and also serves
as a security analyst covering the technology and telecommunications sectors.
Ms. Hedlund is a principal at Turner. Mr. Schrotberger joined Turner in 2001,
has 15 years of investment industry experience and also serves as a security
analyst covering the consumer sector. Mr. Schrotberger is a principal at
Turner.


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


130   DWS TURNER MID CAP GROWTH VIP                  DWS VARIABLE SERIES II -
                                                     CLASS A SHARES
<PAGE>

FINANCIAL HIGHLIGHTS

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

This information doesn't reflect charges and fees associated with the separate
account that invests in the portfolio or any variable life insurance policy or
variable annuity contract for which the portfolio is an investment option.
These charges and fees will reduce returns.



DWS TURNER MID CAP GROWTH VIP - CLASS A



<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,                               2008         2007        2006       2005       2004
<S>                                               <C>           <C>         <C>         <C>        <C>
SELECTED PER SHARE DATA
--------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD                $  12.55     $  10.92    $  11.02    $  9.86    $  8.88
-------------------------------------------------   --------     --------    --------    -------    -------
Income (loss) from investment operations:
 Net investment income (loss)a                        (  .01)      (  .04)     (  .01)    (  .05)     ( .07)
_________________________________________________   ________     ________    ________    _______    _______
 Net realized and unrealized gain (loss)              ( 5.28)        2.64         .77       1.21       1.05
-------------------------------------------------   --------     --------    --------    -------    -------
 TOTAL FROM INVESTMENT OPERATIONS                     ( 5.29)        2.60         .76       1.16        .98
-------------------------------------------------   --------     --------    --------    -------    -------
Less distributions from:
 Net realized gains                                   ( 2.20)      (  .97)     (  .86)         -          -
_________________________________________________   ________     ________    ________    _______    _______
 Tax return of capital                                (  .00)*          -           -          -          -
_________________________________________________   ________     ________    ________    _______    _______
 TOTAL DISTRIBUTIONS                                  ( 2.20)      (  .97)     (  .86)         -          -
-------------------------------------------------   --------     --------    --------    -------    -------
NET ASSET VALUE, END OF PERIOD                      $   5.06     $  12.55    $  10.92    $ 11.02    $  9.86
-------------------------------------------------   --------     --------    --------    -------    -------
Total Return (%)                                      (49.49)b      25.75        6.52      11.76      11.04
_________________________________________________   ________     ________    ________    _______    _______
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
--------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ millions)                    49          129         117        122        118
_________________________________________________   ________     ________    ________    _______    _______
Ratio of expenses before expense reductions (%)         1.03          .95         .97       1.11       1.19
_________________________________________________   ________     ________    ________    _______    _______
Ratio of expenses after expense reductions (%)          1.00          .95         .97       1.11       1.19
_________________________________________________   ________     ________    ________    _______    _______
Ratio of net investment income (loss) (%)             (  .14)      (  .36)     (  .06)    (  .56)     ( .82)
_________________________________________________   ________     ________    ________    _______    _______
Portfolio turnover rate (%)                              156          133         148        151        174
-------------------------------------------------   --------     --------    --------    -------    -------
</TABLE>

a   Based on average shares outstanding during the period.

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

*   Amount is less than $.005.

DWS VARIABLE SERIES II - CLASS A SHARES             DWS TURNER MID CAP GROWTH
                                                    VIP   131
<PAGE>

HYPOTHETICAL EXPENSE SUMMARY

Using the annual portfolio operating expense ratios presented in the fee tables
in the portfolio prospectus, the Hypothetical Expense Summary shows the
estimated fees and expenses, in actual dollars, that would be charged on a
hypothetical investment of $10,000 in the portfolio held for the next 10 years
and the impact of such fees and expenses on portfolio returns for each year and
cumulatively, assuming a 5% return for each year. The historical rate of return
for the portfolio may be higher or lower than 5% and, for money funds, is
typically less than 5%. The tables also assume that all dividends and
distributions are reinvested. The annual portfolio expense ratios shown are net
of any contractual fee waivers or expense reimbursements, if any, for the
period of the contractual commitment. Also, please note that if you are
investing through a third party provider, that provider may have fees and
expenses separate from those of the portfolio that are not reflected here.
Mutual fund fees and expenses fluctuate over time and actual expenses may be
higher or lower than those shown.

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



DWS TURNER MID CAP GROWTH VIP - CLASS A



<TABLE>
<CAPTION>
                MAXIMUM                  INITIAL HYPOTHETICAL                          ASSUMED RATE
             SALES CHARGE:                   INVESTMENT:                                OF RETURN:
                 0.00%                         $10,000                                      5%
               CUMULATIVE                                CUMULATIVE           HYPOTHETICAL
             RETURN BEFORE                              RETURN AFTER        YEAR-END BALANCE           ANNUAL
                FEES AND            ANNUAL FUND           FEES AND           AFTER FEES AND           FEES AND
YEAR            EXPENSES          EXPENSE RATIOS          EXPENSES              EXPENSES              EXPENSES
<S>         <C>                  <C>                   <C>                 <C>                     <C>
   1              5.00%                 0.98%                4.02%            $ 10,402.00           $    99.97
   2             10.25%                 0.98%                8.20%            $ 10,820.16           $   103.99
   3             15.76%                 0.98%               12.55%            $ 11,255.13           $   108.17
   4             21.55%                 0.98%               17.08%            $ 11,707.59           $   112.52
   5             27.63%                 0.98%               21.78%            $ 12,178.23           $   117.04
   6             34.01%                 0.98%               26.68%            $ 12,667.80           $   121.75
   7             40.71%                 0.98%               31.77%            $ 13,177.04           $   126.64
   8             47.75%                 0.98%               37.07%            $ 13,706.76           $   131.73
   9             55.13%                 0.98%               42.58%            $ 14,257.77           $   137.03
  10             62.89%                 0.98%               48.31%            $ 14,830.93           $   142.53
TOTAL                                                                                               $ 1,201.37
</TABLE>


132   DWS TURNER MID CAP GROWTH VIP                  DWS VARIABLE SERIES II -
                                                     CLASS A SHARES
<PAGE>

OTHER POLICIES AND RISKS

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

o Each portfolio may trade securities actively. This could raise transaction
  costs and, accordingly, lower performance.

o The Advisor, or a subadvisor, will establish a debt security's credit quality
  when it buys a security, using independent ratings, or for unrated
  securities, its own credit determination. When ratings don't agree, a
  portfolio will use the higher rating. If a debt security's credit quality
  falls, the Advisor or subadvisor will determine whether selling it would be
  in a portfolio's best interests. For DWS Money Market VIP, such
  determination will be made pursuant to procedures adopted by the Board.


FOR MORE INFORMATION

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

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

Keep in mind that there is no assurance that a portfolio will achieve its
investment objective.

A complete list of each portfolio's portfolio holdings as of the month-end is
posted on www.dws-investments.com on or about the 15th day of the following
month. More frequent posting of portfolio holdings information may be made from
time to time on www.dws-investments.com. The posted portfolio holdings
information is available by portfolio and generally remains accessible at least
until the date on which a portfolio files its Form N-CSR or N-Q with the
Securities and Exchange Commission for the period that includes the date as of
which the posted information is current. Each portfolio's Statement of
Additional Information includes a description of a portfolio's policies and
procedures with respect to the disclosure of a portfolio's portfolio holdings.



THE INVESTMENT ADVISOR

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

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

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

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

On behalf of DWS Alternative Asset Allocation Plus VIP, the Advisor and its
affiliates earn fees at varying rates for providing services to the underlying
DWS funds. The Advisor may therefore have a conflict of interest in selecting
the underlying DWS funds and in determining whether to invest in an ETF, from
which it will not receive any fees. However, the Advisor is a fiduciary to the
portfolio and will select investments that it believes are best suited to meet
the portfolio's investment objective.


DWS VARIABLE SERIES II - CLASS A SHARES                  OTHER POLICIES AND
                                                         RISKS   133
<PAGE>

The Advisor receives a management fee from each portfolio. Below are the
management rates paid by each portfolio for the most recent fiscal year, as a
percentage of each portfolio's average daily net assets:



<TABLE>
<CAPTION>
PORTFOLIO NAME                                    FEE PAID
<S>                                             <C>
DWS Alternative Asset Allocation Plus VIP           0.20%*
DWS Balanced VIP                                    0.39%**
DWS Blue Chip VIP                                  0.59  %
DWS Core Fixed Income VIP                          0.54  %
DWS Diversified International Equity VIP           0.69  %
DWS Dreman Small Mid Cap Value VIP                 0.68  %
DWS Global Thematic VIP                             0.58%**
DWS Government & Agency Securities VIP              0.48%**
DWS High Income VIP                                0.54  %
DWS Large Cap Value VIP                            0.65  %
DWS Mid Cap Growth VIP                              0.56%**
DWS Money Market VIP                                0.30%**
DWS Small Cap Growth VIP                            0.57%**
DWS Strategic Income VIP                            0.57%**
DWS Strategic Value VIP                            0.68  %
DWS Technology VIP                                 0.70  %
DWS Turner Mid Cap Growth VIP                       0.73%**
</TABLE>

*   Based on estimated amounts for the current fiscal year. Management fee has
    two components: (i) a fee on assets invested in other DWS funds; and (ii)
    a fee on assets not invested in other DWS funds ("Other Assets"). The
    Advisor currently intends to invest substantially all the assets of the
    portfolio in other DWS funds. However, in the future, the portfolio may
    invest a larger portion, or all, of its assets in Other Assets. If the
    portfolio's assets are entirely invested in Other Assets, the management
    fee would be 1.20% of average daily net assets. However, in such a
    situation, the Acquired Fund (Underlying Fund) Fees and Expense are
    expected to decrease. The Advisor will waive 0.15% of the management fee
    until the portfolio reaches $50 million in assets and the iGAP strategy is
    implemented.

**   Reflects the effect of expense limitations and/or fee waivers then in
    effect.

With respect to all of the portfolios, except DWS Large Cap Value VIP, the
    management fee paid for the last fiscal year includes the effect of
    approved fee changes that took effect on May 1, 2008.


DWS Alternative Asset Allocation Plus VIP pays the Advisor under the investment
management agreement a fee, calculated daily and paid monthly, in the sum of:
(i) 0.20% of the portfolio's average daily net assets invested in other DWS
funds; and (ii) 1.20% of the portfolio's average daily net assets invested in
all other assets not considered other DWS funds. For purposes of the management
fee, "other DWS funds" means US-registered investment companies with the
Advisor serving as investment advisor.

A discussion regarding the basis for the Board renewal of each portfolio's
investment management agreement and, as applicable, subadvisory agreement, is
contained in the shareholder reports for the annual period ended December 31
(see "Shareholder reports" on the back cover).

In addition, under a separate administrative services agreement between each
portfolio and Deutsche Investment Management Americas Inc., each portfolio pays
the Advisor for providing most of each portfolio's administrative services.


134   THE INVESTMENT ADVISOR                         DWS VARIABLE SERIES II -
                                                     CLASS A SHARES
<PAGE>

PORTFOLIO SUBADVISORS


SUBADVISORS AND SUB-SUBADVISORS FOR DWS ALTERNATIVE ASSET ALLOCATION PLUS VIP
RREEF America L.L.C. ("RREEF"), an investment advisor registered with the SEC,
is located at 875 N. Michigan Avenue, Chicago, Illinois 60611. RREEF is an
indirect wholly owned subsidiary of Deutsche Bank AG. RREEF has provided real
estate investment management services to institutional investors since 1975
across a diversified portfolio of industrial properties, office buildings,
residential apartments and shopping centers. RREEF has also been an investment
advisor of real estate securities since 1993.

Deutsche Investments Australia Limited ("DIAL"), is located at Level 16, 126
Phillip Street, Sydney NSW 200, Australia. DIAL is an indirect wholly owned
subsidiary of Deutsche Bank AG. DIAL serves as both subadvisor for mutual funds
and investment advisor for certain institutional accounts.

RREEF Global Advisers Limited ("RGAL"), is located at Winchester House, 1 Great
Winchester Street, London, United Kingdom, EC2N 2DB. RGAL is an indirect wholly
owned subsidiary of Deutsche Bank AG.

Deutsche Asset Management (Hong Kong) Limited ("DeAM Hong Kong"), is located at
48/F Cheung Kong Center, 2 Queen's Road Central, Hong Kong, China. DeAM Hong
Kong is an indirect wholly owned subsidiary of Deutsche Bank AG.

The subadvisors and sub-subadvisors provide investment advisory and management
services to the portions of DWS Alternative Asset Allocation Plus VIP's
portfolio allocated to direct investments in global real estate, global
infrastructure (as described below). Each subadvisor and sub-subadvisor makes
investment decisions, buy and sells securities for the portfolio and conducts
research that leads to purchase and sale decisions. The Advisor pays a fee to
each subadvisor pursuant to an investment subadvisory agreement between the
Advisor and the subadvisor. The sub-subadvisors are paid for their
sub-subadvisory services by the subadvisor, from the subadvisor's subadvisory
fee paid by the Advisor to the subadvisor.

RREEF provides subadvisory services in connection with direct investments in
global real estate and global infrastructure securities. With respect to global
real estate and global infrastructure securities, RGAL provides sub-subadvisory
services related to European securities, DeAM Hong Kong provides
sub-subadvisory services related to Asian securities and DIAL provides
sub-subadvisory services related to Australian securities.



SUBADVISOR FOR DWS BALANCED VIP AND DWS LARGE CAP VALUE VIP

The subadvisor for DWS Balanced VIP and DWS Large Cap Value VIP is Deutsche
Asset Management International GmbH ("DeAMi"), Mainzer Landstrasse 178-190,
Frankfurt am Main, Germany. DeAMi renders investment advisory and management
services to the portfolio. DeAMi is an investment advisor registered with the
Securities and Exchange Commission, whose assets under management are currently
comprised of institutional accounts and investment companies. DeAMi is a
subsidiary of Deutsche Bank AG. DIMA compensates DeAMi out of the management
fee it receives from the portfolio.



SUBADVISOR FOR DWS DREMAN SMALL MID CAP VALUE VIP

The subadvisor for DWS Dreman Small Mid Cap Value VIP is Dreman Value
Management, L.L.C. ("DVM"), 520 East Cooper Avenue, Suite 230-4, Aspen, CO
81611. DVM was founded in 1977 and currently manages over $7.9 billion in
assets, which is primarily comprised of investment companies. Pursuant to a
subadvisory agreement with DIMA, DVM performs some of the functions of the
Advisor, including making each portfolio's investment decisions and buying and
selling securities for each portfolio.



SUBADVISOR FOR DWS TURNER MID CAP GROWTH VIP

Turner Investment Partners, Inc., 1205 Westlakes Drive Suite 100, Berwyn,
Pennsylvania, 19312 is the subadvisor to DWS Turner Mid Cap Growth VIP. As of
December 31, 2008, Turner Investment Partners, Inc. had approximately $15.4
billion in assets under management. DIMA pays a fee to Turner Investment
Partners, Inc. for acting as subadvisor.


DWS VARIABLE SERIES II - CLASS A SHARES                    PORTFOLIO
                                                           SUBADVISORS   135
<PAGE>

--------------------------------------------------------------------------------
YOUR INVESTMENT IN THE PORTFOLIOS

The information in this section may affect anyone who selects one or more
portfolios as an investment option in a variable annuity contract or variable
life insurance policy that offers one or more portfolios. These contracts and
policies are described in separate prospectuses issued by participating
insurance companies. Each portfolio assumes no responsibility for such
prospectuses.


POLICIES ABOUT TRANSACTIONS
The information in this prospectus applies to Class A shares of each portfolio.
Each portfolio may offer two classes of shares. Class A shares are offered at
net asset value and are not subject to 12b-1 fees.

Technically, the shareholders of DWS Variable Series II (which include each
portfolio just described) are the participating insurance companies (the
"insurance companies") that offer each portfolio as choices for holders of
certain variable annuity contracts or variable life insurance policies (the
"contract(s)") issued or sponsored by the insurance companies. The insurance
companies may pass through voting rights to the contract owners. Each portfolio
does not sell shares directly to the public. Each portfolio sells shares only
to separate accounts of insurance companies. As a contract owner, your premium
payments are allocated to a portfolio by the insurance companies in accordance
with your contract. Please see the contract prospectus that accompanies this
prospectus for a detailed explanation of your contract.

Please bear in mind that there are important differences between funds
available to any investor (a "Retail Fund") and those that are only available
through certain financial institutions, such as insurance companies. For
example, Retail Funds, unlike a portfolio, are not sold to insurance company
separate accounts to fund investments in variable insurance contracts. In
addition, the investment objective, policies and strategies of a portfolio,
while similar to those of a Retail Fund, are not identical. Retail Funds may be
smaller or larger than a portfolio and have different expense ratios than a
portfolio. As a result, the performance of a portfolio and a Retail Fund will
differ.

Should any conflict between contract owners arise that would require that a
substantial amount of net assets be withdrawn from a portfolio, orderly
portfolio management could be disrupted to the potential detriment of
shareholders of that portfolio.

Each portfolio has a verification process for new insurance company accounts to
help the government fight the funding of terrorism and money laundering
activities. Federal law requires all financial institutions to obtain, verify
and record information that identifies each insurance company that opens an
account. This means that when an insurance company opens an account, a
portfolio will ask for its name, address and other information that will allow
a portfolio to identify the company. This information will be verified to
ensure the identity of all insurance companies opening an account.

For certain insurance companies, a portfolio might request additional
information (for instance, a portfolio would ask for documents such as the
insurance company's articles of incorporation) to help a portfolio verify the
insurance company's identity.

Each portfolio will not complete the purchase of any shares for an account
until all information has been provided and the application has been submitted
in "good order." Once the application is determined to be in good order, the
purchase(s) will be effected at the net asset value per share next calculated.

Since DWS Money Market VIP will be investing in instruments that normally
require immediate payment in Federal funds (monies credited to a bank's account
with its regional Federal Reserve Bank), that portfolio has adopted certain
procedures for the convenience of its shareholders and to ensure that DWS Money
Market VIP receives investable funds.

Each portfolio may reject a new account application if the insurance company
doesn't provide any required or requested identifying information, or for other
reasons.


136   YOUR INVESTMENT IN THE PORTFOLIOS              DWS VARIABLE SERIES II -
                                                     CLASS A SHARES
<PAGE>

BUYING AND SELLING SHARES

Each PORTFOLIO IS OPEN FOR BUSINESS each day the New York Stock Exchange is
open. Each portfolio calculates its share price every business day, as of the
close of regular trading on the New York Stock Exchange (typically 4 p.m.
Eastern time, but sometimes earlier, as in the case of scheduled half-day
trading or unscheduled suspensions of trading).

Each portfolio continuously sells shares to each insurance company separate
account, without a sales charge, at the net asset value per share next
determined after a proper purchase order is placed by the insurance company.
The insurance company offers contract owners units in its separate accounts
which correspond to shares in a portfolio. Each insurance company submits
purchase and redemption orders to a portfolio based on allocation instructions
for premium payments, transfer instructions and surrender or partial withdrawal
requests for contract owners, as set forth in the accompanying prospectus for
the contracts. These orders reflect the amount of premium payments to be
invested, surrender and transfer requests, and other matters. Redemption orders
are effected at the next net asset value per share determined after a proper
redemption order is placed by the insurance company. Contract owners should
look at their contract prospectuses for redemption procedures and fees.


IMPORTANT INFORMATION ABOUT BUYING AND SELLING SHARES

o After receiving a contract owner's order, the insurance company buys or sells
  shares at the net asset value next calculated on any day each portfolio is
  open for business.

o Unless otherwise instructed, each portfolio normally makes payment of the
  proceeds from the sale of shares the next business day but always within
  seven calendar days.

o Each portfolio does not issue share certificates.

o Each portfolio reserves the right to reject purchases of shares for any
  reason.

o Each portfolio reserves the right to withdraw or suspend the offering of
  shares at any time.

o Each portfolio reserves the right to reject purchases of shares or to suspend
  or postpone redemptions at times when the New York Stock Exchange is closed
  (other than customary closings), trading is restricted or when an emergency
  exists that prevents a portfolio from disposing of its portfolio securities
  or pricing its shares.


o Each portfolio may refuse, cancel or rescind any purchase order; freeze any
  account (meaning the insurance company will not be able to purchase shares
  in its account); suspend account services; and/or involuntarily redeem the
  account if we think that the account is being used for fraudulent or illegal
  purposes by the insurance company; one or more of these actions will be
  taken when, at the sole discretion of each portfolio, they are deemed to be
  in each portfolio's best interests or when each portfolio is requested or
  compelled to do so by governmental authority or by applicable law.


o Each portfolio may close and liquidate an account if a portfolio is unable to
  verify provided information, or for other reasons; if a portfolio decides to
  close the account, the shares will be redeemed at the net asset value per
  share next calculated after we determine to close the account; the insurance
  company may be subject to gain or loss on the redemption of the portfolio
  shares and may incur tax liability.

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

o A purchase order from an insurance company separate account may not be
  accepted if the sale of portfolio shares has been suspended or if it is
  determined that the purchase would be detrimental to the interests of a
  portfolio.

MARKET TIMING POLICIES AND PROCEDURES. Short-term and excessive trading of
portfolio shares may present risks to each portfolio's long-term shareholders
(as used herein, the term "shareholders" may refer to the contract owners),
including potential dilution in the value of portfolio shares, interference
with the efficient management of a portfolio (including losses on the sale of
investments), taxable gains to remaining


DWS VARIABLE SERIES II - CLASS A SHARES            YOUR INVESTMENT IN THE
                                                   PORTFOLIOS   137
<PAGE>

shareholders and increased brokerage and administrative costs. These risks may
be more pronounced if a portfolio invests in certain securities such as those
that trade in foreign markets, are illiquid or do not otherwise have "readily
available market quotations." Certain investors may seek to employ short-term
trading strategies aimed at exploiting variations in portfolio valuation that
arise from the nature of the securities held by a portfolio (e.g., "time zone
arbitrage"). Each portfolio has adopted policies and procedures that are
intended to detect and deter short-term and excessive trading.

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

Shareholders are limited to four roundtrip transactions in the same portfolio
over a rolling 12-month period. Shareholders with four or more roundtrip
transactions in the same portfolio within a rolling 12-month period generally
will be blocked from making additional purchases of, or exchanges into, that
portfolio. Each portfolio has sole discretion whether to remove a block from a
shareholder's account. The rights of a shareholder to redeem shares of each
portfolio are not affected by the four roundtrip transaction limitation.

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


In certain circumstances, each portfolio may rely upon the policy of the
insurance company or other financial intermediary to deter short-term or
excessive trading if the Advisor believes that the policy of such insurance
company or other financial intermediary is reasonably designed to detect and
deter transactions that are not in the best interests of each portfolio. An
insurance company's or other financial intermediary's policy relating to
short-term or excessive trading may be more or less restrictive than each
portfolio's policies, may permit certain transactions not permitted by each
portfolio's policies, or prohibit transactions not subject to each portfolio's
policies.


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

In addition, to the extent that each portfolio invests some portion of its
assets in foreign securities, each portfolio has adopted certain fair valuation
practices intended to protect each portfolio from "time zone arbitrage" with
respect to its foreign securities holdings and other trading practices that
seek to exploit variations in portfolio valuation that arise from the nature of
the securities held by each portfolio. (See "How each Portfolio Calculates
Share Price.")

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


138   YOUR INVESTMENT IN THE PORTFOLIOS              DWS VARIABLE SERIES II -
                                                     CLASS A SHARES
<PAGE>

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

Since DWS Money Market VIP holds short-term instruments and is intended to
provide liquidity to shareholders, the Advisor does not monitor or limit
short-term and excessive trading activity in DWS Money Market VIP and,
accordingly, the Board has not approved any policies and procedures designed to
limit this activity. However, the portfolio reserves the right to and may
reject or cancel a purchase or exchange order into a money market fund for any
reason, including if, in the opinion of the Advisor, there appears to be a
pattern of short-term and excessive trading by an investor in other DWS funds.


HOW TO RECEIVE ACCOUNT INFORMATION

If you are a contract owner, you should contact your insurance company or the
organization that provides record keeping services for information about your
account.

Please see the contract prospectus that accompanies this prospectus for the
customer service phone number.


HOW TO SELECT SHARES

Shares in a portfolio are available in connection with certain variable annuity
and life insurance arrangements. Each insurance company has different
provisions about how and when their contract owners may select portfolio
shares. Each insurance company is responsible for communicating its contract
owners' instructions to a portfolio. Contract owners should contact their
insurance company to effect transactions in connection with a portfolio.



FINANCIAL INTERMEDIARY SUPPORT PAYMENTS

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

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

The Advisor, the Distributor and/or their affiliates currently make revenue
sharing payments from their own assets in connection with the sale and/or
distribution of DWS fund shares or the retention and/or servicing of investors
and DWS fund shares to financial advisors in amounts that generally range from
..01% up to .50% of assets of each portfolio serviced and maintained by the
financial advisor, .05% to .25% of sales of each portfolio attributable to the
financial advisor, a flat fee of $13,350 up to $500,000, or any combination
thereof. These amounts are subject to change at the discretion of the Advisor,
the Distributor and/or their affiliates. Receipt of, or the prospect of
receiving, this additional compensation may influence your financial advisor's


DWS VARIABLE SERIES II - CLASS A SHARES            YOUR INVESTMENT IN THE
                                                   PORTFOLIOS   139
<PAGE>

recommendation of each portfolio or of any particular share class of each
portfolio. You should review your financial advisor's compensation disclosure
and/or talk to your financial advisor to obtain more information on how this
compensation may have influenced your financial advisor's recommendation of
each portfolio. Additional information regarding these revenue sharing payments
is included in each portfolio's Statement of Additional Information, which is
available to you on request at no charge (see the back cover of this prospectus
for more information on how to request a copy of the Statement of Additional
Information).

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

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



HOW EACH PORTFOLIO CALCULATES SHARE PRICE

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



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

The price at which you buy and sell shares for each portfolio is the NAV.

For DWS Money Market VIP, the share price, or NAV, is normally $1.00 calculated
using amortized cost value (the method used by most money market funds).


FOR THE UNDERLYING FUNDS IN WHICH A PORTFOLIO INVESTS, WE USE THE NAV OF THE
UNDERLYING FUNDS. FOR OTHER SECURITIES, WE TYPICALLY VALUE SECURITIES USING
INFORMATION FURNISHED BY AN INDEPENDENT PRICING SERVICE OR MARKET QUOTATIONS,
WHERE APPROPRIATE. However, we may use methods approved by the Board, such as a
fair valuation model, which are intended to reflect fair value when pricing
service information or market quotations are not readily available or when a
security's value or a meaningful portion of the value of a portfolio's
portfolio is believed to have been materially affected by a significant event,
such as a natural disaster, an economic event like a bankruptcy filing, or a
substantial fluctuation in domestic or foreign markets that has occurred
between the close of the exchange or market on which the security is
principally traded (for example, a foreign exchange or market) and the close of
the New York Stock Exchange. In such a case, a portfolio's value for a security
is likely to be different from the last quoted market price or pricing service
information. In addition, due to the subjective and variable nature of fair
value pricing, it is possible that the value determined for a particular asset
may be materially different from the value realized upon such asset's sale. To
the extent that the portfolio or an underlying fund invests in securities that
are traded primarily in foreign markets, the value of its holdings could change
at a time when you aren't able to buy or sell portfolio shares. This is because
some foreign markets are open on days or at times when the portfolio or an
underlying fund doesn't price its shares. (Note that prices for securities that
trade on foreign exchanges can change significantly on days when the New York
Stock Exchange is closed and you cannot buy or sell portfolio shares. Price
changes in the securities the portfolio or an underlying fund owns may
ultimately affect the price of portfolio shares the next time the net asset
value is calculated.)



140   YOUR INVESTMENT IN THE PORTFOLIOS              DWS VARIABLE SERIES II -
                                                     CLASS A SHARES
<PAGE>

DISTRIBUTIONS

DWS Money Market VIP intends to declare its net investment income as a dividend
daily and distribute dividends monthly. All other portfolios intend to declare
and distribute dividends from their net investment income and capital gains, if
any, annually. Each portfolio may make additional distributions if necessary.

All distributions will be reinvested in shares of a portfolio unless we are
informed by an insurance company that they should be paid out in cash. The
insurance companies will be informed about the amount and character of
distributions from the relevant portfolio for federal income tax purposes.



TAXES

Each portfolio intends to qualify each year as a regulated investment company
under Subchapter M of the Internal Revenue Code of 1986, as amended (the
"Code"), and intends to meet all requirements necessary to avoid paying any
federal income or excise taxes.

Generally, owners of variable annuity and variable life contracts are not
subject to current federal income taxation on income or gains realized with
respect to such contracts. However, some distributions from such contracts,
whether made prior to or during the annuity payment period, may be taxable at
ordinary income tax rates. In addition, distributions made to an owner who is
younger than 59 1-2 may be subject to a 10% penalty tax. For further
information concerning federal income tax consequences for the holders of
variable annuity contracts and variable life insurance policies, such holders
should consult the prospectus used in connection with the issuance of their
particular contracts or policies.

In order for investors to receive the favorable federal income tax treatment
available to holders of variable annuity and variable life contracts, the
separate accounts underlying such contracts, as well as the funds in which such
accounts invest, must meet certain diversification requirements. Each portfolio
intends to comply with these requirements. If a portfolio or separate account
does not meet such requirements or fails to qualify as a regulated investment
company for any taxable year, income allocable to the contracts associated with
the separate account may be taxable currently for federal income tax purposes
to the holders of such contracts and income from prior periods with respect to
such contracts also could be taxable, most likely in the year of the failure.

Under Treasury regulations, insurance companies holding the separate accounts
may have to report to the IRS losses above a certain amount resulting from a
sale or disposition of a portfolio's shares.

The discussion above is generally based on the assumption that shares of a
portfolio will be respected as owned by insurance company separate accounts. If
this is not the case (for example, because the IRS finds an impermissible level
of "investor control" over the investment options underlying variable
contracts), the advantageous federal income tax treatment provided in respect
of insurance company separate accounts under the Code will no longer be
available, and the person or persons determined to own the portfolio shares
will be currently taxed on portfolio distributions, and on the proceeds of any
redemption of portfolio shares, under the Code.

Portfolio investments in securities of foreign issuers may be subject to
withholding and other taxes at the source, including on dividend or interest
payments. Participating insurance companies should consult their own tax
advisors as to whether such distributions are subject to federal income tax if
they are retained as part of policy reserves.

Each portfolio's investments in certain debt obligations may cause each
portfolio to recognize taxable income in excess of the cash generated by such
obligation. Thus, each portfolio could be required at times to liquidate other
investments in order to satisfy its distribution requirements.

The preceding is a brief summary of certain of the relevant federal income tax
considerations. Because each shareholder and contract holder's tax situation is
unique, ask your tax professional about the tax consequences of your
investments, including possible federal, foreign, state or local taxes.


DWS VARIABLE SERIES II - CLASS A SHARES
                                                            DISTRIBUTIONS   141

<PAGE>

--------------------------------------------------------------------------------
TO GET MORE INFORMATION


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

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

For a free copy of any of these documents or to request other information about
a portfolio, call (800) 778-1482, or contact DWS Investments at the address
listed below. Each portfolio's SAI and shareholder reports are also available
through the DWS Investments Web site at www.dws-investments.com. These
documents and other information about the portfolio are available from the
EDGAR Database on the SEC's Internet site at www.sec.gov. If you like, you may
obtain copies of this information, after paying a copying fee, by e-mailing a
request to publicinfo@sec.gov or by writing the SEC at the address listed
below. You can also review and copy these documents and other information about
the portfolio, including the portfolio's SAI, at the SEC's Public Reference
Room in Washington, D.C. Information on the operation of the SEC's Public
Reference Room may be obtained by calling (800) SEC-0330.




<TABLE>
<CAPTION>
DWS INVESTMENTS DISTRIBUTORS, INC.      SEC
<S>                                     <C>
222 South Riverside Plaza               100 F Street, N.E.
Chicago, IL 60606-5808                  Washington, D.C. 20549-0102
(800) 621-1148                          WWW.SEC.GOV
                                        (800) SEC-0330
</TABLE>


<TABLE>
<CAPTION>
SEC FILE NUMBER:
---------------------------------
<S>                                  <C>
DWS Variable Series II 811-5002
</TABLE>


(05/01/09) 2a-A


<PAGE>

                                  MAY 1, 2009




                                   PROSPECTUS


                             DWS VARIABLE SERIES II
                                    CLASS B



DWS ALTERNATIVE ASSET ALLOCATION PLUS VIP
(Class B shares available May 18, 2009)

DWS BLUE CHIP VIP

DWS CORE FIXED INCOME VIP

DWS DREMAN SMALL MID CAP VALUE VIP

DWS GLOBAL THEMATIC VIP

DWS GOVERNMENT & AGENCY SECURITIES VIP

DWS HIGH INCOME VIP

DWS LARGE CAP VALUE VIP

DWS STRATEGIC VALUE VIP
(formerly DWS Dreman High Return Equity VIP)

DWS TECHNOLOGY VIP

DWS CONSERVATIVE ALLOCATION VIP

DWS GROWTH ALLOCATION VIP

DWS MODERATE ALLOCATION VIP



This prospectus should be read in conjunction with the variable life insurance
or variable annuity contract prospectus and plan documents for tax-qualified
plans. These shares are available and are being marketed exclusively as a
pooled funding vehicle for life insurance companies writing all types of
variable life insurance policies and variable annuity contracts.


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


                                     RESHAPING INVESTING. [DWS INVESTMENTS LOGO]
                                                             Deutsche Bank Group

<PAGE>

--------------------------------------------------------------------------------
TABLE OF CONTENTS

HOW EACH PORTFOLIO WORKS





<TABLE>
<S>        <C>
  3        DWS Alternative Asset
           Allocation Plus VIP
 14        DWS Blue Chip VIP
 21        DWS Core Fixed Income VIP
 29        DWS Dreman Small Mid Cap
           Value VIP
 36        DWS Global Thematic VIP
 44        DWS Government & Agency
           Securities VIP
 51        DWS High Income VIP
 58        DWS Large Cap Value VIP


</TABLE>
<TABLE>
<S>        <C>
 64        DWS Strategic Value VIP
 71        DWS Technology VIP
 79        DWS Conservative Allocation
           VIP
 88        DWS Growth Allocation VIP
 97        DWS Moderate Allocation VIP
106        Other Policies and Risks
106        The Investment Advisor
107        Portfolio Subadvisors
</TABLE>





YOUR INVESTMENT IN THE PORTFOLIOS




<TABLE>
<S>        <C>
110        Buying and Selling Shares
113        How each Portfolio Calculates
           Share Price
113        Distributions
114        Taxes
114        Marketing and Distribution
           Fees
</TABLE>




HOW EACH PORTFOLIO WORKS

Each portfolio is designed to serve as an investment option for certain
variable annuity contracts, variable life insurance policies and tax-qualified
plans. Your investment in a portfolio is made in conjunction with one of these
contracts or policies. Each portfolio has its own investment objective and
strategy.

Remember that each portfolio is not a bank deposit. Each portfolio is not
insured or guaranteed by the Federal Deposit Insurance Corporation or any other
government agency. Share prices will go up and down and you could lose money by
investing.

Please read this prospectus in conjunction with the prospectus for your
variable life insurance policy or variable annuity contract or plan documents
for tax-qualified plans.
<PAGE>

DWS ALTERNATIVE ASSET ALLOCATION PLUS VIP


THE PORTFOLIO'S MAIN INVESTMENT STRATEGY

The portfolio seeks capital appreciation. The portfolio seeks to achieve its
objective by investing in alternative (or non-traditional) asset categories and
investment strategies. The portfolio intends to allocate its assets among the
following strategies and/or asset categories: market neutral,
inflation-protection, floating rate securities, commodities, real estate,
infrastructure and emerging markets.

Investments may be made in other DWS funds or directly in the securities and
derivative investments in which such DWS funds could invest. The portfolio may
also invest in securities of exchange traded funds ("ETFs") when a particular
asset category or investment strategy is not available through a DWS fund. The
portfolio's allocations among direct investments and other DWS funds may vary
over time. At times, the entire portfolio may be invested in other DWS funds or
directly in other investments. The portfolio may also be invested in some
combination thereof. To the extent the portfolio directly invests in other
investments rather than DWS funds, the allocated portions of the portfolio will
be managed by the same advisor, subadvisor or sub-subadvisor, as applicable, as
the corresponding DWS fund, following the same general investment strategies.


The portfolio may make allocations ranging from approximately 0% to 30% of its
assets in a particular strategy or asset category. Based on portfolio
management's assessment of market conditions, the portfolio will be rebalanced
periodically to maintain the desired asset allocation among alternative asset
categories and investment strategies. The portfolio's allocations among the
asset categories and investment strategies will change over time and there
should be no expectation that current or past positions will be maintained in
the future. The portfolio intends to invest in the following DWS Funds or
directly in such securities and derivative investments in which such DWS Funds
can invest:


o DWS Commodity Securities Fund. The fund's investment objective is capital
  appreciation. The fund seeks to achieve its investment objective by focusing
  on commodities-related securities and equity-related securities, including
  commodities-related structured notes and similar instruments, that the
  fund's Advisor believes are undervalued but have favorable prospects for
  appreciation.

o DWS Disciplined Market Neutral Fund. The fund seeks capital appreciation
  independent of stock market direction. It pursues its objective by
  investing, under normal circumstances, in long and short positions of common
  stock of large US companies. The managers buy, or take, long positions in
  common stock that the managers believe are undervalued and sell, or take,
  short positions in common stock that the managers believe are overvalued.
  The fund's investment strategy is designed to maintain approximately equal
  dollar amounts invested in long and short positions under normal
  circumstances. By employing this market neutral strategy, the fund seeks to
  limit the fund's volatility relative to movements in the overall stock
  market (that is, the fund's price movements are not expected to correlate
  closely with the market's price movements). The managers attempt to achieve
  returns for the fund that exceed the return on an investment in 3-month US
  Treasury Bills.

o DWS Emerging Markets Equity Fund. The fund seeks long-term growth of capital.
  Under normal circumstances, the fund invests at least 80% of net assets,
  plus the amount of any borrowings for investment purposes, in emerging
  market equities (equities traded mainly in emerging markets or issued by
  companies that are organized in emerging markets or have more than half of
  their business in emerging markets). The fund invests primarily in common
  stocks. The fund considers "emerging markets" to include any country that is
  defined as an emerging or developing economy by any one of the following:
  The International Bank for Reconstruction and Development (i.e., the World
  Bank), the International Finance Corporation or the United Nations or its
  authorities.

DWS VARIABLE SERIES II - CLASS B SHARES       DWS ALTERNATIVE ASSET ALLOCATION
                                              PLUS VIP   3
<PAGE>

o DWS Emerging Markets Fixed Income Fund. The fund seeks to provide high
  current income and, secondarily, long-term capital appreciation. Under
  normal circumstances, the fund invests at least 80% of net assets, plus the
  amount of any borrowings for investment purposes, in high yield bonds (also
  known as "junk bonds") and other debt securities issued by governments and
  corporations in emerging market countries (i.e., the issuer's securities are
  traded mainly in an emerging market, the issuer is organized under the laws
  of an emerging market country or is a company with more than half of its
  business in emerging markets) or the return on which is derived primarily
  from emerging markets. The fund considers "emerging markets" to include any
  country that is defined as an emerging or developing economy by any one of
  the following: The International Bank for Reconstruction and Development
  (i.e., the World Bank), the International Finance Corporation or the United
  Nations or its authorities.

o DWS Floating Rate Plus Fund. The fund seeks to provide high current income.
  The fund invests, under normal market conditions, at least 80% of its total
  assets in adjustable rate loans that have a senior right to payment ("Senior
  Loans") and other floating rate debt securities. The fund may also borrow
  money in an amount up to 33 1-3% of the fund's total assets for a range of
  purposes, including to create investment leverage. In an attempt to enhance
  return, the fund also employs the iGAP strategy (discussed below).

o DWS Gold & Precious Metals Fund. The fund seeks maximum return (principal
  change and income). The fund invests at least 80% of net assets, plus the
  amount of any borrowings for investment purposes, in common stocks and other
  equities of US and foreign companies engaged in activities related to gold,
  silver, platinum or other precious metals, and in gold coin and bullion
  directly. These companies may be involved in activities such as exploration,
  mining, fabrication, processing and distribution.

o DWS Inflation Protected Plus Fund. The fund seeks to provide maximum
  inflation-adjusted return, consistent with preservation of capital. Under
  normal circumstances, the fund will invest at least 80% of its net assets,
  plus any borrowings for investment purposes, in inflation-indexed bonds of
  varying maturities issued by the US government, non-US governments, their
  agencies or instrumentalities, and corporations, and in derivatives related
  to these securities. The fund may invest the remaining portion of its assets
 in other types of fixed-income securities, cash or cash equivalents. In an
 attempt to enhance return, the fund also employs the iGAP strategy (discussed
 below).

o DWS RREEF Global Infrastructure Fund. The fund seeks total return from both
  capital appreciation and current income through investment in a global
  portfolio of securities of infrastructure-related companies. Under normal
  circumstances, the fund invests at least 80% of its net assets in the
  securities of US and non-US infrastructure-related companies. The fund
  considers a company to be an infrastructure-related company if at least 50%
  of its non-cash assets are infrastructure assets or 50% of its gross income
  or net profits are derived, directly or indirectly, from the ownership,
  management, construction, operation, utilization or financing of
  infrastructure assets. Under normal circumstances, the fund invests
  primarily in equity securities, though the fund may also invest in
  fixed-income securities without limitation.

o DWS RREEF Global Real Estate Securities Fund. The fund's investment objective
  is to seek total return through a combination of current income and
  long-term capital appreciation. The fund seeks to achieve this objective by
  investing primarily in publicly listed real estate investment trusts (REITs)
  and real estate operating companies on a global basis. Under normal
  circumstances, the fund will invest at least 80% of its net assets, plus the
  amount of any borrowing for investment purposes, in the equity securities of
  REITs and real estate operating companies listed on recognized stock
  exchanges around the world.

On an ongoing basis, the DWS funds in which the portfolio may invest will be
evaluated on their continued ability to deliver strong performance. To maintain
the investment integrity of the portfolio, alternate DWS funds may be added to
obtain exposure to new asset categories or strategies, to replace
underperforming DWS funds or to enhance returns. Alternatively, the portfolio
may invest in certain ETFs if the desired exposure is not available by
investing in DWS funds.

In addition to the portfolio's main investment strategy, the Advisor seeks to
enhance returns by employing a global tactical asset allocation overlay
strategy. This strategy, which the Advisor calls iGAP (integrated Global Alpha
Platform), attempts to take advantage of short- and medium-term mispricings
within global equity, bond and currency markets. The iGAP strategy is
implemented through the use of derivatives, which are contracts or other
instruments whose value is based on, for example, indices, currencies or
securities. The iGAP strategy primarily uses exchange-traded futures contracts
on global equities, bonds and currencies and over-the-counter


4   DWS ALTERNATIVE ASSET ALLOCATION PLUS VIP        DWS VARIABLE SERIES II -
                                                     CLASS B SHARES
<PAGE>

forward currency contracts, and is expected to have a low correlation with the
portfolio's securities holdings. The iGAP strategy, with respect to the
portfolio, will not be used until assets of the portfolio exceed $50 million;
however, the portfolio may have indirect exposure to the iGAP strategy through
other DWS funds.

While the portfolio and the DWS funds in which it invests may use derivatives
or similar instruments and techniques to hedge existing positions, derivatives
and currency transactions, when used by the portfolio as part of the iGAP
strategy, generally will be used to seek return and not be used for hedging
purposes. Certain DWS funds in which the portfolio invests may also use the
iGAP strategy.

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

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



OTHER INVESTMENTS

As a temporary defensive measure, the portfolio could shift up to 100% of its
assets into investments such as money market securities. This measure could
prevent losses, but, while engaged in a temporary defensive position, the
portfolio will not be pursuing its investment objective. However, the Advisor
may choose not to use this strategy for various reasons, even in very volatile
market conditions.



THE MAIN RISKS OF INVESTING IN THE PORTFOLIO

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

The portfolio's allocations among the asset categories and investment
strategies will change over time, causing corresponding changes in the
portfolio's risk profile.

ASSET ALLOCATION RISK. Although asset allocation among different asset
categories and investment strategies generally reduces risk and exposure to any
one category or strategy, the risk remains that the Advisor may favor an asset
category or investment strategy that performs poorly relative to other asset
categories or investment strategies. To the extent that alternative asset
categories underperform the general stock market, the portfolio would perform
poorly relative to a portfolio invested primarily in the general stock market.

UNDERLYING FUND INVESTMENT RISK. The portfolio invests in underlying funds, so
the portfolio's investment performance is directly related to the performance
of the underlying portfolios. To the extent the particular underlying funds in
which the portfolio invests underperform their benchmarks and/or other funds
investing in the same asset class, the portfolio would perform poorly relative
to other asset allocation funds investing in alternative asset categories and
investment strategies. In addition, the portfolio indirectly pays a portion of
the expenses incurred by the underlying portfolios. As the underlying
portfolios or the portfolio's allocations among the underlying portfolios
change from time to time, or to the extent that the expense ratios of the
underlying portfolios change, the weighted average operating expenses borne by
the portfolio may increase or decrease.



INVESTMENT RISKS OF THE PORTFOLIO AND THE UNDERLYING FUNDS

DWS Alternative Asset Allocation Plus VIP may be subject to the risks discussed
below either through its investment in the DWS funds or through its direct
investment in other securities. Therefore, in the sections below, the term
"portfolio" refers to DWS Alternative Asset Allocation Plus VIP and the
underlying funds.

STOCK MARKET RISK. The portfolio is affected by how the stock market performs.
To the extent the portfolio invests in a particular capitalization or market
sector, the portfolio's performance may be proportionately affected by that
segment's general performance. When stock prices fall, you should expect the
value of your investment to fall as well. Because a stock represents ownership
in its issuer, stock prices can be hurt by poor management, shrinking product
demand and other business risks. These factors may affect single companies as
well as groups of companies. In addition, movements in financial markets may
adversely affect a stock's price, regardless of how well the company performs.
The market as a whole may not favor the types of investments the portfolio
makes, which could affect the portfolio's ability to sell them at an attractive
price.


DWS VARIABLE SERIES II - CLASS B SHARES       DWS ALTERNATIVE ASSET ALLOCATION
                                              PLUS VIP   5
<PAGE>

SECURITY SELECTION RISK. A risk that pervades all investing is the risk that
the securities in the portfolio's portfolio may decline in value.

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

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

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

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

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

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

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

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

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


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


Some governments exercise substantial influence over the private economic
sector and the social and political uncertainties that exist for many
developing countries is significant. In adverse social and political
circumstances, governments have been involved in policies of expropriation,
confiscatory taxation, nationalization, intervention in the securities markets
and trade settlement, and imposition of foreign investment restrictions and
exchange controls.

NON-DIVERSIFICATION RISK. This risk information applies to DWS Commodity
Securities Fund, DWS Gold & Precious Metals Fund, DWS RREEF Global
Infrastructure Fund and DWS RREEF Global Real Estate Securities Fund. The noted
DWS funds are classified as non-diversified under the Investment Company Act of
1940, as amended. This means that these DWS funds may invest in securities of
relatively few issuers. Thus, the performance of one or a small number of
portfolio holdings can affect overall performance more than if these DWS funds
invested in a larger number of issuers.


6   DWS ALTERNATIVE ASSET ALLOCATION PLUS VIP        DWS VARIABLE SERIES II -
                                                     CLASS B SHARES
<PAGE>

PRICING RISK. At times, market conditions may make it difficult to value some
investments, and the portfolio may use certain valuation methodologies for some
of its investments, such as fair value pricing. Given the subjective nature of
such valuation methodologies, it is possible that the value determined for an
investment may be different than the value realized upon such investment's
sale. If the portfolio has valued its securities too highly, you may pay too
much for portfolio shares when you buy into the portfolio. If the portfolio has
underestimated the price of its securities, you may not receive the full market
value when you sell your portfolio shares.

COMMODITY RISK. The portfolio may invest in equity securities issued by
companies in commodity-related industries and other securities related to such
companies. Such investments are subject to the risks associated with
concentration in securities of issuers in commodity-related industries. The
stocks of companies in commodity-related industries may underperform the stock
market as a whole. The stock prices of companies in commodity-related
industries may also experience greater price volatility than other types of
common stocks. Securities issued by companies in commodity-related industries
are sensitive to changes in the prices of, and in supply and demand for,
commodities. The value of securities issued by companies in commodity-related
industries may be affected by changes in overall market movements, changes in
interest rates, or factors affecting a particular industry or commodity, such
as drought, floods, weather, livestock disease, changes in storage costs,
embargoes, tariffs, policies of commodity cartels and international economic,
political and regulatory developments. The Advisor's judgments about trends in
the prices of these securities and commodities may prove to be incorrect.

TAX RISK. The treatment of commodity-linked notes, futures and certain other
derivative instruments for purposes of the portfolio qualifying as a regulated
investment company ("RIC") under the Internal Revenue Code of 1986, as amended
(the "Code") is not certain. DWS Commodity Securities Fund has obtained private
letter rulings from the Internal Revenue Service ("IRS") confirming that the
income and gain arising from certain types of commodity-linked notes in which
DWS Commodity Securities Fund invests constitute "qualifying income" under the
Code. Generally, if the commodity-linked instruments in which the portfolio
invests are not regarded as producing qualifying income, the portfolio may fail
to qualify as a RIC. If the portfolio fails to qualify as a RIC, the portfolio
will be subject to federal income tax on its ordinary income and capital gains
at regular corporate rates (without a deduction for distributions to
shareholders) which will reduce net asset value per share. When distributed,
that income would also be taxable to shareholders who are subject to current
federal income taxation with respect to their investment in the portfolio as a
dividend to the extent attributable to the portfolio's earnings and profits. In
addition, if DWS Alternative Asset Allocation Plus VIP fails to qualify as a
RIC, a separate account underlying a variable life insurance or variable
annuity contract that invests in shares of the portfolio will be required to
treat the portfolio (or if an underlying fund fails to qualify as a RIC, the
portfolio's investment in the underlying fund) as a single investment for
purposes of the diversification requirements of section 817(h) of the Code. If
a separate account fails to satisfy the diversification requirements of Code
section 817(h), income allocable to the contracts associated with the separate
account will be taxed currently for federal income tax purposes to the holders
of such contracts and income from prior periods with respect to such contracts
also could be taxable, most likely in the year of the failure.

COUNTERPARTY RISK. The portfolio will be subject to credit risk of the
counterparty with respect to derivative contracts entered into by the portfolio
or held by special purpose or structured vehicles in which the portfolio
invests. If a counterparty becomes bankrupt or otherwise fails to perform its
obligations due to financial difficulties, the portfolio may experience
significant delays in obtaining any recovery in a bankruptcy or other
reorganization proceeding. The portfolio may obtain only a limited recovery or
may obtain no recovery in such circumstances.

INFLATION-INDEXED BOND RISK. Although inflation-indexed bonds are expected to
be protected from long-term inflationary trends, short-term increases in
inflation may lead to a decline in the portfolio's value. If interest rates
rise due to reasons other than inflation, the portfolio's investment in these
securities may not be protected to the extent that the increase is not
reflected in the bond's inflation measure. Moreover, if the portfolio purchases
inflation-indexed bonds offered by foreign issuers, the rate of inflation
measured by the foreign index may not be correlated to the rate of inflation in
the US. Such foreign investments would, in that case, not provide protection
against inflation in the US. There can be no assurance that the portfolio's
returns will match or exceed the real rate of inflation.

INTEREST RATE RISK. Generally, debt securities will decrease in value when
interest rates rise. The longer the duration of the portfolio's debt
securities, the more sensitive the portfolio will be to interest rate changes.
(As a general rule, a 1% rise in interest rates means a 1% fall in value for
every year of duration.) As interest rates


DWS VARIABLE SERIES II - CLASS B SHARES       DWS ALTERNATIVE ASSET ALLOCATION
                                              PLUS VIP   7
<PAGE>

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

INDUSTRY RISK. While the portfolio does not concentrate in any industry, to the
extent that the portfolio has exposure to a given industry or sector, any
factors affecting that industry or sector could affect the value of portfolio
investments. For example, the real estate sector could be hurt by rising
interest rates or the commodities sector could be hurt by factors affecting a
particular industry or commodity such as drought, floods, weather or changes in
storage costs.

CREDIT RISK. The portfolio will be subject to the risk that the
creditworthiness of a debt security's issuer may decline, causing the value of
the debt security to decline. In addition, an issuer may not be able to make
timely payments on the interest and principal on the debt securities it has
issued. In some cases, debt securities may decline in credit quality or go into
default.

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

SENIOR LOANS RISK. Senior Loans may not be rated by a rating agency, registered
with the Securities and Exchange Commission or any state securities commission
or listed on any national securities exchange. The amount of public information
available with respect to Senior Loans may be less extensive than that
available for registered or exchange-listed securities. In evaluating the
creditworthiness of borrowers, the Advisor relies on its own evaluation of
borrowers; but will consider, and may rely in part on, analyses performed by
others. As a result, the portfolio is particularly dependent on the analytical
abilities of the Advisor. In addition, Senior Loans involve certain special
risks, including:

o CONFLICT OF INTEREST RISK. Affiliates of the Advisor may participate in the
  primary and secondary market for Senior Loans. Because of limitations
  imposed by applicable law, the presence of the Advisor's affiliates in the
  Senior Loan market may restrict the portfolio's ability to acquire some
  Senior Loans, affect the timing of such acquisition or affect the price at
  which a Senior Loan is acquired. The Advisor does not believe that this will
  materially affect the portfolio's ability to achieve its investment
  objectives. Also, because the Advisor may wish to invest in the publicly
  traded securities of a borrower, it may not have access to material
  non-public information regarding the borrower to which other lenders have
  access.

o CREDIT RISK. A portfolio purchasing Senior Loans faces the risk that the
  creditworthiness of the borrower may decline, causing the value of the loans
  to decline. In addition, a borrower may not be able to make timely payments
  on the interest and principal on the debt obligations it has outstanding.
  Any such non-payment could result in a reduction of income to the portfolio,
  a reduction in the value of the Senior Loan and a reduction in the
  portfolio's net asset value. There can be no assurance that the liquidation
  of any collateral securing a Senior Loan would satisfy the borrower's
  obligation in the event of non-payment of scheduled interest or principal
  payments, or that such collateral could be readily liquidated. In the event
  of bankruptcy of a borrower, the portfolio could experience delays or
  limitations with respect to its ability to realize the benefits of the
  collateral securing a Senior Loan. The portfolio may principally invest in
  below investment grade floating rate loans which are considered speculative
  because of the credit risk of their issuers. Such issuers may be more likely
  to default on payments of interest and principal in response to changes in
  economic conditions or circumstances.

8   DWS ALTERNATIVE ASSET ALLOCATION PLUS VIP        DWS VARIABLE SERIES II -
                                                        CLASS B SHARES
<PAGE>

o INTEREST RATE RISK. The value of debt securities will change in response to
  interest rate changes. As interest rates decline, a Senior Loan in which the
  fund invests may be prepaid sooner than scheduled, forcing the portfolio to
  reinvest in lower-yielding securities. The value of Senior Loans with
  adjustable interest rates will fluctuate less in response to interest rate
  changes than will fixed-rate debt securities. This could result in less
  volatility than would be expected for a portfolio that invests primarily in
  fixed-rate debt securities. However, because floating rates on Senior Loans
  only reset periodically, changes in prevailing interest rates may cause a
  fluctuation in the portfolio's value. In addition, extreme increases in
  prevailing interest rates may cause an increase in Senior Loan defaults
  which may cause a decline in the portfolio's value. Finally, a decrease in
  interest rates could adversely affect the income earned by the portfolio
  from its Senior Loans.

o LIQUIDITY RISK. Liquidity risk is the risk that a security cannot be sold
  quickly at a price that reflects the portfolio's estimate of its value. No
  active trading market may exist for some Senior Loans and certain Senior
  Loans may be subject to restrictions on resale. The inability to dispose of
  Senior Loans in a timely fashion could result in losses to the portfolio.

o MARKET RISK. Deteriorating market conditions might cause a general weakness
  in the market that reduces the overall level of securities prices in that
  market. In addition, an increase in demand for floating rate loans may
  adversely affect the rate of interest payable on Senior Loans acquired by
  the portfolio, thus reducing portfolio returns. During periods of limited
  supply of Senior Loans, the portfolio's yield may be lower.

o PREPAYMENT RISK. If a Senior Loan in which the portfolio invests is paid off
  sooner than scheduled, and interest rates are falling, the portfolio may be
  forced to reinvest the payments at lower yields.

BORROWING/LEVERAGE RISK. Because the portfolio may borrow money for investment
purposes, commonly referred to as "leveraging," its exposure to fluctuations in
the prices of its assets will be increased as compared to its exposure if the
portfolio did not borrow. Borrowing activities by the portfolio will amplify
any increase or decrease in the net asset value of the portfolio. In addition,
the interest which the portfolio pays on borrowed money, together with the
additional costs of maintaining a borrowing facility, are additional costs
borne by the portfolio and could reduce or eliminate any net investment
profits. Unless profits on assets acquired with borrowed funds exceed the costs
of borrowing, the use of borrowing will diminish the investment performance of
the portfolio compared with what it would have been without borrowing. When the
portfolio borrows money it must comply with certain asset coverage
requirements, which at times may require the portfolio to dispose of some of
its portfolio holdings even though it may be disadvantageous to do so at that
time.

ETF RISK. An ETF is a fund that holds a portfolio of common stocks or bonds
designed to track the performance of a securities index or industry sector.
ETFs trade on a securities exchange and their shares may, at times, trade at a
premium or discount to their net asset value. In addition, an ETF may not
replicate exactly the performance of the index it seeks to track for a number
of reasons, including transaction costs incurred by the ETF. ETFs incur fees
and expenses, such as operating expenses, licensing fees, trustee fees and
marketing expenses, which are borne proportionately by ETF shareholders, such
as the portfolio. The portfolio will also incur brokerage costs when purchasing
and selling shares of ETFs.

iGAP RISK. The success of the iGAP strategy depends, in part, on the Advisor's
ability to analyze the correlation between various global markets and asset
classes. If the Advisor's correlation analysis proves to be incorrect, losses
to the portfolio may be significant and may substantially exceed the intended
level of market exposure for the iGAP strategy.

SMALL COMPANY CAPITALIZATION RISK. Small company stocks tend to experience
steeper price fluctuations than the stocks of larger companies. A shortage of
reliable information can also pose added risk to small company stocks.
Industry-wide reversals may have a greater impact on small companies, since
they lack the financial resources of larger companies. Small company stocks are
typically less liquid than large company stocks. Accordingly, it may be harder
to find buyers for small company shares.

SHORT SALE RISK. Short sales involve the risk that the portfolio will incur a
loss by subsequently buying a security at a higher price than the price at
which the portfolio previously sold the security short. Any loss will be
increased by the amount of compensation, interest or dividends and transaction
costs the portfolio must pay to a lender of the security. In addition, because
a loss incurred by the portfolio on a short sale stems from increases in the
value of the security sold short, the extent of such loss, like the price of
the security sold short, is theoretically unlimited. By contrast, a loss
incurred by the portfolio on a long position arises from decreases in the value
of the security held by the portfolio and therefore is limited by the fact that
a security's value cannot drop below zero.


DWS VARIABLE SERIES II - CLASS B SHARES       DWS ALTERNATIVE ASSET ALLOCATION
                                              PLUS VIP   9
<PAGE>

The portfolio may not always be able to close out a short position at a
particular time or at an acceptable price. A lender may request that borrowed
securities be returned to it on short notice, and the portfolio may have to buy
the borrowed securities at an unfavorable price. If this occurs at a time that
other short sellers of the same security also want to close out their
positions, it is more likely that the portfolio will have to cover its short
sale at an unfavorable price and potentially reduce or eliminate any gain, or
cause a loss, as a result of the short sale.

The use of short sales - in effect, leveraging the portfolio - could increase
the exposure of the portfolio to the market, increase losses and increase the
volatility of returns.

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



THE PORTFOLIO'S PERFORMANCE HISTORY

Since the portfolio is newly offered, past performance information is not
available.

10   DWS ALTERNATIVE ASSET ALLOCATION PLUS VIP       DWS VARIABLE SERIES II -
                                                     CLASS B SHARES
<PAGE>

HOW MUCH INVESTORS PAY

This table describes the fees and expenses that you may pay if you buy and hold
portfolio shares. The portfolio's shareholders directly bear the fees and
expenses of the portfolio, subject to the Advisor's contractual obligations to
waive fees or reimburse expenses to maintain the portfolio's operating expenses
at a specified level (see "Net Annual Fund and Acquired Funds (Underlying
Funds) Operating Expenses" in the table below). The portfolio will indirectly
bear its proportionate share of fees and expenses incurred by the other DWS
funds and exchange-traded funds in which the portfolio is invested (see
"Acquired Funds (Underlying Funds) Fees and Expenses" in the table below). The
information in the table does not reflect charges and fees associated with the
separate account that invests in the portfolio or any variable life insurance
policy or variable annuity contract for which the portfolio is an investment
option. These charges and fees will increase expenses.



<TABLE>
<CAPTION>
FEE TABLE                                                      CLASS B
<S>                                                          <C>
ANNUAL OPERATING EXPENSES, deducted from portfolio assets
_____________________________________________________________________________
Management Fee 1                                                 0.20%
Distribution/Service (12b-1) Fee                                 0.25
Acquired Funds (Underlying Funds) Fees and Expenses 2,3          1.35
Other Expenses 4                                                 0.48
TOTAL ANNUAL OPERATING EXPENSES                                  2.28
Less Expense Waiver/Reimbursement                                0.32
NET ANNUAL FUND AND ACQUIRED FUNDS (UNDERLYING FUNDS)
OPERATING EXPENSES5                                              1.96
</TABLE>

1   Management fee has two components: (i) a fee on assets invested in other
    DWS funds; and (ii) a fee on assets not invested in other DWS funds
    ("Other Assets"). The Advisor currently intends to invest substantially
    all the assets of the portfolio in other DWS funds. However, in the
    future, the portfolio may invest a larger portion, or all, of its assets
    in Other Assets. If the portfolio's assets are entirely invested in Other
    Assets, the management fee would be 1.20% of average daily net assets.
    However, in such a situation, the Acquired Fund (Underlying Fund) Fees and
    Expense are expected to decrease. The Advisor will waive 0.15% of the
    management fee until the portfolio reaches $50 million in assets and the
    iGAP strategy is implemented.

2   The portfolio's shareholders bear indirectly the expenses of the shares of
    other DWS funds or ETFs in which the portfolio invests. Acquired Fund
    (Underlying Fund) Fees and Expenses for the initial fiscal year are based
    on the expected initial allocation of the portfolio's assets. The Total
    Annual Operating Expenses will vary with changes in allocations to, and
    operating expenses of, the other DWS funds or ETFs in which the portfolio
    invests.

3   "Acquired Funds (Underlying Funds) Fees and Expenses" includes the impact
    of dividends on short sales for investments in DWS Market Neutral Fund.
    "Acquired Funds (Underlying Funds) Fees and Expenses" would be 1.20%
    excluding these dividends on short sales and the "Total Annual Operating
    Expenses" would be 2.13%, without these dividends on short sales.

4   "Other Expenses" are based on estimated amounts for the current fiscal
    year, including 0.05% organizational and offering expenses expected to be
    incurred over the next twelve months only. Actual expenses may be
    different. "Other Expenses" include an administrative services fee paid to
    the Advisor in the amount of 0.10% of average daily net assets.

5   Through April 30, 2010, the Advisor has contractually agreed to waive all
    or a portion of its management fee and reimburse or pay operating expenses
    to the extent necessary to maintain "Total Annual Operating Expenses" at
    0.61% for Class B shares, excluding certain expenses such as extraordinary
    expenses, taxes, brokerage, interest, and acquired funds (underlying
    funds) fees and expenses (estimated at 1.35%).


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




<TABLE>
<CAPTION>
EXAMPLE                1 YEAR        3 YEARS
<S>                   <C>           <C>
Class B shares          $199           $682
</TABLE>



DWS VARIABLE SERIES II - CLASS B SHARES       DWS ALTERNATIVE ASSET ALLOCATION
                                              PLUS VIP   11
<PAGE>

PORTFOLIO MANAGEMENT

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

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

Robert Wang
Managing Director of Deutsche Asset Management and Portfolio Manager of the
portfolio.
   o Joined Deutsche Asset Management in 1995 as portfolio manager for asset
     allocation after 13 years of experience of trading fixed income, foreign
     exchange and derivative products at J.P. Morgan.
   o Global Head of Quantitative Strategies Portfolio Management: New York.
   o Joined the portfolio in 2009.
   o BS, The Wharton School, University of Pennsylvania.

Inna Okounkova
Director of Deutsche Asset Management and Portfolio Manager of the portfolio.
   o Joined Deutsche Asset Management in 1999 as a quantitative analyst,
     becoming an associate Portfolio Manager in 2001.
   o Global Asset Allocation Portfolio Manager: New York.
   o Joined the portfolio in 2009.
   o BS, MS, Moscow State University; MBA, University of Chicago.

Thomas Picciochi
Director of Deutsche Asset Management and Portfolio Manager of the portfolio.
   o Joined Deutsche Asset Management in 1999, formerly serving as portfolio
     manager for Absolute Return Strategies, after 13 years of experience in
     various research and analysis positions at State Street Global Advisors,
     FPL Energy, Barnett Bank, Trade Finance Corporation and Reserve Financial
     Management.
   o Global Asset Allocation Portfolio Manager: New York.
   o Joined the portfolio in 2009.
   o BA and MBA, University of Miami.

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



FINANCIAL HIGHLIGHTS

Since the portfolio is newly offered, financial highlights information is not
available.

12   DWS ALTERNATIVE ASSET ALLOCATION PLUS VIP       DWS VARIABLE SERIES II -
                                                     CLASS B SHARES
<PAGE>

HYPOTHETICAL EXPENSE SUMMARY

Using the annual portfolio operating expense ratios presented in the fee tables
in the portfolio prospectus, the Hypothetical Expense Summary shows the
estimated fees and expenses, in actual dollars, that would be charged on a
hypothetical investment of $10,000 in the portfolio held for the next 10 years
and the impact of such fees and expenses on portfolio returns for each year and
cumulatively, assuming a 5% return for each year. The historical rate of return
for the portfolio may be higher or lower than 5% and, for money funds, is
typically less than 5%. The tables also assume that all dividends and
distributions are reinvested. The annual portfolio expense ratios shown are net
of any contractual fee waivers or expense reimbursements, if any, for the
period of the contractual commitment. Also, please note that if you are
investing through a third party provider, that provider may have fees and
expenses separate from those of the portfolio that are not reflected here.
Mutual fund fees and expenses fluctuate over time and actual expenses may be
higher or lower than those shown.

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



DWS ALTERNATIVE ASSET ALLOCATION PLUS VIP - CLASS B



<TABLE>
<CAPTION>
                MAXIMUM                  INITIAL HYPOTHETICAL                          ASSUMED RATE
             SALES CHARGE:                   INVESTMENT:                                OF RETURN:
                 0.00%                         $10,000                                      5%
               CUMULATIVE                                CUMULATIVE           HYPOTHETICAL
             RETURN BEFORE                              RETURN AFTER        YEAR-END BALANCE          ANNUAL
                FEES AND            ANNUAL FUND           FEES AND           AFTER FEES AND          FEES AND
YEAR            EXPENSES          EXPENSE RATIOS          EXPENSES              EXPENSES             EXPENSES
<S>         <C>                  <C>                   <C>                 <C>                     <C>
   1              5.00%                 1.96%                3.04%            $ 10,304.00          $   198.98
   2             10.25%                 2.28%                5.84%            $ 10,584.27          $   238.13
   3             15.76%                 2.28%                8.72%            $ 10,872.16          $   244.60
   4             21.55%                 2.28%               11.68%            $ 11,167.88          $   251.26
   5             27.63%                 2.28%               14.72%            $ 11,471.65          $   258.09
   6             34.01%                 2.28%               17.84%            $ 11,783.68          $   265.11
   7             40.71%                 2.28%               21.04%            $ 12,104.20          $   272.32
   8             47.75%                 2.28%               24.33%            $ 12,433.43          $   279.73
   9             55.13%                 2.28%               27.72%            $ 12,771.62          $   287.34
  10             62.89%                 2.28%               31.19%            $ 13,119.01          $   295.15
TOTAL                                                                                              $ 2,590.71
</TABLE>


DWS VARIABLE SERIES II - CLASS B SHARES       DWS ALTERNATIVE ASSET ALLOCATION
                                              PLUS VIP   13
<PAGE>

DWS BLUE CHIP VIP


THE PORTFOLIO'S MAIN INVESTMENT STRATEGY

The portfolio seeks growth of capital and income.

Under normal circumstances, the portfolio invests at least 80% of its net
assets, plus the amount of any borrowings for investment purposes, in common
stocks of large US companies that are similar in size to the companies in the
S&P 500 Index (as of February 28, 2009, the S&P 500 Index had a median market
capitalization of $5 billion) and that portfolio management considers to be
"blue chip" companies. Blue chip companies are large, well-known companies that
typically have an established earnings and dividends history, easy access to
credit, solid positions in their industry and strong management.


While the portfolio invests mainly in US common stocks, it could invest up to
20% of its net assets in foreign securities. The portfolio may also invest in
other types of equity securities such as preferred stocks or convertible
securities.


Portfolio management looks for "blue chip" companies whose stock price is
attractive relative to potential growth. Portfolio management uses quantitative
stock techniques and fundamental equity analysis to evaluate each company's
stock price relative to the company's earnings, operating trends, market
outlook and other measures of performance potential.

Portfolio management will normally sell a stock when portfolio management
believes its fundamental factors have changed, other investments offer better
opportunities or in the case of adjusting the portfolio's emphasis on or within
a given industry.

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

Although major changes tend to be infrequent, the Board of Trustees could
change the portfolio's investment objective without seeking shareholder
approval. However, the Board will provide shareholders with at least 60 days'
notice prior to making any changes to the portfolio's 80% investment policy.




DERIVATIVES AND OTHER INVESTMENTS


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

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



THE MAIN RISKS OF INVESTING IN THE PORTFOLIO

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

STOCK MARKET RISK. The portfolio is affected by how the stock market performs.
To the extent the portfolio invests in a particular capitalization or market
sector, the portfolio's performance may be proportionately affected by that
segment's general performance. When stock prices fall, you should expect the
value of your investment to fall as well. Because a stock represents ownership
in its issuer, stock prices can be hurt by poor management, shrinking product
demand and other business risks. These factors may affect single companies as


14   DWS BLUE CHIP VIP                               DWS VARIABLE SERIES II -
                                                     CLASS B SHARES
<PAGE>

well as groups of companies. In addition, movements in financial markets may
adversely affect a stock's price, regardless of how well the company performs.
The market as a whole may not favor the types of investments the portfolio
makes, which could affect the portfolio's ability to sell them at an attractive
price.

GROWTH INVESTING RISK. Since growth stocks usually reinvest a large portion of
earnings in their own businesses, they may lack the dividends associated with
value stocks that might otherwise cushion their decline in a falling market.
Earnings disappointments in growth stocks often result in sharp price declines
because investors buy these stocks for their potential superior earnings
growth. Growth stocks may also be out of favor for certain periods in relation
to value stocks.

VALUE INVESTING RISK. At times, "value" investing may perform better than or
worse than other investment styles and the overall market. If portfolio
management overestimates the value or return potential of one or more
securities, the portfolio may underperform the general equity market. Value
stocks may also be out of favor for certain periods in relation to growth
stocks.

INDUSTRY RISK. While the portfolio does not concentrate in any industry, to the
extent that the portfolio has exposure to a given industry or sector, any
factors affecting that industry or sector could affect the value of portfolio
securities. For example, manufacturers of consumer goods could be hurt by a
rise in unemployment or technology companies could be hurt by such factors as
market saturation, price competition and rapid obsolescence.

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

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

PRICING RISK. At times, market conditions may make it difficult to value some
investments, and the portfolio may use certain valuation methodologies for some
of its investments, such as fair value pricing. Given the subjective nature of
such valuation methodologies, it is possible that the value determined for an
investment may be different than the value realized upon such investment's
sale. If the portfolio has valued its securities too highly, you may pay too
much for portfolio shares when you buy into the portfolio. If the portfolio has
underestimated the price of its securities, you may not receive the full market
value when you sell your portfolio shares.

SECURITY SELECTION RISK. A risk that pervades all investing is the risk that
the securities in the portfolio's portfolio may decline in value.

Other factors that could affect performance include:

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

o growth stocks may be out of favor for certain periods.

o foreign securities may be more volatile than their US counterparts, for
  reasons such as currency fluctuations and political and economic
  uncertainty.

Investors with long-term goals who are interested in a core stock investment
 may be interested in this portfolio.

DWS VARIABLE SERIES II - CLASS B SHARES                       DWS BLUE CHIP
                                                              VIP   15
<PAGE>

PERFORMANCE - CLASS B

While a portfolio's past performance isn't necessarily a sign of how it will do
in the future, it can be valuable for an investor to know.

The bar chart shows how the returns for the portfolio's Class B shares have
varied from year to year, which may give some idea of risk. The table shows
average annual returns for the portfolio and comparable index information
(which, unlike the portfolio, does not have any fees or expenses). The
performance of both the portfolio and the comparable index information varies
over time. All figures assume reinvestment of dividends and distributions.

This information doesn't reflect charges and fees associated with the separate
account that invests in the portfolio or any variable life insurance policy or
variable annuity contract for which the portfolio is an investment option.
These charges and fees will reduce returns.

The inception date for Class B was July 1, 2002. In the bar chart and table,
the performance figures for Class B before that date are based on the
historical performance of the portfolio's original share class (Class A),
adjusted to reflect the higher gross total annual operating expenses of Class
B. Class A is offered in a different prospectus.


ANNUAL TOTAL RETURN (%) as of 12/31 each year - CLASS B

[BAR GRAPHIC OMITTED HERE]

[BAR GRAPHIC DATA]




<TABLE>
<S>          <C>        <C>         <C>         <C>        <C>        <C>       <C>        <C>       <C>
  24.92       -8.07      -16.02      -22.31     26.76      15.55       9.68     15.19      3.15      -38.48
  1999       2000        2001        2002       2003       2004       2005      2006       2007      2008
</TABLE>




<TABLE>
<CAPTION>
                FOR THE PERIODS INCLUDED IN THE BAR CHART:
<S>                                        <C>
BEST QUARTER: 17.43%, Q4 1999              WORST QUARTER: -21.60%, Q4 2008
2009 TOTAL RETURN AS OF MARCH 31: -7.94%
</TABLE>

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



<TABLE>
<CAPTION>
                              1 YEAR         5 YEARS        10 YEARS
<S>                        <C>              <C>            <C>
Portfolio - Class B            -38.48          -1.52          -1.27
Russell 1000 Index             -37.60          -2.04          -1.09
</TABLE>

RUSSELL 1000 (Reg. TM) INDEX is an unmanaged price-only index of the 1,000
largest capitalized companies that are domiciled in the US and whose common
stocks are traded.

Current performance information may be higher or lower than the performance
data quoted above. For more recent performance information, contact your
participating insurance company.


16   DWS BLUE CHIP VIP                               DWS VARIABLE SERIES II -
                                                     CLASS B SHARES
<PAGE>

HOW MUCH INVESTORS PAY

This table describes the fees and expenses that you may pay if you buy and hold
portfolio shares. The information in the table does not reflect charges and
fees associated with the separate account that invests in the portfolio or any
variable life insurance policy or variable annuity contract for which the
portfolio is an investment option. These charges and fees will increase
expenses.



<TABLE>
<CAPTION>
FEE TABLE                                   CLASS B
<S>                                       <C>
ANNUAL OPERATING EXPENSES, deducted from portfolio assets
__________________________________________________________
Management Fee 1                              0.55%
Distribution/Service (12b-1) Fee              0.25
Other Expenses 2                              0.29
TOTAL ANNUAL OPERATING EXPENSES 3, 4          1.09
</TABLE>

1   Restated on an annualized basis to reflect approved fee changes that took
    effect on May 1, 2008.


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


3   Through September 30, 2009, the Advisor has contractually agreed to waive
    all or a portion of its management fee and reimburse or pay certain
    operating expenses of the portfolio to the extent necessary to maintain
    the portfolio's total operating expenses at 1.25% for Class B shares,
    excluding certain expenses such as extraordinary expenses, taxes,
    brokerage and interest. Although there can be no assurance that the
    current waiver/expense reimbursement arrangement will be maintained beyond
    September 30, 2009, the Advisor has committed to review the continuance of
    waiver/expense reimbursement arrangements by September 30, 2009.


4   Except as otherwise noted, the information in the table is based on amounts
    incurred during the portfolio's most recent fiscal year. It is important
    for you to understand that a decline in the portfolio's average net assets
    during the current fiscal year due to recent unprecedented market
    volatility or other factors could cause the portfolio's expense ratios for
    the portfolio's current fiscal year to be higher than the expense
    information presented. For more current expense information, see
    "Financial Highlights" in the portfolio's future annual or semi-annual
    reports.



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



<TABLE>
<CAPTION>
EXAMPLE                1 YEAR        3 YEARS        5 YEARS        10 YEARS
<S>                   <C>           <C>            <C>            <C>
Class B shares          $111           $347           $601         $1,329
</TABLE>


DWS VARIABLE SERIES II - CLASS B SHARES                       DWS BLUE CHIP
                                                              VIP   17
<PAGE>

PORTFOLIO MANAGEMENT

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

The following people handle the day-to-day management of the portfolio:

Robert Wang
Managing Director of Deutsche Asset Management and Portfolio Manager of the
portfolio.
   o Joined Deutsche Asset Management in 1995 as portfolio manager for asset
     allocation after 13 years of experience of trading fixed income and
     derivative securities at J.P. Morgan.
   o Global Head of Quantitative Strategies Portfolio Management: New York.
   o Joined the portfolio in 2003.
   o BS, The Wharton School, University of Pennsylvania.

James B. Francis, CFA
Director of Deutsche Asset Management and Portfolio Manager of the portfolio.
   o Head of Active Quantitative Equity Portfolio Management: New York.
   o Joined Deutsche Asset Management and the portfolio in 2008 after 20 years
     of experience as senior quantitative global equity portfolio manager at
     State Street Global Advisors, and most recently, Northern Trust Global
     Investments.
   o BS in Applied Mathematics from University of Massachusetts, Amherst.

Julie Abbett
Director of Deutsche Asset Management and Portfolio Manager of the portfolio.
   o Senior portfolio manager for Global Quantitative Equity: New York.
   o Joined Deutsche Asset Management in 2000 after four years of combined
     experience as a consultant with equity trading services for BARRA, Inc.
     and a product developer for FactSet Research.
   o Joined the portfolio in 2006.
   o BA, University of Connecticut.

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


18   DWS BLUE CHIP VIP                               DWS VARIABLE SERIES II -
                                                     CLASS B SHARES
<PAGE>

FINANCIAL HIGHLIGHTS

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

This information doesn't reflect charges and fees associated with the separate
account that invests in the portfolio or any variable life insurance policy or
variable annuity contract for which the portfolio is an investment option.
These charges and fees will reduce returns.



DWS BLUE CHIP VIP - CLASS B



<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,                               2008         2007         2006         2005        2004
<S>                                               <C>           <C>         <C>           <C>         <C>
SELECTED PER SHARE DATA
------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD                $  14.61     $  16.12     $  14.83     $  13.60    $  11.80
-------------------------------------------------   --------     --------     --------     --------    --------
Income (loss) from investment operations:
 Net investment income a                                 .04          .11       .11c            .09         .09
_________________________________________________   ________     ________     ________     ________    ________
 Net realized and unrealized gain (loss)              ( 4.89)         .36         2.07         1.22        1.74
-------------------------------------------------   --------     --------     --------     --------    --------
 TOTAL FROM INVESTMENT OPERATIONS                     ( 4.85)         .47         2.18         1.31        1.83
-------------------------------------------------   --------     --------     --------     --------    --------
Less distributions from:
 Net investment income                                (  .16)      (  .11)      (  .08)      (  .08)     (  .03)
_________________________________________________   ________     ________     ________     ________    ________
 Net realized gains                                   ( 2.34)      ( 1.87)      (  .81)           -           -
-------------------------------------------------   --------     --------     --------     --------    --------
 TOTAL DISTRIBUTIONS                                  ( 2.50)      ( 1.98)      (  .89)      (  .08)     (  .03)
-------------------------------------------------   --------     --------     --------     --------    --------
NET ASSET VALUE, END OF PERIOD                      $   7.26     $  14.61     $  16.12     $  14.83    $  13.60
-------------------------------------------------   --------     --------     --------     --------    --------
Total Return (%)                                      (38.48)b       3.15      15.19c          9.68       15.55
_________________________________________________   ________     ________     ________     ________    ________
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ millions)                   .13           11           46           44          37
_________________________________________________   ________     ________     ________     ________    ________
Ratio of expenses before expense reductions (%)         1.22         1.09         1.09         1.09        1.08
_________________________________________________   ________     ________     ________     ________    ________
Ratio of expenses after expense reductions (%)          1.21         1.09         1.09         1.09        1.08
_________________________________________________   ________     ________     ________     ________    ________
Ratio of net investment income (%)                       .67          .75       .74c            .61         .70
_________________________________________________   ________     ________     ________     ________    ________
Portfolio turnover rate (%)                              127          275          226          288         249
-------------------------------------------------   --------     --------     --------     --------    --------
</TABLE>

a   Based on average shares outstanding during the period.

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

c   Includes non-recurring income from the Advisor recorded as a result of an
    administrative proceeding regarding disclosure of brokerage allocation
    practices in connection with sales of DWS Funds. The non-recurring income
    resulted in an increase in net investment income of $0.003 per share and
    an increase in the ratio of net investment income of 0.02%. Excluding this
    non-recurring income, total return would have been 0.02% lower.


DWS VARIABLE SERIES II - CLASS B SHARES                       DWS BLUE CHIP
                                                              VIP   19
<PAGE>

HYPOTHETICAL EXPENSE SUMMARY

Using the annual portfolio operating expense ratios presented in the fee tables
in the portfolio prospectus, the Hypothetical Expense Summary shows the
estimated fees and expenses, in actual dollars, that would be charged on a
hypothetical investment of $10,000 in the portfolio held for the next 10 years
and the impact of such fees and expenses on portfolio returns for each year and
cumulatively, assuming a 5% return for each year. The historical rate of return
for the portfolio may be higher or lower than 5% and, for money funds, is
typically less than 5%. The tables also assume that all dividends and
distributions are reinvested. The annual portfolio expense ratios shown are net
of any contractual fee waivers or expense reimbursements, if any, for the
period of the contractual commitment. Also, please note that if you are
investing through a third party provider, that provider may have fees and
expenses separate from those of the portfolio that are not reflected here.
Mutual fund fees and expenses fluctuate over time and actual expenses may be
higher or lower than those shown.

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



DWS BLUE CHIP VIP - CLASS B



<TABLE>
<CAPTION>
                MAXIMUM                  INITIAL HYPOTHETICAL                          ASSUMED RATE
             SALES CHARGE:                   INVESTMENT:                                OF RETURN:
                 0.00%                         $10,000                                      5%
               CUMULATIVE                                CUMULATIVE           HYPOTHETICAL
             RETURN BEFORE                              RETURN AFTER        YEAR-END BALANCE          ANNUAL
                FEES AND            ANNUAL FUND           FEES AND           AFTER FEES AND          FEES AND
YEAR            EXPENSES          EXPENSE RATIOS          EXPENSES              EXPENSES             EXPENSES
<S>         <C>                  <C>                   <C>                 <C>                     <C>
   1              5.00%                 1.09%                3.91%            $ 10,391.00          $   111.13
   2             10.25%                 1.09%                7.97%            $ 10,797.29          $   115.48
   3             15.76%                 1.09%               12.19%            $ 11,219.46          $   119.99
   4             21.55%                 1.09%               16.58%            $ 11,658.14          $   124.68
   5             27.63%                 1.09%               21.14%            $ 12,113.98          $   129.56
   6             34.01%                 1.09%               25.88%            $ 12,587.63          $   134.62
   7             40.71%                 1.09%               30.80%            $ 13,079.81          $   139.89
   8             47.75%                 1.09%               35.91%            $ 13,591.23          $   145.36
   9             55.13%                 1.09%               41.23%            $ 14,122.65          $   151.04
  10             62.89%                 1.09%               46.75%            $ 14,674.84          $   156.95
TOTAL                                                                                              $ 1,328.70
</TABLE>


20   DWS BLUE CHIP VIP                               DWS VARIABLE SERIES II -
                                                     CLASS B SHARES
<PAGE>

DWS CORE FIXED INCOME VIP


THE PORTFOLIO'S MAIN INVESTMENT STRATEGY

The portfolio seeks high current income.

The portfolio invests for current income, not capital appreciation. Under
normal circumstances, the portfolio invests at least 80% of its assets, plus
the amount of any borrowings for investment purposes, determined at the time of
purchase, in fixed income securities. Fixed income securities include those of
the US Treasury, as well as US government agencies and instrumentalities,
corporate, mortgage-backed and asset-backed securities, taxable municipal and
tax-exempt municipal bonds and liquid Rule 144A securities.

The portfolio invests primarily in investment-grade fixed income securities
rated within the top four credit rating categories. The portfolio may invest up
to 25% of its total assets in US dollar-denominated securities of foreign
issuers and governments. The portfolio may hold up to 20% of its total assets
in cash or money market instruments in order to maintain liquidity, or in the
event portfolio management determines that securities meeting the portfolio's
investment objective are not readily available for purchase. The portfolio's
investments in foreign issuers are limited to US dollar-denominated securities
to avoid currency risk.

Portfolio management utilizes a core US fixed income strategy that seeks to add
incremental returns to the Barclays Capital US Aggregate Index. In managing the
portfolio, portfolio management uses a balanced "top-down" and "bottom-up"
approach.

Portfolio management seeks pricing changes in a broad range of securities and
sectors in order to achieve the portfolio's investment objective.

Company research is a very important part of the investment process. In
selecting individual securities for investment, portfolio management:

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

o determines the intrinsic value of each issue by examining credit, structure,
  option value and liquidity risks. Portfolio management looks to exploit any
  inefficiencies between intrinsic value and market trading price;

o uses credit analysis to determine the issuer's ability to pay interest and
  repay principal on its bonds; and

o subordinates sector weightings to individual bonds that may add above-market
  value.

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

Although major changes tend to be infrequent, the Board of Trustees could
change the portfolio's investment objective without seeking shareholder
approval. However, the Board will provide shareholders with at least 60 days'
notice prior to making any changes to the portfolio's 80% investment policy.




DERIVATIVES AND OTHER INVESTMENTS


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

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


DWS VARIABLE SERIES II - CLASS B SHARES                 DWS CORE FIXED INCOME
                                                        VIP   21
<PAGE>

THE MAIN RISKS OF INVESTING IN THE PORTFOLIO

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

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

CREDIT RISK. A portfolio purchasing bonds faces the risk that the
creditworthiness of the issuer may decline, causing the value of its bonds to
decline. In addition, an issuer may be unable or unwilling to make timely
payments on the interest and principal on the bonds it has issued. Because the
issuers of bonds rated below the top three rating categories may be in
uncertain financial health, the prices of their bonds can be more vulnerable to
bad economic news or even the expectation of bad news, than investment-grade
bonds. In some cases, bonds may decline in credit quality or go into default.
Because this portfolio may invest in securities not paying current interest or
in securities already in default, these risks may be more pronounced.

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


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



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



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



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

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

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

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

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



22   DWS CORE FIXED INCOME VIP                       DWS VARIABLE SERIES II -
                                                         CLASS B SHARES
<PAGE>

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

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

PRICING RISK. At times, market conditions may make it difficult to value some
investments, and the portfolio may use certain valuation methodologies for some
of its investments, such as fair value pricing. Given the subjective nature of
such valuation methodologies, it is possible that the value determined for an
investment may be different than the value realized upon such investment's
sale. If the portfolio has valued its securities too highly, you may pay too
much for portfolio shares when you buy into the portfolio. If the portfolio has
underestimated the price of its securities, you may not receive the full market
value when you sell your portfolio shares.

SECURITY SELECTION RISK. A risk that pervades all investing is the risk that
the securities in the portfolio's portfolio may decline in value.

Another factor that could affect performance is:

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

This portfolio is designed for individuals who are seeking to earn higher
current income than an investment in money market funds may provide.


DWS VARIABLE SERIES II - CLASS B SHARES                 DWS CORE FIXED INCOME
                                                        VIP   23
<PAGE>

PERFORMANCE - CLASS B

While a portfolio's past performance isn't necessarily a sign of how it will do
in the future, it can be valuable for an investor to know.

The bar chart shows how the returns for the portfolio's Class B shares have
varied from year to year, which may give some idea of risk. The table shows
average annual returns for the portfolio and comparable index information
(which, unlike the portfolio, does not have any fees or expenses). The
performance of both the portfolio and the comparable index information varies
over time. All figures assume reinvestment of dividends and distributions.

This information doesn't reflect charges and fees associated with the separate
account that invests in the portfolio or any variable life insurance policy or
variable annuity contract for which the portfolio is an investment option.
These charges and fees will reduce returns.

The inception date for Class B was July 1, 2002. In the bar chart and table,
the performance figures for Class B before that date are based on the
historical performance of the portfolio's original share class (Class A),
adjusted to reflect the higher gross total annual operating expenses of Class
B. Class A is offered in a different prospectus.


From December 2, 2005 through February 27, 2009, Aberdeen Asset Management Inc.
served as the portfolio's subadvisor and was primarily responsible for the day
to day management of the portfolio. Performance would have been different if
the portfolio's current investment strategy had been in effect.



ANNUAL TOTAL RETURN (%) as of 12/31 each year - CLASS B

[BAR GRAPHIC OMITTED HERE]

[BAR GRAPHIC DATA]





<TABLE>
<S>          <C>       <C>       <C>       <C>       <C>       <C>       <C>       <C>       <C>
  -2.30       9.63      5.45      7.77      4.76      4.10      1.85      3.89     3.75       -19.71
  1999       2000      2001      2002      2003      2004      2005      2006      2007      2008
</TABLE>




<TABLE>
<CAPTION>
                FOR THE PERIODS INCLUDED IN THE BAR CHART:
<S>                                       <C>
BEST QUARTER: 4.03%, Q3 2002              WORST QUARTER: -12.94%, Q4 2008
2009 TOTAL RETURN AS OF MARCH 31: 0.26%
</TABLE>

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



<TABLE>
<CAPTION>
                                       1 YEAR         5 YEARS        10 YEARS
<S>                                 <C>              <C>            <C>
Portfolio - Class B                     -19.71          -1.70           1.58
Barclays Capital US Aggregate
Index                                    5.24           4.65            5.63
</TABLE>

BARCLAYS CAPITAL U.S. AGGREGATE INDEX (name changed from Lehman Brothers U.S.
Aggregate Index effective November 3, 2008) is an unmanaged market
value-weighted measure of Treasury issues, agency issues, corporate bond issues
and mortgage securities.

Current performance information may be higher or lower than the performance
data quoted above. For more recent performance information, contact your
participating insurance company.


24   DWS CORE FIXED INCOME VIP                       DWS VARIABLE SERIES II -
                                                     CLASS B SHARES
<PAGE>

HOW MUCH INVESTORS PAY

This table describes the fees and expenses that you may pay if you buy and hold
portfolio shares. The information in the table does not reflect charges and
fees associated with the separate account that invests in the portfolio or any
variable life insurance policy or variable annuity contract for which the
portfolio is an investment option. These charges and fees will increase
expenses.




<TABLE>
<CAPTION>
FEE TABLE                                CLASS B
<S>                                    <C>
ANNUAL OPERATING EXPENSES, deducted from portfolio assets
_________________________________________________________
Management Fee 1                           0.50%
Distribution/Service (12b-1) Fee           0.25
Other Expenses 2                           0.32
TOTAL ANNUAL OPERATING EXPENSES 3          1.07
</TABLE>


1   Restated on an annualized basis to reflect approved fee changes that took
    effect on May 1, 2008.


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

3   Except as otherwise noted, the information in the table is based on amounts
    incurred during the portfolio's most recent fiscal year. It is important
    for you to understand that a decline in the portfolio's average net assets
    during the current fiscal year due to recent unprecedented market
    volatility or other factors could cause the portfolio's expense ratios for
    the portfolio's current fiscal year to be higher than the expense
    information presented. Based on asset levels as of December 31, 2008, the
    gross annualized expense ratio of Class B shares is estimated at 1.15%.
    For more current expense information, see "Financial Highlights" in the
    portfolio's future annual or semi-annual reports.



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



<TABLE>
<CAPTION>
EXAMPLE                1 YEAR        3 YEARS        5 YEARS        10 YEARS
<S>                   <C>           <C>            <C>            <C>
Class B shares          $109           $340           $590         $1,306
</TABLE>


DWS VARIABLE SERIES II - CLASS B SHARES                 DWS CORE FIXED INCOME
                                                        VIP   25
<PAGE>

PORTFOLIO MANAGEMENT

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

Kenneth R. Bowling, CFA
Managing Director of Deutsche Asset Management and Portfolio Manager of the
portfolio.
   o  Joined Deutsche Asset Management in 2007 after 14 years of experience at
     INVESCO where he was most recently director of US fixed Income.
   o  Head of Institutional Fixed Income Investments, Americas: Louisville.
   o  Joined the portfolio in 2009.
   o  BS and MEng from University of Louisville.

Jamie Guenther, CFA
Managing Director of Deutsche Asset Management and Portfolio Manager of the
portfolio.
   o  Joined Deutsche Asset Management in 2007 after 25 years of experience,
     most recently as head of Credit Research and CDO/CSO Credit for INVESCO.
     Prior to that he was head of financial institution investment research at
     Duff & Phelps Investment Research. Before that he was a global security
     analyst for Alexander & Alexander. He began his career in 1982 at Touche
     Ross Financial Consulting.
   o  Head of Institutional Credit: Louisville.
   o  Joined the portfolio in 2009.
   o  BBA from Western Michigan University.

John Brennan
Director of Deutsche Asset Management and Portfolio Manager of the portfolio.
   o  Joined Deutsche Asset Management in 2007 after 14 years of experience at
     INVESCO and Freddie Mac. Prior to joining was head of Structured
     Securities sector team for INVESCO and before that was senior fixed income
     portfolio manager at Freddie Mac specializing in MBS, CMBS, collateralized
     mortgage obligations, ARMS, mortgage derivatives, US Treasuries and agency
     debt.
   o  Portfolio and Sector Manager for Institutional Fixed Income: Louisville.
   o  Joined the portfolio in 2009.
   o  BS from University of Maryland; MBA from William & Mary.

Bruce Harley, CFA, CEBS
Director of Deutsche Asset Management and Portfolio Manager of the portfolio.
   o  Joined Deutsche Asset Management in 2007 after 18 years of experience at
     INVESCO where he was head of Governments and Derivatives, responsible for
     positioning for US duration and term structure; Government and futures
     trading.
   o  Portfolio and Sector Manager for Institutional Fixed Income: Louisville.
   o  Joined the portfolio in 2009.
   o  BS in Economics from University of Louisville.

J. Richard Robben, CFA
Director of Deutsche Asset Management and Portfolio Manager of the portfolio.
   o  Joined Deutsche Asset Management in 2007 after 11 years of experience at
     INVESCO Institutional, most recently as senior portfolio manager for
      LIBOR-related strategies and head of portfolio construction group for
      North American Fixed Income.
   o  Portfolio Manager for Institutional Fixed Income: Louisville.
   o  Joined the portfolio in 2009.
   o  BA from Bellarmine University.

David Vignolo, CFA
Vice President of Deutsche Asset Management and Portfolio Manager of the
portfolio.
   o  Joined Deutsche Asset Management in 2007 after 20 years of experience
     that included head of corporate bond trading and portfolio manager for
     INVESCO and Conning Asset Management Co., and corporate bond trader and
     portfolio manager for ANB Investment Management Co.
   o  Portfolio and Sector Manager for Institutional Fixed Income: Louisville.
   o  Joined the portfolio in 2009.
   o  BS from Indiana University; MBA from Case Western Reserve University.

J. Kevin Horsley, CFA, CPA
Director of Deutsche Asset Management and Portfolio Manager of the portfolio.
   o  Joined Deutsche Asset Management in 2007 after 13 years of experience,
     of which 11 were at INVESCO as senior analyst for a variety of credit
     sectors. He also has experience in the structured securities market
      (asset-backed and commercial mortgage-backed securities), and in research
      coverage of foreign exchange markets, corporate finance, market planning
      in the telecom sector, and in public accounting.
   o  Credit Analyst for Institutional Fixed Income: Louisville.
   o  Joined the portfolio in 2009.
   o  BA from Transylvania University; MBA from Owen Graduate School of
     Management, Vanderbilt University.

Stephen Willer, CFA
Vice President of Deutsche Asset Management and Portfolio Manager of the
portfolio.
   o  Joined Deutsche Asset Management in 2007 after 13 years of experience,
     11 of which were at AMVESCAP, INVESCO Institutional, where he was CDO
     portfolio manager responsible for structuring, pricing and managing
     corporate credit CSOs, developing CDS based trading strategies and
     vehicles, and Alpha decisions for CDS index trading. He started his career
     as a financial analyst at Providian Capital Management.
   o  Portfolio manager for Institutional Fixed Income: Louisville.
   o  Joined the portfolio in 2009.
   o  BS in Finance/Economics from the University of Richmond.

26   DWS CORE FIXED INCOME VIP                       DWS VARIABLE SERIES II -
                                                        CLASS B SHARES
<PAGE>

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



FINANCIAL HIGHLIGHTS

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

This information doesn't reflect charges and fees associated with the separate
account that invests in the portfolio or any variable life insurance policy or
variable annuity contract for which the portfolio is an investment option.
These charges and fees will reduce returns.


From December 2, 2005 through February 27, 2009, Aberdeen Asset Management Inc.
served as the portfolio's subadvisor and was primarily responsible for the day
to day management of the portfolio. Performance would have been different if
the portfolio's current investment strategy had been in effect.




DWS CORE FIXED INCOME VIP - CLASS B



<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,                               2008         2007        2006        2005        2004
<S>                                               <C>           <C>         <C>         <C>         <C>
SELECTED PER SHARE DATA
----------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD                $  11.80     $  11.84     $ 11.78    $  12.04    $  12.13
-------------------------------------------------   --------     --------     -------    --------    --------
Income (loss) from investment operations:
 Net investment income a                                 .53          .51         .49         .42         .45
_________________________________________________   ________     ________     _______    ________    ________
 Net realized and unrealized gain (loss)              ( 2.73)      (  .08)     (  .05)     (  .21)        .05
-------------------------------------------------   --------     --------     -------    --------    --------
 Total from investment operations                     ( 2.20)         .43         .44         .21         .50
-------------------------------------------------   --------     --------     -------    --------    --------
Less distributions from:
 Net investment income                                (  .72)      (  .47)     (  .38)     (  .36)     (  .38)
_________________________________________________   ________     ________     _______    ________    ________
 Net realized gains                                        -            -      (  .00)*    (  .11)     (  .21)
-------------------------------------------------   --------     --------     -------    --------    --------
 TOTAL DISTRIBUTIONS                                  (  .72)      (  .47)     (  .38)     (  .47)     (  .59)
-------------------------------------------------   --------     --------     -------    --------    --------
NET ASSET VALUE, END OF PERIOD                      $   8.88     $  11.80     $ 11.84    $  11.78    $  12.04
-------------------------------------------------   --------     --------     -------    --------    --------
Total Return (%)                                      (19.71)b       3.75        3.89        1.85        4.10
_________________________________________________   ________     ________     _______    ________    ________
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
----------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ millions)                    32           69          82          89          88
_________________________________________________   ________     ________     _______    ________    ________
Ratio of expenses before expense reductions (%)         1.10         1.05        1.07        1.07        1.03
_________________________________________________   ________     ________     _______    ________    ________
Ratio of expenses after expense reductions (%)          1.09         1.05        1.07        1.07        1.03
_________________________________________________   ________     ________     _______    ________    ________
Ratio of net investment income (loss) (%)               4.97         4.39        4.17        3.56        3.81
_________________________________________________   ________     ________     _______    ________    ________
Portfolio turnover rate (%)                              215          209         198         241         176
-------------------------------------------------   --------     --------     -------    --------    --------
</TABLE>

a   Based on average shares outstanding during the period.

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

*   Amount is less than $.005.

DWS VARIABLE SERIES II - CLASS B SHARES                 DWS CORE FIXED INCOME
                                                        VIP   27
<PAGE>

HYPOTHETICAL EXPENSE SUMMARY

Using the annual portfolio operating expense ratios presented in the fee tables
in the portfolio prospectus, the Hypothetical Expense Summary shows the
estimated fees and expenses, in actual dollars, that would be charged on a
hypothetical investment of $10,000 in the portfolio held for the next 10 years
and the impact of such fees and expenses on portfolio returns for each year and
cumulatively, assuming a 5% return for each year. The historical rate of return
for the portfolio may be higher or lower than 5% and, for money funds, is
typically less than 5%. The tables also assume that all dividends and
distributions are reinvested. The annual portfolio expense ratios shown are net
of any contractual fee waivers or expense reimbursements, if any, for the
period of the contractual commitment. Also, please note that if you are
investing through a third party provider, that provider may have fees and
expenses separate from those of the portfolio that are not reflected here.
Mutual fund fees and expenses fluctuate over time and actual expenses may be
higher or lower than those shown.

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



DWS CORE FIXED INCOME VIP - CLASS B



<TABLE>
<CAPTION>
                MAXIMUM                  INITIAL HYPOTHETICAL                          ASSUMED RATE
             SALES CHARGE:                   INVESTMENT:                                OF RETURN:
                 0.00%                         $10,000                                      5%
               CUMULATIVE                                CUMULATIVE           HYPOTHETICAL
             RETURN BEFORE                              RETURN AFTER        YEAR-END BALANCE          ANNUAL
                FEES AND            ANNUAL FUND           FEES AND           AFTER FEES AND          FEES AND
YEAR            EXPENSES          EXPENSE RATIOS          EXPENSES              EXPENSES             EXPENSES
<S>         <C>                  <C>                   <C>                 <C>                     <C>
   1              5.00%                 1.07%                3.93%            $ 10,393.00          $   109.10
   2             10.25%                 1.07%                8.01%            $ 10,801.44          $   113.39
   3             15.76%                 1.07%               12.26%            $ 11,225.94          $   117.85
   4             21.55%                 1.07%               16.67%            $ 11,667.12          $   122.48
   5             27.63%                 1.07%               21.26%            $ 12,125.64          $   127.29
   6             34.01%                 1.07%               26.02%            $ 12,602.18          $   132.29
   7             40.71%                 1.07%               30.97%            $ 13,097.44          $   137.49
   8             47.75%                 1.07%               36.12%            $ 13,612.17          $   142.90
   9             55.13%                 1.07%               41.47%            $ 14,147.13          $   148.51
  10             62.89%                 1.07%               47.03%            $ 14,703.11          $   154.35
TOTAL                                                                                              $ 1,305.65
</TABLE>


28   DWS CORE FIXED INCOME VIP                       DWS VARIABLE SERIES II -
                                                     CLASS B SHARES
<PAGE>

DWS DREMAN SMALL MID CAP VALUE VIP


THE PORTFOLIO'S MAIN INVESTMENT STRATEGY

The portfolio seeks long-term capital appreciation.

Under normal circumstances, the portfolio invests at least 80% of net assets,
plus the amount of any borrowings for investment purposes, in undervalued
common stocks of small and mid-size US companies. The portfolio defines small
companies as those that are similar in market value to those in the Russell
2000 (Reg. TM) Value Index (as of February 28, 2009, the Russell 2000 (Reg. TM)
Value Index had a median market capitalization of $231 million). The portfolio
defines mid-size companies as those that are similar in market value to those
in the Russell Midcap (Reg. TM) Value Index (as of February 28, 2009, the
Russell Midcap (Reg. TM) Value Index had a median market capitalization of $1.8
billion). The portfolio intends to invest primarily in companies whose market
capitalizations fall within the normal range of each Index.


While the portfolio invests mainly in US stocks, it could invest up to 20% of
net assets in foreign securities.


The portfolio's equity investments are mainly common stocks, but may also
include other types of equities such as preferred or convertible stocks. The
portfolio may also invest in initial public offerings.


Portfolio management begins its stock selection process by screening stocks of
small and mid-size companies with below market price-to-earnings (P/E) ratios.
Portfolio management then seeks companies with a low price compared to the book
value, cash flow and yield and analyze individual companies to identify those
that are fundamentally sound and appear to have strong potential for earnings
and dividend growth over the Index.

From the remaining group, portfolio management then completes its fundamental
analysis and makes its buy decisions from a group of the most attractive
stocks, drawing on analysis of economic outlooks for various industries.


Portfolio management will normally sell a stock when it no longer qualifies as
a small or mid-size company, when its P/E rises above that of the Index, its
fundamentals change or other investments offer better opportunities.

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

Although major changes tend to be infrequent, the Board of Trustees could
change the portfolio's investment objective without seeking shareholder
approval. However, the Board will provide shareholders with at least 60 days'
notice prior to making any changes to the portfolio's 80% investment policy.




DERIVATIVES AND OTHER INVESTMENTS

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


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



THE MAIN RISKS OF INVESTING IN THE PORTFOLIO

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


DWS VARIABLE SERIES II - CLASS B SHARES          DWS DREMAN SMALL MID CAP VALUE
                                                 VIP   29
<PAGE>

STOCK MARKET RISK. The portfolio is affected by how the stock market performs.
To the extent the portfolio invests in a particular capitalization or market
sector, the portfolio's performance may be proportionately affected by that
segment's general performance. When stock prices fall, you should expect the
value of your investment to fall as well. Because a stock represents ownership
in its issuer, stock prices can be hurt by poor management, shrinking product
demand and other business risks. These factors may affect single companies as
well as groups of companies. In addition, movements in financial markets may
adversely affect a stock's price, regardless of how well the company performs.
The market as a whole may not favor the types of investments the portfolio
makes, which could affect the portfolio's ability to sell them at an attractive
price.

VALUE INVESTING RISK. At times, "value" investing may perform better than or
worse than other investment styles and the overall market. If portfolio
management overestimates the value or return potential of one or more
securities, the portfolio may underperform the general equity market. Value
stocks may also be out of favor for certain periods in relation to growth
stocks.

SMALL COMPANY CAPITALIZATION RISK. Small company stocks tend to experience
steeper price fluctuations than the stocks of larger companies. A shortage of
reliable information can also pose added risk to small company stocks.
Industry-wide reversals may have a greater impact on small companies, since
they lack the financial resources of larger companies. Small company stocks are
typically less liquid than large company stocks. Accordingly, it may be harder
to find buyers for small company shares.

MEDIUM-SIZED COMPANY RISK. Medium-sized company stocks tend to experience
steeper price fluctuations than stocks of larger companies. A shortage of
reliable information can also pose added risk to stocks of medium-sized
companies. Industry-wide reversals may have a greater impact on medium-sized
companies, since they usually lack the financial resources of larger companies.
Medium-sized company stocks are typically less liquid than large company
stocks. Accordingly, it may be harder to find buyers for medium-sized company
shares.

INDUSTRY RISK. While the portfolio does not concentrate in any industry, to the
extent that the portfolio has exposure to a given industry or sector, any
factors affecting that industry or sector could affect the value of portfolio
securities. For example, manufacturers of consumer goods could be hurt by a
rise in unemployment or technology companies could be hurt by such factors as
market saturation, price competition and rapid obsolescence.

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

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

PRICING RISK. At times, market conditions may make it difficult to value some
investments, and the portfolio may use certain valuation methodologies for some
of its investments, such as fair value pricing. Given the subjective nature of
such valuation methodologies, it is possible that the value determined for an
investment may be different than the value realized upon such investment's
sale. If the portfolio has valued its securities too highly, you may pay too
much for portfolio shares when you buy into the portfolio. If the portfolio has
underestimated the price of its securities, you may not receive the full market
value when you sell your portfolio shares.

SECURITY SELECTION RISK. A risk that pervades all investing is the risk that
the securities in the portfolio's portfolio may decline in value.


30   DWS DREMAN SMALL MID CAP VALUE VIP              DWS VARIABLE SERIES II -
                                                     CLASS B SHARES
<PAGE>

Other factors that could affect performance include:

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

o foreign securities may be more volatile than their US counterparts, for
  reasons such as currency fluctuations and political and economic
  uncertainty.

This portfolio is designed for value-oriented investors who are interested in
small-cap and mid-cap market exposure.



PERFORMANCE - CLASS B

While a portfolio's past performance isn't necessarily a sign of how it will do
in the future, it can be valuable for an investor to know.

The bar chart shows how the returns for the portfolio's Class B shares have
varied from year to year, which may give some idea of risk. The table shows
average annual returns for the portfolio and comparable index information
(which, unlike the portfolio, does not have any fees or expenses). The
performance of both the portfolio and the comparable index information varies
over time. All figures assume reinvestment of dividends and distributions.

This information doesn't reflect charges and fees associated with the separate
account that invests in the portfolio or any variable life insurance policy or
variable annuity contract for which the portfolio is an investment option.
These charges and fees will reduce returns.


Prior to January 18, 2002, the portfolio was named Scudder Small Cap Value
Portfolio, operated with a different investment strategy and a different
advisor managed the portfolio. Performance would have been different if the
portfolio's current policies and advisory agreement had been in effect. Prior
to November 3, 2006, the portfolio was named DWS Dreman Small Cap Value VIP and
operated with a different investment strategy. Performance would have been
different if the portfolio's current policies had been in effect.


The inception date for Class B was July 1, 2002. In the bar chart and table,
the performance figures for Class B before that date are based on the
historical performance of the portfolio's original share class (Class A),
adjusted to reflect the higher gross total annual operating expenses of Class
B. Class A is offered in a different prospectus.


ANNUAL TOTAL RETURN (%) as of 12/31 each year - CLASS B

[BAR GRAPHIC OMITTED HERE]

[BAR GRAPHIC DATA]





<TABLE>
<S>         <C>       <C>        <C>         <C>        <C>        <C>       <C>        <C>     <C>
   2.54      3.79     17.37       -11.63     41.65      25.52       9.78     24.59      2.67     -33.67
  1999      2000      2001        2002       2003       2004       2005      2006       2007     2008
</TABLE>




<TABLE>
<CAPTION>
                 FOR THE PERIODS INCLUDED IN THE BAR CHART:
<S>                                         <C>
BEST QUARTER: 21.63%, Q2 2003               WORST QUARTER: -20.24%, Q4 2008
2009 TOTAL RETURN AS OF MARCH 31: -16.35%
</TABLE>


DWS VARIABLE SERIES II - CLASS B SHARES          DWS DREMAN SMALL MID CAP VALUE
                                                 VIP   31
<PAGE>

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



<TABLE>
<CAPTION>
                                   1 YEAR         5 YEARS        10 YEARS
<S>                             <C>              <C>            <C>
Portfolio - Class B                 -33.67          3.17            6.22
Russell 2500 Value Index            -31.99          -0.15           5.72
Russell 2000 Value Index            -28.92          0.27            6.11
</TABLE>

RUSSELL 2500(TM) VALUE INDEX is an unmanaged index measuring the small- to
mid-cap US equity value market.

RUSSELL 2000 (Reg. TM) VALUE INDEX is an unmanaged index measuring the
performance of those Russell 2000 companies with lower price-to-book ratios and
lower forecasted growth values.

Current performance information may be higher or lower than the performance
data quoted above. For more recent performance information, contact your
participating insurance company.





HOW MUCH INVESTORS PAY

This table describes the fees and expenses that you may pay if you buy and hold
portfolio shares. The information in the table does not reflect charges and
fees associated with the separate account that invests in the portfolio or any
variable life insurance policy or variable annuity contract for which the
portfolio is an investment option. These charges and fees will increase
expenses.



<TABLE>
<CAPTION>
FEE TABLE                                CLASS B
<S>                                    <C>
ANNUAL OPERATING EXPENSES, deducted from portfolio assets
_________________________________________________________
Management Fee 1                           0.64%
Distribution/Service (12b-1) Fee           0.25
Other Expenses 2                           0.26
TOTAL ANNUAL OPERATING EXPENSES 3          1.15
</TABLE>

1   Restated on an annualized basis to reflect approved fee changes that took
    effect on May 1, 2008.


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



3   Except as otherwise noted, the information in the table is based on amounts
    incurred during the portfolio's most recent fiscal year. It is important
    for you to understand that a decline in the portfolio's average net assets
    during the current fiscal year due to recent unprecedented market
    volatility or other factors could cause the portfolio's expense ratios for
    the portfolio's current fiscal year to be higher than the expense
    information presented. Based on asset levels as of December 31, 2008, the
    gross annualized expense ratio of Class B shares is estimated at 1.18%.
    For more current expense information, see "Financial Highlights" in the
    portfolio's future annual or semi-annual reports.



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



<TABLE>
<CAPTION>
EXAMPLE                1 YEAR        3 YEARS        5 YEARS        10 YEARS
<S>                   <C>           <C>            <C>            <C>
Class B shares          $117           $365           $633         $1,398
</TABLE>


32   DWS DREMAN SMALL MID CAP VALUE VIP              DWS VARIABLE SERIES II -
                                                        CLASS B SHARES
<PAGE>

PORTFOLIO MANAGEMENT

The portfolio's subadvisor is Dreman Value Management, L.L.C. The portfolio is
managed by a team of investment professionals who collaborate to develop and
implement the portfolio's investment strategy. Each portfolio manager on the
team has authority over all aspects of the portfolio's investment portfolio,
including but not limited to, purchases and sales of individual securities,
portfolio construction techniques, portfolio risk assessment and the management
of daily cash flows in accordance with portfolio holdings.

The following people handle the day-to-day management of the portfolio:

David N. Dreman
Chairman and Chief Investment Officer of Dreman Value Management, L.L.C. and
Lead Portfolio Manager of the portfolio.
   o Began investment career in 1957.
   o Joined the portfolio in 2002.
   o Founder, Dreman Value Management, L.L.C.

E. Clifton Hoover, Jr.
Co-Chief Investment Officer and Managing Director of Dreman Value Management,
L.L.C. and Portfolio Manager of the portfolio.
   o Joined Dreman Value Management L.L.C. in 2006.
   o Joined the portfolio in 2006.
   o Prior to joining Dreman Value Management, L.L.C., Managing Director and a
     Portfolio Manager at NFJ Investment Group since 1997.
   o Over 20 years of investment industry experience.
   o MS, Texas Tech University.

Mark Roach
Managing Director of Dreman Value Management, L.L.C. and Portfolio Manager of
the portfolio.
   o Joined Dreman Value Management, L.L.C. in 2006.
   o Joined the portfolio in 2006.
   o Prior to that, Portfolio Manager at Vaughan Nelson Investment Management
     since 2002.
   o Over 14 years of investment industry experience.
   o BS, Baldwin Wallace College; MBA, University of Chicago.

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


DWS VARIABLE SERIES II - CLASS B SHARES          DWS DREMAN SMALL MID CAP VALUE
                                                 VIP   33
<PAGE>

FINANCIAL HIGHLIGHTS

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

This information doesn't reflect charges and fees associated with the separate
account that invests in the portfolio or any variable life insurance policy or
variable annuity contract for which the portfolio is an investment option.
These charges and fees will reduce returns.

Prior to November 3, 2006, the portfolio was named DWS Dreman Small Cap Value
VIP and operated with a different investment strategy. Performance may have
been different if the portfolio's current policies had been in effect.



DWS DREMAN SMALL MID CAP VALUE VIP - CLASS B



<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,                               2008         2007        2006        2005        2004
<S>                                               <C>           <C>         <C>         <C>         <C>
SELECTED PER SHARE DATA
----------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD                $  20.08     $  22.88    $  19.93    $  20.01    $  16.03
-------------------------------------------------   --------     --------    --------    --------    --------
Income (loss) from investment operations:
 Net investment income (loss)a                           .09          .10         .07         .11         .10
_________________________________________________   ________     ________    ________    ________    ________
 Net realized and unrealized gain (loss)              ( 4.92)         .54        4.67        1.66        3.97
-------------------------------------------------   --------     --------    --------    --------    --------
 TOTAL FROM INVESTMENT OPERATIONS                     ( 4.83)         .64        4.74        1.77        4.07
-------------------------------------------------   --------     --------    --------    --------    --------
Less distributions from:
 Net investment income                                (  .22)      (  .14)     (  .08)     (  .07)     (  .09)
_________________________________________________   ________     ________    ________    ________    ________
 Net realized gains                                   ( 7.11)      ( 3.30)     ( 1.71)     ( 1.78)          -
-------------------------------------------------   --------     --------    --------    --------    --------
 TOTAL DISTRIBUTIONS                                  ( 7.33)      ( 3.44)     ( 1.79)     ( 1.85)     (  .09)
-------------------------------------------------   --------     --------    --------    --------    --------
NET ASSET VALUE, END OF PERIOD                      $   7.92     $  20.08    $  22.88    $  19.93    $  20.01
-------------------------------------------------   --------     --------    --------    --------    --------
Total Return (%)                                      (33.67)b       2.67       24.59        9.78       25.52
_________________________________________________   ________     ________    ________    ________    ________
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
----------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ millions)                    24           34          90          83          71
_________________________________________________   ________     ________    ________    ________    ________
Ratio of expenses before expense reductions (%)         1.18         1.16        1.17        1.19        1.16
_________________________________________________   ________     ________    ________    ________    ________
Ratio of expenses after expense reductions (%)          1.17         1.16        1.17        1.19        1.16
_________________________________________________   ________     ________    ________    ________    ________
Ratio of net investment income (%)                       .78          .47         .33         .56         .59
_________________________________________________   ________     ________    ________    ________    ________
Portfolio turnover rate (%)                               49          110          52          61          73
-------------------------------------------------   --------     --------    --------    --------    --------
</TABLE>

a   Based on average shares outstanding during the period.

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

34   DWS DREMAN SMALL MID CAP VALUE VIP              DWS VARIABLE SERIES II -
                                                     CLASS B SHARES
<PAGE>

HYPOTHETICAL EXPENSE SUMMARY

Using the annual portfolio operating expense ratios presented in the fee tables
in the portfolio prospectus, the Hypothetical Expense Summary shows the
estimated fees and expenses, in actual dollars, that would be charged on a
hypothetical investment of $10,000 in the portfolio held for the next 10 years
and the impact of such fees and expenses on portfolio returns for each year and
cumulatively, assuming a 5% return for each year. The historical rate of return
for the portfolio may be higher or lower than 5% and, for money funds, is
typically less than 5%. The tables also assume that all dividends and
distributions are reinvested. The annual portfolio expense ratios shown are net
of any contractual fee waivers or expense reimbursements, if any, for the
period of the contractual commitment. Also, please note that if you are
investing through a third party provider, that provider may have fees and
expenses separate from those of the portfolio that are not reflected here.
Mutual fund fees and expenses fluctuate over time and actual expenses may be
higher or lower than those shown.

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



DWS DREMAN SMALL MID CAP VALUE VIP - CLASS B



<TABLE>
<CAPTION>
                MAXIMUM                  INITIAL HYPOTHETICAL                          ASSUMED RATE
             SALES CHARGE:                   INVESTMENT:                                OF RETURN:
                 0.00%                         $10,000                                      5%
               CUMULATIVE                                CUMULATIVE           HYPOTHETICAL
             RETURN BEFORE                              RETURN AFTER        YEAR-END BALANCE          ANNUAL
                FEES AND            ANNUAL FUND           FEES AND           AFTER FEES AND          FEES AND
YEAR            EXPENSES          EXPENSE RATIOS          EXPENSES              EXPENSES             EXPENSES
<S>         <C>                  <C>                   <C>                 <C>                     <C>
   1              5.00%                 1.15%                3.85%            $ 10,385.00          $   117.21
   2             10.25%                 1.15%                7.85%            $ 10,784.82          $   121.73
   3             15.76%                 1.15%               12.00%            $ 11,200.04          $   126.41
   4             21.55%                 1.15%               16.31%            $ 11,631.24          $   131.28
   5             27.63%                 1.15%               20.79%            $ 12,079.04          $   136.33
   6             34.01%                 1.15%               25.44%            $ 12,544.09          $   141.58
   7             40.71%                 1.15%               30.27%            $ 13,027.03          $   147.03
   8             47.75%                 1.15%               35.29%            $ 13,528.57          $   152.69
   9             55.13%                 1.15%               40.49%            $ 14,049.42          $   158.57
  10             62.89%                 1.15%               45.90%            $ 14,590.33          $   164.68
TOTAL                                                                                              $ 1,397.51
</TABLE>


DWS VARIABLE SERIES II - CLASS B SHARES          DWS DREMAN SMALL MID CAP VALUE
                                                 VIP   35
<PAGE>

DWS GLOBAL THEMATIC VIP


THE PORTFOLIO'S MAIN INVESTMENT STRATEGY

The portfolio seeks long-term capital growth.

Under normal circumstances, the portfolio invests at least 80% of net assets,
plus the amount of any borrowings for investment purposes, in common stocks and
other equities of companies throughout the world that portfolio management
considers to be "blue chip" companies. Blue chip companies are large, well
known companies that typically have an established earnings and dividends
history, easy access to credit, solid positions in their industries and strong
management.

In choosing stocks, portfolio management uses a combination of three analytical
disciplines:

BOTTOM-UP RESEARCH. Portfolio management looks for individual companies with a
history of above-average growth, strong competitive positioning, attractive
prices relative to potential growth, sound financial strength and effective
management, among other factors.

GROWTH ORIENTATION. Portfolio management generally looks for companies that
portfolio management believes have above-average potential for sustainable
growth of revenue or earnings and whose market value appears reasonable in
light of their business prospects.

ANALYSIS OF GLOBAL THEMES. Portfolio management considers global economic
outlooks, seeking to identify industries and companies that are likely to
benefit from social, political and economic changes.

Portfolio management may favor different types of securities from different
industries and companies at different times, while still maintaining variety in
terms of the types of securities, issuers and countries represented.

Portfolio management will normally sell a stock when portfolio management
believes its price is unlikely to go much higher, its fundamentals have
deteriorated, other investments offer better opportunities or in the course of
adjusting the fund's exposure to a given country.

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

Although major changes tend to be infrequent, the Board of Trustees could
change the portfolio's investment objective without seeking shareholder
approval. However, the Board will provide shareholders with at least 60 days'
notice prior to making any changes to the portfolio's 80% policy.




DERIVATIVES AND OTHER INVESTMENTS


While most of the portfolio's equities are common stocks, some may be other
types of equities, such as convertible stocks or preferred stocks. The
portfolio may also invest up to 5% of total assets in junk bonds, (i.e., grade
BB/Ba and below). Compared to investment grade bonds, junk bonds may pay higher
yields and have higher volatility and risk of default.

Although not one of its principal investment strategies, the portfolio is
permitted, but not required, to use various types of derivatives (contracts
whose value is based on, for example, indices, currencies or securities). The
portfolio may use derivatives in circumstances where portfolio management
believes they offer an economical means of gaining exposure to a particular
asset class or to keep cash on hand to meet shareholder redemptions or other
needs while maintaining exposure to the market. In particular, the portfolio
may use futures, currency options and forward currency transactions.

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


36   DWS GLOBAL THEMATIC VIP                         DWS VARIABLE SERIES II -
                                                     CLASS B SHARES
<PAGE>

THE MAIN RISKS OF INVESTING IN THE PORTFOLIO

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

STOCK MARKET RISK. An important factor with the portfolio is how the stock
markets perform - in this case US and foreign stock markets. When US and
foreign stock prices fall, you should expect the value of your investment to
fall as well. Compared to large company stocks, small company stocks tend to be
more volatile, in part because these companies tend to be less established and
the valuation of their stocks often depends on future expectations. Because a
stock represents ownership in its issuer, stock prices can be hurt by poor
management, shrinking product demand and other business risks. These risk
factors may affect single companies as well as groups of companies. In
addition, movements in financial markets may adversely affect a stock's price,
regardless of how well the company performs. The market as a whole may not
favor the types of investments the portfolio makes and the portfolio may not be
able to get attractive prices for them.

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

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

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

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

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

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

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

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

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


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



DWS VARIABLE SERIES II - CLASS B SHARES                  DWS GLOBAL THEMATIC
                                                         VIP   37
<PAGE>

Some governments exercise substantial influence over the private economic
sector and the social and political uncertainties that exist for many
developing countries is significant. In adverse social and political
circumstances, governments have been involved in policies of expropriation,
confiscatory taxation, nationalization, intervention in the securities markets
and trade settlement, and imposition of foreign investment restrictions and
exchange controls.

PRICING RISK. At times, market conditions may make it difficult to value some
investments, and the portfolio may use certain valuation methodologies for some
of its investments, such as fair value pricing. Given the subjective nature of
such valuation methodologies, it is possible that the value determined for an
investment may be different than the value realized upon such investment's
sale. If the portfolio has valued its securities too highly, you may pay too
much for portfolio shares when you buy into the portfolio. If the portfolio has
underestimated the price of its securities, you may not receive the full market
value when you sell your portfolio shares.

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

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

SECURITY SELECTION RISK. A risk that pervades all investing is the risk that
the securities in the portfolio's portfolio may decline in value.

Another factor that could affect performance is:

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

If you are interested in large-cap stocks and want to look beyond US markets,
this portfolio may be appropriate for you.


38   DWS GLOBAL THEMATIC VIP                         DWS VARIABLE SERIES II -
                                                     CLASS B SHARES
<PAGE>

PERFORMANCE - CLASS B

While a portfolio's past performance isn't necessarily a sign of how it will do
in the future, it can be valuable for an investor to know.

The bar chart shows how the returns for the portfolio's Class B shares have
varied from year to year, which may give some idea of risk. The table shows
average annual returns for the portfolio and comparable index information
(which, unlike the portfolio, does not have any fees or expenses). The
performance of both the portfolio and the comparable index information varies
over time. All figures assume reinvestment of dividends and distributions.

This information doesn't reflect charges and fees associated with the separate
account that invests in the portfolio or any variable life insurance policy or
variable annuity contract for which the portfolio is an investment option.
These charges and fees will reduce returns.

The inception date for Class B was July 1, 2002. In the bar chart and table,
the performance figures for Class B before that date are based on the
historical performance of the portfolio's original share class (Class A),
adjusted to reflect the higher gross total annual operating expenses of Class
B. Class A is offered in a different prospectus.


ANNUAL TOTAL RETURN (%) as of 12/31 each year - CLASS B

[BAR GRAPHIC OMITTED HERE]

[BAR GRAPHIC DATA]





<TABLE>
<S>          <C>        <C>         <C>         <C>        <C>        <C>        <C>        <C>       <C>
  26.39       -3.60      -15.69      -16.10     28.96      14.33      22.50      29.65      5.84       -47.87
  1999       2000        2001        2002       2003       2004       2005       2006       2007      2008
</TABLE>




<TABLE>
<CAPTION>
                FOR THE PERIODS INCLUDED IN THE BAR CHART:
<S>                                        <C>
BEST QUARTER: 14.70%, Q2 2003              WORST QUARTER: -24.71%, Q4 2008
2009 TOTAL RETURN AS OF MARCH 31: -8.85%
</TABLE>

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



<TABLE>
<CAPTION>
                              1 YEAR         5 YEARS        10 YEARS
<S>                        <C>              <C>            <C>
Portfolio - Class B            -47.87          0.04           1.09
MSCI World Index               -40.71          -0.51          -0.64
</TABLE>

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

MSCI WORLD INDEX is an unmanaged capitalization-weighted measure of stock
markets around the world, including North America, Europe, Australia and Asia.

Current performance information may be higher or lower than the performance
data quoted above. For more recent performance information, contact your
participating insurance company.


DWS VARIABLE SERIES II - CLASS B SHARES                  DWS GLOBAL THEMATIC
                                                         VIP   39
<PAGE>

HOW MUCH INVESTORS PAY

This table describes the fees and expenses that you may pay if you buy and hold
portfolio shares. The information in the table does not reflect charges and
fees associated with the separate account that invests in the portfolio or any
variable life insurance policy or variable annuity contract for which the
portfolio is an investment option. These charges and fees will increase
expenses.



<TABLE>
<CAPTION>
FEE TABLE                                  CLASS B
<S>                                      <C>
ANNUAL OPERATING EXPENSES, deducted from portfolio assets
_________________________________________________________
Management Fee 1                             0.90%
Distribution/Service (12b-1) Fee             0.25
Other Expenses 2                             0.62
TOTAL ANNUAL OPERATING EXPENSES 3            1.77
Less Expense Waiver/Reimbursement 4          0.12
NET ANNUAL OPERATING EXPENSES 4              1.65
</TABLE>

1   Restated on an annualized basis to reflect approved fee changes that took
    effect on May 1, 2008.


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



3   Except as otherwise noted, the information in the table is based on amounts
    incurred during the portfolio's most recent fiscal year. It is important
    for you to understand that a decline in the portfolio's average net assets
    during the current fiscal year due to recent unprecedented market
    volatility or other factors could cause the portfolio's expense ratios for
    the portfolio's current fiscal year to be higher than the expense
    information presented. Based on asset levels as of December 31, 2008, the
    gross annualized expense ratio of Class B shares is estimated at 1.82%.
    For more current expense information, see "Financial Highlights" in the
    portfolio's future annual or semi-annual reports.


4   Through September 30, 2009, the Advisor has contractually agreed to waive
    all or a portion of its management fee and reimburse or pay certain
    operating expenses to the extent necessary to maintain the portfolio's
    total operating expenses at 1.47% for Class B shares, excluding certain
    expenses such as extraordinary expenses, taxes, brokerage and interest.
    Effective October 1, 2009 through April 30, 2010, the Advisor has
    contractually agreed to waive all or a portion of its management fee and
    reimburse or pay certain operating expenses of the portfolio to the extent
    necessary to maintain the portfolio's total operating expenses at ratios
    no higher than 1.65% for Class B shares, excluding certain expenses such
    as extraordinary expenses, taxes, brokerage and interest.


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



<TABLE>
<CAPTION>
EXAMPLE                1 YEAR        3 YEARS        5 YEARS        10 YEARS
<S>                   <C>           <C>            <C>            <C>
Class B shares          $168           $546           $948         $2,074
</TABLE>


40   DWS GLOBAL THEMATIC VIP                         DWS VARIABLE SERIES II -
                                                        CLASS B SHARES
<PAGE>

PORTFOLIO MANAGEMENT

The following person handles the day-to-day management of the portfolio:

Oliver Kratz
Managing Director of Deutsche Asset Management and Portfolio Manager of the
portfolio.
   o Joined Deutsche Asset Management in 1996 and the portfolio in 2003.
   o Head of global portfolio selection team for Alpha Emerging Markets
     Equity: New York.
   o Prior to that, two years of experience at Merrill Lynch, Brown Brothers
     Harriman and McKinsey & Co.; authored Frontier Emerging Markets Securities
     Price Behavior and Valuation; Kluwers Academic Publishers, 1999.
   o BA, Tufts University and Karlova University; MALD and Ph.D, The Fletcher
     School, administered jointly by Harvard University and Tufts University.

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


DWS VARIABLE SERIES II - CLASS B SHARES                  DWS GLOBAL THEMATIC
                                                         VIP   41
<PAGE>

FINANCIAL HIGHLIGHTS

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

This information doesn't reflect charges and fees associated with the separate
account that invests in the portfolio or any variable life insurance policy or
variable annuity contract for which the portfolio is an investment option.
These charges and fees will reduce returns.



DWS GLOBAL THEMATIC VIP - CLASS B



<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,                              2008        2007         2006         2005        2004
<S>                                               <C>         <C>         <C>           <C>         <C>
SELECTED PER SHARE DATA
----------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD               $  15.66    $  17.38     $  14.43     $  11.78    $  10.38
-------------------------------------------------  --------    --------     --------     --------    --------
Income (loss) from investment operations:
 Net investment income (loss)a                          .07         .07       .09c            .07      .00d
_________________________________________________  ________    ________     ________     ________    ________
 Net realized and unrealized gain (loss)             ( 5.83)        .90         4.02         2.58        1.48
-------------------------------------------------  --------    --------     --------     --------    --------
 TOTAL FROM INVESTMENT OPERATIONS                    ( 5.76)        .97         4.11         2.65        1.48
-------------------------------------------------  --------    --------     --------     --------    --------
Less distributions from:
 Net investment income                               (  .14)     (  .05)      (  .03)           -      (  .08)
_________________________________________________  ________    ________     ________     ________    ________
 Net realized gains                                  ( 3.91)     ( 2.64)      ( 1.13)           -           -
-------------------------------------------------  --------    --------     --------     --------    --------
 TOTAL DISTRIBUTIONS                                 ( 4.05)     ( 2.69)      ( 1.16)           -      (  .08)
-------------------------------------------------  --------    --------     --------     --------    --------
NET ASSET VALUE, END OF PERIOD                     $   5.85    $  15.66     $  17.38     $  14.43    $  11.78
-------------------------------------------------  --------    --------     --------     --------    --------
Total Return (%)b                                    (47.87)       5.84      29.65c         22.50       14.33
_________________________________________________  ________    ________     ________     ________    ________
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
----------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ millions)                    4          10           25           20          13
_________________________________________________  ________    ________     ________     ________    ________
Ratio of expenses before expense reductions (%)        1.82        1.81         1.76         1.79        1.84
_________________________________________________  ________    ________     ________     ________    ________
Ratio of expenses after expense reductions (%)         1.45        1.47         1.43         1.65        1.83
_________________________________________________  ________    ________     ________     ________    ________
Ratio of net investment income (%)                      .73         .46       .53c            .61         .02
_________________________________________________  ________    ________     ________     ________    ________
Portfolio turnover rate (%)                             229         191          136           95          81
-------------------------------------------------  --------    --------     --------     --------    --------
</TABLE>

a   Based on average shares outstanding during the period.

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

c   Includes non-recurring income from the Advisor recorded as a result of an
    administrative proceeding regarding disclosure of brokerage allocation
    practices in connection with sales of DWS Funds. The non-recurring income
    resulted in an increase in net investment income of $0.004 per share and
    an increase in the ratio of net investment income of 0.03%. Excluding this
    non-recurring income, total return would have been 0.02% lower.

d   Amount is less than $.005 per share.

42   DWS GLOBAL THEMATIC VIP                         DWS VARIABLE SERIES II -
                                                     CLASS B SHARES
<PAGE>

HYPOTHETICAL EXPENSE SUMMARY

Using the annual portfolio operating expense ratios presented in the fee tables
in the portfolio prospectus, the Hypothetical Expense Summary shows the
estimated fees and expenses, in actual dollars, that would be charged on a
hypothetical investment of $10,000 in the portfolio held for the next 10 years
and the impact of such fees and expenses on portfolio returns for each year and
cumulatively, assuming a 5% return for each year. The historical rate of return
for the portfolio may be higher or lower than 5% and, for money funds, is
typically less than 5%. The tables also assume that all dividends and
distributions are reinvested. The annual portfolio expense ratios shown are net
of any contractual fee waivers or expense reimbursements, if any, for the
period of the contractual commitment. Also, please note that if you are
investing through a third party provider, that provider may have fees and
expenses separate from those of the portfolio that are not reflected here.
Mutual fund fees and expenses fluctuate over time and actual expenses may be
higher or lower than those shown.

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



DWS GLOBAL THEMATIC VIP - CLASS B



<TABLE>
<CAPTION>
                MAXIMUM                  INITIAL HYPOTHETICAL                          ASSUMED RATE
             SALES CHARGE:                   INVESTMENT:                                OF RETURN:
                 0.00%                         $10,000                                      5%
               CUMULATIVE                                CUMULATIVE           HYPOTHETICAL
             RETURN BEFORE                              RETURN AFTER        YEAR-END BALANCE          ANNUAL
                FEES AND            ANNUAL FUND           FEES AND           AFTER FEES AND          FEES AND
YEAR            EXPENSES          EXPENSE RATIOS          EXPENSES              EXPENSES             EXPENSES
<S>         <C>                  <C>                   <C>                 <C>                     <C>
   1              5.00%                 1.65%                3.35%            $ 10,335.00          $   167.76
   2             10.25%                 1.77%                6.69%            $ 10,668.82          $   185.88
   3             15.76%                 1.77%               10.13%            $ 11,013.42          $   191.89
   4             21.55%                 1.77%               13.69%            $ 11,369.16          $   198.09
   5             27.63%                 1.77%               17.36%            $ 11,736.38          $   204.48
   6             34.01%                 1.77%               21.15%            $ 12,115.47          $   211.09
   7             40.71%                 1.77%               25.07%            $ 12,506.80          $   217.91
   8             47.75%                 1.77%               29.11%            $ 12,910.76          $   224.95
   9             55.13%                 1.77%               33.28%            $ 13,327.78          $   232.21
  10             62.89%                 1.77%               37.58%            $ 13,758.27          $   239.71
TOTAL                                                                                              $ 2,073.97
</TABLE>


DWS VARIABLE SERIES II - CLASS B SHARES                  DWS GLOBAL THEMATIC
                                                         VIP   43
<PAGE>

DWS GOVERNMENT & AGENCY SECURITIES VIP


THE PORTFOLIO'S MAIN INVESTMENT STRATEGY

The portfolio seeks high current income consistent with preservation of
capital.

Under normal circumstances, the portfolio invests at least 80% of net assets,
plus the amount of any borrowings for investment purposes, in US government
securities and repurchase agreements of US government securities. US
government-related debt instruments in which the portfolio may invest include:

o direct obligations of the US Treasury;

o securities such as Ginnie Maes which are mortgage-backed securities issued
  and guaranteed by the Government National Mortgage Association (GNMA) and
  supported by the full faith and credit of the United States; and

o securities issued or guaranteed, as to their payment of principal and
  interest, by US government agencies or government sponsored entities, some
  of which may be supported only by the credit of the issuer.

The portfolio normally invests all of its assets in securities issued or
guaranteed by the US government, its agencies or instrumentalities, except the
portfolio may invest up to 10% of its net assets in cash equivalents, such as
money market funds, and short-term bond funds. These securities may not be
issued or guaranteed by the US government, its agencies or instrumentalities.
The portfolio may use derivative instruments as described in "Other
Investments."

In deciding which types of government bonds to buy and sell, portfolio
management first considers the relative attractiveness of Treasuries compared
to other US government and agency securities and determines allocations for
each. Portfolio management's decisions are generally based on a number of
factors, including interest rate outlooks and changes in supply and demand
within the bond market.

In choosing individual bonds, portfolio management reviews each bond's
fundamentals, compare the yields of shorter maturity bonds to those of longer
maturity bonds and use specialized analysis to project prepayment rates and
other factors that could affect a bond's attractiveness.


Portfolio management may adjust the duration (a measure of sensitivity to
interest rate movements) of the portfolio, depending on its outlook for
interest rates.


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

Although major changes tend to be infrequent, the Board of Trustees could
change the portfolio's investment objective without seeking shareholder
approval. However, the Board will provide shareholders with at least 60 days'
notice prior to making any changes to the portfolio's 80% investment policy.



CREDIT QUALITY POLICIES

This portfolio normally invests substantially all of its assets in securities
issued or guaranteed by the US government, its agencies or instrumentalities.
These securities are generally considered to be among the very highest quality
securities.




DERIVATIVES AND OTHER INVESTMENTS


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


44   DWS GOVERNMENT & AGENCY SECURITIES VIP          DWS VARIABLE SERIES II -
                                                     CLASS B SHARES
<PAGE>

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



THE MAIN RISKS OF INVESTING IN THE PORTFOLIO

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

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

AGENCY RISK. Some securities issued by US government agencies or
instrumentalities are supported only by the credit of that agency or
instrumentality while other government securities have an additional line of
credit with the US Treasury. There is no guarantee that the US government will
provide support to such agencies or instrumentalities and such securities may
involve risk of loss of principal and interest. The full faith and credit
guarantee of the US government for certain securities doesn't protect the
portfolio against market-driven declines in the prices or yields of these
securities, nor does it apply to shares of the portfolio itself.

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

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

SECURITY SELECTION RISK. A risk that pervades all investing is the risk that
the securities in the portfolio's portfolio may decline in value.

Another factor that could affect performance is:

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

This portfolio may appeal to investors who want a portfolio that searches for
attractive yields generated by US government securities.


DWS VARIABLE SERIES II - CLASS B SHARES        DWS GOVERNMENT & AGENCY
                                               SECURITIES VIP   45
<PAGE>

PERFORMANCE - CLASS B

While a portfolio's past performance isn't necessarily a sign of how it will do
in the future, it can be valuable for an investor to know.

The bar chart shows how the returns for the portfolio's Class B shares have
varied from year to year, which may give some idea of risk. The table shows
average annual returns for the portfolio and comparable index information
(which, unlike the portfolio, does not have any fees or expenses). The
performance of both the portfolio and the comparable index information varies
over time. All figures assume reinvestment of dividends and distributions.

This information doesn't reflect charges and fees associated with the separate
account that invests in the portfolio or any variable life insurance policy or
variable annuity contract for which the portfolio is an investment option.
These charges and fees will reduce returns.

The inception date for Class B was July 1, 2002. In the bar chart and table,
the performance figures for Class B before that date are based on the
historical performance of the portfolio's original share class (Class A),
adjusted to reflect the higher gross total annual operating expenses of Class
B. Class A is offered in a different prospectus.


ANNUAL TOTAL RETURN (%) as of 12/31 each year - CLASS B

[BAR GRAPHIC OMITTED HERE]

[BAR GRAPHIC DATA]




<TABLE>
<S>         <C>        <C>       <C>       <C>       <C>       <C>       <C>       <C>       <C>
   0.43     10.65       7.22      7.81      1.83      3.36      2.24      3.74     5.43      4.60
  1999      2000       2001      2002      2003      2004      2005      2006      2007      2008
</TABLE>




<TABLE>
<CAPTION>
               FOR THE PERIODS INCLUDED IN THE BAR CHART:
<S>                                       <C>
BEST QUARTER: 4.07%, Q3 2001              WORST QUARTER: -1.06%, Q2 2004
2009 TOTAL RETURN AS OF MARCH 31: 2.63%
</TABLE>

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



<TABLE>
<CAPTION>
                                    1 YEAR        5 YEARS        10 YEARS
<S>                                <C>           <C>            <C>
Portfolio - Class B                   4.60           3.87           4.69
Barclays Capital GNMA Index           7.87           5.39           5.94
</TABLE>

BARCLAYS CAPITAL GNMA INDEX (name changed from Lehman Brothers GNMA Index
effective November 3, 2008) is an unmanaged market value-weighted measure of
all fixed-rate securities backed by mortgage pools of the Government National
Mortgage Association.

Current performance information may be higher or lower than the performance
data quoted above. For more recent performance information, contact your
participating insurance company.


46   DWS GOVERNMENT & AGENCY SECURITIES VIP          DWS VARIABLE SERIES II -
                                                     CLASS B SHARES
<PAGE>

HOW MUCH INVESTORS PAY

This table describes the fees and expenses that you may pay if you buy and hold
portfolio shares. The information in the table does not reflect charges and
fees associated with the separate account that invests in the portfolio or any
variable life insurance policy or variable annuity contract for which the
portfolio is an investment option. These charges and fees will increase
expenses.



<TABLE>
<CAPTION>
FEE TABLE                                CLASS B
<S>                                    <C>
ANNUAL OPERATING EXPENSES, deducted from portfolio assets
_________________________________________________________
Management Fee 1                           0.45%
Distribution/Service (12b-1) Fee           0.25
Other Expenses 2                           0.28
TOTAL ANNUAL OPERATING EXPENSES 3          0.98
</TABLE>

1   Restated on an annualized basis to reflect approved fee changes that took
    effect on May 1, 2008.


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


3   Through September 30, 2009, the Advisor has contractually agreed to waive
    all or a portion of its management fee and reimburse or pay certain
    operating expenses of the portfolio to the extent necessary to maintain
    the portfolio's total operating expenses at 1.05% for Class B shares,
    excluding certain expenses such as extraordinary expenses, taxes,
    brokerage and interest. Although there can be no assurance that the
    current waiver/expense reimbursement arrangement will be maintained beyond
    September 30, 2009, the Advisor has committed to review the continuance of
    waiver/expense reimbursement arrangements by September 30, 2009.


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



<TABLE>
<CAPTION>
EXAMPLE                1 YEAR        3 YEARS        5 YEARS        10 YEARS
<S>                   <C>           <C>            <C>            <C>
Class B shares          $100           $312           $542         $1,201
</TABLE>


DWS VARIABLE SERIES II - CLASS B SHARES        DWS GOVERNMENT & AGENCY
                                               SECURITIES VIP   47
<PAGE>

PORTFOLIO MANAGEMENT

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

The following people handle the day-to-day management of the portfolio:

William Chepolis, CFA
Managing Director of Deutsche Asset Management and Co-Manager of the portfolio.
   o Joined Deutsche Asset Management in 1998 after 13 years of experience as
     vice president and portfolio manager for Norwest Bank, where he managed
     the bank's fixed income and foreign exchange portfolios.
   o Portfolio Manager for Retail Fixed Income: New York.
   o Joined the portfolio in 2002.
   o BIS, University of Minnesota.

Matthew F. MacDonald, CFA
Director of Deutsche Asset Management and Co-Manager of the portfolio.
   o Joined Deutsche Asset Management and the portfolio in 2006 after 14 years
     of fixed income experience at Bank of America Global Structured Products
     and PPM America, Inc., where he was portfolio manager for public fixed
     income, including MBS, ABS, CDOs and corporate bonds; earlier, as an
     analyst for MBS, ABS and money markets; and originally, at Duff & Phelps
     Credit Rating Company.
   o Portfolio Manager for Retail Fixed Income: New York.
   o BA, Harvard University; MBA, University of Chicago Graduate School of
     Business.

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


48   DWS GOVERNMENT & AGENCY SECURITIES VIP          DWS VARIABLE SERIES II -
                                                     CLASS B SHARES
<PAGE>

FINANCIAL HIGHLIGHTS

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

This information doesn't reflect charges and fees associated with the separate
account that invests in the portfolio or any variable life insurance policy or
variable annuity contract for which the portfolio is an investment option.
These charges and fees will reduce returns.



DWS GOVERNMENT & AGENCY SECURITIES VIP - CLASS B



<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,                              2008         2007         2006        2005        2004
<S>                                               <C>          <C>          <C>         <C>         <C>
SELECTED PER SHARE DATA
----------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD                $  12.35     $  12.25    $  12.23    $  12.52    $  12.51
-------------------------------------------------   --------     --------    --------    --------    --------
Income (loss) from investment operations:
 Net investment income a                                 .52          .53         .50         .47         .40
_________________________________________________   ________     ________    ________    ________    ________
 Net realized and unrealized gain (loss)                 .03          .12      (  .06)     (  .21)        .02
-------------------------------------------------   --------     --------    --------    --------    --------
 TOTAL FROM INVESTMENT OPERATIONS                        .55          .65         .44         .26         .42
-------------------------------------------------   --------     --------    --------    --------    --------
Less distributions from:
 Net investment income                                (  .53)      (  .55)     (  .42)     (  .45)     (  .30)
_________________________________________________   ________     ________    ________    ________    ________
 Net realized gains                                        -            -           -      (  .10)     (  .11)
-------------------------------------------------   --------     --------    --------    --------    --------
 TOTAL DISTRIBUTIONS                                  (  .53)      (  .55)     (  .42)     (  .55)     (  .41)
-------------------------------------------------   --------     --------    --------    --------    --------
NET ASSET VALUE, END OF PERIOD                      $  12.37     $  12.35    $  12.25    $  12.23    $  12.52
-------------------------------------------------   --------     --------    --------    --------    --------
Total Return (%)                                     4.60b        5.43b          3.74        2.24        3.36
_________________________________________________   ________     ________    ________    ________    ________
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
----------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ millions)                     8            5          33          47          49
_________________________________________________   ________     ________    ________    ________    ________
Ratio of expenses before expense reductions (%)         1.00         1.04        1.07        1.02        1.00
_________________________________________________   ________     ________    ________    ________    ________
Ratio of expenses after expense reductions (%)          1.00         1.01        1.07        1.02        1.00
_________________________________________________   ________     ________    ________    ________    ________
Ratio of net investment income (%)                      4.24         4.39        4.16        3.78        3.21
_________________________________________________   ________     ________    ________    ________    ________
Portfolio turnover rate (%)                              543          465         241         191         226
-------------------------------------------------   --------     --------    --------    --------    --------
</TABLE>

a   Based on average shares outstanding during the period.

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

DWS VARIABLE SERIES II - CLASS B SHARES        DWS GOVERNMENT & AGENCY
                                               SECURITIES VIP   49
<PAGE>

HYPOTHETICAL EXPENSE SUMMARY

Using the annual portfolio operating expense ratios presented in the fee tables
in the portfolio prospectus, the Hypothetical Expense Summary shows the
estimated fees and expenses, in actual dollars, that would be charged on a
hypothetical investment of $10,000 in the portfolio held for the next 10 years
and the impact of such fees and expenses on portfolio returns for each year and
cumulatively, assuming a 5% return for each year. The historical rate of return
for the portfolio may be higher or lower than 5% and, for money funds, is
typically less than 5%. The tables also assume that all dividends and
distributions are reinvested. The annual portfolio expense ratios shown are net
of any contractual fee waivers or expense reimbursements, if any, for the
period of the contractual commitment. Also, please note that if you are
investing through a third party provider, that provider may have fees and
expenses separate from those of the portfolio that are not reflected here.
Mutual fund fees and expenses fluctuate over time and actual expenses may be
higher or lower than those shown.

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



DWS GOVERNMENT & AGENCY SECURITIES VIP - CLASS B



<TABLE>
<CAPTION>
                MAXIMUM                  INITIAL HYPOTHETICAL                          ASSUMED RATE
             SALES CHARGE:                   INVESTMENT:                                OF RETURN:
                 0.00%                         $10,000                                      5%
               CUMULATIVE                                CUMULATIVE           HYPOTHETICAL
             RETURN BEFORE                              RETURN AFTER        YEAR-END BALANCE           ANNUAL
                FEES AND            ANNUAL FUND           FEES AND           AFTER FEES AND           FEES AND
YEAR            EXPENSES          EXPENSE RATIOS          EXPENSES              EXPENSES              EXPENSES
<S>         <C>                  <C>                   <C>                 <C>                     <C>
   1              5.00%                 0.98%                4.02%            $ 10,402.00           $    99.97
   2             10.25%                 0.98%                8.20%            $ 10,820.16           $   103.99
   3             15.76%                 0.98%               12.55%            $ 11,255.13           $   108.17
   4             21.55%                 0.98%               17.08%            $ 11,707.59           $   112.52
   5             27.63%                 0.98%               21.78%            $ 12,178.23           $   117.04
   6             34.01%                 0.98%               26.68%            $ 12,667.80           $   121.75
   7             40.71%                 0.98%               31.77%            $ 13,177.04           $   126.64
   8             47.75%                 0.98%               37.07%            $ 13,706.76           $   131.73
   9             55.13%                 0.98%               42.58%            $ 14,257.77           $   137.03
  10             62.89%                 0.98%               48.31%            $ 14,830.93           $   142.53
TOTAL                                                                                               $ 1,201.37
</TABLE>


50   DWS GOVERNMENT & AGENCY SECURITIES VIP          DWS VARIABLE SERIES II -
                                                     CLASS B SHARES
<PAGE>

DWS HIGH INCOME VIP


THE PORTFOLIO'S MAIN INVESTMENT STRATEGY

The portfolio seeks to provide a high level of current income.

Under normal circumstances, this portfolio generally invests at least 65% of
net assets, plus the amount of any borrowings for investment purposes, in junk
bonds, which are those rated below the fourth highest credit rating category
(i.e., grade BB/Ba and below). Compared to investment-grade bonds, junk bonds
may pay higher yields, have higher volatility and higher risk of default on
payments of interest or principal. The portfolio may invest up to 50% of total
assets in bonds denominated in US dollars or foreign currencies from foreign
issuers.

Portfolio management focuses on cash flow and total return analysis, and broad
diversification among countries, sectors, industries and individual issuers and
maturities. Portfolio management uses an active process which emphasizes
relative value in a global environment, managing on a total return basis, and
using intensive research to identify stable to improving credit situations that
may provide yield compensation for the risk of investing in below investment
grade fixed income securities (junk bonds).

The investment process involves using primarily a "bottom-up" approach by using
relative value and fundamental analysis to select the best securities within
each industry, and a top-down approach to assess the overall risk and return in
the market and which considers macro trends in the economy. To select
securities or investments, portfolio management:

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

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

o assesses new offerings versus secondary market opportunities; and

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

PORTFOLIO MATURITY. Portfolio management intends to maintain a dollar-weighted
effective average portfolio maturity of seven to ten years. The portfolio's
average portfolio maturity may vary and may be shortened by certain of the
portfolio's securities which have floating or variable interest rates or
include put features that provide the portfolio the right to sell the security
at face value prior to maturity. Subject to its portfolio maturity policy, the
portfolio may purchase individual securities with any stated maturity.

The dollar-weighted effective average portfolio maturity may be shorter than
the stated maturity due to several factors, including but not limited to,
prepayment patterns, call dates and put features.

In implementing this strategy, the portfolio may experience a high portfolio
turnover rate.

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

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




DERIVATIVES AND OTHER INVESTMENTS


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


DWS VARIABLE SERIES II - CLASS B SHARES                     DWS HIGH INCOME
                                                            VIP   51
<PAGE>

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



THE MAIN RISKS OF INVESTING IN THE PORTFOLIO

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

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

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

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

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

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

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

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

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

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

52   DWS HIGH INCOME VIP                             DWS VARIABLE SERIES II -
                                                        CLASS B SHARES
<PAGE>

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

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

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


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


Some governments exercise substantial influence over the private economic
sector and the social and political uncertainties that exist for many
developing countries is significant. In adverse social and political
circumstances, governments have been involved in policies of expropriation,
confiscatory taxation, nationalization, intervention in the securities markets
and trade settlement, and imposition of foreign investment restrictions and
exchange controls.

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

PRICING RISK. At times, market conditions may make it difficult to value some
investments, and the portfolio may use certain valuation methodologies for some
of its investments, such as fair value pricing. Given the subjective nature of
such valuation methodologies, it is possible that the value determined for an
investment may be different than the value realized upon such investment's
sale. If the portfolio has valued its securities too highly, you may pay too
much for portfolio shares when you buy into the portfolio. If the portfolio has
underestimated the price of its securities, you may not receive the full market
value when you sell your portfolio shares.

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

SECURITY SELECTION RISK. A risk that pervades all investing is the risk that
the securities in the portfolio's portfolio may decline in value.

Another factor that could affect performance is:

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

Investors who seek high current income and can accept risk of loss of principal
may be interested in this portfolio.


DWS VARIABLE SERIES II - CLASS B SHARES                     DWS HIGH INCOME
                                                            VIP   53
<PAGE>

PERFORMANCE - CLASS B

While a portfolio's past performance isn't necessarily a sign of how it will do
in the future, it can be valuable for an investor to know.

The bar chart shows how the returns for the portfolio's Class B shares have
varied from year to year, which may give some idea of risk. The table shows
average annual returns for the portfolio and comparable index information
(which, unlike the portfolio, does not have any fees or expenses). The
performance of both the portfolio and the comparable index information varies
over time. All figures assume reinvestment of dividends and distributions.

This information doesn't reflect charges and fees associated with the separate
account that invests in the portfolio or any variable life insurance policy or
variable annuity contract for which the portfolio is an investment option.
These charges and fees will reduce returns.

The inception date for Class B was July 1, 2002. In the bar chart and table,
the performance figures for Class B before that date are based on the
historical performance of the portfolio's original share class (Class A),
adjusted to reflect the higher gross total annual operating expenses of Class
B. Class A is offered in a different prospectus.


ANNUAL TOTAL RETURN (%) as of 12/31 each year - CLASS B

[BAR GRAPHIC OMITTED HERE]

[BAR GRAPHIC DATA]




<TABLE>
<S>         <C>        <C>       <C>        <C>        <C>        <C>       <C>        <C>     <C>
   1.90      -8.91      2.37      -0.58     24.14      12.08       3.41     10.11      0.54     -24.13
  1999      2000       2001      2002       2003       2004       2005      2006       2007     2008
</TABLE>




<TABLE>
<CAPTION>
                FOR THE PERIODS INCLUDED IN THE BAR CHART:
<S>                                       <C>
BEST QUARTER: 8.44%, Q2 2003              WORST QUARTER: -16.33%, Q4 2008
2009 TOTAL RETURN AS OF MARCH 31: 3.56%
</TABLE>

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



<TABLE>
<CAPTION>
                                         1 YEAR         5 YEARS        10 YEARS
<S>                                   <C>              <C>            <C>
Portfolio - Class B                       -24.13          -0.53           1.33
Credit Suisse High Yield Index            -26.17          -0.59           2.87
</TABLE>

CREDIT SUISSE HIGH YIELD INDEX is an unmanaged trader-priced portfolio,
constructed to mirror the global high-yield debt market.

Current performance information may be higher or lower than the performance
data quoted above. For more recent performance information, contact your
participating insurance company.


54   DWS HIGH INCOME VIP                             DWS VARIABLE SERIES II -
                                                     CLASS B SHARES
<PAGE>

HOW MUCH INVESTORS PAY

This table describes the fees and expenses that you may pay if you buy and hold
portfolio shares. The information in the table does not reflect charges and
fees associated with the separate account that invests in the portfolio or any
variable life insurance policy or variable annuity contract for which the
portfolio is an investment option. These charges and fees will increase
expenses.



<TABLE>
<CAPTION>
FEE TABLE                                CLASS B
<S>                                    <C>
ANNUAL OPERATING EXPENSES, deducted from portfolio assets
_________________________________________________________
Management Fee 1                           0.50%
Distribution/Service (12b-1) Fee           0.25
Other Expenses 2                           0.30
TOTAL ANNUAL OPERATING EXPENSES 3          1.05
</TABLE>

1   Restated on an annualized basis to reflect approved fee changes that took
    effect on May 1, 2008.


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


3   Through September 30, 2009, the Advisor has contractually agreed to waive
    all or a portion of its management fee and reimburse or pay certain
    operating expenses of the portfolio to the extent necessary to maintain
    the portfolio's total operating expenses at 1.18% for Class B shares,
    excluding certain expenses such as extraordinary expenses, taxes,
    brokerage and interest. Although there can be no assurance that the
    current waiver/expense reimbursement arrangement will be maintained beyond
    September 30, 2009, the Advisor has committed to review the continuance of
    waiver/expense reimbursement arrangements by September 30, 2009.


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



<TABLE>
<CAPTION>
EXAMPLE                1 YEAR        3 YEARS        5 YEARS        10 YEARS
<S>                   <C>           <C>            <C>            <C>
Class B shares          $107           $334           $579         $1,283
</TABLE>

PORTFOLIO MANAGEMENT

The following person handles the day-to-day management of the portfolio:

Gary Sullivan, CFA
Managing Director of Deutsche Asset Management and Portfolio Manager of the
portfolio.
   o Joined Deutsche Asset Management in 1996 and the portfolio in 2006.
     Served as the head of the High Yield group in Europe and as an Emerging
     Markets portfolio manager.
   o 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.
   o BS, United States Military Academy (West Point); MBA, New York
     University, Stern School of Business

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


DWS VARIABLE SERIES II - CLASS B SHARES                     DWS HIGH INCOME
                                                            VIP   55
<PAGE>

FINANCIAL HIGHLIGHTS

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

This information doesn't reflect charges and fees associated with the separate
account that invests in the portfolio or any variable life insurance policy or
variable annuity contract for which the portfolio is an investment option.
These charges and fees will reduce returns.



DWS HIGH INCOME VIP - CLASS B



<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,                               2008        2007       2006       2005       2004
<S>                                               <C>           <C>        <C>        <C>        <C>
SELECTED PER SHARE DATA
------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD                $   7.81     $  8.38    $  8.22    $  8.77    $  8.41
-------------------------------------------------   --------     -------    -------    -------    -------
Income (loss) from investment operations:
 Net investment income a                                 .53         .60        .59        .65        .64
_________________________________________________   ________     _______    _______    _______    _______
 Net realized and unrealized gain (loss)              ( 2.27)      ( .54)       .20      ( .39)       .32
-------------------------------------------------   --------     -------    -------    -------    -------
 TOTAL FROM INVESTMENT OPERATIONS                     ( 1.74)        .06        .79        .26        .96
-------------------------------------------------   --------     -------    -------    -------    -------
Less distributions from:
 Net investment income                                (  .76)      ( .63)     ( .63)     ( .81)     ( .60)
_________________________________________________   ________     _______    _______    _______    _______
NET ASSET VALUE, END OF PERIOD                      $   5.31     $  7.81    $  8.38    $  8.22    $  8.77
-------------------------------------------------   --------     -------    -------    -------    -------
Total Return (%)                                      (24.13)b       .54      10.11       3.41      12.08
_________________________________________________   ________     _______    _______    _______    _______
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ millions)                   .1           10         53         56         57
_________________________________________________   ________     _______    _______    _______    _______
Ratio of expenses before expense reductions (%)         1.25        1.08       1.10       1.10       1.06
_________________________________________________   ________     _______    _______    _______    _______
Ratio of expenses after expense reductions (%)          1.23        1.08       1.10       1.10       1.06
_________________________________________________   ________     _______    _______    _______    _______
Ratio of net investment income (%)                      7.98        7.45       7.34       7.87       7.71
_________________________________________________   ________     _______    _______    _______    _______
Portfolio turnover rate (%)                               38          61         93        100        162
-------------------------------------------------   --------     -------    -------    -------    -------
</TABLE>

a   Based on average shares outstanding during the period.

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

56   DWS HIGH INCOME VIP                             DWS VARIABLE SERIES II -
                                                     CLASS B SHARES
<PAGE>

HYPOTHETICAL EXPENSE SUMMARY

Using the annual portfolio operating expense ratios presented in the fee tables
in the portfolio prospectus, the Hypothetical Expense Summary shows the
estimated fees and expenses, in actual dollars, that would be charged on a
hypothetical investment of $10,000 in the portfolio held for the next 10 years
and the impact of such fees and expenses on portfolio returns for each year and
cumulatively, assuming a 5% return for each year. The historical rate of return
for the portfolio may be higher or lower than 5% and, for money funds, is
typically less than 5%. The tables also assume that all dividends and
distributions are reinvested. The annual portfolio expense ratios shown are net
of any contractual fee waivers or expense reimbursements, if any, for the
period of the contractual commitment. Also, please note that if you are
investing through a third party provider, that provider may have fees and
expenses separate from those of the portfolio that are not reflected here.
Mutual fund fees and expenses fluctuate over time and actual expenses may be
higher or lower than those shown.

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



DWS HIGH INCOME VIP - CLASS B



<TABLE>
<CAPTION>
                MAXIMUM                  INITIAL HYPOTHETICAL                          ASSUMED RATE
             SALES CHARGE:                   INVESTMENT:                                OF RETURN:
                 0.00%                         $10,000                                      5%
               CUMULATIVE                                CUMULATIVE           HYPOTHETICAL
             RETURN BEFORE                              RETURN AFTER        YEAR-END BALANCE          ANNUAL
                FEES AND            ANNUAL FUND           FEES AND           AFTER FEES AND          FEES AND
YEAR            EXPENSES          EXPENSE RATIOS          EXPENSES              EXPENSES             EXPENSES
<S>         <C>                  <C>                   <C>                 <C>                     <C>
   1              5.00%                 1.05%                3.95%            $ 10,395.00          $   107.07
   2             10.25%                 1.05%                8.06%            $ 10,805.60          $   111.30
   3             15.76%                 1.05%               12.32%            $ 11,232.42          $   115.70
   4             21.55%                 1.05%               16.76%            $ 11,676.10          $   120.27
   5             27.63%                 1.05%               21.37%            $ 12,137.31          $   125.02
   6             34.01%                 1.05%               26.17%            $ 12,616.73          $   129.96
   7             40.71%                 1.05%               31.15%            $ 13,115.10          $   135.09
   8             47.75%                 1.05%               36.33%            $ 13,633.14          $   140.43
   9             55.13%                 1.05%               41.72%            $ 14,171.65          $   145.98
  10             62.89%                 1.05%               47.31%            $ 14,731.43          $   151.74
TOTAL                                                                                              $ 1,282.56
</TABLE>


DWS VARIABLE SERIES II - CLASS B SHARES                     DWS HIGH INCOME
                                                            VIP   57
<PAGE>

DWS LARGE CAP VALUE VIP


THE PORTFOLIO'S MAIN INVESTMENT STRATEGY

The portfolio seeks to achieve a high rate of total return.


Under normal circumstances, the portfolio invests at least 80% of net assets,
plus the amount of any borrowings for investment purposes, in common stocks and
other equity securities of large US companies that are similar in size to the
companies in the Russell 1000 (Reg. TM) Value Index (as of February 28, 2009,
the Russell 1000 (Reg. TM) Value Index had a median market capitalization of
$2.1 billion) and that portfolio management believes are undervalued. These are
typically companies that have been sound historically but are temporarily out
of favor. The portfolio intends to invest primarily in companies whose market
capitalizations fall within the normal range of the Index. Although the
portfolio can invest in stocks of any economic sector (which is comprised of
two or more industries), at times the portfolio may emphasize certain sectors,
even investing more than 25% of its portfolio in any one sector.

The portfolio may invest up to 20% of total assets in foreign securities.


The portfolio's equity investments are mainly common stocks, but may also
include other types of equities such as preferred or convertible stocks.

Portfolio management begins by screening for stocks whose price-to-earnings
ratios are below the average for the S&P 500 Index. Portfolio management then
compares a company's stock price to its book value, cash flow and yield, and
analyze individual companies to identify those that are financially sound and
appear to have strong potential for long-term growth.

Portfolio management assembles the portfolio from among the most attractive
stocks, drawing on analysis of economic outlooks for various sectors and
industries.

Portfolio management will normally sell a stock when it believes the stock's
price is unlikely to go higher, its fundamental factors have changed, other
investments offer better opportunities or in the course of adjusting the
portfolio's emphasis on a given sector.

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

Although major changes tend to be infrequent, the Board of Trustees could
change the portfolio's investment objective without seeking shareholder
approval. However, the Board will provide shareholders with at least 60 days'
notice prior to making any changes to the portfolio's 80% investment policy.




DERIVATIVES AND OTHER INVESTMENTS

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


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



THE MAIN RISKS OF INVESTING IN THE PORTFOLIO

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


58   DWS LARGE CAP VALUE VIP                         DWS VARIABLE SERIES II -
                                                     CLASS B SHARES
<PAGE>

STOCK MARKET RISK. The portfolio is affected by how the stock market performs.
To the extent the portfolio invests in a particular market sector, the
portfolio's performance may be proportionately affected by that segment's
general performance. When stock prices fall, you should expect the value of
your investment to fall as well. Because a stock represents ownership in its
issuer, stock prices can be hurt by poor management, shrinking product demand
and other business risks. These may affect single companies as well as groups
of companies. In addition, movements in financial markets may adversely affect
a stock's price, regardless of how well the company performs. The market as a
whole may not favor the types of investments the portfolio makes and the
portfolio may not be able to get an attractive price for them.

VALUE INVESTING RISK. At times, "value" investing may perform better than or
worse than other investment styles and the overall market. If portfolio
management overestimates the value or return potential of one or more
securities, the portfolio may underperform the general equity market. Value
stocks may also be out of favor for certain periods in relation to growth
stocks.

INDUSTRY RISK. While the portfolio does not concentrate in any industry, to the
extent that the portfolio has exposure to a given industry or sector, any
factors affecting that industry or sector could affect the value of portfolio
securities. For example, manufacturers of consumer goods could be hurt by a
rise in unemployment or technology companies could be hurt by such factors as
market saturation, price competition and rapid obsolescence.

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

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

PRICING RISK. At times, market conditions may make it difficult to value some
investments, and the portfolio may use certain valuation methodologies for some
of its investments, such as fair value pricing. Given the subjective nature of
such valuation methodologies, it is possible that the value determined for an
investment may be different than the value realized upon such investment's
sale. If the portfolio has valued its securities too highly, you may pay too
much for portfolio shares when you buy into the portfolio. If the portfolio has
underestimated the price of its securities, you may not receive the full market
value when you sell your portfolio shares.

SECURITY SELECTION RISK. A risk that pervades all investing is the risk that
the securities in the portfolio's portfolio may decline in value.

Other factors that could affect performance include:

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

o foreign securities may be more volatile than their US counterparts, for
  reasons such as currency fluctuations and political and economic
  uncertainty.

Investors seeking to diversify a growth-oriented portfolio or add a core
holding to a value-oriented portfolio may want to consider this portfolio.


DWS VARIABLE SERIES II - CLASS B SHARES                  DWS LARGE CAP VALUE
                                                         VIP   59
<PAGE>

PERFORMANCE - CLASS B

While a portfolio's past performance isn't necessarily a sign of how it will do
in the future, it can be valuable for an investor to know.

The bar chart shows how the returns for the portfolio's Class B shares have
varied from year to year, which may give some idea of risk. The table shows
average annual returns for the portfolio and comparable index information
(which, unlike the portfolio, does not have any fees or expenses). The
performance of both the portfolio and the comparable index information varies
over time. All figures assume reinvestment of dividends and distributions.

This information doesn't reflect charges and fees associated with the separate
account that invests in the portfolio or any variable life insurance policy or
variable annuity contract for which the portfolio is an investment option.
These charges and fees will reduce returns.

The inception date for Class B was July 1, 2002. In the bar chart and table,
the performance figures for Class B before that date are based on the
historical performance of the portfolio's original share class (Class A),
adjusted to reflect the higher gross total annual operating expenses of Class
B. Class A is offered in a different prospectus.


ANNUAL TOTAL RETURN (%) as of 12/31 each year - CLASS B

[BAR GRAPHIC OMITTED HERE]

[BAR GRAPHIC DATA]




<TABLE>
<S>           <C>        <C>       <C>         <C>        <C>       <C>       <C>        <C>        <C>
  -10.44      15.84       1.61      -15.18     32.19       9.65      1.58     14.96      12.77       -36.64
   1999       2000       2001       2002       2003       2004      2005      2006       2007        2008
</TABLE>




<TABLE>
<CAPTION>
                FOR THE PERIODS INCLUDED IN THE BAR CHART:
<S>                                        <C>
BEST QUARTER: 18.75%, Q2 2003              WORST QUARTER: -22.50%, Q4 2008
2009 TOTAL RETURN AS OF MARCH 31: -7.68%
</TABLE>

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



<TABLE>
<CAPTION>
                                   1 YEAR         5 YEARS        10 YEARS
<S>                             <C>              <C>            <C>
Portfolio - Class B                 -36.64          -1.77           0.78
Russell 1000 Value Index            -36.85          -0.79           1.36
</TABLE>

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

RUSSELL 1000 (Reg. TM) VALUE INDEX is an unmanaged index that consists of those
stocks in the Russell 1000 Index with less-than-average growth orientation.
Russell 1000 (Reg. TM) Index is an unmanaged price-only index of the 1,000
largest capitalized companies that are domiciled in the US and whose common
stocks are traded.

Current performance information may be higher or lower than the performance
data quoted above. For more recent performance information, contact your
participating insurance company.


60   DWS LARGE CAP VALUE VIP                         DWS VARIABLE SERIES II -
                                                     CLASS B SHARES
<PAGE>

HOW MUCH INVESTORS PAY

This table describes the fees and expenses that you may pay if you buy and hold
portfolio shares. The information in the table does not reflect charges and
fees associated with the separate account that invests in the portfolio or any
variable life insurance policy or variable annuity contract for which the
portfolio is an investment option. These charges and fees will increase
expenses.



<TABLE>
<CAPTION>
FEE TABLE                                   CLASS B
<S>                                       <C>
ANNUAL OPERATING EXPENSES, deducted from portfolio assets
__________________________________________________________
Management Fee                                0.65%
Distribution/Service (12b-1) Fee              0.25
Other Expenses 1                              0.30
TOTAL ANNUAL OPERATING EXPENSES 2, 3          1.20
</TABLE>

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

2   Through September 30, 2009, the Advisor has contractually agreed to waive
    all or a portion of its management fee and reimburse or pay certain
    operating expenses of the portfolio to the extent necessary to maintain
    the portfolio's total operating expenses at 1.25% for Class B shares,
    excluding certain expenses such as extraordinary expenses, taxes,
    brokerage and interest. Although there can be no assurance that the
    current waiver/expense reimbursement arrangement will be maintained beyond
    September 30, 2009, the Advisor has committed to review the continuance of
    waiver/expense reimbursement arrangements by September 30, 2009.


3   Except as otherwise noted, the information in the table is based on amounts
    incurred during the portfolio's most recent fiscal year. It is important
    for you to understand that a decline in the portfolio's average net assets
    during the current fiscal year due to recent unprecedented market
    volatility or other factors could cause the portfolio's expense ratios for
    the portfolio's current fiscal year to be higher than the expense
    information presented. For more current expense information, see
    "Financial Highlights" in the portfolio's future annual or semi-annual
    reports.



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



<TABLE>
<CAPTION>
EXAMPLE                1 YEAR        3 YEARS        5 YEARS        10 YEARS
<S>                   <C>           <C>            <C>            <C>
Class B shares          $122           $381           $660         $1,455
</TABLE>

PORTFOLIO MANAGEMENT

Deutsche Asset Management International GmbH, Mainzer Landstrasse 178-190,
Frankfurt am Main, Germany, is the subadvisor for the portfolio.

The following person handles the day-to-day management of the portfolio:

Thomas Schuessler, PhD
Managing Director of Deutsche Asset Management and Portfolio Manager of the
portfolio.
   o Joined Deutsche Asset Management in 2001 after 5 years at Deutsche Bank
     where he managed various projects and worked in the office of the Chairman
     of the Management Board.
   o US and Global Fund Management: Frankfurt.
   o Joined the portfolio in 2007.
   o PhD, University of Heidelberg, studies in physics and economics at
     University of Heidelberg and University of Utah.

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


DWS VARIABLE SERIES II - CLASS B SHARES                  DWS LARGE CAP VALUE
                                                         VIP   61
<PAGE>

FINANCIAL HIGHLIGHTS

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

This information doesn't reflect charges and fees associated with the separate
account that invests in the portfolio or any variable life insurance policy or
variable annuity contract for which the portfolio is an investment option.
These charges and fees will reduce returns.



DWS LARGE CAP VALUE VIP - CLASS B



<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,                               2008          2007          2006         2005         2004
<S>                                               <C>           <C>            <C>          <C>          <C>
SELECTED PER SHARE DATA
---------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD                $  19.20      $   17.94      $  15.79     $  15.77    $  14.55
-------------------------------------------------   --------      ---------      --------     --------    --------
Income (loss) from investment operations:
 Net investment income (loss)a                           .12            .19        .23c            .19         .22
_________________________________________________   ________      _________      ________     ________    ________
 Net realized and unrealized gain (loss)              ( 5.64)          1.99          2.11          .05        1.17
-------------------------------------------------   --------      ---------      --------     --------    --------
 TOTAL FROM INVESTMENT OPERATIONS                     ( 5.52)          2.18          2.34          .24        1.39
-------------------------------------------------   --------      ---------      --------     --------    --------
Less distributions from:
 Net investment income                                (  .28)        (  .25)       (  .19)      (  .22)     (  .17)
_________________________________________________   ________      _________      ________     ________    ________
 Net realized gains                                   ( 4.48)        (  .67)            -            -           -
_________________________________________________   ________      _________      ________     ________    ________
 TOTAL DISTRIBUTIONS                                  ( 4.76)        (  .92)       (  .19)      (  .22)     (  .17)
-------------------------------------------------   --------      ---------      --------     --------    --------
NET ASSET VALUE, END OF PERIOD                      $   8.92      $   19.20      $  17.94     $  15.79    $  15.77
-------------------------------------------------   --------      ---------      --------     --------    --------
Total Return (%)                                      (36.64)b     12.77b,d       14.96c       1.58b          9.65
_________________________________________________   ________      _________      ________     ________    ________
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
---------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ millions)                   .29              8            40           40          40
_________________________________________________   ________      _________      ________     ________    ________
Ratio of expenses before expense reductions (%)         1.28           1.21          1.21         1.21        1.18
_________________________________________________   ________      _________      ________     ________    ________
Ratio of expenses after expense reductions (%)          1.26           1.20          1.21         1.20        1.18
_________________________________________________   ________      _________      ________     ________    ________
Ratio of net investment income (loss) (%)               1.20           1.06       1.35c           1.24        1.46
_________________________________________________   ________      _________      ________     ________    ________
Portfolio turnover rate (%)                               97            103            76           64          40
-------------------------------------------------   --------      ---------      --------     --------    --------
</TABLE>

a   Based on average shares outstanding during the period.

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

c   Includes non-recurring income from the Advisor recorded as a result of an
    administrative proceeding regarding disclosure of brokerage allocation
    practices in connection with sales of DWS Funds. The non-recurring income
    resulted in an increase in net investment income of $0.008 per share and
    an increase in the ratio of net investment income of 0.04%. Excluding this
    non-recurring income, total return would have been 0.04% lower.

d   Includes a reimbursement from the Advisor to reimburse the effect of losses
    incurred as the result of certain operation errors during the period.
    Excluding this reimbursement, total return would have been 0.04% lower.


62   DWS LARGE CAP VALUE VIP                         DWS VARIABLE SERIES II -
                                                        CLASS B SHARES
<PAGE>

HYPOTHETICAL EXPENSE SUMMARY

Using the annual portfolio operating expense ratios presented in the fee tables
in the portfolio prospectus, the Hypothetical Expense Summary shows the
estimated fees and expenses, in actual dollars, that would be charged on a
hypothetical investment of $10,000 in the portfolio held for the next 10 years
and the impact of such fees and expenses on portfolio returns for each year and
cumulatively, assuming a 5% return for each year. The historical rate of return
for the portfolio may be higher or lower than 5% and, for money funds, is
typically less than 5%. The tables also assume that all dividends and
distributions are reinvested. The annual portfolio expense ratios shown are net
of any contractual fee waivers or expense reimbursements, if any, for the
period of the contractual commitment. Also, please note that if you are
investing through a third party provider, that provider may have fees and
expenses separate from those of the portfolio that are not reflected here.
Mutual fund fees and expenses fluctuate over time and actual expenses may be
higher or lower than those shown.

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



DWS LARGE CAP VALUE VIP - CLASS B



<TABLE>
<CAPTION>
                MAXIMUM                  INITIAL HYPOTHETICAL                          ASSUMED RATE
             SALES CHARGE:                   INVESTMENT:                                OF RETURN:
                 0.00%                         $10,000                                      5%
               CUMULATIVE                                CUMULATIVE           HYPOTHETICAL
             RETURN BEFORE                              RETURN AFTER        YEAR-END BALANCE          ANNUAL
                FEES AND            ANNUAL FUND           FEES AND           AFTER FEES AND          FEES AND
YEAR            EXPENSES          EXPENSE RATIOS          EXPENSES              EXPENSES             EXPENSES
<S>         <C>                  <C>                   <C>                 <C>                     <C>
   1              5.00%                 1.20%                3.80%            $ 10,380.00          $   122.28
   2             10.25%                 1.20%                7.74%            $ 10,774.44          $   126.93
   3             15.76%                 1.20%               11.84%            $ 11,183.87          $   131.75
   4             21.55%                 1.20%               16.09%            $ 11,608.86          $   136.76
   5             27.63%                 1.20%               20.50%            $ 12,049.99          $   141.95
   6             34.01%                 1.20%               25.08%            $ 12,507.89          $   147.35
   7             40.71%                 1.20%               29.83%            $ 12,983.19          $   152.95
   8             47.75%                 1.20%               34.77%            $ 13,476.55          $   158.76
   9             55.13%                 1.20%               39.89%            $ 13,988.66          $   164.79
  10             62.89%                 1.20%               45.20%            $ 14,520.23          $   171.05
TOTAL                                                                                              $ 1,454.57
</TABLE>


DWS VARIABLE SERIES II - CLASS B SHARES                  DWS LARGE CAP VALUE
                                                         VIP   63
<PAGE>

DWS STRATEGIC VALUE VIP


THE PORTFOLIO'S MAIN INVESTMENT STRATEGY

The portfolio seeks to achieve a high rate of total return.

Under normal circumstances, the portfolio invests at least 80% of net assets,
plus the amount of any borrowings for investment purposes, in common stocks and
other equity securities. The portfolio focuses on stocks of large US companies
that are similar in size to the companies in the S&P 500 Index (as of February
28, 2009, the S&P 500 Index had a median market capitalization of $5 billion)
and that portfolio management believes are undervalued. The portfolio intends
to invest primarily in companies whose market capitalizations fall within the
normal range of the S&P 500 Index. Although the portfolio can invest in stocks
of any economic sector (which is comprised of two or more industries), at times
it may emphasize one or more sectors. In fact, it may invest more than 25% of
total assets in a single sector.

The portfolio may invest up to 20% of net assets in foreign securities
including US dollar-denominated American Depository Receipts.

The portfolio's equity investments are mainly common stocks, but may also
include other types of equities such as preferred or convertible stocks.
Portfolio management seeks to invest in a diversified portfolio normally
consisting of approximately 60-80 stocks.

Portfolio management begins by comparing a company's stock price to its book
value, cash flow, earnings and sales and analyzing individual companies to
identify those that are financially sound and appear to have strong potential
for long-term growth and income.

Portfolio management assembles the portfolio from among the most attractive
stocks, drawing on analysis of economic outlooks for various sectors and
industries.

Portfolio management employs a disciplined sell strategy and will normally sell
a stock when it reaches a target price, its fundamental factors have changed or
when other investments offer better opportunities.


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

Although major changes tend to be infrequent, the Board of Trustees could
change the portfolio's investment objective without seeking shareholder
approval. However, the Board will provide shareholders with at least 60 days'
notice prior to making any changes to the portfolio's 80% investment policy.



DERIVATIVES AND OTHER INVESTMENTS

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


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



THE MAIN RISKS OF INVESTING IN THE PORTFOLIO

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


64   DWS STRATEGIC VALUE VIP                         DWS VARIABLE SERIES II -
                                                     CLASS B SHARES
<PAGE>

STOCK MARKET RISK. The portfolio is affected by how the stock market performs.
To the extent the portfolio invests in a particular capitalization or market
sector, the portfolio's performance may be proportionately affected by that
segment's general performance. When stock prices fall, you should expect the
value of your investment to fall as well. Because a stock represents ownership
in its issuer, stock prices can be hurt by poor management, shrinking product
demand and other business risks. These factors may affect single companies as
well as groups of companies. In addition, movements in financial markets may
adversely affect a stock's price, regardless of how well the company performs.
The market as a whole may not favor the types of investments the portfolio
makes, which could affect the portfolio's ability to sell them at an attractive
price.

VALUE INVESTING RISK. At times, "value" investing may perform better than or
worse than other investment styles and the overall market. If portfolio
management overestimates the value or return potential of one or more
securities, the portfolio may underperform the general equity market. Value
stocks may also be out of favor for certain periods in relation to growth
stocks.

INDUSTRY RISK. While the portfolio does not concentrate in any industry, to the
extent that the portfolio has exposure to a given industry or sector, any
factors affecting that industry or sector could affect the value of portfolio
securities. For example, manufacturers of consumer goods could be hurt by a
rise in unemployment or technology companies could be hurt by such factors as
market saturation, price competition and rapid obsolescence.

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

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

PRICING RISK. At times, market conditions may make it difficult to value some
investments, and the portfolio may use certain valuation methodologies for some
of its investments, such as fair value pricing. Given the subjective nature of
such valuation methodologies, it is possible that the value determined for an
investment may be different than the value realized upon such investment's
sale. If the portfolio has valued its securities too highly, you may pay too
much for portfolio shares when you buy into the portfolio. If the portfolio has
underestimated the price of its securities, you may not receive the full market
value when you sell your portfolio shares.

SECURITY SELECTION RISK. A risk that pervades all investing is the risk that
the securities in the portfolio's portfolio may decline in value.

Other factors that could affect performance include:

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

o foreign securities may be more volatile than their US counterparts, for
  reasons such as currency fluctuations and political and economic
  uncertainty.

This portfolio may serve investors with long-term goals who are interested in a
large-cap value portfolio that may focus on certain sectors of the economy.



PERFORMANCE - CLASS B

While a portfolio's past performance isn't necessarily a sign of how it will do
in the future, it can be valuable for an investor to know.


DWS VARIABLE SERIES II - CLASS B SHARES                   DWS STRATEGIC VALUE
                                                          VIP   65
<PAGE>

The bar chart shows how the returns for the portfolio's Class B shares have
varied from year to year, which may give some idea of risk. The table shows
average annual returns for the portfolio and comparable index information
(which, unlike the portfolio, does not have any fees or expenses). The
performance of both the portfolio and the comparable index information varies
over time. All figures assume reinvestment of dividends and distributions.

This information doesn't reflect charges and fees associated with the separate
account that invests in the portfolio or any variable life insurance policy or
variable annuity contract for which the portfolio is an investment option.
These charges and fees will reduce returns.


For the periods shown, Dreman Value Management, L.L.C. served as the
portfolio's subadvisor and was primarily responsible for the day-to-day
management of the portfolio. Performance would have been different if the
portfolio's current investment strategy had been in effect.


The inception date for Class B was July 1, 2002. In the bar chart and table,
the performance figures for Class B before that date are based on the
historical performance of the portfolio's original share class (Class A),
adjusted to reflect the higher gross total annual operating expenses of Class
B. Class A is offered in a different prospectus.


ANNUAL TOTAL RETURN (%) as of 12/31 each year - CLASS B

[BAR GRAPHIC OMITTED HERE]

[BAR GRAPHIC DATA]





<TABLE>
<S>           <C>        <C>       <C>         <C>        <C>        <C>       <C>        <C>        <C>
  -11.38      30.19       1.44      -18.25     31.60      13.53       7.51     18.21       -2.19     -46.16
   1999       2000       2001       2002       2003       2004       2005      2006       2007       2008
</TABLE>




<TABLE>
<CAPTION>
                 FOR THE PERIODS INCLUDED IN THE BAR CHART:
<S>                                         <C>
BEST QUARTER: 20.65%, Q2 2003               WORST QUARTER: -23.11%, Q4 2008
2009 TOTAL RETURN AS OF MARCH 31: -15.52%
</TABLE>

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



<TABLE>
<CAPTION>
                                            1 YEAR         5 YEARS        10 YEARS
<S>                                      <C>              <C>            <C>
Portfolio - Class B                          -46.16          -5.34          -0.44
Standard & Poor's (S&P) 500 Index            -37.00          -2.19          -1.38
</TABLE>

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

STANDARD & POOR'S 500 INDEX (S&P 500) is an unmanaged, capitalization-weighted
index of 500 stocks. The index is designed to measure performance of the broad
domestic economy through changes in the aggregate market value of 500 stocks
representing all major industries.

Current performance information may be higher or lower than the performance
data quoted above. For more recent performance information, contact your
participating insurance company.


66   DWS STRATEGIC VALUE VIP                         DWS VARIABLE SERIES II -
                                                     CLASS B SHARES
<PAGE>

HOW MUCH INVESTORS PAY

This table describes the fees and expenses that you may pay if you buy and hold
portfolio shares. The information in the table does not reflect charges and
fees associated with the separate account that invests in the portfolio or any
variable life insurance policy or variable annuity contract for which the
portfolio is an investment option. These charges and fees will increase
expenses.



<TABLE>
<CAPTION>
FEE TABLE                                CLASS B
<S>                                    <C>
ANNUAL OPERATING EXPENSES, deducted from portfolio assets
_________________________________________________________
Management Fee 1                           0.64%
Distribution/Service (12b-1) Fee           0.25
Other Expenses 2                           0.24
TOTAL ANNUAL OPERATING EXPENSES 3          1.13
Less Expense Reimbursement                 0.02
NET ANNUAL OPERATING EXPENSES 4            1.11
</TABLE>

1   Restated on an annualized basis to reflect approved fee changes that took
    effect on May 1, 2008.


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



3   Except as otherwise noted, the information in the table is based on amounts
    incurred during the portfolio's most recent fiscal year. It is important
    for you to understand that a decline in the portfolio's average net assets
    during the current fiscal year due to recent unprecedented market
    volatility or other factors could cause the portfolio's expense ratios for
    the portfolio's current fiscal year to be higher than the expense
    information presented. Based on asset levels as of December 31, 2008, the
    gross annualized expense ratio of Class B shares is estimated at 1.14%.
    For more current expense information, see "Financial Highlights" in the
    portfolio's future annual or semi-annual reports.


4   Through April 30, 2010, the Advisor has contractually agreed to waive all
    or a portion of its management fee and reimburse or pay certain operating
    expenses of the portfolio so that the total annual operating expenses of
    the portfolio will not exceed 1.11% for Class B shares, excluding certain
    expenses such as extraordinary expenses, taxes, brokerage and interest.


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



<TABLE>
<CAPTION>
EXAMPLE                1 YEAR        3 YEARS        5 YEARS        10 YEARS
<S>                   <C>           <C>            <C>            <C>
Class B shares          $113           $357           $620         $1,373
</TABLE>


DWS VARIABLE SERIES II - CLASS B SHARES                   DWS STRATEGIC VALUE
                                                          VIP   67
<PAGE>

PORTFOLIO MANAGEMENT

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

The following people handle the day-to-day management of the portfolio:

Volker Dosch
Managing Director of Deutsche Asset Management and Portfolio Manager of the
portfolio.
   o Joined Deutsche Asset Management in 1989 and the portfolio in 2009.
   o Fund Manager of US and global equity funds; Head of US Equities; Deputy
     Head of Fund Management International Equities; Head of Sector-Funds:
     Frankfurt.

   o Master's degree in Economics ("Diplom-Volkswirt") from the University of
     Frankfurt, Germany.


Oliver Pfeil, PhD
Vice President of Deutsche Asset Management and Portfolio Manager of the
portfolio.
   o Joined Deutsche Asset Management in 2006 after 3 years as Executive
     Assistant to the Management Board of Deutsche Bank. Previously, Research
     Fellow at the Swiss Institute of Banking and Finance at the University of
   St. Gallen (2000-2002); Visiting Scholar in Capital Markets Research at MIT
   Sloan School of Management (2002-2003). Also, serves as part-time Lecturer
   in Finance at the University of St. Gallen in Switzerland.
   o Joined the portfolio in 2009.
   o Portfolio manager for US and global value equity: Frankfurt.

   o PhD in finance and accounting and Master's degree in Business
     Administration from the University of St. Gallen; CEMS Master in
     International Management from University of St. Gallen & ESADE, Barcelona;
     completed bank training program ("Bankkaufmann") at Sal. Oppenheim jr. &
     Cie. KGaA, Cologne.


Thomas Schuessler, PhD
Managing Director of Deutsche Asset Management and Portfolio Manager of the
portfolio.
   o Joined Deutsche Asset Management in 2001 after 5 years at Deutsche Bank
     where he managed various products and worked in the office of the Chairman
     of the Management Board.
   o US and Global Fund Management: Frankfurt.
   o Joined the portfolio in 2009.
   o PhD, University of Heidelberg, studies in physics and economics at
     University of Heidelberg and University of Utah.

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


68   DWS STRATEGIC VALUE VIP                         DWS VARIABLE SERIES II -
                                                     CLASS B SHARES
<PAGE>

FINANCIAL HIGHLIGHTS


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


This information doesn't reflect charges and fees associated with the separate
account that invests in the portfolio or any variable life insurance policy or
variable annuity contract for which the portfolio is an investment option.
These charges and fees will reduce returns.


For the periods shown, Dreman Value Management, L.L.C. served as the
portfolio's subadvisor and was primarily responsible for the day-to-day
management of the portfolio. Performance would have been different if the
portfolio's current investment strategy had been in effect.




DWS STRATEGIC VALUE VIP - CLASS B



<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,                              2008         2007         2006         2005        2004
<S>                                              <C>           <C>         <C>           <C>         <C>
SELECTED PER SHARE DATA
-----------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD               $  14.41      $ 15.02     $  13.39     $  12.63    $  11.27
------------------------------------------------   --------      -------     --------     --------    --------
Income (loss) from investment operations:
 Net investment income (loss)a                          .16          .24          .22          .19         .18
________________________________________________   ________      _______     ________     ________    ________
 Net realized and unrealized gain (loss)             ( 5.79)      (  .56)        2.19          .75        1.33
------------------------------------------------   --------      -------     --------     --------    --------
 TOTAL FROM INVESTMENT OPERATIONS                    ( 5.63)      (  .32)        2.41          .94        1.51
------------------------------------------------   --------      -------     --------     --------    --------
Less distributions from:
 Net investment income                               (  .31)      (  .16)      (  .19)      (  .18)     (  .15)
________________________________________________   ________      _______     ________     ________    ________
 Net realized gains                                  ( 2.25)      (  .13)      (  .59)           -           -
------------------------------------------------   --------      -------     --------     --------    --------
 TOTAL DISTRIBUTIONS                                 ( 2.56)      (  .29)      (  .78)      (  .18)     (  .15)
------------------------------------------------   --------      -------     --------     --------    --------
NET ASSET VALUE, END OF PERIOD                     $   6.22      $ 14.41     $  15.02     $  13.39    $  12.63
------------------------------------------------   --------      -------     --------     --------    --------
Total Return (%)                                     (46.16)b     ( 2.19)b    18.21b          7.51       13.53
________________________________________________   ________      _______     ________     ________    ________
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
-----------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ millions)                    2           37          191          135         117
________________________________________________   ________      _______     ________     ________    ________
Ratio of expenses before expense reduction (%)         1.21         1.15         1.16         1.17        1.16
________________________________________________   ________      _______     ________     ________    ________
Ratio of expenses after expense reduction (%)          1.17         1.13         1.16         1.17        1.16
________________________________________________   ________      _______     ________     ________    ________
Ratio of net investment income (%)                     1.84         1.59         1.48         1.45        1.58
________________________________________________   ________      _______     ________     ________    ________
Portfolio turnover rate (%)                              28           27           20           10           9
------------------------------------------------   --------      -------     --------     --------    --------
</TABLE>

a   Based on average shares outstanding during the period.

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

DWS VARIABLE SERIES II - CLASS B SHARES                   DWS STRATEGIC VALUE
                                                          VIP   69
<PAGE>

HYPOTHETICAL EXPENSE SUMMARY

Using the annual portfolio operating expense ratios presented in the fee tables
in the portfolio prospectus, the Hypothetical Expense Summary shows the
estimated fees and expenses, in actual dollars, that would be charged on a
hypothetical investment of $10,000 in the portfolio held for the next 10 years
and the impact of such fees and expenses on portfolio returns for each year and
cumulatively, assuming a 5% return for each year. The historical rate of return
for the portfolio may be higher or lower than 5% and, for money funds, is
typically less than 5%. The tables also assume that all dividends and
distributions are reinvested. The annual portfolio expense ratios shown are net
of any contractual fee waivers or expense reimbursements, if any, for the
period of the contractual commitment. Also, please note that if you are
investing through a third party provider, that provider may have fees and
expenses separate from those of the portfolio that are not reflected here.
Mutual fund fees and expenses fluctuate over time and actual expenses may be
higher or lower than those shown.

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



DWS STRATEGIC VALUE VIP - CLASS B



<TABLE>
<CAPTION>
                MAXIMUM                  INITIAL HYPOTHETICAL                          ASSUMED RATE
             SALES CHARGE:                   INVESTMENT:                                OF RETURN:
                 0.00%                         $10,000                                      5%
               CUMULATIVE                                CUMULATIVE           HYPOTHETICAL
             RETURN BEFORE                              RETURN AFTER        YEAR-END BALANCE          ANNUAL
                FEES AND            ANNUAL FUND           FEES AND           AFTER FEES AND          FEES AND
YEAR            EXPENSES          EXPENSE RATIOS          EXPENSES              EXPENSES             EXPENSES
<S>         <C>                  <C>                   <C>                 <C>                     <C>
   1              5.00%                 1.11%                3.89%            $ 10,389.00          $   113.16
   2             10.25%                 1.13%                7.91%            $ 10,791.05          $   119.67
   3             15.76%                 1.13%               12.09%            $ 11,208.67          $   124.30
   4             21.55%                 1.13%               16.42%            $ 11,642.44          $   129.11
   5             27.63%                 1.13%               20.93%            $ 12,093.01          $   134.11
   6             34.01%                 1.13%               25.61%            $ 12,561.01          $   139.30
   7             40.71%                 1.13%               30.47%            $ 13,047.12          $   144.69
   8             47.75%                 1.13%               35.52%            $ 13,552.04          $   150.29
   9             55.13%                 1.13%               40.77%            $ 14,076.50          $   156.10
  10             62.89%                 1.13%               46.21%            $ 14,621.26          $   162.14
TOTAL                                                                                              $ 1,372.87
</TABLE>


70   DWS STRATEGIC VALUE VIP                         DWS VARIABLE SERIES II -
                                                     CLASS B SHARES
<PAGE>

DWS TECHNOLOGY VIP


THE PORTFOLIO'S MAIN INVESTMENT STRATEGY

The portfolio seeks growth of capital.

Under normal circumstances, the portfolio invests at least 80% of net assets,
plus the amount of any borrowings for investment purposes, in common stocks of
companies in the technology sector. For purposes of the portfolio's 80%
investment policy, companies in the technology sector must commit at least half
of their assets to the technology sector or derive at least half of their
revenues or net income from that sector. Examples of industries within the
technology sector are semiconductors, software, telecom equipment,
computer/hardware, IT services, the Internet and health technology. The
portfolio may invest in companies of any size. In addition, the portfolio may
invest in initial public offerings. While the portfolio invests mainly in US
stocks, it could invest up to 35% of net assets in foreign securities.

The portfolio's equity investments are mainly common stocks, but may also
include other types of equities such as preferred or convertible stocks.

In choosing stocks, portfolio management uses a combination of three analytical
disciplines:

BOTTOM-UP RESEARCH. Portfolio management looks for individual companies with a
history of above-average growth, strong competitive positioning, attractive
prices relative to potential growth, innovative products and services, sound
financial strength and effective management, among other factors.

GROWTH ORIENTATION. Portfolio management generally looks for companies that
portfolio management believes have above-average potential for sustainable
growth of revenue or earnings and whose market value appears reasonable in
light of their business prospects.

TOP-DOWN ANALYSIS. Portfolio management considers the economic outlooks for
various industries within the technology sector and looks for those industries
that may benefit from changes in the overall business environment.

In addition, portfolio management uses the support of a quantitative analytic
group and its tools to attempt to actively manage the forecasted volatility
risk of the portfolio as a whole as compared to funds with a similar investment
objective, as well as appropriate benchmarks and peer groups. Portfolio
management may favor securities from various industries and companies within
the technology sector at different times.

Portfolio management will normally sell a stock when portfolio management
believes its price is unlikely to go higher, its fundamental factors have
changed, other investments offer better opportunities or in adjusting emphasis
on a given technology industry.

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

Although major changes tend to be infrequent, the Board of Trustees could
change the portfolio's investment objective without seeking shareholder
approval. However, the Board will provide shareholders with at least 60 days'
notice prior to making any changes to the portfolio's 80% investment policy.




DERIVATIVES AND OTHER INVESTMENTS


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


DWS VARIABLE SERIES II - CLASS B SHARES                      DWS TECHNOLOGY
                                                             VIP   71
<PAGE>

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



THE MAIN RISKS OF INVESTING IN THE PORTFOLIO

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

STOCK MARKET RISK. The portfolio is affected by how the stock market performs.
To the extent the portfolio invests in a particular capitalization, the
portfolio's performance may be proportionately affected by that segment's
general performance. When stock prices fall, you should expect the value of
your investment to fall as well. Because a stock represents ownership in its
issuer, stock prices can be hurt by poor management, shrinking product demand
and other business risks. These factors may affect single companies as well as
groups of companies. In addition, movements in financial markets may adversely
affect a stock's price, regardless of how well the company performs. The market
as a whole may not favor the types of investments the portfolio makes, which
could affect the portfolio's ability to sell them at an attractive price.

CONCENTRATION RISK. The portfolio concentrates its investments in the group of
industries constituting the technology sector. As a result, factors affecting
this sector, such as market price movements, market saturation and rapid
product obsolescence will have a significant impact on the portfolio's
performance. Additionally, many technology companies are smaller companies that
may have limited business lines and limited financial resources, making them
highly vulnerable to business and economic risks.

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

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

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

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

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

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

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

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

72   DWS TECHNOLOGY VIP                              DWS VARIABLE SERIES II -
                                                        CLASS B SHARES
<PAGE>

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

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


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


Some governments exercise substantial influence over the private economic
sector and the social and political uncertainties that exist for many
developing countries is significant. In adverse social and political
circumstances, governments have been involved in policies of expropriation,
confiscatory taxation, nationalization, intervention in the securities markets
and trade settlement, and imposition of foreign investment restrictions and
exchange controls.

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

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


SMALL COMPANY CAPITALIZATION RISK. Small company stocks tend to experience
steeper price fluctuations than the stocks of larger companies. A shortage of
reliable information can also pose added risk to small company stocks.
Industry-wide reversals may have a greater impact on small companies, since
they lack the financial resources of larger companies. Small company stocks are
typically less liquid than large company stocks. Accordingly, it may be harder
to find buyers for small company shares.


PRICING RISK. At times, market conditions may make it difficult to value some
investments, and the portfolio may use certain valuation methodologies for some
of its investments, such as fair value pricing. Given the subjective nature of
such valuation methodologies, it is possible that the value determined for an
investment may be different than the value realized upon such investment's
sale. If the portfolio has valued its securities too highly, you may pay too
much for portfolio shares when you buy into the portfolio. If the portfolio has
underestimated the price of its securities, you may not receive the full market
value when you sell your portfolio shares.

SECURITY SELECTION RISK. A risk that pervades all investing is the risk that
the securities in the portfolio's portfolio may decline in value.

Other factors that could affect performance include:

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


DWS VARIABLE SERIES II - CLASS B SHARES                      DWS TECHNOLOGY
                                                             VIP   73
<PAGE>

o growth stocks may be out of favor for certain periods.

This portfolio is designed for investors who can accept above-average risks and
are interested in exposure to a sector that offers attractive long-term growth
potential.



PERFORMANCE - CLASS B

While a portfolio's past performance isn't necessarily a sign of how it will do
in the future, it can be valuable for an investor to know.

The bar chart shows how the returns for the portfolio's Class B shares have
varied from year to year, which may give some idea of risk. The table shows
average annual returns for the portfolio and comparable index information
(which, unlike the portfolio, does not have any fees or expenses). The
performance of both the portfolio and the comparable index information varies
over time. All figures assume reinvestment of dividends and distributions.

This information doesn't reflect charges and fees associated with the separate
account that invests in the portfolio or any variable life insurance policy or
variable annuity contract for which the portfolio is an investment option.
These charges and fees will reduce returns.

The inception date for Class B was July 1, 2002. In the bar chart and table,
the performance figures for Class B before that date are based on the
historical performance of the portfolio's original share class (Class A),
adjusted to reflect the higher gross total annual operating expenses of Class
B. Class A is offered in a different prospectus.


ANNUAL TOTAL RETURN (%) as of 12/31 each year - CLASS B


[BAR GRAPHIC OMITTED HERE]

[BAR GRAPHIC DATA]





<TABLE>
<S>           <C>         <C>         <C>        <C>       <C>       <C>       <C>        <C>
  -21.77       -32.56      -35.72     46.42       1.48      3.27      0.43     13.84      -46.44
   2000        2001        2002       2003       2004      2005      2006      2007       2008
</TABLE>




<TABLE>
<CAPTION>
                FOR THE PERIODS INCLUDED IN THE BAR CHART:
<S>                                       <C>
BEST QUARTER: 28.49%, Q4 2001             WORST QUARTER: -33.68%, Q3 2001
2009 TOTAL RETURN AS OF MARCH 31: 3.72%
</TABLE>

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



<TABLE>
<CAPTION>
                                      1 YEAR         5 YEARS        SINCE INCEPTION*
<S>                                <C>              <C>            <C>
Portfolio - Class B                    -46.44          -8.49              -5.74
Russell 1000 Growth Index              -38.44          -3.42              -5.04
S&P Goldman Sachs Technology
Index                                  -43.33          -5.38              -6.69
</TABLE>

*   Since 5/1/99. Index comparisons begin 4/30/99.

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

RUSSELL 1000 (Reg. TM) GROWTH INDEX is an unmanaged index that consists of
those stocks in the Russell 1000 (Reg. TM) Index that have higher price-to-book
ratios and higher forecasted growth values. Russell 1000 (Reg. TM) Index is an
unmanaged price-only index of the 1,000 largest capitalized companies that are
domiciled in the US and whose common stocks are traded.


74   DWS TECHNOLOGY VIP                              DWS VARIABLE SERIES II -
                                                     CLASS B SHARES
<PAGE>

S&P GOLDMAN SACHS TECHNOLOGY INDEX is an unmanaged capitalization-weighted
index based on a universe of technology-related stocks.

Current performance information may be higher or lower than the performance
data quoted above. For more recent performance information, contact your
participating insurance company.





HOW MUCH INVESTORS PAY

This table describes the fees and expenses that you may pay if you buy and hold
portfolio shares. The information in the table does not reflect charges and
fees associated with the separate account that invests in the portfolio or any
variable life insurance policy or variable annuity contract for which the
portfolio is an investment option. These charges and fees will increase
expenses.



<TABLE>
<CAPTION>
FEE TABLE                                   CLASS B
<S>                                       <C>
ANNUAL OPERATING EXPENSES, deducted from portfolio assets
__________________________________________________________
Management Fee 1                              0.66%
Distribution/Service (12b-1) Fee              0.25
Other Expenses 2                              0.38
TOTAL ANNUAL OPERATING EXPENSES 3, 4          1.29
</TABLE>

1   Restated on an annualized basis to reflect approved fee changes that took
    effect on May 1, 2008.


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


3   Through September 30, 2009, the Advisor has contractually agreed to waive
    all or a portion of its management fee and reimburse or pay certain
    operating expenses of the portfolio to the extent necessary to maintain
    the portfolio's total operating expenses at 1.48% for Class B shares,
    excluding certain expenses such as extraordinary expenses, taxes,
    brokerage and interest. Although there can be no assurance that the
    current waiver/expense reimbursement arrangement will be maintained beyond
    September 30, 2009, the Advisor has committed to review the continuance of
    waiver/expense reimbursement arrangements by September 30, 2009.


4   Except as otherwise noted, the information in the table is based on amounts
    incurred during the portfolio's most recent fiscal year. It is important
    for you to understand that a decline in the portfolio's average net assets
    during the current fiscal year due to recent unprecedented market
    volatility or other factors could cause the portfolio's expense ratios for
    the portfolio's current fiscal year to be higher than the expense
    information presented. Based on asset levels as of December 31, 2008, the
    gross annualized expense ratio of Class B shares is estimated at 1.39%.
    For more current expense information, see "Financial Highlights" in the
    portfolio's future annual or semi-annual reports.



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



<TABLE>
<CAPTION>
EXAMPLE                1 YEAR        3 YEARS        5 YEARS        10 YEARS
<S>                   <C>           <C>            <C>            <C>
Class B shares          $131           $409           $708         $1,556
</TABLE>


DWS VARIABLE SERIES II - CLASS B SHARES                      DWS TECHNOLOGY
                                                             VIP   75
<PAGE>

PORTFOLIO MANAGEMENT

The following person handles the day-to-day management of the portfolio:

Clark Chang
Director of Deutsche Asset Management and Portfolio Manager of the portfolio.
   o Global Equity analyst for Technology Fund: New York.
   o Joined Deutsche Asset Management in 2007 after seven years of experience
     as senior analyst for technology sector for Firsthand Capital Management,
     Nollenberger Capital Partners and Fulcrum Global Partners.
   o Joined the portfolio in 2008.
   o BS in Computer Science from University of California, Los Angeles (UCLA);
     MBA with Finance concentration from Anderson School of Management, UCLA.

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


76   DWS TECHNOLOGY VIP                              DWS VARIABLE SERIES II -
                                                     CLASS B SHARES
<PAGE>

FINANCIAL HIGHLIGHTS

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

This information doesn't reflect charges and fees associated with the separate
account that invests in the portfolio or any variable life insurance policy or
variable annuity contract for which the portfolio is an investment option.
These charges and fees will reduce returns.



DWS TECHNOLOGY VIP - CLASS B



<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,                               2008        2007        2006       2005       2004
<S>                                               <C>           <C>        <C>         <C>        <C>
SELECTED PER SHARE DATA
-------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD                $  10.53     $  9.25     $ 9.21     $  8.93    $  8.80
-------------------------------------------------   --------     -------     ------     -------    -------
Income (loss) from investment operations:
 Net investment income (loss)a                        (  .03)     (  .05)     ( .04)c     ( .07)       .01
_________________________________________________   ________     _______     ______     _______    _______
 Net realized and unrealized gain (loss)              ( 4.86)       1.33        .08         .36        .12
-------------------------------------------------   --------     -------     ------     -------    -------
 TOTAL FROM INVESTMENT OPERATIONS                     ( 4.89)       1.28        .04         .29        .13
-------------------------------------------------   --------     -------     ------     -------    -------
Less distributions from:
 Net investment income                                     -           -          -       ( .01)         -
_________________________________________________   ________     _______     ______     _______    _______
NET ASSET VALUE, END OF PERIOD                      $   5.64     $ 10.53     $ 9.25     $  9.21    $  8.93
-------------------------------------------------   --------     -------     ------     -------    -------
Total Return (%)                                      (46.44)b     13.84      .43c         3.27     1.48b
_________________________________________________   ________     _______     ______     _______    _______
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
-------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ millions)                     2           3         14          16         16
_________________________________________________   ________     _______     ______     _______    _______
Ratio of expenses before expense reductions (%)         1.35        1.29       1.28        1.26       1.22
_________________________________________________   ________     _______     ______     _______    _______
Ratio of expenses after expense reductions (%)          1.35        1.29       1.28        1.26       1.21
_________________________________________________   ________     _______     ______     _______    _______
Ratio of net investment income (loss) (%)             (  .35)     (  .53)     ( .51)c     ( .76)       .05
_________________________________________________   ________     _______     ______     _______    _______
Portfolio turnover rate (%)                               71          91         49         135        112
-------------------------------------------------   --------     -------     ------     -------    -------
</TABLE>

a   Based on average shares outstanding during the period.

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

c   Includes non-recurring income from the Advisor recorded as a result of an
    administrative proceeding regarding disclosure of brokerage allocation
    practices in connection with sales of DWS Funds. The non-recurring income
    resulted in an increase in net investment income of $0.017 per share and
    an increase in the ratio of net investment income of 0.18%. Excluding this
    non-recurring income, total return would have been 0.19% lower.


DWS VARIABLE SERIES II - CLASS B SHARES                      DWS TECHNOLOGY
                                                             VIP   77
<PAGE>

HYPOTHETICAL EXPENSE SUMMARY

Using the annual portfolio operating expense ratios presented in the fee tables
in the portfolio prospectus, the Hypothetical Expense Summary shows the
estimated fees and expenses, in actual dollars, that would be charged on a
hypothetical investment of $10,000 in the portfolio held for the next 10 years
and the impact of such fees and expenses on portfolio returns for each year and
cumulatively, assuming a 5% return for each year. The historical rate of return
for the portfolio may be higher or lower than 5% and, for money funds, is
typically less than 5%. The tables also assume that all dividends and
distributions are reinvested. The annual portfolio expense ratios shown are net
of any contractual fee waivers or expense reimbursements, if any, for the
period of the contractual commitment. Also, please note that if you are
investing through a third party provider, that provider may have fees and
expenses separate from those of the portfolio that are not reflected here.
Mutual fund fees and expenses fluctuate over time and actual expenses may be
higher or lower than those shown.

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



DWS TECHNOLOGY VIP - CLASS B



<TABLE>
<CAPTION>
                MAXIMUM                  INITIAL HYPOTHETICAL                          ASSUMED RATE
             SALES CHARGE:                   INVESTMENT:                                OF RETURN:
                 0.00%                         $10,000                                      5%
               CUMULATIVE                                CUMULATIVE           HYPOTHETICAL
             RETURN BEFORE                              RETURN AFTER        YEAR-END BALANCE          ANNUAL
                FEES AND            ANNUAL FUND           FEES AND           AFTER FEES AND          FEES AND
YEAR            EXPENSES          EXPENSE RATIOS          EXPENSES              EXPENSES             EXPENSES
<S>         <C>                  <C>                   <C>                 <C>                     <C>
   1              5.00%                 1.29%                3.71%            $ 10,371.00          $   131.39
   2             10.25%                 1.29%                7.56%            $ 10,755.76          $   136.27
   3             15.76%                 1.29%               11.55%            $ 11,154.80          $   141.32
   4             21.55%                 1.29%               15.69%            $ 11,568.65          $   146.57
   5             27.63%                 1.29%               19.98%            $ 11,997.84          $   152.00
   6             34.01%                 1.29%               24.43%            $ 12,442.96          $   157.64
   7             40.71%                 1.29%               29.05%            $ 12,904.60          $   163.49
   8             47.75%                 1.29%               33.83%            $ 13,383.36          $   169.56
   9             55.13%                 1.29%               38.80%            $ 13,879.88          $   175.85
  10             62.89%                 1.29%               43.95%            $ 14,394.82          $   182.37
TOTAL                                                                                              $ 1,556.46
</TABLE>


78   DWS TECHNOLOGY VIP                              DWS VARIABLE SERIES II -
                                                     CLASS B SHARES
<PAGE>

DWS CONSERVATIVE ALLOCATION VIP


THE PORTFOLIO'S MAIN INVESTMENT STRATEGY

The portfolio seeks a balance of current income and long-term growth of capital
with an emphasis on current income. The portfolio does this by investing in
other DWS VIP portfolios ("underlying portfolios") that invest across a range
of asset classes, utilizing a wide variety of securities and investment styles.
The portfolio will always invest in the share class of an underlying portfolio
with the lowest fees and expenses.

The portfolio's target allocation is as follows:

o 60% in underlying portfolios which invest primarily in fixed-income
  securities of all credit qualities and maturities ("fixed-income
  portfolios").

o 40% in underlying portfolios which invest primarily in equity securities of
  all capitalization levels ("equity portfolios").

Portfolio management has the flexibility to adjust this allocation within the
 following ranges:

o 45-75% in fixed-income portfolios.

o 25-55% in equity portfolios.

While the actual allocation may vary, portfolio management expects that over
the long term it will average out to be similar to the target allocation.


Portfolio management regularly reviews the actual allocation and may adjust it
in seeking to take advantage of current or expected market conditions or to
manage risk. In making its allocation decisions, portfolio management uses a
proprietary mix of qualitative and quantitative inputs to arrive at a view for
the securities markets and segments of those markets. Based on the desired
exposure to particular investments and a thorough risk analysis, portfolio
management then decides which portfolios to use as underlying portfolios and in
which proportions.


It is expected that, in the future, portfolio management may invest in
instruments, commonly called "derivatives," including, but not limited to,
futures and forward currency exchange contracts, to attempt to manage risk and
enhance returns. Derivatives may be used to hedge the portfolio against price
fluctuations and otherwise reduce risk. Derivatives may also be used to
increase the portfolio's exposure to certain markets in an attempt to enhance
returns. These strategies may be used separately or in combination. Portfolio
management may also use these derivatives strategies to help maintain cash
reserves or otherwise liquid assets to meet shareholder redemptions, or for
other needs, while maintaining exposure to the markets. Portfolio management
will determine which derivative instruments to purchase by using a quantitative
strategy that incorporates data from various international markets. The
strategy seeks to shift the emphasis on the portfolio's holdings in response to
short- and medium-term changes in global markets. The use of the strategy is
subject to Board approval. Shareholders will be notified prior to the use of
the strategy.

The underlying portfolios use a broad array of investment styles. These
portfolios can buy many types of securities, among them common stocks of
companies of any size, corporate bonds of varying credit quality, US government
and agency bonds, mortgage- and asset-backed securities, money market
instruments and others. These securities are mainly from US issuers but may be,
to a more limited extent, from foreign issuers.

Underlying portfolios include DWS VIP portfolios, and may include retail DWS
funds managed by the Advisor and, pursuant to an exemptive order obtained from
the Securities and Exchange Commission, non-affiliated exchange traded funds
("ETFs") in excess of the Investment Company Act of 1940, as amended limits.
The portfolio will invest in a retail DWS fund only when a suitable DWS VIP
portfolio is not available and in an ETF only when neither a suitable DWS VIP
portfolio nor a retail DWS fund is available. The portfolio's allocations among
the underlying funds will change over time and there should be no expectation
that current or past positions in an underlying fund will be maintained in the
future.

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


DWS VARIABLE SERIES II - CLASS B SHARES             DWS CONSERVATIVE ALLOCATION
                                                    VIP   79
<PAGE>

THE MAIN RISKS OF INVESTING IN THE PORTFOLIO

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

ASSET ALLOCATION RISK. Although asset allocation among different asset
categories and investment strategies generally reduces risk and exposure to any
one category or strategy, the risk remains that the Advisor may favor an asset
category or investment strategy that performs poorly relative to other asset
categories or investment strategies. To the extent that alternative asset
categories underperform the general stock market, the portfolio would perform
poorly relative to a portfolio invested primarily in the general stock market.

UNDERLYING PORTFOLIO RISK. Certain DWS fund-of-funds are permitted to invest in
the portfolio. As a result, the portfolio may have large inflows or outflows of
cash from time to time. This could have adverse effects on the portfolio's
performance if the portfolio were required to sell securities or invest cash at
times when it otherwise would not do so. This activity could also accelerate
the realization of capital gains and increase the portfolio's transaction
costs. The Advisor will monitor the impact of these transactions and the
portfolio may discontinue such arrangements if they are not deemed to be in the
best interests of the portfolio.

ETF RISK. An ETF is a fund that holds a portfolio of common stocks or bonds
designed to track the performance of a securities index or industry sector.
ETFs trade on a securities exchange and their shares may, at times, trade at a
premium or discount to their net asset value. In addition, an ETF may not
replicate exactly the performance of the index it seeks to track for a number
of reasons, including transaction costs incurred by the ETF. ETFs incur fees
and expenses, such as operating expenses, licensing fees, trustee fees and
marketing expenses, which are borne proportionately by ETF shareholders, such
as the portfolio. The portfolio will also incur brokerage costs when purchasing
and selling shares of ETFs.



INVESTMENT RISKS OF THE UNDERLYING PORTFOLIOS

The investment risks below are risks of certain of the underlying portfolios;
by investing in the underlying portfolios the portfolio is also exposed to
these risks.

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

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

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


80   DWS CONSERVATIVE ALLOCATION VIP                 DWS VARIABLE SERIES II -
                                                     CLASS B SHARES
<PAGE>

STOCK MARKET RISK. The portfolio is affected by how the stock market performs.
To the extent the portfolio invests in a particular capitalization or market
sector, the portfolio's performance may be proportionately affected by that
segment's general performance. When stock prices fall, you should expect the
value of your investment to fall as well. Because a stock represents ownership
in its issuer, stock prices can be hurt by poor management, shrinking product
demand and other business risks. These factors may affect single companies as
well as groups of companies. In addition, movements in financial markets may
adversely affect a stock's price, regardless of how well the company performs.
The market as a whole may not favor the types of investments the portfolio
makes, which could affect the portfolio's ability to sell them at an attractive
price.

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

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

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

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

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

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

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

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

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


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


Some governments exercise substantial influence over the private economic
sector and the social and political uncertainties that exist for many
developing countries is significant. In adverse social and political
circumstances, governments have been involved in policies of expropriation,
confiscatory taxation, nationalization, intervention in the securities markets
and trade settlement, and imposition of foreign investment restrictions and
exchange controls.


DWS VARIABLE SERIES II - CLASS B SHARES             DWS CONSERVATIVE ALLOCATION
                                                    VIP   81
<PAGE>

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

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

PRICING RISK. At times, market conditions may make it difficult to value some
investments, and the portfolio may use certain valuation methodologies for some
of its investments, such as fair value pricing. Given the subjective nature of
such valuation methodologies, it is possible that the value determined for an
investment may be different than the value realized upon such investment's
sale. If the portfolio has valued its securities too highly, you may pay too
much for portfolio shares when you buy into the portfolio. If the portfolio has
underestimated the price of its securities, you may not receive the full market
value when you sell your portfolio shares.

Other factors that could affect performance are:

o the managers of the portfolio or the underlying portfolios could be incorrect
  in their analysis of economic trends, countries, industries, companies, the
  relative attractiveness of asset classes or other matters; and

o the underlying portfolios may trade securities more actively than comparable
  portfolios. Upon the use of the derivatives strategy, the portfolio may also
  trade derivative instruments more actively than comparable portfolios. Any
  of these cases could raise transactions costs and thereby lower returns.

This portfolio is designed for investors who are interested in a relatively
conservative balanced asset allocation investment.


82   DWS CONSERVATIVE ALLOCATION VIP                 DWS VARIABLE SERIES II -
                                                     CLASS B SHARES
<PAGE>

PERFORMANCE - CLASS B

While a portfolio's past performance isn't necessarily a sign of how it will do
in the future, it can be valuable for an investor to know.

The bar chart shows how the returns for the portfolio's Class B shares have
varied from year to year, which may give some idea of risk. The table shows
average annual returns for the portfolio and comparable index information
(which, unlike the portfolio, does not have any fees or expenses). The
performance of both the portfolio and the comparable index information varies
over time. All figures assume reinvestment of dividends and distributions.

This information doesn't reflect charges and fees associated with the separate
account that invests in the portfolio or any variable life insurance policy or
variable annuity contract for which the portfolio is an investment option.
These charges and fees will reduce returns.


ANNUAL TOTAL RETURN (%) as of 12/31 each year - CLASS B

[BAR GRAPHIC OMITTED HERE]

[BAR GRAPHIC DATA]




<TABLE>
<S>         <C>       <C>       <C>
   4.38      8.81     4.68       -22.88
  2005      2006       2007     2008
</TABLE>




<TABLE>
<CAPTION>
                FOR THE PERIODS INCLUDED IN THE BAR CHART:
<S>                                        <C>
BEST QUARTER: 3.49%, Q4 2006               WORST QUARTER: -12.28%, Q4 2008
2009 TOTAL RETURN AS OF MARCH 31: -3.40%
</TABLE>

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



<TABLE>
<CAPTION>
                                       1 YEAR         SINCE INCEPTION*
<S>                                 <C>              <C>
Portfolio - Class B                     -22.88              -0.52
Barclays Capital US Aggregate Index       5.24               4.65
Russell 1000 Index                      -37.60              -2.39
</TABLE>

*   Since 8/16/04. Index comparisons begin 8/31/04.

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

BARCLAYS CAPITAL U.S. AGGREGATE INDEX (name changed from Lehman Brothers U.S.
Aggregate Index effective November 3, 2008) is an unmanaged market
value-weighted measure of Treasury issues, agency issues, corporate bond issues
and mortgage securities.

RUSSELL 1000 (Reg. TM) INDEX is an unmanaged price-only index of the 1,000
largest capitalized companies that are domiciled in the US and whose common
stocks are traded.

Current performance information may be higher or lower than the performance
data quoted above. For more recent performance information, contact your
participating insurance company.


DWS VARIABLE SERIES II - CLASS B SHARES             DWS CONSERVATIVE ALLOCATION
                                                    VIP   83
<PAGE>

HOW MUCH INVESTORS PAY

This table describes the fees and expenses that you may pay if you buy and hold
portfolio shares. The portfolio's shareholders directly bear the fees and
expenses of the portfolio, subject to the contractual obligations of the
advisor, underwriter and accounting agent to waive fees or reimburse expenses
to maintain the portfolio's operating expenses at a specified level. The
portfolio will indirectly bear its proportionate share of fees and expenses
incurred by the underlying portfolios in which the portfolio is invested (see
"Acquired (Underlying) Portfolios Fees and Expenses" in the table below). The
information in the table does not reflect charges and fees associated with the
separate account that invests in the portfolio or any variable life insurance
policy or variable annuity contract for which the portfolio is an investment
option. These charges and fees will increase expenses.



<TABLE>
<CAPTION>
FEE TABLE                                                   CLASS B
<S>                                                       <C>
ANNUAL OPERATING EXPENSES, deducted from portfolio assets
__________________________________________________________________________
Management Fee 1,2                                            0.07%
Distribution/Service (12b-1) Fee                              0.25
Other Expenses 3                                              0.90
Acquired (Underlying) Portfolios Fees and Expenses 4          0.68
TOTAL ANNUAL OPERATING EXPENSES 5                             1.90
Less Fee Waiver/Expense Reimbursement                         0.47
NET ANNUAL OPERATING EXPENSES 6                               1.43
</TABLE>

1   Restated on an annualized basis to reflect approved fee changes that took
    effect on May 1, 2008.

2   Through September 30, 2009, the Advisor has contractually agreed to waive a
    portion of its Investment Management Fee in the amount of 0.05% of the
    portfolio's average daily net assets.


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

4   The amount indicated is based on the indirect net expenses associated with
    the portfolio's investment in the underlying funds for the fiscal year
    ended December 31, 2008.



5   Except as otherwise noted, the information in the table is based on amounts
    incurred during the portfolio's most recent fiscal year. It is important
    for you to understand that a decline in the portfolio's average net assets
    during the current fiscal year due to recent unprecedented market
    volatility or other factors could cause the portfolio's expense ratios for
    the portfolio's current fiscal year to be higher than the expense
    information presented. Based on asset levels as of December 31, 2008, the
    gross annualized expense ratio of Class B shares is estimated at 1.89%.
    For more current expense information, see "Financial Highlights" in the
    portfolio's future annual or semi-annual reports.


6   Through September 30, 2009, the Advisor has contractually agreed to waive
    all or a portion of its management fee and reimburse or pay certain
    operating expenses of the portfolio to the extent necessary to maintain
    the portfolio's total operating expenses at 0.62% for Class B shares,
    excluding certain expenses such as extraordinary expenses, taxes,
    brokerage, interest and indirect expenses of underlying DWS portfolios.
    Effective October 1, 2009 through April 30, 2010, the Advisor has
    contractually agreed to waive all or a portion of its management fee and
    reimburse or pay certain operating expenses of the portfolio to the extent
    necessary to maintain the portfolio's total operating expenses at ratios
    no higher than 0.75% for Class B shares, excluding certain expenses such
    as extraordinary expenses, taxes, brokerage, interest and indirect
    expenses of underlying DWS portfolios.


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



<TABLE>
<CAPTION>
EXAMPLE                1 YEAR        3 YEARS        5 YEARS        10 YEARS
<S>                   <C>           <C>            <C>            <C>
Class B shares          $146           $551           $983         $2,184
</TABLE>


84   DWS CONSERVATIVE ALLOCATION VIP                 DWS VARIABLE SERIES II -
                                                        CLASS B SHARES
<PAGE>

PORTFOLIO MANAGEMENT

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

The following people handle the day-to-day management of the portfolio:

Inna Okounkova
Director of Deutsche Asset Management and Portfolio Manager of the portfolio.
   o Global Asset Allocation portfolio manager: New York.
   o Joined Deutsche Asset Management in 1999 as a quantitative analyst,
     becoming an associate portfolio manager in 2001.
   o BS, MS, Moscow State University; MBA, University of Chicago.
   o Joined the portfolio in 2004.

Robert Wang
Managing Director of Deutsche Asset Management and Portfolio Manager of the
portfolio.
   o Global Head of Quantitative Strategies Portfolio Management: New York.
   o Joined Deutsche Asset Management in 1995 as a senior fixed income
     portfolio manager after 13 years of experience at J.P. Morgan & Co.
     trading fixed income, derivatives and foreign exchange products.
   o BS, The Wharton School, University of Pennsylvania.
   o Joined the portfolio in 2004.

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


DWS VARIABLE SERIES II - CLASS B SHARES             DWS CONSERVATIVE ALLOCATION
                                                    VIP   85
<PAGE>

FINANCIAL HIGHLIGHTS

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

This information doesn't reflect charges and fees associated with the separate
account that invests in the portfolio or any variable life insurance policy or
variable annuity contract for which the portfolio is an investment option.
These charges and fees will reduce returns.



DWS CONSERVATIVE ALLOCATION VIP - CLASS B



<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,                               2008        2007        2006        2005       2004a
<S>                                                <C>         <C>         <C>         <C>         <C>
SELECTED PER SHARE DATA
------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD                $  11.84    $  11.86    $  11.10    $  10.66     $ 10.00
--------------------------------------------------  --------    --------    --------    --------     -------
Income (loss) from investment operations:
 Net investment income (loss)b                           .37         .31         .22         .19      (  .03)
__________________________________________________  ________    ________    ________    ________     _______
 Net realized and unrealized gain (loss)              ( 2.46)        .23         .74         .28         .69
--------------------------------------------------  --------    --------    --------    --------     -------
 TOTAL FROM INVESTMENT OPERATIONS                     ( 2.09)        .54         .96         .47         .66
--------------------------------------------------  --------    --------    --------    --------     -------
Less distributions from:
 Net investment income                                ( 1.23)     (  .24)     (  .14)          -           -
__________________________________________________  ________    ________    ________    ________     _______
 Net realized gain                                    ( 2.09)     (  .32)     (  .06)     (  .03)          -
__________________________________________________  ________    ________    ________    ________     _______
 TOTAL DISTRIBUTIONS                                  ( 3.32)     (  .56)     (  .20)     (  .03)          -
--------------------------------------------------  --------    --------    --------    --------     -------
NET ASSET VALUE, END OF PERIOD                      $   6.43    $  11.84    $  11.86    $  11.10     $ 10.66
--------------------------------------------------  --------    --------    --------    --------     -------
Total Return (%)c,d                                   (22.88)       4.68        8.81        4.38        6.60**
__________________________________________________  ________    ________    ________    ________     _______
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
--------------------------------------------------------------------------------------------------   -------
Net assets, end of period ($ millions)                    13          18          59          46          14
__________________________________________________  ________    ________    ________    ________     _______
Ratio of expenses before expense reductions (%)e        1.24         .77         .79         .94        2.96*
__________________________________________________  ________    ________    ________    ________     _______
Ratio of expenses after expense reductions (%)e          .70         .71         .74         .75         .75*
__________________________________________________  ________    ________    ________    ________     _______
Ratio of net investment income (loss) (%)               4.45        2.65        1.90        1.73      (  .67)*
__________________________________________________  ________    ________    ________    ________     _______
Portfolio turnover rate (%)                               59          32          31          27          18
--------------------------------------------------  --------    --------    --------    --------     -------
</TABLE>

a   For the period from August 16, 2004 (commencement of operations) to
    December 31, 2004.

b   Based on average shares outstanding during the period.

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

d   Total return would have been lower if the Advisor had not reduced some of
    the Underlying Portfolios' expenses.

e   The Portfolio invests in other DWS Portfolios and non-affiliated funds and
    indirectly bears its proportionate share of fees and expenses incurred by
    the Underlying DWS Portfolios and non-affiliated funds in which the
    Portfolio is invested. This ratio does not include these indirect fees and
    expenses.

*   Annualized

**   Not annualized

86   DWS CONSERVATIVE ALLOCATION VIP                 DWS VARIABLE SERIES II -
                                                     CLASS B SHARES
<PAGE>

HYPOTHETICAL EXPENSE SUMMARY

Using the annual portfolio operating expense ratios presented in the fee tables
in the portfolio prospectus, the Hypothetical Expense Summary shows the
estimated fees and expenses, in actual dollars, that would be charged on a
hypothetical investment of $10,000 in the portfolio held for the next 10 years
and the impact of such fees and expenses on portfolio returns for each year and
cumulatively, assuming a 5% return for each year. The historical rate of return
for the portfolio may be higher or lower than 5% and, for money funds, is
typically less than 5%. The tables also assume that all dividends and
distributions are reinvested. The annual portfolio expense ratios shown are net
of any contractual fee waivers or expense reimbursements, if any, for the
period of the contractual commitment. Also, please note that if you are
investing through a third party provider, that provider may have fees and
expenses separate from those of the portfolio that are not reflected here.
Mutual fund fees and expenses fluctuate over time and actual expenses may be
higher or lower than those shown.

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



DWS CONSERVATIVE ALLOCATION VIP - CLASS B



<TABLE>
<CAPTION>
                MAXIMUM                  INITIAL HYPOTHETICAL                          ASSUMED RATE
             SALES CHARGE:                   INVESTMENT:                                OF RETURN:
                 0.00%                         $10,000                                      5%
               CUMULATIVE                                CUMULATIVE           HYPOTHETICAL
             RETURN BEFORE                              RETURN AFTER        YEAR-END BALANCE          ANNUAL
                FEES AND            ANNUAL FUND           FEES AND           AFTER FEES AND          FEES AND
YEAR            EXPENSES          EXPENSE RATIOS          EXPENSES              EXPENSES             EXPENSES
<S>         <C>                  <C>                   <C>                 <C>                     <C>
   1              5.00%                 1.43%                3.57%            $ 10,357.00          $   145.55
   2             10.25%                 1.90%                6.78%            $ 10,678.07          $   199.83
   3             15.76%                 1.90%               10.09%            $ 11,009.09          $   206.03
   4             21.55%                 1.90%               13.50%            $ 11,350.37          $   212.41
   5             27.63%                 1.90%               17.02%            $ 11,702.23          $   219.00
   6             34.01%                 1.90%               20.65%            $ 12,065.00          $   225.79
   7             40.71%                 1.90%               24.39%            $ 12,439.01          $   232.79
   8             47.75%                 1.90%               28.25%            $ 13,824.62          $   240.00
   9             55.13%                 1.90%               32.22%            $ 13,222.19          $   247.44
  10             62.89%                 1.90%               36.32%            $ 13,632.07          $   255.12
TOTAL                                                                                              $ 2,183.96
</TABLE>


DWS VARIABLE SERIES II - CLASS B SHARES             DWS CONSERVATIVE ALLOCATION
                                                    VIP   87
<PAGE>

DWS GROWTH ALLOCATION VIP


THE PORTFOLIO'S MAIN INVESTMENT STRATEGY

The portfolio seeks long-term growth of capital. The portfolio does this by
investing in other DWS VIP portfolios ("underlying portfolios") that invest
across a range of asset classes, utilizing a wide variety of securities and
investment styles. The portfolio will always invest in the share class of an
underlying portfolio with the lowest fees and expenses.

The portfolio's target allocation is as follows:

o 25% in underlying portfolios which invest primarily in fixed-income
  securities of all credit qualities and maturities ("fixed-income
  portfolios").

o 75% in underlying portfolios which invest primarily in equity securities of
  all capitalization levels ("equity portfolios").


Portfolio management has the flexibility to adjust this allocation within the
 following ranges:


o 20-40% in fixed-income portfolios.

o 60-80% in equity portfolios.


While the actual allocation may vary, portfolio management expects that over
the long term it will average out to be similar to the target allocation.

Portfolio management regularly reviews the actual allocation and may adjust it
in seeking to take advantage of current or expected market conditions or to
manage risk. In making its allocation decisions, portfolio management uses a
proprietary mix of qualitative and quantitative inputs to arrive at a view for
the securities markets and segments of those markets. Based on the desired
exposure to particular investments and a thorough risk analysis, portfolio
management then decides which portfolios to use as underlying portfolios and in
which proportions.

It is expected that, in the future, portfolio management may invest in
instruments, commonly called "derivatives," including, but not limited to,
futures and forward currency exchange contracts, to attempt to manage risk and
enhance returns. Derivatives may be used to hedge the portfolio against price
fluctuations and otherwise reduce risk. Derivatives may also be used to
increase the portfolio's exposure to certain markets in an attempt to enhance
returns. These strategies may be used separately or in combination. Portfolio
management may also use these derivatives strategies to help maintain cash
reserves or otherwise liquid assets to meet shareholder redemptions, or for
other needs, while maintaining exposure to the markets. Portfolio management
will determine which derivative instruments to purchase by using a quantitative
strategy that incorporates data from various international markets. The
strategy seeks to shift the emphasis on the portfolio's holdings in response to
short-and medium-term changes in global markets. The use of the strategy is
subject to Board approval. Shareholders will be notified prior to the use of
the strategy.


The underlying portfolios use a broad array of investment styles. These
portfolios can buy many types of securities, among them common stocks of
companies of any size, corporate bonds of varying credit quality, US government
and agency bonds, mortgage- and asset-backed securities, money market
instruments and others. These securities are mainly from US issuers but may be,
to a more limited extent, from foreign issuers.

Underlying portfolios include DWS VIP portfolios, and may include retail DWS
funds managed by the Advisor and, pursuant to an exemptive order obtained from
the Securities and Exchange Commission, non-affiliated exchange traded funds
("ETFs") in excess of the Investment Company Act of 1940 limits. The portfolio
will invest in a retail DWS fund only when a suitable DWS VIP portfolio is not
available and in an ETF only when neither a suitable DWS VIP portfolio nor a
retail DWS fund is available. The portfolio's allocations among the underlying
funds will change over time and there should be no expectation that current or
past positions in an underlying fund will be maintained in the future.


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



88   DWS GROWTH ALLOCATION VIP                       DWS VARIABLE SERIES II -
                                                     CLASS B SHARES
<PAGE>

THE MAIN RISKS OF INVESTING IN THE PORTFOLIO

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

ASSET ALLOCATION RISK. Although asset allocation among different asset
categories and investment strategies generally reduces risk and exposure to any
one category or strategy, the risk remains that the Advisor may favor an asset
category or investment strategy that performs poorly relative to other asset
categories or investment strategies. To the extent that alternative asset
categories underperform the general stock market, the portfolio would perform
poorly relative to a portfolio invested primarily in the general stock market.

UNDERLYING PORTFOLIO RISK. Certain DWS fund-of-funds are permitted to invest in
the portfolio. As a result, the portfolio may have large inflows or outflows of
cash from time to time. This could have adverse effects on the portfolio's
performance if the portfolio were required to sell securities or invest cash at
times when it otherwise would not do so. This activity could also accelerate
the realization of capital gains and increase the portfolio's transaction
costs. The Advisor will monitor the impact of these transactions and the
portfolio may discontinue such arrangements if they are not deemed to be in the
best interests of the portfolio.

ETF RISK. An ETF is a fund that holds a portfolio of common stocks or bonds
designed to track the performance of a securities index or industry sector.
ETFs trade on a securities exchange and their shares may, at times, trade at a
premium or discount to their net asset value. In addition, an ETF may not
replicate exactly the performance of the index it seeks to track for a number
of reasons, including transaction costs incurred by the ETF. ETFs incur fees
and expenses, such as operating expenses, licensing fees, trustee fees and
marketing expenses, which are borne proportionately by ETF shareholders, such
as the portfolio. The portfolio will also incur brokerage costs when purchasing
and selling shares of ETFs.



INVESTMENT RISKS OF THE UNDERLYING PORTFOLIOS

The investment risks below are risks of certain of the underlying portfolios;
by investing in the underlying portfolios the portfolio is also exposed to
these risks.

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

STOCK MARKET RISK. The portfolio is affected by how the stock market performs.
To the extent the portfolio invests in a particular capitalization or market
sector, the portfolio's performance may be proportionately affected by that
segment's general performance. When stock prices fall, you should expect the
value of your investment to fall as well. Because a stock represents ownership
in its issuer, stock prices can be hurt by poor management, shrinking product
demand and other business risks. These factors may affect single companies as
well as groups of companies. In addition, movements in financial markets may
adversely affect a stock's price, regardless of how well the company performs.
The market as a whole may not favor the types of investments the portfolio
makes, which could affect the portfolio's ability to sell them at an attractive
price.

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

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

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

DWS VARIABLE SERIES II - CLASS B SHARES                DWS GROWTH ALLOCATION
                                                       VIP   89
<PAGE>

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

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

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

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

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

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


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


Some governments exercise substantial influence over the private economic
sector and the social and political uncertainties that exist for many
developing countries is significant. In adverse social and political
circumstances, governments have been involved in policies of expropriation,
confiscatory taxation, nationalization, intervention in the securities markets
and trade settlement, and imposition of foreign investment restrictions and
exchange controls.

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

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


90   DWS GROWTH ALLOCATION VIP                       DWS VARIABLE SERIES II -
                                                     CLASS B SHARES
<PAGE>

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

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

PRICING RISK. At times, market conditions may make it difficult to value some
investments, and the portfolio may use certain valuation methodologies for some
of its investments, such as fair value pricing. Given the subjective nature of
such valuation methodologies, it is possible that the value determined for an
investment may be different than the value realized upon such investment's
sale. If the portfolio has valued its securities too highly, you may pay too
much for portfolio shares when you buy into the portfolio. If the portfolio has
underestimated the price of its securities, you may not receive the full market
value when you sell your portfolio shares.

Other factors that could affect performance are:

o the managers of the portfolio or the underlying portfolios could be incorrect
  in their analysis of economic trends, countries, industries, companies, the
  relative attractiveness of asset classes or other matters; and

o the underlying portfolios may trade securities more actively than comparable
  portfolios. Upon the use of the derivatives strategy, the portfolio may also
  trade derivative instruments more actively than comparable portfolios. Any
  of these cases could raise transactions costs and thereby lower returns.

This portfolio is designed for investors who are interested in a growth-focused
 asset allocation investment.

DWS VARIABLE SERIES II - CLASS B SHARES                DWS GROWTH ALLOCATION
                                                       VIP   91
<PAGE>

PERFORMANCE - CLASS B

While a portfolio's past performance isn't necessarily a sign of how it will do
in the future, it can be valuable for an investor to know.

The bar chart shows how the returns for the portfolio's Class B shares have
varied from year to year, which may give some idea of risk. The table shows
average annual returns for the portfolio and comparable index information
(which, unlike the portfolio, does not have any fees or expenses). The
performance of both the portfolio and the comparable index information varies
over time. All figures assume reinvestment of dividends and distributions.

This information doesn't reflect charges and fees associated with the separate
account that invests in the portfolio or any variable life insurance policy or
variable annuity contract for which the portfolio is an investment option.
These charges and fees will reduce returns.


ANNUAL TOTAL RETURN (%) as of 12/31 each year - CLASS B

[BAR GRAPHIC OMITTED HERE]

[BAR GRAPHIC DATA]





<TABLE>
<S>         <C>        <C>       <C>
   6.02     12.66      5.58      -34.55
  2005      2006       2007      2008
</TABLE>




<TABLE>
<CAPTION>
                FOR THE PERIODS INCLUDED IN THE BAR CHART:
<S>                                        <C>
BEST QUARTER: 5.72%, Q4 2006               WORST QUARTER: -19.85%, Q4 2008
2009 TOTAL RETURN AS OF MARCH 31: -6.73%
</TABLE>

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



<TABLE>
<CAPTION>
                                       1 YEAR         SINCE INCEPTION*
<S>                                 <C>              <C>
Portfolio - Class B                     -34.55              -2.13
Russell 1000 Index                      -37.60              -2.39
Barclays Capital US Aggregate
Index                                    5.24               4.65
</TABLE>

*   Since 8/16/04. Index comparisons begin 8/31/04.

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

RUSSELL 1000 (Reg. TM) INDEX is an unmanaged price-only index of the 1,000
largest capitalized companies that are domiciled in the US and whose common
stocks are traded.

BARCLAYS CAPITAL U.S. AGGREGATE INDEX (name changed from Lehman Brothers U.S.
Aggregate Index effective November 3, 2008) is an unmanaged market
value-weighted measure of Treasury issues, agency issues, corporate bond issues
and mortgage securities.

Current performance information may be higher or lower than the performance
data quoted above. For more recent performance information, contact your
participating insurance company.


92   DWS GROWTH ALLOCATION VIP                       DWS VARIABLE SERIES II -
                                                     CLASS B SHARES
<PAGE>

HOW MUCH INVESTORS PAY

This table describes the fees and expenses that you may pay if you buy and hold
portfolio shares. The portfolio's shareholders directly bear the fees and
expenses of the portfolio, subject to the contractual obligations of the
advisor, underwriter and accounting agent to waive fees or reimburse expenses
to maintain the portfolio's operating expenses at a specified level. The
portfolio will indirectly bear its proportionate share of fees and expenses
incurred by the underlying portfolios in which the portfolio is invested (see
"Acquired (Underlying) Portfolios Fees and Expenses" in the table below). The
information in the table does not reflect charges and fees associated with the
separate account that invests in the portfolio or any variable life insurance
policy or variable annuity contract for which the portfolio is an investment
option. These charges and fees will increase expenses.



<TABLE>
<CAPTION>
FEE TABLE                                                         CLASS B
<S>                                                             <C>
ANNUAL OPERATING EXPENSES, deducted from portfolio assets
________________________________________________________________________________
Management Fee 1,2                                                  0.07%
Distribution/Service (12b-1) Fee                                    0.25
Other Expenses 3                                                    0.65
Underlying Portfolio Fees and Expenses 4                            0.79
TOTAL ANNUAL PORTFOLIO AND UNDERLYING PORTFOLIO OPERATING
EXPENSES 5                                                          1.76
Less Fee Waiver/Expense Reimbursement                               0.22
NET ANNUAL OPERATING EXPENSES 6                                     1.54
</TABLE>


1   Restated on an annualized basis to reflect approved fee changes that took
    effect on May 1, 2008.


2   Through September 30, 2009, the Advisor has contractually agreed to waive a
    portion of its Investment Management Fee in the amount of 0.05% of the
    portfolio's average daily net assets.


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


4   The amount indicated is based on the indirect net expenses associated with
    the portfolio's investment in the underlying funds for the fiscal year
    ended December 31, 2008.


5   Except as otherwise noted, the information in the table is based on amounts
    incurred during the portfolio's most recent fiscal year. It is important
    for you to understand that a decline in the portfolio's average net assets
    during the current fiscal year due to recent unprecedented market
    volatility or other factors could cause the portfolio's expense ratios for
    the portfolio's current fiscal year to be higher than the expense
    information presented. Based on asset levels as of December 31, 2008, the
    gross annualized expense ratio of Class B shares is estimated at 1.78%.
    For more current expense information, see "Financial Highlights" in the
    portfolio's future annual or semi-annual reports.


6   Through September 30, 2009, the Advisor has contractually agreed to waive
    all or a portion of its management fee and reimburse or pay certain
    operating expenses of the portfolio to the extent necessary to maintain
    the portfolio's total operating expenses at 0.63% for Class B shares,
    excluding certain expenses such as extraordinary expenses, taxes,
    brokerage, interest and indirect expenses of underlying DWS portfolios.
    Effective October 1, 2009 through April 30, 2010, the Advisor has
    contractually agreed to waive all or a portion of its management fee and
    reimburse or pay certain operating expenses of the portfolio to the extent
    necessary to maintain the portfolio's total operating expenses at ratios
    no higher than 0.75% for Class B shares, excluding certain expenses such
    as extraordinary expenses, taxes, brokerage, interest and indirect
    expenses of underlying DWS portfolios.


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



<TABLE>
<CAPTION>
EXAMPLE                1 YEAR        3 YEARS        5 YEARS        10 YEARS
<S>                   <C>           <C>            <C>            <C>
Class B shares          $157           $533           $934         $2,055
</TABLE>


DWS VARIABLE SERIES II - CLASS B SHARES                DWS GROWTH ALLOCATION
                                                       VIP   93
<PAGE>

PORTFOLIO MANAGEMENT

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

The following people handle the day-to-day management of the portfolio:

Inna Okounkova
Director of Deutsche Asset Management and Portfolio Manager of the portfolio.
   o Global Asset Allocation portfolio manager: New York.
   o Joined Deutsche Asset Management in 1999 as a quantitative analyst,
     becoming an associate portfolio manager in 2001.
   o BS, MS, Moscow State University; MBA, University of Chicago.
   o Joined the portfolio in 2004.

Robert Wang
Managing Director of Deutsche Asset Management and Portfolio Manager of the
portfolio.
   o Global Head of Quantitative Strategies Portfolio Management: New York.
   o Joined Deutsche Asset Management in 1995 as a senior fixed income
     portfolio manager after 13 years of experience at J.P. Morgan & Co.
     trading fixed income, derivatives and foreign exchange products.
   o BS, The Wharton School, University of Pennsylvania.
   o Joined the portfolio in 2004.

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


94   DWS GROWTH ALLOCATION VIP                       DWS VARIABLE SERIES II -
                                                     CLASS B SHARES
<PAGE>

FINANCIAL HIGHLIGHTS

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

This information doesn't reflect charges and fees associated with the separate
account that invests in the portfolio or any variable life insurance policy or
variable annuity contract for which the portfolio is an investment option.
These charges and fees will reduce returns.



DWS GROWTH ALLOCATION VIP - CLASS B



<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,                               2008        2007        2006        2005       2004A
<S>                                                <C>         <C>         <C>         <C>         <C>
SELECTED PER SHARE DATA
--------------------------------------------------------------------------------------------------         -
NET ASSET VALUE, BEGINNING OF PERIOD                $  12.70    $  12.94    $  11.67    $  11.03     $ 10.00
--------------------------------------------------  --------    --------    --------    --------     -------
Income (loss) from investment operations:
 Net investment income (loss)b                           .21         .21         .14         .11      (  .03)
__________________________________________________  ________    ________    ________    ________     _______
 Net realized and unrealized gain (loss)              ( 3.76)        .47        1.33         .55        1.06
--------------------------------------------------  --------    --------    --------    --------     -------
 TOTAL FROM INVESTMENT OPERATIONS                     ( 3.55)        .68        1.47         .66        1.03
--------------------------------------------------  --------    --------    --------    --------     -------
Less distributions from:
 Net investment income                                (  .51)     (  .26)     (  .10)          -           -
__________________________________________________  ________    ________    ________    ________     _______
 Net realized gains                                   ( 2.38)     (  .66)     (  .10)     (  .02)          -
--------------------------------------------------  --------    --------    --------    --------     -------
 TOTAL DISTRIBUTIONS                                  ( 2.89)     (  .92)     (  .20)     (  .02)          -
--------------------------------------------------  --------    --------    --------    --------     -------
NET ASSET VALUE, END OF PERIOD                      $   6.26    $  12.70    $  12.94    $  11.67     $ 11.03
--------------------------------------------------  --------    --------    --------    --------     -------
Total Return (%)c,d                                   (34.55)       5.58       12.66        6.02       10.30**
__________________________________________________  ________    ________    ________    ________     _______
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
--------------------------------------------------------------------------------------------------   -------
Net assets, end of period ($ millions)                    20          33         209         197          47
__________________________________________________  ________    ________    ________    ________     _______
Ratio of expenses before expense reductions (%)e        1.00         .63         .62         .65        1.38*
__________________________________________________  ________    ________    ________    ________     _______
Ratio of expenses after expense reductions (%)e          .71         .58         .57         .60        0.75*
__________________________________________________  ________    ________    ________    ________     _______
Ratio of net investment income (loss) (%)               2.43        1.60        1.20        1.01      ( 0.69)*
__________________________________________________  ________    ________    ________    ________     _______
Portfolio turnover rate (%)                               45          31          45          20          15
--------------------------------------------------  --------    --------    --------    --------     -------
</TABLE>

a   For the period from August 16, 2004 (commencement of operations) to
    December 31, 2004.

b   Based on average shares outstanding during the period.

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

d   Total return would have been lower if the Advisor had not reduced certain
    of the Underlying Portfolios' expenses.

e   The Portfolio invests in other DWS Portfolios and non-affiliated funds and
    indirectly bears its proportionate share of fees and expenses incurred by
    the Underlying DWS Portfolios and non-affiliated funds in which the
    Portfolio is invested. This ratio does not include these indirect fees and
    expenses.

*   Annualized

**   Not annualized

DWS VARIABLE SERIES II - CLASS B SHARES                DWS GROWTH ALLOCATION
                                                       VIP   95
<PAGE>

HYPOTHETICAL EXPENSE SUMMARY

Using the annual portfolio operating expense ratios presented in the fee tables
in the portfolio prospectus, the Hypothetical Expense Summary shows the
estimated fees and expenses, in actual dollars, that would be charged on a
hypothetical investment of $10,000 in the portfolio held for the next 10 years
and the impact of such fees and expenses on portfolio returns for each year and
cumulatively, assuming a 5% return for each year. The historical rate of return
for the portfolio may be higher or lower than 5% and, for money funds, is
typically less than 5%. The tables also assume that all dividends and
distributions are reinvested. The annual portfolio expense ratios shown are net
of any contractual fee waivers or expense reimbursements, if any, for the
period of the contractual commitment. Also, please note that if you are
investing through a third party provider, that provider may have fees and
expenses separate from those of the portfolio that are not reflected here.
Mutual fund fees and expenses fluctuate over time and actual expenses may be
higher or lower than those shown.

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



DWS GROWTH ALLOCATION VIP - CLASS B



<TABLE>
<CAPTION>
                MAXIMUM                  INITIAL HYPOTHETICAL                          ASSUMED RATE
             SALES CHARGE:                   INVESTMENT:                                OF RETURN:
                 0.00%                         $10,000                                      5%
               CUMULATIVE                                CUMULATIVE           HYPOTHETICAL
             RETURN BEFORE                              RETURN AFTER        YEAR-END BALANCE          ANNUAL
                FEES AND            ANNUAL FUND           FEES AND           AFTER FEES AND          FEES AND
YEAR            EXPENSES          EXPENSE RATIOS          EXPENSES              EXPENSES             EXPENSES
<S>         <C>                  <C>                   <C>                 <C>                     <C>
   1              5.00%                 1.54%                3.46%            $ 10,346.00          $   156.66
   2             10.25%                 1.76%                6.81%            $ 10,681.21          $   185.04
   3             15.76%                 1.76%               10.27%            $ 11,027.28          $   191.03
   4             21.55%                 1.76%               13.85%            $ 11,384.57          $   197.22
   5             27.63%                 1.76%               17.53%            $ 11,753.43          $   203.61
   6             34.01%                 1.76%               21.34%            $ 12,134.24          $   210.21
   7             40.71%                 1.76%               25.27%            $ 12,527.39          $   217.02
   8             47.75%                 1.76%               29.33%            $ 12,933.27          $   224.05
   9             55.13%                 1.76%               33.52%            $ 13,352.31          $   231.31
  10             62.89%                 1.76%               37.85%            $ 13,784.93          $   238.81
TOTAL                                                                                              $ 2,054.96
</TABLE>


96   DWS GROWTH ALLOCATION VIP                       DWS VARIABLE SERIES II -
                                                     CLASS B SHARES
<PAGE>

DWS MODERATE ALLOCATION VIP


THE PORTFOLIO'S MAIN INVESTMENT STRATEGY

The portfolio seeks a balance of long-term growth of capital and current income
with an emphasis on growth of capital. The portfolio does this by investing in
other DWS VIP portfolios ("underlying portfolios") that invest across a range
of asset classes, utilizing a wide variety of securities and investment styles.
The portfolio will always invest in the share class of an underlying portfolio
with the lowest fees and expenses.

The portfolio's target allocation is as follows:

o 40% in underlying portfolios which invest primarily in fixed-income
  securities of all credit qualities and maturities ("fixed-income
  portfolios").

o 60% in underlying portfolios which invest primarily in equity securities of
  all capitalization levels ("equity portfolios").


Portfolio management has the flexibility to adjust this allocation within the
 following ranges:


o 25-55% in fixed-income portfolios.

o 45-75% in equity portfolios.


While the actual allocation may vary, portfolio management expects that over
the long term it will average out to be similar to the target allocation.

Portfolio management regularly reviews the actual allocation and may adjust it
in seeking to take advantage of current or expected market conditions or to
manage risk. In making its allocation decisions, portfolio management uses a
proprietary mix of qualitative and quantitative inputs to arrive at a view for
the securities markets and segments of those markets. Based on the desired
exposure to particular investments and a thorough risk analysis, portfolio
management then decides which portfolios to use as underlying portfolios and in
which proportions.

It is expected that, in the future, portfolio management may invest in
instruments, commonly called "derivatives," including, but not limited to,
futures and forward currency exchange contracts, to attempt to manage risk and
enhance returns. Derivatives may be used to hedge the portfolio against price
fluctuations and otherwise reduce risk. Derivatives may also be used to
increase the portfolio's exposure to certain markets in an attempt to enhance
returns. These strategies may be used separately or in combination. Portfolio
management may also use these derivatives strategies to help maintain cash
reserves or otherwise liquid assets to meet shareholder redemptions, or for
other needs, while maintaining exposure to the markets. Portfolio management
will determine which derivative instruments to purchase by using a quantitative
strategy that incorporates data from various international markets. The
strategy seeks to shift the emphasis on the portfolio's holdings in response to
short- and medium-term changes in global markets. The use of the strategy is
subject to Board approval. Shareholders will be notified prior to the use of
the strategy.


The underlying portfolios use a broad array of investment styles. These
portfolios can buy many types of securities, among them common stocks of
companies of any size, corporate bonds of varying credit quality, US government
and agency bonds, mortgage- and asset-backed securities, money market
instruments and others. These securities are mainly from US issuers but may be,
to a more limited extent, from foreign issuers.

Underlying portfolios include DWS VIP portfolios, and may include retail DWS
funds managed by the Advisor and, pursuant to an exemptive order obtained from
the Securities and Exchange Commission, non-affiliated exchange traded funds
("ETFs") in excess of the Investment Company Act of 1940 limits. The portfolio
will invest in a retail DWS fund only when a suitable DWS VIP portfolio is not
available and in an ETF only when neither a suitable DWS VIP portfolio nor a
retail DWS fund is available. The portfolio's allocations among the underlying
funds will change over time and there should be no expectation that current or
past positions in an underlying fund will be maintained in the future.


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



DWS VARIABLE SERIES II - CLASS B SHARES               DWS MODERATE ALLOCATION
                                                      VIP   97
<PAGE>

THE MAIN RISKS OF INVESTING IN THE PORTFOLIO

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

ASSET ALLOCATION RISK. Although asset allocation among different asset
categories and investment strategies generally reduces risk and exposure to any
one category or strategy, the risk remains that the Advisor may favor an asset
category or investment strategy that performs poorly relative to other asset
categories or investment strategies. To the extent that alternative asset
categories underperform the general stock market, the portfolio would perform
poorly relative to a portfolio invested primarily in the general stock market.

UNDERLYING PORTFOLIO RISK. Certain DWS fund-of-funds are permitted to invest in
the portfolio. As a result, the portfolio may have large inflows or outflows of
cash from time to time. This could have adverse effects on the portfolio's
performance if the portfolio were required to sell securities or invest cash at
times when it otherwise would not do so. This activity could also accelerate
the realization of capital gains and increase the portfolio's transaction
costs. The Advisor will monitor the impact of these transactions and the
portfolio may discontinue such arrangements if they are not deemed to be in the
best interests of the portfolio.

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

ETF RISK. An ETF is a fund that holds a portfolio of common stocks or bonds
designed to track the performance of a securities index or industry sector.
ETFs trade on a securities exchange and their shares may, at times, trade at a
premium or discount to their net asset value. In addition, an ETF may not
replicate exactly the performance of the index it seeks to track for a number
of reasons, including transaction costs incurred by the ETF. ETFs incur fees
and expenses, such as operating expenses, licensing fees, trustee fees and
marketing expenses, which are borne proportionately by ETF shareholders, such
as the portfolio. The portfolio will also incur brokerage costs when purchasing
and selling shares of ETFs.



INVESTMENT RISKS OF THE UNDERLYING PORTFOLIOS

The investment risks below are risks of certain of the underlying portfolios;
by investing in the underlying portfolios the portfolio is also exposed to
these risks.

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

STOCK MARKET RISK. The portfolio is affected by how the stock market performs.
To the extent the portfolio invests in a particular capitalization or market
sector, the portfolio's performance may be proportionately affected by that
segment's general performance. When stock prices fall, you should expect the
value of your investment to fall as well. Because a stock represents ownership
in its issuer, stock prices can be hurt by poor management, shrinking product
demand and other business risks. These factors may affect single companies as
well as groups of companies. In addition, movements in financial markets may
adversely affect a stock's price, regardless of how well the company performs.
The market as a whole may not favor the types of investments the portfolio
makes, which could affect the portfolio's ability to sell them at an attractive
price.

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

98   DWS MODERATE ALLOCATION VIP                     DWS VARIABLE SERIES II -
                                                     CLASS B SHARES
<PAGE>

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

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

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

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

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

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

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

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


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


Some governments exercise substantial influence over the private economic
sector and the social and political uncertainties that exist for many
developing countries is significant. In adverse social and political
circumstances, governments have been involved in policies of expropriation,
confiscatory taxation, nationalization, intervention in the securities markets
and trade settlement, and imposition of foreign investment restrictions and
exchange controls.

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


DWS VARIABLE SERIES II - CLASS B SHARES               DWS MODERATE ALLOCATION
                                                      VIP   99
<PAGE>

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

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

PRICING RISK. At times, market conditions may make it difficult to value some
investments, and the portfolio may use certain valuation methodologies for some
of its investments, such as fair value pricing. Given the subjective nature of
such valuation methodologies, it is possible that the value determined for an
investment may be different than the value realized upon such investment's
sale. If the portfolio has valued its securities too highly, you may pay too
much for portfolio shares when you buy into the portfolio. If the portfolio has
underestimated the price of its securities, you may not receive the full market
value when you sell your portfolio shares.

Other factors that could affect performance are:

o the managers of the portfolio or the underlying portfolios could be incorrect
  in their analysis of economic trends, countries, industries, companies, the
  relative attractiveness of asset classes or other matters; and

o the underlying portfolios may trade securities more actively than comparable
  portfolios. Upon the use of the derivatives strategy, the portfolio may also
  trade derivative instruments more actively than comparable portfolios. Any
  of these cases could raise transactions costs and thereby lower returns.

This portfolio is designed for investors who are interested in a
growth-oriented, balanced asset allocation investment.


100   DWS MODERATE ALLOCATION VIP                    DWS VARIABLE SERIES II -
                                                     CLASS B SHARES
<PAGE>

PERFORMANCE - CLASS B

While a portfolio's past performance isn't necessarily a sign of how it will do
in the future, it can be valuable for an investor to know.

The bar chart shows how the returns for the portfolio's Class B shares have
varied from year to year, which may give some idea of risk. The table shows
average annual returns for the portfolio and comparable index information
(which, unlike the portfolio, does not have any fees or expenses). The
performance of both the portfolio and the comparable index information varies
over time. All figures assume reinvestment of dividends and distributions.

This information doesn't reflect charges and fees associated with the separate
account that invests in the portfolio or any variable life insurance policy or
variable annuity contract for which the portfolio is an investment option.
These charges and fees will reduce returns.


ANNUAL TOTAL RETURN (%) as of 12/31 each year - CLASS B

[BAR GRAPHIC OMITTED HERE]

[BAR GRAPHIC DATA]





<TABLE>
<S>         <C>        <C>       <C>
   5.06     10.93      5.09       -30.36
  2005      2006        2007     2008
</TABLE>




<TABLE>
<CAPTION>
                FOR THE PERIODS INCLUDED IN THE BAR CHART:
<S>                                        <C>
BEST QUARTER: 4.72%, Q4 2006               WORST QUARTER: -17.07%, Q4 2008
2009 TOTAL RETURN AS OF MARCH 31: -5.62%
</TABLE>

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



<TABLE>
<CAPTION>
                                       1 YEAR         SINCE INCEPTION*
<S>                                 <C>              <C>
Portfolio - Class B                     -30.36              -1.78
Russell 1000 Index                      -37.60              -2.39
Barclays Capital US Aggregate
Index                                    5.24               4.65
</TABLE>

*   Since 8/16/04. Index comparisons begin 8/31/04.

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

RUSSELL 1000 (Reg. TM) INDEX is an unmanaged price-only index of the 1,000
largest capitalized companies that are domiciled in the US and whose common
stocks are traded.

BARCLAYS CAPITAL U.S. AGGREGATE INDEX (name changed from Lehman Brothers U.S.
Aggregate Index effective November 3, 2008) is an unmanaged market
value-weighted measure of Treasury issues, agency issues, corporate bond issues
and mortgage securities.

Current performance information may be higher or lower than the performance
data quoted above. For more recent performance information, contact your
participating insurance company.


DWS VARIABLE SERIES II - CLASS B SHARES              DWS MODERATE ALLOCATION
                                                     VIP   101
<PAGE>

HOW MUCH INVESTORS PAY

This table describes the fees and expenses that you may pay if you buy and hold
portfolio shares. The portfolio's shareholders directly bear the fees and
expenses of the portfolio, subject to the contractual obligations of the
advisor, underwriter and accounting agent to waive fees or reimburse expenses
to maintain the portfolio's operating expenses at a specified level. The
portfolio will indirectly bear its proportionate share of fees and expenses
incurred by the underlying portfolios in which the portfolio is invested (see
"Acquired (Underlying) Portfolios Fee and Expenses" in the table below). The
information in the table does not reflect charges and fees associated with the
separate account that invests in the portfolio or any variable life insurance
policy or variable annuity contract for which the portfolio is an investment
option. These charges and fees will increase expenses.



<TABLE>
<CAPTION>
FEE TABLE                                                           CLASS B
<S>                                                               <C>
ANNUAL OPERATING EXPENSES, deducted from portfolio assets
__________________________________________________________________________________
Management Fee 1,2                                                    0.07%
Distribution/Service (12b-1) Fee                                      0.25
Other Expenses 3                                                      0.60
Acquired (Underlying) Portfolios Fees and Expenses 4                  0.75
TOTAL ANNUAL PORTFOLIO AND ACQUIRED (UNDERLYING) PORTFOLIOS
OPERATING EXPENSES 5                                                  1.67
Less Fee Waiver/Expense Reimbursement 6                               0.17
NET ANNUAL OPERATING EXPENSES 6                                       1.50
</TABLE>

1   Restated on an annualized basis to reflect approved fee changes that took
    effect on May 1, 2008.

2   Through September 30, 2008, the Advisor has contractually agreed to waive a
    portion of its Investment Management Fee in the amount of 0.05% of the
    portfolio's average daily net assets.


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


4   The amount indicated is based on the indirect net expenses associated with
    the portfolio's investment in the underlying funds for the fiscal year
    ended December 31, 2008.


5   Except as otherwise noted, the information in the table is based on amounts
    incurred during the portfolio's most recent fiscal year. It is important
    for you to understand that a decline in the portfolio's average net assets
    during the current fiscal year due to recent unprecedented market
    volatility or other factors could cause the portfolio's expense ratios for
    the portfolio's current fiscal year to be higher than the expense
    information presented. Based on asset levels as of December 31, 2008, the
    gross annualized expense ratio of Class B shares is estimated at 1.69%.
    For more current expense information, see "Financial Highlights" in the
    portfolio's future annual or semi-annual reports.


6   Through September 30, 2009, the Advisor has contractually agreed to waive
    all or a portion of its management fee and reimburse or pay certain
    operating expenses of the portfolio to the extent necessary to maintain
    the portfolio's total operating expenses at 0.62% for Class B shares,
    excluding certain expenses such as extraordinary expenses, taxes,
    brokerage, interest and indirect expenses of underlying DWS portfolios.
    Effective October 1, 2009 through April 30, 2010, the Advisor has
    contractually agreed to waive all or a portion of its management fee and
    reimburse or pay certain operating expenses of the portfolio to the extent
    necessary to maintain the portfolio's total operating expenses at ratios
    no higher than 0.75% for Class B shares, excluding certain expenses such
    as extraordinary expenses, taxes, brokerage, interest and indirect
    expenses of underlying DWS portfolios.


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



<TABLE>
<CAPTION>
EXAMPLE                1 YEAR        3 YEARS        5 YEARS        10 YEARS
<S>                   <C>           <C>            <C>            <C>
Class B shares          $153           $510           $891         $1,962
</TABLE>


102   DWS MODERATE ALLOCATION VIP                    DWS VARIABLE SERIES II -
                                                        CLASS B SHARES
<PAGE>

PORTFOLIO MANAGEMENT

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

The following people handle the day-to-day management of the portfolio:

Inna Okounkova
Director of Deutsche Asset Management and Portfolio Manager of the portfolio.
   o Global Asset Allocation portfolio manager: New York.
   o Joined Deutsche Asset Management in 1999 as a quantitative analyst,
     becoming an associate portfolio manager in 2001.
   o BS, MS, Moscow State University; MBA, University of Chicago.
   o Joined the portfolio in 2004.

Robert Wang
Managing Director of Deutsche Asset Management and Portfolio Manager of the
portfolio.
   o Global Head of Quantitative Strategies Portfolio Management: New York.
   o Joined Deutsche Asset Management in 1995 as a senior fixed income
     portfolio manager after 13 years of experience at J.P. Morgan & Co.
     trading fixed income, derivatives and foreign exchange products.
   o BS, The Wharton School, University of Pennsylvania.
   o Joined the portfolio in 2004.

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


DWS VARIABLE SERIES II - CLASS B SHARES              DWS MODERATE ALLOCATION
                                                     VIP   103
<PAGE>

FINANCIAL HIGHLIGHTS

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

This information doesn't reflect charges and fees associated with the separate
account that invests in the portfolio or any variable life insurance policy or
variable annuity contract for which the portfolio is an investment option.
These charges and fees will reduce returns.



DWS MODERATE ALLOCATION VIP - CLASS B



<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,                               2008        2007        2006        2005       2004A
<S>                                                <C>         <C>         <C>         <C>         <C>
SELECTED PER SHARE DATA
--------------------------------------------------------------------------------------         -           -
NET ASSET VALUE, BEGINNING OF PERIOD                $  12.28    $  12.42    $  11.37    $  10.84     $ 10.00
--------------------------------------------------  --------    --------    --------    --------     -------
Income (loss) from investment operations:
 Net investment income (loss)b                           .34         .26         .19         .12      (  .03)
__________________________________________________  ________    ________    ________    ________     _______
 Net realized and unrealized gain (loss)              ( 3.63)        .34        1.04         .43         .87
--------------------------------------------------  --------    --------    --------    --------     -------
 TOTAL FROM INVESTMENT OPERATIONS                     ( 3.29)        .60        1.23         .55         .84
--------------------------------------------------  --------    --------    --------    --------     -------
Less distributions from:
 Net investment income                                (  .42)     (  .28)     (  .10)          -           -
__________________________________________________  ________    ________    ________    ________     _______
 Net realized gains                                   ( 1.33)     (  .46)     (  .08)     (  .02)          -
--------------------------------------------------  --------    --------    --------    --------     -------
 TOTAL DISTRIBUTIONS                                  ( 1.75)     (  .74)     (  .18)     (  .02)          -
--------------------------------------------------  --------    --------    --------    --------     -------
NET ASSET VALUE, END OF PERIOD                      $   7.24    $  12.28    $  12.42    $  11.37     $ 10.84
--------------------------------------------------  --------    --------    --------    --------     -------
Total Return (%)c,d                                   (30.36)       5.09       10.93        5.06        8.40**
__________________________________________________  ________    ________    ________    ________     _______
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
--------------------------------------------------------------------------------------  --------     -------
Net assets, end of period ($ millions)                    23          34         179         171          39
__________________________________________________  ________    ________    ________    ________     _______
Ratio of expenses before expense reductions (%)e         .95         .63         .62         .66        1.53*
__________________________________________________  ________    ________    ________    ________     _______
Ratio of expenses after expense reductions (%)e          .71         .58         .57         .61         .75*
__________________________________________________  ________    ________    ________    ________     _______
Ratio of net investment income (loss) (%)               3.53        2.11        1.65        1.15      (  .68)*
__________________________________________________  ________    ________    ________    ________     _______
Portfolio turnover rate (%)                               59          30          35          14          13
--------------------------------------------------  --------    --------    --------    --------     -------
</TABLE>

a   For the period from August 16, 2004 (commencement of operations) to
    December 31, 2004.

b   Based on average shares outstanding during the period.

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

d   Total return would have been lower if the Advisor had not reduced certain
    of the Underlying Portfolios' expenses.

e   The Portfolio invests in other DWS Portfolios and non-affiliated funds and
    indirectly bears its proportionate share of fees and expenses incurred by
    the Underlying DWS Portfolios and non-affiliated funds in which the
    Portfolio is invested. This ratio does not include these indirect fees and
    expenses.

*   Annualized

**   Not annualized

104   DWS MODERATE ALLOCATION VIP                    DWS VARIABLE SERIES II -
                                                     CLASS B SHARES
<PAGE>

HYPOTHETICAL EXPENSE SUMMARY

Using the annual portfolio operating expense ratios presented in the fee tables
in the portfolio prospectus, the Hypothetical Expense Summary shows the
estimated fees and expenses, in actual dollars, that would be charged on a
hypothetical investment of $10,000 in the portfolio held for the next 10 years
and the impact of such fees and expenses on portfolio returns for each year and
cumulatively, assuming a 5% return for each year. The historical rate of return
for the portfolio may be higher or lower than 5% and, for money funds, is
typically less than 5%. The tables also assume that all dividends and
distributions are reinvested. The annual portfolio expense ratios shown are net
of any contractual fee waivers or expense reimbursements, if any, for the
period of the contractual commitment. Also, please note that if you are
investing through a third party provider, that provider may have fees and
expenses separate from those of the portfolio that are not reflected here.
Mutual fund fees and expenses fluctuate over time and actual expenses may be
higher or lower than those shown.

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



DWS MODERATE ALLOCATION VIP - CLASS B



<TABLE>
<CAPTION>
                MAXIMUM                  INITIAL HYPOTHETICAL                          ASSUMED RATE
             SALES CHARGE:                   INVESTMENT:                                OF RETURN:
                 0.00%                         $10,000                                      5%
               CUMULATIVE                                CUMULATIVE           HYPOTHETICAL
             RETURN BEFORE                              RETURN AFTER        YEAR-END BALANCE          ANNUAL
                FEES AND            ANNUAL FUND           FEES AND           AFTER FEES AND          FEES AND
YEAR            EXPENSES          EXPENSE RATIOS          EXPENSES              EXPENSES             EXPENSES
<S>         <C>                  <C>                   <C>                 <C>                     <C>
   1              5.00%                 1.50%                3.50%            $ 10,350.00          $   152.63
   2             10.25%                 1.67%                6.95%            $ 10,694.66          $   175.72
   3             15.76%                 1.67%               10.51%            $ 11,050.79          $   181.57
   4             21.55%                 1.67%               14.19%            $ 11,418.78          $   187.62
   5             27.63%                 1.67%               17.99%            $ 11,799.02          $   193.87
   6             34.01%                 1.67%               21.92%            $ 12,191.93          $   200.32
   7             40.71%                 1.67%               25.98%            $ 12,597.92          $   207.00
   8             47.75%                 1.67%               30.17%            $ 13,017.43          $   213.89
   9             55.13%                 1.67%               34.51%            $ 13,450.91          $   221.01
  10             62.89%                 1.67%               38.99%            $ 13,898.83          $   228.37
TOTAL                                                                                              $ 1,962.00
</TABLE>


DWS VARIABLE SERIES II - CLASS B SHARES              DWS MODERATE ALLOCATION
                                                     VIP   105
<PAGE>

OTHER POLICIES AND RISKS

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

o Each portfolio may trade securities actively. This could raise transaction
  costs and, accordingly, lower performance.

o The Advisor, or a subadvisor, will establish a debt security's credit quality
  when it buys a security, using independent ratings, or for unrated
  securities, its own credit determination. When ratings don't agree, a
  portfolio will use the higher rating. If a debt security's credit quality
  falls, the Advisor or subadvisor will determine whether selling it would be
  in a portfolio's best interests.


FOR MORE INFORMATION

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

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

Keep in mind that there is no assurance that a portfolio will achieve its
investment objective.

A complete list of each portfolio's portfolio holdings as of the month-end is
posted on www.dws-investments.com on or about the 15th day of the following
month. More frequent posting of portfolio holdings information may be made from
time to time on www.dws-investments.com. The posted portfolio holdings
information is available by portfolio and generally remains accessible at least
until the date on which a portfolio files its Form N-CSR or N-Q with the
Securities and Exchange Commission for the period that includes the date as of
which the posted information is current. Each portfolio's Statement of
Additional Information includes a description of a portfolio's policies and
procedures with respect to the disclosure of a portfolio's portfolio holdings.



THE INVESTMENT ADVISOR

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

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

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

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

On behalf of DWS Alternative Asset Allocation Plus VIP, DWS Conservative
Allocation VIP, DWS Growth Allocation VIP and DWS Moderate Allocation VIP, the
Advisor and its affiliates earn fees at varying rates for providing services to
the underlying DWS VIP portfolios and retail DWS funds. The Advisor may
therefore have a conflict of interest in selecting the underlying DWS funds and
in determining whether to invest in an ETF, from which it will not receive any
fees. However, the Advisor is a fiduciary to each portfolio and will select
investments that it believes are best suited to meet each portfolio's
investment objective.


106   OTHER POLICIES AND RISKS                       DWS VARIABLE SERIES II -
                                                     CLASS B SHARES
<PAGE>

The Advisor receives a management fee from each portfolio. Below are the
management rates paid by each portfolio for the most recent fiscal year, as a
percentage of each portfolio's average daily net assets:



<TABLE>
<CAPTION>
PORTFOLIO NAME                                    FEE PAID
<S>                                             <C>
DWS Alternative Asset Allocation Plus VIP           0.20%*
DWS Blue Chip VIP                                   0.59%
DWS Core Fixed Income VIP                           0.54%
DWS Dreman Small Mid Cap Value VIP                  0.68%
DWS Global Thematic VIP                             0.58%**
DWS Government & Agency Securities VIP              0.48%**
DWS High Income VIP                                 0.54%
DWS Large Cap Value VIP                             0.65%
DWS Strategic Value VIP                             0.68%
DWS Technology VIP                                  0.70%
DWS Conservative Allocation VIP                     0.00%**
DWS Growth Allocation VIP                           0.05%**
DWS Moderate Allocation VIP                         0.05%**
</TABLE>

*   Based on estimated amounts for the current fiscal year. Management fee has
    two components: (i) a fee on assets invested in other DWS funds; and (ii)
    a fee on assets not invested in other DWS funds ("Other Assets"). The
    Advisor currently intends to invest substantially all the assets of the
    portfolio in other DWS funds. However, in the future, the portfolio may
    invest a larger portion, or all, of its assets in Other Assets. If the
    portfolio's assets are entirely invested in Other Assets, the management
    fee would be 1.20% of average daily net assets. However, in such a
    situation, the Acquired Fund (Underlying Fund) Fees and Expense are
    expected to decrease. The Advisor will waive 0.15% of the management fee
    until the portfolio reaches $50 million in assets and the iGAP strategy is
    implemented.

**   Reflects the effect of expense limitations and/or fee waivers then in
    effect.

With respect to all of the portfolios, except DWS Large Cap Value VIP, the
    management fee paid for the last fiscal year includes the effect of
    approved fee changes that took effect on May 1, 2008.


DWS Alternative Asset Allocation Plus VIP pays the Advisor under the investment
management agreement a fee, calculated daily and paid monthly, in the sum of:
(i) 0.20% of the portfolio's average daily net assets invested in other DWS
funds; and (ii) 1.20% of the portfolio's average daily net assets invested in
all other assets not considered other DWS funds. For purposes of the management
fee, "other DWS funds" means US-registered investment companies with the
Advisor serving as investment advisor.

A discussion regarding the basis for the Board renewal of each portfolio's
investment management agreement and, as applicable, subadvisory agreement, is
contained in the shareholder reports for the annual period ended December 31
(see "Shareholder reports" on the back cover).

In addition, under a separate administrative services agreement between each
portfolio and Deutsche Investment Management Americas Inc., each portfolio pays
the Advisor for providing most of each portfolio's administrative services.



PORTFOLIO SUBADVISORS


SUBADVISORS AND SUB-SUBADVISORS FOR DWS ALTERNATIVE ASSET ALLOCATION PLUS VIP
RREEF America L.L.C. ("RREEF"), an investment advisor registered with the SEC,
is located at 875 N. Michigan Avenue, Chicago, Illinois 60611. RREEF is an
indirect wholly owned subsidiary of Deutsche Bank AG. RREEF has provided real
estate investment management services to institutional investors since 1975
across a diversified portfolio of industrial properties, office buildings,
residential apartments and shopping centers. RREEF has also been an investment
advisor of real estate securities since 1993.

Deutsche Investments Australia Limited ("DIAL"), is located at Level 16, 126
Phillip Street, Sydney NSW 200, Australia. DIAL is an indirect wholly owned
subsidiary of Deutsche Bank AG. DIAL serves as both subadvisor for mutual funds
and investment advisor for certain institutional accounts.


DWS VARIABLE SERIES II - CLASS B SHARES                   THE INVESTMENT
                                                          ADVISOR   107
<PAGE>

RREEF Global Advisers Limited ("RGAL"), is located at Winchester House, 1 Great
Winchester Street, London, United Kingdom, EC2N 2DB. RGAL is an indirect wholly
owned subsidiary of Deutsche Bank AG.

Deutsche Asset Management (Hong Kong) Limited ("DeAM Hong Kong"), is located at
48/F Cheung Kong Center, 2 Queen's Road Central, Hong Kong, China. DeAM Hong
Kong is an indirect wholly owned subsidiary of Deutsche Bank AG.

The subadvisors and sub-subadvisors provide investment advisory and management
services to the portions of DWS Alternative Asset Allocation Plus VIP's
portfolio allocated to direct investments in global real estate, global
infrastructure (as described below). Each subadvisor and sub-subadvisor makes
investment decisions, buy and sells securities for the portfolio and conducts
research that leads to purchase and sale decisions. The Advisor pays a fee to
each subadvisor pursuant to an investment subadvisory agreement between the
Advisor and the subadvisor. The sub-subadvisors are paid for their
sub-subadvisory services by the subadvisor, from the subadvisor's subadvisory
fee paid by the Advisor to the subadvisor.

RREEF provides subadvisory services in connection with direct investments in
global real estate and global infrastructure securities. With respect to global
real estate and global infrastructure securities, RGAL provides sub-subadvisory
services related to European securities, DeAM Hong Kong provides
sub-subadvisory services related to Asian securities and DIAL provides
sub-subadvisory services related to Australian securities.



SUBADVISOR FOR DWS LARGE CAP VALUE VIP

The subadvisor for DWS Large Cap Value VIP is Deutsche Asset Management
International GmbH ("DeAMi"), Mainzer Landstrasse 178-190, Frankfurt am Main,
Germany. DeAMi renders investment advisory and management services to the
portfolio. DeAMi is an investment advisor registered with the Securities and
Exchange Commission, whose assets under management are currently comprised of
institutional accounts and investment companies. DeAMi is a subsidiary of
Deutsche Bank AG. DIMA compensates DeAMi out of the management fee it receives
from the portfolio.



SUBADVISOR FOR DWS DREMAN SMALL MID CAP VALUE VIP

The subadvisor for DWS Dreman Small Mid Cap Value VIP is Dreman Value
Management, L.L.C. ("DVM"), 520 East Cooper Avenue, Suite 230-4, Aspen, CO
81611. DVM was founded in 1977 and currently manages over $7.9 billion in
assets, which is primarily comprised of investment companies. Pursuant to a
subadvisory agreement with DIMA, DVM performs some of the functions of the
Advisor, including making each portfolio's investment decisions and buying and
selling securities for each portfolio.

108   PORTFOLIO SUBADVISORS                          DWS VARIABLE SERIES II -
                                                     CLASS B SHARES
<PAGE>

--------------------------------------------------------------------------------
YOUR INVESTMENT IN THE PORTFOLIOS

The information in this section may affect anyone who selects one or more
portfolios as an investment option in a variable annuity contract or variable
life insurance policy that offers one or more portfolios. These contracts and
policies are described in separate prospectuses issued by participating
insurance companies. Each portfolio assumes no responsibility for such
prospectuses.


POLICIES ABOUT TRANSACTIONS

The information in this prospectus applies to Class B shares of each portfolio.
Each portfolio may offer two classes of shares. Class B shares are offered at
net asset value and are subject to 12b-1 fees.

Technically, the shareholders of DWS Variable Series II (which include each
portfolio just described) are the participating insurance companies (the
"insurance companies") that offer each portfolio as choices for holders of
certain variable annuity contracts or variable life insurance policies (the
"contract(s)") issued or sponsored by the insurance companies. The insurance
companies may pass through voting rights to the contract owners. Each portfolio
does not sell shares directly to the public. Each portfolio sells shares only
to separate accounts of insurance companies. As a contract owner, your premium
payments are allocated to a portfolio by the insurance companies in accordance
with your contract. Please see the contract prospectus that accompanies this
prospectus for a detailed explanation of your contract.

Please bear in mind that there are important differences between funds
available to any investor (a "Retail Fund") and those that are only available
through certain financial institutions, such as insurance companies. For
example, Retail Funds, unlike a portfolio, are not sold to insurance company
separate accounts to fund investments in variable insurance contracts. In
addition, the investment objective, policies and strategies of a portfolio,
while similar to those of a Retail Fund, are not identical. Retail Funds may be
smaller or larger than a portfolio and have different expense ratios than a
portfolio. As a result, the performance of a portfolio and a Retail Fund will
differ.

Should any conflict between contract owners arise that would require that a
substantial amount of net assets be withdrawn from a portfolio, orderly
portfolio management could be disrupted to the potential detriment of
shareholders of that portfolio.

Each portfolio has a verification process for new insurance company accounts to
help the government fight the funding of terrorism and money laundering
activities. Federal law requires all financial institutions to obtain, verify
and record information that identifies each insurance company that opens an
account. This means that when an insurance company opens an account, a
portfolio will ask for its name, address and other information that will allow
a portfolio to identify the company. This information will be verified to
ensure the identity of all insurance companies opening an account.

For certain insurance companies, a portfolio might request additional
information (for instance, a portfolio would ask for documents such as the
insurance company's articles of incorporation) to help a portfolio verify the
insurance company's identity.

Each portfolio will not complete the purchase of any shares for an account
until all information has been provided and the application has been submitted
in "good order." Once the application is determined to be in good order, the
purchase(s) will be effected at the net asset value per share next calculated.

Each portfolio may reject a new account application if the insurance company
doesn't provide any required or requested identifying information, or for other
reasons.


DWS VARIABLE SERIES II - CLASS B SHARES            YOUR INVESTMENT IN THE
                                                   PORTFOLIOS   109
<PAGE>

BUYING AND SELLING SHARES

Each PORTFOLIO IS OPEN FOR BUSINESS each day the New York Stock Exchange is
open. Each portfolio calculates its share price every business day, as of the
close of regular trading on the New York Stock Exchange (typically 4 p.m.
Eastern time, but sometimes earlier, as in the case of scheduled half-day
trading or unscheduled suspensions of trading).

Each portfolio continuously sells shares to each insurance company separate
account, without a sales charge, at the net asset value per share next
determined after a proper purchase order is placed by the insurance company.
The insurance company offers contract owners units in its separate accounts
which correspond to shares in a portfolio. Each insurance company submits
purchase and redemption orders to a portfolio based on allocation instructions
for premium payments, transfer instructions and surrender or partial withdrawal
requests for contract owners, as set forth in the accompanying prospectus for
the contracts. These orders reflect the amount of premium payments to be
invested, surrender and transfer requests, and other matters. Redemption orders
are effected at the next net asset value per share determined after a proper
redemption order is placed by the insurance company. Contract owners should
look at their contract prospectuses for redemption procedures and fees.


IMPORTANT INFORMATION ABOUT BUYING AND SELLING SHARES

o After receiving a contract owner's order, the insurance company buys or sells
  shares at the net asset value next calculated on any day each portfolio is
  open for business.

o Unless otherwise instructed, each portfolio normally makes payment of the
  proceeds from the sale of shares the next business day but always within
  seven calendar days.

o Each portfolio does not issue share certificates.

o Each portfolio reserves the right to reject purchases of shares for any
  reason.

o Each portfolio reserves the right to withdraw or suspend the offering of
  shares at any time.

o Each portfolio reserves the right to reject purchases of shares or to suspend
  or postpone redemptions at times when the New York Stock Exchange is closed
  (other than customary closings), trading is restricted or when an emergency
  exists that prevents a portfolio from disposing of its portfolio securities
  or pricing its shares.


o Each portfolio may refuse, cancel or rescind any purchase order; freeze any
  account (meaning the insurance company will not be able to purchase shares
  in its account); suspend account services; and/or involuntarily redeem the
  account if we think that the account is being used for fraudulent or illegal
  purposes by the insurance company; one or more of these actions will be
  taken when, at the sole discretion of each portfolio, they are deemed to be
  in each portfolio's best interests or when each portfolio is requested or
  compelled to do so by governmental authority or by applicable law.


o Each portfolio may close and liquidate an account if a portfolio is unable to
  verify provided information, or for other reasons; if a portfolio decides to
  close the account, the shares will be redeemed at the net asset value per
  share next calculated after we determine to close the account; the insurance
  company may be subject to gain or loss on the redemption of the portfolio
  shares and may incur tax liability.

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

o A purchase order from an insurance company separate account may not be
  accepted if the sale of portfolio shares has been suspended or if it is
  determined that the purchase would be detrimental to the interests of a
  portfolio.

MARKET TIMING POLICIES AND PROCEDURES. Short-term and excessive trading of
portfolio shares may present risks to each portfolio's long-term shareholders
(as used herein, the term "shareholders" may refer to the contract owners),
including potential dilution in the value of portfolio shares, interference
with the efficient management of a portfolio (including losses on the sale of
investments), taxable gains to remaining


110   YOUR INVESTMENT IN THE PORTFOLIOS              DWS VARIABLE SERIES II -
                                                     CLASS B SHARES
<PAGE>

shareholders and increased brokerage and administrative costs. These risks may
be more pronounced if a portfolio invests in certain securities such as those
that trade in foreign markets, are illiquid or do not otherwise have "readily
available market quotations." Certain investors may seek to employ short-term
trading strategies aimed at exploiting variations in portfolio valuation that
arise from the nature of the securities held by a portfolio (e.g., "time zone
arbitrage"). Each portfolio has adopted policies and procedures that are
intended to detect and deter short-term and excessive trading.

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

Shareholders are limited to four roundtrip transactions in the same portfolio
over a rolling 12-month period. Shareholders with four or more roundtrip
transactions in the same portfolio within a rolling 12-month period generally
will be blocked from making additional purchases of, or exchanges into, that
portfolio. Each portfolio has sole discretion whether to remove a block from a
shareholder's account. The rights of a shareholder to redeem shares of each
portfolio are not affected by the four roundtrip transaction limitation.

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


In certain circumstances, each portfolio may rely upon the policy of the
insurance company or other financial intermediary to deter short-term or
excessive trading if the Advisor believes that the policy of such insurance
company or other financial intermediary is reasonably designed to detect and
deter transactions that are not in the best interests of each portfolio. An
insurance company's or other financial intermediary's policy relating to
short-term or excessive trading may be more or less restrictive than each
portfolio's policies, may permit certain transactions not permitted by each
portfolio's policies, or prohibit transactions not subject to each portfolio's
policies.


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

In addition, to the extent that each portfolio invests some portion of its
assets in foreign securities, each portfolio has adopted certain fair valuation
practices intended to protect each portfolio from "time zone arbitrage" with
respect to its foreign securities holdings and other trading practices that
seek to exploit variations in portfolio valuation that arise from the nature of
the securities held by each portfolio. (See "How each Portfolio Calculates
Share Price.")

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


DWS VARIABLE SERIES II - CLASS B SHARES            YOUR INVESTMENT IN THE
                                                   PORTFOLIOS   111
<PAGE>

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


HOW TO RECEIVE ACCOUNT INFORMATION

If you are a contract owner, you should contact your insurance company or the
organization that provides record keeping services for information about your
account.

Please see the contract prospectus that accompanies this prospectus for the
customer service phone number.


HOW TO SELECT SHARES

Shares in a portfolio are available in connection with certain variable annuity
and life insurance arrangements. Each insurance company has different
provisions about how and when their contract owners may select portfolio
shares. Each insurance company is responsible for communicating its contract
owners' instructions to a portfolio. Contract owners should contact their
insurance company to effect transactions in connection with a portfolio.



FINANCIAL INTERMEDIARY SUPPORT PAYMENTS

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

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

The Advisor, the Distributor and/or their affiliates currently make revenue
sharing payments from their own assets in connection with the sale and/or
distribution of DWS fund shares or the retention and/or servicing of investors
and DWS fund shares to financial advisors in amounts that generally range from
..01% up to .50% of assets of each portfolio serviced and maintained by the
financial advisor, .05% to .25% of sales of each portfolio attributable to the
financial advisor, a flat fee of $13,350 up to $500,000, or any combination
thereof. These amounts are subject to change at the discretion of the Advisor,
the Distributor and/or their affiliates. Receipt of, or the prospect of
receiving, this additional compensation may influence your financial advisor's
recommendation of each portfolio or of any particular share class of each
portfolio. You should review your financial advisor's compensation disclosure
and/or talk to your financial advisor to obtain more information on how this
compensation may have influenced your financial advisor's recommendation of
each portfolio. Additional information regarding these revenue sharing payments
is included in each portfolio's Statement of Additional Information, which is
available to you on request at no charge (see the back cover of this prospectus
for more information on how to request a copy of the Statement of Additional
Information).


112   YOUR INVESTMENT IN THE PORTFOLIOS              DWS VARIABLE SERIES II -
                                                     CLASS B SHARES
<PAGE>

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

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



HOW EACH PORTFOLIO CALCULATES SHARE PRICE

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



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

The price at which you buy and sell shares for each portfolio is the NAV.


FOR THE UNDERLYING FUNDS IN WHICH A PORTFOLIO INVESTS, WE USE THE NAV OF THE
UNDERLYING FUNDS. FOR OTHER SECURITIES, WE TYPICALLY VALUE SECURITIES USING
INFORMATION FURNISHED BY AN INDEPENDENT PRICING SERVICE OR MARKET QUOTATIONS,
WHERE APPROPRIATE. However, we may use methods approved by the Board, such as a
fair valuation model, which are intended to reflect fair value when pricing
service information or market quotations are not readily available or when a
security's value or a meaningful portion of the value of a portfolio's
portfolio is believed to have been materially affected by a significant event,
such as a natural disaster, an economic event like a bankruptcy filing, or a
substantial fluctuation in domestic or foreign markets that has occurred
between the close of the exchange or market on which the security is
principally traded (for example, a foreign exchange or market) and the close of
the New York Stock Exchange. In such a case, a portfolio's value for a security
is likely to be different from the last quoted market price or pricing service
information. In addition, due to the subjective and variable nature of fair
value pricing, it is possible that the value determined for a particular asset
may be materially different from the value realized upon such asset's sale. To
the extent that the portfolio or an underlying fund invests in securities that
are traded primarily in foreign markets, the value of its holdings could change
at a time when you aren't able to buy or sell portfolio shares. This is because
some foreign markets are open on days or at times when the portfolio or an
underlying fund doesn't price its shares. (Note that prices for securities that
trade on foreign exchanges can change significantly on days when the New York
Stock Exchange is closed and you cannot buy or sell portfolio shares. Price
changes in the securities the portfolio or an underlying fund owns may
ultimately affect the price of portfolio shares the next time the net asset
value is calculated.)




DISTRIBUTIONS

Each portfolio intends to declare and distribute dividends from their net
investment income and capital gains, if any, annually. Each portfolio may make
additional distributions if necessary.

All distributions will be reinvested in shares of a portfolio unless we are
informed by an insurance company that they should be paid out in cash. The
insurance companies will be informed about the amount and character of
distributions from the relevant portfolio for federal income tax purposes.


DWS VARIABLE SERIES II - CLASS B SHARES            YOUR INVESTMENT IN THE
                                                   PORTFOLIOS   113
<PAGE>

TAXES

Each portfolio intends to qualify each year as a regulated investment company
under Subchapter M of the Internal Revenue Code of 1986, as amended (the
"Code"), and intends to meet all requirements necessary to avoid paying any
federal income or excise taxes.

Generally, owners of variable annuity and variable life contracts are not
subject to current federal income taxation on income or gains realized with
respect to such contracts. However, some distributions from such contracts,
whether made prior to or during the annuity payment period, may be taxable at
ordinary income tax rates. In addition, distributions made to an owner who is
younger than 59 1-2 may be subject to a 10% penalty tax. For further
information concerning federal income tax consequences for the holders of
variable annuity contracts and variable life insurance policies, such holders
should consult the prospectus used in connection with the issuance of their
particular contracts or policies.

In order for investors to receive the favorable federal income tax treatment
available to holders of variable annuity and variable life contracts, the
separate accounts underlying such contracts, as well as the funds in which such
accounts invest, must meet certain diversification requirements. Each portfolio
intends to comply with these requirements. If a portfolio or separate account
does not meet such requirements or fails to qualify as a regulated investment
company for any taxable year, income allocable to the contracts associated with
the separate account may be taxable currently for federal income tax purposes
to the holders of such contracts and income from prior periods with respect to
such contracts also could be taxable, most likely in the year of the failure.

Under Treasury regulations, insurance companies holding the separate accounts
may have to report to the IRS losses above a certain amount resulting from a
sale or disposition of a portfolio's shares.

The discussion above is generally based on the assumption that shares of a
portfolio will be respected as owned by insurance company separate accounts. If
this is not the case (for example, because the IRS finds an impermissible level
of "investor control" over the investment options underlying variable
contracts), the advantageous federal income tax treatment provided in respect
of insurance company separate accounts under the Code will no longer be
available, and the person or persons determined to own the portfolio shares
will be currently taxed on portfolio distributions, and on the proceeds of any
redemption of portfolio shares, under the Code.

Portfolio investments in securities of foreign issuers may be subject to
withholding and other taxes at the source, including on dividend or interest
payments. Participating insurance companies should consult their own tax
advisors as to whether such distributions are subject to federal income tax if
they are retained as part of policy reserves.

Each portfolio's investments in certain debt obligations may cause each
portfolio to recognize taxable income in excess of the cash generated by such
obligation. Thus, each portfolio could be required at times to liquidate other
investments in order to satisfy its distribution requirements.

The preceding is a brief summary of certain of the relevant federal income tax
considerations. Because each shareholder and contract holder's tax situation is
unique, ask your tax professional about the tax consequences of your
investments, including possible federal, foreign, state or local taxes.



MARKETING AND DISTRIBUTION FEES

DWS Variable Series II has adopted a 12b-1 plan for each portfolio's Class B
shares. Under the plan, DWS Variable Series II may make quarterly payments to
the distributor for distribution and shareholder servicing related expenses
incurred or paid by the distributor or a participating insurance company. No
such payment shall be made with respect to any quarterly period in excess of an
amount determined for such period at the annual rate of 0.25% of the average
daily net assets of Class B shares during that quarterly period. Depending on
the participating insurance company's corporate structure and applicable state
law, the distributor may remit payments to the participating insurance
company's affiliated broker-dealers or other affiliated company rather than to
the participating insurance company itself.

Because 12b-1 fees for Class B shares are paid out of portfolio assets on an
ongoing basis, they will, over time, increase the cost of investment in Class B
shares and may cost more than other types of sales charges.


114   DISTRIBUTIONS                                  DWS VARIABLE SERIES II -
                                                     CLASS B SHARES
<PAGE>

Examples of expenses payable under the plan include the costs of printing and
mailing materials (such as portfolio prospectuses, shareholder reports,
portfolio advertisements and sales literature), holding seminars and sales
meetings, providing customer service to policyholders and sales compensation.


DWS VARIABLE SERIES II - CLASS B SHARES
                                                            DISTRIBUTIONS   115

<PAGE>

--------------------------------------------------------------------------------
TO GET MORE INFORMATION


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

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

For a free copy of any of these documents or to request other information about
a portfolio, call (800) 778-1482, or contact DWS Investments at the address
listed below. Each portfolio's SAI and shareholder reports are also available
through the DWS Investments Web site at www.dws-investments.com. These
documents and other information about the portfolio are available from the
EDGAR Database on the SEC's Internet site at www.sec.gov. If you like, you may
obtain copies of this information, after paying a copying fee, by e-mailing a
request to publicinfo@sec.gov or by writing the SEC at the address listed
below. You can also review and copy these documents and other information about
the portfolio, including the portfolio's SAI, at the SEC's Public Reference
Room in Washington, D.C. Information on the operation of the SEC's Public
Reference Room may be obtained by calling (800) SEC-0330.




<TABLE>
<CAPTION>
DWS INVESTMENTS DISTRIBUTORS, INC.      SEC
<S>                                     <C>
222 South Riverside Plaza               100 F Street, N.E.
Chicago, IL 60606-5808                  Washington, D.C. 20549-0102
(800) 621-1148                          WWW.SEC.GOV
                                        (800) SEC-0330
</TABLE>


<TABLE>
<CAPTION>
SEC FILE NUMBER:
---------------------------------
<S>                                  <C>
DWS Variable Series II 811-5002
</TABLE>
---------------------------------


(05/01/09) 2b-A

<PAGE>

Supplement to the currently effective Statement of Additional Information for
the listed portfolio:

DWS Variable Series II:
         DWS Strategic Value VIP

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

DWS Strategic Value VIP's (the "Portfolio") Board has approved the termination
of Dreman Value Management, L.L.C. ("DVM") as the Portfolio's subadvisor.
Effective on or about the close of business on June 1, 2009 (the "Transition
Date"), DVM will cease to act as the Portfolio's subadvisor and Deutsche
Investment Management Americas Inc. (the "Advisor") will assume all day-to-day
advisory responsibilities for the Portfolio that were previously delegated to
DVM.

Until on or about the Transition Date, the name of the Portfolio is DWS Dreman
High Return Equity VIP.

Until on or about the Transition Date, the following information supplements the
"Management of the Fund" section of the Portfolio's Statement of Additional
Information:

Subadvisor to DWS Dreman High Return Equity VIP. Dreman Value Management, L.L.C.
("DVM"), 520 East Cooper Avenue, Aspen, Colorado, is the subadvisor to DWS
Dreman High Return Equity VIP. DVM is controlled by David N. Dreman. DVM serves
as subadvisor pursuant to the terms of a subadvisory agreement between it and
the Advisor for the Portfolio. DVM was formed in April 1997 and has served as
subadvisor for DWS Dreman High Return Equity VIP since its inception. DVM is
controlled by David Dreman.

Under the terms of the subadvisory agreement, DVM manages the investment and
reinvestment of the Portfolio's assets and will provide such investment advice,
research and assistance as the Advisor may, from time to time, reasonably
request.

The subadvisory agreement provides that DVM will not be liable for any error of
judgment or mistake of law or for any loss suffered by the Portfolio in
connection with matters to which the subadvisory agreement relates, except a
loss resulting from willful misfeasance, bad faith or gross negligence on the
part of DVM in the performance of its duties or from reckless disregard by DVM
of its obligations and duties under the subadvisory agreement.

Pursuant to the subadvisory agreement dated April 5, 2002, for DWS Dreman High
Return Equity VIP, DVM receives a subadvisory fee of 1/12 of an annualized rate,
payable monthly, of 0.3375% of 1% of the average daily net assets for DWS Dreman
High Return Equity VIP.

Fees paid to DVM for the last three fiscal years were as follows:


<TABLE>
<CAPTION>
                                                2008            2007             2006
                                                ----            ----             ----

<S>                                        <C>              <C>              <C>
 DWS Dreman High Return Equity VIP         $1,950,845       $3,428,653       $3,196,136

</TABLE>

<PAGE>


Until on or about the Transition Date, the following information supplements the
"Compensation of Portfolio Managers" section of the Portfolio's Statement of
Additional Information:

DWS Dreman High Return Equity VIP

The Portfolio has been advised that the subadvisor has implemented a highly
competitive compensation plan which seeks to attract and retain exceptional
investment professionals who have demonstrated that they can consistently
outperform their respective fund's benchmark. The compensation plan is comprised
of both a fixed component and a variable component. The variable component is
determined by assessing the investment professional's performance by utilizing
both quantitative and qualitative factors.

The sub-advisor's investment professionals are each paid a fixed base salary
that is determined based on their job function and responsibilities. The base
salary is deemed to be competitive with the marketplace and specifically with
salaries in the financial services industry by utilizing various salary surveys
compiled for the financial services industry specifically investment advisory
firms. The variable component of the subadvisor's compensation plan which takes
the form of a cash bonus combined with either, employee retention bonus units
payable over time or outright stock grants is discretionary and is designed to
reward and retain investment professionals including portfolio managers and
research analysts for their contributions to the Fund's performance relative to
its benchmark. Additionally, employees are eligible for a profit sharing plan.

Investment professionals may receive equity in the form of units or fractional
units of membership interest in the subadvisor or they may receive employee
retention bonus units which enable them to participate in the growth of the
firm. Investment professionals also participate in the subadvisor's profit
sharing plan, a defined contribution plan that allows the subadvisor to
contribute up to twenty percent of an employee's total compensation, subject to
various regulatory limitations, to each employee's profit sharing account. The
subadvisor's profit sharing plan is a qualified plan which benefits employees of
the firm including both portfolio managers and research analysts. Contributions
to the subadvisor's profit sharing plan vest over a specified term. Finally all
employees of the subadvisor including investment professionals receive
additional fringe benefits in the form of subsidized medical, dental,
group-term, and life insurance coverage.

The basis for determining the variable component of an investment professional's
total compensation is determined through a subjective process which evaluates an
investment professional performance against several quantitative and qualitative
factors including the following:

Quantitative factors:

(i)      Relative ranking of the Portfolio's performance against its peers in
         the one, three and five year pre-tax investment performance categories.
         The Portfolio's performance is evaluated against peers in its fund
         category and performance is ranked from one to four on a declining
         scale depending on the quartile in which the portfolio manager's
         absolute performance falls. The portfolio manager is rewarded on a
         graduated scale for outperforming relative to his peers.

(ii)     Relative performance of the Portfolio's performance against the
         pre-determined indices for the product strategy against which the
         Portfolio's performance is measured. The portfolio manager is rewarded
         on a graduated scale for outperforming relative to the fund's benchmark
         index.

(iii)    Performance of the Portfolio's portfolio measured through attribution
         analysis models which analyzes the portfolio manager's contribution
         from both an asset allocation or sector allocation perspective and
         security selection perspective. This factor evaluates how the
         investment professional performs in linking performance with the
         client's investment objective including investment parameters and risk
         and return objectives. This factor may include some qualitative
         characteristics.

Qualitative factors:
(i) Ability to work well with other members of the investment professional team
and mentor junior members (ii) Contributions to the organizational overall
success with new product strategies (iii) Other factors such as contributing to
the team in a leadership role and by being responsive to requests for assistance

Portfolio Ownership of Portfolio Managers for DWS Dreman High Return Equity VIP.
The following table shows the dollar range of shares owned beneficially and of
record by each member of the Portfolio's management team in the Portfolio,
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 Portfolio's most recent fiscal
year end.

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

<S>                                       <C>                                           <C>
DWS Dreman High Return Equity VIP         David N. Dreman                               $0
                                          E. Clifton Hoover, Jr.                        $0
                                          F. James Hutchinson                           $0
</TABLE>

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

Other SEC Registered Investment Companies Managed:

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

<S>                       <C>                             <C>       <C>                       <C>              <C>
DWS Dreman High Return
Equity VIP                David N. Dreman                 19        $6,819,000,000            0                $0
                          E. Clifton Hoover, Jr.          15        $6,673,000,000            0               $0
                          F. James Hutchinson              8        $4,041,000,000            0               $0


<PAGE>

Other Pooled Investment Vehicles Managed:

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

DWS Dreman High Return
Equity VIP                David N. Dreman               6          $146,000,000             3           $5,230,000
                          E. Clifton Hoover, Jr.        0                    $0             0                   $0
                          F. James Hutchinson           0                    $0             0                   $0

Other Accounts Managed:

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

DWS Dreman High Return
Equity VIP                David N. Dreman              125          $1,075,000,000          0                   $0
                          E. Clifton Hoover, Jr.       106            $941,056,000          0                   $0
                          F. James Hutchinson           0                       $0          0                   $0
</TABLE>

In addition to the accounts above, an investment professional may manage
accounts in a personal capacity that may include holdings that are similar to,
or the same as, those of the Portfolio. 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.

Potential Conflicts of Interest for Subadvised Portfolios' Managers

DWS Dreman High Return Equity VIP. The subadvisor manages clients' accounts
using a contrarian value investment strategy. For both its large capitalization
and small capitalization strategies the subadvisor utilizes a model portfolio
and rebalances client's accounts whenever changes are made to the model
portfolio. In addition the subadvisor aggregates its trades and allocates the
trades to all clients' accounts in an equitable manner. The subadvisor strongly
believes aggregating its orders protect all clients from being disadvantaged by
price or time execution. The model portfolio approach and the trade aggregation
policy of the subadvisor seek to eliminate conflicts of interest that could
arise when a portfolio manager has day-to-day portfolio management
responsibilities with respect to more than one fund or account. The subadvisor
does not receive any performance-based fees from any of its accounts with the
exception of hedge funds that are managed by an affiliated firm. The hedge funds
are treated like all other client accounts and trades done for the fund are
generally aggregated with trades done for its other client accounts.

The subadvisor's investment professionals are compensated in the same manner for
all client accounts irrespective of the type of account.


               Please Retain This Supplement for Future Reference

May 1, 2009

<PAGE>


                       STATEMENT OF ADDITIONAL INFORMATION
                                   May 1, 2009


                              CLASS A AND B SHARES

                             DWS VARIABLE SERIES II

                    345 Park Avenue, New York, New York 10154
                                 1-800-778-1482

This combined Statement of Additional Information is not a prospectus. It should
be read in conjunction with the applicable prospectuses of DWS Variable Series
II (the "Fund") dated May 1, 2009, as amended from time to time. The
prospectuses may be obtained without charge from the Fund by calling the
toll-free number listed above, and are also available along with other related
materials on the Securities and Exchange Commission ("SEC") Internet Web site
(http://www.sec.gov). The prospectuses are also available from Participating
Insurance Companies.

DWS Variable Series II offers a choice of 20 portfolios, 16 of which are
described herein (each a "Portfolio," collectively, the "Portfolios"), to
holders of certain variable life insurance and variable annuity contracts
offered by participating insurance companies ("Participating Insurance
Companies").

The Portfolios described herein are:

DWS Balanced VIP
DWS Blue Chip VIP
DWS Core Fixed Income VIP
DWS Dreman Small Mid Cap Value VIP
DWS Global Thematic VIP
DWS Government & Agency Securities VIP
DWS High Income VIP
DWS Diversified International Equity VIP
    formerly DWS International Select Equity VIP
DWS Large Cap Value VIP
DWS Mid Cap Growth VIP
DWS Money Market VIP
DWS Small Cap Growth VIP
DWS Strategic Income VIP
DWS Strategic Value VIP
    formerly DWS Dreman High Return Equity VIP
DWS Technology VIP
DWS Turner Mid Cap Growth VIP




                                TABLE OF CONTENTS
                                                                            Page
                                                                            ----

INVESTMENT RESTRICTIONS.......................................................2
         Portfolio Holdings...................................................4

INVESTMENT POLICIES AND TECHNIQUES............................................5

MANAGEMENT OF THE FUND.......................................................33
         Investment Advisor..................................................33


FUND SERVICE PROVIDERS.......................................................61
         Administrator.......................................................62
         Distributor.........................................................63
         Custodian...........................................................64
         Transfer Agent......................................................64
         Legal Counsel.......................................................65

         Independent Registered Public Accounting Firm.......................65

         Fund Accounting Agent...............................................66

PORTFOLIO TRANSACTIONS.......................................................66

PURCHASE AND REDEMPTIONS.....................................................78

DIVIDENDS, CAPITAL GAINS AND TAXES...........................................82

NET ASSET VALUE..............................................................83

BOARD MEMBERS AND OFFICERS...................................................85

FUND ORGANIZATION...........................................................101

PROXY VOTING GUIDELINES.....................................................103

ADDITIONAL INFORMATION......................................................103

FINANCIAL STATEMENTS........................................................104

APPENDIX A -- PROXY VOTING GUIDELINES.......................................105

APPENDIX B -- RATINGS OF INVESTMENTS........................................130




                             INVESTMENT RESTRICTIONS

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

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

The Fund has adopted for each Portfolio certain fundamental investment
restrictions that cannot be changed without approval by a "majority" of the
outstanding voting shares of a Portfolio. As defined in the Investment Company
Act of 1940, as amended (the "1940 Act"), this means the lesser of the vote of
(a) 67% of the shares of a Portfolio present at a meeting where more than 50% of
the outstanding shares are present in person or by proxy or (b) more than 50% of
the outstanding shares of a Portfolio.

Each Portfolio (except DWS Technology VIP) is classified as a diversified series
of the Fund, an open-end management investment company. A diversified portfolio
may not, with respect to 75% of total assets, invest more than 5% of total
assets in the securities of a single issuer or invest in more than 10% of the
outstanding voting securities of such issuer. DWS Technology VIP is classified
as a non-diversified series of the Fund, an open-end management investment
company. A non-diversified portfolio may invest a greater proportion of its
assets in the obligations of a small number of issuers, and may be subject to
greater risk and substantial losses as a result of changes in the financial
condition or the market's assessment of the issuers. Each of the foregoing
Portfolios intends to comply with the diversification requirements imposed by
the Internal Revenue Code of 1986, as amended (the "Code") for qualification as
a regulated investment company.

Each Portfolio may not, as a fundamental policy:
(1)      borrow money, except as permitted under the 1940 Act, and as
         interpreted or modified by regulatory authority having jurisdiction,
         from time to time;
(2)      issue senior securities, except as permitted under the 1940 Act, and as
         interpreted or modified by regulatory authority having jurisdiction,
         from time to time;
(3)      for all Portfolios except DWS Money Market VIP and DWS Technology VIP:
         concentrate its investments in a particular industry, as that term is
         used in the 1940 Act, and as interpreted or modified by regulatory
         authority having jurisdiction, from time to time;

(4)      for DWS Money Market VIP only: concentrate its investments in a
         particular industry (excluding US government obligations), as that term
         is used in the 1940 Act, and as interpreted or modified by regulatory
         authority having jurisdiction, from time to time, except that the
         Portfolio will invest more than 25% of its total assets in the
         obligations of banks and other financial institutions;

(5)      for DWS Technology VIP only: concentrate its investments in a
         particular industry, as that term is used in the 1940 Act, and as
         interpreted or modified by regulatory authority having jurisdiction,
         from time to time, except that the Portfolio will concentrate its
         assets in the group of industries constituting the technology sector
         and may concentrate in one or more industries in the technology sector;
(6)      engage in the business of underwriting securities issued by others,
         except to the extent that a Portfolio may be deemed to be an
         underwriter in connection with the disposition of portfolio securities;
(7)      purchase or sell real estate, which term does not include securities of
         companies which deal in real estate or mortgages or investments secured
         by real estate or interests therein, except that a Portfolio reserves
         freedom of action to hold and to sell real estate acquired as a result
         of a Portfolio's ownership of securities;
(8)      purchase or sell commodities, except as permitted by the 1940 Act, as
         amended, and as interpreted or modified by the regulatory authority
         having jurisdiction from time to time; or

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

With regard to Restriction (4) above, for purposes of determining the percentage
of DWS Money Market VIP's total assets invested in securities of issuers having
their principal business activities in a particular industry, asset-backed
securities will be classified based on standard classifications utilized by
ratings agencies.

DWS Money Market VIP may not invest more than 50% of its assets in asset-backed
securities.

With regard to Restriction (3) above, for purposes of determining the percentage
of each Portfolio's (except DWS Money Market VIP and DWS Technology VIP) total
assets invested in securities of issuers having their principal business
activities in a particular industry, asset-backed securities will be classified
as a single industry.

With respect to investment restriction (4) for DWS Money Market VIP, domestic
banks include US banks and US branches of foreign banks that are subject to the
same regulation as US banks. Domestic banks may also include foreign branches of
domestic banks if the investment risk associated with investing in instruments
issued by the foreign branch of a domestic bank is the same as investing in
instruments issued by the domestic parent. As a result, the Portfolio may be
more adversely affected by changes in market or economic conditions and other
circumstances affecting the banking industry than it would be if the Portfolio's
assets were not so concentrated.

The Fund has also adopted the following non-fundamental policies, which may be
changed or eliminated for each Portfolio by the Fund's Board of Trustees without
a shareholder vote:

As a matter of non-fundamental policy, each Portfolio, except DWS Money Market
VIP, does not intend to:

(1)      borrow money in an amount greater than 5% of its total assets, except
         (i) for temporary or emergency purposes and (ii) by engaging in reverse
         repurchase agreements, dollar rolls, or other investments or
         transactions described in a Portfolio's registration statement which
         may be deemed to be borrowings;

(2)      purchase securities on margin or make short sales, except (i) short
         sales against the box, (ii) in connection with arbitrage transactions,
         (iii) for margin deposits in connection with futures contracts, options
         or other permitted investments, (iv) that transactions in futures
         contracts and options shall not be deemed to constitute selling
         securities short, and (v) that a Portfolio may obtain such short-term
         credits as may be deemed necessary for the clearance of securities
         transactions;

(3)      purchase options, unless the aggregate premiums paid on all such
         options held by a Portfolio at any time do not exceed 20% of its total
         assets; or sell put options, if as a result, the aggregate value of the
         obligations underlying such put options would exceed 50% of its total
         assets;

(4)      enter into futures contracts or purchase options thereon unless
         immediately after the purchase, the value of the aggregate initial
         margin with respect to such futures contracts entered into on behalf of
         a Portfolio and the premium paid for such options on futures contracts
         does not exceed 5% of the fair market value of a Portfolio's total
         assets; provided that in the case of an option that is in-the-money at
         the time of purchase, the in-the money amount may be excluded in
         computing the 5% limit;

(5)      purchase warrants if as a result, such securities, taken at the lower
         of cost or market value, would represent more than 5% of the value of a
         Portfolio's total assets (for this purpose, warrants acquired in units
         or attached to securities will be deemed to have no value); and

(6)      invest more than 15% of net assets in illiquid securities.

For all Portfolios, except DWS Strategic Income VIP:

(7)      acquire securities of registered, open-end investment companies or
         registered unit investment trusts in reliance on Sections 12(d)(1)(F)
         or 12(d)(1)(G) of the 1940 Act.

For all Portfolios, except DWS Core Fixed Income VIP, DWS Government & Agency
Securities VIP, DWS High Income VIP, DWS Money Market VIP and DWS Strategic
Income VIP:

(8)      enter into either of reverse repurchase agreements or dollar rolls in
         an amount greater than 5% of its total assets.

For all Portfolios, except DWS Money Market VIP:

(9)      lend portfolio securities in an amount greater than one third of its
         total assets.

For DWS Money Market VIP only:

(10)     borrow money in an amount greater than 5% of its total assets, except
         for temporary emergency purposes;

(11)     lend portfolio securities in an amount greater than 5% of its total
         assets; and

(12)     invest more than 10% of total assets in non-affiliated registered
         investment companies.


Concentration. DWS Technology VIP "concentrates," for purposes of the 1940 Act,
its assets in securities of companies in the technology sector which means that
at least 25% of its net assets will be invested in this sector at all times. As
a result, the Portfolio may be subject to greater market fluctuation than a
portfolio which has securities representing a broader range of investment
alternatives.


Portfolio Holdings

In addition to the public disclosure of portfolio holdings through required
Securities and Exchange Commission ("SEC") quarterly filings, a Portfolio may
make its portfolio holdings information publicly available on the DWS Funds' Web
site as described in each Portfolio's prospectuses. Each Portfolio does not
disseminate non-public information about portfolio holdings except in accordance
with policies and procedures adopted by each Portfolio.

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

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

Portfolio holdings information distributed by the trading desks of DeAM or a
subadvisor for the purpose of facilitating efficient trading of such securities
and receipt of relevant research is not subject to the foregoing requirements.
Non-public portfolio holding information does not include portfolio
characteristics (other than holdings or subsets of holdings) about each
Portfolio and information derived therefrom, including, but not limited to, how
each Portfolio's investments are divided among various sectors, industries,
countries, value and growth stocks, bonds, currencies and cash, types of bonds,
bond maturities, duration, bond coupons and bond credit quality ratings so long
as the identity of each Portfolio's holdings could not be derived from such
information.

Registered investment companies that are subadvised by DeAM may be subject to
different portfolio holdings disclosure policies, and neither DeAM nor the
Fund's Trustees exercise control over such policies. In addition, separate
account clients of DeAM have access to their portfolio holdings and are not
subject to a portfolio's portfolio holdings disclosure policy. The portfolio
holdings of some of the funds subadvised by DeAM and some of the separate
accounts managed by DeAM may substantially overlap with the portfolio holdings
of a Portfolio.

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

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

Master-feeder Fund Structure. The Fund's Board of Trustees has the discretion
with respect to each Portfolio to retain the current distribution arrangement
for a Portfolio while investing in a master fund in a master-feeder fund
structure as described below.

A master-feeder fund structure is one in which a fund (a "feeder fund"), instead
of investing directly in a portfolio of securities, invests most or all of its
investment assets in a separate registered investment company (the "master
fund") with substantially the same investment objective and policies as the
feeder fund. Such a structure permits the pooling of assets of two or more
feeder funds, preserving separate identities or distribution channels at the
feeder fund level. Based on the premise that certain of the expenses of
operating an investment portfolio are relatively fixed, a larger investment
portfolio may eventually achieve a lower ratio of operating expenses to average
net assets. An existing investment company is able to convert to a feeder fund
by selling all of its investments, which involves brokerage and other
transaction costs and realization of a taxable gain or loss, or by contributing
its assets to the master fund and avoiding transaction costs and, if proper
procedures are followed, the realization of taxable gain or loss.

                       INVESTMENT POLICIES AND TECHNIQUES

General Investment Policies


Descriptions in this Statement of Additional Information of a particular
investment practice or technique in which a Portfolio may engage (such as short
selling, hedging, etc.) or a financial instrument which a Portfolio may purchase
(such as options, forward foreign currency contracts, etc.) are meant to
describe the spectrum of investments that Deutsche Investment Management
Americas Inc. ("DIMA" or the "Advisor"), in its discretion, might, but is not
required to, use in managing each Portfolio's assets. The Advisor may, in its
discretion, at any time employ such practice, technique or instrument for one or
more Portfolios but not for all investment companies advised by it. Furthermore,
it is possible that certain types of financial instruments or investment
techniques described herein may not be available, permissible, economically
feasible or effective for their intended purposes in all markets. Certain
practices, techniques or instruments may not be principal activities of a
Portfolio but, to the extent employed, could from time to time have a material
impact on a Portfolio's performance.

It is possible that certain investment practices and techniques described below
may not be permissible for a Portfolio based on its investment restrictions, as
described herein, and in a Portfolio's applicable prospectuses.

Each Portfolio has a different investment objective which it pursues through
separate investment policies, as described below. The differences in objectives
and policies among the Portfolios can be expected to affect the degree of market
and financial risk to which each Portfolio is subject and the return of each
Portfolio. The investment objectives and policies of each Portfolio may, unless
otherwise specifically stated, be changed by the Trustees of the Fund without a
shareholder vote. There is no assurance that the objectives of each Portfolio
will be achieved.



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

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

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


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

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

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

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

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

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

In the case of loan participations where a bank or other lending institution
serves as financial intermediary between a fund and the borrower, if the
participation does not shift to the portfolio the direct debtor-creditor
relationship with the borrower, SEC interpretations require the portfolios, in
some circumstances, to treat both the lending bank or other lending institution
and the borrower as issuers for purposes of a Portfolio's investment policies.
Treating a financial intermediary as an issuer of indebtedness may restrict a
Portfolio's ability to invest in indebtedness related to a single financial
intermediary, or a group of intermediaries engaged in the same industry, even if
the underlying borrowers represent many different companies and industries.

Borrowing. Each Portfolio will borrow only when the Advisor or a Subadvisor
believes that borrowing will benefit a Portfolio after taking into account all
considerations such as the costs of the borrowing relative to the expected
return. DWS High Income VIP may borrow up to 5% of its net assets against called
and tendered bonds held by the Portfolio. Any borrowing, including borrowing
against called and tendered bonds, is subject to the Portfolio's fundamental and
non-fundamental investment policies.

Borrowing by a Portfolio will involve special risk considerations. To the extent
a Portfolio borrows money, positive or negative performance by a Portfolio's
investments may be magnified. Any gain in the value of securities purchased with
borrowed money, or income earned on such securities, that exceeds the interest
paid on the amount borrowed would cause the net asset value of a Portfolio's
shares to increase more rapidly than otherwise would be the case. Conversely,
any decline in the value of securities purchased, or cost in excess of income
earned, would cause the net asset value of a Portfolio's shares to decrease more
rapidly than otherwise would be the case. Borrowed money thus creates an
opportunity for greater capital gain but at the same time increases exposure to
capital risk. Money borrowed will be subject to interest costs which may or may
not be recovered by appreciation of the securities purchased or from income
received as a holder of those securities. A Portfolio also may be required to
maintain minimum average balances in connection with such borrowing or to pay a
commitment or other fee to maintain a line of credit; either of these
requirements would increase the cost of borrowing over the stated interest rate.

Certificates of Deposit and Bankers' Acceptances. Certificates of deposit are
receipts issued by a depository institution in exchange for the deposit of
funds. The issuer agrees to pay the amount deposited plus interest to the bearer
of the receipt on the date specified on the certificate. The certificate usually
can be traded in the secondary market prior to maturity. Bankers' acceptances
typically arise from short-term credit arrangements designed to enable
businesses to obtain funds to finance commercial transactions. Generally, an
acceptance is a time draft drawn on a bank by an exporter or an importer to
obtain a stated amount of funds to pay for specific merchandise. The draft is
then "accepted" by a bank that, in effect, unconditionally guarantees to pay the
face value of the instrument on its maturity date. The acceptance may then be
held by the accepting bank as an earning asset or it may be sold in the
secondary market at the going rate of discount for a specific maturity. Although
maturities for acceptances can be as long as 270 days, most acceptances have
maturities of six months or less.

Banker's acceptances are credit instruments evidencing the obligations of a bank
to pay a draft drawn on it by a customer. These instruments reflect the
obligation both of the bank and of the drawer to pay the face amount of the
instrument upon maturity.

Time deposits are non-negotiable deposits maintained in a banking institution
for a specified period of time at a stated interest rate. Time deposits which
may be held by the Portfolios will not benefit from insurance from the Bank
Insurance Fund or the Savings Association Insurance Fund administered by the
Federal Deposit Insurance Corporation. Fixed time deposits may be withdrawn on
demand by the investor, but may be subject to early withdrawal penalties that
vary with market conditions and the remaining maturity of the obligation. Fixed
time deposits subject to withdrawal penalties maturing in more than seven
calendar days are subject to a Portfolio's limitation on investments in illiquid
securities.

Collateralized Obligations. Subject to its investment objectives and policies, a
Portfolio may purchase collateralized obligations, including interest only
("IO") and principal only ("PO") securities. A collateralized obligation is a
debt security issued by a corporation, trust or custodian, or by a US government
agency or instrumentality that is collateralized by a portfolio or pool of
mortgages, mortgage-backed securities, US government securities or other assets.
The issuer's obligation to make interest and principal payments is secured by
the underlying pool or portfolio of securities. Collateralized obligations
issued or guaranteed by a US government agency or instrumentality, such as the
Federal Home Loan Mortgage Corporation, are considered US government securities.
Privately-issued collateralized obligations collateralized by a portfolio of US
government securities are not direct obligations of the US government or any of
its agencies or instrumentalities and are not considered US government
securities. A variety of types of collateralized obligations are available
currently and others may become available in the future.

Collateralized obligations, depending on their structure and the rate of
prepayments, can be volatile. Some collateralized obligations may not be as
liquid as other securities. Since collateralized obligations may be issued in
classes with varying maturities and interest rates, the investor may obtain
greater predictability of maturity than with direct investments in
mortgage-backed securities. Classes with shorter maturities may have lower
volatility and lower yield while those with longer maturities may have higher
volatility and higher yield. This provides the investor with greater control
over the characteristics of the investment in a changing interest rate
environment. With respect to interest only and principal only securities, an
investor has the option to select from a pool of underlying collateral the
portion of the cash flows that most closely corresponds to the investor's
forecast of interest rate movements. These instruments tend to be highly
sensitive to prepayment rates on the underlying collateral and thus place a
premium on accurate prepayment projections by the investor.

A Portfolio, other than DWS Money Market VIP, may invest in collateralized
obligations whose yield floats inversely against a specified index rate. These
"inverse floaters" are more volatile than conventional fixed or floating rate
collateralized obligations and the yield thereon, as well as the value thereof,
will fluctuate in inverse proportion to changes in the index upon which rate
adjustments are based. As a result, the yield on an inverse floater will
generally increase when market yields (as reflected by the index) decrease and
decrease when market yields increase. The extent of the volatility of inverse
floaters depends on the extent of anticipated changes in market rates of
interest. Generally, inverse floaters provide for interest rate adjustments
based upon a multiple of the specified interest index, which further increases
their volatility. The degree of additional volatility will be directly
proportional to the size of the multiple used in determining interest rate
adjustments. Currently, none of the Portfolios intends to invest more than 5% of
its net assets in inverse floaters. DWS Money Market VIP does not invest in
inverse floaters.

A Portfolio will currently invest in only those collateralized obligations that
are fully collateralized and that meet the quality standards otherwise
applicable to a Portfolio's investments. Fully collateralized means that the
collateral will generate cash flows sufficient to meet obligations to holders of
the collateralized obligations under even the most conservative prepayment and
interest rate projections. Thus, the collateralized obligations are structured
to anticipate a worst case prepayment condition and to minimize the reinvestment
rate risk for cash flows between coupon dates for the collateralized
obligations. A worst case prepayment condition generally assumes immediate
prepayment of all securities purchased at a premium and zero prepayment of all
securities purchased at a discount. Reinvestment rate risk may be minimized by
assuming very conservative reinvestment rates and by other means such as by
maintaining the flexibility to increase principal distributions in a low
interest rate environment. The effective credit quality of the collateralized
obligations in such instances is the credit quality of the issuer of the
collateral. The requirements as to collateralization are determined by the
issuer or sponsor of the collateralized obligation in order to satisfy rating
agencies, if rated. Payments of principal and interest on the underlying
collateral securities are not passed through directly to the holders of the
collateralized obligations as such. Collateralized obligations, depending on
their structure and the rate of prepayments, can be volatile. Some
collateralized obligations may not be as liquid as other securities.

Collateralized obligations often are issued in two or more classes with varying
maturities and stated rates of interest. Because interest and principal payments
on the underlying securities are not passed through directly to holders of
collateralized obligations, such obligations of varying maturities may be
secured by a single portfolio or pool of securities, the payments on which are
used to pay interest on each class and to retire successive maturities in
sequence. These relationships may in effect "strip" the interest payments from
principal payments of the underlying securities and allow for the separate
purchase of either the interest or the principal payments. Collateralized
obligations are designed to be retired as the underlying securities are repaid.
In the event of prepayment on or call of such securities, the class of
collateralized obligation first to mature generally will be paid down first.
Therefore, although in most cases the issuer of collateralized obligations will
not supply additional collateral in the event of such prepayment, there will be
sufficient collateral to secure collateralized obligations that remain
outstanding. It is anticipated that no more than 5% of a Portfolio's net assets
will be invested in IO and PO securities. Governmentally-issued and
privately-issued IO's and PO's will be considered illiquid for purposes of a
Portfolio's limitation on illiquid securities, however, the Board of Trustees
may adopt guidelines under which governmentally-issued IO's and PO's may be
determined to be liquid.

Common Stocks. Common stock is issued by companies to raise cash for business
purposes and represents a proportionate interest in the issuing companies.
Therefore, a Portfolio participates in the success or failure of any company in
which it holds stock. The market values of common stock can fluctuate
significantly, reflecting the business performance of the issuing company,
investor perception and general economic or financial market movements. Despite
the risk of price volatility, however, common stocks have historically offered a
greater potential for long-term gain on investment, compared to other classes of
financial assets, such as bonds or cash equivalents, although there can be no
assurance that this will be true in the future.

Convertible Securities. Subject to its investment objectives and policies, each
Portfolio (except DWS Money Market VIP) may invest in convertible securities,
that is, bonds, notes, debentures, preferred stocks and other securities which
are convertible into common stock. Investments in convertible securities can
provide an opportunity for capital appreciation and/or income through interest
and dividend payments and/or by virtue of their conversion or exchange features.

The convertible securities in which a Portfolio may invest include fixed-income
or zero coupon debt securities which may be converted or exchanged at a stated
or determinable exchange ratio into underlying shares of common stock including
Liquid Yield Option Notes ("LYONs"(TM)). The exchange ratio for any particular
convertible security may be adjusted from time to time due to stock splits,
dividends, spin-offs, other corporate distributions or scheduled changes in the
exchange ratio. Convertible debt securities and convertible preferred stocks,
until converted, have general characteristics similar to both debt and equity
securities. Although to a lesser extent than with debt securities generally, the
market value of convertible securities tends to decline as interest rates
increase and, conversely, tends to increase as interest rates decline. In
addition, because of the conversion or exchange feature, the market value of
convertible securities typically changes as the market value of the underlying
common stocks changes, and, therefore, also tends to follow movements in the
general market for equity securities. A unique feature of convertible securities
is that as the market price of the underlying common stock declines, convertible
securities tend to trade increasingly on a yield basis, and so may not
experience market value declines to the same extent as the underlying common
stock. When the market price of the underlying common stock increases, the
prices of the convertible securities tend to rise as a reflection of the value
of the underlying common stock, although typically not as much as the underlying
common stock. While no securities investments are without risk, investments in
convertible securities generally entail less risk than investments in common
stock of the same issuer.

Convertible securities often provide for a stream of income (or in the case of
zero coupon securities, accretion of income) with generally higher yields than
common stocks. Convertible securities generally offer lower yields than
non-convertible securities of similar quality because of their conversion or
exchange features. Of course, like all debt securities, there can be no
assurance of income or principal payments because the issuers of the convertible
securities may default on their obligations.

Convertible securities generally are subordinated to other similar but
non-convertible securities of the same issuer, although convertible bonds, as
corporate debt obligations, enjoy seniority in right of payment to all equity
securities, and convertible preferred stock is senior to common stock of the
same issuer. However, because of the subordination feature, convertible bonds
and convertible preferred stock typically have lower ratings than similar
non-convertible securities.


Delayed Delivery Transactions. DWS Balanced VIP, DWS Core Fixed Income VIP, DWS
Global Thematic VIP, DWS Government & Agency Securities VIP, DWS High Income
VIP, DWS Mid Cap Growth VIP, DWS Strategic Income VIP, DWS Strategic Value VIP,
DWS Technology VIP and DWS Turner Mid Cap Growth VIP may purchase or sell
portfolio securities on a when-issued or delayed delivery basis. When-issued or
delayed delivery transactions arise when securities are purchased by the
Portfolio with payment and delivery to take place in the future in order to
secure what is considered to be an advantageous price and yield to the Portfolio
at the time of entering into the transaction. When the Portfolio enters into a
delayed delivery transaction, it becomes obligated to purchase securities and it
has all of the rights and risks attendant to ownership of a security, although
delivery and payment occur at a later date. The value of fixed-income securities
to be delivered in the future will fluctuate as interest rates vary. At the time
a Portfolio makes the commitment to purchase a security on a when-issued or
delayed delivery basis, it will record the transaction and reflect the liability
for the purchase and the value of the security in determining its net asset
value. Likewise, at the time a Portfolio makes the commitment to sell a security
on a delayed delivery basis, it will record the transaction and include the
proceeds to be received in determining its net asset value; accordingly, any
fluctuations in the value of the security sold pursuant to a delayed delivery
commitment are ignored in calculating net asset value so long as the commitment
remains in effect. The Portfolio generally has the ability to close out a
purchase obligation on or before the settlement date, rather than take delivery
of the security.


Depositary Receipts. Investments in securities of foreign issuers may be in the
form of sponsored or unsponsored American Depositary Receipts ("ADRs"), European
Depositary Receipts ("EDRs"), Global Depositary Receipts ("GDRs"), International
Depositary Receipts ("IDRs") and other types of Depositary Receipts (which,
together with ADRs, EDRs, GDRs and IDRs are hereinafter referred to as
"Depositary Receipts"). Depositary Receipts provide indirect investment in
securities of foreign issuers. Prices of unsponsored Depositary Receipts may be
more volatile than if they were sponsored by the issuer of the underlying
securities. Depositary Receipts may not necessarily be denominated in the same
currency as the underlying securities into which they may be converted. In
addition, the issuers of the stock of unsponsored Depositary Receipts are not
obligated to disclose material information in the United States and, therefore,
there may not be a correlation between such information and the market value of
the Depositary Receipts. ADRs are Depository Receipts typically issued by a US
bank or trust company which evidence ownership of underlying securities issued
by a foreign corporation. GDRs, IDRs and other types of Depositary Receipts are
typically issued by foreign banks or trust companies, although they also may be
issued by United States banks or trust companies, and evidence ownership of
underlying securities issued by either a foreign or a United States corporation.
Generally, Depositary Receipts in registered form are designed for use in the
United States securities markets and Depositary Receipts in bearer form are
designed for use in securities markets outside the United States. For purposes
of a Portfolio's investment policies, a Portfolio's investments in ADRs, GDRs
and other types of Depositary Receipts will be deemed to be investments in the
underlying securities. Depositary Receipts, including those denominated in US
dollars, will be subject to foreign currency exchange rate risk. However, by
investing in US dollar-denominated ADRs rather than directly in foreign issuers'
stock, a Portfolio avoids currency risks during the settlement period. In
general, there is a large, liquid market in the United States for most ADRs.
However, certain Depositary Receipts may not be listed on an exchange and
therefore may be illiquid securities.

Direct Debt Instruments. Direct debt instruments are interests in amounts owed
by a corporate, governmental or other borrower to lenders (direct loans), to
suppliers of goods or services (trade claims or other receivables) or to other
parties. DWS Balanced VIP, DWS High Income VIP and DWS Strategic Income VIP may
invest in all types of direct debt investments, but among these investments each
Portfolio currently intends to invest primarily in direct loans and trade
claims.

When a Portfolio participates in a direct loan it will be lending money directly
to an issuer. Direct loans generally do not have an underwriter or agent bank,
but instead, are negotiated between a company's management team and a lender or
group of lenders. Direct loans typically offer better security and structural
terms than other types of high yield securities. Direct debt obligations are
often the most senior-obligations in an issuer's capital structure or are
well-collateralized so that overall risk is lessened.

Trade claims are unsecured rights of payment arising from obligations other than
borrowed funds. Trade claims include vendor claims and other receivables that
are adequately documented and available for purchase from high yield
broker-dealers. Trade claims typically may sell at a discount. In addition to
the risks otherwise associated with low-quality obligations, trade claims have
other risks, including the possibility that the amount of the claim may be
disputed by the obligor. Trade claims normally would be considered illiquid and
pricing can be volatile.

Direct debt instruments involve a risk of loss in case of default or insolvency
of the borrower. A Portfolio will rely primarily upon the creditworthiness of
the borrower and/or the collateral for payment of interest and repayment of
principal. The value of a Portfolio's investments may be adversely affected if
scheduled interest or principal payments are not made. Because most direct loans
will be secured, there will be a smaller risk of loss with direct loans than
with an investment in unsecured high yield bonds or trade claims. Indebtedness
of borrowers whose creditworthiness is poor involves substantially greater risks
and may be highly speculative. Borrowers that are in bankruptcy or restructuring
may never pay off their indebtedness or may pay only a small fraction of the
amount owed. Investments in direct debt instruments also involve interest rate
risk and liquidity risk. However, interest rate risk is lessened by the
generally short-term nature of direct debt instruments and their interest rate
structure, which typically floats. To the extent the direct debt instruments in
which a Portfolio invests are considered illiquid, the lack of a liquid
secondary market (1) will have an adverse impact on the value of such
instruments, (2) will have an adverse impact on the Portfolio's ability to
dispose of them when necessary to meet the Portfolio's liquidity needs or in
response to a specific economic event, such as a decline in creditworthiness of
the issuer, and (3) may make it more difficult for the Portfolio to assign a
value of these instruments for purposes of valuing the Portfolio's portfolio and
calculating its net asset value. In order to lessen liquidity risk, each
Portfolio anticipates investing primarily in direct debt instruments that are
quoted and traded in the high yield market and will not invest in these
instruments if it would cause more than 15% of the Portfolio's net assets to be
illiquid. Trade claims may also present a tax risk to a Portfolio. The
Portfolios will not invest in trade claims if it affects the Portfolio's
qualification as a regulated investment company under the Code.

Foreign Fixed-Income Securities. Since most foreign fixed-income securities are
not rated, a Portfolio will invest in foreign fixed-income securities based upon
the Advisor's or subadvisor's analysis without relying on published ratings.
Since such investments will be based upon the Advisor or subadvisor's analysis
rather than upon published ratings, achievement of a Portfolio's goals may
depend more upon the abilities of the Advisor or subadvisor than would otherwise
be the case.

The value of the foreign fixed-income securities held by a Portfolio, and thus
the net asset value of the Portfolio's shares, generally will fluctuate with (a)
changes in the perceived creditworthiness of the issuers of those securities,
(b) movements in interest rates, and (c) changes in the relative values of the
currencies in which a Portfolio's investments in fixed-income securities are
denominated with respect to the US dollar. The extent of the fluctuation will
depend on various factors, such as the average maturity of a Portfolio's
investments in foreign fixed-income securities, and the extent to which a
Portfolio hedges against its interest rate, credit and currency exchange rate
risks. Many of the foreign fixed-income obligations in which a Portfolio will
invest will have long maturities. A longer average maturity generally is
associated with a higher level of volatility in the market value of such
securities in response to changes in market conditions.

Investment in sovereign debt, including Brady Bonds, can involve a high degree
of risk. The governmental entity that controls the repayment of sovereign debt
may not be able or willing to repay the principal and/or interest when due in
accordance with the terms of such debt. A governmental entity's willingness or
ability to repay principal and interest due in a timely manner may be affected
by, among other factors, its cash flow situation, the extent of its foreign
reserves, the availability of sufficient foreign exchange on the date a payment
is due, the relative size of the debt service burden to the economy as a whole,
the governmental entity's policy toward the International Monetary Fund, and the
political constraints to which a governmental entity may be subject.
Governmental entities may also be dependent on expected disbursements from
foreign governments, multilateral agencies and others abroad to reduce principal
and interest arrearages on their debt. The commitment on the part of these
governments, agencies and others to make such disbursements may be conditioned
on a governmental entity's implementation of economic reforms and/or economic
performance and the timely service of such debtor's obligations. Failure to
implement such reforms, achieve such levels of economic performance or repay
principal or interest when due may result in the cancellation of such third
parties commitments to lend funds to the governmental entity, which may further
impair such debtor's ability or willingness to service its debts in a timely
manner. Consequently, governmental entities may default on their sovereign debt.
Holders of sovereign debt may be requested to participate in the rescheduling of
such debt and to extend further loans to governmental entities. There is no
bankruptcy proceeding by which sovereign debt on which governmental entities
have defaulted may be collected in whole or in part.

Brady Bonds are debt securities issued under a plan implemented to allow debtor
nations to restructure their outstanding commercial bank indebtedness. Foreign
governmental issuers of debt or the governmental authorities that control the
repayment of the debt may be unable or unwilling to repay principal or pay
interest when due. In the event of default, there may be limited or no legal
recourse in that, generally, remedies for defaults must be pursued in the courts
of the defaulting party. Political conditions, especially a sovereign entity's
willingness to meet the terms of its fixed-income securities, are of
considerable significance. Also, there can be no assurance that the holders of
commercial bank loans to the same sovereign entity may not contest payments to
the holders of sovereign debt in the event of default under commercial bank loan
agreements. In addition, there is no bankruptcy proceeding with respect to
sovereign debt on which a sovereign has defaulted, and a Portfolio may be unable
to collect all or any part of its investment in a particular issue.

Foreign investment in certain sovereign debt is restricted or controlled to
varying degrees, including requiring governmental approval for the repatriation
of income, capital or proceeds of sales by foreign investors. These restrictions
or controls may at times limit or preclude foreign investment in certain
sovereign debt or increase the costs and expenses of a Portfolio. A significant
portion of the sovereign debt in which a Portfolio may invest is issued as part
of debt restructuring and such debt is to be considered speculative. There is a
history of defaults with respect to commercial bank loans by public and private
entities issuing Brady Bonds. All or a portion of the interest payments and/or
principal repayment with respect to Brady Bonds may be uncollateralized.


Foreign Securities. DWS Mid Cap Growth VIP and DWS Blue Chip VIP invest mainly
in US common stocks, but may invest up to 20% of its net assets in foreign
securities. DWS Small Cap Growth VIP invests mainly in US common stocks, but may
invest up to 25% of its total assets in foreign securities. DWS High Income VIP
generally invests in US bonds or instruments, but up to 50% of its total assets
could be in bonds from foreign issuers. DWS Core Fixed Income VIP generally
invests in US bonds or instruments, but up to 25% of its total assets could be
in bonds from foreign issuers. DWS Technology VIP invests mainly in US stocks,
but may invest up to 35% and 20%, respectively, of net assets in foreign
securities. DWS Strategic Value VIP and DWS Dreman Small Mid Cap Value VIP may
invest up to 20% of net assets in US dollar-denominated American Depositary
Receipts ("ADRs") and in securities of foreign companies traded principally in
securities markets outside the US. DWS Balanced VIP may invest without limit in
foreign securities. DWS Money Market VIP and DWS Government & Agency Securities
VIP, each within its quality standards, may also invest in securities of foreign
issuers. However, such investments will be in US dollar-denominated instruments.


Investing in foreign securities involves certain special considerations,
including those set forth below, which are not typically associated with
investing in US securities and which may favorably or unfavorably affect a
Portfolio's performance. As foreign companies are not generally subject to
uniform accounting, auditing and financial reporting standards, practices and
requirements comparable to those applicable to domestic companies, there may be
less publicly available information about a foreign company than about a
domestic company. Many foreign securities markets, while growing in volume of
trading activity, have substantially less volume than the US market, and
securities of some foreign issuers are less liquid and more volatile than
securities of domestic issuers. Similarly, volume and liquidity in most foreign
bond markets is less than in the US and, at times, volatility of price can be
greater than in the US. Fixed commissions on some foreign securities exchanges
and bid to asked spreads in foreign bond markets are generally higher than
commissions or bid to asked spreads on US markets, although the Advisor and a
subadvisor will endeavor to achieve the most favorable net results on its
portfolio transactions. There is generally less governmental supervision and
regulation of securities exchanges, brokers and listed companies in foreign
countries than in the US. It may be more difficult for a Portfolio's agents to
keep currently informed about corporate actions in foreign countries which may
affect the prices of portfolio securities. Communications between the US and
foreign countries may be less reliable than within the US, thus increasing the
risk of delayed settlements of portfolio transactions or loss of certificates
for portfolio securities. Payment for securities without delivery may be
required in certain foreign markets. In addition, with respect to certain
foreign countries, there is the possibility of expropriation or confiscatory
taxation, political or social instability, or diplomatic developments which
could affect US investments in those countries. Moreover, individual foreign
economies may differ favorably or unfavorably from the US economy in such
respects as growth of gross national product, rate of inflation, capital
reinvestment, resource self-sufficiency and balance of payments position. The
management of a Portfolio seeks to mitigate the risks associated with the
foregoing considerations through continuous professional management.

High Yield, High Risk Bonds. Certain Portfolios may also purchase debt
securities which are rated below investment-grade (commonly referred to as "junk
bonds" or "high yield"), that is, rated below Baa by Moody's or below BBB by S&P
or judged to be of equivalent quality as determined by the Advisor or
subadvisor. These securities usually entail greater risk (including the
possibility of default or bankruptcy of the issuers of such securities),
generally involve greater volatility of price and risk to principal and income,
and may be less liquid, than securities in the higher rating categories. The
lower the ratings of such debt securities, the more their risks render them like
equity securities. Securities rated D may be in default with respect to payment
of principal or interest. See the Appendix to this Statement of Additional
Information for a more complete description of the ratings assigned by ratings
organizations and their respective characteristics.

Issuers of such high yielding securities often are highly leveraged and may not
have available to them more traditional methods of financing. Therefore, the
risk associated with acquiring the securities of such issuers generally is
greater than is the case with higher rated securities. For example, during an
economic downturn or a sustained period of rising interest rates, highly
leveraged issuers of high yield securities may experience financial stress.
During such periods, such issuers may not have sufficient revenues to meet their
interest payment obligations. The issuer's ability to service its debt
obligations may also be adversely affected by specific corporate developments,
or the issuer's inability to meet specific projected business forecasts, or the
unavailability of additional financing. The risk of loss from default by the
issuer is significantly greater for the holders of high yield securities because
such securities are generally unsecured and are often subordinated to other
creditors of the issuer. Prices and yields of high yield securities will
fluctuate over time and, during periods of economic uncertainty, volatility of
high yield securities may adversely affect a Portfolio's net asset value. In
addition, investments in high yield zero coupon or pay-in-kind bonds, rather
than income-bearing high yield securities, may be more speculative and may be
subject to greater fluctuations in value due to changes in interest rates.

A Portfolio may have difficulty disposing of certain high yield (high risk)
securities because they may have a thin trading market. Because not all dealers
maintain markets in all high yield securities, a Portfolio anticipates that such
securities could be sold only to a limited number of dealers or institutional
investors. The lack of a liquid secondary market may have an adverse effect on
the market price and a Portfolio's ability to dispose of particular issues and
may also make it more difficult for a Portfolio to obtain accurate market
quotations for purposes of valuing a Portfolio's assets. Market quotations
generally are available on many high yield issues only from a limited number of
dealers and may not necessarily represent firm bids of such dealers or prices
for actual sales. Adverse publicity and investor perceptions may decrease the
values and liquidity of high yield securities. These securities may also involve
special registration responsibilities, liabilities and costs, and liquidity and
valuation difficulties.

Credit quality in the high-yield securities market can change suddenly and
unexpectedly, and even recently-issued credit ratings may not fully reflect the
actual risks posed by a particular high-yield security. For these reasons, it is
generally the policy of the Advisor and Subadvisors not to rely exclusively on
ratings issued by established credit rating agencies, but to supplement such
ratings with their own independent and ongoing review of credit quality. The
achievement of a Portfolio's investment objective by investment in such
securities may be more dependent on the Advisor's or Subadvisor's credit
analysis than is the case for higher quality bonds. Should the rating of a
portfolio security be downgraded, the Advisor or Subadvisor will determine
whether it is in the best interests of the Portfolio to retain or dispose of
such security.

Prices for below investment-grade securities may be affected by legislative and
regulatory developments. Also, Congress has from time to time considered
legislation which would restrict or eliminate the corporate tax deduction for
interest payments in these securities and regulate corporate restructurings.
Such legislation may significantly depress the prices of outstanding securities
of this type.

DWS Core Fixed Income VIP will not invest more than 5% of its net assets in junk
bonds.


Integrated Global Alpha Platform Strategy ("iGAP Strategy") (for DWS Balanced
VIP and DWS Strategic Income VIP). The Advisor seeks to enhance returns by
employing a global tactical asset allocation overlay strategy. The global
tactical asset allocation strategy, which the Advisor calls iGAP, is a total
return strategy designed to add value by benefiting from short-term and mid-term
mis-pricings within global equity, bond and currency markets. iGAP is expected
to have a low correlation to the performance of the Portfolio's investments in
bond holdings.

The iGAP strategy combines diverse macro investment views from various
investment teams within Deutsche Asset Management. Because a single investment
approach rarely works in all market conditions, the teams are chosen to
diversify investment approaches thereby enhancing the expected return for a
given level of risk. The collective views are then used to determine iGAP's
positions using a disciplined, risk managed process. The result is a collection
of long and short investment positions within global equity, bond and currency
markets designed to generate excess returns that have little correlation to
major securities markets. The equity, bond and currency positions are then
implemented by the iGAP portfolio managers using exchange-traded futures and
over-the-counter forward currency transactions. The iGAP portfolio managers
consider factors such as liquidity, cost, margin requirement and credit quality
when selecting the appropriate derivative or other instrument. When used as a
part of the iGAP strategy, derivatives and other instruments generally will not
be used for hedging purposes.



DWS Strategic Income VIP may invest up to 5% of net assets in shares of DWS
Floating Rate Plus Fund. DWS Floating Rate Plus Fund seeks to provide high
current income. DWS Floating Rate Plus Fund pursues its objective by investing,
under normal circumstances, at least 80% of its total assets in adjustable rate
loans that have a senior right to payment ("Senior Loans") and other floating
rate debt securities. DWS Floating Rate Plus Fund also seeks to enhance returns
by using the iGAP strategy that is implemented through the use of derivatives.


Impact of Sub-Prime Mortgage Market. A Portfolio may invest in mortgage-backed,
asset-backed and other fixed-income securities whose value and liquidity may be
adversely affected by the critical downturn in the sub-prime mortgage lending
market in the US. Sub-prime loans, which, have higher interest rates, are made
to borrowers with low credit ratings or other factors that increase the risk of
default. Concerns about widespread defaults on sub-prime loans have also created
heightened volatility and turmoil in the general credit markets. As a result, a
Portfolio's investments in certain fixed-income securities may decline in value,
their market value may be more difficult to determine, and a Portfolio may have
more difficulty disposing of them.

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

Inflation-Indexed Bonds. DWS Balanced VIP may purchase inflation-indexed
securities issued by the US Treasury, US government agencies and
instrumentalities other than the US Treasury, and entities other than the US
Treasury or US government agencies and instrumentalities.

Inflation-indexed bonds are fixed income securities or other instruments whose
principal value is periodically adjusted according to the rate of inflation. Two
structures are common. The US Treasury and some other issuers use a structure
that accrues inflation on either a current or lagged basis into the principal
value of the bond. Most other issuers pay out the price index accruals as part
of a semi-annual coupon.

Inflation-indexed securities issued by the US Treasury have maturities of five,
ten or twenty years, although it is possible that securities with other
maturities will be issued in the future. The US Treasury securities pay interest
on a semi-annual basis, equal to a fixed percentage of the inflation-adjusted
principal amount. For example, if the Portfolio purchased an inflation-indexed
bond with a par value of $1,000 and a 3% real rate of return coupon (payable
1.5% semi-annually), and calculated inflation over the first six months was 1%,
the mid-year value of the bond would be $1,010 and the first semi-annual
interest payment would be $15.15 ($1,010 times 1.5%). If calculated inflation
during the second half of the year resulted in the whole year's inflation
equaling 3%, the end of year value of the bond would be $1,030 and the second
semi-annual interest payment would be $15.45 ($1,030 times 1.5%).

If the periodic adjustment rate measuring inflation falls, the principal value
of inflation-indexed bonds will be adjusted downward, and, consequently, the
interest payable on these securities (calculated with respect to a smaller
principal amount) will be reduced. Repayment of the original bond principal on
maturity (as adjusted for inflation) is guaranteed in the case of US Treasury
inflation-indexed bonds, even during a period of deflation. However, the current
market value of the bonds is not guaranteed and will fluctuate. The Portfolio
may also invest in other inflation related bonds that may or may not provide a
similar guarantee. If a guarantee of principal is not provided, the adjusted
principal value of the bond repaid at maturity may be less than the original
principal. In addition, if the Portfolio purchases inflation-indexed bonds
offered by foreign issuers, the rate of inflation measured by the foreign
inflation index may not be correlated to the rate of inflation in the US.

The value of inflation-indexed bonds is expected to change in response to
changes in real interest rates. Real interest rates, in turn, are tied to the
relationship between nominal interest rates and the rate of inflation.
Therefore, if inflation were to rise at a faster rate than nominal interest
rates, real interest rates might decline, leading to an increase in value of
inflation-indexed bonds. In contrast, if nominal interest rates increased at a
faster rate than inflation, real interest rates might rise, leading to a
decrease in value of inflation-indexed bonds. There can be no assurance,
however, that the value of inflation-indexed bonds will be directly correlated
to changes in interest rates.

While these securities are expected to be protected from long-term inflationary
trends, short-term increases in inflation may lead to a decline in value. If
interest rates rise due to reasons other than inflation (for example, due to
changes in currency exchange rates), investors in these securities may not be
protected to the extent that the increase is not reflected in the bond's
inflation measure.

In general, the measure used to determine the periodic adjustment of US
inflation-indexed bonds is the Consumer Price Index for Urban Consumers
("CPI-U"), which is calculated monthly by the US Bureau of Labor Statistics. The
CPI-U is a measurement of changes in the cost of living, made up of components
such as housing, food, transportation and energy. The inflation adjustment to
the securities references this index with a three month lag. Inflation-indexed
bonds issued by a foreign government are generally adjusted to reflect a
comparable inflation index calculate by the applicable government. There can be
no assurance that the CPI-U or any foreign inflation index will accurately
measure the real rate of inflation in the prices of goods and services.
Moreover, there can be no assurance that the rate of inflation in a foreign
country will be correlated to the rate of inflation in the US. Finally, income
distributions of the Portfolio are likely to fluctuate more than those of a
conventional bond fund.

The taxation of inflation-indexed US Treasury securities is similar to the
taxation of conventional bonds. Both interest payments and the difference
between original principal and the inflation-adjusted principal will be treated
as interest income subject to taxation. Interest payments are taxable when
received or accrued. The inflation adjustment to the principal is subject to tax
in the year the adjustment is made, not at maturity of the security when the
cash from the repayment of principal is received. If an upward adjustment has
been made (which typically should happen), investors in non-tax-deferred
accounts will pay taxes on this amount currently. Decreases in the indexed
principal can be deducted only from current or previous interest payments
reported as income and is otherwise carried forward.

Inflation-indexed US Treasury securities therefore have a potential cash flow
mismatch to an investor, because investors must pay taxes on the
inflation-adjusted principal before the repayment of principal is received. It
is possible that, particularly for high income tax bracket investors,
inflation-indexed US Treasury securities would not generate enough income in a
given year to cover the tax liability they could create. This is similar to the
current tax treatment for zero-coupon bonds and other discount securities. If
inflation-indexed US Treasury securities are sold prior to maturity, capital
losses or gains are realized in the same manner as traditional bonds See "Taxes"
below.

Inflation-indexed securities are designed to offer a return linked to inflation,
thereby protecting future purchasing power of the money invested in them.
However, inflation-indexed securities provide this protected return only if held
to maturity. In addition, inflation-indexed securities may not trade at par
value. Real interest rates (the market rate of interest less the anticipated
rate of inflation) change over time as a result of many factors, such as what
investors are demanding as a true value for money. When real rates do change,
inflation-indexed securities prices will be more sensitive to these changes than
conventional bonds, because these securities were sold originally based upon a
real interest rate that is no longer prevailing. Should market expectations for
real interest rates rise, the price of inflation-indexed securities and the
share price of the Portfolio may fall. Investors in the Portfolio should be
prepared to accept not only this share price volatility but also the possible
adverse tax consequences it may cause.

An investment in securities featuring inflation-adjusted principal and/or
interest involves factors not associated with more traditional fixed-principal
securities. Such factors include the possibility that the inflation index may be
subject to significant changes, that changes in the index may or may not
correlate to changes in interest rates generally or changes in other indices, or
that the resulting interest may be greater or less than that payable on other
securities of similar maturities. In the event of sustained deflation, it is
possible that the amount of semiannual interest payments, the inflation-adjusted
principal of the security and the value of the stripped components, will
decrease. If any of these possibilities are realized, the Portfolio's net asset
value could be negatively affected.

Interfund Borrowing and Lending Program. The Fund has received exemptive relief
from the SEC which permits a Portfolio to participate in an interfund lending
program among certain investment companies advised by the Advisor. The interfund
lending program allows the participating portfolios to borrow money from and
loan money to each other for temporary or emergency purposes. The program is
subject to a number of conditions designed to ensure fair and equitable
treatment of all participating funds, including the following: (1) no Portfolio
may borrow money through the program unless it receives a more favorable
interest rate than a rate approximating the lowest interest rate at which bank
loans would be available to any of the participating portfolio under a loan
agreement; and (2) no Portfolio may lend money through the program unless it
receives a more favorable return than that available from an investment in
repurchase agreements and, to the extent applicable, money market cash sweep
arrangements. In addition, a Portfolio may participate in the program only if
and to the extent that such participation is consistent with the Portfolio's
investment objectives and policies (for instance, money market funds would
normally participate only as lenders and tax exempt funds only as borrowers).
Interfund loans and borrowings may extend overnight, but could have a maximum
duration of seven days. Loans may be called on one day's notice. A Portfolio may
have to borrow from a bank at a higher interest rate if an interfund loan is
called or not renewed. Any delay in repayment to a lending Portfolio could
result in a lost investment opportunity or additional costs. The program is
subject to the oversight and periodic review by the Boards of Trustees.
Borrowings through the interfund lending program are subject to each Portfolio's
policies on borrowing.

Investment Company Securities. Each Portfolio may acquire securities of other
investment companies to the extent consistent with its investment objective and
policies and subject to the limitations of the 1940 Act. The Portfolio will
indirectly bear its proportionate share of any management fees and other
expenses paid by such other investment companies. For example, a Portfolio may
invest in a variety of investment companies which seek to track the composition
and performance of specific indexes or a specific portion of an index. These
index-based investments hold substantially all of their assets in securities
representing their specific index or a specific portion of an index.
Accordingly, the main risk of investing in index-based investments is the same
as investing in a portfolio of equity securities comprising the index. The
market prices of index-based investments will fluctuate in accordance with both
changes in the market value of their underlying portfolio securities and due to
supply and demand for the instruments on the exchanges on which they are traded
(which may result in their trading at a discount or premium to their NAVs).
Index-based investments may not replicate exactly the performance of their
specified index because of transaction costs and because of the temporary
unavailability of certain component securities of the index.

Examples of index-based investments include:

SPDRs(R): SPDRs, an acronym for "Standard & Poor's Depositary Receipts," are
based on the S&P 500 Composite Stock Price Index. They are issued by the SPDR
Trust, a unit investment trust that holds shares of substantially all the
companies in the S&P 500 in substantially the same weighting and seeks to
closely track the price performance and dividend yield of the Index.

MidCap SPDRs(R): MidCap SPDRs are based on the S&P MidCap 400 Index. They are
issued by the MidCap SPDR Trust, a unit investment trust that holds a portfolio
of securities consisting of substantially all of the common stocks in the S&P
MidCap 400 Index in substantially the same weighting and seeks to closely track
the price performance and dividend yield of the S&P Mid Cap 400 Index.

Select Sector SPDRs(R): Select Sector SPDRs are based on a particular sector or
group of industries that are represented by a specified Select Sector Index
within the Standard & Poor's Composite Stock Price Index. They are issued by The
Select Sector SPDR Trust, an open-end management investment company with nine
portfolios that each seeks to closely track the price performance and dividend
yield of a particular Select Sector Index.

DIAMONDS (SM): DIAMONDS are based on the Dow Jones Industrial Average (SM). They
are issued by the DIAMONDS Trust, a unit investment trust that holds a portfolio
of all the component common stocks of the Dow Jones Industrial Average and seeks
to closely track the price performance and dividend yield of the Dow.

Nasdaq-100 Shares: Nasdaq-100 Shares are based on the Nasdaq 100 Index. They are
issued by the Nasdaq-100 Trust, a unit investment trust that holds a portfolio
consisting of substantially all of the securities, in substantially the same
weighting, as the component stocks of the Nasdaq-100 Index and seeks to closely
track the price performance and dividend yield of the Nasdaq-100 Index.

The DWS Strategic Income VIP may invest in shares of DWS Floating Rate Plus
Fund. DWS Floating Rate Plus Fund seeks to provide high current income. DWS
Floating Rate Plus Fund pursues its objective by investing, under normal
circumstances, at least 80% of its total assets in adjustable rate loans that
have a senior right to payment ("Senior Loans") and other floating rate debt
securities. DWS Floating Rate Plus Fund also seeks to enhance returns by
employing a global tactical asset allocation strategy that is implemented
through the use of derivatives.

Investment-Grade Bonds. "Investment-grade" bonds are those rated Aaa, Aa, A or
Baa by Moody's or AAA, AA, A or BBB by S&P or, if unrated, judged to be of
equivalent quality as determined by the Advisor or a Subadvisor. Moody's
considers bonds it rates Baa to have speculative elements as well as
investment-grade characteristics. To the extent that a Portfolio invests in
higher-grade securities, a Portfolio will not be able to avail itself of
opportunities for higher income which may be available at lower grades.

Investment of Uninvested Cash Balances. Each Portfolio may have cash balances
that have not been invested in portfolio securities ("Uninvested Cash").
Uninvested Cash may result from a variety of sources, including dividends or
interest received from portfolio securities, unsettled securities transactions,
reserves held for investment strategy purposes, scheduled maturity of
investments, liquidation of investment securities to meet anticipated
redemptions and dividend payments, and new cash received from investors.
Uninvested Cash may be invested directly in money market instruments or other
short-term debt obligations. Pursuant to an Exemptive Order issued by the SEC,
each Portfolio (except DWS Money Market VIP) may use Uninvested Cash to purchase
shares of affiliated funds including money market funds, short-term bond funds
and Cash Management QP Trust or one or more future entities for which DIMA acts
as trustee or investment advisor that operate as cash management investment
vehicles and that are excluded from the definition of investment company
pursuant to Section 3(c)(1) or 3(c)(7) of the 1940 Act (collectively, the
"Central Funds") in excess of the limitations of Section 12(d)(1) of the 1940
Act. Investment by each Portfolio in shares of the Central Funds will be in
accordance with the Portfolio's investment policies and restrictions as set
forth in its registration statement. Currently, DWS Money Market VIP does not
intend to invest in Central Funds.

Certain of the Central Funds comply with Rule 2a-7 under the 1940 Act. The other
Central Funds are or will be short-term bond funds that invest in fixed-income
securities and maintain a dollar-weighted average maturity of three years or
less. Each of the Central Funds will be managed specifically to maintain a
highly liquid portfolio, and access to them will enhance each Portfolio's
ability to manage Uninvested Cash.

Each Portfolio will invest Uninvested Cash in Central Funds only to the extent
that each Portfolio's aggregate investment in the Central Funds does not exceed
25% of its total assets (except DWS Core Fixed Income VIP cannot exceed 20% of
its total assets) in shares of the Central Funds. Purchase and sales of shares
of Central Funds are made at net asset value.


Lending of Portfolio Securities. Each Portfolio (with the exception of DWS Money
Market VIP) may lend its investment securities to approved institutional
borrowers who need to borrow securities in order to complete certain
transactions, such as covering short sales, avoiding failures to deliver
securities or completing arbitrage operations. By lending their investment
securities, the Portfolios attempt to increase their net investment income
through the receipt of interest on the loan. Any gain or loss in the market
price of the securities loaned that might occur during the term of the loan
would belong to a Portfolio. A Portfolio may lend its investment securities so
long as the terms, structure and the aggregate amount of such loans are not
inconsistent with the 1940 Act or the rules and regulations or interpretations
of the SEC thereunder, which currently require that (a) the borrower pledge and
maintain with a Portfolio collateral consisting of liquid, unencumbered assets
having a value at all times not less than 100% of the value of the securities
loaned, (b) the borrower add to such collateral whenever the price of the
securities loaned rises (i.e., the borrower "marks to the market" on a daily
basis), (c) the loan be made subject to termination by a Portfolio at any time,
and (d) a Portfolio receives reasonable interest on the loan (which may include
the Portfolio investing any cash collateral in interest bearing short-term
investments), and distributions on the loaned securities and any increase in
their market value. A Portfolio will bear any losses incurred from the
investment of the collateral it receives. There may be risks of delay in
recovery of the securities or even loss of rights in the collateral should the
borrower of the securities fail financially. However, loans will be made only to
borrowers selected by a Portfolio's delegate after a commercially reasonable
review of relevant facts and circumstances, including the creditworthiness of
the borrower.


At the present time, the staff of the SEC does not object if an investment
company pays reasonable negotiated fees in connection with loaned securities, so
long as such fees are set forth in a written contract and approved by the
investment company's Board of Trustees/Directors. In addition, voting rights may
pass with the loaned securities, but if a material event occurs affecting an
investment on loan, the loan must be called and the securities voted. Pursuant
to an exemptive order granted by the SEC, cash collateral received by a
Portfolio may be invested in a money market fund managed by the Advisor or a
subadvisor (or one of its affiliates).

Maintenance of $1.00 Net Asset Value, Credit Quality and Portfolio Maturity. DWS
Money Market VIP effects sales, redemptions and repurchases at the net asset
value per share, normally $1.00. In fulfillment of its responsibilities under
Rule 2a-7 of the 1940 Act, the Portfolio's Board has approved policies
established by the Portfolio's Advisor reasonably calculated to prevent the
Portfolio's net asset value per share from deviating from $1.00 except under
unusual or extraordinary circumstances and the Portfolio's Board will
periodically review the Advisor's operations under such policies at regularly
scheduled Board meetings. Those policies include a weekly monitoring by the
Advisor of unrealized gains and losses in the Portfolio's portfolio, and when
necessary, in an effort to avoid deviation, taking corrective action, such as
adjusting the maturity of the portfolio, or, if possible, realizing gains or
losses to offset in part unrealized losses or gains. The result of those
policies may be that the yield on shares of the Portfolio will be lower than
would be the case if the policies were not in effect. Such policies also provide
for certain action to be taken with respect to portfolio securities which
experience a downgrade in rating or suffer a default.

Mortgage-Backed and Asset-Backed Securities

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

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


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


Each Portfolio may invest in mortgage-backed securities issued by
non-governmental entities including collateralized mortgage obligations ("CMOs")
and real estate mortgage investment conduits ("REMICs"). CMOs are securities
collateralized by mortgages, mortgage pass-throughs, mortgage pay-through bonds
(bonds representing an interest in a pool of mortgages where the cash flow
generated from the mortgage collateral pool is dedicated to bond repayment), and
mortgage-backed bonds (general obligations of the issuers payable out of the
issuers' general funds and additionally secured by a first lien on a pool of
single family detached properties). Many CMOs are issued with a number of
classes or series that have different maturities and are retired in sequence.
Investors purchasing such CMOs in the shortest maturities receive or are
credited with their pro rata portion of the unscheduled prepayments of principal
up to a predetermined portion of the total CMO obligation. Until that portion of
such CMO obligation is repaid, investors in the longer maturities receive
interest only. Accordingly, the CMOs in the longer maturity series are less
likely than other mortgage pass-throughs to be prepaid prior to their stated
maturity. Although some of the mortgages underlying CMOs may be supported by
various types of insurance, and some CMOs may be backed by GNMA certificates or
other mortgage pass-throughs issued or guaranteed by US Government agencies or
instrumentalities, the CMOs themselves are not generally guaranteed.

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

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


Mortgage-backed securities may be issued or guaranteed by GNMA, FNMA and FHLMC,
but also may be issued or guaranteed by other issuers, including private
companies. GNMA is a government-owned corporation that is an agency of the U.S.
Department of Housing and Urban Development. It guarantees, with the full faith
and credit of the United States, full and timely payment of all monthly
principal and interest on its mortgage-backed securities. Until recently, FNMA
and FHLMC were government-sponsored corporations owned entirely by private
stockholders. Both issue mortgage-related securities that contain guarantees as
to timely payment of interest and principal but that are not backed by the full
faith and credit of the U.S. government. The value of the companies' securities
fell sharply in 2008 due to concerns that the firms did not have sufficient
capital to offset losses. In mid-2008, the U.S. Treasury was authorized to
increase the size of home loans that FNMA and FHLMC could purchase in certain
residential areas and, until 2009, to lend FNMA and FHLMC emergency funds and to
purchase the companies' stock. More recently, in September 2008, the U.S.
Treasury announced that FNMA and FHLMC had been placed in conservatorship by the
Federal Housing Finance Agency ("FHFA"), a newly created independent regulator.
In addition to placing the companies in conservatorship, the U.S. Treasury
announced three additional steps that it intended to take with respect to FNMA
and FHLMC. First, the U.S. Treasury has entered into preferred stock purchase
agreements ("PSPAs") under which, if the FHFA determines that FNMA's or FHLMC's
liabilities have exceeded its assets under generally accepted accounting
principles, the U.S. Treasury will contribute cash capital to the company in an
amount equal to the difference between liabilities and assets. The PSPAs are
designed to provide protection to the senior and subordinated debt and the
mortgage-backed securities issued by FNMA and FHLMC. Second, the U.S. Treasury
established a new secured lending credit facility that is available to FNMA and
FHLMC until December 2009. Third, the U.S. Treasury initiated a temporary
program to purchase FNMA and FHLMC mortgage-backed securities, which is expected
to continue until December 2009. No assurance can be given that the U.S.
Treasury initiatives discussed above with respect to the debt and
mortgage-backed securities issued by FNMA and FHLMC will be successful.


Asset-Backed Securities. Asset-backed securities may include pools of mortgages
("mortgage-backed securities"), loans, receivables or other assets. Payment of
principal and interest may be largely dependent upon the cash flows generated by
the assets backing the securities. Asset-backed securities present certain risks
that are not presented by mortgage-backed securities. Primarily, these
securities may not have the benefit of any security interest in the related
assets. Credit card receivables are generally unsecured and the debtors are
entitled to the protection of a number of state and federal consumer credit
laws, many of which give such debtors the right to set off certain amounts owed
on the credit cards, thereby reducing the balance due. There is the possibility
that recoveries on repossessed collateral may not, in some cases, be available
to support payments on these securities. Asset-backed securities are often
backed by a pool of assets representing the obligations of a number of different
parties. To lessen the effect of failures by obligors on underlying assets to
make payments, the securities may contain elements of credit support which fall
into two categories: (i) liquidity protection, and (ii) protection against
losses resulting from ultimate default by an obligor on the underlying assets.
Liquidity protection refers to the provision of advances, generally by the
entity administering the pool of assets, to ensure that the receipt of payments
on the underlying pool occurs in a timely fashion. Protection against losses
results from payment of the insurance obligations on at least a portion of the
assets in the pool. This protection may be provided through guarantees, policies
or letters of credit obtained by the issuer or sponsor from third parties,
through various means of structuring the transaction or through a combination of
such approaches. A Portfolio will not pay any additional or separate fees for
credit support. The degree of credit support provided for each issue is
generally based on historical information respecting the level of credit risk
associated with the underlying assets. Delinquency or loss in excess of that
anticipated or failure of the credit support could adversely affect the return
on an investment in such a security. The availability of asset-backed securities
may be affected by legislative or regulatory developments. It is possible that
such developments may require the Portfolios to dispose of any then existing
holdings of such securities. The Portfolios, except DWS Balanced VIP, DWS Core
Fixed Income VIP and DWS Money Market VIP, do not intend to invest more than 5%
of its total assets in asset-backed securities. DWS Balanced VIP and DWS Core
Fixed Income VIP currently do not intend to invest more than 25% of its total
assets in asset-backed securities. DWS Money Market VIP may not invest more than
50% of its assets in asset-backed securities.

Non-Diversified Portfolios. DWS Technology VIP is classified as a
"non-diversified" portfolio so that it will be able to invest to a greater
degree in the securities of a single issuer, subject to the diversification
requirements for qualification as a regulated investment company under the Code.
This allows the Portfolio, as to 50% of its assets, to invest more than 5% of
its assets, but not more than 25%, in the securities of an individual foreign
government or corporate issuer. Since a Portfolio may invest a relatively high
percentage of its assets in the securities (i.e., these funds purchase stock) of
a limited number of issuers, a Portfolio may be more susceptible to any single
economic, political or regulatory occurrence than a diversified portfolio.

Privatized Enterprises. Investments in foreign securities may include securities
issued by enterprises that have undergone or are currently undergoing
privatization. The governments of certain foreign countries have, to varying
degrees, embarked on privatization programs contemplating the sale of all or
part of their interests in state enterprises. A Portfolio's investments in the
securities of privatized enterprises may include privately negotiated
investments in a government or state-owned or controlled company or enterprise
that has not yet conducted an initial equity offering, investments in the
initial offering of equity securities of a state enterprise or former state
enterprise and investments in the securities of a state enterprise following its
initial equity offering.

In certain jurisdictions, the ability of foreign entities, such as a Portfolio,
to participate in privatizations may be limited by local law, or the price or
terms on which a Portfolio may be able to participate may be less advantageous
than for local investors. Moreover, there can be no assurance that governments
that have embarked on privatization programs will continue to divest their
ownership of state enterprises, that proposed privatizations will be successful
or that governments will not re-nationalize enterprises that have been
privatized.

In the case of the enterprises in which a Portfolio may invest, large blocks of
the stock of those enterprises may be held by a small group of stockholders,
even after the initial equity offerings by those enterprises. The sale of some
portion or all of those blocks could have an adverse effect on the price of the
stock of any such enterprise.

Prior to making an initial equity offering, most state enterprises or former
state enterprises go through an internal reorganization or management. Such
reorganizations are made in an attempt to better enable these enterprises to
compete in the private sector. However, certain reorganizations could result in
a management team that does not function as well as the enterprise's prior
management and may have a negative effect on such enterprise. In addition, the
privatization of an enterprise by its government may occur over a number of
years, with the government continuing to hold a controlling position in the
enterprise even after the initial equity offering for the enterprise.

Prior to privatization, most of the state enterprises in which a Portfolio may
invest enjoy the protection of and receive preferential treatment from the
respective sovereigns that own or control them. After making an initial equity
offering these enterprises may no longer have such protection or receive such
preferential treatment and may become subject to market competition from which
they were previously protected. Some of these enterprises may not be able to
effectively operate in a competitive market and may suffer losses or experience
bankruptcy due to such competition.

Real Estate Investment Trusts (REITs). Certain Portfolios may invest in REITs.
REITs are sometimes informally characterized as equity REITs, mortgage REITs and
hybrid REITs. Investment in REITs may subject the Portfolio to risks associated
with the direct ownership of real estate, such as decreases in real estate
values, overbuilding, increased competition and other risks related to local or
general economic conditions, increases in operating costs and property taxes,
changes in zoning laws, casualty or condemnation losses, possible environmental
liabilities, regulatory limitations on rent and fluctuations in rental income.
Equity REITs generally experience these risks directly through fee or leasehold
interests, whereas mortgage REITs generally experience these risks indirectly
through mortgage interests, unless the mortgage REIT forecloses on the
underlying real estate. Changes in interest rates may also affect the value of
the Portfolio's investment in REITs. For instance, during periods of declining
interest rates, certain mortgage REITs may hold mortgages that the mortgagors
elect to prepay, which prepayment may diminish the yield on securities issued by
those REITs.

Certain REITs have relatively small market capitalization, which may tend to
increase the volatility of the market price of their securities. Furthermore,
REITs are dependent upon specialized management skills, have limited
diversification and are, therefore, subject to risks inherent in operating and
financing a limited number of projects. REITs are also subject to heavy cash
flow dependency, defaults by borrowers and the possibility of failing to qualify
for tax-free pass-through of income under the Code and to maintain exemption
from the registration requirements of the 1940 Act. By investing in REITs
indirectly through the Portfolio, a shareholder will bear not only his or her
proportionate share of the expenses of the Portfolio, but also, indirectly,
similar expenses of the REITs. In addition, REITs depend generally on their
ability to generate cash flow to make distributions to shareholders.

Repurchase Agreements. Each Portfolio may invest in repurchase agreements
pursuant to its investment guidelines. In a repurchase agreement, the Portfolio
acquires ownership of a security and simultaneously commits to resell that
security to the seller, typically a bank or broker/dealer.

A repurchase agreement provides a means for a Portfolio to earn income on funds
for periods as short as overnight. It is an arrangement under which the
purchaser (i.e., the Portfolio) acquires a security ("Obligation") and the
seller agrees, at the time of sale, to repurchase the Obligation at a specified
time and price. Securities subject to a repurchase agreement are held in a
segregated account and, as described in more detail below, the value of such
securities is kept at least equal to the repurchase price on a daily basis. The
repurchase price may be higher than the purchase price, the difference being
income to a Portfolio, or the purchase and repurchase prices may be the same,
with interest at a stated rate due to a Portfolio together with the repurchase
price upon repurchase. In either case, the income to a Portfolio is unrelated to
the interest rate on the Obligation itself. Obligations will be held by the
custodian or in the Federal Reserve Book Entry System.

It is not clear whether a court would consider the Obligation purchased by a
Portfolio subject to a repurchase agreement as being owned by a Portfolio or as
being collateral for a loan by a Portfolio to the seller. In the event of the
commencement of bankruptcy or insolvency proceedings with respect to the seller
of the Obligation before repurchase of the Obligation under a repurchase
agreement, a Portfolio may encounter delay and incur costs before being able to
sell the security. Delays may involve loss of interest or decline in price of
the Obligation. If the court characterizes the transaction as a loan and a
Portfolio has not perfected a security interest in the Obligation, a Portfolio
may be required to return the Obligation to the seller's estate and be treated
as an unsecured creditor of the seller. As an unsecured creditor, a Portfolio
would be at risk of losing some or all of the principal and income involved in
the transaction. As with any unsecured debt Obligation purchased for a
Portfolio, the Advisor or a subadvisor seeks to reduce the risk of loss through
repurchase agreements by analyzing the creditworthiness of the obligor, in this
case the seller of the Obligation. Apart from the risk of bankruptcy or
insolvency proceedings, there is also the risk that the seller may fail to
repurchase the Obligation, in which case a Portfolio may incur a loss if the
proceeds to a Portfolio of the sale to a third party are less than the
repurchase price. However, if the market value (including interest) of the
Obligation subject to the repurchase agreement becomes less than the repurchase
price (including interest), a Portfolio will direct the seller of the Obligation
to deliver additional securities so that the market value (including interest)
of all securities subject to the repurchase agreement will equal or exceed the
repurchase price.

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

Securities as a Result of Exchanges or Workouts (DWS Balanced VIP, DWS High
Income VIP and DWS Strategic Income VIP only): Consistent with the Portfolio's
investment objectives, policies and restrictions, the Portfolio may hold various
instruments received in an exchange or workout of a distressed security (i.e., a
low-rated debt security that is in default or at risk of becoming in default).
Such instruments may include, but are not limited to, equity securities,
warrants, rights, participation interests in sales of assets and
contingent-interest obligations.

Reverse Repurchase Agreements. Each Portfolio (except DWS Money Market VIP) may
enter into "reverse repurchase agreements," which are repurchase agreements in
which a Portfolio, as the seller of the securities, agrees to repurchase such
securities at an agreed time and price. Each Portfolio maintains a segregated
account in connection with outstanding reverse repurchase agreements. A
Portfolio will enter into reverse repurchase agreements only when the Advisor or
Subadvisor believes that the interest income to be earned from the investment of
the proceeds of the transaction will be greater than the interest expense of the
transaction. Such transactions may increase fluctuations in the market value of
a Portfolio's assets and its yield.

Section 4(2) Paper. Subject to its investment objectives and policies, each
Portfolio may invest in commercial paper issued under the Securities Act of 1933
in reliance on the exemption from registration afforded by Section 3(a)(3)
thereof. Such commercial paper may be issued only to finance current
transactions and must mature in nine months or less. Trading of such commercial
paper is conducted primarily by institutional investors through investment
dealers, and individual investor participation in the commercial paper market is
very limited. A Portfolio also may invest in commercial paper issued in reliance
on the so-called "private placement" exemption from registration afforded by
Section 4(2) of the Securities Act of 1933 ("Section 4(2) paper"). Section 4(2)
paper is restricted as to disposition under the federal securities laws, and
generally is sold to institutional investors such as a Portfolio who agree that
they are purchasing the paper for investment and not with a view to public
distribution. Any resale by the purchaser must be in an exempt transaction.
Section 4(2) paper normally is resold to other institutional investors like the
Portfolio through or with the assistance of the issuer or investment dealers who
make a market in the Section 4(2) paper, thus providing liquidity. The Advisor
or Subadvisor considers the legally restricted but readily saleable Section 4(2)
paper to be liquid; however, pursuant to procedures approved by the Board of
Trustees of the Fund, if a particular investment in Section 4(2) paper is not
determined to be liquid, that investment will be included within the limitation
of the particular Portfolio on illiquid securities. The Advisor or Subadvisor
monitors the liquidity of each Portfolio's investments in Section 4(2) paper on
a continuing basis.


Small Company Risk. DWS Small Cap Growth VIP, DWS Balanced VIP and DWS Dreman
Small Mid Cap Value VIP intend to invest a substantial portion of their assets
in small capitalization stocks similar in size to those comprising the Russell
2000 Growth Index, for DWS Small Cap Growth VIP and the Russell 2000 Value
Index, for DWS Dreman Small Mid Cap Value VIP. Other Portfolios may invest in
small capitalization stocks to a lesser degree. Many small companies may have
sales and earnings growth rates which exceed those of larger companies and such
growth rates may in turn be reflected in more rapid share price appreciation
over time; however, investing in smaller company stocks involves greater risk
than is customarily associated with investing in larger, more established
companies. For example, smaller companies can have limited product lines,
markets, or financial and managerial resources. Smaller companies may also be
dependent on one or a few key persons, and may be more susceptible to losses and
risks of bankruptcy. Also, the securities of smaller companies may be thinly
traded (and therefore have to be sold at a discount from current market prices
or sold in small lots over an extended period of time). Transaction costs in
smaller company stocks may be higher than those of larger companies. Investors
should therefore expect that the value of the shares of the DWS Small Cap Growth
VIP and DWS Dreman Small Mid Cap Value VIP may be more volatile than the shares
of a portfolio that invests in larger capitalization stocks.


Short Sales Against-the-Box. All Portfolios (except DWS Money Market VIP) may
make short sales against-the-box for the purpose of, but not limited to,
deferring realization of loss when deemed advantageous for federal income tax
purposes. A short sale "against-the-box" is a short sale in which a Portfolio
owns at least an equal amount of the securities sold short or securities
convertible into or exchangeable for, without payment of any further
consideration, securities of the same issue as, and at least equal in amount to,
the securities sold short. A Portfolio will incur a loss as a result of the
short sale if the price of the security increases between the dates of the short
sale and the date on which a Portfolio replaces the borrowed security. A
Portfolio will incur transaction costs, including interest expenses in
connection with opening, maintaining, and closing short sales against the box.
Each Portfolio does not currently intend to engage in such short sales to the
extent that more than 5% of its net assets will be held as collateral.

Variable Rate Securities. DWS Money Market VIP may invest in Variable Rate
Securities, instruments having rates of interest that are adjusted periodically
or that "float" continuously according to formulae intended to minimize
fluctuation in values of the instruments. The interest rate of Variable Rate
Securities ordinarily is determined by reference to or is a percentage of an
objective standard such as a bank's prime rate, the 90-day US Treasury Bill
rate, or the rate of return on commercial paper or bank certificates of deposit.
Generally, the changes in the interest rate on Variable Rate Securities reduce
the fluctuation in the market value of such securities. Accordingly, as interest
rates decrease or increase, the potential for capital appreciation or
depreciation is less than for fixed-rate obligations. Some Variable Rate Demand
Securities ("Variable Rate Demand Securities") have a demand feature entitling
the purchaser to resell the securities at an amount approximately equal to
amortized cost or the principal amount thereof plus accrued interest. As is the
case for other Variable Rate Securities, the interest rate on Variable Rate
Demand Securities varies according to some objective standard intended to
minimize fluctuation in the values of the instruments. The Portfolio determines
the maturity of Variable Rate Securities in accordance with Rule 2a-7 which
allows the Portfolio to consider certain of such instruments as having
maturities shorter than the maturity date on the face of the instrument.

Strategic Transactions and Derivatives (all Portfolios except DWS Money Market
VIP). A Portfolio may, but is not required to, utilize various other investment
strategies as described below for a variety of purposes, such as hedging various
market risks, managing the effective maturity or duration of fixed-income
securities in a portfolio, or enhancing potential gain. These strategies may be
executed through the use of derivative contracts.

In the course of pursuing these investment strategies, a Portfolio may purchase
and sell exchange-listed and over-the-counter put and call options on
securities, equity and fixed-income indices and other instruments, purchase and
sell futures contracts and options thereon, enter into various transactions such
as swaps, caps, floors, collars, currency forward contracts, currency futures
contracts, currency swaps or options on currencies, or currency futures and
various other currency transactions (collectively, all the above are called
"Strategic Transactions"). In addition, Strategic Transactions may also include
new techniques, instruments or strategies that are permitted as regulatory
changes occur. Strategic Transactions may be used without limit (subject to
certain limitations imposed by the 1940 Act) to attempt to protect against
possible changes in the market value of securities held in or to be purchased
for a Portfolio resulting from securities markets or currency exchange rate
fluctuations, to protect a Portfolio's unrealized gains in the value of its
portfolio securities, to facilitate the sale of such securities for investment
purposes, to manage the effective maturity or duration of fixed-income
securities in a portfolio, or to establish a position in the derivatives markets
as a substitute for purchasing or selling particular securities. Some Strategic
Transactions may also be used to enhance potential gain although no more than 5%
of a Portfolio's assets will be committed to certain Strategic Transactions
entered into for non-hedging purposes, unless permitted by the investment
objective and policies of a Portfolio. Any or all of these investment techniques
may be used at any time and in any combination, and there is no particular
strategy that dictates the use of one technique rather than another, as use of
any Strategic Transaction is a function of numerous variables including market
conditions. The ability of a Portfolio to utilize these Strategic Transactions
successfully will depend on the Advisor's ability to predict pertinent market
movements, which cannot be assured. A Portfolio will comply with applicable
regulatory requirements when implementing these strategies, techniques and
instruments. Strategic Transactions will not be used to alter fundamental
investment purposes and characteristics of a Portfolio, and the Portfolio will
segregate assets (or as provided by applicable regulations, enter into certain
offsetting positions) to cover its obligations under options, futures and swaps
to limit leveraging of a Portfolio.

Strategic Transactions, including derivative contracts, have risks associated
with them including possible default by the other party to the transaction,
illiquidity and, to the extent the Advisor's or a subadvisor's view as to
certain market movements is incorrect, the risk that the use of such Strategic
Transactions could result in losses greater than if they had not been used. Use
of put and call options may result in losses to a Portfolio, force the sale or
purchase of portfolio securities at inopportune times or for prices higher than
(in the case of put options) or lower than (in the case of call options) current
market values, limit the amount of appreciation a Portfolio can realize on its
investments or cause a Portfolio to hold a security it might otherwise sell. The
use of currency transactions can result in a Portfolio incurring losses as a
result of a number of factors including the imposition of exchange controls,
suspension of settlements, or the inability to deliver or receive a specified
currency. The use of options and futures transactions entails certain other
risks. In particular, the variable degree of correlation between price movements
of futures contracts and price movements in the related portfolio position of a
Portfolio creates the possibility that losses on the hedging instrument may be
greater than gains in the value of a Portfolio's position. In addition, futures
and options markets may not be liquid in all circumstances and certain
over-the-counter options may have no markets. As a result, in certain markets, a
Portfolio might not be able to close out a transaction without incurring
substantial losses, if at all. Although the use of futures and options
transactions for hedging should tend to minimize the risk of loss due to a
decline in the value of the hedged position, at the same time they tend to limit
any potential gain which might result from an increase in value of such
position. Finally, the daily variation margin requirements for futures contracts
would create a greater ongoing potential financial risk than would purchases of
options, where the exposure is limited to the cost of the initial premium.
Losses resulting from the use of Strategic Transactions would reduce net asset
value, and possibly income, and such losses can be greater than if the Strategic
Transactions had not been utilized.


General Characteristics of Options . Put options and call options typically have
similar structural characteristics and operational mechanics regardless of the
underlying instrument on which they are purchased or sold. Thus, the following
general discussion relates to each of the particular types of options discussed
in greater detail below. In addition, many Strategic Transactions involving
options require segregation of a Portfolio's assets in special accounts, as
described in the section entitled "Asset Segregation."


A put option gives the purchaser of the option, upon payment of a premium, the
right to sell, and the writer the obligation to buy, the underlying security,
commodity, index, currency or other instrument at the exercise price. For
instance, each Portfolio's purchase of a put option on a security might be
designed to protect its holdings in the underlying instrument (or, in some
cases, a similar instrument) against a substantial decline in the market value
by giving each Portfolio the right to sell such instrument at the option
exercise price. A call option, upon payment of a premium, gives the purchaser of
the option the right to buy, and the seller the obligation to sell, the
underlying instrument at the exercise price. Each Portfolio's purchase of a call
option on a security, financial future, index, currency or other instrument
might be intended to protect each Portfolio against an increase in the price of
the underlying instrument that it intends to purchase in the future by fixing
the price at which it may purchase such instrument. An American style put or
call option may be exercised at any time during the option period while a
European style put or call option may be exercised only upon expiration or
during a fixed period prior thereto. Each Portfolio is authorized to purchase
and sell exchange listed options and over-the-counter options ("OTC options").
Exchange listed options are issued by a regulated intermediary such as the
Options Clearing Corporation ("OCC"), which guarantees the performance of the
obligations of the parties to such options. The discussion below uses the OCC as
an example, but is also applicable to other financial intermediaries.

With certain exceptions, OCC issued and exchange listed options generally settle
by physical delivery of the underlying security or currency, although in the
future cash settlement may become available. Index options and Eurodollar
instruments are cash settled for the net amount, if any, by which the option is
"in the-money" (i.e., where the value of the underlying instrument exceeds, in
the case of a call option, or is less than, in the case of a put option, the
exercise price of the option) at the time the option is exercised. Frequently,
rather than taking or making delivery of the underlying instrument through the
process of exercising the option, listed options are closed by entering into
offsetting purchase or sale transactions that do not result in ownership of the
new option.

Each Portfolio's ability to close out its position as a purchaser or seller of
an OCC or exchange listed put or call option is dependent, in part, upon the
liquidity of the option market. Among the possible reasons for the absence of a
liquid option market on an exchange are: (i) insufficient trading interest in
certain options; (ii) restrictions on transactions imposed by an exchange; (iii)
trading halts, suspensions or other restrictions imposed with respect to
particular classes or series of options or underlying securities including
reaching daily price limits; (iv) interruption of the normal operations of the
OCC or an exchange; (v) inadequacy of the facilities of an exchange or OCC to
handle current trading volume; or (vi) a decision by one or more exchanges to
discontinue the trading of options (or a particular class or series of options),
in which event the relevant market for that option on that exchange would cease
to exist, although outstanding options on that exchange would generally continue
to be exercisable in accordance with their terms.

The hours of trading for listed options may not coincide with the hours during
which the underlying financial instruments are traded. To the extent that the
option markets close before the markets for the underlying financial
instruments, significant price and rate movements can take place in the
underlying markets that may not be reflected in the option markets.

OTC options are purchased from or sold to securities dealers, financial
institutions or other parties ("Counterparties") through direct bilateral
agreement with the Counterparty. In contrast to exchange listed options, which
generally have standardized terms and performance mechanics, all the terms of an
OTC option, including such terms as method of settlement, term, exercise price,
premium, guarantees and security, are set by negotiation of the parties. Each
Portfolio expects generally to enter into OTC options that have cash settlement
provisions, although it is not required to do so.

Unless the parties provide for it, there is no central clearing or guaranty
function in an OTC option. As a result, if the Counterparty fails to make or
take delivery of the security, currency or other instrument underlying an OTC
option it has entered into with each Portfolio or fails to make a cash
settlement payment due in accordance with the terms of that option, each
Portfolio will lose any premium it paid for the option as well as any
anticipated benefit of the transaction. Accordingly, the Advisor must assess the
creditworthiness of each such Counterparty or any guarantor or credit
enhancement of the Counterparty's credit to determine the likelihood that the
terms of the OTC option will be satisfied. Each Portfolio will engage in OTC
option transactions only with US government securities dealers recognized by the
Federal Reserve Bank of New York as "primary dealers" or broker/dealers,
domestic or foreign banks or other financial institutions which have received
(or the guarantors of the obligation of which have received) a short-term credit
rating of A-1 from S&P or P-1 from Moody's or an equivalent rating from any
other nationally recognized statistical rating organization ("NRSRO") or, in the
case of OTC currency transactions, are determined to be of equivalent credit
quality by the Advisor. The staff of the SEC currently takes the position that
OTC options purchased by each Portfolio, and portfolio securities "covering" the
amount of each Portfolio's obligation pursuant to an OTC option sold by it (the
cost of any sell-back plus the in-the-money amount, if any) are illiquid, and
are subject to each Portfolio's limitation on investing no more than 15% of its
net assets in illiquid securities.

If each Portfolio sells a call option, the premium that it receives may serve as
a partial hedge, to the extent of the option premium, against a decrease in the
value of the underlying securities or instruments in its portfolio or will
increase each Portfolio's income. The sale of put options can also provide
income.

Each Portfolio may purchase and sell call options on securities including, but
not limited to, US Treasury and agency securities, mortgage-backed securities,
foreign sovereign debt, corporate debt securities, equity securities (including
convertible securities) and Eurodollar instruments that are traded on US and
foreign securities exchanges and in the over-the-counter markets, and on
securities indices, currencies and futures contracts. All calls sold by each
Portfolio must be "covered" (i.e., each Portfolio must own the securities or
futures contract subject to the call) or must meet the asset segregation
requirements described below as long as the call is outstanding. Even though
each Portfolio will receive the option premium to help protect it against loss,
a call sold by each Portfolio exposes each Portfolio during the term of the
option to possible loss of opportunity to realize appreciation in the market
price of the underlying security or instrument and may require each Portfolio to
hold a security or instrument which it might otherwise have sold.

Each Portfolio may purchase and sell put options on securities including, but
not limited to, US Treasury and agency securities, mortgage-backed securities,
foreign sovereign debt, corporate debt securities, equity securities (including
convertible securities), Eurodollar instruments (whether or not it holds the
above securities in its portfolio), and on securities indices, currencies and
futures contracts other than futures on individual corporate debt and individual
equity securities. Each Portfolio will not sell put options if, as a result,
more than 50% of each Portfolio's total assets would be required to be
segregated to cover its potential obligations under such put options other than
those with respect to futures and options thereon. In selling put options, there
is a risk that each Portfolio may be required to buy the underlying security at
a disadvantageous price above the market price.

General Characteristics of Futures. A Portfolio may enter into futures contracts
or purchase or sell put and call options on such futures as a hedge against
anticipated interest rate, currency or equity market changes, and for duration
management, risk management and return enhancement purposes. Futures are
generally bought and sold on the commodities exchanges where they are listed
with payment of initial and variation margin as described below. The sale of a
futures contract creates a firm obligation by a Portfolio, as seller, to deliver
to the buyer the specific type of financial instrument called for in the
contract at a specific future time for a specified price (or, with respect to
index futures and Eurodollar instruments, the net cash amount). Options on
futures contracts are similar to options on securities except that an option on
a futures contract gives the purchaser the right in return for the premium paid
to assume a position in a futures contract and obligates the seller to deliver
such position.

The Advisor has claimed an exclusion with respect to the Portfolios and the
Portfolios are excluded from the definition of the term "commodity pool
operator" under the Commodity Exchange Act and therefore are not subject to
commodity pool operator registration and regulation under the Commodity Exchange
Act. Futures and options on futures may be entered into for bona fide hedging,
risk management (including duration management) or other portfolio and return
enhancement management purposes to the extent consistent with the exclusion from
commodity pool operator registration. Typically, maintaining a futures contract
or selling an option thereon requires a Portfolio to deposit with a financial
intermediary or futures commission merchant as security for its obligations an
amount of cash or other specified assets (initial margin) which initially is
typically 1% to 10% of the face amount of the contract (but may be higher in
some circumstances). Additional cash or assets (variation margin) may be
required to be deposited thereafter on a daily basis as the mark to market value
of the contract fluctuates. The purchase of an option on financial futures
involves payment of a premium for the option without any further obligation on
the part of a Portfolio. If a Portfolio exercises an option on a futures
contract it will be obligated to post initial margin (and potential subsequent
variation margin) for the resulting futures position just as it would for any
position. Futures contracts and options thereon are generally settled by
entering into an offsetting transaction but there can be no assurance that the
position can be offset prior to settlement at an advantageous price, nor that
delivery will occur.

Options on Securities Indices and Other Financial Indices. A Portfolio also may
purchase and sell call and put options on securities indices and other financial
indices and in so doing can achieve many of the same objectives it would achieve
through the sale or purchase of options on individual securities or other
instruments. Options on securities indices and other financial indices are
similar to options on a security or other instrument except that, rather than
settling by physical delivery of the underlying instrument, they settle by cash
settlement, i.e., an option on an index gives the holder the right to receive,
upon exercise of the option, an amount of cash if the closing level of the index
upon which the option is based exceeds, in the case of a call, or is less than,
in the case of a put, the exercise price of the option (except if, in the case
of an OTC option, physical delivery is specified). This amount of cash is equal
to the excess of the closing price of the index over the exercise price of the
option, which also may be multiplied by a formula value. The seller of the
option is obligated, in return for the premium received, to make delivery of
this amount. The gain or loss on an option on an index depends on price
movements in the instruments making up the market, market segment, industry or
other composite on which the underlying index is based, rather than price
movements in individual securities, as is the case with respect to options on
securities.

Currency Transactions. A Portfolio may engage in currency transactions with
Counterparties primarily in order to hedge, or manage the risk of the value of
portfolio holdings denominated in particular currencies against fluctuations in
relative value or to enhance returns. Currency transactions include forward
currency contracts, exchange listed currency futures, exchange listed and OTC
options on currencies, and currency swaps. A forward currency contract involves
a privately negotiated obligation to purchase or sell (with delivery generally
required) a specific currency at a future date, which may be any fixed number of
days from the date of the contract agreed upon by the parties, at a price set at
the time of the contract. A currency swap is an agreement to exchange cash flows
based on the notional difference among two or more currencies and operates
similarly to an interest rate swap, which is described below. A Portfolio may
enter into currency transactions with Counterparties which have received (or the
guarantors of the obligations which have received) a credit rating of A-1 or P-1
by S&P or Moody's, respectively, or that have an equivalent rating from a NRSRO
or (except for OTC currency options) are determined to be of equivalent credit
quality by the Advisor or a subadvisor.

With respect to hedging, a Portfolio's dealings in forward currency contracts
and other currency transactions such as futures, options, options on futures and
swaps may involve hedging either specific transactions or portfolio positions
except as described below. Transaction hedging is entering into a currency
transaction with respect to specific assets or liabilities of a Portfolio, which
will generally arise in connection with the purchase or sale of its portfolio
securities or the receipt of income therefrom. Position hedging is entering into
a currency transaction with respect to portfolio security positions denominated
in, exposed to or generally quoted in that currency.

To the extent a Portfolio intends to hedge its currency exposure, a Portfolio
generally will not enter into a transaction and obtain exposure to an extent
greater, after netting all transactions intended wholly or partially to offset
other transactions, than the aggregate market value (at the time of entering
into the transaction) of the securities held in its portfolio that are
denominated in, exposed to or generally quoted in or currently convertible into
such currency, other than with respect to proxy hedging or cross hedging as
described below.

A Portfolio may also cross-hedge currencies by entering into transactions to
purchase or sell one or more currencies that are expected to decline in value
relative to other currencies to which a Portfolio has or in which a Portfolio
expects to have portfolio exposure.

To reduce the effect of currency fluctuations on the value of existing or
anticipated holdings of portfolio securities, a Portfolio may also engage in
proxy hedging. Proxy hedging is often used when the currency to which a
Portfolio's portfolio is exposed is difficult to hedge or to hedge against the
dollar. Proxy hedging entails entering into a commitment or option to sell a
currency whose changes in value are generally considered to be correlated to a
currency or currencies in which some or all of a Portfolio's portfolio
securities are or are expected to be denominated, in exchange for US dollars.
The amount of the commitment or option would not exceed the value of a
Portfolio's securities denominated in correlated currencies. Currency hedging
involves some of the same risks and considerations as other transactions with
similar instruments. Currency transactions can result in losses to a Portfolio
if the currency being hedged fluctuates in value to a degree or in a direction
that is not anticipated. Further, there is the risk that the perceived
correlation between various currencies may not be present or may not be present
during the particular time that a Portfolio is engaging in proxy hedging. If a
Portfolio enters into a currency hedging transaction, a Portfolio will comply
with the asset segregation requirements described below.

Risks of Currency Transactions. Currency transactions are subject to risks
different from those of other portfolio transactions. Because currency control
is of great importance to the issuing governments and influences economic
planning and policy, purchases and sales of currency and related instruments can
be negatively affected by government exchange controls, blockages, and
manipulations or exchange restrictions imposed by governments. These can result
in losses to a Portfolio if it is unable to deliver or receive currency or funds
in settlement of obligations and could also cause hedges it has entered into to
be rendered useless, resulting in full currency exposure as well as incurring
transaction costs. Buyers and sellers of currency futures are subject to the
same risks that apply to the use of futures generally. Further, settlement of a
currency futures contract for the purchase of most currencies must occur at a
bank based in the issuing nation. Trading options on currency futures is
relatively new, and the ability to establish and close out positions on such
options is subject to the maintenance of a liquid market which may not always be
available. Currency exchange rates may fluctuate based on factors extrinsic to
that country's economy.

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

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

DWS Balanced VIP and DWS Strategic Income VIP may invest up to 15% of its total
assets in credit default swaps (measured by the notional amount of the credit
default swap). A credit default swap is a contract between a buyer and a seller
of protection against a pre-defined credit event. The buyer of protection pays
the seller a fixed regular fee provided that no event of default on an
underlying reference obligation has occurred. If an event of default occurs, the
seller must pay the buyer the full notional value, or "par value," of the
reference obligation in exchange for the reference obligation. Credit default
swaps are used as a means of "buying" credit protection, i.e., attempting to
mitigate the risk of default or credit quality deterioration in some portion of
the Portfolio's holdings, or "selling" credit protection, i.e., attempting to
gain exposure to an underlying issuer's credit quality characteristics without
directly investing in that issuer. No more than 5% of each DWS Balanced VIP and
DWS Strategic Income VIP's total assets may be invested in credit default swaps
for purposes of buying credit protection on individual securities if the
Portfolio does not own the underlying security or securities at the time of
investment. Where the Portfolio is a seller of credit protection, it effectively
adds leverage to its portfolio because, in addition, to its total net assets,
the Portfolio would be subject to investment exposure on the notional amount of
the swap. The Portfolio will only sell credit protection with respect to
securities in which it would be authorized to invest directly. The Portfolio
currently considers credit default swaps to be illiquid and treats the market
value of the contract as illiquid for purposes of determining compliance with
the Portfolio's restrictions on investing in illiquid securities.

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

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

Eurodollar Instruments. The Fund may make investments in Eurodollar instruments
for hedging purposes or to enhance potential gain. Eurodollar instruments are US
dollar-denominated futures contracts or options thereon which are linked to the
London Interbank Offered Rate ("LIBOR"), although foreign currency-denominated
instruments are available from time to time. Eurodollar futures contracts enable
purchasers to obtain a fixed rate for the lending of funds and sellers to obtain
a fixed rate for borrowings. The Fund might use Eurodollar futures contracts and
options thereon to hedge against changes in LIBOR, to which many interest rate
swaps and fixed income instruments are linked.

Commodity-Linked Derivative Instruments. DWS Balanced VIP may invest in
commodity-linked derivative instruments, in particular in structured notes. The
value of a commodity-linked derivative instrument typically is based on the
price movements of a physical commodity, a commodity futures contract or
commodity index, or some other readily measurable economic variable dependent
upon changes in the value of commodities or the commodities markets. The
Portfolio invests in commodity-linked derivative investments that are hybrid
instruments excluded from regulation under the Commodity Exchange Act and the
rules thereunder. Additionally, from time to time the Portfolio may invest in
other hybrid instruments that do not qualify for exemption from regulation under
the Commodity Exchange Act.

The Portfolio will invest in derivative debt instruments with principal and/or
coupon payments linked to the value of commodities, commodity futures contracts,
or the performance of commodity indices. These are "commodity-linked" or
"index-linked" notes. They are sometimes referred to as "structured notes"
because the terms of the debt instrument may be structured by the issuer of the
note and the purchaser of the note, such as the Portfolio. These notes may be
issued by banks, brokerage firms, insurance companies and other corporations.

The values of these notes will rise and fall in response to changes in the
underlying commodity or related index or investment. These notes expose the
Portfolio economically to movements in commodity prices, but a particular note
is primarily a debt obligation. These notes also are subject to credit and
interest rate risks that in general affect the value of debt securities.
Therefore, at the maturity of the note, the Portfolio may receive more or less
principal than it originally invested. The Portfolio might receive interest
payments on the note that are more or less than the stated coupon interest rate
payments.


The structured notes the Portfolio enters into are expected to involve leverage,
meaning that the value of the instrument will be calculated as a multiple of the
upward or downward price movement of the underlying index. The prices of
commodity-linked instruments may move in different directions than investments
in traditional equity and debt securities in periods of rising inflation. Of
course, there can be no guarantee that the Portfolio's commodity-linked
investments would not be correlated with traditional financial assets under any
particular market conditions.


Commodity-linked structured notes may be issued by US and foreign banks,
brokerage firms, insurance companies and other corporations. These notes are
debt securities of the issuer and so, in addition to fluctuating in response to
changes in the underlying commodity index, will be subject to credit and
interest rate risks that typically affect debt securities.


The commodity-linked instruments the Portfolio invests in may be wholly
principal protected, partially principal protected or offer no principal
protection. With a wholly principal protected instrument, the Portfolio will
receive at maturity the greater of the par value of the note or the increase in
value of the underlying index. Partially protected instruments may suffer some
loss of principal up to a specified limit if the underlying index declines in
value during the term of the instrument. For instruments without principal
protection, there is a risk that the instrument could lose all of its value if
the index declines sufficiently. The Advisor's decision on whether and to what
extent to use principal protection depends in part on the cost of the
protection. In addition, the ability of the Portfolio to take advantage of any
protection feature depends on the creditworthiness of the issuer of the
instrument.

Derivative strategies and the writing of uncovered (or so-called "naked")
options are speculative and may hurt a Portfolio's performance. The Portfolio
may attempt to hedge its investments in order to mitigate risk, but it is not
required to do so. The benefits to be derived from a Portfolio's derivatives and
options strategy are dependent upon the Advisor's ability to discern pricing
inefficiencies and predict trends in the commodities and other markets, which
decisions could prove to be inaccurate. This requires different skills and
techniques than predicting changes in the price of individual stocks or
fixed-income securities, and there can be no assurance that the use of this
strategy will be successful.


Risks of Strategic Transactions Outside the US. When conducted outside the US,
Strategic Transactions may not be regulated as rigorously as in the US, may not
involve a clearing mechanism and related guarantees, and are subject to the risk
of governmental actions affecting trading in, or the prices of, foreign
securities, currencies and other instruments. The value of such positions also
could be adversely affected by: (i) other complex foreign political, legal and
economic factors, (ii) lesser availability than in the US of data on which to
make trading decisions, (iii) delays in a Portfolio's ability to act upon
economic events occurring in foreign markets during non-business hours in the
US, (iv) the imposition of different exercise and settlement terms and
procedures and margin requirements than in the US, and (v) lower trading volume
and liquidity.

Combined Transactions. A Portfolio may enter into multiple transactions,
including multiple options transactions, multiple futures transactions, multiple
currency transactions (including forward currency contracts) and multiple
interest rate transactions and any combination of futures, options, currency and
interest rate transactions ("component" transactions), instead of a single
Strategic Transaction, as part of a single or combined strategy when, in the
opinion of the Advisor or Subadvisor, it is in the best interests of a Portfolio
to do so. A combined transaction will usually contain elements of risk that are
present in each of its component transactions. Although combined transactions
are normally entered into based on the Advisor's or a subadvisor's judgment that
the combined strategies will reduce risk or otherwise more effectively achieve
the desired portfolio management goal, it is possible that the combination will
instead increase such risks or hinder achievement of the portfolio management
objective.


Warrants. Each Portfolio (except DWS Money Market VIP) may invest in warrants up
to five percent of the value of its respective net assets. The holder of a
warrant has the right, until the warrant expires, to purchase a given number of
shares of a particular issuer at a specified price. Such investments can provide
a greater potential for profit or loss than an equivalent investment in the
underlying security. Prices of warrants do not necessarily move, however, in
tandem with the prices of the underlying securities and are, therefore,
considered speculative investments. Warrants pay no dividends and confer no
rights other than a purchase option. Thus, if a warrant held by a Portfolio were
not exercised by the date of its expiration, a Portfolio would lose the entire
purchase price of the warrant.

Zero Coupon Government Securities. Subject to its investment objective and
policies, a Portfolio may invest in zero coupon US Government securities. Zero
coupon bonds are purchased at a discount from the face amount. The buyer
receives only the right to receive a fixed payment on a certain date in the
future and does not receive any periodic interest payments. These securities may
include those created directly by the US Treasury and those created as
collateralized obligations through various proprietary custodial, trust or other
relationships. The effect of owning instruments which do not make current
interest payments is that a fixed yield is earned not only on the original
investment but also, in effect, on all discount accretion during the life of the
obligations. This implicit reinvestment of earnings at the same rate eliminates
the risk of being unable to reinvest distributions at a rate as high as the
implicit yield on the zero coupon bond, but at the same time eliminates any
opportunity to reinvest earnings at higher rates. For this reason, zero coupon
bonds are subject to substantially greater price fluctuations during periods of
changing market interest rates than those of comparable securities that pay
interest currently, which fluctuation is greater as the period to maturity is
longer. Zero coupon bonds created as collateralized obligations are similar to
those created through the US Treasury, but the former investments do not provide
absolute certainty of maturity or of cash flows after prior classes of the
collateralized obligations are retired. No Portfolio currently intends to invest
more than 20% of its net assets in zero coupon US Government securities.

CERTAIN INVESTMENT POLICIES AND TECHNIQUES OF DWS FLOATING RATE PLUS FUND

Of the Portfolios listed in this Statement of Additional Information, only DWS
Strategic Income VIP may invest in shares of DWS Floating Rate Plus Fund. DWS
Floating Rate Plus Fund invests primarily in Senior Loans and may borrow for
investment purposes, as described below.

Senior Loans. DWS Floating Rate Plus Fund may invest in Senior Loans. Senior
Loans are direct obligations of corporations or other business entities and are
generally arranged by banks or other commercial lending institutions and made
generally to finance internal growth, mergers, acquisitions, stock repurchases
and leveraged buyouts. Senior Loans may include restrictive covenants which must
be maintained by the borrower. Such covenants, in addition to the timely payment
of interest and principal, may include mandatory prepayment provisions arising
from free cash flow, restrictions on dividend payments and usually state that a
borrower must maintain specific minimum financial ratios as well as establishing
limits on total debt. A breach of covenant, which is not waived by the agent, is
normally an event of acceleration, i.e., the agent has the right to call the
outstanding Senior Loan. In addition, loan covenants may include mandatory
prepayment provisions stemming from free cash flow. Free cash flow is cash that
is in excess of capital expenditures plus debt service requirements of principal
and interest. The free cash flow shall be applied to prepay the Senor Loan in an
order of maturity described in the loan documents. Under certain interests in
Senior Loans, the fund may have an obligation to make additional loans upon
demand by the borrower. The fund intends to reserve against such contingent
obligations by segregating sufficient assets in high quality short-term liquid
investments or borrowing to cover such obligations.

The fund's investment in Senior Loans may take the form of purchase of an
assignment or a portion of a Senior Loan from a third party ("assignment") or
acquiring a participation in a Senior Loan ("participation"). The fund may pay a
fee or forego a portion of interest payments to the lender selling a
participation or assignment under the terms of such participation or assignment.
When the fund is a purchaser of an assignment, it typically succeeds to all the
rights and obligations under the loan agreement of the assigning lender and
becomes a lender under the loan agreement with the same rights and obligations
as the assigning lender. Assignments are, however, arranged through private
negotiations between potential assignees and potential assignors, and the rights
and obligations acquired by the purchaser of an assignment may be more limited
than those held by the assigning lender. The fund may also invest in
participations in Senior Loans. With respect to any given Senior Loan, the
rights of the fund when it acquires a participation may be more limited than the
rights of the original lenders or of investors who acquire an assignment.
Participations may entail certain risks relating to the creditworthiness of the
parties from which the participations are obtained.

In a typical interest in a Senior Loan, the agent administers the loan and has
the right to monitor the collateral. The agent is also required to segregate the
principal and interest payments received from the borrower and to hold these
payments for the benefit of the lenders. The fund normally looks to the agent to
collect and distribute principal of and interest on a Senior Loan. Furthermore,
the fund looks to the agent to use normal credit remedies, such as to foreclose
on collateral; monitor credit loan covenants; and notify the lenders of any
adverse changes in the borrower's financial condition or declarations of
insolvency. In the event of a default by the borrower, it is possible, though
unlikely, that the fund could receive a portion of the borrower's collateral. If
the fund receives collateral other than cash, such collateral will be liquidated
and the cash received from such liquidation will be available for investment as
part of the fund's portfolio. At times the fund may also negotiate with the
agent regarding the agent's exercise of credit remedies under a Senior Loan. The
agent is compensated for these services by the borrower as is set forth in the
loan agreement. Such compensation may take the form of a fee or other amount
paid upon the making of the Senior Loan and/or an ongoing fee or other amount.

The loan agreement in connection with Senior Loans sets forth the standard of
care to be exercised by the agents on behalf of the lenders and usually provides
for the termination of the agent's agency status in the event that it fails to
act properly, becomes insolvent, enters FDIC receivership, or if not FDIC
insured, enters into bankruptcy or if the agent resigns. In the event an agent
is unable to perform its obligations as agent, another lender would generally
serve in that capacity.

The fund believes that the principal credit risk associated with acquiring
Senior Loans from another lender is the credit risk associated with the borrower
of the underlying Senior Loan. The fund may incur additional credit risk,
however, when the fund acquires a participation in a Senior Loan from another
lender because the fund must assume the risk of insolvency or bankruptcy of the
other lender from which the Senior Loan was acquired. However, in acquiring
Senior Loans, the fund conducts an analysis and evaluation of the financial
condition of each such lender. The fund has taken the following measures in an
effort to reduce such risks. The fund will only acquire participations in Senior
Loans if the lender selling the participation, and any other persons
interpositioned between the fund and the lender, at the time of investment has
outstanding debt or deposit obligations rated investment grade (BBB or A-3 or
higher by Standards & Poor's Ratings Group ("S&P") or Baa or P-3 or higher by
Moody's Investors Service ("Moody's")) or determined by the Advisor to be of
comparable quality. Long-term debt rated BBB by S&P is regarded by S&P as having
adequate capacity to pay interest and repay principal and debt rated Baa by
Moody's is regarded by Moody's as a medium grade obligation, i.e., it is neither
highly protected nor poorly secured. Commercial paper rated A-1 by S&P indicates
that the degree of safety regarding timely payment is considered by S&P to be
either overwhelming or very strong and issues of commercial paper rated Prime-1
by Moody's are considered by Moody's to have a superior ability for repayment of
senior short-term debt obligations.

Senior Loans, unlike certain bonds, usually do not have call protection. This
means that interests comprising the fund's portfolio, while having a stated one
to ten-year term, may be prepaid, often without penalty. The fund generally
holds Senior Loans to maturity unless it has become necessary to sell them to
adjust the fund's portfolio in accordance with the Advisor's view of current or
expected economic or specific industry or borrower conditions.

Senior Loans frequently require full or partial prepayment of a loan when there
are asset sales or a securities issuance. Prepayments on Senior Loans may also
be made by the borrower at its election. The rate of such prepayments may be
affected by, among other things, general business and economic conditions, as
well as the financial status of the borrower. Prepayment would cause the actual
duration of a Senior Loan to be shorter than its stated maturity. Prepayment may
be deferred by the fund. This should, however, allow the fund to reinvest in a
new loan and recognize as income any unamortized loan fees. This may result in a
new facility fee payable to the fund.

Because interest rates paid on these Senior Loans periodically fluctuate with
the market, it is expected that the prepayment and a subsequent purchase of a
new Senior Loan by the fund will not have a material adverse impact on the yield
of the portfolio. See "Portfolio Transactions."

Under a Senior Loan, the borrower generally must pledge as collateral assets
which may include one or more of the following: cash; accounts receivable;
inventory; property, plant and equipment; both common and preferred stock in its
subsidiaries; trademarks, copyrights, patent rights; and franchise value. The
fund may also receive guarantees as a form of collateral. In some instances, a
Senior Loan may be secured only by stock in a borrower or its affiliates. The
fund may also invest in Senior Loans not secured by any collateral. The market
value of the assets serving as collateral (if any) will, at the time of
investment, in the opinion of the Advisor, equal or exceed the principal amount
of the Senior Loan. The valuations of these assets may be performed by an
independent appraisal. If the agent becomes aware that the value of the
collateral has declined, the agent may take action as it deemed necessary for
the protection of its own interests and the interests of the other lenders,
including, for example, giving the borrower an opportunity to provide additional
collateral or accelerating the loan. There is no assurance, however, that the
borrower would provide additional collateral or that the liquidation of the
existing collateral would satisfy the borrower's obligation in the event of
nonpayment of scheduled interest or principal, or that such collateral could be
readily liquidated.

The fund may be required to pay and may receive various fees and commissions in
the process of purchasing, selling and holding Senior Loans. The fee component
may include any, or a combination of, the following elements: arrangement fees,
non-use fees, facility fees, letter of credit fees and ticking fees. Arrangement
fees are paid at the commencement of a loan as compensation for the initiation
of the transaction. A non-use fee is paid based upon the amount committed but
not used under the loan. Facility fees are on-going annual fees paid in
connection with a loan. Letter of credit fees are paid if a loan involves a
letter of credit. Ticking fees are paid from the initial commitment indication
until loan closing if for an extended period. The amount of fees is negotiated
at the time of transaction.

If legislation or state or federal regulators impose additional requirements or
restrictions on the ability of financial institutions to make loans that are
considered highly leveraged transactions, the availability of Senior Loans for
investment by the fund may be adversely affected. In addition, such requirements
or restrictions could reduce or eliminate sources of financing for certain
borrowers. This would increase the risk of default. If legislation or federal or
state regulators require financial institutions to dispose of Senior Loans that
are considered highly leveraged transactions or subject such Senior Loans to
increased regulatory scrutiny, financial institutions may determine to sell such
Senior Loans. Such sales could result in prices that, in the opinion of the
Advisor, do not represent fair value. If the fund attempts to sell a Senior Loan
at a time when a financial institution is engaging in such a sale, the price the
fund could get for the Senior Loan may be adversely affected.

Borrowing. DWS Floating Rate Plus Fund may borrow money from banks for
investment purposes to the extent permitted by the 1940 Act. This practice is
known as leverage. Currently, under the 1940 Act, the fund may borrow up to
one-third of its total assets (including the amount borrowed) provided that it
maintains continuous asset coverage of 300% with respect to such borrowings and
sells (within three days) sufficient portfolio holdings to restore such coverage
if it should decline to less than 300% due to market fluctuations or otherwise,
even if disadvantageous from an investment standpoint. The fund may borrow
through other means to the extent permitted by the 1940 Act. In addition to
borrowing for leverage purposes, the fund also may borrow money to meet
redemptions in order to avoid forced, unplanned sales of portfolio securities or
for other temporary or emergency purposes. This allows the fund greater
flexibility to buy and sell portfolio securities for investment or tax
considerations, rather than for cash flow considerations.

The use of borrowing by the fund involves special risk considerations that may
not be associated with other funds having similar policies. Because
substantially all of the fund's assets fluctuate in value, whereas the interest
obligation resulting from a borrowing may be fixed by the terms of the fund's
agreement with its lender, the net asset value per share of the funds will tend
to increase more when its portfolio securities increase in value and decrease
more when its portfolio securities decrease in value than would otherwise be the
case if the fund did not borrow funds. In addition, interest costs on borrowings
may fluctuate with changing market rates of interest and may partially offset or
exceed the return earned on borrowed funds. Under adverse market conditions, the
fund might have to sell portfolio securities to meet interest or principal
payments at a time when fundamental investment considerations would not favor
such sales. The interest that the fund must pay on borrowed money, together with
any additional fees to establish and maintain a borrowing facility, are
additional costs that will reduce or eliminate any net investment income and may
also offset any potential capital gains. Unless appreciation and income, if any,
on assets acquired with borrowed funds exceed the costs of borrowing, the use of
leverage will diminish the investment performance of the fund compared with what
it would have been without leverage.

                             MANAGEMENT OF THE FUND

Investment Advisor

DIMA, which is part of Deutsche Asset Management ("DeAM"), is the investment
advisor for each Portfolio. Under the supervision of the Board of Trustees of
the Fund, with headquarters at 345 Park Avenue, New York, New York 10154, DIMA
or a subadvisor, makes each Portfolio's investment decisions, buys and sells
securities for each Portfolio and conducts research that leads to these purchase
and sale decisions. The Advisor or a subadvisor manages each Portfolio's daily
investment and business affairs subject to the policies established by the
Fund's Board of Trustees. DIMA and its predecessors have more than 80 years of
experience managing mutual funds. DIMA provides a full range of investment
advisory services to institutional and retail clients. Each Portfolio's
investment advisor or subadvisor is also responsible for selecting brokers and
dealers and for negotiating brokerage commissions and dealer charges.

DeAM is the marketing name in the US for the asset management activities of
Deutsche Bank AG, DIMA, Deutsche Bank Trust Company Americas and DWS Trust
Company. DeAM is a global asset management organization that offers a wide range
of investing expertise and resources, including hundreds of portfolio managers
and analysts and an office network that reaches the world's major investment
centers. This well-resourced global investment platform brings together a wide
variety of experience and investment insight, across industries, regions, asset
classes and investing styles. DIMA is an indirect, wholly owned subsidiary of
Deutsche Bank AG. Deutsche Bank AG is a major global banking institution that is
engaged in a wide range of financial services, including investment management,
mutual fund, retail, private and commercial banking, investment banking and
insurance. DWS Investments is part of Deutsche Bank's Asset Management division
and, within the US, represents the retail asset management activities of
Deutsche Bank AG, Deutsche Bank Trust Company Americas, Deutsche Investment
Management Americas Inc. and DWS Trust Company.

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

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




Michael Sieghart provides consulting services to DIMA in connection with the
investment management services provided by the Advisor to DWS International VIP.
Michael Sieghart is employed by Deutsche Asset Management International GmbH
("DeAMi"), Mainzer Landstrasse 178-190, 60325 Frankfurt am Main, Germany, an
investment advisor registered with the US Securities and Exchange Commission.
DeAMi is an affiliate of DIMA and a subsidiary of Deutsche Bank AG.

The Board and the shareholders of each Portfolio approved an amended and
restated investment management agreement (the "Investment Management Agreement")
for the Portfolios. Pursuant to the Investment Management Agreement for each
Portfolio, the Advisor provides continuing investment management of the assets
of a Portfolio. In addition to the investment management of the assets of the
Portfolios, the Advisor determines the investments to be made for the Portfolio,
including what portion of its assets remain uninvested in cash or cash
equivalents, and with whom the orders for investments are placed, consistent
with the Portfolio's policies as stated in its prospectus and SAI, or as adopted
by the Portfolio's Board. The Advisor will also monitor, to the extent not
monitored by the Portfolio's administrator or other agent, the Portfolio's
compliance with its investment and tax guidelines and other compliance policies.


The Advisor provides assistance to the Portfolio's Board in valuing the
securities and other instruments held by the Portfolio, to the extent reasonably
required by valuation policies and procedures that may be adopted by the Fund.

Pursuant to the Investment Management Agreement, (unless otherwise provided in
the agreement or as determined by the Portfolio's Board and to the extent
permitted by applicable law), the Advisor pays the compensation and expenses of
all the Board members, officers, and executive employees of the Portfolio,
including the Portfolio's share of payroll taxes, who are affiliated persons of
the Advisor.

The Investment Management Agreement provides that the Portfolio is generally
responsible for expenses that include: fees payable to the Advisor; outside
legal, accounting or auditing expenses, including with respect to expenses
related to negotiation, acquisition or distribution of portfolio investments;
maintenance of books and records that are maintained by the Portfolio, the
Portfolio's custodian, or other agents of the Portfolio; taxes and governmental
fees; fees and expenses of the Portfolio's accounting agent, custodian,
sub-custodians, depositories, transfer agents, dividend reimbursing agents and
registrars; payment for portfolio pricing or valuation services to pricing
agents, accountants, bankers and other specialists, if any; brokerage
commissions or other costs of acquiring or disposing of any portfolio securities
or other instruments of the Portfolio; and litigation expenses and other
extraordinary expenses not incurred in the ordinary course of the Portfolio's
business.

The Investment Management Agreement allows the Advisor to delegate any of its
duties under the Agreement to a subadvisor, subject to a majority vote of the
Board of the Portfolio, including a majority of the Board who are not interested
persons of the Portfolio, and, if required by applicable law, subject to a
majority vote of the Portfolio's shareholders.


The Investment Management Agreement continues in effect from year to year only
if its continuance is approved annually by the vote of a majority of those
Trustees who are not parties to the Investment Management Agreement or
interested persons of the Advisor or the Fund, cast in person at a meeting
called for the purpose of voting on such approval, and either by a vote of the
Fund's Trustees or of a majority of the outstanding voting securities of the
respective Portfolio. The Investment Management Agreement may be terminated at
any time without payment of penalty by either party on sixty days' written
notice and automatically terminates in the event of its assignment.

The Investment Management Agreement provides that the Advisor shall not be
liable for any error of judgment or mistake of law or for any loss suffered by
the Portfolio in connection with matters to which the agreement relates, except
a loss resulting from willful malfeasance, bad faith or gross negligence on the
part of the Advisor in the performance of its duties or from reckless disregard
by the Advisor of its obligations and duties under the agreement.


For all services provided under the Investment Management Agreement, each
Portfolio pays the Advisor a fee, computed daily and paid monthly, at the annual
rate as a percentage of net assets shown below:

<TABLE>
<CAPTION>
                      Portfolio                                         Management Fee Rate
                      ---------                                         -------------------

<S>                                                                           <C>
DWS Balanced VIP                                                       0.370% to $250 million
                                                                       0.345% next $750 million
                                                                       0.310% thereafter

DWS Blue Chip VIP                                                      0.550% to $250 million
                                                                       0.520% to next $750 million
                                                                       0.500% to next $1.5 billion
                                                                       0.480% to next $2.5 billion
                                                                       0.450% to next $2.5 billion
                                                                       0.430% to next $2.5 billion
                                                                       0.410% to next $2.5 billion
                                                                       0.390% thereafter

DWS Core Fixed Income VIP                                              0.500% to $250 million
                                                                       0.470% next $750 million
                                                                       0.450% next $1.5 billion
                                                                       0.430% next $2.5 billion
                                                                       0.400% next $2.5 billion
                                                                       0.380% next $2.5 billion
                                                                       0.360% next $2.5 billion
                                                                       0.340% thereafter

DWS Diversified International Equity VIP                               0.650% to $1.5 billion
                                                                       0.635% next $1.75 billion
                                                                       0.620% next $1.75 billion
                                                                       0.605% thereafter

DWS Dreman Small Mid Cap Value VIP                                     0.650% to $250 million
                                                                       0.620% next $750 million
                                                                       0.600% next $1.5 billion
                                                                       0.580% next $2.5 billion
                                                                       0.550% next $2.5 billion
                                                                       0.540% next $2.5 billion
                                                                       0.530% next $2.5 billion
                                                                       0.520% thereafter

DWS Global Thematic VIP                                                0.915% to $250 million
                                                                       0.865% next $500 million
                                                                       0.815% next $750 million
                                                                       0.765% next $1.5 billion
                                                                       0.715% thereafter

DWS Government & Agency Securities VIP                                 0.450% to $250 million
                                                                       0.430% next $750 million
                                                                       0.410% next $1.5 billion
                                                                       0.400% next $2.5 billion
                                                                       0.380% next $2.5 billion
                                                                       0.360% next $2.5 billion
                                                                       0.340% next $2.5 billion
                                                                       0.320% thereafter

DWS High Income VIP                                                    0.500% to $250 million
                                                                       0.470% next $750 million
                                                                       0.450% next $1.5 billion
                                                                       0.430% next $2.5 billion
                                                                       0.400% next $2.5 billion
                                                                       0.380% next $2.5 billion
                                                                       0.360% next $2.5 billion
                                                                       0.340% thereafter







DWS Large Cap Value VIP                                                0.650% to $250 million
                                                                       0.625% next $750 million
                                                                       0.600% next $1.5 billion
                                                                       0.575% next $2.5 billion
                                                                       0.550% next $2.5 billion
                                                                       0.525% next $2.5 billion
                                                                       0.500% next $2.5 billion
                                                                       0.475% thereafter


DWS Mid Cap Growth VIP                                                 0.665% to $250 million
                                                                       0.635% next $750 million
                                                                       0.615% next $1.5 billion
                                                                       0.595% next $2.5 billion
                                                                       0.565% next $2.5 billion
                                                                       0.555% next $2.5 billion
                                                                       0.545% next $2.5 billion
                                                                       0.535% thereafter

DWS Money Market VIP                                                   0.285% to $500 million
                                                                       0.270% next $500 million
                                                                       0.255% next $1.0 billion
                                                                       0.240% thereafter

DWS Small Cap Growth VIP                                               0.550% to $250 million
                                                                       0.525% next $750 million
                                                                       0.500% thereafter

DWS Strategic Income VIP                                               0.550% to $250 million
                                                                       0.520% next $750 million
                                                                       0.50% next $1.5 billion
                                                                       0.48% next $2.5 billion
                                                                       0.450% next $1.5 billion
                                                                       0.430% next $2.5 billion
                                                                       0.410% next $2.5 billion
                                                                       0.390% thereafter

DWS Strategic Value VIP                                                0.665% to $250 million
                                                                       0.635% next $750 million
                                                                       0.615% next $1.5 billion
                                                                       0.595% next $2.5 billion
                                                                       0.565% next $2.5 billion
                                                                       0.555% next $2.5 billion
                                                                       0.545% next $2.5 billion
                                                                       0.535% thereafter

DWS Technology VIP                                                     0.665% to $250 million
                                                                       0.635% next $750 million
                                                                       0.615% next $1.5 billion
                                                                       0.595% next $2.5 billion
                                                                       0.565% next $2.5 billion
                                                                       0.555% next $2.5 billion
                                                                       0.545% next $2.5 billion
                                                                       0.535% thereafter

DWS Turner Mid Cap Growth VIP                                          0.715% to $250 million
                                                                       0.700% next $250 million
                                                                       0.685% next $500 million
                                                                       0.670% thereafter



Prior to May 1, 2008 (April 11, 2007 for DWS Large Cap Value VIP), the
Portfolios listed below each paid the Advisor a graduated investment management
fee, based on the average daily net assets of a Portfolio, payable monthly, at
the annual rates shown below. The prior investment management agreement for each
Portfolio included the provision of administrative services:


DWS Blue Chip VIP and DWS Strategic Income VIP


Average Daily Net Assets                                                              Fee Rate
------------------------                                                              --------
First $250 million                                                                     0.650%
next $750 million                                                                      0.620%
next $1.5 billion                                                                      0.600%
next $2.5 billion                                                                      0.580%
next $2.5 billion                                                                      0.550%
next $2.5 billion                                                                      0.530%
next $2.5 billion                                                                      0.510%
Over $12.5 billion                                                                     0.490%

DWS Core Fixed Income VIP and DWS High Income VIP


Average Daily Net Assets                                                              Fee Rate
------------------------                                                              --------
First $250 million                                                                     0.600%
next $750 million                                                                      0.570%
next $1.5 billion                                                                      0.550%
next $2.5 billion                                                                      0.530%
next $2.5 billion                                                                      0.500%
next $2.5 billion                                                                      0.480%
next $2.5 billion                                                                      0.460%
Over $12.5 billion                                                                     0.440%


DWS Diversified International Equity VIP



Average Daily Net Assets                                                              Fee Rate
------------------------                                                              --------
First $1.5 billion                                                                     0.750%
next $1.75 billion                                                                     0.735%
next $1.75 billion                                                                     0.720%
Over $5 billion                                                                        0.705%

DWS Dreman Small Mid Cap Value VIP


Average Daily Net Assets                                                              Fee Rate
------------------------                                                              --------
First $250 million                                                                     0.750%
next $750 million                                                                      0.720%
next $1.5 billion                                                                      0.700%
next $2.5 billion                                                                      0.680%
next $2.5 billion                                                                      0.650%
next $2.5 billion                                                                      0.640%
next $2.5 billion                                                                      0.630%
Over $12.5 billion                                                                     0.620%

DWS Government & Agency Securities VIP


Average Daily Net Assets                                                              Fee Rate
------------------------                                                              --------
First $250 million                                                                     0.550%
next $750 million                                                                      0.530%
next $1.5 billion                                                                      0.510%
next $2.5 billion                                                                      0.500%
next $2.5 billion                                                                      0.480%
next $2.5 billion                                                                      0.460%
next $2.5 billion                                                                      0.440%
Over $12.5 billion                                                                     0.420%


DWS Large Cap Value VIP



Average Daily Net Assets                                                              Fee Rate
------------------------                                                              --------
First $250 million                                                                     0.750%
next $750 million                                                                      0.725%
next $1.5 billion                                                                      0.700%
next $2.5 billion                                                                      0.675%
next $2.5 billion                                                                      0.650%
next $2.5 billion                                                                      0.625%
next $2.5 billion                                                                      0.600%
Over $12.5 billion                                                                     0.575%


Prior to May 1, 2008, DWS Balanced VIP paid the Advisor a monthly investment
management fee, based on the average daily net assets of the Portfolio, computed
and accrued daily and payable monthly, at the annual rates shown below:


Average Daily Net Assets                                                               Fee Rate
------------------------                                                               --------

First $250 million                                                                      0.470%
Next $750 million                                                                       0.445%
Over $1 billion                                                                         0.410%


Prior to May 1, 2008, DWS Strategic Value VIP, DWS Mid Cap Growth VIP and DWS
Technology VIP each paid the Advisor a graduated investment management fee,
based on the average daily net assets of a Portfolio, payable monthly, at the
annual rates shown below:


Average Daily Net Assets of the Portfolio                                             Fee Rate
-----------------------------------------                                             --------

$0-$250 million                                                                        0.750%
next $750 million                                                                      0.720%
next $1.5 billion                                                                      0.700%
next $2.5 billion                                                                      0.680%
next $2.5 billion                                                                      0.650%
next $2.5 billion                                                                      0.640%
next $2.5 billion                                                                      0.630%
Over $12.5 billion                                                                     0.620%


Prior to May 1, 2008, DWS Global Thematic VIP paid the Advisor a graduated
investment management fee, based on the average daily net assets of the
Portfolio, payable monthly, at the annual rates shown below:


Average Daily Net Assets of the Portfolio                                             Fee Rate
-----------------------------------------                                             --------

$0-$250 million                                                                        1.000%
next $500 million                                                                      0.950%
next $750 million                                                                      0.900%
next $1.5 billion                                                                      0.850%
Over $3 billion                                                                        0.800%



Prior to May 1, 2008, DWS Money Market VIP paid the Advisor a graduated
investment management fee, based on the average daily net assets of the
Portfolio, computed daily and payable monthly, at the annual rates shown below:


DWS Money Market VIP

Average Daily Net Assets                                                              Fee Rate
------------------------                                                              --------

First $500 million                                                                     0.385%
Next $500 million                                                                      0.370%
Next $1 billion                                                                        0.355%
Over $2 billion                                                                        0.340%


Prior to May 1, 2008, DWS Small Cap Growth VIP paid the Advisor a graduated
investment management fee, based on the average daily net assets of the
Portfolio, computed and accrued daily and payable monthly, at the annual rates
shown below:


Average Daily Net Assets                                                              Fee Rate
------------------------                                                              --------

First $250 million                                                                     0.650%
Next $750 million                                                                      0.625%
Over $1 billion                                                                        0.600%


Prior to May 1, 2008, DWS Turner Mid Cap Growth VIP paid the Advisor a graduated
investment management fee based on the average daily net assets of the
Portfolio, computed and accrued daily and payable monthly, at the annual rates
shown below:


Average Daily Net Assets of the Portfolio                                             Fee Rate
-----------------------------------------                                             --------

First $250 million                                                                     0.800%
Next $250 million                                                                      0.785%
Next $500 million                                                                      0.770%
Over $1 billion                                                                        0.755%


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

The Board and the Portfolios' shareholders have approved a subadvisor policy for
the Portfolios (the "Subadvisor Approval Policy"). The Subadvisor Approval
Policy permits the Advisor, subject to the approval of the Board, including a
majority of the Independent Board Members, to terminate an existing subadvisor
or sub-subadvisor and hire another subadvisor or sub-subadvisor, as applicable,
and materially amend an existing subadvisory agreement or sub-subadvisory
agreement without obtaining shareholder approval. The Portfolios could not
implement the Subadvisor Approval Policy without the SEC granting the Portfolios
exemptive relief. A number of other mutual fund complexes have obtained
exemptive relief with respect to an advisor's ability to appoint, replace or
amend the subadvisory agreement with unaffiliated subadvisors and subadvisors
that are wholly owned subsidiaries of the advisor. However, exemptive relief
with regard to an advisor's ability to appoint, replace or amend the subadvisory
agreement with a subadvisor, who is affiliated with, but not wholly owned
subsidiary of the advisor, without shareholder approval, would be more expansive
relief than previously granted by the SEC. In addition, exemptive relief with
regard to an advisor's ability to appoint, replace or amend a sub-subadvisory
agreement with a sub-advisor, without shareholder approval, would be more
expansive relief than previously obtained by other mutual fund complexes.
Accordingly, there can be no assurance that the Portfolios' exemptive
application will be granted by the SEC or that it will be sufficiently broad to
allow the Portfolios to implement the Subadvisor Approval Policy as described
above. The SEC also has proposed Rule 15a-5 under the 1940 Act in October 2003
to permit the appointment and termination of subadvisors and amendment to
subadvisory agreements without shareholder approval. No action has been taken on
proposed Rule 15a-5 under the 1940 Act since it proposal and there is no
assurances that the rule will be adopted as proposed. The Portfolios and the
Advisor will be subject to the conditions imposed by the SEC (either by an
exemptive order or as part of the final rule) whenever the Advisor acts under
the Subadvisor Approval Policy, including any shareholder notice requirements.


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

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

The investment management fees paid by each Portfolio for its last three fiscal
years are shown in the table below:


                                                                    Amount Waived
Portfolio                                           Fiscal 2008      Fiscal 2008      Fiscal 2007((1))  Fiscal 2006((1))
---------                                           -----------      -----------      ----------------  ----------------
DWS Balanced VIP(2)                                  $1,716,044       $48,022         $2,666,534        $2,967,510
DWS Blue Chip VIP(3)                                 $1,059,617           N/A         $2,018,922        $2,228,613
DWS Core Fixed Income VIP(4)                         $1,158,767           N/A         $2,144,122        $2,124,452
DWS Diversified International Equity VIP(5)          $1,244,991           N/A         $2,007,490        $2,094,158
DWS Dreman Small Mid Cap Value VIP(6)                $2,646,998           N/A         $4,418,373        $4,646,491
DWS Global Thematic VIP(7)                           $1,138,988      $441,223         $1,732,290        $1,342,622
DWS Government & Agency Securities VIP(8)            $1,045,390        $9,385         $1,209,630        $1,427,977
DWS High Income VIP(9)                               $1,139,273           N/A         $1,912,439        $2,263,303
DWS Large Cap Value VIP(10)                          $1,214,541           N/A         $1,950,386        $2,335,628
DWS Mid Cap Growth VIP(11)                             $252,379       $51,613           $435,886          $473,444
DWS Money Market VIP(12)                             $1,247,502        $74,810         $1,392,290        $1,444,203
DWS Small Cap Growth VIP(13)                           $733,616        $29,376         $1,413,741        $1,738,224
DWS Strategic Income VIP(14)                           $578,416        $12,958           $697,461          $662,490
DWS Strategic Value VIP(15)                          $3,949,911           N/A         $7,381,802        $7,237,569
DWS Technology VIP(16)                                 $762,698            N/A         $1,237,197        $1,472,355
DWS Turner Mid Cap Growth VIP(17)                      $737,881        $16,056         $1,067,206        $1,209,780


(1)      Prior to April 11, 2007 for DWS Large Cap Value VIP and May 1, 2008 for
         all other Portfolios, these fees included an administrative services
         fee.


(2)      Through April 30, 2008, the Advisor had agreed to waive all or a
         portion of its management fee and reimburse or pay operating expenses
         to the extent necessary to maintain DWS Balanced VIP's total operating
         expenses at 0.51% for Class A, excluding certain expenses such as
         extraordinary expenses, taxes, brokerage, interest, and organizational
         and offering expenses. Effective May 2, 2005 through April 30, 2008,
         the Advisor agreed to limit its fees and reimburse expenses of DWS
         Balanced VIP to the extent necessary to maintain the annual expenses of
         Class A at 0.51% (excluding certain expenses such as extraordinary
         expenses, taxes, brokerage, interest and fund accounting outsourcing
         fee savings).

(3)      Through September 30, 2009, the Advisor has contractually agreed to
         waive all or a portion of its management fee and reimburse or pay
         certain operating expenses of DWS Blue Chip VIP to the extent necessary
         to maintain DWS Blue Chip VIP's total operating expenses at 1.25% for
         Class B shares, excluding certain expenses such as extraordinary
         expenses, taxes, brokerage and interest. Although there can be no
         assurance that the current waiver/expense reimbursement arrangement
         will be maintained beyond September 30, 2009, the Advisor has committed
         to review the continuance of waiver/expense reimbursement arrangements
         by September 30, 2009. Prior to October 1, 2006, the investment
         management fee for DWS Blue Chip VIP was calculated according to the
         following schedule: 0.650% of average daily net assets.

(4)      Through September 30, 2008, the Advisor had contractually agreed to
         waive all or a portion of its management fee and reimburse or pay
         certain operating expenses so that the total annual operating expenses
         of DWS Core Fixed Income VIP will not exceed 0.70% for Class A shares,
         excluding certain expenses such as extraordinary expenses, taxes,
         brokerage and interest expenses. Prior to October 1, 2006, the
         investment management fee for DWS Core Fixed Income VIP was calculated
         according to the following schedule: 0.600% of average daily net
         assets.

(5)      Prior to October 1, 2006, the investment management fee for DWS
         Diversified International Equity VIP was calculated according to the
         following schedule: 0.750% of average daily net assets.

(6)      Prior to October 1, 2006, the investment management fee for DWS Dreman
         Small Mid Cap Value VIP was calculated according to the following
         schedule: 0.750% of average daily net assets.

(7)      Through September 30, 2009, the Advisor has contractually agreed to
         waive all or a portion of its management fee and reimburse or pay
         certain operating expenses of the portfolio to the extent necessary to
         maintain DWS Global Thematic VIP's total operating expenses at 1.07%
         and 1.47% for Class A shares and Class B shares, respectively,
         excluding certain expenses such as extraordinary expenses, taxes,
         brokerage and interest. Effective October 1, 2009 through April 30,
         2010, the Advisor has contractually agreed to waive all or a portion of
         its management fee and reimburse or pay certain operating expenses of
         DWS Global Thematic VIP to the extent necessary to maintain the DWS
         Global Thematic VIP's total operating expenses at ratios no higher than
         1.25% and 1.65% for Class A shares, and Class B shares, respectively,
         excluding certain expenses such as extraordinary expenses, taxes,
         brokerage and interest. Through April 30, 2009, the Advisor had agreed
         to waive all or a portion of its management fee and reimburse or pay
         certain operating expenses so that the total annual operating expenses
         of the portfolio will not exceed 1.05% and 1.45% for Class A shares and
         Class B shares, respectively, excluding certain expenses such as
         extraordinary expenses, taxes, brokerage, interest, and indirect
         expenses of underlying DWS portfolios. Through September 30, 2007, the
         Advisor had agreed to waive all or a portion of its management fee and
         reimburse or pay operating expenses to the extent necessary to maintain
         DWS Global Thematic VIP's total operating expenses at 1.12% and 1.52%
         for Class A and Class B shares, respectively, excluding certain
         expenses such as extraordinary expenses, taxes, brokerage, interest,
         and organizational and offering expenses. From October 1, 2007 through
         April 30, 2008, the Advisor had agreed to waive all or a portion of its
         management fee and reimburse or pay operating expenses to the extent
         necessary so that the portfolio's total operating expenses would not
         exceed 1.10% and 1.50% for Class A and Class B shares, respectively,
         excluding certain expenses such as extraordinary expenses, taxes,
         brokerage, interest, and organizational and offering expenses. From
         October 1, 2005 through September 30, 2006, the Advisor agreed to limit
         its fees and reimburse expenses of DWS Global Thematic VIP to the
         extent necessary to maintain the annual expenses of Class A at 1.04%
         and Class B at 1.44% (excluding certain expenses such as extraordinary
         expenses, taxes, brokerage, interest and fund accounting outsourcing
         fee savings).

(8)      Through September 30, 2009, the Advisor has contractually agreed to
         waive all or a portion of its management fee and reimburse or pay
         certain operating expenses of DWS Government & Agency Securities VIP to
         the extent necessary to maintain DWS Government & Agency Securities
         VIP's total operating expenses at 0.65% and 1.05% for Class A shares
         and Class B shares, respectively, excluding certain expenses such as
         extraordinary expenses, taxes, brokerage and interest. Although there
         can be no assurance that the current waiver/expense reimbursement
         arrangement will be maintained beyond September 30, 2009, the Advisor
         has committed to review the continuance of waiver/expense reimbursement
         arrangements by September 30, 2009. Through September 30, 2008, the
         Advisor had agreed to waive all or a portion of its management fee and
         reimburse or pay certain operating expenses so that the total annual
         operating expenses of DWS Government & Agency Securities VIP would not
         exceed 0.64% and 1.04% for Class A shares and Class B shares,
         respectively, excluding certain expenses such as extraordinary
         expenses, taxes, brokerage and interest. Prior to October 1, 2006, the
         investment management fee for DWS Government & Agency Securities VIP
         was calculated according to the following schedule: 0.550% of average
         daily net assets. Through April 30, 2008, the Advisor had agreed to
         waive all or a portion of its management fee and reimburse or pay
         operating expenses to the extent necessary to maintain DWS Government &
         Agency Securities VIP's total operating expenses at 0.63% for Class B
         shares, excluding certain expenses such as extraordinary expenses,
         taxes, brokerage, interest, and organizational and offering expenses.

(9)      Through September 30, 2009, the Advisor has contractually agreed to
         waive all or a portion of its management fee and reimburse or pay
         certain operating expenses of DWS High Income VIP to the extent
         necessary to maintain DWS High Income VIP's total operating expenses at
         1.18% for Class B shares, excluding certain expenses such as
         extraordinary expenses, taxes, brokerage and interest. Although there
         can be no assurance that the current waiver/expense reimbursement
         arrangement will be maintained beyond September 30, 2009, the Advisor
         has committed to review the continuance of waiver/expense reimbursement
         arrangements by September 30, 2009. Prior to October 1, 2006, the
         investment management fee for DWS High Income VIP was calculated
         according to the following schedule: 0.600% of average daily net
         assets.

(10)     Through September 30, 2009, the Advisor has contractually agreed to
         waive all or a portion of its management fee and reimburse or pay
         certain operating expenses of DWS Large Cap Value VIP to the extent
         necessary to maintain DWS Large Cap Value VIP's total operating
         expenses at 1.25% for Class B shares, excluding certain expenses such
         as extraordinary expenses, taxes, brokerage and interest. Although
         there can be no assurance that the current waiver/expense reimbursement
         arrangement will be maintained beyond September 30, 2009, the Advisor
         has committed to review the continuance of waiver/expense reimbursement
         arrangements by September 30, 2009. In addition, for the fiscal year
         ended December 31, 2008, the Advisor waived record keeping expenses of
         Class B shares of DWS Large Cap Value VIP in the amount of $94.

(11)     Through September 30, 2009, the Advisor has contractually agreed to
         waive all or a portion of its management fee and reimburse or pay
         certain operating expenses of DWS Mid Cap Growth VIP to the extent
         necessary to maintain DWS Mid Cap Growth VIP's total operating expenses
         at 0.94% for Class A shares, excluding certain expenses such as
         extraordinary expenses, taxes, brokerage and interest. Effective
         October 1, 2009 through April 30, 2010, the Advisor has contractually
         agreed to waive all or a portion of its management fee and reimburse or
         pay certain expense of DWS Mid Cap Growth VIP to the extent necessary
         to maintain DWS Mid Cap Growth VIP's total operating expenses at ratios
         no higher 1.10% for Class A shares, excluding certain expenses such as
         extraordinary expenses, taxes, brokerage and interest. Through April
         30, 2009, the Advisor had agreed to waive all or a portion of its
         management fee and reimburse or pay certain operating expenses so that
         the total annual operating expenses of DWS Mid Cap Growth VIP would not
         exceed 0.94% for Class A shares, excluding certain expenses such as
         extraordinary expenses, taxes, brokerage and interest. Through
         September 30, 2007, the Advisor had agreed to waive all or a portion of
         its management fee and reimburse or pay operating expenses to the
         extent necessary to maintain DWS Mid Cap Growth VIP's total operating
         expenses at 0.90% for Class A shares, excluding certain expenses such
         as extraordinary expenses, taxes, brokerage, interest, and
         organizational and offering expenses. From October 1, 2007 through
         April 30, 2008, the Advisor had agreed to waive all or a portion of its
         management fee and reimburse or pay operating expenses to the extent
         necessary to maintain so that the portfolio's total operating expenses
         would not exceed 0.94% for Class A shares, excluding certain expenses
         such as extraordinary expenses, taxes, brokerage, interest, and
         organizational and offering expenses.

(12)     Through April 30, 2010, the Advisor has contractually agreed to waive
         all or a portion of its management fee and reimburse or pay certain
         operating expenses of DWS Money Market VIP so that the total annual
         operating expenses of the portfolio will not exceed 0.44% for Class A
         shares, excluding certain expenses such as extraordinary expenses,
         taxes, brokerage and interest. Through April 30, 2008, the Advisor had
         agreed to waive all or a portion of its management fee and reimburse or
         pay operating expenses to the extent necessary to maintain DWS Money
         Market VIP's total operating expenses at 0.44% for Class A shares,
         excluding certain expenses such as extraordinary expenses, taxes,
         brokerage, interest, and organizational and offering expenses. Prior to
         November 6, 2006, the investment management fee for DWS Money Market
         VIP was calculated according to the following schedule: 0.500% of the
         first $215 million of average daily net assets; 0.375% of the next $335
         million of average daily net assets; 0.300% of the next $250 million of
         average daily net assets and 0.250% of average daily net assets in
         excess of $800 million.

(13)     Through April 30, 2008, the Advisor had agreed to waive all or a
         portion of its management fee and reimburse or pay operating expenses
         to the extent necessary to maintain DWS Small Cap Growth VIP's total
         operating expenses at 0.72% for Class A shares, excluding certain
         expenses such as extraordinary expenses, taxes, brokerage, interest,
         and organizational and offering expenses. From May 2, 2005 through
         April 30, 2008, the Advisor agreed to limit its fees and reimburse
         expenses of DWS Small Cap Growth VIP to the extent necessary to
         maintain the annual expense of Class A at 0.72% (excluding certain
         expenses such as extraordinary expenses, taxes, brokerage, interest and
         fund accounting outsourcing fee savings).

(14)     Through September 30, 2009, the Advisor has contractually agreed to
         waive all or a portion of its management fee and reimburse or pay
         certain operating expenses of DWS Strategic Income VIP to the extent
         necessary to maintain DWS Strategic Income VIP's total operating
         expenses at 0.82% for Class A shares, excluding certain expenses such
         as extraordinary expenses, taxes, brokerage and interest. Although
         there can be no assurance that the current waiver/expense reimbursement
         arrangement will be maintained beyond September 30, 2009, the Advisor
         has committed to review the continuance of waiver/expense reimbursement
         arrangements by September 30, 2009. Through September 30, 2008, the
         Advisor had contractually agreed to waive all or a portion of its
         management fee and reimburse or pay certain operating expenses so that
         the total annual operating expenses of DWS Strategic Income VIP would
         not exceed 0.83% for Class A shares, excluding certain expenses such as
         extraordinary expenses, taxes, brokerage, interest, and indirect
         expenses of underlying DWS funds. Prior to October 1, 2006, the
         investment management fee for DWS Strategic Income VIP was calculated
         according to the following schedule: 0.650% of average daily net
         assets.

(15)     Through April 30, 2010, the Advisor has contractually agreed to waive
         all or a portion of its management fee and reimburse or pay certain
         operating expenses so that the total annual operating expenses of DWS
         Strategic Value VIP will not exceed 0.78% and 1.11% for Class A shares
         and Class B shares, respectively, excluding certain expenses such as
         extraordinary expenses, taxes, brokerage and interest. In addition, for
         the fiscal year ended December 31, 2008, the Advisor waived record
         keeping expenses of Class B shares of DWS Strategic Value VIP in the
         amount of $2,522. In addition, for the fiscal year ended December 31,
         2006, the Advisor waived record keeping expenses of Class B shares of
         DWS Strategic Value VIP in the amount of $9,001.

(16)     Through September 30, 2009, the Advisor has contractually agreed to
         waive all or a portion of its management fee and reimburse or pay
         certain operating expenses of DWS Technology VIP to the extent
         necessary to maintain the DWS Technology VIP's total operating expenses
         at 1.48% for Class B shares, excluding certain expenses such as
         extraordinary expenses, taxes, brokerage and interest. Although there
         can be no assurance that the current waiver/expense reimbursement
         arrangement will be maintained beyond September 30, 2009, the Advisor
         has committed to review the continuance of waiver/expense reimbursement
         arrangements by September 30, 2009.

(17)     Through September 30, 2008, the Advisor had contractually agreed to
         waive all or a portion of its management fee and reimburse or pay
         certain operating expenses so that the total annual operating expenses
         of DWS Turner Mid Cap Growth VIP would not exceed 0.94% for Class A
         shares, excluding certain expenses such as extraordinary expenses,
         taxes, brokerage and interest..

Subadvisor to DWS Balanced VIP and DWS Large Cap Value VIP. Effective May 1,
2008 for DWS Balanced VIP and effective February 5, 2007 for DWS Large Cap Value
VIP, Deutsche Asset Management International GmbH ("DeAMi"), an investment
advisor registered with the US Securities and Exchange Commission, is the
subadvisor to the Portfolio. Pursuant to the sub-advisory agreement (the
"Sub-Advisory Agreement") DeAMi, Mainzer Landstrasse 178-190, Frankfurt am Main,
Germany, 60327, renders investment advisory and management services to the
Portfolio pursuant to the terms of the Sub-Advisory Agreement between DeAMi and
DIMA. DeAMi is an affiliate of DIMA and a subsidiary of Deutsche Bank AG. Under
the terms of the Sub-Advisory Agreement, DeAMi manages the investment and
reinvestment of a portion of the large cap value allocation of the Portfolio's
investment portfolio and provides such investment advice, research and
assistance as DIMA may, from time to time, reasonably request.

The subadvisory agreement with DeAMi continues in effect from year to year, but
only as long as such continuance is specifically approved at least annually (a)
by a majority of the Trustees who are not parties to such agreement or
interested persons of any such party except in their capacity as Trustees of the
Fund, and (b) either by a majority of the shareholders or the Board of Trustees
of the Fund. The subadvisory agreement may be terminated at any time upon 60
days' notice by DeAMi, by the Advisor or by the Board of Trustees of the Fund or
by majority vote of the outstanding shares of the Portfolio, and will terminate
automatically upon assignment or upon termination of the Portfolio's investment
management agreement.

DIMA will pay a fee to DeAMi for serving as subadvisor with respect to a portion
of the DWS Balanced VIP's large cap value allocation at the annual rates shown
below:


Assets Managed by DeAMi (in Euros)                            Sub-Advisory Fee (as a % of average daily net assets)
----------------------------------                            -----------------------------------------------------

(euro)0 - (euro)250 million                                                                     0.300%
(euro)250 million - (euro)500 million                                                           0.200%
(euro)500 million - (euro)1 billion                                                             0.120%
(euro)1 billion - (euro)2.5 billion                                                             0.080%
(euro)2.5 billion - (euro)5 billion                                                             0.055%
(euro)5 billion - (euro)25 billion                                                              0.035%
(euro)25 billion - (euro)50 billion                                                             0.025%
 over (euro)50 billion                                                                          0.015%


The subadvisory fee paid by DIMA to DeAMi for DWS Balanced VIP for the period
May 1, 2008 through December 31, 2008 is as follows:

                                                  2008
                                                  ----


 DWS Balanced VIP                               $608,011


DIMA will pay a fee to DeAMi for serving as subadvisor to the Fund at an annual
rate of 50% of the Advisor's annual management fee it receives from DWS Large
Cap Value VIP.


The subadvisory fees paid by DIMA to DeAMi for DWS Large Cap Value VIP for the
last two fiscal years are as follows:

                                                  2008             2007
                                                  ----             ----


 DWS Large Cap Value VIP                        $608,011         $835,420


The Sub-Advisory Agreement provides that DeAMi will not be liable for any error
of judgment or mistake of law or for any loss suffered by the Portfolio in
connection with matters to which the Sub-Advisory Agreement relates, except a
loss resulting from willful misconduct, bad faith or gross negligence on the
part of DeAMi in the performance of its duties or from reckless disregard by
DeAMi of its obligations and duties under the Sub-Advisory Agreement.

Subadvisor to DWS Dreman Small Mid Cap Value VIP. Dreman Value Management,
L.L.C. ("DVM"), 520 East Cooper Avenue, Aspen, Colorado, is the subadvisor to
DWS Dreman Small Mid Cap Value VIP. DVM is controlled by David N. Dreman. DVM
serves as subadvisor pursuant to the terms of a subadvisory agreement between it
and the Advisor for each Portfolio. DVM was formed in April 1997 and has served
as subadvisor for DWS Dreman Small Mid Cap Value VIP since January 18, 2002. DVM
is controlled by David Dreman.

Under the terms of each subadvisory agreement, DVM manages the investment and
reinvestment of each Portfolio's assets and will provide such investment advice,
research and assistance as the Advisor may, from time to time, reasonably
request.

Each subadvisory agreement provides that DVM will not be liable for any error of
judgment or mistake of law or for any loss suffered by the Portfolio in
connection with matters to which the subadvisory agreement relates, except a
loss resulting from willful misfeasance, bad faith or gross negligence on the
part of DVM in the performance of its duties or from reckless disregard by DVM
of its obligations and duties under the subadvisory agreement.


The subadvisory agreement with DVM for DWS Dreman Small Mid Cap Value VIP
continues in effect from year to year, but only as long as such continuance is
specifically approved at least annually (a) by a majority of the Trustees who
are not parties to such agreement or interested persons of any such party except
in their capacity as Trustees of the Fund, and (b) by the shareholders or the
Board of Trustees of the Fund. The subadvisory agreement may be terminated at
any time upon 60 days' notice by the Advisor or by the Board of Trustees of the
Fund or by majority vote of the outstanding shares of the Portfolio, and will
terminate automatically upon assignment or upon termination of the Portfolio's
investment management agreement. DVM may terminate the subadvisory agreement
upon 90 days' notice to the Advisor.


Effective January 18, 2002, DVM receives a subadvisory fee of 1/12 of an
annualized rate, payable monthly, of 0.375% of 1% of the average daily net
assets for DWS Dreman Small Mid Cap Value VIP. Fees paid to DVM for the last
three fiscal years were as follows:


                                                     2008             2007              2006
                                                     ----             ----              ----

 DWS Dreman Small Mid Cap Value VIP              $1,467,969       $2,244,769        $2,326,338
</TABLE>



Subadvisor to DWS Turner Mid Cap Growth VIP. Turner Investment Partners, Inc.
("TIP"), 1205 Westlakes Drive, Suite 100, Berwyn, PA 19312, is the subadvisor to
DWS Turner Mid Cap Growth VIP. TIP is controlled by Robert E. Turner and Mark D.
Turner. TIP has served as subadvisor to the Portfolio since its inception on May
1, 2001.

Under the terms of the subadvisory agreement, TIP manages the investment and
reinvestment of the Portfolio's assets and will provide such investment advice,
research and assistance as the Advisor may, from time to time, reasonably
request.

The subadvisory agreement provides that TIP will not be liable for any error of
judgment or mistake of law or for any loss suffered by the Portfolio in
connection with matters to which the subadvisory agreement relates, except a
loss resulting from willful misfeasance, bad faith or gross negligence on the
part of TIP in the performance of its duties or from reckless disregard by TIP
of its obligations and duties under the subadvisory agreement.


The subadvisory agreement with TIP continues in effect from year to year, but
only as long as such continuance is specifically approved at least annually (a)
by a majority of the trustees who are not parties to such agreement or
interested persons of any such party except in their capacity as trustees of the
Fund, and (b) by a majority of the shareholders or the Board of Trustees of the
Fund. The subadvisory agreement may be terminated at any time upon 60 days'
notice by TIP, by the Advisor or by the Board of Trustees of the Fund or by
majority vote of the outstanding shares of the Portfolio and will terminate
automatically upon assignment or upon termination of the Portfolio's investment
management agreement.


The Advisor pays TIP for its services a subadvisory fee, payable monthly, at the
annual rates shown below:

Average Daily Net Assets of the Portfolio           Annual Subadvisory Fee Rate
-----------------------------------------           ---------------------------

 $0-$50 million                                                0.550%
 Next $200 million                                             0.525%
 On amounts over $250 million                                  0.500%

The subadvisory fees paid by DIMA to TIP for DWS Turner Mid Cap Growth VIP for
the past three fiscal years are as follows:

                                        2008              2007             2006
                                        ----              ----             ----


 DWS Turner Mid Cap Growth VIP       $591,000          $711,772         $805,959


Codes of Ethics. The Fund, Advisor and subadvisors, and principal underwriter
have each adopted codes of ethics under Rule 17j-1 under the 1940 Act. Board
Members and officers of the Fund and employees of the Advisor or Subadvisors,
and principal underwriter are permitted to make personal securities
transactions, including transactions in securities that may be purchased or held
by the Portfolios, subject to requirements and restrictions set forth in the
applicable Code of Ethics. The Advisor's Code of Ethics contains provisions and
requirements designed to identify and address certain conflicts of interest
between personal investment activities and the interests of the Portfolios.
Among other things, the Advisor's Code of Ethics prohibits certain types of
transactions absent prior approval, imposes time periods during which personal
transactions may not be made in certain securities, imposes holding periods
(generally 30 days) on most transactions and requires the submission of
duplicate broker confirmations and quarterly reporting of securities
transactions. Exceptions to these and other provisions of the Advisor's Code of
Ethics may be granted in particular circumstances after review by appropriate
personnel.

Compensation of Portfolio Managers

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

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

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

o        The quantitative analysis of a portfolio manager's individual
         performance is based on, among other factors, performance of all of the
         accounts managed by the portfolio manager (which includes the portfolio
         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 portfolio's prospectus to which the portfolio'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
         portfolio's assets due to the purchase or sale of portfolio shares is
         not considered a material factor.

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

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

Portfolio Ownership of Portfolio Managers.

For Portfolios managed by the Advisor or an affiliated Advisor the following
table shows the dollar range of shares owned beneficially and of record by each
member of the Portfolio's management team (except DWS Money Market VIP) in the
applicable Portfolio 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 Portfolio's most recent fiscal year end.

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

<S>                                         <C>                             <C>                          <C>
Balanced                             Joseph Axtell                          $0                  $100,001-$500,000
                                     Julie Abbett                          $0(1)                 $50,001-$100,000
                                     Matthew F. MacDonald                   $0                   $10,001-$50,000
                                     Owen Fitzpatrick                       $0                  $100,001-$500,000
                                     J. Richard Robben                      $0                   $10,001-$50,000
                                     Richard Shepley                        $0                  $100,001-$500,000
                                     Robert Wang                           $0(2)                $100,001-$500,000
                                     Thomas Picciochi                      $0(3)                $100,001-$500,000
                                     William Chepolis                       $0                  $100,001-$500,000
                                     Gary Sullivan                          $0                   $50,001-$100,000
                                     Inna Okounkova                        $0(4)                $100,001-$500,000
                                     James B. Francis                       $0                          $0
                                     John Brennan                           $0                          $0
                                     Thomas Schuessler(13)                  $0                   $50,001-$100,000

Blue Chip                            Julie Abbett                          $0(5)                 $50,001-$100,000
                                     Robert Wang                           $0(6)                $100,001-$500,000
                                     James B. Francis                       $0                          $0

Core Fixed Income                    Kenneth R. Bowling                     $0                      $1-$10,000
                                     Jamie Guenther                         $0                      $1-$10,000
                                     John Brennan                           $0                          $0
                                     Bruce Harley                           $0                   $10,001-$50,000
                                     J. Richard Robben                      $0                   $10,001-$50,000
                                     David Vignolo                          $0                  $100,001-$500,000
                                     J. Kevin Horsely                       $0                   $10,001-$50,000
                                     Stephen Willer                         $0                   $10,001-$50,000

Global Thematic                      Oliver Kratz                          $0(7)                $100,001-$500,000

Government & Agency Securities       William Chepolis                      $0(8)                $100,001-$500,000
                                     Matthew F. MacDonald                   $0                   $10,001-$50,000

High Income                          Gary Sullivan                         $0(9)                 $50,001-$100,000

Diversified International Equity     Robert Wang                            $0                  $100,001-$500,000
                                     Russell Shtern                         $0                   $10,001-$50,000

Large Cap Value                      Thomas Schuessler(13)                  $0                   $50,001-$100,000

Mid Cap Growth                       Rafaelina M. Lee                       $0                          $0
                                     Joseph Axtell                       $0(1)(0)               $100,001-$500,000
                                     Jeffrey Saeger                         $0                   $50,001-$100,000

Small Cap Growth                     Rafaelina M. Lee                       $0                          $0
                                     Joseph Axtell                          $0                  $100,001-$500,000
                                     Jeffrey Saeger                         $0                   $50,001-$100,000

Strategic Income                     William Chepolis                       $0                  $100,001-$500,000
                                     Matthew F. MacDonald                   $0                   $10,001-$50,000
                                     Robert Wang                          $0(11)                $100,001-$500,000
                                     Gary Sullivan                          $0                   $50,001-$100,000
                                     Thomas Picciochi                     $0(12)                $100,001-$500,000


Strategic Value                      Volker Dosch                           $0                  $50,001 - $100,000
                                     Oliver Pfeil                           $0                  $10,001 - $50,000
                                     Thomas Scheussler                      $0                $500,001 - $1,000,000


Technology                           Clark Chang                            $0                          $0

(1)      Although the Portfolio Manager does not have an investment in this
         variable annuity portfolio, the Portfolio Manager does hold $1-$10,000
         in DWS Balanced Fund, the retail mutual fund that has the same
         investment strategy. This investment is included in the "Dollar Range
         of All DWS Fund Shares Owned."

(2)      Although the Portfolio Manager does not have an investment in this
         variable annuity portfolio, the Portfolio Manager does hold $1-$10,000
         in DWS Balanced Fund, the retail mutual fund that has the same
         investment strategy. This investment is included in the "Dollar Range
         of All DWS Fund Shares Owned."

(3)      Although the Portfolio Manager does not have an investment in this
         variable annuity portfolio, the Portfolio Manager does hold $1-$10,000
         in DWS Balanced Fund, the retail mutual fund that has the same
         investment strategy. This investment is included in the "Dollar Range
         of All DWS Fund Shares Owned."

(4)      Although the Portfolio Manager does not have an investment in this
         variable annuity portfolio, the Portfolio Manager does hold $1-$10,000
         in DWS Balanced Fund, the retail mutual fund that has the same
         investment strategy. This investment is included in the "Dollar Range
         of All DWS Fund Shares Owned."

(5)      Although the Portfolio Manager does not have an investment in this
         variable annuity portfolio, the Portfolio Manager does hold $1-$10,000
         in DWS Blue Chip Fund, the retail mutual fund that has the same
         investment strategy. This investment is included in the "Dollar Range
         of All DWS Fund Shares Owned."

(6)      Although the Portfolio Manager does not have an investment in this
         variable annuity portfolio, the Portfolio Manager does hold $1-$10,000
         in DWS Blue Chip Fund, the retail mutual fund that has the same
         investment strategy. This investment is included in the "Dollar Range
         of All DWS Fund Shares Owned."

(7)      Although the Portfolio Manager does not have an investment in this
         variable annuity portfolio, the Portfolio Manager does hold
         $100,001-$500,000 in DWS Global Thematic Fund, the retail mutual fund
         that has the same investment strategy. This investment is included in
         the "Dollar Range of All DWS Fund Shares Owned."

(8)      Although the Portfolio Manager does not have an investment in this
         variable annuity portfolio, the Portfolio Manager does hold
         $10,001-$50,000 in DWS Strategic Government Securities Fund, the retail
         mutual fund that has the same investment strategy. This investment is
         included in the "Dollar Range of All DWS Fund Shares Owned."

(9)      Although the Portfolio Manager does not have an investment in this
         variable annuity portfolio, the Portfolio Manager does hold
         $50,001-$100,000 in DWS High Income Fund, the retail mutual fund that
         has the same investment strategy. This investment is included in the
         "Dollar Range of All DWS Fund Shares Owned."

(10)     Although the Portfolio Manager does not have an investment in this
         variable annuity portfolio, the Portfolio Manager does hold $1-$10,000
         in DWS Mid Cap Growth Fund, the retail mutual fund that has the same
         investment strategy. This investment is included in the "Dollar Range
         of All DWS Fund Shares Owned."

(11)     Although the Portfolio Manager does not have an investment in this
         variable annuity portfolio, the Portfolio Manager does hold $1-$10,000
         in DWS Strategic Income Fund, the retail mutual fund that has the same
         investment strategy. This investment is included in the "Dollar Range
         of All DWS Fund Shares Owned."

(12)     Although the Portfolio Manager does not have an investment in this
         variable annuity portfolio, the Portfolio Manager does hold $1-$10,000
         in DWS Strategic Income Fund, the retail mutual fund that has the same
         investment strategy. This investment is included in the "Dollar Range
         of All DWS Fund Shares Owned."

(13)     Because the portfolio manager is not resident in the US, the manager
         generally does not invest in US registered investment companies, such
         as the Portfolio, on account of US tax and other regulatory limitations
         applicable to foreign investors.

Conflicts of Interest

In addition to managing the assets of the Portfolios, the 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 Portfolio, (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 Portfolios' most recent fiscal year end.

Other SEC Registered Investment Companies Managed:

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

Balanced                   Joseph Axtell                  14            $4,296,621,929             0                $0
                           Julie Abbett                   22            $5,891,217,508             0                $0
                           Matthew F. MacDonald           15            $7,993,543,901             0                $0
                           Owen Fitzpatrick               0                         $0             0                $0
                           J. Richard Robben              6             $2,036,024,237             0                $0
                           Richard Shepley                4             $3,359,478,778             0                $0
                           Robert Wang                    44           $11,446,475,308             0                $0
                           Thomas Picciochi               12            $5,985,112,093             0                $0
                           William Chepolis               15            $7,870,476,192             0                $0
                           Gary Sullivan                  11            $5,245,887,347             0                $0
                           Inna Okounkova                 15            $2,444,552,016             0                $0
                           James B. Francis               22            $5,891,217,508             0                $0
                           John Brennan                   6             $2,036,024,237             0                $0
                           Thomas Schuessler(13)          3             $1,517,672,928             0                $0

Blue Chip                  Julie Abbett                   22            $6,092,757,779             0                $0
                           Robert Wang                    44           $11,648,015,578             0                $0
                           James B. Francis               22            $6,092,757,779             0                $0

Core Fixed Income          Kenneth R. Bowling             5               $981,953,360      0                       $0
                           Jamie Guenther                 5               $981,953,360      0                       $0
                           John Brennan                   7             $2,343,865,082      0                       $0
                           Bruce Harley                   5               $981,953,360      0                       $0
                           J. Richard Robben              7             $2,343,865,082      0                       $0
                           David Vignolo                  5               $981,953,360      0                       $0
                           J. Kevin Horsely               5               $981,953,360      0                       $0
                           Stephen Willer                 5               $981,953,360      0                       $0

Global Thematic            Oliver Kratz                   1               $996,467,959      0                       $0

Government & Agency
Securities                 William Chepolis               16            $7,958,059,950             0                $0
                           Matthew F. MacDonald           15            $8,081,127,659             0                $0

High Income                Gary Sullivan                  11            $5,399,130,624             0                $0

Diversified                Robert Wang
International Equity                                      45           $11,754,316,153             0                $0
                           Russell Shtern                 1               $423,664,031             0                $0

Large Cap Value            Thomas Schuessler              3             $1,413,893,653             0                $0

Mid Cap Growth             Rafaelina M. Lee               4               $523,608,851             0                $0
                           Joseph Axtell                  14            $4,586,145,759             0                $0
                           Jeffrey Saeger                 8             $1,289,392,738             0                $0

Small Cap Growth           Rafaelina M. Lee               4               $472,581,957             0                $0
                           Joseph Axtell                  14            $4,535,118,865             0                $0
                           Jeffrey Saeger                 8             $1,238,365,844             0                $0

Strategic Income           William Chepolis               16            $8,105,482,270             0                $0
                           Matthew F. MacDonald           15            $8,228,549,979             0                $0
                           Robert Wang                    44           $11,681,481,385             0                $0
                           Gary Sullivan                  11            $5,480,893,424             0                $0
                           Thomas Picciochi               12            $6,220,118,170             0                $0


Strategic Value            Volker Dosch                   4             $1,550,668,705             0                $0
                           Oliver Pfeil                   0                         $0             0                $0
                           Thomas Scheussler              0                         $0             0                $0


Technology                 Clark Chang                    1               $466,225,573             0                $0

Other Pooled Investment Vehicles Managed:

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

Balanced                   Joseph Axtell                  1                 $2,463,486             0                      $0
                           Julie Abbett                   18              $211,430,184             0                      $0
                           Matthew F. MacDonald           0                         $0             0                      $0
                           Owen Fitzpatrick               0                         $0             0                      $0
                           J. Richard Robben              0                         $0             0                      $0
                           Richard Shepley                0                         $0             0                      $0
                           Robert Wang                    38            $1,528,682,925             1              $4,184,315
                           Thomas Picciochi               13              $570,623,604             1              $4,184,315
                           William Chepolis               0                         $0             0                      $0
                           Gary Sullivan                  0                         $0             0                      $0
                           Inna Okounkova                 3                $58,377,538             0                      $0
                           James B. Francis               18              $211,430,184             0                      $0
                           John Brennan                   0                         $0             0                      $0
                           Thomas Schuessler(13)          3             $3,649,872,792             0                      $0

Blue Chip                  Julie Abbett                   18              $211,430,184             0                      $0
                           Robert Wang                    38            $1,528,682,925             1              $4,184,315
                           James B. Francis               18              $211,430,184             0                      $0

Core Fixed Income          Kenneth R. Bowling             0                         $0             0                      $0
                           Jamie Guenther                 0                         $0             0                      $0
                           John Brennan                   0                         $0             0                      $0
                           Bruce Harley                   0                         $0             0                      $0
                           J. Richard Robben              0                         $0             0                      $0
                           David Vignolo                  0                         $0             0                      $0
                           J. Kevin Horsely               0                         $0             0                      $0
                           Stephen Willer                 0                         $0             0                      $0

Global Thematic            Oliver Kratz                   20            $2,132,186,684             0                      $0

Government & Agency        William Chepolis
Securities                                                0                         $0             0                      $0
                           Matthew F. MacDonald           0                         $0             0                      $0

High Income                Gary Sullivan                  0                         $0             0                      $0

Diversified                Robert Wang                    38            $1,528,682,925             1              $4,184,315
International Equity
                           Russell Shtern                 4               $688,251,599             0                      $0

Large Cap Value            Thomas Schuessler              3             $3,649,872,792             0                      $0

Mid Cap Growth             Rafaelina M. Lee               0                         $0             0                      $0
                           Joseph Axtell                  1                 $2,463,486             0                      $0
                           Jeffrey Saeger                 8               $110,777,983             0                      $0

Small Cap Growth           Rafaelina M. Lee               0                         $0             0                      $0
                           Joseph Axtell                  1                 $2,463,486             0                      $0
                           Jeffrey Saeger                 8               $110,777,983             0                      $0

Strategic Income           William Chepolis               0                         $0             0                      $0
                           Matthew F. MacDonald           0                         $0             0                      $0
                           Robert Wang                    38            $1,528,682,925             1              $4,184,315
                           Gary Sullivan                  0                         $0             0                      $0
                           Thomas Picciochi               13              $570,623,604             1              $4,184,315


Strategic Value            Volker Dosch                   3             $3,649,872,792             1            $477,270,101
                           Oliver Pfeil                   1                $75,658,420             1            $239,723,099
                           Thomas Scheussler              2             $1,514,041,400             1             $43,372,730


Technology                 Clark Chang                    0                         $0             0                      $0

Other Accounts Managed:

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

Balanced                   Joseph Axtell                  3                 $159,923,273           0                     $0
                           Julie Abbett                   4                 $372,201,540           0                     $0
                           Matthew F. MacDonald           1                  $98,724,945           0                     $0
                           Owen Fitzpatrick               0                           $0           0                     $0
                           J. Richard Robben              0                           $0           0                     $0
                           Richard Shepley                7                 $320,439,456           0                     $0
                           Robert Wang                    46              $6,324,034,835           8           $211,118,336
                           Thomas Picciochi               12                $939,669,114           8           $211,118,336
                           William Chepolis               1                  $98,724,945           0                     $0
                           Gary Sullivan                  0                           $0           0                     $0
                           Inna Okounkova                 0                           $0           0                     $0
                           James B. Francis               4                 $372,201,540           0                     $0
                           John Brennan                   0                           $0           0                     $0
                           Thomas Schuessler(13)          3                  $13,815,263           0                     $0

Blue Chip                  Julie Abbett                   4                 $372,201,540           0                     $0
                           Robert Wang                    46              $6,324,034,835           8           $211,118,336
                           James B. Francis               4                 $372,201,540           0                     $0

Core Fixed Income          Kenneth R. Bowling             0                           $0           0                     $0
                           Jamie Guenther                 0                           $0           0                     $0
                           John Brennan                   0                           $0           0                     $0
                           Bruce Harley                   0                           $0           0                     $0
                           J. Richard Robben              0                           $0           0                     $0
                           David Vignolo                  0                           $0           0                     $0
                           J. Kevin Horsely               0                           $0           0                     $0
                           Stephen Willer                 0                           $0           0                     $0

Global Thematic            Oliver Kratz                   25              $2,933,843,278           1            $143,363,834

Government & Agency        William Chepolis               1                  $98,724,945           0                      $0
Securities
                           Matthew F. MacDonald           1                  $98,724,945           0                      $0

High Income                Gary Sullivan                  0                           $0           0                      $0

Diversified                Robert Wang                    46              $6,324,034,835           8            $211,118,336
International Equity
                           Russell Shtern                 29              $4,987,753,652           0                      $0

Large Cap Value            Thomas Schuessler              3                  $13,815,263           0                      $0

Mid Cap Growth             Rafaelina M. Lee               2                 $131,986,760           0                      $0
                           Joseph Axtell                  3                 $159,923,273           0                      $0
                           Jeffrey Saeger                 5                 $523,934,563           0                      $0

Small Cap Growth           Rafaelina M. Lee               2                 $131,986,760           0                      $0
                           Joseph Axtell                  3                 $159,923,273           0                      $0
                           Jeffrey Saeger                 5                 $523,934,563           0                      $0

Strategic Income           William Chepolis               1                  $98,724,945           0                      $0
                           Matthew F. MacDonald           1                  $98,724,945           0                      $0
                           Robert Wang                    46              $6,324,034,835           8            $211,118,336
                           Gary Sullivan                  0                           $0           0                      $0
                           Thomas Picciochi               12                $939,669,114           8            $211,118,336


Strategic Value            Volker Dosch                   3                  $13,815,263           0                      $0
                           Oliver Pfeil                   0                           $0           0                      $0
                           Thomas Scheussler              0                           $0           0                      $0


Technology                 Clark Chang                    0                           $0           0                      $0
</TABLE>

In addition to the accounts above, an investment professional may manage
accounts in a personal capacity that may include holdings that are similar to,
or the same as, those of the Portfolio. 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 Portfolio and other client accounts.

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

o        Certain investments may be appropriate for the Portfolio and also for
         other clients advised by the Advisor, including other client accounts
         managed by the Portfolio's management team. Investment decisions for
         the Portfolio 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 Portfolio 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 Portfolio. Purchase and sale orders for the Portfolio may
         be combined with those of other clients of the Advisor in the interest
         of achieving the most favorable net results to the Portfolio and the
         other clients.

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

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

o        The Advisor and its affiliates and the investment team of the Portfolio
         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 Portfolio's 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 Portfolio's Board of
Trustees.

Compensation of Portfolio Managers of Non-affiliated Subadvised Portfolios

DWS Dreman Small Mid Cap Value VIP

The Portfolio has been advised that the subadvisor has implemented a highly
competitive compensation plan which seeks to attract and retain exceptional
investment professionals who have demonstrated that they can consistently
outperform their respective fund's benchmark. The compensation plan is comprised
of both a fixed component and a variable component. The variable component is
determined by assessing the investment professional's performance by utilizing
both quantitative and qualitative factors.

The sub-advisor's investment professionals are each paid a fixed base salary
that is determined based on their job function and responsibilities. The base
salary is deemed to be competitive with the marketplace and specifically with
salaries in the financial services industry by utilizing various salary surveys
compiled for the financial services industry specifically investment advisory
firms. The variable component of the subadvisor's compensation plan which takes
the form of a cash bonus combined with either, employee retention bonus units
payable over time or outright stock grants is discretionary and is designed to
reward and retain investment professionals including portfolio managers and
research analysts for their contributions to the Fund's performance relative to
its benchmark. Additionally, employees are eligible for a profit sharing plan.


Investment professionals may receive equity in the form of units or fractional
units of membership interest in the subadvisor or they may receive employee
retention bonus units which enable them to participate in the growth of the
firm. Investment professionals also participate in the subadvisor's profit
sharing plan, a defined contribution plan that allows the subadvisor to
contribute up to twenty percent of an employee's total compensation, subject to
various regulatory limitations, to each employee's profit sharing account. The
subadvisor's profit sharing plan is a qualified plan which benefits employees of
the firm including both portfolio managers and research analysts. Contributions
to the subadvisor's profit sharing plan vest over a specified term. Finally all
employees of the subadvisor including investment professionals receive
additional fringe benefits in the form of subsidized medical, dental,
group-term, and life insurance coverage.


The basis for determining the variable component of an investment professional's
total compensation is determined through a subjective process which evaluates an
investment professional performance against several quantitative and qualitative
factors including the following:

Quantitative factors:

(i)      Relative ranking of the Portfolio's performance against its peers in
         the one, three and five year pre-tax investment performance categories.
         The Portfolio's performance is evaluated against peers in its fund
         category and performance is ranked from one to four on a declining
         scale depending on the quartile in which the portfolio manager's
         absolute performance falls. The portfolio manager is rewarded on a
         graduated scale for outperforming relative to his peers.

(ii)     Relative performance of the Portfolio's performance against the
         pre-determined indices for the product strategy against which the
         Portfolio's performance is measured. The portfolio manager is rewarded
         on a graduated scale for outperforming relative to the fund's benchmark
         index.

(iii)    Performance of the Portfolio's portfolio measured through attribution
         analysis models which analyzes the portfolio manager's contribution
         from both an asset allocation or sector allocation perspective and
         security selection perspective. This factor evaluates how the
         investment professional performs in linking performance with the
         client's investment objective including investment parameters and risk
         and return objectives. This factor may include some qualitative
         characteristics.

Qualitative factors:

(i)      Ability to work well with other members of the investment professional
         team and mentor junior members

(ii)     Contributions to the organizational overall success with new product
         strategies

(iii)    Other factors such as contributing to the team in a leadership role and
         by being responsive to requests for assistance

DWS Turner Mid Cap Growth VIP

Compensation. Turner's investment professionals receive a base salary
commensurate with their level of experience. Turner's goal is to maintain
competitive base salaries through review of industry standards, market
conditions, and salary surveys. Bonus compensation, which is a multiple of base
salary, is based on the performance of each individual's sector and portfolio
assignments relative to appropriate market benchmarks. In addition, each
employee is eligible for equity awards. Turner believes this compensation
provides incentive to attract and retain highly qualified people.

The objective performance criteria noted above accounts for 90% of the bonus
calculation. The remaining 10% is based upon subjective, "good will" factors
including teamwork, interpersonal relations, the individual's contribution to
overall success of the firm, media and client relations, presentation skills,
and professional development. Portfolio managers/analysts are reviewed on an
annual basis. The Chief Investment Officer, Robert E. Turner, CFA, is
responsible for setting base salaries, bonus targets, and making all subjective
judgments related to an investment professionals' compensation.

Portfolio Ownership of Portfolio Managers for each Portfolio managed by a
Subadvisor. The following table shows the dollar range of shares owned
beneficially and of record by each member of the Portfolios' management team in
the applicable Portfolio, 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 Portfolios'
most recent fiscal year end.

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

<S>                                             <C>                                      <C>
Dreman Small Mid Cap Value                David N. Dreman                               $0
                                          E. Clifton Hoover, Jr.                        $0
                                          Mark Roach                                    $0

Turner Mid Cap Growth                     Tara Hedlund                                  $0
                                          Jason Schrotberger                            $0
                                          Christopher K. McHugh                         $0

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

Other SEC Registered Investment Companies Managed:

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

Dreman Small Mid Cap Value  David N. Dreman                   19        $6,881,000,000                 0                  $0
                            E. Clifton Hoover, Jr.            15        $6,736,000,000                 0                  $0
                            Mark Roach                        10        $1,924,000,000                 0                  $0

Turner Mid Cap Growth       Tara Hedlund                       9        $2,000,000,000                 1         $18,000,000
                            Jason Schrotberger                14        $2,300,000,000                 1         $18,000,000
                            Christopher K. McHugh             14        $2,400,000,000                 3        $375,000,000

Other Pooled Investment Vehicles Managed:

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

Dreman Small Mid Cap Value  David N. Dreman                 6             $146,000,000             3             $5,230,000
                            E. Clifton Hoover, Jr.          0                       $0             0                     $0
                            Mark Roach                      0                       $0             0                     $0

Turner Mid Cap Growth       Tara Hedlund                    21            $195,000,000             0                     $0
                            Jason Schrotberger              30            $251,000,000             1            $21,000,000
                            Christopher K. McHugh           32            $268,000,000             1            $21,000,000

Other Accounts Managed:

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

Dreman Small Mid Cap
Value                     David N. Dreman                  125            $1,075,000,000           0                     $0
                          E. Clifton Hoover, Jr.           106              $941,056,000           0                     $0
                          Mark Roach                        19              $137,522,000           0                     $0
Turner Mid Cap Growth     Tara Hedlund                     16               $499,000,000           1            $63,000,000
                          Jason Schrotberger               58             $1,900,000,000           5           $302,000,000
                          Christopher K. McHugh            28             $1,100,000,000           2            $79,000,000
</TABLE>

In addition to the accounts above, an investment professional may manage
accounts in a personal capacity that may include holdings that are similar to,
or the same as, those of the 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.

Potential Conflicts of Interest for Subadvised Portfolios' Managers

DWS Dreman Small Mid Cap Value VIP. The subadvisor manages clients' accounts
using a contrarian value investment strategy. For both its large capitalization
and small capitalization strategies the subadvisor utilizes a model portfolio
and rebalances client's accounts whenever changes are made to the model
portfolio. In addition the subadvisor aggregates its trades and allocates the
trades to all clients' accounts in an equitable manner. The subadvisor strongly
believes aggregating its orders protect all clients from being disadvantaged by
price or time execution. The model portfolio approach and the trade aggregation
policy of the subadvisor seek to eliminate conflicts of interest that could
arise when a portfolio manager has day-to-day portfolio management
responsibilities with respect to more than one fund or account. The subadvisor
does not receive any performance-based fees from any of its accounts with the
exception of hedge funds that are managed by an affiliated firm. The hedge funds
are treated like all other client accounts and trades done for the fund are
generally aggregated with trades done for its other client accounts.

The subadvisor's investment professionals are compensated in the same manner for
all client accounts irrespective of the type of account.

DWS Turner Mid Cap Growth VIP. As is typical for many money managers, potential
conflicts of interest may arise related to Turner's management of accounts
including the Fund where not all accounts are able to participate in a desired
IPO, or other limited opportunity, relating to use of soft dollars and other
brokerage practices, related to the voting of proxies, employee personal
securities trading, and relating to a variety of other circumstances. In all
cases, however, Turner believes it has written policies and procedures in place
reasonably designed to prevent violations of the federal securities laws and to
prevent material conflicts of interest from arising. Please also see Turner's
Form ADV, Part II for a description of some of its policies and procedures in
this regard.

Regulatory Matters and Legal Proceedings

On December 21, 2006, Deutsche Asset Management ("DeAM") settled proceedings
with the Securities and Exchange Commission ("SEC") and the New York Attorney
General on behalf of Deutsche Asset Management, Inc. ("DAMI") and DIMA, the
investment advisors to many of the DWS Investments funds, regarding allegations
of improper trading of fund shares at DeAM and at the legacy Scudder and Kemper
organizations prior to their acquisition by DeAM in April 2002. These regulators
alleged that although the prospectuses for certain funds in the regulators' view
indicated that the funds did not permit market timing, DAMI and DIMA breached
their fiduciary duty to those funds in that their efforts to limit trading
activity in the funds were not effective at certain times. The regulators also
alleged that DAMI and DIMA breached their fiduciary duty to certain funds by
entering into certain market timing arrangements with investors. These trading
arrangements originated in businesses that existed prior to the currently
constituted DeAM organization, which came together as a result of various
mergers of the legacy Scudder, Kemper and Deutsche fund groups, and all of the
arrangements were terminated prior to the start of the regulatory investigations
that began in the summer of 2003. No current DeAM employee approved these
trading arrangements. Under the terms of the settlements, DAMI and DIMA neither
admitted nor denied any wrongdoing.

The terms of the SEC settlement, which identified improper trading in the legacy
Deutsche and Kemper mutual funds only, provide for payment of disgorgement in
the amount of $17.2 million. The terms of the settlement with the New York
Attorney General provide for payment of disgorgement in the amount of $102.3
million, which is inclusive of the amount payable under the SEC settlement, plus
a civil penalty in the amount of $20 million. The total amount payable by DeAM,
approximately $122.3 million, will be distributed to shareholders of the
affected funds in accordance with a distribution plan to be developed by a
distribution consultant. The funds' investment advisors do not believe these
amounts will have a material adverse financial impact on them or materially
affect their ability to perform under their investment management agreements
with the DWS funds. The above-described amounts are not material to Deutsche
Bank, and have already been reserved.

Among the terms of the settled orders, DeAM is subject to certain undertakings
regarding the conduct of its business in the future, including formation of a
Code of Ethics Oversight Committee to oversee all matters relating to issues
arising under the advisors' Code of Ethics; establishment of an Internal
Compliance Controls Committee having overall compliance oversight responsibility
of the advisors; engagement of an Independent Compliance Consultant to conduct a
comprehensive review of the advisors' supervisory compliance and other policies
and procedures designed to prevent and detect breaches of fiduciary duty,
breaches of the Code of Ethics and federal securities law violations by the
advisors and their employees; and commencing in 2008, the advisors shall undergo
a compliance review by an independent third party.

In addition, DeAM is subject to certain further undertakings relating to the
governance of the mutual funds, including that at least 75% of the members of
the Boards of Trustees/Directors overseeing the DWS Funds continue to be
independent of DeAM; the Chairmen of the DWS Funds' Boards of Trustees/Directors
continue to be independent of DeAM; DeAM maintain existing management fee
reductions for certain funds for a period of five years and not increase
management fees for these certain funds during this period; the funds retain a
senior officer (or independent consultants, as applicable) responsible for
assisting in the review of fee arrangements and monitoring compliance by the
funds and the investment advisors with securities laws, fiduciary duties, codes
of ethics and other compliance policies, the expense of which shall be borne by
DeAM; and periodic account statements, fund prospectuses and the mutual funds'
web site contain additional disclosure and/or tools that assist investors in
understanding the fees and costs associated with an investment in the funds and
the impact of fees and expenses on fund returns.

DeAM has also settled proceedings with the Illinois Secretary of State regarding
market timing matters. The terms of the Illinois settlement provide for investor
education contributions totaling approximately $4 million and a payment in the
amount of $2 million to the Securities Audit and Enforcement Fund.

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

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

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

Additional information announced by DeAM regarding the terms of the settlements
is available at www.dws-investments.com/regulatory_settlements.

The matters alleged in the regulatory settlements described above also serve as
the general basis of a number of private class action lawsuits involving the DWS
funds. These lawsuits name as defendants various persons, including certain DWS
funds, the funds' investment advisors and their affiliates, and certain
individuals, including in some cases fund Trustees/Directors, officers, and
other parties. Each DWS fund's investment advisor has agreed to indemnify the
applicable DWS funds in connection with these lawsuits, or other lawsuits or
regulatory actions that may be filed making similar allegations.

Based on currently available information, the funds' investment advisors believe
the likelihood that the pending lawsuits will have a material adverse financial
impact on a DWS fund is remote and such actions are not likely to materially
affect their ability to perform under their investment management agreements
with the DWS funds.

                             FUND SERVICE PROVIDERS

Recordkeeping

Technically, the shareholders of the Portfolios of the Fund are the
Participating Insurance Companies that offer the Portfolios as investment
options for holders of certain variable annuity contracts and variable life
insurance policies. Effectively, ownership of Portfolio shares is passed through
to insurance company contract and policy holders. The holders of the shares of
the Portfolios on the records of the Fund are the Participating Insurance
Companies and no information concerning the Portfolio holdings of specific
contract and policy holders is maintained by the Fund. The insurance companies
place orders for the purchase and redemption of Portfolio shares with the Fund
reflecting the investment of premiums paid, surrender and transfer requests and
other matters on a net basis; they maintain all records of the transactions and
holdings of Portfolio shares and distributions thereon for individual contract
and policy holders; and they prepare and mail to contract and policy holders
confirmations and periodic account statements reflecting such transactions and
holdings.

The Portfolios of the Fund may compensate certain insurance companies for record
keeping and other administrative services performed with regard to holdings of
Class B Portfolio shares as an expense of the Class B shares up to 0.15%. These
fees are included within the "Other Expenses" category in the fee table for each
portfolio in the Class B Shares Prospectus (see "How Much Investors Pay" in a
Portfolio's prospectus). In addition, the Advisor may, from time to time, pay
from its own resources certain insurance companies for record keeping and other
administrative services related to Class A and Class B shares of the Portfolios
held by such insurance companies on behalf of their contract and policy holders.


Administrator


Each Portfolio has entered into an administrative services agreement with the
Advisor (the "Administrative Services Agreement"), pursuant to which the Advisor
provides administrative services to the Portfolio including, among others,
providing the Portfolio with personnel, preparing and making required filings on
behalf of the Portfolio, maintaining books and records for the Portfolio, and
monitoring the valuation of Portfolio securities. For all services provided
under the Administrative Services Agreement, the Portfolio pays the Advisor a
fee, computed daily and paid monthly, of 0.100% of each Portfolio's average
daily net assets.

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

The administrative services fees paid by each Portfolio for the period from May
1, 2008 through December 31, 2008 (for the fiscal year ended December 31, 2008
and the period April 11, 2007 through December 31, 2007 for DWS Large Cap Value
VIP) are shown in the table below:

Portfolio                                          2008               2007
---------                                          ----               ----


DWS Balanced VIP                                      $267,755        N/A
DWS Blue Chip VIP                                     $105,793        N/A
DWS Core Fixed Income VIP                             $129,626        N/A
DWS Diversified International Equity VIP              $105,669        N/A
DWS Dreman Small Mid Cap Value VIP                    $244,036        N/A
DWS Global Thematic VIP                                $72,094        N/A
DWS Government & Agency Securities VIP                $143,349        N/A
DWS High Income VIP                                   $131,305        N/A
DWS Large Cap Value VIP                               $186,852      $197,410
DWS Mid Cap Growth VIP                                 $21,460        N/A
DWS Money Market VIP                                 $263,770         N/A
DWS Small Cap Growth VIP                              $74,373         N/A
DWS Strategic Income VIP                              $62,261         N/A
DWS Strategic Value VIP                              $331,580         N/A
DWS Technology VIP                                    $66,748         N/A
DWS Turner Mid Cap Growth VIP                         $59,597         N/A


Pursuant to an agreement between the Advisor and State Street Bank and Trust
Company, the Advisor has delegated certain administrative functions to SSB. The
costs and expenses of such delegation are borne by the Advisor, not by the
Portfolios.

Distributor

DWS Investments Distributors, Inc. ("DIDI" or the "Distributor"), 222 South
Riverside Plaza, Chicago, Illinois 60606, a wholly owned subsidiary of DIMA, is
the distributor and principal underwriter for shares of each Portfolio pursuant
to an Underwriting Agreement in the continuous offering of its shares. Terms of
continuation, termination and assignment under the underwriting agreement are
identical to those described above with regard to the investment management
agreements, except that termination other than upon assignment requires sixty
days' notice.


Each Portfolio that offers Class B shares has adopted a distribution plan under
Rule 12b-1 (the "Plan") that provides for fees payable as an expense of the
Class B shares. Under the Plan, the Fund may make quarterly payments as
reimbursement to the Distributor for distribution and shareholder servicing
related expenses incurred or paid by the distributor or a participating
insurance company. No such payment shall be made with respect to any quarterly
period in excess of an amount determined for such period at the annual rate of
0.25% of the average daily net assets of Class B shares during that quarterly
period. The fee is payable by the Fund, on behalf of each Portfolio, of up to
0.25% of the average daily net assets attributable to the Class B shares of a
Portfolio. Because 12b-1 fees are paid out of Portfolio assets on an ongoing
basis, they will, over time, increase the cost of investment and may cost more
than other types of sales charges. The Plan and any Rule 12b-1-related agreement
that is entered into by the Fund or the Distributor in connection with the Plan
will continue in effect for a period of more than one year only so long as
continuance is specifically approved at least annually by a vote of a majority
of the Fund's Board of Trustees, and of a majority of the Trustees who are not
interested persons (as defined in the 1940 Act) of the Fund or a Portfolio
("Independent Trustees"), cast in person at a meeting called for the purpose of
voting on the Plan, or the Rule 12b-1 related agreement, as applicable. In
addition, the Plan and any Rule 12b-1 related agreement, may be terminated as to
Class B shares of a Portfolio at any time, without penalty, by vote of a
majority of the outstanding Class B shares of that Portfolio or by vote of a
majority of the Independent Trustees. The Plan and Underwriting Agreement also
provide that it may not be amended to increase materially the amount that may be
spent for distribution of Class B shares of a Portfolio without the approval of
Class B shareholders of that Portfolio. Prior to February 3, 2009, DWS Money
Market VIP and prior to March 6, 2009, DWS Balanced VIP, DWS Diversified
International Equity VIP, DWS Mid Cap Growth VIP, DWS Small Cap Growth VIP, DWS
Strategic Income VIP and DWS Turner Mid Cap Growth VIP offered Class B shares.

For the fiscal year ended December 31, 2008 the distribution fees paid were as
follows:

<TABLE>
<CAPTION>
                                                    Total Fees for                                  Unpaid at
Portfolio                                             Fiscal 2008           Fees Waived         December 31, 2008
---------                                             -----------           -----------         -----------------

<S>                                                        <C>                   <C>                       <C>
DWS Balanced VIP                                           $5,567                $0                        $0
DWS Blue Chip VIP                                          $8,244                $0                      $188
DWS Core Fixed Income VIP                                $126,837                $0                    $6,729
DWS Diversified International Equity VIP                  $11,230                $0                       $20
DWS Dreman Small Mid Cap Value VIP                        $83,016                $0                    $4,823
DWS Global Thematic VIP                                   $17,747                $0                      $827
DWS Government & Agency Securities VIP                    $18,374                $0                    $1,739
DWS High Income VIP                                        $8,000                $0                       $34
DWS Large Cap Value VIP                                    $6,151                $0                        $0
DWS Mid Cap Growth VIP                                     $1,412                $0                        $4
DWS Money Market VIP                                      $10,318               $255                       $0
DWS Small Cap Growth VIP                                   $4,740                $1                      $125
DWS Strategic Income VIP                                   $7,116                $0                        $0
DWS Strategic Value VIP                                   $31,412                $0                      $431
DWS Technology VIP                                         $6,303                $0                      $329
DWS Turner Mid Cap Growth VIP                              $3,805                $0                      $139


In addition, DIDI may, from time to time, from its own resources pay certain
firms additional amounts for ongoing administrative services and assistance
provided to their customers and clients who are shareholders of the Fund.

Custodian


State Street Bank and Trust Company ("SSB"), 225 Franklin Street, Boston,
Massachusetts 02110, as custodian, has custody of all securities and cash of
each Portfolio (other than the DWS Diversified International Equity VIP and DWS
Global Thematic VIP). Brown Brothers Harriman & Co. ("BBH"), as custodian, has
custody of all securities and cash of DWS Diversified International Equity VIP
and DWS Global Thematic VIP. Each custodian attends to the collection of
principal and income, and payment for and collection of proceeds of securities
bought and sold by those Portfolios.

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


Transfer Agent

DWS Investments Service Company ("DISC" or the "Transfer Agent"), 811 Main
Street, Kansas City, Missouri 64105-2005, an affiliate of the Advisor, is each
Portfolio's transfer agent, dividend-paying agent and shareholder service agent.


The Transfer Agent receives an annual service fee for each account of the Fund,
based on the type of account. For open retail accounts, the fee is a flat fee
ranging from $20.00 to $27.50 per account, for open wholesale money funds the
fee is $35.05 per account, while for certain retirement accounts serviced on the
recordkeeping system of ADP, Inc., the fee is a flat fee up to $3.80 per account
(as of 2008, indexed to inflation) plus an asset based fee of up to 0.25% of
average net assets. 1/12th of the annual service charge for each account is
charged and payable to the Transfer Agent each month. A fee is charged for any
account which at any time during the month had a share balance in the Fund.
Smaller fees are also charged for closed accounts for which information must be
retained on the Transfer Agent's system for up to 18 months after closing for
tax reporting purposes.


Fees paid to DISC for the period ended December 31, 2008 are set forth below:

Portfolio                                              Fiscal Year 2008               Waived
---------                                              ----------------               ------

DWS Balanced VIP A                                            $221                      $221
DWS Blue Chip VIP A                                           $361                       N/A
DWS Blue Chip VIP B                                            $22                       N/A
DWS Core Fixed Income VIP A                                   $259                       N/A
DWS Core Fixed Income VIP B                                    $82                       N/A
DWS Diversified International Equity VIP A                    $152                       N/A
DWS Dreman Small Mid Cap Value VIP A                          $706                       N/A
DWS Dreman Small Mid Cap Value VIP B                          $289                       N/A
DWS Global Thematic VIP A                                     $112                       N/A
DWS Global Thematic VIP B                                     $112                       N/A
DWS Government & Agency VIP A                                 $552                      $552
DWS Government & Agency VIP B                                  $71                       N/A
DWS High Income VIP A                                         $399                       N/A
DWS High Income VIP B                                          $33                       N/A
DWS Large Cap Value VIP A                                     $312                       N/A
DWS Large Cap Value VIP B                                      $60                       $60
DWS Mid Cap Growth VIP A                                      $208                      $208
DWS Money Market VIP A                                        $711                      $711
DWS Small Cap Growth VIP A                                    $387                      $151
DWS Strategic Income VIP A                                    $147                       N/A
DWS Strategic Value VIP A                                     $604                       N/A
DWS Strategic Value VIP B                                     $243                      $243
DWS Technology VIP A                                          $233                       N/A
DWS Technology VIP B                                          $142                       N/A
DWS Turner Mid Cap Growth VIP A                                $93                       $93

Fees paid to DISC for the period ended December 31, 2007 are set forth below:

Portfolio                                              Fiscal Year 2007               Waived
---------                                              ----------------               ------

DWS Balanced VIP A                                            $453                      $453
DWS Blue Chip VIP A                                           $348                       N/A
DWS Blue Chip VIP B                                           $102                       N/A
DWS Core Fixed Income VIP A                                   $206                       N/A
DWS Core Fixed Income VIP B                                   $162                       N/A
DWS Diversified International Equity VIP A                    $247                       N/A
DWS Dreman Small Cap Value VIP A                              $712                       N/A
DWS Dreman Small Cap Value VIP B                              $301                       N/A
DWS Global Thematic VIP A                                     $313                      $313
DWS Global Thematic VIP B                                     $153                      $153
DWS Government & Agency VIP A                                 $918                      $918
DWS Government & Agency VIP B                                  $96                       N/A
DWS High Income VIP A                                         $375                       N/A
DWS High Income VIP B                                         $173                       N/A
DWS Large Cap Value VIP A                                     $332                       N/A
DWS Large Cap Value VIP B                                     $146                       N/A
DWS Mid Cap Growth VIP A                                      $237                      $237
DWS Money Market VIP A                                        $690                      $690
DWS Small Cap Growth VIP A                                    $365                      $365
DWS Strategic Income VIP A                                    $225                       N/A
DWS Strategic Value VIP A                                     $682                       N/A
DWS Strategic Value VIP B                                     $313                      $313
DWS Technology VIP A                                          $258                       N/A
DWS Technology VIP B                                          $232                       N/A
DWS Turner Mid Cap Growth VIP A                               $104                       N/A

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

Pursuant to a sub-transfer agency agreement between DISC and DST Systems, Inc.
("DST"), DISC has delegated certain transfer agent, dividend paying agent and
shareholder servicing agent functions to DST. The costs and expenses of such
delegation are borne by DISC, not by the Funds.

Legal Counsel

Vedder Price P.C., 222 North LaSalle Street, Chicago, Illinois 60601, serves as
legal counsel to the Fund.

Ropes & Gray LLP, One International Place, Boston, MA 02110-2624, serves as
counsel to the Independent Trustees.

Independent Registered Public Accounting Firm

The financial highlights of the Portfolios included in the Portfolios'
prospectuses and the financial statements of the Portfolios incorporated by
reference in this Statement of Additional Information have been so included or
incorporated by reference in reliance on the report of Ernst & Young LLP,
independent registered public accounting firm, 200 Clarendon Street, Boston, MA
02116, given on the authority of said firm as experts in auditing and
accounting. Ernst & Young LLP audits the financial statements of the Portfolios
and provides other audit, tax and related services. Shareholders will receive
annual audited financial statements and semi-annual unaudited financial
statements.

Fund Accounting Agent

Prior to May 1, 2008 (April 11, 2007 for DWS Large Cap Value VIP), DWS
Investments Fund Accounting Corp. ("DIFA"), One Beacon Street, Boston,
Massachusetts, 02108, a subsidiary of DIMA, was responsible for determining the
daily net asset value per share and maintaining the Portfolios and general
accounting records of each Portfolio. DIFA received no fee for its services to
each Portfolio, other than the Portfolios noted below.

For the fiscal years ended December 31, noted below, and for the period from
January 1, 2008 through April 30, 2008, DIFA received a fee for its services
from certain Portfolios as follows:

Portfolio                                               Fiscal 2008     Fiscal 2007    Fiscal 2006
---------                                               -----------     -----------    -----------

DWS Global Thematic VIP                                       $69,550       $242,233         $175,325
DWS Mid Cap Growth VIP                                        $20,790        $60,283          $59,257
DWS Strategic Value VIP                                       $40,370       $141,319         $153,345
DWS Technology VIP                                            $21,129        $59,280          $66,562
DWS Turner Mid Cap Growth VIP                                 $22,504        $81,746          $94,442
</TABLE>

Pursuant to a sub-administration and sub-accounting agreement among the Advisor,
DIFA and SSB, DIFA had delegated certain fund accounting functions to SSB under
each Portfolio's fund accounting agreements. The costs and expenses of such
delegation were borne by DIFA, not by the Portfolios.

                             PORTFOLIO TRANSACTIONS

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

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

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

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

The Advisor is permitted by Section 28(e) of the Securities Exchange Act of
1934, as amended ("1934 Act"), when placing portfolio transactions for a
Portfolio, to cause the Portfolio to pay brokerage commissions in excess of that
which another broker-dealer might charge for executing the same transaction in
order to obtain research and brokerage services if the Advisor determines that
such commissions are reasonable in relation to the overall services provided.
The Advisor may from time to time, in reliance on Section 28(e) of the 1934 Act,
execute portfolio transactions with broker-dealers that provide research and
brokerage services to the Advisor. Consistent with the Advisor's policy
regarding best execution, where more than one broker is believed to be capable
of providing best execution for a particular trade, the Advisor may take into
consideration the receipt of research and brokerage services in selecting the
broker-dealer to execute the trade. Although certain research and brokerage
services from broker-dealers may be useful to a Portfolio and to the Advisor, it
is the opinion of the Advisor that such information only supplements its own
research effort since the information must still be analyzed, weighed and
reviewed by the Advisor's staff. To the extent that research and brokerage
services of value are received by the Advisor, the Advisor may avoid expenses
that it might otherwise incur. Research and brokerage services received from a
broker-dealer may be useful to the Advisor and its affiliates in providing
investment management services to all or some of its clients, which includes a
Portfolio. Services received from broker-dealers that executed securities
transactions for a Portfolio will not necessarily be used by the Advisor
specifically to service such Fund.

Research and brokerage services provided by broker-dealers may include, but are
not limited to, information on the economy, industries, groups of securities,
individual companies, statistical information, accounting and tax law
interpretations, political developments, legal developments affecting portfolio
securities, technical market action, pricing and appraisal services, credit
analysis, risk measurement analysis, performance analysis and measurement and
analysis of corporate responsibility issues. Research and brokerage services are
typically received in the form of written or electronic reports, access to
specialized financial publications, telephone contacts and personal meetings
with security analysts, but may also be provided in the form of access to
various computer software and meetings arranged with corporate and industry
representatives.

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

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

The Advisor may use brokerage commissions to obtain certain brokerage products
or services that have a mixed use (i.e., it also serves a function that does not
relate to the investment decision-making process). In those circumstances, the
Advisor will make a good faith judgment to evaluate the various benefits and
uses to which it intends to put the mixed use product or service and will pay
for that portion of the mixed use product or service that it reasonably believes
does not constitute research and brokerage services with its own resources.

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

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

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

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

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

Portfolio Turnover. The portfolio turnover rates for each Portfolio, other than
DWS Money Market VIP, are listed below. Each Portfolio's average portfolio
turnover rate is the ratio of the lesser of sales or purchases to the monthly
average value of the portfolio securities owned during the year, excluding all
securities with maturities or expiration dates at the time of acquisition of one
year or less. Securities with maturities of less than one year are excluded from
portfolio turnover rate calculations. Frequency of portfolio turnover will not
be a limiting factor should the Advisor or a Subadvisor deem it desirable to
purchase or sell securities.

Purchases and sales are made for a Portfolio whenever necessary, in management's
opinion, to meet a Portfolio's objective. Higher portfolio turnover (over 100%)
involves correspondingly greater brokerage commissions or other transaction
costs. Higher portfolio turnover may result in the realization of greater net
short-term capital gains for federal income tax purposes.

The Portfolios do not generally make investments for short-term profits, but are
not restricted in policy with regard to portfolio turnover and will make changes
in their investment portfolios from time to time as business and economic
conditions and market prices may dictate and as its investment policy may
require.

Portfolio turnover rates for the years ended December 31, 2008 and 2007,
respectively, for the Portfolios are as follows:

<TABLE>
<CAPTION>
Name                                                 December 31, 2008              December 31, 2007
----                                                 -----------------              -----------------

<S>                                                          <C>                                  <C>
DWS Balanced VIP                                             263%                                 190%
DWS Blue Chip VIP                                            127%                                 275%
DWS Core Fixed Income VIP                                    215%                                 197%
DWS Dreman Small Mid Cap Value VIP                            49%                                 110%
DWS Global Thematic VIP                                      229%                                 191%
DWS Government & Agency Securities VIP                       543%                                 465%
DWS High Income VIP                                           38%                                  61%
DWS Diversified International Equity VIP                     132%                                 117%
DWS Large Cap Value VIP                                       97%                                 103%
DWS Mid Cap Growth VIP                                        82%                                  68%
DWS Small Cap Growth VIP                                      67%                                  67%
DWS Strategic Income VIP                                     234%                                 147%
DWS Strategic Value VIP                                       28%                                  27%
DWS Technology VIP                                            71%                                  91%
DWS Turner Mid Cap Growth VIP                                156%                                 133%

DWS Balanced VIP: The Portfolio is required to identify any securities of its
"regular brokers or dealers" (as such term is defined in the 1940 Act) that the
Portfolio has acquired during the most recent fiscal year. As of December 31,
2008, the Portfolio held the following securities of its regular brokers or
dealers:




                                                                              Value of Securities Owned as
Name of Regular Broker or Dealer or Parent (Issuer)                               of December 31, 2008
---------------------------------------------------                               --------------------


1st Source Corp.                                                                       $28,000
Aegon NV                                                                               $25,000
Alleanza Assicurazioni SpA                                                              $2,000
Allianz SE (E)                                                                        $348,000
Allied Irish Banks PLC.                                                                $37,000
Allied World Assurance Co.                                                            $102,000
AMP Limited NPV                                                                         $4,000
Anglo Irish Bank Corp. PLC.                                                             $4,000
Argo Group International Holding                                                      $153,000
Assicurazioni Generali SpA                                                             $32,000
Assured Guaranty LTD.                                                                  $13,000
Astoria Finl Corp.                                                                     $53,000
ASX Limited                                                                             $7,000
Atrium European Real Estate LTD.                                                        $7,000
Australia & New Zealand Banking Group, PLC.                                            $10,000
Aviva PLC.                                                                              $3,000
AXA                                                                                    $27,000
AXA Asia Pacific Holdings LTD.                                                          $2,000
Baloise Holdings PLC.                                                                   $7,000
Banco Latinoamericano de Exportaciones                                                $121,000
Banco Popolare do Verona e Novara                                                      $10,000
Banco Santander, S.A.                                                                  $40,000
Bank of America Corp.                                                                 $553,000
Bank of Montreal                                                                        $8,000
Bank of Nova Scotia                                                                    $13,000
Bank of New York Mellon Corp.                                                         $589,000
Bank of East Asia                                                                       $4,000
Bank of Yokohama LTD.                                                                   $6,000
Barclays Bank                                                                           $3,000
Banco Bilbao Vizcaya Argenta                                                           $27,000
Banca Popolare di Milano                                                               $13,000
Banco Comercial Portugues SA                                                           $99,000
Banco Espirito Santo SA                                                                $78,000
Banco Popular Espanol SA                                                                $5,000
BGC Partners Inc.                                                                       $6,000
Governor & Co. of the Bank of Ireland                                                  $21,000
BNP Paribas                                                                           $240,000
BOC Hong Kong                                                                           $5,000
Brookfield Asset Management, Inc.                                                       $5,000
Capitaland LTD.                                                                        $11,000
Capitamall Trust                                                                        $3,000
Canadian Imperial Bank of Commerce                                                    $382,000
Cheung Kong                                                                            $23,000
Chuo Mitsui Trust Holdings, Inc.                                                        $5,000
Commonwealth Bank of Australia                                                         $12,000
CNP Assurances                                                                          $2,000
Commerzbank AG                                                                         $11,000
Community Bank System, Inc.                                                            $68,000
Corio NV                                                                                $3,000
Credit Agricole SA                                                                      $4,000
Credit Saison                                                                           $3,000
Credit Suisse Group                                                                    $23,000
Daiwa Securities Group, Inc.                                                            $6,000
Danske Bank A/S                                                                        $32,000
DBS Group Holdings LTD.                                                                $21,000
Deutsche Boerse AG                                                                    $344,000
Dexia SA                                                                               $13,000
Dime Community Bancshares                                                             $164,000
DNB NOR Bank ASA                                                                      $177,000
Doral Financial Corp.                                                                  $57,000
Deutsche Postbank AG                                                                    $1,000
Enstar Group LTD.                                                                      $35,000
Erste Group Bank AG                                                                   $102,000
FNB Corp-Pennsylvania                                                                  $45,000
First Financial Bancshares, Inc.                                                       $72,000
First Merchants Corp.                                                                  $22,000
First Merit Corp.                                                                     $136,000
Flushing Financial Corp.                                                               $55,000
Fortis Bank                                                                            $18,000
Goldman Sachs Group, Inc.                                                           $1,315,000
GPT Group                                                                               $1,000
Great West Lifeco, Inc.                                                                 $2,000
Hallmark Financial Services, Inc.                                                      $18,000
Hung Lung Property                                                                      $4,000
Hang Seng Bank LTD.                                                                    $15,000
HBOS PLC                                                                                $3,000
HCP, Inc.                                                                              $50,000
Henderson Land Development Co.                                                          $4,000
Hong Kong Exchange & Clearing LTD.                                                     $15,000
Hopewell Holdings                                                                       $3,000
HSBC Holding PLC.                                                                     $160,000
Hudson City Bancorp., Inc.                                                            $476,000
Hypo Real Estate Holding AG                                                             $4,000
IGM Financial, Inc.                                                                     $3,000
ING Groep NV                                                                           $56,000
Insurance Australia Group LTD.                                                          $3,000
Interactive Brokers Group Inc.                                                         $20,000
International Bancshares  Corp.                                                        $59,000
Intesa Sanpaolo SpA                                                                   $298,000
Investors AB                                                                            $9,000
Irish Life & Permanent PLC.                                                             $4,000
JPMorgan Chase & Co.                                                                $2,599,000
Julius Baer Holdings AG-B                                                              $10,000
Jyske Bank A/S                                                                          $9,000
KBC Ancora                                                                              $1,000
KBC Groep NV                                                                           $27,000
Kerry Properties LTD.                                                                   $3,000
Labranche & Co., Inc.                                                                  $14,000
Lakeland Bancorp                                                                       $16,000
Legal & General Group PLC.                                                              $2,000
Lend Lease Corp., LTD.                                                                  $1,000
Link Real Estate NPV                                                                    $4,000
Lloyds TSB Group PLC.                                                                   $2,000
Macquarie Group LTD.                                                                    $8,000
Man Group PLC.                                                                          $2,000
Manulife Financial Corp                                                                $13,000
Mediobanca SpA                                                                          $4,000
Mitsubishi Estate Co., LTD.                                                            $16,000
Mitsubishi UFJ Financial Group Inc.                                                   $260,000
Mitsui Fudosan Co., LTD.                                                               $17,000
Mitsui Sumitomo Group                                                                  $10,000
Mizuho Financial Group, Inc.                                                           $18,000
Monte Paschi Siena                                                                      $2,000
Munchener Ruckversicherungs-Gesellschaft AG                                           $372,000
National Bank of Canada                                                                 $3,000
National Penn Bancshares, Inc.                                                        $155,000
National Australia Bank LTD.                                                           $12,000
NBT Bancorp., Inc.                                                                    $131,000
New World Development Co.,                                                              $6,000
Nomura Holdings, Inc.                                                                   $7,000
Nordea Bank AB                                                                         $27,000
Old Mutual PLC.                                                                         $7,000
Oriental Finance Group, Inc.                                                            $6,000
ORIX Corp.                                                                              $3,000
Oversea-Chinese Banking Corp.                                                          $24,000
PNC Financial Services Group, Inc.                                                    $596,000
Power Corp. of Canada                                                                   $4,000
Power Financial Corp.                                                                   $2,000
Private Bank Corp., Inc.                                                              $149,000
Prospect Capital Corp.                                                                $152,000
Prudential PLC.                                                                         $3,000
QBE Insurance Group LTD.                                                                $7,000
Raiffeisen International Bank-Holding                                                  $32,000
Reinet Investments SCA                                                                  $2,000
Reinsurance Group of America, Inc. (RGA)                                               $94,000
Republic Bancorp.,                                                                     $19,000
Resona Holdings                                                                         $5,000
Royal Bank of Canada                                                                   $20,000
Royal Bank of Scotland Group PLC. (THE)                                                 $6,000
S & T Bancorp, Inc.                                                                   $121,000
Sampo Oyj                                                                              $87,000
Santander Bancorp                                                                      $62,000
Singapore Exchange                                                                      $4,000
Sino Land Co., Ltd                                                                      $6,000
Skandinaviska Enskilda Banken AB                                                        $7,000
Societe Generale                                                                      $299,000
Sompo Japan Insurance, Inc.                                                             $7,000
Southside Bancshares                                                                   $45,000
Standard Charter Bank                                                                   $9,000
State Street Corp.                                                                    $391,000
Stockland                                                                               $3,000
Sumitomo Mitsui Banking Corp.                                                          $13,000
Sumitomo Trust & Banking Co., LTD.                                                      $6,000
Sun Hung Kai Properties LTD.                                                           $17,000
Sun Life Financial, Inc.                                                                $7,000
Suncorp-Metway LTD.                                                                     $3,000
Susquehanna Bancshares Inc.                                                            $16,000
SVB Financial Group                                                                    $45,000
Svenska Handelsbanken                                                                  $19,000
Swedbank AB                                                                             $9,000
Swiss Life Holding                                                                      $1,000
Swiss Reinsurance LTD                                                                   $9,000
SWS Group, Inc.                                                                        $34,000
Sybank AS                                                                               $5,000
T&D Holdings, Inc.                                                                      $4,000
Tokio Marine Holdings, Inc.                                                             $9,000
Tomkins Financial Corp.                                                                $93,000
Topdanmark AS                                                                          $16,000
Toronto Dominion Bank                                                                   $7,000
Trygvesta A/S                                                                          $15,000
UBI Banca                                                                              $10,000
UBS AG                                                                                 $33,000
UMB Financial Corp.                                                                   $143,000
Unibail-Rodamco                                                                         $6,000
UniCredit SpA.                                                                         $22,000
United Bankshares Inc.                                                                 $80,000
United Overseas Bank LTD.                                                             $199,000
US Bancorp                                                                            $438,000
Vienna Insurance Group                                                                 $31,000
Wereldhave NV                                                                           $4,000
Westfield Group                                                                         $8,000
Westpac Banking Corp                                                                   $17,000
WSFS Financial Corp                                                                    $34,000
Zurich Financial Services AG                                                           $26,000
Citigroup                                                                           $4,157,000
Merrill Lynch & Co.                                                                   $785,000

DWS Blue Chip VIP: The Portfolio is required to identify any securities of its
"regular brokers or dealers" (as such term is defined in the 1940 Act) that the
Portfolio has acquired during the most recent fiscal year. As of December 31,
2008, the Portfolio held the following securities of its regular brokers or
dealers:




                                                                             Value of Securities Owned as
Name of Regular Broker or Dealer or Parent (Issuer)                              of December 31, 2008
---------------------------------------------------                              --------------------


Unibanco Uniao de Bancos Bras                                                         $446,000
Wells Fargo                                                                         $1,492,000
State Street Bank & Trust                                                             $716,000
JP Morgan Chase                                                                     $2,447,000
Bank of New York Mellon Corp.                                                       $1,790,000
Gallagher Arthur & Co.                                                                 $75,000

DWS Core Fixed Income VIP: The Portfolio is required to identify any securities
of its "regular brokers or dealers" (as such term is defined in the 1940 Act)
that the Portfolio has acquired during the most recent fiscal year. As of
December 31, 2008, the Portfolio held the following securities of its regular
brokers or dealers:




                                                                             Value of Securities Owned as
Name of Regular Broker or Dealer or Parent (Issuer)                              of December 31, 2008
---------------------------------------------------                              --------------------


Citigroup                                                                           $4,592,000
Banco Mercantil del Norte SA                                                          $213,000
Bank of America Corp.                                                                 $270,000
Dresdner Advisors LLC.                                                                $158,000
HBOS PLC.                                                                             $172,000
Morgan Stanley                                                                      $3,902,000
National Australia Bank LTD.                                                          $467,000
US Bancorp                                                                            $242,000
PNC Financial Services Group                                                          $296,000
Royal Bank of Scotland Group PLC (THE)                                                $440,000
Standard Charter Bank                                                                 $403,000
Woori Investment & Securities America, Inc.                                            $66,000
Xstrata Finance Canada LTD.                                                         $1,129,000
Wachovia                                                                            $1,476,000
Wells Fargo                                                                         $2,868,000
HSBC Securities                                                                       $370,000
Merrill Lynch                                                                       $1,675,000
JP Morgan                                                                          $10,108,000
Lehman Brothers                                                                     $1,291,000
Bear Sterns                                                                         $2,288,000

DWS Diversified International Equity VIP: The Portfolio is required to identify
any securities of its "regular brokers or dealers" (as such term is defined in
the 1940 Act) that the Portfolio has acquired during the most recent fiscal
year. As of December 31, 2008, the Portfolio held the following securities of
its regular brokers or dealers:




                                                                            Value of Securities Owned as of
Name of Regular Broker or Dealer or Parent (Issuer)                                December 31, 2008
---------------------------------------------------                                -----------------


Allianz AG                                                                           $1,495,000
AXA                                                                                  $1,200,000
BNP Paribas                                                                            $963,000
China Life Insurance Co., LTD.                                                       $1,219,000
Deutsche Boerse AG                                                                   $1,806,000
HSBC Holdings PLC                                                                      $874,000
Intesa Sanpaolo SpA                                                                  $1,323,000
Mitsubishi UFJ Financial Group                                                       $1,458,000
Munchener Ruckversicherungs-Gesellschaft AG                                          $1,933,000
Societe Generale                                                                     $1,573,000
United Overseas Bank LTD                                                             $1,318,000

DWS Dreman Small Mid Cap Value VIP: The Portfolio is required to identify any
securities of its "regular brokers or dealers" (as such term is defined in the
1940 Act) that the Portfolio has acquired during the most recent fiscal year. As
of December 31, 2008, the Portfolio held the following securities of its regular
brokers or dealers:


                                                                              Value of Securities Owned as
Name of Regular Broker or Dealer or Parent (Issuer)                               of December 31, 2008
---------------------------------------------------                               --------------------


Arch Capital Group LTD.                                                              $5,138,000
Argo Group International Holding                                                     $6,180,000
Boston Private Financial                                                             $1,595,000
Endurance Specialty Holdings LTD.                                                    $6,724,000
FBR Capital Market, Inc.                                                               $465,000
IPC Holdings LTD                                                                     $5,588,000
MB Financial, Inc.                                                                   $4,978,000
Platinum Underwriters Holdings LTD                                                   $5,179,000
Willis Group Holdings LTD                                                            $1,173,000

DWS Global Thematic VIP: The Portfolio is required to identify any securities of
its "regular brokers or dealers" (as such term is defined in the 1940 Act) that
the Portfolio has acquired during the most recent fiscal year. As of December
31, 2008, the Portfolio held the following securities of its regular brokers or
dealers:




                                                                                Value of Securities Owned as
Name of Regular Broker or Dealer or Parent (Issuer)                                 of December 31, 2008
---------------------------------------------------                                 --------------------


Aberdeen Asset Management                                                                $680,000
Siam City Bank Pcl-for Reg.                                                              $106,000
Mizuho Financial Group, Inc.                                                             $608,000
Australian Wealth Management LTD                                                         $443,000
Lazard LTD.                                                                              $868,000
Industrial & Commercial Bank of China                                                    $320,000
Julius Baer Holdings AG-B                                                                $566,000
Deutsche Postbank AG                                                                     $873,000
Merrill Lynch & Co.                                                                      $368,000

DWS Government & Agency Securities VIP: The Portfolio is required to identify
any securities of its "regular brokers or dealers" (as such term is defined in
the 1940 Act) that the Portfolio has acquired during the most recent fiscal
year. As of December 31, 2008, the Portfolio did not hold any securities of its
regular brokers or dealers.

DWS High Income VIP: The Portfolio is required to identify any securities of its
"regular brokers or dealers" (as such term is defined in the 1940 Act) that the
Portfolio has acquired during the most recent fiscal year. As of December 31,
2008, the Portfolio held the following securities of its regular brokers or
dealers:




                                                                              Value of Securities Owned as
Name of Regular Broker or Dealer or Parent (Issuer)                               of December 31, 2008
---------------------------------------------------                               --------------------


Buffalo Thunder Development Authority                                                  $50,000
Citigroup, Inc. Series E                                                              $380,000
GMAC LLC                                                                            $1,513,000
Hawker Beechcraft Acquisition Co., LLC.                                               $729,000
Hellas Telecom                                                                        $189,000
Hexion Specialty Chemicals                                                            $576,000
Local TV Finance LLC.                                                                  $95,000
Regency Energy Partners LP                                                            $353,000
Tropicana Entertainment LLC.                                                           $12,000
UCI Holdco, Inc.                                                                      $109,000
Universal City Development Partners                                                 $1,371,000
Vanguard Health Holding Co. I LLC.                                                    $357,000
Vanguard Health Holding Co. II LLC.                                                   $914,000

DWS Large Cap Value VIP: The Portfolio is required to identify any securities of
its "regular brokers or dealers" (as such term is defined in the 1940 Act) that
the Portfolio has acquired during the most recent fiscal year. As of December
31, 2008, the Portfolio held the following securities of its regular brokers or
dealers:




                                                                              Value of Securities Owned as
Name of Regular Broker or Dealer or Parent (Issuer)                               of December 31, 2008
---------------------------------------------------                               --------------------


ACE Limited                                                                          $1,714,000
Bank America Corp.                                                                     $574,000
Capitol Federal Financial                                                              $580,000
CDN Imperial BK of Commerce                                                          $1,434,000
Jefferies Group, Inc.                                                                  $492,000
JPMorgan Chase & Co.                                                                 $1,561,000
NYSE Euronext                                                                        $1,174,000
PartnerRe LTD.                                                                         $643,000
PNC Financial Services Group                                                           $468,000
Synovus Financial Corp.                                                                $414,000
TD Ameritrade Holding Corp.                                                            $679,000

DWS Mid Cap Growth VIP: The Portfolio is required to identify any securities of
its "regular brokers or dealers" (as such term is defined in the 1940 Act) that
the Portfolio has acquired during the most recent fiscal year. As of December
31, 2008, the Portfolio held the following securities of its regular brokers or
dealers:




                                                                             Value of Securities Owned as
Name of Regular Broker or Dealer or Parent (Issuer)                              of December 31, 2008
---------------------------------------------------                              --------------------


Waddell & Reed Financial, Inc.                                                        $212,000
Northern Trust Corp.                                                                  $182,000
T. Rowe Price Group, Inc.                                                             $344,000
TD Ameritrade Holding Corp.                                                           $272,000

DWS Money Market VIP: The Portfolio is required to identify any securities of
its "regular brokers or dealers" (as such term is defined in the 1940 Act) that
the Portfolio has acquired during the most recent fiscal year. As of December
31, 2008, the Portfolio held the following securities of its regular brokers or
dealers:




                                                                             Value of Securities Owned as
Name of Regular Broker or Dealer or Parent (Issuer)                              of December 31, 2008
---------------------------------------------------                              --------------------


Abbey National Treasury Services PLC                                                $3,500,000
Australia & New Zealand Banking Group, PLC.                                         $7,490,000
Barclays Bank PLC.                                                                  $3,000,000
Bank of America NA                                                                 $13,173,000
Bank of Nova Scotia                                                                 $7,800,000
Bank of Scotland                                                                    $1,200,000
BNP Paribas                                                                         $3,500,000
Allied Irish Banks PLC                                                              $3,000,000
Credit Agricole SA                                                                  $2,500,000
General Electric Capital Corp                                                      $13,959,000
ING Bank NV                                                                           $750,000
Intesa Sanpaolo SpA.                                                                $5,800,000
JPMorgan Chase & Co.                                                               $29,000,000
Metropolitan Life Global Funding I                                                  $1,500,000
National Australia Bank LTD                                                         $3,250,000
Natixis                                                                             $3,000,000
Rabobank Netherland                                                                 $5,000,000
Royal Bank of Canada                                                                $1,800,000
Svenska Handelsbanken                                                               $8,000,000
Citigroup, Inc.                                                                     $8,000,000

DWS Small Cap Growth VIP: The Portfolio is required to identify any securities
of its "regular brokers or dealers" (as such term is defined in the 1940 Act)
that the Portfolio has acquired during the most recent fiscal year. As of
December 31, 2008, the Portfolio held the following securities of its regular
brokers or dealers:




                                                                              Value of Securities Owned as
Name of Regular Broker or Dealer or Parent (Issuer)                               of December 31, 2008
---------------------------------------------------                               --------------------


Waddell & Reed Financial, Inc.                                                         $611,000

DWS Strategic Income VIP: The Portfolio is required to identify any securities
of its "regular brokers or dealers" (as such term is defined in the 1940 Act)
that the Portfolio has acquired during the most recent fiscal year. As of
December 31, 2008, the Portfolio held the following securities of its regular
brokers or dealers:




                                                                              Value of Securities Owned as
Name of Regular Broker or Dealer or Parent (Issuer)                               of December 31, 2008
---------------------------------------------------                               --------------------


New ASAT (Finance) LTD.                                                                  $9,000
NiSource Finance Corp.                                                                   $8,000
Aries Vermogensverwaltung GMBH.                                                        $316,000
Buffalo Thunder Development Authority                                                    $6,000
Cit Group, Inc.                                                                        $323,000
Citigroup, Inc., Series E                                                               $53,000
Citigroup, Inc.                                                                         $71,000
Commonwealth Bank of Australia                                                         $987,000
Depfa ACS Bank                                                                         $920,000
Hawker Beechcraft Acquisition Co., LLC.                                                 $59,000
Hawker Beechcraft Acquisition Co., LLC. (PIK)                                           $34,000
Hexion U.S. Finance Corp.                                                               $10,000
Kreditanstalt fuer Wiederaufbau EUR                                                  $3,443,000
Kreditanstalt fuer Wiederaufbau JPY                                                  $3,206,000
Local TV Finance LLC.                                                                   $11,000
Regency Energy Partners LP                                                              $55,000
Tropicana Entertainment LLC.                                                             $2,000
UCI Holdco, Inc.                                                                        $12,000
Universal City Development Partners                                                    $152,000
Vanguard Health Holding Co. I LLC                                                       $59,000
Vanguard Health Holding Co. II LLC                                                     $125,000
Williams Companies, Inc.                                                                $10,000
Credit Suisse                                                                          $623,000
JP Morgan Chase                                                                        $134,000
Wachovia Bank Commercial Mortgage Trust                                                $610,000
Wachovia Corp.                                                                         $249,000
GMAC LLC                                                                               $212,000
Washington Mutual Master Note Trust                                                    $742,000

DWS Strategic Value VIP: The Portfolio is required to identify any securities of
its "regular brokers or dealers" (as such term is defined in the 1940 Act) that
the Portfolio has acquired during the most recent fiscal year. As of December
31, 2008, the Portfolio held the following securities of its regular brokers or
dealers:




                                                                              Value of Securities Owned as
Name of Regular Broker or Dealer or Parent (Issuer)                               of December 31, 2008
---------------------------------------------------                               --------------------


Bank of America Corp.                                                               $10,186,000
Goldman Sachs Group, Inc.                                                            $5,855,000
JPMorgan Chase & Co.                                                                 $8,032,000
PNC Financial Services Group                                                         $7,294,000
Suntrust Banks, Inc.                                                                 $4,006,000
Travelers Companies Inc.                                                             $3,257,000
US Bancorp                                                                           $4,392,000
Washington Mutual, Inc.                                                                 $30,000
Citigroup, Inc.                                                                      $3,752,000
Wells Fargo                                                                          $1,846,000

DWS Technology VIP: The Portfolio is required to identify any securities of its
"regular brokers or dealers" (as such term is defined in the 1940 Act) that the
Portfolio has acquired during the most recent fiscal year. As of December 31,
2008, the Portfolio did not hold any securities of its regular brokers or
dealers.

DWS Turner Mid Cap Growth VIP: The Portfolio is required to identify any
securities of its "regular brokers or dealers" (as such term is defined in the
1940 Act) that the Portfolio has acquired during the most recent fiscal year. As
of December 31, 2008, the Portfolio held the following securities of its regular
brokers or dealers:




                                                                              Value of Securities Owned as
Name of Regular Broker or Dealer or Parent (Issuer)                               of December 31, 2008
---------------------------------------------------                               --------------------


T. Rowe Price Group, Inc.                                                              $833,000
Northern Trust Corp.                                                                   $706,000
BlackRock, Inc.                                                                        $287,000
Lazard LTD.                                                                            $566,000
People's United Financial, Inc.                                                        $429,000

The table below shows total brokerage commissions paid by each Portfolio for the
last three fiscal years, as applicable.

 Portfolio                                      Fiscal 2008       Fiscal 2007        Fiscal 2006
 ---------                                      -----------       -----------        -----------


 DWS Balanced VIP                                        $0                $0           $529,681
 DWS Blue Chip VIP                                 $131,526          $434,083           $353,271
 DWS Core Fixed Income VIP                           $4,953                $0                 $0
 DWS Diversified International Equity VIP          $821,263          $911,116         $1,099,630
 DWS Strategic Value VIP                           $403,090          $581,172           $344,095
 DWS Dreman Small Mid Cap Value VIP                $447,757        $1,193,080         $1,450,335
 DWS Global Thematic VIP                           $811,767          $982,359           $666,802
 DWS Government & Agency Securities VIP             $27,364           $13,354             $7,131
 DWS High Income VIP                                     $0                $0                 $0
 DWS Large Cap Value VIP                           $501,313          $507,082           $485,059
 DWS Money Market VIP                                    $0                $0                 $0
 DWS Mid Cap Growth VIP                             $80,219           $80,264            $75,020
 DWS Small Cap Growth VIP                          $327,182          $437,462           $632,776
 DWS Strategic Income VIP                           $11,589                $0             $5,556
 DWS Technology VIP                                $279,514          $433,195           $379,052
 DWS Turner Mid Cap Growth VIP                     $312,743          $298,896           $400,264
</TABLE>

In addition, for the fiscal year ended December 31, 2008:

<TABLE>
<CAPTION>
                                                                        Percentage of
                                                 Percentage of           Transactions          Dollar Amount of
                                                  Commissions             Involving            Commissions Paid
                                               Paid to Affiliated    Commissions Paid to        to Brokers for
Portfolio                                           Brokers           Affiliated Brokers      Research Services
---------                                           -------           ------------------      -----------------

<S>                                                    <C>                    <C>                     <C>
DWS Balanced VIP                                       0%                     0%                      $0
DWS Blue Chip VIP                                      0%                     0%                      $0
DWS Core Fixed Income VIP                              0%                     0%                      $0
DWS Dreman Small Mid Cap Value VIP                     0%                     0%                      $0
DWS Global Thematic VIP                                0%                     0%                      $0
DWS Government & Agency Securities VIP                 0%                     0%                      $0
DWS High Income VIP                                    0%                     0%                      $0
DWS Diversified International Equity VIP               0%                     0%                      $0
DWS Large Cap Value VIP                                0%                     0%                      $0
DWS Mid Cap Growth VIP                                 0%                     0%                      $0
DWS Money Market VIP                                   0%                     0%                      $0
DWS Small Cap Growth VIP                               0%                     0%                      $0
DWS Strategic Income VIP                               0%                     0%                      $0
DWS Strategic Value VIP                                0%                     0%                      $0
DWS Technology VIP                                     0%                     0%                      $0
DWS Turner Mid Cap Growth VIP                          0%                     0%                      $0
</TABLE>




                            PURCHASE AND REDEMPTIONS


The separate accounts of the Participating Insurance Companies purchase and
redeem shares of each Portfolio based on, among other things, the amount of
premium payments to be invested and surrender and transfer requests to be
effected on that day pursuant to variable annuity contracts and variable life
insurance policies, but only on days on which the Exchange is open for trading.
Such purchases and redemptions of the shares of each Portfolio are effected at
their respective net asset values per share, determined as of the close of
regular trading on the Exchange (normally 4 p.m. Eastern time) on that same day
(See "NET ASSET VALUE."). Payment for redemptions will be made by State Street
Bank and Trust Company or Brown Brothers Harriman & Co., as applicable, on
behalf of the Fund and the applicable Portfolios within seven days thereafter.
No fee is charged the separate accounts of the Participating Insurance Companies
when they redeem Fund shares.



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



Revenue Sharing

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

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

The Advisor, the Distributor and/or their affiliates currently make revenue
sharing payments from their own assets in connection with the sale and/or
distribution of DWS fund shares, or the retention and/or servicing of investors,
to financial advisors in amounts that generally range from .01% up to .50% of
assets of the Portfolio serviced and maintained by the financial advisor, .05%
to .25% of sales of the Portfolio attributable to the financial advisor, a flat
fee of $13,350 up to $500,000, or any combination thereof. These amounts are
annual figures typically paid on a quarterly basis and are subject to change at
the discretion of the Advisor, the Distributor and/or their affiliates. Receipt
of, or the prospect of receiving, this additional compensation, may influence
your financial advisor's recommendation of this Portfolio or of any particular
share class of the Portfolio. You should review your financial advisor's
compensation disclosure and/or talk to your financial advisor to obtain more
information on how this compensation may have influenced your financial
advisor's recommendation of this Portfolio.

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

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

Channel: Broker-Dealers and Financial Advisors
----------------------------------------------
AIG Advisors Group
Ameriprise
Cadaret, Grant & Co. Inc.
Capital Analyst, Incorporated
Citigroup Global Markets, Inc. (dba Smith Barney)
Commonwealth Equity Services, LLP (dba Commonwealth Financial Network)
Deutsche Bank Group
Ensemble Financial Services
First Allied Securities
First Clearing/Wachovia Securities
HD Vest Investment Securities, Inc.
ING Advisors Network
John Hancock Distributors LLC
LPL Financial
M.L. Stern & Co.
Meridien Financial Group
Merrill Lynch, Pierce, Fenner & Smith Inc.
Morgan Stanley
Oppenheimer & Co., Inc.
PlanMember Services
Prime Capital Inc.
Raymond James & Associates
Raymond James Financial Services
RBC Dain Rauscher, Inc
Securities America, Inc.
UBS Financial Services
Wells Fargo Investments, LLC

Channel: Cash Product Platform
------------------------------
Allegheny Investments LTD
Bank of America
Bank of New York (Hare & Co.)
BMO Capital Markets
Brown Brothers Harriman
Brown Investment Advisory & Trust Company
Cadaret Grant & Co.
Chicago Mercantile Exchange
D.A. Davidson & Company
Deutsche Bank Group
Emmett A. Larkin Company
Fiduciary Trust Co. - International
First Southwest Company
J.P. Morgan Clearing Corp.
Legent Clearing LLC
Lincoln Investment Planning
LPL Financial
Mellon Financial Markets LLC
Mesirow Financial, Inc.
Penson Financial Services
Pershing Choice Platform
ProFunds Distributors, Inc.
Ridge Clearing & Outsourcing Solutions
Robert W. Baird & Co.
Romano Brothers and Company
SAMCO Capital Markets
Smith Moore & Company
Sungard Institutional Brokerage Inc.
Treasury Curve LLC
US Bancorp
UBS Financial Services
William Blair & Company

Channel: Third Party Insurance Platforms
----------------------------------------
Allstate Life Insurance Company of New York
Ameritas Life Insurance Group
Annuity Investors Life Insurance Company
Columbus Life Insurance Company
Commonwealth Annuity and Life Insurance Company
Companion Life Insurance Company
Connecticut General Life Insurance Company
EquiTrust Life Insurance Company
Farm Bureau Life Insurance Company
Farmers New World Life Insurance Company
Fidelity Security Life Insurance Company
First Allmerica Financial Life Insurance Company
First Great West Life and Annuity Company
Genworth Life Insurance Company of New York
Genworth Life and Annuity Insurance Company
Great West Life and Annuity Insurance Company
Hartford Life Insurance Company
Integrity Life Insurance Company
John Hancock Life Insurance companies
Kemper Investors Life Insurance Company
Lincoln Benefit Life Insurance Company
Lincoln Life & Annuity Company of New York
Lincoln National Life Insurance Company
Massachusetts Mutual Life Insurance Group
MetLife Group
Minnesota Life Insurance Company
National Life Insurance Company
National Integrity Life Insurance Company
Nationwide Group
New York Life Insurance and Annuity Corporation
Phoenix Life Insurance Company
Protective Life Insurance
Provident Mutual Life Insurance
Prudential Insurance Company of America
Sun Life Group
Symetra Life Insurance Company
Transamerica Life Insurance Company
Union Central Life Insurance Company
United of Omaha Life Insurance Company
United Investors Life Insurance Company
Western Southern Life Assurance Company

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

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

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

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

                       DIVIDENDS, CAPITAL GAINS AND TAXES

Dividends for DWS Money Market VIP. DWS Money Market VIP's net investment income
is declared as a dividend daily and paid monthly in additional shares. If a
shareholder withdraws its entire account, all dividends accrued to the time of
withdrawal will be paid at that time.

Dividends for All Portfolios Except DWS Money Market VIP. The Fund normally
follows the practice of declaring and distributing substantially all the net
investment income and any net capital gains of these Portfolios at least
annually.

The Fund may at any time vary the dividend practices with respect to a Portfolio
and, therefore, reserves the right from time to time to either distribute or
retain for reinvestment such of its net investment income and its net capital
gains as the Board of Trustees of the Fund determines appropriate under the then
current circumstances.

Federal Income Taxes. Each Portfolio intends to qualify as a regulated
investment company under subchapter M of the Code in order to avoid federal
income taxation of the Portfolio on income and gains distributed to
shareholders.

Pursuant to the requirements of Section 817(h) of the Code, with certain limited
exceptions, the only shareholders of the Portfolios will be insurance companies
and their separate accounts that fund variable insurance and annuity contracts.
The prospectus that describes a particular variable insurance or annuity
contract should discuss the taxation of separate accounts and the owner of the
particular variable insurance or annuity contract. Potential insurance and
annuity contract holders should review such prospectus.

Each Portfolio intends to comply with the requirements of Section 817(h) of the
Code and related regulations. Section 817(h) and the regulations issued by the
Treasury Department impose certain diversification requirements affecting the
securities in which the Portfolios may invest. These diversification
requirements are in addition to the diversification requirements under
subchapter M of the Code and the 1940 Act. A failure to meet the requirements of
Section 817(h) could result in federal income taxation of the insurance company
offering the variable insurance or annuity contract and immediate taxation of
the owner of the contract to the extent of appreciation on investment under the
contract.

If owners of a variable insurance or annuity contract possess sufficient
incidents of ownership, they may be considered for federal income tax purposes
the owners of the assets of the separate accounts used to support their
contracts. In those circumstances, income and gains from the separate account's
assets for a taxable year would be included in the owner's gross income for the
current taxable year.

The preceding is a brief summary of certain of the relevant federal income tax
considerations applicable to an investment in the Portfolios. The summary is not
intended as a complete explanation or a substitute for careful tax planning and
consultation with individual tax advisors.

                                 NET ASSET VALUE

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

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

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

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

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


For DWS Money Market VIP. The net asset value ("NAV") per share of the Portfolio
is calculated on each day on which the Portfolio is open for business. The
Portfolio is open for business each day the New York Stock Exchange is open, as
described in the Portfolio's current prospectus. The NAV per share of the
Portfolio is computed by dividing the value of the Portfolio's assets less all
liabilities, by the total number of shares of the Portfolio outstanding.
Although there is no guarantee, the Portfolio's NAV per share will normally be
$1.00.


DWS Money Market VIP values its portfolio instruments at amortized cost, which
does not take into account unrealized capital gains or losses. This involves
initially valuing an instrument at its cost and thereafter assuming a constant
amortization to maturity of any discount or premium, regardless of the impact of
fluctuating interest rates on the market value of the instrument. While this
method provides certainty in valuation, it may result in periods during which
value, as determined by amortized cost, is higher or lower than the price the
Portfolio would receive if it sold the instrument. Calculations are made to
compare the value of the Portfolio's investments valued at amortized cost with
market values. Market valuations are obtained by using actual quotations
provided by market makers, estimates of market value, or values obtained from
yield data relating to classes of money market instruments published by
reputable sources at the mean between the bid and asked prices for the
instruments. In accordance with Board approved procedures, in the event market
quotations are not readily available for certain portfolio assets, for purposes
of the market value comparison, the fair value of such portfolio assets will be
determined by the Portfolio's Pricing Committee (or, in some cases, the Board's
Valuation Committee). If a deviation of 1/2 of 1% or more were to occur between
the net asset value per share calculated by reference to market values and the
Portfolio's $1.00 per share net asset value, or if there were any other
deviation that the Board of Trustees of the Portfolio believed would result in a
material dilution to shareholders or purchasers, the Board of Trustees would
promptly consider what action, if any, should be initiated. If the Portfolio's
net asset value per share (computed using market values) declined, or were
expected to decline, below $1.00 (computed using amortized cost), the Board of
Trustees of the Portfolio might temporarily reduce or suspend dividend payments
in an effort to maintain the net asset value at $1.00 per share. As a result of
such reduction or suspension of dividends or other action by the Board of
Trustees, an investor would receive less income during a given period than if
such a reduction or suspension had not taken place. Such action could result in
investors receiving no dividend for the period during which they hold their
shares and receiving, upon redemption, a price per share lower than that which
they paid. On the other hand, if the Portfolio's net asset value per share
(computed using market values) were to increase, or were anticipated to increase
above $1.00 (computed using amortized cost), the Board of Trustees of the
Portfolio might supplement dividends in an effort to maintain the net asset
value at $1.00 per share. Redemption orders received in connection with the
administration of checkwriting programs by certain dealers or other financial
services firms prior to the determination of the Portfolio's net asset value
also may be processed on a confirmed basis in accordance with the procedures
established by DIDI.



                           BOARD MEMBERS AND OFFICERS

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

Independent Board Members

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
 Name, Year of Birth, Position                                                                   Number of Funds
 with the Trust and Length of     Business Experience and                                        in DWS Fund
 Time Served(1)                   Directorships During the Past 5 Years                          Complex Overseen
--------------------------------------------------------------------------------------------------------------------
<S>                                         <C>                                                          <C>
Paul K. Freeman                   Consultant, World Bank/Inter-American Development Bank;               129
(1950)                            Governing Council of the Independent Directors Council
Chairperson since 2009, and       (governance, executive committees); formerly: Project Leader,
Board Member since 1993           International Institute for Applied Systems Analysis
                                  (1998-2001); Chief Executive Officer, The Eric Group, Inc.
                                  (environmental insurance) (1986-1998)
--------------------------------------------------------------------------------------------------------------------
John W. Ballantine (1946)         Retired; formerly: Executive Vice President and Chief Risk            129
Board Member since 1999           Management Officer, First Chicago NBD Corporation/The First
                                  National Bank of Chicago (1996-1998); Executive Vice
                                  President and Head of International Banking (1995-1996);
                                  Directorships: Healthways Inc. (provider of disease and care
                                  management services); Portland General Electric (utility
                                  company); Stockwell Capital Investments PLC (private equity);
                                  former Directorships: First Oak Brook Bancshares, Inc. and
                                  Oak Brook Bank
--------------------------------------------------------------------------------------------------------------------
 Henry P. Becton, Jr. (1943)      Vice Chair, WGBH Educational Foundation; Directorships:               129
 Board Member since               Association of Public Television Stations; Becton Dickinson
 1990                             and Company(2) (medical technology company); Belo
                                  Corporation(2) (media company); Boston Museum
                                  of Science; Public Radio International; PRX,
                                  The Public Radio Exchange; The PBS Foundation;
                                  former Directorships: American Public
                                  Television; Concord Academy; New England
                                  Aquarium; Mass. Corporation for Educational
                                  Telecommunications; Committee for Economic
                                  Development; Public Broadcasting Service
--------------------------------------------------------------------------------------------------------------------
Dawn-Marie Driscoll (1946)        President, Driscoll Associates (consulting firm); Executive           129
Board Member since 1987           Fellow, Center for Business Ethics, Bentley University;
                                  formerly: Partner, Palmer & Dodge (1988-1990); Vice President
                                  of Corporate Affairs and General Counsel, Filene's
                                  (1978-1988); Directorships: Trustee of 20 open-end mutual
                                  funds managed by Sun Capital Advisers, Inc. (since 2007);
                                  Director of ICI Mutual Insurance Company (since 2007);
                                  Advisory Board, Center for Business Ethics,
                                  Bentley University; Trustee, Southwest Florida
                                  Community Foundation (charitable
                                  organization); former Directorships:
                                  Investment Company Institute (audit,
                                  executive, nominating committees) and
                                  Independent Directors Council (governance,
                                  executive
                                  committees)
--------------------------------------------------------------------------------------------------------------------
Keith R. Fox (1954)               Managing General Partner, Exeter Capital Partners (a series           129
Board Member since                of private equity funds); Directorships: Progressive Holding
1996                              Corporation (kitchen goods importer and distributor); Natural
                                  History, Inc. (magazine publisher); Box Top Media Inc.
                                  (advertising); The Kennel Shop (retailer)
--------------------------------------------------------------------------------------------------------------------
Kenneth C. Froewiss               Clinical Professor of Finance, NYU Stern School of Business           129
(1945)                            (1997-present); Member, Finance Committee, Association for
Board Member since                Asian Studies (2002-present); Director, Mitsui Sumitomo
2001                              Insurance Group (US) (2004-present); prior thereto, Managing
                                  Director, J.P. Morgan (investment banking firm) (until 1996)
--------------------------------------------------------------------------------------------------------------------
Richard J. Herring                Jacob Safra Professor of International Banking and Professor,         129
(1946)                            Finance Department, The Wharton School, University of
Board Member since                Pennsylvania (since July 1972); Co-Director, Wharton
1990                              Financial Institutions Center (since July 2000); Director,
                                  Japan Equity Fund, Inc. (since September 2007), Thai Capital
                                  Fund, Inc. (since September 2007), Singapore Fund, Inc.
                                  (since September 2007); formerly: Vice Dean and Director,
                                  Wharton Undergraduate Division (July 1995-June 2000);
                                  Director, Lauder Institute of International Management
                                  Studies (July 2000-June 2006)
--------------------------------------------------------------------------------------------------------------------
William McClayton (1944)          Managing Director, Diamond Management & Technology                    129
Board Member since 2004           Consultants, Inc. (global management consulting firm)
                                  (2001-present); Directorship: Board of Managers, YMCA of
                                  Metropolitan Chicago; formerly: Senior Partner, Arthur
                                  Andersen LLP (accounting) (1966-2001); Trustee, Ravinia
                                  Festival
--------------------------------------------------------------------------------------------------------------------
Rebecca W. Rimel                  President and Chief Executive Officer, The Pew Charitable             129
(1951)                            Trusts (charitable organization) (1994 to present); Trustee,
Board Member since                Thomas Jefferson Foundation (charitable organization) (1994
1995                              to present); Trustee, Executive Committee, Philadelphia
                                  Chamber of Commerce (2001 to 2007); Trustee,
                                  Pro Publica (2007-present) (charitable
                                  organization); formerly: Executive Vice
                                  President, The Glenmede Trust Company
                                  (investment trust and wealth management) (1983
                                  to 2004); Board Member, Investor Education
                                  (charitable organization) (2004-2005);
                                  Director, Viasys Health Care(2) (January
                                  2007-June 2007)
--------------------------------------------------------------------------------------------------------------------
William N. Searcy, Jr.            Private investor since October 2003; Trustee of 20 open-end           129
(1946)                            mutual funds managed by Sun Capital Advisers, Inc. (since
Board Member since                October 1998); formerly: Pension & Savings Trust Officer,
1993                              Sprint Corporation(2) (telecommunications) (November
                                  1989-September 2003)
--------------------------------------------------------------------------------------------------------------------
Jean Gleason Stromberg            Retired; formerly: Consultant (1997-2001); Director, US               129
(1943)                            Government Accountability Office (1996-1997); Partner,
Board Member since                Fulbright & Jaworski, L.L.P. (law firm) (1978-1996);
1997                              Directorships: The William and Flora Hewlett Foundation;
                                  Business Leadership Council, Wellesley College; former
                                  Directorships: Service Source, Inc., Mutual Fund Directors
                                  Forum (2002-2004), American Bar Retirement Association
                                  (funding vehicle for retirement plans) (1987-1990 and
                                  1994-1996)
--------------------------------------------------------------------------------------------------------------------
Robert H. Wadsworth (1940)        President, Robert H. Wadsworth & Associates, Inc. (consulting         132
Board Member since 1999           firm) (1983 to present); Director, The Phoenix Boys Choir
                                  Association
--------------------------------------------------------------------------------------------------------------------

Interested Board Member

--------------------------------------------------------------------------------------------------------------------
 Name, Year of Birth, Position    Business Experience and                                        Number of Funds
 with the Trust and Length of                                                                    in DWS Fund
 Time Served(1)                   Directorships During the Past 5 Years                          Complex Overseen
--------------------------------------------------------------------------------------------------------------------
 Axel Schwarzer(3)                Managing Director(4), Deutsche Asset Management; Head of              129
 (1958)                           Deutsche Asset Management Americas; CEO of DWS Investments;
 Board Member since               formerly: board member of DWS Investments, Germany
 2006                             (1999-2005); Head of Sales and Product Management for the
                                  Retail and Private Banking Division of
                                  Deutsche Bank in Germany (1997-1999); various
                                  strategic and operational positions for
                                  Deutsche Bank Germany Retail and Private
                                  Banking Division in the field of investment
                                  funds, tax driven instruments and asset
                                  management for corporates (1989-1996)
--------------------------------------------------------------------------------------------------------------------

Officers((5))

--------------------------------------------------------------------------------------------------------------------
 Name, Year of Birth, Position
 with the Trust and Length of     Business Experience and
 Time Served(6)                   Directorships During the Past 5 Years
--------------------------------------------------------------------------------------------------------------------
 Michael G. Clark(7) (1965)       Managing Director(4), Deutsche Asset Management (2006-present); President of
 President, 2006-present          DWS family of funds; Director, ICI Mutual Insurance Company (since
                                  October 2007); formerly: Director of Fund Board Relations (2004-2006) and
                                  Director of Product Development (2000-2004), Merrill Lynch Investment Managers;
                                  Senior Vice President Operations, Merrill Lynch Asset Management (1999-2000)
--------------------------------------------------------------------------------------------------------------------
 John Millette(8) (1962)          Director(4), Deutsche Asset Management
 Vice President and Secretary,
 1999-present
--------------------------------------------------------------------------------------------------------------------
 Paul H. Schubert(7) (1963)       Managing Director(4), Deutsche Asset Management (since July 2004); formerly:
 Chief Financial Officer,         Executive Director, Head of Mutual Fund Services and Treasurer for UBS Family
 2004-present                     of Funds (1998-2004); Vice President and Director of Mutual Fund Finance at UBS
 Treasurer, 2005-present          Global Asset Management (1994-1998)
--------------------------------------------------------------------------------------------------------------------
 Caroline Pearson(8) (1962)       Managing Director(4), Deutsche Asset Management
 Assistant Secretary,
 1997-present
--------------------------------------------------------------------------------------------------------------------
 Rita Rubin(9) (1970)             Vice President and Counsel, Deutsche Asset Management (since October 2007);
 Assistant Secretary,             formerly, Vice President, Morgan Stanley Investment Management (2004-2007);
 2009-present                     Attorney, Shearman & Sterling LLP (2004); Vice President and Associate General
                                  Counsel, UBS Global Asset Management (2001-2004)
--------------------------------------------------------------------------------------------------------------------
 Paul Antosca(8)                  Director(4), Deutsche Asset Management (since 2006); formerly: Vice President,
 (1957)                           The Manufacturers Life Insurance Company (U.S.A.) (1990-2006)
 Assistant Treasurer,
 2007-present
--------------------------------------------------------------------------------------------------------------------
 Jack Clark (8)                   Director(4), Deutsche Asset Management (since 2007); formerly: Vice President,
 (1967)                           State Street Corporation (2002-2007)
 Assistant Treasurer,
 2007-present
--------------------------------------------------------------------------------------------------------------------
 Diane Kenneally(8)               Director(4), Deutsche Asset Management
 (1966)
 Assistant Treasurer,
 2007-present
--------------------------------------------------------------------------------------------------------------------
 Jason Vazquez(9) (1972)          Vice President, Deutsche Asset Management (since 2006); formerly: AML
 Anti-Money Laundering            Operations Manager for Bear Stearns (2004-2006); Supervising Compliance
 Compliance Officer,              Principal and Operations Manager for AXA Financial (1999-2004)
 2007-present
--------------------------------------------------------------------------------------------------------------------
 Robert Kloby(9) (1962)           Managing Director(4), Deutsche Asset Management (2004-present); formerly: Chief
 Chief Compliance Officer,        Compliance Officer/Chief Risk Officer, Robeco USA (2000-2004); Vice President,
 2006-present                     The Prudential Insurance Company of America (1988-2000); E.F. Hutton and
                                  Company (1984-1988)
--------------------------------------------------------------------------------------------------------------------
  J. Christopher Jackson(9)        Director(4), Deutsche Asset Management (2006-present); formerly: Director,
 (1951)                           Senior Vice President, General Counsel, and Assistant Secretary, Hansberger
 Chief Legal Officer,             Global Investors, Inc. (1996-2006); Director, National Society of Compliance
 2006-present                     Professionals (2002-2005) (2006-2009)
--------------------------------------------------------------------------------------------------------------------

(1)      The length of time served represents the year in which the Board Member
         joined the board of one or more DWS funds currently overseen by the
         Board.

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

(3)      The mailing address of Axel Schwarzer is c/o Deutsche Investment
         Management Americas Inc., 345 Park Avenue, New York, New York 10154.
         Mr. Schwarzer is an interested Board Member by virtue of his positions
         with Deutsche Asset Management. As an interested person, Mr. Schwarzer
         receives no compensation from the Portfolios.

(4)      Executive title, not a board directorship.

(5)      As a result of their respective positions held with the Advisor, these
         individuals are considered "interested persons" of the Advisor within
         the meaning of the 1940 Act. Interested persons receive no compensation
         from the Portfolios.

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

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

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

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

Certain officers hold similar positions for other investment companies for which
DIMA or an affiliate serves as the Advisor.

Officer's Role with Principal Underwriter:  DWS Investments Distributors, Inc.

 Paul H. Schubert:                   Vice President
 Jason Vazquez:                      Vice President and AML Compliance Officer
 Caroline Pearson:                   Secretary

Board Members' Responsibilities. The officers of the Trust manage its day-to-day
operations under the direction of the Board. The primary responsibility of the
Board is to represent the interests of the Portfolios and to provide oversight
of the management of the Portfolios.

Board Committees. The Board has established the following standing committees:
Audit Committee, Nominating and Governance Committee, Contract Committee, Equity
Oversight Committee, Fixed-Income and Quant Oversight Committee, Marketing and
Shareholder Services Committee, and Operations Committee. For each committee,
the Board has adopted a written charter setting forth each committee's
responsibilities. Each committee was reconstituted effective April 1, 2008.

Audit Committee: The Audit Committee, which consists entirely of Independent
Board Members, assists the Board in fulfilling its responsibility for oversight
of (1) the integrity of the financial statements, (2) the Portfolios' accounting
and financial reporting policies and procedures, (3) the Portfolios' compliance
with legal and regulatory requirements related to accounting and financial
reporting and (4) the qualifications, independence and performance of the
independent registered public accounting firm for the Portfolios. It also
approves and recommends to the Board the appointment, retention or termination
of the independent registered public accounting firm for the Portfolios, reviews
the scope of audit and internal controls, considers and reports to the Board on
matters relating to the Portfolios' accounting and financial reporting
practices, and performs such other tasks as the full Board deems necessary or
appropriate. The Audit Committee receives annual representations from the
independent registered public accounting firm as to its independence. The
members of the Audit Committee are William McClayton (Chair), Kenneth C.
Froewiss (Vice Chair), John W. Ballantine, Henry P. Becton, Jr., Keith R. Fox
and William N. Searcy, Jr. During the calendar year 2008, the Audit Committee of
the Portfolios' Board held six (6) meetings.

Nominating and Governance Committee: The Nominating and Governance Committee,
which consists entirely of Independent Board Members, recommends individuals for
membership on the Board, nominates officers, Board and committee chairs, vice
chairs and committee members, and oversees the operations of the Board. The
Nominating and Governance Committee also reviews recommendations by shareholders
for candidates for Board positions. Shareholders may recommend candidates for
Board positions by forwarding their correspondence by US mail or courier service
to Dawn-Marie Driscoll, P.O. Box 100176, Cape Coral, FL 33904. The members of
the Nominating and Governance Committee are Henry P. Becton, Jr. (Chair),
Rebecca W. Rimel (Vice Chair), Paul K. Freeman and William McClayton. During the
calendar year 2008, the Nominating and Governance Committee of the Portfolios'
Board held five (5) meetings.


Contract Committee: The Contract Committee, which consists entirely of
Independent Board Members, reviews at least annually, (a) the Portfolios'
financial arrangements with DIMA and its affiliates, and (b) the Portfolios'
expense ratios. The members of the Contract Committee are Robert H. Wadsworth
(Chair), Keith R. Fox (Vice Chair), Henry P. Becton, Jr., Richard J. Herring,
William McClayton and Jean Gleason Stromberg. During the calendar year 2008, the
Contract Review Committee of the Portfolios' Board held seven (7) meetings.


Equity Oversight Committee: The Equity Oversight Committee reviews the
investment operations of those portfolios that primarily invest in equity
securities (except for those funds managed by a quantitative investment team).
The members of the Equity Oversight Committee are John W. Ballantine (Chair),
William McClayton (Vice Chair), Henry P. Becton, Jr., Keith R. Fox, Richard J.
Herring and Rebecca W. Rimel. During the calendar year 2008, the Equity
Oversight Committee of the Portfolios' Board held five (5) meetings.

Fixed-Income and Quant Oversight Committee: The Fixed-Income and Quant Oversight
Committee reviews the investment operations of those portfolios that primarily
invest in fixed-income securities or are managed by a quantitative investment
team. The members of the Fixed-Income and Quant Oversight Committee are William
N. Searcy, Jr. (Chair), Jean Gleason Stromberg (Vice Chair), Dawn-Marie
Driscoll, Kenneth C. Froewiss and Robert H. Wadsworth. During the calendar year
2008, the Fixed-Income Oversight Committee of the Portfolios' Board held five
(5) meetings.

Marketing and Shareholder Services Committee: The Marketing and Shareholder
Services Committee reviews the Portfolios' marketing program, sales practices
and literature and shareholder services. The Marketing and Shareholder Services
Committee also considers matters relating to fund mergers and liquidations and
the organization of new funds. The members of the Marketing and Shareholder
Services Committee are Richard J. Herring (Chair), Dawn-Marie Driscoll (Vice
Chair), Rebecca W. Rimel, Jean Gleason Stromberg and Robert H. Wadsworth. During
the calendar year 2008, the Marketing/Distribution/Shareholder Service Committee
of the Portfolios' Board held four (4) meetings.

The Operations Committee: The Operations Committee reviews the administrative
operations, legal affairs and general compliance matters of the Portfolios. The
Operations Committee reviews administrative matters related to the operations of
the Portfolios, policies and procedures relating to portfolio transactions,
custody arrangements, fidelity bond and insurance arrangements, valuation of
Portfolio assets and securities and such other tasks as the full Board deems
necessary or appropriate. The Operations Committee also oversees the valuation
of the Portfolios' securities and other assets and determines, as needed, the
fair value of Portfolio securities or other assets under certain circumstances
as described in the Portfolios' Valuation Procedures. The Operations Committee
has appointed a Valuation Sub-Committee, which may make determinations of fair
value required when the Operations Committee is not in session. The members of
the Operations Committee are Dawn-Marie Driscoll (Chair), John W. Ballantine
(Vice Chair), Kenneth C. Froewiss, Rebecca W. Rimel and William N. Searcy, Jr.
The members of the Valuation Sub-Committee are Kenneth C. Froewiss (Chair), John
W. Ballantine, Dawn-Marie Driscoll (Alternate), Rebecca W. Rimel (Alternate) and
William N. Searcy, Jr. (Alternate). During the calendar year 2008, the
Operations Committee held five (5) meetings and the Valuation Sub-Committee held
two (2) meetings on behalf of DWS Strategic Value VIP and two (2) meetings on
behalf of DWS Money Market VIP meetings.

Ad Hoc Committees. In addition to the standing committees described above, from
time to time the Board may also form ad hoc committees to consider specific
issues.

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

Board Members who are officers, directors, employees or stockholders of Deutsche
Asset Management or its affiliates receive no direct compensation from the
Portfolios, although they are compensated as employees of Deutsche Asset
Management, or its affiliates, and as a result may be deemed to participate in
fees paid by the Portfolios. The following tables show compensation from the
Portfolios and aggregate compensation from all of the funds in the DWS fund
complex received by each Independent Board Member during the calendar year 2008.
Mr. Schwarzer is an interested person of the Portfolios and received no
compensation from the Portfolios or any fund in the DWS fund complex during the
relevant periods.

                                        Aggregate           Aggregate             Aggregate
                                      Compensation         Compensation          Compensation
                                        from DWS          from DWS Blue         from DWS Core
  Name of Board Member                Balanced VIP          Chip VIP           Fixed Income VIP
  --------------------                ------------          --------           ----------------

  John W. Ballantine                     $1,755            $1,181                $1,297
  Henry P. Becton, Jr.(2)                $1,057            $6,920                $1,238
  Dawn-Marie Driscoll(2)((3))            $1,231            $8,171                $1,444
  Keith R. Fox((2))                       $987             $6,422                $1,155
  Paul K. Freeman                        $1,920            $1,290                $1,429
  Kenneth C. Froewiss                     $971             $6,309                $1,135
  Richard J. Herring(2)                  $1,022            $6,673                $1,196
  William McClayton((4))                 $2,033            $1,378                $1,520
  Rebecca W. Rimel(2)                    $1,010            $6,586                $1,183
  William N. Searcy, Jr.                 $1,010            $6,591                $1,182
  Jean Gleason Stromberg                  $964             $6,257                $1,127
  Robert H. Wadsworth                    $1,743            $1,153                $1,271


                                                                                                     Aggregate
                                        Aggregate           Aggregate                              Compensation
                                      Compensation         Compensation          Aggregate           from DWS
                                        from DWS        from DWS Dreman         Compensation        Government &
                                     Strategic Value     Small Mid Cap        from DWS Global         Agency
  Name of Board Member                 Equity VIP           Value VIP           Thematic VIP       Securities VIP
  --------------------                 -----------                ----         -------------      --------------

  John W. Ballantine                     $2,194            $1,706                $971             $1,126
  Henry P. Becton, Jr.(2)                 $127               $127                 $60             $2,189
  Dawn-Marie Driscoll(2)((3))             $127               $127                 $64             $2,568
  Keith R. Fox((2))                       $127               $127                 $59             $2,036
  Paul K. Freeman                        $2,397            $1,867              $1,065             $1,226
  Kenneth C. Froewiss                     $127               $127                 $59             $2,001
  Richard J. Herring(2)                   $127               $127                 $60             $2,111
  William McClayton((4))                 $2,512            $1,978              $1,140             $1,288
  Rebecca W. Rimel(2)                     $127               $127                 $59             $2,088
  William N. Searcy, Jr.                  $127               $127                 $60             $2,085
  Jean Gleason Stromberg                  $127               $127                 $59             $1,985
  Robert H. Wadsworth                    $2,172            $1,691                $950             $1,098


                                        Aggregate                                         Aggregate
                                      Compensation        Aggregate Compensation         Compensation
                                     from DWS High         from DWS Diversified         from DWS Large
  Name of Board Member                 Income VIP       International Equity VIP        Cap Value VIP
  --------------------                 -----------      -------------------------           ---------

  John W. Ballantine                     $1,216                    $1,175                $1,201
  Henry P. Becton, Jr.(2)                 $127                       $691                  $127
  Dawn-Marie Driscoll(2)((3))             $127                       $797                  $127
  Keith R. Fox((2))                       $127                       $648                  $127
  Paul K. Freeman                        $1,328                    $1,295                $1,311
  Kenneth C. Froewiss                     $127                       $638                  $127
  Richard J. Herring(2)                   $127                       $668                  $127
  William McClayton((4))                 $1,395                    $1,379                $1,401
  Rebecca W. Rimel(2)                     $127                       $663                  $127
  William N. Searcy, Jr.                  $127                       $661                  $127
  Jean Gleason Stromberg                  $127                       $633                  $127
  Robert H. Wadsworth                    $1,190                    $1,157                $1,173


                                                                                                     Aggregate
                                        Aggregate           Aggregate            Aggregate         Compensation
                                      Compensation         Compensation         Compensation         from DWS
                                    from DWS Mid Cap      from DWS Money       from DWS Small        Strategic
   Name of Board Member                 Growth VIP          Market VIP         Cap Growth VIP        Income VIP
   --------------------                 ----------          ----------         --------------        ----------

  John W. Ballantine                      $619             $1,531              $1,001               $833
  Henry P. Becton, Jr.(2)                 $612               $312             $67,065               $742
  Dawn-Marie Driscoll(2)((3))             $700               $350             $79,500               $858
  Keith R. Fox((2))                       $574               $297             $62,190               $695
  Paul K. Freeman                         $673             $1,667              $1,094               $913
  Kenneth C. Froewiss                     $564               $294             $61,121               $684
  Richard J. Herring(2)                   $590               $305             $64,733               $718
  William McClayton((4))                  $730             $1,761              $1,179               $973
  Rebecca W. Rimel(2)                     $589               $302             $63,745               $710
  William N. Searcy, Jr.                  $583               $302             $63,956               $711
  Jean Gleason Stromberg                  $560               $292             $60,635               $679
  Robert H. Wadsworth                     $602             $1,503                $979               $809


                                        Aggregate
                                      Compensation      Aggregate Compensation         Total Compensation
                                        from DWS         from DWS Turner Mid             from Fund and
  Name of Board Member               Technology VIP         Cap Growth VIP             DWS Fund Complex(1)
  --------------------               ---------------        ---------------            -------------------

  John W. Ballantine                      $937                    $885                       $237,500
  Henry P. Becton, Jr.(2)                 $127                    $852                       $246,000
  Dawn-Marie Driscoll(2)((3))             $127                    $989                       $292,500
  Keith R. Fox((2))                       $127                    $797                       $229,500
  Paul K. Freeman                        $1,029                   $966                       $255,000
  Kenneth C. Froewiss                     $127                    $785                       $226,750
  Richard J. Herring(2)                   $127                    $825                       $240,000
  William McClayton((4))                 $1,101                 $1,037                       $257,500
  Rebecca W. Rimel(2)                     $127                    $815                       $233,500
  William N. Searcy, Jr.                  $127                    $815                       $238,000
  Jean Gleason Stromberg                  $127                    $779                       $225,500
  Robert H. Wadsworth                     $914                    $862                       $273,500

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

(2)      Aggregate compensation includes amounts paid to the Board Members for
         special meetings of ad hoc committees of the Board in connection with
         the consolidation of the DWS fund boards and various funds, meetings
         for considering fund expense simplification initiatives, and
         consideration of issues specific to the Portfolios' direct shareholders
         (i.e., those shareholders who did not purchase shares through financial
         intermediaries). Such amounts totaled $8,000 for Mr. Becton, $2,000 for
         Ms. Driscoll, $2,000 for Mr. Fox, $2,000 for Dr. Herring and $8,000 for
         Ms. Rimel. These meeting fees were borne by the funds.

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

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

Board Member Ownership in the Portfolios

The following table shows the dollar range of equity securities beneficially
owned by each Board Member in the Portfolios and DWS fund complex as of December
31, 2008.

                                                                                  Aggregate Dollar Range of
                                            Dollar Range of Beneficial       Ownership in all Funds Overseen by
                                                     Ownership                          Board Member
Board Member                                 in DWS Variable Series II          in the DWS Fund Complex((1))
------------                                 -------------------------          ----------------------------

Independent Board Member:

John W. Ballantine                                     None                                Over $100,000
Henry P. Becton, Jr.                                   None                                Over $100,000
Dawn-Marie Driscoll                                    None                                Over $100,000
Keith R. Fox                                           None                                Over $100,000
Paul K. Freeman                                        None                                Over $100,000
Kenneth C. Froewiss                                    None                                Over $100,000
Richard J. Herring                                     None                                Over $100,000
William McClayton                                      None                                Over $100,000
Rebecca W. Rimel                                       None                                Over $100,000
William N. Searcy, Jr.                                 None                                Over $100,000
Jean Gleason Stromberg                                 None                                Over $100,000
Robert H. Wadsworth                                    None                                Over $100,000

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

Axel Schwarzer                                         None                                Over $100,000

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

Ownership in Securities of the Advisor and Related Companies

As reported to the Portfolios, the information in the following table reflects
ownership by the Independent Board Members and their immediate family members of
certain securities as of December 31, 2008. Immediate family members can be a
spouse, children residing in the same household including step and adoptive
children, and any dependents. The securities represent ownership in the Advisor
or principal underwriter of the Portfolios and any persons (other than a
registered investment company) directly or indirectly controlling, controlled
by, or under common control with the Advisor or principal underwriter of the
Portfolios (including Deutsche Bank AG).

                                                                                   Value of        Percent of
                                   Owner and                                     Securities on     Class on an
Independent                     Relationship to                     Title of     an Aggregate       Aggregate
Board Member                      Board Member         Company        Class          Basis            Basis
------------                      ------------         -------        -----          -----            -----

John W. Ballantine                                      None
Henry P. Becton, Jr.                                    None
Dawn-Marie Driscoll                                     None
Keith R. Fox                                            None
Paul K. Freeman                                         None
Kenneth C. Froewiss                                     None
Richard J. Herring                                      None
William McClayton                                       None
Rebecca W. Rimel                                        None
William N. Searcy, Jr.                                  None
Jean Gleason Stromberg                                  None
Robert H. Wadsworth                                     None

Securities Beneficially Owned

As of April 3, 2009, the Board Members and officers of the Trust owned, as a
group, less than 1% of the outstanding shares of each Portfolio.

To the best of each Portfolio's knowledge, as of April 3, 2009, no person owned
of record or beneficially 5% or more of any class of the Portfolio's outstanding
shares, except as noted below.

DWS Balanced VIP

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

KEMPER INVESTORS LIFE                                           7,460,131.09                   42.08% of Class A
C/O PRODUCT VALUATION
TOPEKA KS  66636-1000

ALLMERICA LIFE SVSII                                            4,095,471.95                   23.10% of Class A
TOPEKA KS  66636-1000

ZURICH DESTINATIONS FARMERS SVSII                               2,879,538.04                   16.24% of Class A
C/O KILICO
ATTN INVESTMENT ACCOUNTING LL-2W
GREENVILLE SC  29602-9097

SYMETRA LIFE INSURANCE CO                                       1,207,276.88                   6.81% of Class A
ATTN LIFE FINANCE
SEPARATE ACCOUNTS
BELLEVUE WA  98004-5130

CHARTER NAT LIFE INS CO-HORIZON                                 1,146,621.42                   6.47% of Class A
ATTN ACCTNG FINANCIAL CONTROL TEAM
VERNON HILLS IL  60061-1826

DWS Blue Chip VIP

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

ZURICH DESTINATIONS FARMERS SVSII                               8,458,317.91                   57.76% of Class A
C/O KILICO
ATTN INVESTMENT ACCOUNTING LL-2W
GREENVILLE SC  29602-9097

ALLMERICA LIFE SVSII                                            5,230,831.27                   35.72% of Class A
TOPEKA KS  66636-1000

KEMPER INVESTORS LIFE INS CO                                      18,379.94                     100% of Class B
VARIABLE ANNUITY SEPARATE ACCOUNTS
C/O PRODUCT VALUATION
TOPEKA KS  66636-1000

DWS Core Fixed Income VIP

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

ZURICH DESTINATIONS FARMERS SVSII                               5,237,091.46                   42.42% of Class A
C/O KILICO
ATTN INVESTMENT ACCOUNTING LL-2W
GREENVILLE SC  29602-9097

ALLMERICA LIFE SVSII                                            4,713,130.46                   38.17% of Class A
TOPEKA KS  66636-1000
KEMPER INVESTORS LIFE                                           1,439,300.07                   11.66% of Class A
C/O PRODUCT VALUATION
TOPEKA KS  66636-1000

THE MANUFACTURES LIFE INS CO (USA)                              3,678,097.04                   99.75% of Class B
BOSTON MA  02116-3787

DWS Strategic Value VIP

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

ZURICH DESTINATIONS FARMERS SVSII                              30,805,581.57                   62.05% of Class A
C/O KILICO
ATTN INVESTMENT ACCOUNTING LL-2W
GREENVILLE SC  29602-9097

ALLMERICA LIFE SVSII                                           13,441,100.83                   27.07% of Class A
TOPEKA KS  66636-1000

NATIONWIDE INSURANCE CO                                          89,459.86                     27.31% of Class B
NWVL14
C/O IPO PORTFOLIO ACCOUNTING
COLUMBUS OH  43218-2029

GE CAPITAL LIFE ASSURANCE CO                                     67,649.83                     20.65% of Class B
OF NEW YORK
RICHMOND VA  23230-1702

NATIONAL LIFE INS CO                                             44,815.12                     13.68% of Class B
SENTINEL ADVANTAGE (VA)
MONTPELIER VT  05604-0001

NATIONWIDE INSURANCE CO                                          39,547.97                     12.07% of Class B
NWPP
IPO PORTFOLIO ACCOUNTING
COLUMBUS OH  43218-2029

NATIONAL LIFE INS CO                                             27,016.79                     8.25% of Class B
VARITRAK (VUL)
MONTPELIER VT  05604-0001

KEMPER INVESTORS LIFE INS CO                                     26,710.40                     8.15% of Class B
VARIABLE ANNUITY SEPARATE ACCOUNTS
C/O PRODUCT VALUATION
TOPEKA KS  66636-1000

NATIONWIDE INSURANCE CO                                          21,413.29                     6.54% of Class B
NWVL-C
C/O IPO PORTFOLIO ACCOUNTING
COLUMBUS OH  43218-2029

DWS Dreman Small Cap Value VIP

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

ZURICH DESTINATIONS FARMERS SVSII                              13,697,020.02                   48.52% of Class A
C/O KILICO
ATTN INVESTMENT ACCOUNTING LL-2W
GREENVILLE SC  29602-9097

ALLMERICA LIFE SVSII                                            6,988,381.81                   24.76% of Class A
TOPEKA KS  66636-1000

KEMPER INVESTORS LIFE                                           3,759,455.22                   13.32% of Class A
C/O PRODUCT VALUATION
TOPEKA KS  66636-1000

METLIFE INSURANCE CO OF CT                                      1,234,820.26                   40.17% of Class B
ATTN SHAREHOLDER ACCOUNTING DEPT
HARTFORD CT  06199-0027

NATIONWIDE INSURANCE CO                                          535,028.47                    17.41% of Class B
NWVL14
C/O IPO PORTFOLIO ACCOUNTING
COLUMBUS OH  43218-2029

NATIONAL LIFE INS CO                                             527,112.18                    17.15% of Class B
SENTINEL ADVANTAGE (VA)
MONTPELIER VT  05604-0001

NATIONWIDE INSURANCE CO                                          344,214.15                    11.2% of Class B
NWPP
IPO PORTFOLIO ACCOUNTING
COLUMBUS OH  43218-2029

NATIONAL LIFE INS CO                                             272,038.63                    8.85% of Class B
VARITRAK (VUL)
MONTPELIER VT  05604-0001

DWS Global Thematic VIP

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

ZURICH DESTINATIONS FARMERS SVSII                               6,558,815.89                   65.21% of Class A
C/O KILICO
ATTN INVESTMENT ACCOUNTING LL-2W
GREENVILLE SC  29602-9097

ALLMERICA LIFE SVSII                                            3,002,149.17                   29.85% of Class A
TOPEKA KS  66636-1000

METLIFE INSURANCE CO OF CT                                       696,590.71                    99.21% of Class B
ATTN SHAREHOLDER ACCOUNTING DEPT
HARTFORD CT  06199-0027

DWS Government & Agency Securities VIP

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

ZURICH DESTINATIONS FARMERS SVSII                               7,303,638.10                   42.65% of Class A
C/O KILICO
ATTN INVESTMENT ACCOUNTING LL-2W
GREENVILLE SC  29602-9097

ALLMERICA LIFE SVSII                                            6,263,523.11                   36.58% of Class A
TOPEKA KS  66636-1000

KEMPER INVESTORS LIFE                                           2,466,542.40                   14.4% of Class A
C/O PRODUCT VALUATION
TOPEKA KS  66636-1000

METLIFE INSURANCE CO OF CT                                       619,638.55                    96.89% of Class B
ATTN SHAREHOLDER ACCOUNTING DEPT
HARTFORD CT  06199-0027


DWS High Income VIP

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

ALLMERICA LIFE SVSII                                            9,909,820.54                   34.13% of Class A
TOPEKA KS  66636-1000

ZURICH DESTINATIONS FARMERS SVSII                               8,816,869.54                   30.37% of Class A
C/O KILICO
ATTN INVESTMENT ACCOUNTING LL-2W
GREENVILLE SC  29602-9097

KEMPER INVESTORS LIFE                                           8,273,697.15                   28.5% of Class A
C/O PRODUCT VALUATION
TOPEKA KS  66636-1000

KEMPER INVESTORS LIFE INS CO                                     25,275.74                      100% of Class B
VARIABLE ANNUITY SEPARATE ACCOUNTS
C/O PRODUCT VALUATION
TOPEKA KS  66636-1000

DWS Diversified International Equity VIP

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

ZURICH DESTINATIONS FARMERS SVSII                               7,168,731.07                   49.21% of Class A
C/O KILICO
ATTN INVESTMENT ACCOUNTING LL-2W
GREENVILLE SC  29602-9097

ALLMERICA LIFE SVSII                                            3,724,348.20                   25.57% of Class A
TOPEKA KS  66636-1000

KEMPER INVESTORS LIFE                                           3,577,312.56                   24.56% of Class A
C/O PRODUCT VALUATION
TOPEKA KS  66636-1000

DWS Large Cap Value VIP

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

ZURICH DESTINATIONS FARMERS SVSII                               5,523,818.89                   41.68% of Class A
C/O KILICO
ATTN INVESTMENT ACCOUNTING LL-2W
GREENVILLE SC  29602-9097

ALLMERICA LIFE SVSII                                            3,820,167.93                   28.82% of Class A
TOPEKA KS  66636-1000

KEMPER INVESTORS LIFE                                           2,240,848.62                   16.91% of Class A
C/O PRODUCT VALUATION
TOPEKA KS  66636-1000

NATIONWIDE INSURANCE CO                                          25,240.08                     77.01% of Class B
NWPP
IPO PORTFOLIO ACCOUNTING
COLUMBUS OH  43218-2029

KEMPER INVESTORS LIFE INS CO                                      7,536.46                     22.99% of Class B
VARIABLE ANNUITY SEPARATE ACCOUNTS
C/O PRODUCT VALUATION
TOPEKA KS  66636-1000

DWS Mid Cap Growth VIP

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

ZURICH DESTINATIONS FARMERS SVSII                               1,697,278.17                   63.08% of Class A
C/O KILICO
ATTN INVESTMENT ACCOUNTING LL-2W
GREENVILLE SC  29602-9097

ALLMERICA LIFE SVSII                                             938,874.93                    34.89% of Class A
TOPEKA KS  66636-1000

DWS Money Market VIP

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

ZURICH DESTINATIONS FARMERS SVSII                              172,451,749.13                  43.29% of Class A
C/O KILICO
ATTN INVESTMENT ACCOUNTING LL-2W
GREENVILLE SC  29602-9097

ALLMERICA LIFE SVSII                                           79,395,522.71                   19.93% of Class A
TOPEKA KS  66636-1000
KEMPER INVESTORS LIFE                                          49,186,443.32                   12.35% of Class A
C/O PRODUCT VALUATION
TOPEKA KS  66636-1000

CHARTER NAT LIFE INS CO-HORIZON                                21,824,994.34                   5.48% of Class A
ATTN ACCTNG FINANCIAL CONTROL TEAM
VERNON HILLS IL  60061-1826

UNION CEN INDIVIDUAL MONEY MARKET                              21,105,437.61                    5.3% of Class A
CINCINNATI OH  45201-0179

DWS Small Cap Growth VIP

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

ZURICH DESTINATIONS FARMERS SVSII                               4,191,460.03                   46.01% of Class A
C/O KILICO
ATTN INVESTMENT ACCOUNTING LL-2W
GREENVILLE SC  29602-9097

KEMPER INVESTORS LIFE                                           2,229,316.66                   24.47% of Class A
C/O PRODUCT VALUATION
TOPEKA KS  66636-1000

ALLMERICA LIFE SVSII                                            2,219,777.53                   24.37% of Class A
TOPEKA KS  66636-1000

DWS Strategic Income VIP

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

ZURICH DESTINATIONS FARMERS SVSII                               4,634,245.99                   63.73% of Class A
C/O KILICO
ATTN INVESTMENT ACCOUNTING LL-2W
GREENVILLE SC  29602-9097

ALLMERICA LIFE SVSII                                            2,465,931.55                   33.91% of Class A
TOPEKA KS  66636-1000

DWS Technology VIP

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

ZURICH DESTINATIONS FARMERS SVSII                               6,111,515.78                   59.15% of Class A
C/O KILICO
ATTN INVESTMENT ACCOUNTING LL-2W
GREENVILLE SC  29602-9097

ALLMERICA LIFE SVSII                                            3,498,259.69                   33.86% of Class A
TOPEKA KS  66636-1000

METLIFE INSURANCE CO OF CT                                       267,769.17                    92.28% of Class B
ATTN SHAREHOLDER ACCOUNTING DEPT
HARTFORD CT  06199-0027

GE CAPITAL LIFE ASSURANCE CO                                     18,519.04                     6.38% of Class B
OF NEW YORK
RICHMOND VA  23230-1702

DWS Turner Mid Cap Growth VIP

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

ZURICH DESTINATIONS FARMERS SVSII                               7,770,150.97                   80.68% of Class A
C/O KILICO
ATTN INVESTMENT ACCOUNTING LL-2W
GREENVILLE SC  29602-9097

ALLMERICA LIFE SVSII                                            1,822,225.42                   18.92% of Class A
TOPEKA KS  66636-1000
</TABLE>

Agreement to Indemnify Independent Trustees for Certain Expenses

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

                                FUND ORGANIZATION


The Fund was organized as a business trust under the laws of Massachusetts on
January 22, 1987 and is governed by an Amended and Restated Declaration of
Trust, approved by shareholders in the second quarter of 2008, as may be further
amended from time to time (the "Declaration of Trust"). On February 6, 2006 the
Fund changed its name from "Scudder Variable Series II" to "DWS Variable Series
II." The Fund may issue an unlimited number of shares of beneficial interest all
having no par value. Since the Fund offers multiple Portfolios, it is known as a
"series company." Currently, the following Portfolios offer Class A and Class B
shares: DWS Blue Chip VIP, DWS Core Fixed Income VIP, DWS Dreman Small Mid Cap
Value VIP, DWS Global Thematic VIP, DWS Government & Agency Securities VIP, DWS
High Income VIP, DWS Large Cap Value VIP, DWS Strategic Value VIP and DWS
Technology VIP. The following Portfolios offer Class A shares only: DWS Balanced
VIP, DWS Diversified International Equity VIP, DWS Mid Cap Growth VIP, DWS Money
Market VIP, DWS Small Cap Growth VIP, DWS Strategic Income VIP and DWS Turner
Mid Cap Growth VIP. All shares issued and outstanding are fully paid and
nonassessable, transferable, have no pre-emptive or conversion rights (except as
may be determined by the Board of Trustees) and are redeemable as described in
the SAI and a Portfolio's prospectus. Each share has equal rights with each
other share of the same class of the Portfolio as to voting, dividends,
exchanges, conversion features and liquidation. Shareholders are entitled to one
vote for each full share held and fractional votes for fractional shares held.



 Information about the Portfolios' investment performance is contained in the
Fund's 2008 Annual Report to Shareholders, which may be obtained without charge
from the Fund or from Participating Insurance Companies which offer the
Portfolios.

Shareholder inquiries should be made by writing the Fund at the address shown on
the front cover or from Participating Insurance Companies which offer the
Portfolios.



A Portfolio generally is not required to hold meetings of its shareholders.
Under the Declaration of Trust, however, shareholder meetings will be held in
connection with the following matters to the extent and as provided in the
Declaration of Trust and as required by applicable law: (a) the election or
removal of trustees if a meeting is called for such purpose; (b) the termination
of the Fund or a Portfolio; (c) an amendment of the Declaration of Trust; and
(d) such additional matters as may be required by law or as the Trustees may
determine to be necessary or desirable. Shareholders also vote upon changes in
fundamental policies or restrictions.



Under current interpretations of the 1940 Act, the Fund expects that
Participating Insurance Company shareholders will offer VLI and VA contract
holders the opportunity to instruct them as to how Fund shares attributable to
such contracts will be voted with respect to the matters described above. The
separate prospectuses describing the VLI and VA contracts include additional
disclosure of how contract holder voting rights are computed.


The Declaration of Trust provides that shareholder meeting quorum requirements
shall be established in the Fund's By-laws. The By-laws currently in effect
provide that the presence in person or by proxy of the holders of thirty percent
of the shares entitled to vote at a meeting (or of an individual series or class
if required to vote separately) shall constitute a quorum for the transaction of
business at meetings of shareholders of the Fund.

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

The Declaration of Trust provides that the Board of Trustees may, in its
discretion, establish minimum investment amounts for shareholder accounts,
impose fees on accounts that do not exceed a minimum investment amount and
involuntarily redeem shares in any such account in payment of such fees. The
Board of Trustees, in its sole discretion, also may cause the Fund to redeem all
of the shares of the Fund or one or more series or classes held by any
shareholder for any reason, to the extent permissible by the 1940 Act, including
(a) if the shareholder owns shares having an aggregate net asset value of less
than a specified minimum amount, (b) if a particular shareholder's ownership of
shares would disqualify a series from being a regulated investment company, (c)
upon a shareholder's failure to provide sufficient identification to permit the
Fund to verify the shareholder's identity, (d) upon a shareholder's failure to
pay for shares or meet or maintain the qualifications for ownership of a
particular class or series of shares, (e) if the Board of Trustees determines
(or pursuant to policies established by the Board it is determined) that share
ownership by a particular shareholder is not in the best interests of remaining
shareholders, (f) when a Portfolio is requested or compelled to do so by
governmental authority or applicable law and (g) upon a shareholder's failure to
comply with a request for information with respect to the direct or indirect
ownership of shares of the Fund. The Declaration of Trust also authorizes the
Board of Trustees to terminate a Portfolio or any class without shareholder
approval, and the Fund may suspend the right of shareholders to require the Fund
to redeem shares to the extent permissible under the 1940 Act.

Upon the termination of the Fund or any series, after paying or adequately
providing for the payment of all liabilities which may include the establishment
of a liquidating trust or similar vehicle, and upon receipt of such releases,
indemnities and refunding agreements as they deem necessary for their
protection, the Trustees may distribute the remaining Fund property or property
of the series, in cash or in kind or partly each, to the shareholders of the
Fund or the series involved, ratably according to the number of shares of the
Fund or such series held by the several shareholders of the Fund or such series
on the date of termination, except to the extent otherwise required or permitted
by the preferences and special or relative rights and privileges of any classes
of shares of a series involved, provided that any distribution to the
shareholders of a particular class of shares shall be made to such shareholders
pro rata in proportion to the number of shares of such class held by each of
them. The composition of any such distribution (e.g., cash, securities or other
assets) shall be determined by the Fund in its sole discretion, and may be
different among shareholders (including differences among shareholders in the
same series or class).

Under Massachusetts law, shareholders of a Massachusetts business trust could,
under certain circumstances, be held personally liable for obligations of a
Portfolio. The Declaration of Trust, however, disclaims shareholder liability
for acts or obligations of the Portfolio and requires that notice of such
disclaimer be given in each agreement, obligation, or instrument entered into or
executed by the Portfolio or the Portfolio's trustees. Moreover, the Declaration
of Trust provides for indemnification out of Portfolio property for all losses
and expenses of any shareholder held personally liable for the obligations of
the Portfolio and the Portfolio may be covered by insurance which the Trustees
consider adequate to cover foreseeable tort claims. Thus, the risk of a
shareholder incurring financial loss on account of shareholder liability is
considered by the Advisor remote and not material, since it is limited to
circumstances in which a disclaimer is inoperative and the Portfolio itself is
unable to meet its obligations.



                             PROXY VOTING GUIDELINES

The Fund has delegated proxy voting responsibilities to the Advisor, subject to
the Board's general oversight. The Advisor votes proxies pursuant to the proxy
voting policy and guidelines set forth in Appendix A to this SAI).

You may obtain information about how a Portfolio voted proxies related to its
portfolio securities during the 12-month period ended June 30 by visiting the
Securities and Exchange Commission's Web site at www.sec.gov or by visiting our
Web site at: www.dws-investments.com (click on "proxy voting" at the bottom of
the page).

                             ADDITIONAL INFORMATION

Other Information

The CUSIP number for each Portfolio is as follows:

DWS Balanced VIP - Class A                                             23338H685
DWS Blue Chip VIP - Class A                                            23338H305
DWS Blue Chip VIP - Class B                                            23338H404
DWS Core Fixed Income VIP - Class A                                    23338H826
DWS Core Fixed Income VIP - Class B                                    23338H818
DWS Dreman Small Mid Cap Value VIP - Class A                           23338H750
DWS Dreman Small Mid Cap Value VIP - Class B                           23338H743
DWS Global Thematic VIP - Class A                                      23338H701
DWS Global Thematic VIP - Class B                                      23338H800
DWS Government & Agency Securities VIP - Class A                       23338H883
DWS Government & Agency Securities VIP - Class B                       23338H875
DWS High Income VIP - Class A                                          23338H867
DWS High Income VIP - Class B                                          23338H859
DWS Diversified International Equity VIP - Class A                     23338H842
DWS Large Cap Value VIP - Class A                                      23338H503
DWS Large Cap Value VIP - Class B                                      23338H602
DWS Mid Cap Growth VIP - Class A                                       23338H107
DWS Money Market VIP - Class A                                         23338H792
DWS Small Cap Growth VIP - Class A                                     23338H776
DWS Strategic Income VIP - Class A                                     23338H735
DWS Strategic Value VIP - Class A                                      23338H628
DWS Strategic Value VIP - Class B                                      23338H610
DWS Technology VIP - Class A                                           23338H719
DWS Technology VIP - Class B                                           23338H693
DWS Turner Mid Cap Growth VIP - Class A                                23338H578

Each series of DWS Variable Series II has a fiscal year ending December 31.

Many of the investment changes in the Portfolios will be made at prices
different from those prevailing at the time they may be reflected in a regular
report to shareholders of the Fund. These transactions will reflect investment
decisions made by the Advisor in light of each Portfolio's investment objectives
and policies, its other portfolio holdings and tax considerations, and should
not be construed as recommendations for similar action by other investors.


Each Portfolio, through its combined Prospectuses and combined Statement of
Additional Information, offers only its own share classes, yet it is possible
that one Portfolio might become liable for a misstatement regarding the other
Portfolio. The Trustees have considered this, and have approved the use of the
Prospectus and Statement of Additional Information.

The Portfolios' prospectuses and this Statement of Additional Information omit
certain information contained in the Registration Statement and its amendments
which the Fund has filed with the SEC under the Securities Act of 1933 and
reference is hereby made to the Registration Statement for further information
with respect to the Fund and the securities offered hereby. The Registration
Statement and its amendments are available for inspection by the public at the
SEC in Washington, D.C.

                              FINANCIAL STATEMENTS

The audited financial statements, including the investment portfolios of each
Portfolio, as applicable, together with the Report of Independent Registered
Public Accounting Firm, Financial Highlights and notes to financial statements
in the Annual Report to the Shareholders of each Portfolio dated December 31,
2008 are incorporated herein by reference and are hereby deemed to be a part of
this Statement of Additional Information. A copy of the Fund's Annual Report may
be obtained without charge by contacting the Customer Service Center at the
telephone number shown in the contract prospectus.



                      APPENDIX A -- PROXY VOTING GUIDELINES

       Deutsche Asset Management ("AM") Proxy Voting Policy and Guidelines


I.       INTRODUCTION

AM has adopted and implemented the following policies and procedures, which it
believes are reasonably designed to ensure that proxies are voted in the best
economic interest of clients, in accordance with its fiduciary duties and local
regulation. These Proxy Voting Policies, Procedures and Guidelines shall apply
to all accounts managed by US domiciled advisers and to all US client accounts
managed by non US regional offices. Non US regional offices are required to
maintain procedures and to vote proxies as may be required by law on behalf of
their non US clients. In addition, AM's proxy policies reflect the fiduciary
standards and responsibilities for ERISA accounts.

The attached guidelines represent a set of global recommendations that were
determined by the Global Proxy Voting Sub-Committee ("the GPVSC"). These
guidelines were developed to provide AM with a comprehensive list of
recommendations that represent how AM will generally vote proxies for its
clients. The recommendations derived from the application of these guidelines
are not intended to influence the various AM legal entities either directly or
indirectly by parent or affiliated companies. In addition, the organizational
structures and documents of the various AM legal entities allows, where
necessary or appropriate, the execution by individual AM subsidiaries of the
proxy voting rights independently of any DB parent or affiliated company. This
applies in particular to non U.S. fund management companies. The individuals
that make proxy voting decisions are also free to act independently, subject to
the normal and customary supervision by the management/boards of these AM legal
entities.


II.      AM'S PROXY VOTING RESPONSIBILITIES

Proxy votes are the property of AM's advisory clients.(1) As such, AM's
authority and responsibility to vote such proxies depend upon its contractual
relationships with its clients. AM has delegated responsibility for effecting
its advisory clients' proxy votes to Institutional Shareholder Services ("ISS"),
an independent third-party proxy voting specialist. ISS votes AM's advisory
clients' proxies in accordance with AM's proxy guidelines or AM's specific
instructions. Where a client has given specific instructions as to how a proxy
should be voted, AM will notify ISS to carry out those instructions. Where no
specific instruction exists, AM will follow the procedures in voting the proxies
set forth in this document. Certain Taft-Hartley clients may direct AM to have
ISS vote their proxies in accordance with Taft Hartley voting Guidelines

_____________________

(1)      For purposes of these Policies and Procedures, "clients" refers to
         persons or entities: for which AM serves as investment adviser or
         sub-adviser; for which AM votes proxies; and that have an economic or
         beneficial ownership interest in the portfolio securities of issuers
         soliciting such proxies.

Clients may in certain instances contract with their custodial agent and notify
AM that they wish to engage in securities lending transactions. In such cases,
it is the responsibility of the custodian to deduct the number of shares that
are on loan so that they do not get voted twice.


III.     POLICIES

1.       Proxy voting activities are conducted in the best economic interest of
         clients

AM has adopted the following policies and procedures to ensure that proxies are
voted in accordance with the best economic interest of its clients, as
determined by AM in good faith after appropriate review.

2.       The Global Proxy Voting Sub-Committee

The Global Proxy Voting Sub-Committee (the "GPVSC") is an internal working group
established by the applicable AM's Investment Risk Oversight Committee pursuant
to a written charter. The GPVSC is responsible for overseeing AM's proxy voting
activities, including:

(i)    adopting, monitoring and updating guidelines, attached as Exhibit A (the
       "Guidelines"), that provide how AM will generally vote proxies pertaining
       to a comprehensive list of common proxy voting matters;

(ii)   voting proxies where (A) the issues are not covered by specific client
       instruction or the Guidelines; (B) the Guidelines specify that the issues
       are to be determined on a case-by-case basis; or (C) where an exception
       to the Guidelines may be in the best economic interest of AM's clients;
       and

(iii)  monitoring the Proxy Vendor Oversight's proxy voting activities (see
       below).

AM's Proxy Vendor Oversight, a function of AM's Operations Group, is responsible
for coordinating with ISS to administer AM's proxy voting process and for voting
proxies in accordance with any specific client instructions or, if there are
none, the Guidelines, and overseeing ISS' proxy responsibilities in this regard.

3.       Availability of Proxy Voting Policies and Procedures and proxy voting
         record

Copies of these Policies and Procedures, as they may be updated from time to
time, are made available to clients as required by law and otherwise at AM's
discretion. Clients may also obtain information on how their proxies were voted
by AM as required by law and otherwise at AM's discretion; however, AM must not
selectively disclose its investment company clients' proxy voting records. The
Proxy Vendor Oversight will make proxy voting reports available to advisory
clients upon request. The investment companies' proxy voting records will be
disclosed to shareholders by means of publicly-available annual filings of each
company's proxy voting record for 12-month periods ended June 30 (see
"Recordkeeping" below), if so required by relevant law.


IV.      PROCEDURES

The key aspects of AM's proxy voting process are as follows:

1.       The GPVSC's Proxy Voting Guidelines

The Guidelines set forth the GPVSC's standard voting positions on a
comprehensive list of common proxy voting matters. The GPVSC has developed, and
continues to update the Guidelines based on consideration of current corporate
governance principles, industry standards, client feedback, and the impact of
the matter on issuers and the value of the investments.

The GPVSC will review the Guidelines as necessary to support the best economic
interests of AM's clients and, in any event, at least annually. The GPVSC will
make changes to the Guidelines, whether as a result of the annual review or
otherwise, taking solely into account the best economic interests of clients.
Before changing the Guidelines, the GPVSC will thoroughly review and evaluate
the proposed change and the reasons therefore, and the GPVSC Chair will ask
GPVSC members whether anyone outside of the AM organization (but within Deutsche
Bank and its affiliates) or any entity that identifies itself as a AM advisory
client has requested or attempted to influence the proposed change and whether
any member has a conflict of interest with respect to the proposed change. If
any such matter is reported to the GPVSC Chair, the Chair will promptly notify
the Conflicts of Interest Management Sub-Committee (see below) and will defer
the approval, if possible. Lastly, the GPVSC will fully document its rationale
for approving any change to the Guidelines.

The Guidelines may reflect a voting position that differs from the actual
practices of the public company(ies) within the Deutsche Bank organization or of
the investment companies for which AM or an affiliate serves as investment
adviser or sponsor. Investment companies, particularly closed-end investment
companies, are different from traditional operating companies. These differences
may call for differences in voting positions on the same matter. Further, the
manner in which AM votes investment company proxies may differ from proposals
for which a AM-advised or sponsored investment company solicits proxies from its
shareholders. As reflected in the Guidelines, proxies solicited by closed-end
(and open-end) investment companies are generally voted in accordance with the
pre-determined guidelines of ISS. See Section IV.3.B.

Funds ("Underlying Funds") in which Topiary Fund Management Fund of Funds (each,
a "Fund") invest, may from time to time seek to revise their investment terms
(i.e. liquidity, fees, etc.) or investment structure. In such event, the
Underlying Funds may require approval/consent from its investors to effect the
relevant changes. Topiary Fund Management has adopted Proxy Voting Procedures
which outline the process for these approvals.

2.       Specific proxy voting decisions made by the GPVSC

The Proxy Vendor Oversight will refer to the GPVSC all proxy proposals (i) that
are not covered by specific client instructions or the Guidelines; or (ii) that,
according to the Guidelines, should be evaluated and voted on a case-by-case
basis.

Additionally, if, the Proxy Vendor Oversight, the GPVSC Chair or any member of
the GPVSC, a portfolio manager, a research analyst or a sub-adviser believes
that voting a particular proxy in accordance with the Guidelines may not be in
the best economic interests of clients, that individual may bring the matter to
the attention of the GPVSC Chair and/or the Proxy Vendor Oversight.(2)

_____________________

(2)      The Proxy Vendor Oversight generally monitors upcoming proxy
         solicitations for heightened attention from the press or the industry
         and for novel or unusual proposals or circumstances, which may prompt
         the Proxy Vendor Oversight to bring the solicitation to the attention
         of the GPVSC Chair. AM portfolio managers, AM research analysts and
         sub-advisers also may bring a particular proxy vote to the attention of
         the GPVSC Chair, as a result of their ongoing monitoring of portfolio
         securities held by advisory clients and/or their review of the periodic
         proxy voting record reports that the GPVSC Chair distributes to AM
         portfolio managers and AM research analysts.

If the Proxy Vendor Oversight refers a proxy proposal to the GPVSC or the GPVSC
determines that voting a particular proxy in accordance with the Guidelines is
not in the best economic interests of clients, the GPVSC will evaluate and vote
the proxy, subject to the procedures below regarding conflicts.

The GPVSC endeavors to hold meetings to decide how to vote particular proxies
sufficiently before the voting deadline so that the procedures below regarding
conflicts can be completed before the GPVSC's voting determination.

3.       Certain proxy votes may not be cast

In some cases, the GPVSC may determine that it is in the best economic interests
of its clients not to vote certain proxies. If the conditions below are met with
regard to a proxy proposal, AM will abstain from voting:

o        Neither the Guidelines nor specific client instructions cover an issue;

o        ISS does not make a recommendation on the issue;

o        The GPVSC cannot convene on the proxy proposal at issue to make a
         determination as to what would be in the client's best interest. (This
         could happen, for example, if the Conflicts of Interest Management
         Sub-committee found that there was a material conflict or if despite
         all best efforts being made, the GPVSC quorum requirement could not be
         met).

In addition, it is AM's policy not to vote proxies of issuers subject to laws of
those jurisdictions that impose restrictions upon selling shares after proxies
are voted, in order to preserve liquidity. In other cases, it may not be
possible to vote certain proxies, despite good faith efforts to do so. For
example, some jurisdictions do not provide adequate notice to shareholders so
that proxies may be voted on a timely basis. Voting rights on securities that
have been loaned to third-parties transfer to those third-parties, with loan
termination often being the only way to attempt to vote proxies on the loaned
securities. Lastly, the GPVSC may determine that the costs to the client(s)
associated with voting a particular proxy or group of proxies outweighs the
economic benefits expected from voting the proxy or group of proxies.

The Proxy Vendor Oversight will coordinate with the GPVSC Chair regarding any
specific proxies and any categories of proxies that will not or cannot be voted.
The reasons for not voting any proxy shall be documented.

4.       Conflict of Interest Procedures

A. Procedures to Address Conflicts of Interest and Improper Influence

Overriding Principle. In the limited circumstances where the GPVSC votes
proxies,(3) the GPVSC will vote those proxies in accordance with what it, in
good faith, determines to be the best economic interests of AM's clients.(4)

_____________________

(3)      As mentioned above, the GPVSC votes proxies (i) where neither a
         specific client instruction nor a Guideline directs how the proxy
         should be voted, (ii) where the Guidelines specify that an issue is to
         be determined on a case by case basis or (iii) where voting in
         accordance with the Guidelines may not be in the best economic
         interests of clients.

(4)      The Proxy Vendor Oversight, who serves as the non-voting secretary of
         the GPVSC, may receive routine calls from proxy solicitors and other
         parties interested in a particular proxy vote. Any contact that
         attempts to exert improper pressure or influence shall be reported to
         the Conflicts of Interest Management Sub-Committee.

Independence of the GPVSC. As a matter of Compliance policy, the GPVSC and the
Proxy Vendor Oversight are structured to be independent from other parts of
Deutsche Bank. Members of the GPVSC and the employee responsible for Proxy
Vendor Oversight are employees of AM. As such, they may not be subject to the
supervision or control of any employees of Deutsche Bank Corporate and
Investment Banking division ("CIB"). Their compensation cannot be based upon
their contribution to any business activity outside of AM without prior approval
of Legal and Compliance. They can have no contact with employees of Deutsche
Bank outside of the Private Client and Asset Management division ("PCAM")
regarding specific clients, business matters or initiatives without the prior
approval of Legal and Compliance. They furthermore may not discuss proxy votes
with any person outside of AM (and within AM only on a need to know basis).

Conflict Review Procedures. There will be a committee (the "Conflicts of
Interest Management Sub-Committee") established within AM that will monitor for
potential material conflicts of interest in connection with proxy proposals that
are to be evaluated by the GPVSC. Promptly upon a determination that a vote
shall be presented to the GPVSC, the GPVSC Chair shall notify the Conflicts of
Interest Management Sub-Committee. The Conflicts of Interest Management
Sub-Committee shall promptly collect and review any information deemed
reasonably appropriate to evaluate, in its reasonable judgment, if AM or any
person participating in the proxy voting process has, or has the appearance of,
a material conflict of interest. For the purposes of this policy, a conflict of
interest shall be considered "material" to the extent that a reasonable person
could expect the conflict to influence, or appear to influence, the GPVSC's
decision on the particular vote at issue. GPVSC should provide the Conflicts of
Interest Management Sub-Committee a reasonable amount of time (no less than 24
hours) to perform all necessary and appropriate reviews. To the extent that a
conflicts review can not be sufficiently completed by the Conflicts of Interest
Management Sub-Committee the proxies will be voted in accordance with the
standard guidelines.

The information considered by the Conflicts of Interest Management Sub-Committee
may include without limitation information regarding (i) AM client
relationships; (ii) any relevant personal conflict known by the Conflicts of
Interest Management Sub-Committee or brought to the attention of that
sub-committee; (iii) and any communications with members of the GPVSC (or anyone
participating or providing information to the GPVSC) and any person outside of
the AM organization (but within Deutsche Bank and its affiliates) or any entity
that identifies itself as a AM advisory client regarding the vote at issue. In
the context of any determination, the Conflicts of Interest Management
Sub-Committee may consult with, and shall be entitled to rely upon, all
applicable outside experts, including legal counsel.

Upon completion of the investigation, the Conflicts of Interest Management
Sub-Committee will document its findings and conclusions. If the Conflicts of
Interest Management Sub-Committee determines that (i) AM has a material conflict
of interest that would prevent it from deciding how to vote the proxies
concerned without further client consent or (ii) certain individuals should be
recused from participating in the proxy vote at issue, the Conflicts of Interest
Management Sub-Committee will so inform the GPVSC chair.

If notified that AM has a material conflict of interest as described above, the
GPVSC chair will obtain instructions as to how the proxies should be voted
either from (i) if time permits, the effected clients, or (ii) in accordance
with the standard guidelines. If notified that certain individuals should be
recused from the proxy vote at issue, the GPVSC Chair shall do so in accordance
with the procedures set forth below.

Note: Any AM employee who becomes aware of a potential, material conflict of
interest in respect of any proxy vote to be made on behalf of clients shall
notify Compliance. Compliance shall call a meeting of the conflict review
committee to evaluate such conflict and determine a recommended course of
action.

Procedures to be followed by the GPVSC. At the beginning of any discussion
regarding how to vote any proxy, the GPVSC Chair (or his or her delegate) will
inquire as to whether any GPVSC member (whether voting or ex officio) or any
person participating in the proxy voting process has a personal conflict of
interest or has actual knowledge of an actual or apparent conflict that has not
been reported to the Conflicts of Interest Management Sub-Committee.

The GPVSC Chair also will inquire of these same parties whether they have actual
knowledge regarding whether any director, officer or employee outside of the AM
organization (but within Deutsche Bank and its affiliates) or any entity that
identifies itself as a AM advisory client, has: (i) requested that AM, the Proxy
Vendor Oversight (or any member thereof) or a GPVSC member vote a particular
proxy in a certain manner; (ii) attempted to influence AM, the Proxy Vendor
Oversight (or any member thereof), a GPVSC member or any other person in
connection with proxy voting activities; or (iii) otherwise communicated with a
GPVSC member or any other person participating or providing information to the
GPVSC regarding the particular proxy vote at issue, and which incident has not
yet been reported to the Conflicts of Interest Management Sub- Committee.

If any such incidents are reported to the GPVSC Chair, the Chair will promptly
notify the Conflicts of Interest Management Sub-Committee and, if possible, will
delay the vote until the Conflicts of Interest Management Sub-Committee can
complete the conflicts report. If a delay is not possible, the Conflicts of
Interest Management Sub-Committee will instruct the GPVSC whether anyone should
be recused from the proxy voting process, or whether AM should vote the proxy in
accordance with the standard guidelines, seek instructions as to how to vote the
proxy at issue from ISS or, if time permits, the effected clients. These
inquiries and discussions will be properly reflected in the GPVSC's minutes.

Duty to Report. Any AM employee, including any GPVSC member (whether voting or
ex officio), that is aware of any actual or apparent conflict of interest
relevant to, or any attempt by any person outside of the AM organization (but
within Deutsche Bank and its affiliates) or any entity that identifies itself as
a AM advisory client to influence, how AM votes its proxies has a duty to
disclose the existence of the situation to the GPVSC Chair (or his or her
designee) and the details of the matter to the Conflicts of Interest Management
Sub-Committee. In the case of any person participating in the deliberations on a
specific vote, such disclosure should be made before engaging in any activities
or participating in any discussion pertaining to that vote.

Recusal of Members. The GPVSC will recuse from participating in a specific proxy
vote any GPVSC members (whether voting or ex officio) and/or any other person
who (i) are personally involved in a material conflict of interest; or (ii) who,
as determined by the Conflicts of Interest Management Sub-Committee, have actual
knowledge of a circumstance or fact that could effect their independent
judgment, in respect of such vote. The GPVSC will also exclude from
consideration the views of any person (whether requested or volunteered) if the
GPVSC or any member thereof knows, or if the Conflicts of Interest Management
Sub-Committee has determined, that such other person has a material conflict of
interest with respect to the particular proxy, or has attempted to influence the
vote in any manner prohibited by these policies.

If, after excluding all relevant GPVSC voting members pursuant to the paragraph
above, there are three or more GPVSC voting members remaining, those remaining
GPVSC members will determine how to vote the proxy in accordance with these
Policies and Procedures. If there are fewer than three GPVSC voting members
remaining, the GPVSC Chair will vote the proxy in accordance with the standard
guidelines, will obtain instructions as to how to have the proxy voted from, if
time permits, the effected clients and otherwise from ISS.

B.       Investment Companies and Affiliated Public Companies

Investment Companies. As reflected in the Guidelines, all proxies solicited by
open-end and closed-end investment companies are voted in accordance with the
pre-determined guidelines of ISS, unless the investment company client directs
AM to vote differently on a specific proxy or specific categories of proxies.
However, regarding investment companies for which AM or an affiliate serves as
investment adviser or principal underwriter, such proxies are voted in the same
proportion as the vote of all other shareholders (i.e., "mirror" or "echo"
voting). Master fund proxies solicited from feeder funds are voted in accordance
with applicable provisions of Section 12 of the Investment Company Act of 1940.

Subject to participation agreements with certain Exchange Traded Funds ("ETF")
issuers that have received exemptive orders from the U.S. Securities and
Exchange Commission allowing investing DWS funds to exceed the limits set forth
in Section 12(d)(1)(A) and (B) of the Investment Company Act of 1940, DeAM will
echo vote proxies for ETFs in which Deutsche Bank holds more than 25% of
outstanding voting shares globally when required to do so by participation
agreements and SEC orders.

Affiliated Public Companies. For proxies solicited by non-investment company
issuers of or within the Deutsche Bank organization, e.g., Deutsche bank itself,
these proxies will be voted in the same proportion as the vote of other
shareholders (i.e., "mirror" or "echo" voting).

Note: With respect to the QP Trust (not registered under the Investment Company
Act of 1940), the Fund is not required to engage in echo voting and the
investment adviser will use these Guidelines, and may determine, with respect to
the QP Trust, to vote contrary to the positions in the Guidelines, consistent
with the Fund's best interest.

C.       Other Procedures That Limit Conflicts of Interest

AM and other entities in the Deutsche Bank organization have adopted a number of
policies, procedures and internal controls that are designed to avoid various
conflicts of interest, including those that may arise in connection with proxy
voting, including:

o        Deutsche Bank Americas Restricted Activities Policy. This policy
         provides for, among other things, independence of AM employees from
         CIB, and information barriers between AM and other affiliates.
         Specifically, no AM employee may be subject to the supervision or
         control of any employee of CIB. No AM employee shall have his or her
         compensation based upon his or her contribution to any business
         activity within the Bank outside of the business of AM, without the
         prior approval of Legal or Compliance. Further, no employee of CIB
         shall have any input into the compensation of a AM employee without the
         prior approval of Legal or Compliance. Under the information barriers
         section of this policy, as a general rule, AM employees who are
         associated with the investment process should have no contact with
         employees of Deutsche Bank or its affiliates, outside of PCAM,
         regarding specific clients, business matters, or initiatives. Further,
         under no circumstances should proxy votes be discussed with any
         Deutsche Bank employee outside of AM (and should only be discussed on a
         need-to-know basis within AM).

Other relevant internal policies include the Deutsche Bank Americas Code of
Professional Conduct, the Deutsche Asset Management Information Sharing
Procedures, the Deutsche Asset Management Code of Ethics, the Sarbanes-Oxley
Senior Officer Code of Ethics, and the Deutsche Bank Group Code of Conduct. The
GPVSC expects that these policies, procedures and internal controls will greatly
reduce the chance that the GPVSC (or, its members) would be involved in, aware
of or influenced by, an actual or apparent conflict of interest.


V.       RECORDKEEPING

At a minimum, the following types of records must be properly maintained and
readily accessible in order to evidence compliance with this policy.

o        AM will maintain a record of each vote cast by AM that includes among
         other things, company name, meeting date, proposals presented, vote
         cast and shares voted.

o        The Proxy Vendor Oversight maintains records for each of the proxy
         ballots it votes. Specifically, the records include, but are not
         limited to:

         -        The proxy statement (and any additional solicitation
                  materials) and relevant portions of annual statements.

         -        Any additional information considered in the voting process
                  that may be obtained from an issuing company, its agents or
                  proxy research firms.

         -        Analyst worksheets created for stock option plan and share
                  increase analyses.

         -        Proxy Edge print-screen of actual vote election.

o        AM will retain these Policies and Procedures and the Guidelines; will
         maintain records of client requests for proxy voting information; and
         will retain any documents the Proxy Vendor Oversight or the GPVSC
         prepared that were material to making a voting decision or that
         memorialized the basis for a proxy voting decision.

o        The GPVSC also will create and maintain appropriate records documenting
         its compliance with these Policies and Procedures, including records of
         its deliberations and decisions regarding conflicts of interest and
         their resolution.

o        With respect to AM's investment company clients, ISS will create and
         maintain records of each company's proxy voting record for 12-month
         periods ended June 30. AM will compile the following information for
         each matter relating to a portfolio security considered at any
         shareholder meeting held during the period covered by the report and
         with respect to which the company was entitled to vote:

         -        The name of the issuer of the portfolio security;

         -        The exchange ticker symbol of the portfolio security (if
                  symbol is available through reasonably practicable means);

         -        The Council on Uniform Securities Identification Procedures
                  number for the portfolio security (if the number is available
                  through reasonably practicable means);

         -        The shareholder meeting date;

         -        A brief identification of the matter voted on;

         -        Whether the matter was proposed by the issuer or by a security
                  holder;

         -        Whether the company cast its vote on the matter;

         -        How the company cast its vote (e.g., for or against proposal,
                  or abstain; for or withhold regarding election of directors);
                  and

         -        Whether the company cast its vote for or against management.

Note: This list is intended to provide guidance only in terms of the records
that must be maintained in accordance with this policy. In addition, please note
that records must be maintained in accordance with the applicable AM Records
Management Policy.

With respect to electronically stored records, "properly maintained" is defined
as complete, authentic (unalterable) usable and backed-up. At a minimum, records
should be retained for a period of not less than six years (or longer, if
necessary to comply with applicable regulatory requirements), the first three
years in an appropriate AM office.


VI.      THE GPVSC'S OVERSIGHT ROLE

In addition to adopting the Guidelines and making proxy voting decisions on
matters referred to it as set forth above, the GPVSC will monitor the proxy
voting process by reviewing summary proxy information presented by ISS. The
GPVSC will use this review process to determine, among other things, whether any
changes should be made to the Guidelines. This review will take place at least
quarterly and will be documented in the GPVSC's minutes.


Attachment A - Global Proxy Voting Guidelines







                            Deutsche Asset Management

                         Global Proxy Voting Guidelines



                             As Amended October 2008


                                [GRAPHIC OMITTED]
Table of contents

I        Board Of Directors And Executives

         A        Election Of Directors

         B        Classified Boards Of Directors

         C        Board And Committee Independence

         D        Liability And Indemnification Of Directors

         E        Qualifications Of Directors

         F        Removal Of Directors And Filling Of Vacancies

         G        Proposals To Fix The Size Of The Board

         H        Proposals to Restrict Chief Executive Officer's Service on

                  Multiple Boards

         I        Proposals to Restrict Supervisory Board Members Service on

                  Multiple Boards

         J        Proposals to Establish Audit Committees

II       Capital Structure

         A        Authorization Of Additional Shares

         B        Authorization Of "Blank Check" Preferred Stock

         C        Stock Splits/Reverse Stock Splits

         D        Dual Class/Supervoting Stock

         E        Large Block Issuance

         F        Recapitalization Into A Single Class Of Stock

         G        Share Repurchases

         H        Reductions In Par Value

III      Corporate Governance Issues

         A        Confidential Voting

         B        Cumulative Voting

         C        Supermajority Voting Requirements

         D        Shareholder Right To Vote

IV       Compensation

         A        Establishment of a Remuneration Committee

         B        Executive And Director Stock Option Plans

         C        Employee Stock Option/Purchase Plans

         D        Golden Parachutes

         E        Proposals To Limit Benefits Or Executive Compensation

         F        Option Expensing

         G        Management board election and motion

         H        Remuneration (variable pay)

         I        Long-term incentive plans

         J        Shareholder Proposals Concerning "Pay For Superior
                  Performance"

         K        Executive Compensation Advisory

V        Anti-Takeover Related Issues

         A        Shareholder Rights Plans ("Poison Pills")

         B        Reincorporation

         C        Fair-Price Proposals

         D        Exemption From State Takeover Laws

         E        Non-Financial Effects Of Takeover Bids

VI       Mergers & Acquisitions

VII      Social & Political Issues

         A        Labor & Human Rights

         B        Diversity & Equality

         C        Health & Safety

         D        Government/Military

         E        Tobacco

VIII     Environmental Issues

IX       Miscellaneous Items

         A        Ratification Of Auditors

         B        Limitation Of Non-Audit Services Provided By Independent
                  Auditor

         C        Audit Firm Rotation

         D        Transaction Of Other Business

         E        Motions To Adjourn The Meeting

         F        Bundled Proposals

         G        Change Of Company Name

         H        Proposals Related To The Annual Meeting

         I        Reimbursement Of Expenses Incurred From Candidate Nomination

         J        Investment Company Proxies

         K        International Proxy Voting


These Guidelines may reflect a voting position that differs from the actual
practices of the public company (ies) within the Deutsche Bank organization or
of the investment companies for which AM or an affiliate serves as investment
adviser or sponsor.

NOTE: Because of the unique structure and regulatory scheme applicable to
closed-end investment companies, the voting guidelines (particularly those
related to governance issues) generally will be inapplicable to holdings of
closed-end investment companies. As a result, determinations on the appropriate
voting recommendation for closed-end investment company shares will be made on a
case-by-case basis.


I.       Board of Directors and Executives

A.       Election of Directors

Routine: AM Policy is to vote "for" the uncontested election of directors. Votes
for a director in an uncontested election will be withheld in cases where a
director has shown an inability to perform his/her duties in the best interests
of the shareholders.

Proxy contest: In a proxy contest involving election of directors, a
case-by-case voting decision will be made based upon analysis of the issues
involved and the merits of the incumbent and dissident slates of directors. AM
will incorporate the decisions of a third party proxy research vendor,
currently, Institutional Shareholder Services ("ISS") subject to review by the
Proxy Voting Sub-Committee (GPVSC) as set forth in the AM's Proxy Voting
Policies and Procedures.

Rationale: The large majority of corporate directors fulfill their fiduciary
obligation and in most cases support for management's nominees is warranted. As
the issues relevant to a contested election differ in each instance, those cases
must be addressed as they arise.

B.       Classified Boards of Directors

AM policy is to vote against proposals to classify the board and for proposals
to repeal classified boards and elect directors annually.

Rationale: Directors should be held accountable on an annual basis. By
entrenching the incumbent board, a classified board may be used as an
anti-takeover device to the detriment of the shareholders in a hostile take-over
situation.

C.       Board and Committee Independence

AM policy is to vote:

1.       "For" proposals that require that a certain percentage (majority up to
         66 2/3%) of members of a board of directors be comprised of independent
         or unaffiliated directors.

2.       "For" proposals that require all members of a company's compensation,
         audit, nominating, or other similar committees be comprised of
         independent or unaffiliated directors.

3.       "Against" shareholder proposals to require the addition of special
         interest, or constituency, representatives to boards of directors.

4.       "For" separation of the Chairman and CEO positions.

5.       "Against" proposals that require a company to appoint a Chairman who is
         an independent director.

Rationale: Board independence is a cornerstone of effective governance and
accountability. A board that is sufficiently independent from management assures
that shareholders' interests are adequately represented. However, the Chairman
of the board must have sufficient involvement in and experience with the
operations of the company to perform the functions required of that position and
lead the company.

No director qualifies as 'independent' unless the board of directors
affirmatively determines that the director has no material relationship with the
listed company (either directly or as a partner, shareholder or officer of an
organization that has a relationship with the company).

Whether a director is in fact not "independent" will depend on the laws and
regulations of the primary market for the security and the exchanges, if any, on
which the security trades.

D.       Liability and Indemnification of Directors

AM policy is to vote "for" management proposals to limit directors' liability
and to broaden the indemnification of directors, unless broader indemnification
or limitations on directors' liability would effect shareholders' interests in
pending litigation.

Rationale: While shareholders want directors and officers to be responsible for
their actions, it is not in the best interests of the shareholders for them to
be to risk averse. If the risk of personal liability is too great, companies may
not be able to find capable directors willing to serve. We support expanding
coverage only for actions taken in good faith and not for serious violations of
fiduciary obligation or negligence.

E.       Qualifications of Directors

AM policy is to follow management's recommended vote on either management or
shareholder proposals that set retirement ages for directors or require specific
levels of stock ownership by directors.

Rationale: As a general rule, the board of directors, and not the shareholders,
is most qualified to establish qualification policies.

F.       Removal of Directors and Filling of Vacancies

AM policy is to vote "against" proposals that include provisions that directors
may be removed only for cause or proposals that include provisions that only
continuing directors may fill board vacancies.

Rationale: Differing state statutes permit removal of directors with or without
cause. Removal of directors for cause usually requires proof of self-dealing,
fraud or misappropriation of corporate assets, limiting shareholders' ability to
remove directors except under extreme circumstances. Removal without cause
requires no such showing.

Allowing only incumbent directors to fill vacancies can serve as an
anti-takeover device, precluding shareholders from filling the board until the
next regular election.

G.       Proposals to Fix the Size of the Board

AM policy is to vote:

1.       "For" proposals to fix the size of the board unless: (a) no specific
         reason for the proposed change is given; or (b) the proposal is part of
         a package of takeover defenses.

2.       "Against" proposals allowing management to fix the size of the board
         without shareholder approval.

Rationale: Absent danger of anti-takeover use, companies should be granted a
reasonable amount of flexibility in fixing the size of its board.

H.       Proposals to Restrict Chief Executive Officer's Service on Multiple
         Boards

AM policy is to vote "For" proposals to restrict a Chief Executive Officer from
serving on more than three outside boards of directors.

Rationale: Chief Executive Officer must have sufficient time to ensure that
shareholders' interests are represented adequately.

Note: A director's service on multiple closed-end fund boards within a fund
complex are treated as service on a single Board for the purpose of the proxy
voting guidelines.

I.       Proposals to Restrict Supervisory Board Members Service on Multiple
         Boards (For FFT Securities)

AM policy is to vote "for" proposals to restrict a Supervisory Board Member from
serving on more than five supervisory boards.

Rationale: We consider a strong, independent and knowledgeable supervisory board
as important counter-balance to executive management to ensure that the
interests of shareholders are fully reflected by the company.

Full information should be disclosed in the annual reports and accounts to allow
all shareholders to judge the success of the supervisory board controlling their
company.

Supervisory Board Member must have sufficient time to ensure that shareholders'
interests are represented adequately.

Note: A director's service on multiple closed-end fund boards within a fund
complex are treated as service on a single Board for the purpose of the proxy
voting guidelines.

J.       Proposals to Establish Audit Committees (For FFT and U.S. Securities)
         AM policy is to vote "for" proposals that require the establishment of
         audit committees.

Rationale: The audit committee should deal with accounting and risk management
related questions, verifies the independence of the auditor with due regard to
possible conflicts of interest. It also should determine the procedure of the
audit process.


II.      Capital Structure

A.       Authorization of Additional Shares (For U.S. Securities)

AM policy is to vote "for" proposals to increase the authorization of existing
classes of stock that do not exceed a 3:1 ratio of shares authorized to shares
outstanding for a large cap company, and do not exceed a 4:1 ratio of shares
authorized to shares outstanding for a small-midcap company (companies having a
market capitalization under one billion U.S. dollars.).

Rationale: While companies need an adequate number of shares in order to carry
on business, increases requested for general financial flexibility must be
limited to protect shareholders from their potential use as an anti-takeover
device. Requested increases for specifically designated, reasonable business
purposes (stock split, merger, etc.) will be considered in light of those
purposes and the number of shares required.

B.       Authorization of "Blank Check" Preferred Stock (For U.S. Securities)

AM policy is to vote:

1.   "Against" proposals to create blank check preferred stock or to increase
     the number of authorized shares of blank check preferred stock unless the
     company expressly states that the stock will not be used for anti-takeover
     purposes and will not be issued without shareholder approval.

2.   "For" proposals mandating shareholder approval of blank check stock
     placement.

Rationale: Shareholders should be permitted to monitor the issuance of classes
of preferred stock in which the board of directors is given unfettered
discretion to set voting, dividend, conversion and other rights for the shares
issued.

C.       Stock Splits/Reverse Stock Splits

AM policy is to vote "for" stock splits if a legitimate business purpose is set
forth and the split is in the shareholders' best interests. A vote is cast "for"
a reverse stock split only if the number of shares authorized is reduced in the
same proportion as the reverse split or if the effective increase in authorized
shares (relative to outstanding shares) complies with the proxy guidelines for
common stock increases (see, Section II.A, above.)

Rationale: Generally, stock splits do not detrimentally effect shareholders.
Reverse stock splits, however, may have the same result as an increase in
authorized shares and should be analyzed accordingly.

D.       Dual Class/Supervoting Stock

AM policy is to vote "against" proposals to create or authorize additional
shares of super-voting stock or stock with unequal voting rights.

Rationale: The "one share, one vote" principal ensures that no shareholder
maintains a voting interest exceeding their equity interest in the company.

E.       Large Block Issuance (For U.S. Securities)

AM policy is to address large block issuances of stock on a case-by-case basis,
incorporating the recommendation of an independent third party proxy research
firm (currently ISS) subject to review by the GPVSC as set forth in AM's Proxy
Policies and Procedures.

Additionally, AM supports proposals requiring shareholder approval of large
block issuances.

Rationale: Stock issuances must be reviewed in light of the business
circumstances leading to the request and the potential impact on shareholder
value.

F.       Recapitalization into a Single Class of Stock

AM policy is to vote "for" recapitalization plans to provide for a single class
of common stock, provided the terms are fair, with no class of stock being
unduly disadvantaged.

Rationale: Consolidation of multiple classes of stock is a business decision
that may be left to the board and/management if there is no adverse effect on
shareholders.

G.       Share Repurchases

AM policy is to vote "for" share repurchase plans provided all shareholders are
able to participate on equal terms.

Rationale: Buybacks are generally considered beneficial to shareholders because
they tend to increase returns to the remaining shareholders.

H.       Reductions in Par Value

AM policy is to vote "for" proposals to reduce par value, provided a legitimate
business purpose is stated (e.g., the reduction of corporate tax
responsibility.)

Rationale: Usually, adjustments to par value are a routine financial decision
with no substantial impact on shareholders.


III.     Corporate Governance Issues

A.       Confidential Voting

AM policy is to vote "for" proposals to provide for confidential voting and
independent tabulation of voting results and to vote "against" proposals to
repeal such provisions.

Rationale: Confidential voting protects the privacy rights of all shareholders.
This is particularly important for employee-shareholders or shareholders with
business or other affiliations with the company, who may be vulnerable to
coercion or retaliation when opposing management. Confidential voting does not
interfere with the ability of corporations to communicate with all shareholders,
nor does it prohibit shareholders from making their views known directly to
management.

B.       Cumulative Voting (For U.S. Securities)

AM policy is to vote "against" shareholder proposals requesting cumulative
voting and "for"management proposals to eliminate it. The protections afforded
shareholders by cumulative voting are not necessary when a company has a history
of good performance and does not have a concentrated ownership interest.
Accordingly, a vote is cast "against" cumulative voting and "for" proposals to
eliminate it if:

a)       The company has a five year return on investment greater than the
         relevant industry index,

b)       All directors and executive officers as a group beneficially own less
         than 10% of the outstanding stock, and

c)       No shareholder (or voting block) beneficially owns 15% or more of the
         company.

Thus, failure of any one of the three criteria results in a vote for cumulative
voting in accordance with the general policy.

Rationale: Cumulative voting is a tool that should be used to ensure that
holders of a significant number of shares may have board representation;
however, the presence of other safeguards may make their use unnecessary.

C.       Supermajority Voting Requirements

AM policy is to vote "against" management proposals to require a supermajority
vote to amend the charter or bylaws and to vote "for" shareholder proposals to
modify or rescind existing supermajority requirements.

*Exception made when company holds a controlling position and seeks to lower
threshold to maintain control and/or make changes to corporate by-laws.

Rationale: Supermajority voting provisions violate the democratic principle that
a simple majority should carry the vote. Setting supermajority requirements may
make it difficult or impossible for shareholders to remove egregious by-law or
charter provisions. Occasionally, a company with a significant insider held
position might attempt to lower a supermajority threshold to make it easier for
management to approve provisions that may be detrimental to shareholders. In
that case, it may not be in the shareholders interests to lower the
supermajority provision.

D.       Shareholder Right to Vote

AM policy is to vote "against" proposals that restrict the right of shareholders
to call special meetings, amend the bylaws, or act by written consent. Policy is
to vote "for" proposals that remove such restrictions.

Rationale: Any reasonable means whereby shareholders can make their views known
to management or effect the governance process should be supported.


IV.      Compensation

Annual Incentive Plans or Bonus Plans are often submitted to shareholders for
approval. These plans typically award cash to executives based on company
performance. Deutsche Bank believes that the responsibility for executive
compensation decisions rest with the board of directors and/or the compensation
committee, and its policy is not to second-guess the board's award of cash
compensation amounts to executives unless a particular award or series of awards
is deemed excessive. If stock options are awarded as part of these bonus or
incentive plans, the provisions must meet Deutsche Bank's criteria regarding
stock option plans, or similar stock-based incentive compensation schemes, as
set forth below.

A.       Establishment of a Remuneration Committee (For FFT Securities)

AM policy is to vote "for" proposals that require the establishment of a
remuneration committee.

Rationale: Corporations should disclose in each annual report or proxy statement
their policies on remuneration. Essential details regarding executive
remuneration including share options, long-term incentive plans and bonuses,
should be disclosed in the annual report, so that investors can judge whether
corporate pay policies and practices meet the standard.

The remuneration committee shall not comprise any board members and should be
sensitive to the wider scene on executive pay. It should ensure that
performance-based elements of executive pay are designed to align the interests
of shareholders.

B.       Executive and Director Stock Option Plans

AM policy is to vote "for" stock option plans that meet the following criteria:

(1)      The resulting dilution of existing shares is less than (a) 15 percent
         of outstanding shares for large capital corporations or (b) 20 percent
         of outstanding shares for small-mid capital companies (companies having
         a market capitalization under one billion U.S. dollars.)

(2)      The transfer of equity resulting from granting options at less than FMV
         is no greater than 3% of the over-all market capitalization of large
         capital corporations, or 5% of market cap for small-mid capital
         companies.

(3)      The plan does not contain express repricing provisions and, in the
         absence of an express statement that options will not be repriced; the
         company does not have a history of repricing options.

(4)      The plan does not grant options on super-voting stock.

AM will support performance-based option proposals as long as a) they do not
mandate that all options granted by the company must be performance based, and
b) only certain high-level executives are subject to receive the performance
based options.

AM will support proposals to eliminate the payment of outside director pensions.

Rationale: Determining the cost to the company and to shareholders of
stock-based incentive plans raises significant issues not encountered with
cash-based compensation plans. These include the potential dilution of existing
shareholders' voting power, the transfer of equity out of the company resulting
from the grant and execution of options at less than FMV and the authority to
reprice or replace underwater options. Our stock option plan analysis model
seeks to allow reasonable levels of flexibility for a company yet still protect
shareholders from the negative impact of excessive stock compensation.
Acknowledging that small mid-capital corporations often rely more heavily on
stock option plans as their main source of executive compensation and may not be
able to compete with their large capital competitors with cash compensation, we
provide slightly more flexibility for those companies.

C.       Employee Stock Option/Purchase Plans

AM policy is to vote for employee stock purchase plans (ESPP's) when the plan
complies with Internal Revenue Code 423, allowing non-management employees to
purchase stock at 85% of FMV.

AM policy is to vote "for" employee stock option plans (ESOPs) provided they
meet the standards for stock option plans in general. However, when computing
dilution and transfer of equity, ESOPs are considered independently from
executive and director option plans.

Rationale: ESOPs and ESPP's encourage rank-and-file employees to acquire an
ownership stake in the companies they work for and have been shown to promote
employee loyalty and improve productivity.

D.       Golden Parachutes

AM policy is to vote "for" proposals to require shareholder approval of golden
parachutes and for proposals that would limit golden parachutes to no more than
three times base compensation. Policy is to vote "against" more restrictive
shareholder proposals to limit golden parachutes.

Rationale: In setting a reasonable limitation, AM considers that an effective
parachute should be less attractive than continued employment and that the IRS
has opined that amounts greater than three times annual salary, are excessive.

E.       Proposals to Limit Benefits or Executive Compensation

AM policy is to vote "against"

1.   Proposals to limit benefits, pensions or compensation and

2.   Proposals that request or require disclosure of executive compensation
     greater than the disclosure required by Securities and Exchange Commission
     (SEC) regulations.

Rationale: Levels of compensation and benefits are generally considered to be
day-to-day operations of the company, and are best left unrestricted by
arbitrary limitations proposed by shareholders.

F.       Option Expensing

AM policy is to support proposals requesting companies to expense stock options.

Rationale: Although companies can choose to expense options voluntarily, the
Financial Accounting Standards Board (FASB) does not yet require it, instead
allowing companies to disclose the theoretical value of options as a footnote.
Because the expensing of stock options lowers earnings, most companies elect not
to do so. Given the fact that options have become an integral component of
compensation and their exercise results in a transfer of shareholder value, AM
agrees that their value should not be ignored and treated as "no cost"
compensation. The expensing of stock options would promote more modest and
appropriate use of stock options in executive compensation plans and present a
more accurate picture of company operational earnings.

G.        Management board election and motion (For FFT Securities)

AM policy is to vote "against":

o        the election of board members with positions on either remuneration or
         audit committees;

o        the election of supervisory board members with too many supervisory
         board mandates;

o        "automatic" election of former board members into the supervisory
         board.

Rationale: Management as an entity, and each of its members, are responsible for
all actions of the company, and are - subject to applicable laws and regulations
- accountable to the shareholders as a whole for their actions.

Sufficient information should be disclosed in the annual company report and
account to allow shareholders to judge the success of the company.

H.       Remuneration (variable pay): (For FFT Securities)

Executive remuneration for Management Board

AM policy is to vote "for" remuneration for Management Board that is transparent
and linked to results.

Rationale: Executive compensation should motivate management and align the
interests of management with the shareholders. The focus should be on criteria
that prevent excessive remuneration; but enable the company to hire and retain
first-class professionals.

Shareholder interests are normally best served when management is remunerated to
optimise long-term returns. Criteria should include suitable measurements like
return on capital employed or economic value added.

Interests should generally also be correctly aligned when management own shares
in the company - even more so if these shares represent a substantial portion of
their own wealth.

Its disclosure shall differentiate between fixed pay, variable (performance
related) pay and long-term incentives, including stock option plans with
valuation ranges as well as pension and any other significant arrangements.

Executive remuneration for Supervisory Board

AM policy is to vote "for" remuneration for Supervisory Board that is at least
50% in fixed form.

Rationale: It would normally be preferable if performance linked compensation
were not based on dividend payments, but linked to suitable result based
parameters. Consulting and procurement services should also be published in the
company report.

I.       Long-term incentive plans (For FFT Securities)

AM policy is to vote "for" long-term incentive plans for members of a management
board that reward for above average company performance.

Rationale: Incentive plans will normally be supported if they:

o        directly align the interests of members of management boards with those
         of shareholders;

o        establish challenging performance criteria to reward only above average
         performance;

o        measure performance by total shareholder return in relation to the
         market or a range of comparable companies;

o        are long-term in nature and encourage long-term ownership of the shares
         once exercised through minimum holding periods;

o        do not allow a repricing of the exercise price in stock option plans.

J.       Shareholder Proposals Concerning "Pay for Superior Performance"

AM policy is to address pay for superior performance proposals on a case-by-case
basis, incorporating the recommendation of an independent third party proxy
research firm (currently ISS) subject to review by the GPVSC as set forth in
AM's Proxy Policies and Procedures.

Rationale: While AM agrees that compensation issues are better left to the
discretion of management, they appreciate the need to monitor for excessive
compensation practices on a case by case basis. If, after a review of the ISS
metrics, AM is comfortable with ISS's applying this calculation and will vote
according to their recommendation.

K.       Executive Compensation Advisory

AM policy is to follow management's recommended vote on shareholder proposals to
propose an advisory resolution seeking to ratify the compensation of the
company's named executive officers (NEOs) on an annual basis.

Rationale: AM believes that controls exist within senior management and
corporate compensation committees, ensuring fair compensation to executives.
This might allow shareholders to require approval for all levels of management's
compensation.

V.       Anti-Takeover Related Issues

A.       Shareholder Rights Plans ("Poison Pills")

AM policy is to vote "for" proposals to require shareholder ratification of
poison pills or that request boards to redeem poison pills, and to vote
"against" the adoption of poison pills if they are submitted for shareholder
ratification.

Rationale: Poison pills are the most prevalent form of corporate takeover
defenses and can be (and usually are) adopted without shareholder review or
consent. The potential cost of poison pills to shareholders during an attempted
takeover outweighs the benefits.

B.       Reincorporation

AM policy is to examine reincorporation proposals on a case-by-case basis. The
voting decision is based on: (1) differences in state law between the existing
state of incorporation and the proposed state of incorporation; and (2)
differences between the existing and the proposed charter/bylaws/articles of
incorporation and their effect on shareholder rights. If changes resulting from
the proposed reincorporation violate the corporate governance principles set
forth in these guidelines, the reincorporation will be deemed contrary to
shareholder's interests and a vote cast "against."

Rationale: Reincorporations can be properly analyzed only by looking at the
advantages and disadvantages to their shareholders. Care must be taken that
anti-takeover protection is not the sole or primary result of a proposed change.

C.       Fair-Price Proposals

AM policy is to vote "for" management fair-price proposals, provided that: (1)
the proposal applies only to two-tier offers; (2) the proposal sets an objective
fair-price test based on the highest price that the acquirer has paid for a
company's shares; (3) the supermajority requirement for bids that fail the
fair-price test is no higher than two-thirds of the outstanding shares; (4) the
proposal contains no other anti-takeover provisions or provisions that restrict
shareholders rights.

A vote is cast for shareholder proposals that would modify or repeal existing
fair-price requirements that do not meet these standards.

Rationale: While fair price provisions may be used as anti-takeover devices, if
adequate provisions are included, they provide some protection to shareholders
who have some say in their application and the ability to reject those
protections if desired.

D.       Exemption from state takeover laws

AM policy is to vote "for" shareholder proposals to opt out of state takeover
laws and to vote "against" management proposals requesting to opt out of state
takeover laws.

Rationale: Control share statutes, enacted at the state level, may harm
long-term share value by entrenching management. They also unfairly deny certain
shares their inherent voting rights.

E.       Non-financial Effects of Takeover Bids

Policy is to vote "against" shareholder proposals to require consideration of
non-financial effects of merger or acquisition proposals.

Rationale: Non-financial effects may often be subjective and are secondary to
AM's stated purpose of acting in its client's best economic interest.


VI.      Mergers & Acquisitions

Evaluation of mergers, acquisitions and other special corporate transactions
(i.e., takeovers, spin-offs, sales of assets, reorganizations, restructurings
and recapitalizations) are performed on a case-by-case basis incorporating
information from an independent proxy research source (currently ISS.)
Additional resources including portfolio management and research analysts may be
considered as set forth in AM's Policies and Procedures.


VII.     Social, Environmental & Political Issues

Social and environmental issues are becoming increasingly important to corporate
success. We incorporate social and environmental considerations into both our
investment decisions and our proxy voting decisions - particularly if the
financial performance of the company could be impacted.

With increasing frequency, shareholder proposals are submitted relating to
social and political responsibility issues. Almost universally, the company
management will recommend a vote "against" these proposals. These types of
proposals cover an extremely wide range of issues. Many of the issues tend to be
controversial and are subject to more than one reasonable, yet opposing, theory
of support. More so than with other types of proxy proposals, social and
political responsibility issues may not have a connection to the economic and
corporate governance principles effecting shareholders' interests. AM's policy
regarding social and political responsibility issues, as with any other issue,
is designed to protect our client shareholders' economic interests.

Occasionally, a distinction is made between a shareholder proposal requesting
direct action on behalf of the board and a request for a report on (or
disclosure of) some information. In order to avoid unduly burdening any company
with reporting requirements, AM's policy is to vote against shareholder
proposals that demand additional disclosure or reporting than is required by the
Securities and Exchange Commission unless it appears there is a legitimate issue
and the company has not adequately addressed shareholders' concerns.

A.       Labor & Human Rights

AM policy is to vote "against" adopting global codes of conduct or workplace
standards exceeding those mandated by law.

Rationale: Additional requirements beyond those mandated by law are deemed
unnecessary and potentially burdensome to companies

B.       Diversity & Equality

1.       AM policy is to vote "against" shareholder proposals to force equal
         employment opportunity, affirmative action or board diversity.

Rationale: Compliance with State and Federal legislation along with information
made available through filings with the EEOC provides sufficient assurance that
companies act responsibly and make information public.

2.       AM policy is also to vote "against" proposals to adopt the Mac Bride
         Principles. The Mac Bride Principles promote fair employment,
         specifically regarding religious discrimination.

Rationale: Compliance with the Fair Employment Act of 1989 makes adoption of the
Mac Bride Principles redundant. Their adoption could potentially lead to charges
of reverse discrimination.

C.       Health & Safety

1.       AM policy is to vote "against" adopting a pharmaceutical price
         restraint policy or reporting pricing policy changes.

Rationale: Pricing is an integral part of business for pharmaceutical companies
and should not be dictated by shareholders (particularly pursuant to an
arbitrary formula.) Disclosing pricing policies may also jeopardize a company's
competitive position in the marketplace.

2.       AM policy is to vote "against" shareholder proposals to control the use
         or labeling of and reporting on genetically engineered products.

Rationale: Additional requirements beyond those mandated by law are deemed
unnecessary and potentially burdensome to companies.

D.       Government/Military

1.       AM policy is to vote against shareholder proposals regarding the
         production or sale of military arms or nuclear or space-based weapons,
         including proposals seeking to dictate a company's interaction with a
         particular foreign country or agency.

Rationale: Generally, management is in a better position to determine what
products or industries a company can and should participate in. Regulation of
the production or distribution of military supplies is, or should be, a matter
of government policy.

2.       AM policy is to vote "against" shareholder proposals regarding
         political contributions and donations.

Rationale: The Board of Directors and Management, not shareholders, should
evaluate and determine the recipients of any contributions made by the company.

3.       AM policy is to vote "against" shareholder proposals regarding
         charitable contributions and donations.

Rationale: The Board of Directors and Management, not shareholders, should
evaluate and determine the recipients of any contributions made by the company.

E.       Tobacco

1.       AM policy is to vote "against" shareholder proposals requesting
         additional standards or reporting requirements for tobacco companies as
         well as "against" requesting companies to report on the intentional
         manipulation of nicotine content.

Rationale: Where a tobacco company's actions meet the requirements of legal and
industry standards, imposing additional burdens may detrimentally effect a
company's ability to compete. The disclosure of nicotine content information
could affect the company's rights in any pending or future litigation.

2.       Shareholder requests to spin-off or restructure tobacco businesses will
         be opposed.

Rationale: These decisions are more appropriately left to the Board and
management, and not to shareholder mandate.


VIII.    Environmental Issues

AM policy is to follow management's recommended vote on CERES Principles or
other similar environmental mandates (e.g., those relating to Greenhouse gas
emissions or the use of nuclear power).

Rationale: Environmental issues are extensively regulated by outside agencies
and compliance with additional requirements often involves significant cost to
companies.


IX.      Miscellaneous Items

A.       Ratification of Auditors

AM policy is to vote "for" a) the management recommended selection of auditors
and b) proposals to require shareholder approval of auditors.

Rationale: Absent evidence that auditors have not performed their duties
adequately, support for management's nomination is warranted.

B.       Limitation of non-audit services provided by independent auditor

AM policy is to support proposals limiting non-audit fees to 50% of the
aggregate annual fees earned by the firm retained as a company's independent
auditor.

Rationale: In the wake of financial reporting problems and alleged audit
failures at a number of companies, AM supports the general principle that
companies should retain separate firms for audit and consulting services to
avoid potential conflicts of interest. However, given the protections afforded
by the recently enacted Sarbanes-Oxley Act of 2002 (which requires Audit
Committee pre-approval for non-audit services and prohibits auditors from
providing specific types of services), and the fact that some non-audit services
are legitimate audit-related services, complete separation of audit and
consulting fees may not be warranted. A reasonable limitation is appropriate to
help ensure auditor independence and it is reasonable to expect that audit fees
exceed non-audit fees.

C.       Audit firm rotation

AM policy is to support proposals seeking audit firm rotation unless the
rotation period sought is less than five years.

Rationale: While the Sarbanes-Oxley Act mandates that the lead audit partner be
switched every five years, AM believes that rotation of the actual audit firm
would provide an even stronger system of checks and balances on the audit
function.

D.       Transaction of Other Business

AM policy is to vote against "transaction of other business" proposals.

Rationale: This is a routine item to allow shareholders to raise other issues
and discuss them at the meeting. As the nature of these issues may not be
disclosed prior to the meeting, we recommend a vote against these proposals.
This protects shareholders voting by proxy (and not physically present at a
meeting) from having action taken at the meeting that they did not receive
proper notification of or sufficient opportunity to consider.

E.       Motions to Adjourn the Meeting

AM Policy is to vote against proposals to adjourn the meeting.

Rationale: Management may seek authority to adjourn the meeting if a favorable
outcome is not secured. Shareholders should already have had enough information
to make a decision. Once votes have been cast, there is no justification for
management to continue spending time and money to press shareholders for
support.

F.       Bundled Proposals

AM policy is to vote against bundled proposals if any bundled issue would
require a vote against it if proposed individually.

Rationale: Shareholders should not be forced to "take the good with the bad" in
cases where the proposals could reasonably have been submitted separately.

G.       Change of Company Name

AM policy is to support management on proposals to change the company name.

Rationale: This is generally considered a business decision for a company.

H.       Proposals Related to the Annual Meeting

AM Policy is to vote in favor of management for proposals related to the conduct
of the annual meeting (meeting time, place, etc.)

Rationale: These are considered routine administrative proposals.

I.       Reimbursement of Expenses Incurred from Candidate Nomination

AM policy is to follow management's recommended vote on shareholder proposals
related to the amending of company bylaws to provide for the reimbursement of
reasonable expenses incurred in connection with nominating one or more
candidates in a contested election of directors to the corporation's board of
directors.

Rationale: Corporations should not be liable for costs associated with
shareholder proposals for directors.

J.       Investment Company Proxies

Proxies solicited by investment companies are voted in accordance with the
recommendations of an independent third party, currently ISS. However, regarding
investment companies for which AM or an affiliate serves as investment adviser
or principal underwriter, such proxies are voted in the same proportion as the
vote of all other shareholders. Proxies solicited by master funds from feeder
funds will be voted in accordance with applicable provisions of Section 12 of
the Investment Company Act of 1940.

Investment companies, particularly closed-end investment companies, are
different from traditional operating companies. These differences may call for
differences in voting positions on the same matter. For example, AM could vote
"for" staggered boards of closed-end investment companies, although AM generally
votes "against" staggered boards for operating companies. Further, the manner in
which AM votes investment company proxies may differ from proposals for which a
AM-advised investment company solicits proxies from its shareholders. As
reflected in the Guidelines, proxies solicited by closed-end (and open-end)
investment companies are voted in accordance with the pre-determined guidelines
of an independent third-party.

Subject to participation agreements with certain Exchange Traded Funds ("ETF")
issuers that have received exemptive orders from the U.S. Securities and
Exchange Commission allowing investing DWS funds to exceed the limits set forth
in Section 12(d)(1)(A) and (B) of the Investment Company Act of 1940, DeAM will
echo vote proxies for ETFs in which Deutsche Bank holds more than 25% of
outstanding voting shares globally when required to do so by participation
agreements and SEC orders.

Note: With respect to the QP Trust (not registered under the Investment Company
Act of 1940), the Fund is not required to engage in echo voting and the
investment adviser will use these Guidelines, and may determine, with respect to
the QP Trust, to vote contrary to the positions in the Guidelines, consistent
with the Fund's best interest.


K.       International Proxy Voting

The above guidelines pertain to issuers organized in the United States, Canada
and Germany. Proxies solicited by other issuers are voted in accordance with
international guidelines or the recommendation of ISS and in accordance with
applicable law and regulation.







--------------------------------------------------------------------------------
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.
--------------------------------------------------------------------------------

                      APPENDIX B -- RATINGS OF INVESTMENTS

BOND AND COMMERCIAL PAPER RATINGS

Set forth below are descriptions of ratings which represent opinions as to the
quality of the securities. It should be emphasized, however, that ratings are
relative and subjective and are not absolute standards of quality.

MOODY'S INVESTORS SERVICE, INC. -- CORPORATE BOND RATINGS

Aaa: Bonds which are rated Aaa are judged to be of the highest quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt-edged." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.

Aa: Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuations of protective elements
may be of greater amplitude or there may be other elements present which make
the long-term risk appear somewhat larger than in Aaa securities.

A: Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper -medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.

Baa: Bonds which are rated Baa are considered as medium grade obligations,
(i.e., they are neither highly protected nor poorly secured). Interest payments
and principal security appear adequate for the present, but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.

Ba: Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safe-guarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.

B: Bonds which are rated B are considered speculative and generally lack
characteristics of the desirable investment. Assurance of interest and principal
payments or of maintenance of other terms of the contract over any long period
of time may be small.

Caa: Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.

Ca: Bonds which are rated Ca represent obligations which are highly speculative.
Such issues are often in default or have other marked shortcomings.

C: Bonds which are rated C are the lowest rated class of bonds, typically are in
default and can be regarded as having extremely poor prospects of ever attaining
any real investment standing.

Note: Moody's appends numerical modifiers 1, 2 and 3 to each generic rating
classification from Aa through Caa in its corporate bond rating system. The
modifier 1 indicates that the issue ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking; and the modifier
3 indicates that the issue ranks in the lower end of its generic rating
category.

MOODY'S INVESTORS SERVICE, INC. -- SHORT-TERM RATINGS

Moody's short-term debt ratings are opinions of the ability of issuers to honor
short-term financial obligations. Ratings may be assigned to issuers, short-term
programs or to individual short-term debt instruments. Such obligations
generally have an original maturity not exceeding thirteen months, unless
explicitly noted. Issuers rated Prime-1 or P-1 (or supporting institutions) have
a superior ability for repayment of short-term debt obligations. Prime-1 or P-1
repayment ability will often be evidenced by many of the following
characteristics:

o        Leading market positions in well established industries.

o        High rates of return on funds employed.

o        Conservative capitalization structure with moderate reliance on debt
         and ample asset protection.

o        Broad margins in earnings coverage of fixed financial charges and high
         internal cash generation.

o        Well established access to a range of financial markets and assured
         sources of alternate liquidity.

Issuers rated Prime-2 or P-2 (or supporting institutions) have a strong ability
for repayment of short-term debt obligations. This will normally be evidenced by
many of the characteristics cited above but to a lesser degree. Earnings trends
and coverage ratios, while sound, may be more subject to variation.
Capitalization characteristics, while still appropriate, may be more affected by
external conditions. Ample alternate liquidity is maintained.

STANDARD & POOR'S RATINGS SERVICES -- CORPORATE BOND RATINGS

INVESTMENT GRADE

AAA: Debt rated AAA has the highest rating assigned by S&P's to a debt
obligation. Capacity to pay interest and repay principal is extremely strong.

AA: Debt rated AA has a very strong capacity to pay interest and repay principal
and differs from the higher rated issues only in small degree.

A: Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than bonds in higher rated categories.

BBB: Debt rated BBB has an adequate capacity to pay interest and repay
principal. Whereas it normally exhibits adequate protection parameters, adverse
economic conditions or changing circumstances are more likely to lead to a
weakened capacity to pay interest and repay principal for debt in this category
than in higher rated categories.

SPECULATIVE GRADE

Debt rated BB, B, CCC, CC, and C has significant speculative characteristics
with respect to capacity to pay interest and repay principal. BB indicates the
least degree of speculation and C the highest. While such debt will likely have
some quality and protective characteristics, these may be outweighed by large
uncertainties or major exposures to adverse conditions.

BB: Debt rated BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments.

The BB rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BBB- rating.

B: Debt rated B has a greater vulnerability to default but currently has the
capacity to meet interest payments and principal repayments. Adverse business,
financial, or economic conditions will likely impair capacity or willingness to
pay interest and repay principal.

The B rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BB or BB- rating.

CCC: Debt rated CCC has a current vulnerability to default, and is dependent
upon favorable business, financial, and economic conditions to meet timely
payment of interest and repayment of principal. In the event of adverse
business, financial, or economic conditions, it is not likely to have the
capacity to pay interest and repay principal.

The CCC rating category is also used for debt subordinated to senior debt that
is assigned an actual or implied B or B- rating.

CC: Debt rated CC has a current high vulnerability to default, and is dependent
upon favorable business, financial, and economic conditions to meet timely
payment of interest and repayment of principal.

The rating CC is also applied to debt subordinated to senior debt which is
assigned an actual or implied CCC debt rating.

C: The rating C is typically applied to debt subordinated to senior debt which
is assigned an actual or implied CCC- debt rating. The C rating may be used to
cover a situation where a bankruptcy petition has been filed, but debt service
payments are continued.

C1: The Rating C1 is reserved for income bonds on which no interest is being
paid.

D: Debt rated D is in payment default. The D rating category is used when
interest payments or principal payments are not made on the date due even if the
applicable grace period has not expired, unless Standard & Poor's believes that
such payments will be made during such grace period. The D rating also will be
used upon the filing of a bankruptcy petition if debt service payments are
jeopardized.

Plus (+) or Minus (-): The ratings from AA to CCC may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.

R: Debt rated `R' is under regulatory supervision owing to its financial
condition. During the pendency of the regulatory supervision, the regulators may
have the power to favor one class of obligations over others or pay some
obligations and not others.

N.R.: Bonds may lack a S&P's rating because no public rating has been requested,
because there is insufficient information on which to base a rating, or because
S&P's does not rate a particular type of obligation as a matter of policy.

STANDARD & POOR'S RATINGS SERVICES -- SHORT-TERM RATINGS

S&P's commercial paper rating is a current assessment of the likelihood of
timely payment of debt considered short-term in the relevant market.

A-1: This highest category indicates that the degree of safety regarding timely
payment is strong. Those issues determined to possess extremely strong safety
characteristics are denoted with a plus (+) sign designation.

A-2: Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as for
issues designated A-1.

A-3: Issues carrying this designation have adequate capacity for timely payment.
However, adverse economic conditions or changing circumstances are more likely
to lead to a weakened capacity of the issuer to meet its financial commitments.

FITCH INVESTORS SERVICE, INC. -- BOND RATINGS

INVESTMENT GRADE

AAA: Bonds considered to be investment grade and of the highest credit quality.
The obligor has an exceptionally strong ability to pay interest and repay
principal, which is unlikely to be affected by reasonably foreseeable events.

AA: Bonds considered to be investment grade and of very high credit quality. The
obligor's ability to pay interest and repay principal is very strong, although
not quite as strong as bonds rated AAA. Bonds rated in the AAA and AA categories
are not significantly vulnerable to foreseeable events.

A: Bonds considered to be investment grade and of high credit quality. The
obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions and
circumstances than bonds with higher ratings.

BBB: Bonds considered to be investment grade and of good credit quality. The
obligor's ability to pay interest and repay principal is considered to be
adequate. Adverse changes in economic conditions and circumstances, however, are
more likely to have adverse impact on these bonds, and therefore, impair timely
payment. The likelihood that the ratings of these bonds will fall below
investment grade is higher than for bonds with higher ratings.

SPECULATIVE GRADE

BB: Bonds are considered speculative. The obligor's ability to pay interest and
repay principal may be affected over time by adverse economic changes. However,
business or financial alternatives may be available which could assist the
obligor in satisfying its debt service requirements.

B: Bonds are considered highly speculative. While bonds in this class are
currently meeting debt service requirements, the probability of continued timely
payment of principal and interest reflects the obligor's limited margin of
safety and the need for reasonable business and economic activity throughout the
life of the issue.

CCC: Bonds have certain identifiable characteristics which, if not remedied, may
lead to default. The ability to meet obligations requires an advantageous
business and economic environment.

CC: Bonds are minimally protected. Default in payment of interest and/or
principal seems probable over time.

C: Bonds are in imminent default in payment of interest or principal.

DDD, DD and D: Bonds are in default of interest and/or principal payments. Such
bonds are extremely speculative and should be valued on the basis of their
ultimate recovery value in liquidation or reorganization of the obligor. DDD
represents the highest potential for recovery on these bonds, and D represents
the lowest potential for recovery.

Plus (+) or Minus (-): The ratings from AA to CC may be appended by the addition
of a plus or minus sign to denote the relative status within the rating
category.

NR: Indicates that Fitch Rating does not publicly rate the specific issue.

FITCH INVESTORS SERVICE, INC. -- SHORT-TERM RATINGS

Fitch's short-term ratings apply to debt obligations that are payable on demand
or have original maturities of generally up to three years, including commercial
paper, certificates of deposit, medium-term notes, and municipal and investment
notes.

F-1+: Exceptionally Strong Credit Quality. Issues assigned this rating are
regarded as having the strongest capacity for timely payment.

F-1: Very Strong Credit Quality. Issues assigned this rating reflect a capacity
for timely payment only slightly less than issues rated F-1+.

F-2: Good Credit Quality. Issues assigned this rating have a satisfactory
capacity for timely payment, but the margin of safety is not as great as the
F-1+ and F-1 categories.

F-3: Fair Credit Quality. Issues assigned this rating have characteristics
suggesting that the capacity for timely payment is adequate; however, near-term
adverse changes could cause these securities to be rated below investment grade.

B: Speculative. Minimal capacity for timely payment of financial commitments,
plus vulnerability to near-term adverse changes in financial and economic
conditions.

C: High default risk. Default is a real possibility. Capacity for meeting
financial commitments is solely reliant upon a sustained, favorable business and
economic environment.

D: Default. Denotes actual or imminent payment default.




<PAGE>

                       STATEMENT OF ADDITIONAL INFORMATION



                       DWS VARIABLE SERIES II (the "Fund")


                    DWS Alternative Asset Allocation Plus VIP
          (Class A Shares and Class B Shares (available May 18, 2009))

                                   May 1, 2009


                    345 Park Avenue, New York, New York 10154
                                 1-800-778-1482



This Statement of Additional Information ("SAI") is not a prospectus. It should
be read in conjunction with the prospectuses of DWS Alternative Asset Allocation
Plus VIP (the "Portfolio") dated May 1, 2009, as amended from time to time. The
prospectuses may be obtained without charge from the Fund by calling the
toll-free number listed above, and is also available along with other related
materials on the Securities and Exchange Commission ("SEC") Internet Web site
(http://www.sec.gov). The prospectuses are also available from the participating
insurance companies ("Participating Insurance Companies").

The Fund offers a choice of 20 portfolios, one of which is the Portfolio, to
holders of certain variable annuity contracts and variable life insurance
policies offered by Participating Insurance Companies.




                                TABLE OF CONTENTS

                                                                      Page
                                                                      ----


INVESTMENT RESTRICTIONS..................................................1
-----------------------

INVESTMENT POLICIES AND TECHNIQUES.......................................2
         Portfolio Holdings.............................................40

MANAGEMENT OF THE PORTFOLIO.............................................41

PORTFOLIO SERVICE PROVIDERS.............................................48
         Administrator..................................................48
         Distributor....................................................49
         Recordkeeping..................................................49
         Custodian......................................................50
         Transfer Agent.................................................50
         Counsel........................................................50
         Independent Registered Public Accounting Firm..................50

PORTFOLIO TRANSACTIONS..................................................52

PURCHASE AND REDEMPTIONS................................................54

DIVIDENDS AND CAPITAL GAINS.............................................59

FEDERAL INCOME TAXES....................................................59

NET ASSET VALUE.........................................................60

BOARD MEMBERS AND OFFICERS..............................................61

FUND ORGANIZATION.......................................................69

PROXY VOTING GUIDELINES.................................................71

FINANCIAL STATEMENTS....................................................72

ADDITIONAL INFORMATION..................................................72

APPENDIX A -- PROXY VOTING GUIDELINES...................................73

APPENDIX B -- RATINGS OF INVESTMENTS....................................98




                             INVESTMENT RESTRICTIONS

Except as otherwise indicated, the Portfolio's investment objective and policies
are not fundamental and may be changed without a vote of shareholders. There can
be no assurance that the Portfolio's investment objective will be met.

If a percentage restriction is adhered to at the time of the investment, a later
increase or decrease in percentage beyond the specified limit resulting from a
change in values or net assets will not be considered a violation.


The Fund has adopted for the Portfolio certain fundamental investment
restrictions that will not be changed unless approved by a "majority" of the
outstanding voting shares of the Portfolio. As defined in the Investment Company
Act of 1940, as amended (the "1940 Act"), this means the lesser of the vote of
(a) 67% of the shares of the Portfolio present at a meeting where more than 50%
of the outstanding shares are present in person or by proxy or (b) more than 50%
of the outstanding shares of the Portfolio.

The Portfolio is classified as a diversified series of the Fund, an open-end
management investment company. Under the 1940 Act, a diversified portfolio may
not, with respect to 75% of total assets, invest more than 5% of total assets in
the securities of a single issuer or invest in more than 10% of the outstanding
voting securities of such issuer.


The Portfolio may not, as a fundamental policy:

(1)  borrow money, except as permitted under the 1940 Act, and as interpreted or
     modified by regulatory authority having jurisdiction, from time to time;

(2)  issue senior securities, except as permitted under the 1940 Act, and as
     interpreted or modified by regulatory authority having jurisdiction, from
     time to time;

(3)  engage in the business of underwriting securities issued by others, except
     to the extent that the Portfolio may be deemed to be an underwriter in
     connection with the disposition of portfolio securities;

(4)  concentrate its investments in a particular industry, as that term is used
     in the 1940 Act, and as interpreted by or modified by regulatory authority
     having jurisdiction, from time to time; except that the Portfolio may
     concentrate in any underlying DWS fund;

(5)  purchase or sell real estate, which term does not include securities of
     companies which deal in real estate or mortgages or investment secured by
     real estate or interests therein, except that the Portfolio reserves
     freedom of action to hold and to sell real estate acquired as a result of
     the Portfolio's ownership of securities;

(6)  purchase or sell commodities, except as permitted by the 1940 Act, and as
     interpreted or modified by the regulatory authority having jurisdiction,
     from time to time; or

(7)  make loans except as permitted under the 1940 Act, and as interpreted or
     modified by regulatory authority having jurisdiction, from time to time.

With regard to fundamental policy (4) above, for purposes of determining the
percentage of the Portfolio's total assets invested in securities of issuers
having their principal business activities in a particular industry,
asset-backed securities will be classified as a single industry.


The Fund has also adopted the following non-fundamental policies for the
Portfolio, which may be changed or eliminated for the Portfolio by the Fund's
Board without a shareholder vote:


As a matter of non-fundamental policy, the Portfolio does not intend to:

(1)  purchase securities on margin, except (i) margin deposits in connection
     with short sales, futures contracts, options or other permitted
     investments; (ii) that transactions in futures contracts and options shall
     not be deemed to constitute selling securities short; and (iii) that the
     Portfolio may obtain such short-term credits as may be deemed necessary for
     the clearance of securities transactions; and

(2)  lend portfolio securities in an amount greater than 33 1/3% of its total
     assets.

To meet requirements contained in the Internal Revenue Code of 1986, as amended
(the "Code"), for qualification as a regulated investment company, the Portfolio
must limit its investments so that at the close of each quarter of its taxable
year (1) no more than 25% of the value of its total assets is invested in (a)
the securities (other than US Government securities or securities of a regulated
investment company) of a single issuer or two or more issuers which the
Portfolio controls and which are engaged in the same, similar or related trades
or businesses, or (b) in the securities of one or more qualified publicly traded
partnerships (as discussed in "Federal Income Taxes" below), and (2) at least
50% of the value of its total assets is represented by cash, cash items
(including receivables), government securities, securities of other regulated
investment companies, and other securities of any issuer that does not represent
more than 5% of the value of the Portfolio's total assets or more than 10% of
the issuer's outstanding voting securities.

                       INVESTMENT POLICIES AND TECHNIQUES

General. This section explains the extent to which the Portfolio's investment
advisor, Deutsche Investment Management Americas Inc. ("DIMA" or the "Advisor"),
can use various investment vehicles and strategies in managing the Portfolio's
assets. Descriptions of the investment techniques and risks associated with the
Portfolio appear herein. In the case of the Portfolio's principal investment
strategies, these descriptions elaborate upon discussions contained in the
Prospectus.

The Portfolio is a diversified series of DWS Variable Series II, an open-end
management investment company, which continuously offers and redeems shares at
net asset value. The Portfolio offers Class A and Class B shares.

In general, within the restrictions outlined here and in the Portfolio's
Prospectus, the Advisor has broad powers to decide how to invest Portfolio
assets, including the power to hold them uninvested.

Descriptions in this SAI of a particular investment practice or technique in
which the Portfolio may engage or a financial instrument which the Portfolio may
purchase (such as options, etc.) are meant to describe the spectrum of
investments that the Advisor in its discretion, might, but is not required to,
use in managing the Portfolio's assets. For purposes of this section, the
investment policies and techniques apply to the Portfolio (including when the
Advisor invests directly in individual securities on behalf of the Portfolio)
and the Underlying DWS Funds in which the Portfolio may invest, unless otherwise
indicated. The Portfolio and Underlying DWS Funds are referred to herein as a
"fund." Not all Underlying DWS Funds may engage in all of the practices
described below and an Underlying DWS Fund's ability to engage in any technique
or strategy is subject to the investment policies and techniques contained in
its prospectus and Statement of Additional Information. The Advisor may, in its
discretion, at any time employ such practice, technique or instrument for one or
more funds, but not for all funds advised by it. Furthermore, it is possible
that certain types of financial instruments or investment techniques described
herein may not be available, permissible, economically feasible or effective for
their intended purposes in all markets. Certain practices, techniques, or
instruments may not be principal activities of the Portfolio or an Underlying
DWS Fund but, to the extent employed, could from time to time have a material
impact on the Portfolio's performance.

Adjustable Rate Securities. The interest rates paid on the adjustable rate
securities in which a fund invests generally are readjusted at intervals of one
year or less to an increment over some predetermined interest rate index. There
are three main categories of indices: those based on US Treasury securities,
those derived from a calculated measure such as a cost of funds index and those
based on a moving average of mortgage rates. Commonly used indices include the
one-year, three-year and five-year constant maturity Treasury rates, the
three-month Treasury bill rate, the 180-day Treasury bill rate, rates on
longer-term Treasury securities, the 11th District Federal Home Loan Bank Cost
of Funds, the National Median Cost of Funds, the one-month, three-month,
six-month or one-year London Interbank Offered Rate ("LIBOR"), the prime rate of
a specific bank or commercial paper rates. Some indices, such as the one-year
constant maturity Treasury rate, closely mirror changes in market interest rate
levels. Others, such as the 11th District Home Loan Bank Cost of Funds index,
tend to lag behind changes in market rate levels and tend to be somewhat less
volatile.

The mortgage-backed securities either issued or guaranteed by the Government
National Mortgage Association ("GNMA"), Federal Home Loan Mortgage Corporation
("FHLMC") or Federal National Mortgage Association ("FNMA" or "Fannie Mae")
("Certificates") are called pass-through Certificates because a pro rata share
of both regular interest and principal payments (less GNMA's, FHLMC's or FNMA's
fees and any applicable loan servicing fees), as well as unscheduled early
prepayments on the underlying mortgage pool, are passed through monthly to the
holder of the Certificate (i.e., a fund). The principal and interest on GNMA
securities are guaranteed by GNMA and backed by the full faith and credit of the
US Government. FNMA guarantees full and timely payment of all interest and
principal, while FHLMC guarantees timely payment of interest and ultimate
collection of principal. mortgage-backed securities from FNMA and FHLMC are not
backed by the full faith and credit of the United States; however, they are
generally considered to offer minimal credit risks. The yields provided by these
mortgage-backed securities have historically exceeded the yields on other types
of US Government securities with comparable maturities in large measure due to
the prepayment risk discussed below.

If prepayments of principal are made on the underlying mortgages during periods
of rising interest rates, a fund generally will be able to reinvest such amounts
in securities with a higher current rate of return. However, a fund will not
benefit from increases in interest rates to the extent that interest rates rise
to the point where they cause the current coupon of adjustable rate mortgages
held as investments by a fund to exceed the maximum allowable annual or lifetime
reset limits (or "cap rates") for a particular mortgage. Also, a fund's net
asset value could vary to the extent that current yields on mortgage-backed
securities are different than market yields during interim periods between
coupon reset dates.

During periods of declining interest rates, of course, the coupon rates may
readjust downward, resulting in lower yields to a fund. Further, because of this
feature, the value of adjustable rate mortgages is unlikely to rise during
periods of declining interest rates to the same extent as fixed-rate
instruments. As with other mortgage-backed securities, interest rate declines
may result in accelerated prepayment of mortgages, and the proceeds from such
prepayments must be reinvested at lower prevailing interest rates.

One additional difference between adjustable rate mortgages and fixed rate
mortgages is that for certain types of adjustable rate mortgage securities, the
rate of amortization of principal, as well as interest payments, can and does
change in accordance with movements in a specified, published interest rate
index. The amount of interest due to an adjustable rate mortgage security holder
is calculated by adding a specified additional amount, the "margin," to the
index, subject to limitations or "caps" on the maximum and minimum interest that
is charged to the mortgagor during the life of the mortgage or to maximum and
minimum changes to that interest rate during a given period.

Advance Refunded Bonds. A fund may purchase Municipal Securities that are
subsequently refunded by the issuance and delivery of a new issue of bonds prior
to the date on which the outstanding issue of bonds can be redeemed or paid. The
proceeds from the new issue of bonds are typically placed in an escrow fund
consisting of US Government obligations that are used to pay the interest,
principal and call premium on the issue being refunded. A fund may also purchase
Municipal Securities that have been refunded prior to purchase by the fund.

Asset-Backed Securities. Asset-backed securities may include pools of mortgages
("mortgage-backed securities"), loans, receivables or other assets. Payment of
principal and interest may be largely dependent upon the cash flows generated by
the assets backing the securities. For purposes of determining the percentage of
a fund's total assets invested in securities of issuers having their principal
business activities in a particular industry, asset-backed securities will be
classified separately, based on the nature of the underlying assets, according
to the following categories: captive auto, diversified, retail and consumer
loans, captive equipment and business, business trade receivables, nuclear fuel
and capital and mortgage lending. Asset-backed securities (other than
mortgage-backed securities) present certain risks that are not presented by
mortgage-backed securities. Primarily, these securities may not have the benefit
of any security interest in the related assets. Credit card receivables are
generally unsecured and the debtors are entitled to the protection of a number
of state and federal consumer credit laws, many of which give such debtors the
right to set off certain amounts owed on the credit cards, thereby reducing the
balance due. There is the possibility that recoveries on repossessed collateral
may not, in some cases, be available to support payments on these securities.
Asset-backed securities are often backed by a pool of assets representing the
obligations of a number of different parties. To lessen the effect of failures
by obligors on underlying assets to make payments, the securities may contain
elements of credit support which fall into two categories: (i) liquidity
protection, and (ii) protection against losses resulting from ultimate default
by an obligor on the underlying assets. Liquidity protection refers to the
provision of advances, generally by the entity administering the pool of assets,
to ensure that the receipt of payments on the underlying pool occurs in a timely
fashion. Protection against losses results from payment of the insurance
obligations on at least a portion of the assets in the pool. This protection may
be provided through guarantees, policies or letters of credit obtained by the
issuer or sponsor from third parties, through various means of structuring the
transaction or through a combination of such approaches. The funds will not pay
any additional or separate fees for credit support. The degree of credit support
provided for each issue is generally based on historical information respecting
the level of credit risk associated with the underlying assets. Delinquency or
loss in excess of that anticipated or failure of the credit support could
adversely affect the return on an investment in such a security. The
availability of asset-backed securities may be affected by legislative or
regulatory developments. It is possible that such developments may require the
funds to dispose of any then existing holdings of such securities.

Asset-Indexed Securities. Asset-indexed securities are debt securities usually
issued by companies in precious metals related businesses such as mining, the
principal amount, redemption terms, or interest rates of which are related to
the market price of a specified precious metal. A fund will only enter into
transactions in publicly traded asset-indexed securities. Market prices of
asset-indexed securities will relate primarily to changes in the market prices
of the precious metals to which the securities are indexed rather than to
changes in market rates of interest. However, there may not be a perfect
correlation between the price movements of the asset-indexed securities and the
underlying precious metals. Asset-indexed securities typically bear interest or
pay dividends at below market rates (and in certain cases at nominal rates). A
fund may purchase asset-indexed securities to the extent permitted by law.

Asset Segregation. Certain investment transactions expose a fund to an
obligation to make future payments to third parties. Examples of these types of
transactions, include, but are not limited to, reverse repurchase agreements,
short sales, dollar rolls, when-issued, delayed-delivery or forward commitment
transactions and certain derivatives such as swaps, futures, forwards, and
options. To the extent that a fund engages in such transactions, a fund will (to
the extent required by applicable law) either (1) segregate cash or liquid
assets in the prescribed amount or (2) otherwise "cover" its future obligations
under the transaction, such as by holding an offsetting investment. If a fund
segregates sufficient cash or other liquid assets or otherwise "covers" its
obligations under such transactions, a fund will not consider the transactions
to be borrowings for purposes of its investment restrictions or "senior
securities" under the 1940 Act, and therefore, such transactions will not be
subject to the 300% asset coverage requirement under the 1940 Act otherwise
applicable to borrowings by a fund.

In some cases (e.g., with respect to futures and forwards that are contractually
required to "cash-settle"), a fund will segregate cash or other liquid assets
with respect to the amount of the daily net (marked-to-market) obligation
arising from the transaction, rather than the notional amount of the underlying
contract. By segregating assets in an amount equal to the net obligation rather
than the notional amount, a fund will have the ability to employ leverage to a
greater extent than if it set aside cash or other liquid assets equal to the
notional amount of the contract, which may increase the risk associated with
such transactions.

A fund may utilize methods of segregating assets or otherwise "covering"
transactions that are currently or in the future permitted under the 1940 Act,
the rules and regulation thereunder, or orders issued by the SEC thereunder. For
these purposes, interpretations and guidance provided by the SEC staff may be
taken into account when deemed appropriate by a fund.

Assets used as segregation or cover cannot be sold while the position in the
corresponding transaction is open, unless they are replaced with other
appropriate assets. As a result, the commitment of a large portion of a fund's
assets for segregation and cover purposes could impede portfolio management or a
fund's ability to meet redemption requests or other current obligations.

Segregating assets or otherwise "covering" for these purposes does not
necessarily limit the percentage of the assets of a fund that may be at risk
with respect to certain derivative transactions.

Bank and Savings and Loan Obligations. These obligations include negotiable
certificates of deposit, bankers' acceptances, deposit notes, fixed time
deposits or other short-term bank obligations. Certificates of deposit are
negotiable certificates evidencing the obligations of a bank to repay funds
deposited with it for a specified period of time. A fund may invest in
certificates of deposit of large domestic banks and their foreign branches,
large US regulated subsidiaries of large foreign banks (i.e., banks which at the
time of their most recent annual financial statements show total assets in
excess of $1 billion), and of smaller banks as described below. Although a fund
recognizes that the size of a bank is important, this fact alone is not
necessarily indicative of its creditworthiness. Investment in certificates of
deposit issued by foreign branches of domestic banks involves investment risks
that are different in some respects from those associated with investment in
certificates of deposit issued by domestic branches of domestic banks, including
the possible imposition of withholding taxes on interest income, the possible
adoption of foreign governmental restrictions which might adversely affect the
payment of principal and interest on such certificates of deposit, or other
adverse political or economic developments. In addition, it might be more
difficult to obtain and enforce a judgment against a foreign branch of a
domestic bank.

Banker's acceptances are credit instruments evidencing the obligations of a bank
to pay a draft drawn on it by a customer. These instruments reflect the
obligation both of the bank and of the drawer to pay the face amount of the
instrument upon maturity.

Time deposits are non-negotiable deposits maintained in a banking institution
for a specified period of time at a stated interest rate. Time deposits which
may be held by a fund will not benefit from insurance from the Bank Insurance
Fund or the Savings Association Insurance Fund administered by the Federal
Deposit Insurance Corporation. Fixed time deposits may be withdrawn on demand by
the investor, but may be subject to early withdrawal penalties that vary with
market conditions and the remaining maturity of the obligation. Fixed time
deposits subject to withdrawal penalties maturing in more than seven calendar
days are subject to a fund's limitation on investments in illiquid securities.

Bank Loans. Bank loans are typically senior debt obligations of borrowers
(issuers) and as such, are considered to hold a senior position in the capital
structure of the borrower. These may include loans which hold the most senior
position, that hold an equal ranking with other senior debt, or loans that are,
in the judgment of the Advisor, in the category of senior debt of the borrower.
This capital structure position generally gives the holders of these loans a
priority claim on some or all of the borrower's assets in the event of a
default. In most cases, these loans are either partially or fully collateralized
by the assets of a corporation, partnership, limited liability company or other
business entity, or by cash flow that the Advisor believes has a market value at
the time of acquisition that equals or exceeds the principal amount of the loan.
These loans are often issued in connection with recapitalizations, acquisitions,
leveraged buy-outs and refinancings. It is important to note that Moody's and
S&P may rate bank loans higher than high yield bonds of the same issuer to
reflect their more senior position. The fund may invest in both fixed- and
floating-rate loans. In addition, bank loans can trade either as an "assignment"
or "participation." When a fund buys an assignment, it is essentially becoming a
party to the bank agreement. The vast majority of all trades are assignments and
would therefore generally represent the preponderance of bank loans held by the
fund. In certain cases, a fund may buy bank loans on a participation basis, if
for example, the fund did not want to become party to the bank agreement.
However, in all cases, a fund will not purchase bank loans where Deutsche Bank,
or an affiliate, serves as an agent bank.

Participations and assignments involve credit risk, interest rate risk,
liquidity risk, and the risk of being a lender. If a fund purchases a
participation, it may only be able to enforce its rights through the lender, and
may assume the credit risk of both the lender and the borrower.

Investments in loans through direct assignment of a financial institution's
interests with respect to a loan may involve additional risks. For example, if a
loan is foreclosed, the purchaser could become part owner of any collateral, and
would bear the costs and liabilities associated with owning and disposing of the
collateral. In addition, it is at least conceivable that under emerging legal
theories of lender liability, a purchaser could be held liable as a co-lender.

In the case of loans administered by a bank or other financial institution that
acts as agent for all holders, if assets held by the agent for the benefit of a
purchaser are determined to be subject to the claims of the agent's general
creditors, the purchaser might incur certain costs and delays in realizing
payment on the loan or loan participation and could suffer a loss of principal
or interest.

In the case of loan participations where a bank or other lending institution
serves as financial intermediary between a fund and the borrower, if the
participation does not shift to the fund the direct debtor-creditor relationship
with the borrower, Securities and Exchange Commission ("SEC") interpretations
require the fund, in some circumstances, to treat both the lending bank or other
lending institution and the borrower as issuers for purposes of the fund's
investment policies. Treating a financial intermediary as an issuer of
indebtedness may restrict a fund's ability to invest in indebtedness related to
a single financial intermediary, or a group of intermediaries engaged in the
same industry, even if the underlying borrowers represent many different
companies and industries.

Borrowing. As a matter of fundamental policy, a fund will not borrow money,
except as permitted under the 1940 Act, and as interpreted or modified by
regulatory authority having jurisdiction, from time to time. While each fund
(except the Portfolio and DWS Floating Rate Plus Fund) does not currently intend
to borrow for investment leveraging purposes, if such a strategy were
implemented in the future it would increase the funds' volatility and the risk
of loss in a declining market. Borrowing by a fund will involve special risk
considerations. Although the principal of a fund's borrowings will be fixed, a
fund's assets may change in value during the time a borrowing is outstanding,
thus increasing exposure to capital risk.

The Portfolio and DWS Floating Rate Plus Fund may borrow money from banks for
investment purposes to the extent permitted by the 1940 Act. This practice is
known as leverage. Currently, under the 1940 Act, a fund may borrow up to
one-third of its total assets (including the amount borrowed) provided that it
maintains continuous asset coverage of 300% with respect to such borrowings and
sells (within three days) sufficient portfolio holdings to restore such coverage
if it should decline to less than 300% due to market fluctuations or otherwise,
even if disadvantageous from an investment standpoint. A fund may borrow through
other means to the extent permitted by the 1940 Act. In addition to borrowing
for leverage purposes, a fund also may borrow money to meet redemptions in order
to avoid forced, unplanned sales of portfolio securities or for other temporary
or emergency purposes. This allows a fund greater flexibility to buy and sell
portfolio securities for investment or tax considerations, rather than for cash
flow considerations.

The use of borrowing involves special risk considerations that may not be
associated with other funds having similar policies. Because substantially all
of a fund's assets fluctuate in value, whereas the interest obligation resulting
from a borrowing may be fixed by the terms of a fund's agreement with its
lender, the net asset value per share of a fund will tend to increase more when
its portfolio securities increase in value and decrease more when its portfolio
securities decrease in value than would otherwise be the case if a fund did not
borrow funds. In addition, interest costs on borrowings may fluctuate with
changing market rates of interest and may partially offset or exceed the return
earned on borrowed funds. Under adverse market conditions, a fund might have to
sell portfolio securities to meet interest or principal payments at a time when
fundamental investment considerations would not favor such sales. The interest
that a fund must pay on borrowed money, together with any additional fees to
establish and maintain a borrowing facility, are additional costs that will
reduce or eliminate any net investment income and may also offset any potential
capital gains. Unless appreciation and income, if any, on assets acquired with
borrowed funds exceed the costs of borrowing, the use of leverage will diminish
the investment performance of a fund compared with what it would have been
without leverage.

Certificates of Deposit and Bankers' Acceptances. Certificates of deposit are
receipts issued by a depository institution in exchange for the deposit of
funds. The issuer agrees to pay the amount deposited plus interest to the bearer
of the receipt on the date specified on the certificate. The certificate usually
can be traded in the secondary market prior to maturity. Bankers' acceptances
typically arise from short-term credit arrangements designed to enable
businesses to obtain funds to finance commercial transactions. Generally, an
acceptance is a time draft drawn on a bank by an exporter or an importer to
obtain a stated amount of funds to pay for specific merchandise. The draft is
then "accepted" by a bank that, in effect, unconditionally guarantees to pay the
face value of the instrument on its maturity date. The acceptance may then be
held by the accepting bank as an earning asset or it may be sold in the
secondary market at the going rate of discount for a specific maturity. Although
maturities for acceptances can be as long as 270 days, most acceptances have
maturities of six months or less.

Collateralized Mortgage Obligations ("CMOs"). CMOs are hybrids between
mortgage-backed bonds and mortgage pass-through securities. Similar to a bond,
interest and prepaid principal are paid, in most cases, semiannually. CMOs may
be collateralized by whole mortgage loans but are more typically collateralized
by portfolios of mortgage pass-through securities guaranteed by GNMA, FHLMC, or
Fannie Mae, and their income streams.

CMOs are structured into multiple classes, each bearing a different stated
maturity. Actual maturity and average life will depend upon the prepayment
experience of the collateral. CMOs provide for a modified form of call
protection through a de facto breakdown of the underlying pool of mortgages
according to how quickly the loans are repaid. Monthly payment of principal
received from the pool of underlying mortgages, including prepayments, is first
returned to investors holding the shortest maturity class. Investors holding the
longer maturity classes receive principal only after the first class has been
retired. An investor is partially guarded against a sooner than desired return
of principal because of the sequential payments. The prices of certain CMOs,
depending on their structure and the rate of prepayments, can be volatile. Some
CMOs may also not be as liquid as other securities.

In a typical CMO transaction, a corporation issues multiple series (e.g., A, B,
C, Z) of CMO bonds ("Bonds"). Proceeds of the Bond offering are used to purchase
mortgages or mortgage pass-through certificates ("Collateral"). The Collateral
is pledged to a third party trustee as security for the Bonds. Principal and
interest payments from the Collateral are used to pay principal on the Bonds in
the order A, B, C, Z. The Series A, B, and C Bonds all bear current interest.
Interest on the Series Z Bond is accrued and added to principal and a like
amount is paid as principal on the Series A, B, or C Bond currently being paid
off. When the Series A, B, and C Bonds are paid in full, interest and principal
on the Series Z Bond begins to be paid currently. With some CMOs, the issuer
serves as a conduit to allow loan originators (primarily builders or savings and
loan associations) to borrow against their loan portfolios.

The principal risk of CMOs results from the rate of prepayments on underlying
mortgages serving as collateral and from the structure of the deal. An increase
or decrease in prepayment rates will affect the yield, average life and price of
CMOs.

Commercial Paper. A fund may invest in commercial paper issued by major
corporations under the Securities Act of 1933, as amended (the "1933 Act") in
reliance on the exemption from registration afforded by Section 3(a)(3) thereof.
Such commercial paper may be issued only to finance current transactions and
must mature in nine months or less. Trading of such commercial paper is
conducted primarily by institutional investors through investment dealers, and
individual investor participation in the commercial paper market is very
limited. A fund also may invest in commercial paper issued in reliance on the
so-called "private placement" exemption from registration afforded by Section
4(2) of the 1933 Act ("Section 4(2) paper"). Section 4(2) paper is restricted as
to disposition under the federal securities laws, and generally is sold to
institutional investors such as a fund who agree that they are purchasing the
paper for investment and not with a view to public distribution. Any resale by
the purchaser must be in an exempt transaction. Section 4(2) paper normally is
resold to other institutional investors like a fund through or with the
assistance of the issuer or investment dealers who make a market in the Section
4(2) paper, thus providing liquidity. The Advisor considers the legally
restricted but readily saleable Section 4(2) paper to be liquid; however,
pursuant to procedures approved by a fund's Board, if a particular investment in
Section 4(2) paper is not determined to be liquid, that investment will be
included within the limitation of a fund on illiquid securities. The Advisor
monitors the liquidity of its investments in Section 4(2) paper on a continuing
basis.

Commodity-Linked Derivative Instruments. A fund may invest in commodity-linked
derivative instruments, in particular in structured notes. The value of a
commodity-linked derivative instrument typically is based on the price movements
of a physical commodity, a commodity futures contract or commodity index, or
some other readily measurable economic variable dependent upon changes in the
value of commodities or the commodities markets. A fund invests in
commodity-linked derivative investments that are hybrid instruments excluded
from regulation under the Commodity Exchange Act and the rules thereunder.
Additionally, from time to time a fund may invest in other hybrid instruments
that do not qualify for exemption from regulation under the Commodity Exchange
Act.

A fund will invest in derivative debt instruments with principal and/or coupon
payments linked to the value of commodities, commodity futures contracts, or the
performance of commodity indices. These are "commodity-linked" or "index-linked"
notes. They are sometimes referred to as "structured notes" because the terms of
the debt instrument may be structured by the issuer of the note and the
purchaser of the note, such as a fund. These notes may be issued by banks,
brokerage firms, insurance companies and other corporations.

The values of these notes will rise and fall in response to changes in the
underlying commodity or related index or investment. These notes expose a fund
economically to movements in commodity prices, but a particular note is
primarily a debt obligation. These notes also are subject to credit and interest
rate risks that in general affect the value of debt securities. Therefore, at
the maturity of the note, a fund may receive more or less principal than it
originally invested. A fund might receive interest payments on the note that are
more or less than the stated coupon interest rate payments.

The structured notes a fund enters into are expected to involve leverage,
meaning that the value of the instrument will be calculated as a multiple of the
upward or downward price movement of the underlying index. The prices of
commodity-linked instruments may move in different directions than investments
in traditional equity and debt securities in periods of rising inflation. Of
course, there can be no guarantee that a fund's commodity-linked investments
would not be correlated with traditional financial assets under any particular
market conditions.

Commodity-linked structured notes may be issued by US and foreign banks,
brokerage firms, insurance companies and other corporations. These notes are
debt securities of the issuer and so, in addition to fluctuating in response to
changes in the underlying commodity index, will be subject to credit and
interest rate risks that typically affect debt securities.

The commodity-linked instruments a fund invests in may be wholly principal
protected, partially principal protected or offer no principal protection. With
a wholly principal protected instrument, a fund will receive at maturity the
greater of the par value of the note or the increase in value of the underlying
index. Partially protected instruments may suffer some loss of principal up to a
specified limit if the underlying index declines in value during the term of the
instrument. For instruments without principal protection, there is a risk that
the instrument could lose all of its value if the index declines sufficiently.
The Advisor's decision on whether and to what extent to use principal protection
depends in part on the cost of the protection. In addition, the ability of a
fund to take advantage of any protection feature depends on the creditworthiness
of the issuer of the instrument.

Derivative strategies and the writing of uncovered (or so-called "naked")
options are speculative and may hurt a fund's performance. A fund may attempt to
hedge its investments in order to mitigate risk, but it is not required to do
so. The benefits to be derived from a fund's derivatives and options strategy
are dependent upon the Advisor's ability to discern pricing inefficiencies and
predict trends in the commodities and other markets, which decisions could prove
to be inaccurate. This requires different skills and techniques than predicting
changes in the price of individual stocks or fixed-income securities, and there
can be no assurance that the use of this strategy will be successful.

Common Stocks. Common stock is issued by companies to raise cash for business
purposes and represents a proportionate interest in the issuing companies.
Therefore, a fund participates in the success or failure of any company in which
it holds stock. The market values of common stock can fluctuate significantly,
reflecting the business performance of the issuing company, investor perception
and general economic and financial market movements. Despite the risk of price
volatility, however, common stocks have historically offered a greater potential
for long-term gain on investment, compared to other classes of financial assets
such as bonds or cash equivalents, although there can be no assurance that this
will be true in the future.

Convertible Securities. A fund may invest in convertible securities, that is,
bonds, notes, debentures, preferred stocks and other securities which are
convertible into common stock. Investments in convertible securities can provide
an opportunity for capital appreciation and/or income through interest and
dividend payments by virtue of their conversion or exchange features.

The convertible securities in which a fund may invest are either fixed income or
zero coupon debt securities which may be converted or exchanged at a stated or
determinable exchange ratio into underlying shares of common stock. The exchange
ratio for any particular convertible security may be adjusted from time to time
due to stock splits, dividends, spin-offs, other corporate distributions or
scheduled changes in the exchange ratio. Convertible debt securities and
convertible preferred stocks, until converted, have general characteristics
similar to both debt and equity securities. Although to a lesser extent than
with debt securities generally, the market value of convertible securities tends
to decline as interest rates increase and, conversely, tends to increase as
interest rates decline. In addition, because of the conversion or exchange
feature, the market value of convertible securities typically changes as the
market value of the underlying common stocks changes, and, therefore, also tends
to follow movements in the general market for equity securities. A unique
feature of convertible securities is that as the market price of the underlying
common stock declines, convertible securities tend to trade increasingly on a
yield basis, and so may not experience market value declines to the same extent
as the underlying common stock. When the market price of the underlying common
stock increases, the prices of the convertible securities tend to rise as a
reflection of the value of the underlying common stock, although typically not
as much as the underlying common stock. While no securities investments are
without risk, investments in convertible securities generally entail less risk
than investments in common stock of the same issuer.

As debt securities, convertible securities are investments which provide for a
stream of income (or in the case of zero coupon securities, accretion of income)
with generally higher yields than common stocks. Convertible securities
generally offer lower yields than non-convertible securities of similar quality
because of their conversion or exchange features.

Of course, like all debt securities, there can be no assurance of income or
principal payments because the issuers of the convertible securities may default
on their obligations.

Convertible securities generally are subordinated to other similar but
non-convertible securities of the same issuer, although convertible bonds, as
corporate debt obligations, enjoy seniority in right of payment to all equity
securities, and convertible preferred stock is senior to common stock, of the
same issuer. However, because of the subordination feature, convertible bonds
and convertible preferred stock typically have lower ratings than similar
non-convertible securities. Convertible securities may be issued as fixed income
obligations that pay current income or as zero coupon notes and bonds, including
Liquid Yield Option Notes ("LYONs"(TM)).

Corporate Obligations. Investment in corporate debt obligations involves credit
and interest rate risk. The value of fixed-income investments will fluctuate
with changes in interest rates and bond market conditions, tending to rise as
interest rates decline and to decline as interest rates rise. Corporate debt
obligations generally offer less current yield than securities of lower quality,
but lower-quality securities generally have less liquidity, greater credit and
market risk, and as a result, more price volatility. Longer-term bonds are,
however, generally more volatile than bonds with shorter maturities.

Currency Management Techniques. The instruments involved in currency-related
transactions may be considered derivative instruments. In connection with its
investments in foreign securities, a fund may enter into currency related
transactions to attempt to protect against an anticipated rise in the US dollar
price of securities that it intends to purchase. In addition, a fund may enter
into currency-related transactions to attempt to protect against the decline in
value of its foreign currency denominated or quoted portfolio securities, or a
decline in the value of anticipated dividends or interest from such securities,
due to a decline in the value of the foreign currency against the US dollar. In
addition to protecting a fund from currency movements, a fund will use currency
management techniques to add to investment returns and generally not for hedging
purposes when it employs the global asset allocation strategy. The forecasting
of currency market movements is extremely difficult and there can be no
assurance that currency strategies will be successful. If the Advisor is
incorrect in its forecast, currency strategies may result in investment
performance worse than if the strategies were not attempted. In addition,
forward contracts and over-the-counter currency options may be illiquid and are
subject to the risk that the counterparty will default on its obligations.

Custodial Receipts. Custodial receipts are interests in separately traded
interest and principal component parts of US Government securities that are
issued by banks or brokerage firms and are created by depositing US Government
securities into a special account at a custodian bank. The custodian holds the
interest and principal payments for the benefit of the registered owners of the
certificates or receipts. The custodian arranges for the issuance of the
certificates or receipts evidencing ownership and maintains the register.
Custodial receipts include Treasury Receipts ("TRs"), Treasury Investment Growth
Receipts ("TIGRs"), and Certificates of Accrual on Treasury Securities ("CATS").
TIGRs and CATS are interests in private proprietary accounts while TRs and
STRIPS (see "US Government Securities" below) are interests in accounts
sponsored by the US Treasury. Receipts are sold as zero coupon securities; for
more information, see "Zero Coupon Securities."

A fund may acquire US Government securities and their unmatured interest coupons
that have been separated ("stripped") by their holder, typically a custodian
bank or investment brokerage firm. Having separated the interest coupons from
the underlying principal of the US Government securities, the holder will resell
the stripped securities in custodial receipt programs with a number of different
names, including TIGRs and CATS. The stripped coupons are sold separately from
the underlying principal, which is usually sold at a deep discount because the
buyer receives only the right to receive a future fixed payment on the security
and does not receive any rights to periodic interest (cash) payments. The
underlying US Treasury bonds and notes themselves are generally held in
book-entry form at a Federal Reserve Bank. Counsel to the underwriters of these
certificates or other evidences of ownership of US Treasury securities have
stated that, in their opinion, purchasers of the stripped securities most likely
will be deemed the beneficial holders of the underlying US Government securities
for federal income tax and securities purposes. In the case of CATS and TIGRS,
the Internal Revenue Service (the "IRS") has reached this conclusion for the
purpose of applying the diversification requirements applicable to regulated
investment companies, such as a fund, under the Code. CATS and TIGRS are not
considered US Government securities by the staff of the SEC. Further, the IRS
conclusion noted above is contained only in a general counsel memorandum, which
is an internal document of no precedential value or binding effect, and a
private letter ruling, which also may not be relied upon by a fund. Each fund is
not aware of any binding legislative, judicial or administrative authority on
this issue.

Depositary Receipts. A fund may invest in sponsored or unsponsored American
Depositary Receipts ("ADRs"), European Depositary Receipts ("EDRs"), Global
Depositary Receipts ("GDRs"), International Depositary Receipts ("IDRs") and
other types of Depositary Receipts (which, together with ADRs, GDRs and IDRs are
hereinafter referred to as "Depositary Receipts"). Depositary receipts provide
indirect investment in securities of foreign issuers. Prices of unsponsored
Depositary Receipts may be more volatile than if they were sponsored by the
issuer of the underlying securities. Depositary Receipts may not necessarily be
denominated in the same currency as the underlying securities into which they
may be converted. In addition, the issuers of the stock of unsponsored
Depositary Receipts are not obligated to disclose material information in the
United States and, therefore, there may not be a correlation between such
information and the market value of the Depositary Receipts. ADRs are Depositary
Receipts which are bought and sold in the United States and are typically issued
by a US bank or trust company which evidence ownership of underlying securities
by a foreign corporation. GDRs, IDRs and other types of Depositary Receipts are
typically issued by foreign banks or trust companies, although they may also be
issued by United States banks or trust companies, and evidence ownership of
underlying securities issued by either a foreign or a United States corporation.
Generally, Depositary Receipts in registered form are designed for use in the
United States securities markets and Depositary Receipts in bearer form are
designed for use in securities markets outside the United States. For purposes
of a fund's investment policies, a fund's investments in ADRs, GDRs and other
types of Depositary Receipts will be deemed to be investments in the underlying
securities. Depositary Receipts, including those denominated in US dollars will
be subject to foreign currency exchange rate risk. However, by investing in US
dollar-denominated ADRs rather than directly in foreign issuers' stock, a fund
avoids currency risks during the settlement period. In general, there is a
large, liquid market in the United States for most ADRs. However, certain
Depositary Receipts may not be listed on an exchange and therefore may be
illiquid securities.

Dollar Roll Transactions. Dollar roll transactions consist of the sale by a fund
to a bank or broker/dealer (the "counterparty") of GNMA certificates or other
mortgage-backed securities together with a commitment to purchase from the
counterparty similar, but not identical, securities at a future date, at the
same price. The counterparty receives all principal and interest payments,
including prepayments, made on the security while it is the holder. A fund
receives a fee from the counterparty as consideration for entering into the
commitment to purchase. Dollar rolls may be renewed over a period of several
months with a different purchase and repurchase price fixed and a cash
settlement made at each renewal without physical delivery of securities.
Moreover, the transaction may be preceded by a firm commitment agreement
pursuant to which a fund agrees to buy a security on a future date.

A dollar roll involves costs to a fund. For example, while a fund receives a fee
as consideration for agreeing to repurchase the security, a fund forgoes the
right to receive all principal and interest payments while the counterparty
holds the security. These payments to the counterparty may exceed the fee
received by a fund, thereby effectively charging a fund interest on its
borrowing. Further, although a fund can estimate the amount of expected
principal prepayment over the term of the dollar roll, a variation in the actual
amount of prepayment could increase or decrease the cost of a fund's borrowing.

The entry into dollar rolls involves potential risks of loss that are different
from those related to the securities underlying the transactions. For example,
if the counterparty becomes insolvent, a fund's right to purchase from the
counterparty might be restricted. Additionally, the value of such securities may
change adversely before a fund is able to purchase them. Similarly, a fund may
be required to purchase securities in connection with a dollar roll at a higher
price than may otherwise be available on the open market. Since, as noted above,
the counterparty is required to deliver a similar, but not identical security to
a fund, the security that a fund is required to buy under the dollar roll may be
worth less than an identical security. Finally, there can be no assurance that a
fund's use of the cash that it receives from a dollar roll will provide a return
that exceeds borrowing costs.

Equity Equivalents. In addition to investing in common stocks, the fund may
invest in other equity securities and equity equivalents, including securities
that permit the fund to receive an equity interest in an issuer, the opportunity
to acquire an equity interest in an issuer or the opportunity to receive a
return on its investment that permits the Fund to benefit from the growth over
time in the equity of an issuer. Examples of equity securities and equity
security equivalents include preferred stock, convertible preferred stock and
convertible debt securities.

Equity equivalents also may include securities whose value or return is derived
from the value or return of a different security.

Eurodollar Instruments. A fund may make investments in Eurodollar instruments
for hedging purposes or to enhance potential gain. Eurodollar instruments are US
dollar-denominated futures contracts or options thereon which are linked to the
London Interbank Offered Rate ("LIBOR"), although foreign currency-denominated
instruments are available from time to time. Eurodollar futures contracts enable
purchasers to obtain a fixed rate for the lending of funds and sellers to obtain
a fixed rate for borrowings. A fund might use Eurodollar futures contracts and
options thereon to hedge against changes in LIBOR, to which many interest rate
swaps and fixed income instruments are linked.

Eurodollar Obligations. Eurodollar bank obligations are US dollar-denominated
certificates of deposit and time deposits issued outside the US capital markets
by foreign branches of US banks and US branches of foreign banks. Eurodollar
obligations are subject to the same risks that pertain to domestic issues,
notably credit risk, market risk and liquidity risk. Additionally, Eurodollar
obligations are subject to certain sovereign risks.

Foreign Currencies. Because investments in foreign securities will usually
involve currencies of foreign countries, and because a fund may hold foreign
currencies and forward foreign currency exchange contracts ("forward
contracts"), futures contracts and options on futures contracts on foreign
currencies, the value of the assets of a fund as measured in US dollars may be
affected favorably or unfavorably by changes in foreign currency exchange rates
and exchange control regulations, and a fund may incur costs in connection with
conversions between various currencies.

The strength or weakness of the US dollar against these currencies is
responsible for part of a fund's investment performance. If the dollar falls in
value relative to the Japanese yen, for example, the dollar value of a Japanese
stock held in the portfolio will rise even though the price of the stock in yen
remains unchanged. Conversely, if the dollar rises in value relative to the yen,
the dollar value of the Japanese stock will fall. Many foreign currencies have
experienced significant devaluation relative to the dollar.

Although a fund values its assets daily in terms of US dollars, it does not
intend to convert its holdings of foreign currencies into US dollars on a daily
basis. It will do so from time to time, and investors should be aware of the
costs of currency conversion. Although foreign exchange dealers do not charge a
fee for conversion, they do realize a profit based on the difference (the
"spread") between the prices at which they are buying and selling various
currencies. Thus, a dealer may offer to sell a foreign currency to a fund at one
rate, while offering a lesser rate of exchange should a fund desire to resell
that currency to the dealer. A fund will conduct its foreign currency exchange
transactions either on a spot (i.e., cash) basis at the spot rate prevailing in
the foreign currency exchange market, or through entering into forward contracts
(or options thereon) to purchase or sell foreign currencies.
(See "Strategic Transactions and Derivatives" below.)

Foreign Fixed Income Securities. Because most foreign fixed income securities
are not rated, a fund will invest in foreign fixed income securities based on
the Advisor's analysis without relying on published ratings. Since such
investments will be based upon the Advisor's analysis rather than upon published
ratings, achievement of a fund's goals may depend more upon the abilities of the
underlying funds' advisor than would otherwise be the case.

The value of the foreign fixed income securities held by a fund, and thus the
net asset value of a fund's shares, generally will fluctuate with (a) changes in
the perceived creditworthiness of the issuers of those securities, (b) movements
in interest rates, and (c) changes in the relative values of the currencies in
which a fund's investments in fixed income securities are denominated with
respect to the US Dollar. The extent of the fluctuation will depend on various
factors, such as the average maturity of a fund's investments in foreign fixed
income securities, and the extent to which a fund hedges its interest rate,
credit and currency exchange rate risks. A longer average maturity generally is
associated with a higher level of volatility in the market value of such
securities in response to changes in market conditions.

Investments in sovereign debt, including Brady Bonds, involve special risks.
Brady Bonds are debt securities issued under a plan implemented to allow debtor
nations to restructure their outstanding commercial bank indebtedness. Foreign
governmental issuers of debt or the governmental authorities that control the
repayment of the debt may be unable or unwilling to repay principal or pay
interest when due. In the event of default, there may be limited or no legal
recourse in that, generally, remedies for defaults must be pursued in the courts
of the defaulting party. Political conditions, especially a sovereign entity's
willingness to meet the terms of its fixed income securities, are of
considerable significance. Also, there can be no assurance that the holders of
commercial bank loans to the same sovereign entity may not contest payments to
the holders of sovereign debt in the event of default under commercial bank loan
agreements. In addition, there is no bankruptcy proceeding with respect to
sovereign debt on which a sovereign has defaulted, and a fund may be unable to
collect all or any part of its investment in a particular issue. Foreign
investment in certain sovereign debt is restricted or controlled to varying
degrees, including requiring governmental approval for the repatriation of
income, capital or proceed of sales by foreign investors. These restrictions or
controls may at times limit or preclude foreign investment in certain sovereign
debt or increase the costs and expenses of a fund. Sovereign debt may be issued
as part of debt restructuring and such debt is to be considered speculative.
There is a history of defaults with respect to commercial bank loans by public
and private entities issuing Brady Bonds. All or a portion of the interest
payments and/or principal repayment with respect to Brady Bonds may be
uncollateralized.

Foreign Government Securities. The foreign government securities in which a fund
may invest generally consist of debt obligations issued or guaranteed by
national, state or provincial governments or similar political subdivisions. A
fund may invest in foreign government securities in the form of American
Depository Receipts. Foreign government securities also include debt securities
of supranational entities. Quasi-governmental and supranational entities include
international organizations designated or supported by governmental entities to
promote economic reconstruction or development and international banking
institutions and related government agencies. Examples include the International
Bank for Reconstruction and Development (the "World Bank"), the Japanese
Development Bank, the Asian Development Bank and the InterAmerican Development
Bank. Foreign government securities also include mortgage-related securities
issued or guaranteed by national, state or provincial governmental
instrumentalities, including quasi-governmental agencies.

Foreign Investment. Foreign securities are normally denominated and traded in
foreign currencies. As a result, the value of a fund's foreign investments and
the value of its shares may be affected favorably or unfavorably by changes in
currency exchange rates relative to the US dollar. There may be less information
publicly available about a foreign issuer than about a US issuer, and foreign
issuers may not be subject to accounting, auditing and financial reporting
standards and practices comparable to those in the US. The securities of some
foreign issuers are less liquid and at times more volatile than securities of
comparable US issuers. Foreign brokerage commissions and other fees are also
generally higher than in the US. Foreign settlement procedures and trade
regulations may involve certain risks (such as delay in payment or delivery of
securities or in the recovery of a fund's assets held abroad) and expenses not
present in the settlement of investments in US markets. Payment for securities
without delivery may be required in certain foreign markets.

In addition, foreign securities may be subject to the risk of nationalization or
expropriation of assets, imposition of currency exchange controls or
restrictions on the repatriation of foreign currency, confiscatory taxation,
political or financial instability and diplomatic developments which could
affect the value of a fund's investments in certain foreign countries.
Governments of many countries have exercised and continue to exercise
substantial influence over many aspects of the private sector through the
ownership or control of many companies, including some of the largest in these
countries. As a result, government actions in the future could have a
significant effect on economic conditions which may adversely affect prices of
certain portfolio securities. There is also generally less government
supervision and regulation of stock exchanges, brokers, and listed companies
than in the US. Dividends or interest on, or proceeds from the sale of, foreign
securities may be subject to foreign withholding taxes, and special US federal
income tax considerations may apply. Moreover, foreign economies may differ
favorably or unfavorably from the US economy in such respects as growth of gross
national product, rate of inflation, capital reinvestment, resource
self-sufficiency and balance of payments position.

Legal remedies available to investors in certain foreign countries may be more
limited than those available with respect to investments in the US or in other
foreign countries. The laws of some foreign countries may limit the fund's
ability to invest in securities of certain issuers organized under the laws of
those foreign countries.

Of particular importance, many foreign countries are heavily dependent upon
exports, particularly to developed countries, and, accordingly, have been and
may continue to be adversely affected by trade barriers, managed adjustments in
relative currency values, and other protectionist measures imposed or negotiated
by the US and other countries with which they trade. These economies also have
been and may continue to be negatively impacted by economic conditions in the US
and other trading partners, which can lower the demand for goods produced in
those countries.

The risks described above, including the risks of nationalization or
expropriation of assets, typically are increased in connection with investments
in "emerging markets." For example, political and economic structures in these
countries may be in their infancy and developing rapidly, and such countries may
lack the social, political and economic stability characteristic of more
developed countries (including amplified risk of war and terrorism). Certain of
these countries have in the past failed to recognize private property rights and
have at times nationalized and expropriated the assets of private companies.
Investments in emerging markets may be considered speculative.

The currencies of certain emerging market countries have experienced
devaluations relative to the US dollar, and future devaluations may adversely
affect the value of assets denominated in such currencies. In addition, currency
hedging techniques may be unavailable in certain emerging market countries. Many
emerging market countries have experienced substantial, and in some periods
extremely high, rates of inflation or deflation for many years, and future
inflation may adversely affect the economies and securities markets of such
countries.

In addition, unanticipated political or social developments may affect the value
of investments in emerging markets and the availability of additional
investments in these markets. Any change in the leadership or politics of
emerging market countries, or the countries that exercise a significant
influence over those countries, may halt the expansion of or reverse the
liberalization of foreign investment policies now occurring and adversely affect
existing investment opportunities. The small size, limited trading volume and
relative inexperience of the securities markets in these countries may make
investments in securities traded in emerging markets illiquid and more volatile
than investments in securities traded in more developed countries. For example,
limited market size may cause prices to be unduly influenced by traders who
control large positions. In addition, the fund may be required to establish
special custodial or other arrangements before making investments in securities
traded in emerging markets. There may be little financial or accounting
information available with respect to issuers of emerging market securities, and
it may be difficult as a result to assess the value of prospects of an
investment in such securities.

The risk also exists that an emergency situation may arise in one or more
emerging markets as a result of which trading of securities may cease or may be
substantially curtailed and prices for a fund's securities in such markets may
not be readily available. A fund may suspend redemption of its shares for any
period during which an emergency exists, as determined by the SEC. Accordingly
if a fund believes that appropriate circumstances exist, it will promptly apply
to the SEC for a determination that an emergency is present. During the period
commencing from a fund's identification of such condition until the date of the
SEC action, a fund's securities in the affected markets will be valued at fair
value determined in good faith by or under the direction of a fund's Board.

High Yield/High Risk Bonds. A fund may also purchase debt securities which are
rated below investment-grade (commonly referred to as "junk bonds"), that is,
rated below Baa by Moody's or below BBB by S&P and unrated securities judged to
be of equivalent quality as determined by the underlying fund's advisor. These
securities usually entail greater risk (including the possibility of default or
bankruptcy of the issuers of such securities), generally involve greater
volatility of price and risk to principal and income, and may be less liquid,
than securities in the higher rating categories. The lower the ratings of such
debt securities, the more their risks render them like equity securities.
Securities rated D may be in default with respect to payment of principal or
interest.

Issuers of such high yield securities often are highly leveraged and may not
have available to them more traditional methods of financing. Therefore, the
risk associated with acquiring the securities of such issuers generally is
greater than is the case with higher rated securities. For example, during an
economic downturn or a sustained period of rising interest rates, highly
leveraged issuers of high yield securities may experience financial stress.
During such periods, such issuers may not have sufficient revenues to meet their
interest payment obligations. The issuer's ability to service its debt
obligations may also be adversely affected by specific corporate developments,
or the issuer's inability to meet specific projected business forecasts, or the
unavailability of additional financing. The risk of loss from default by the
issuer is significantly greater for the holders of high yield securities because
such securities are generally unsecured and are often subordinated to other
creditors of the issuer. Prices and yields of high yield securities will
fluctuate over time and, during periods of economic uncertainty, volatility of
high yield securities may adversely affect a fund's net asset value. In
addition, investments in high yield zero coupon or pay-in-kind bonds, rather
than income-bearing high yield securities, may be more speculative and may be
subject to greater fluctuations in value due to changes in interest rates.

A fund may have difficulty disposing of certain high yield securities because
they may have a thin trading market. Because not all dealers maintain markets in
all high yield securities, a fund anticipates that such securities could be sold
only to a limited number of dealers or institutional investors. The lack of a
liquid secondary market may have an adverse effect on the market price and a
fund's ability to dispose of particular issues and may also make it more
difficult for a fund to obtain accurate market quotations for purposes of
valuing a fund's assets. Market quotations generally are available on many high
yield issues only from a limited number of dealers and may not necessarily
represent firm bids of such dealers or prices for actual sales. Adverse
publicity and investor perceptions may decrease the values and liquidity of high
yield securities. These securities may also involve special registration
responsibilities, liabilities and costs, and liquidity and valuation
difficulties.

Credit quality in the high-yield securities market can change suddenly and
unexpectedly, and even recently issued credit ratings may not fully reflect the
actual risks posed by a particular high-yield security. For these reasons, it is
generally the policy of the underlying fund's advisor (or subadvisor) not to
rely exclusively on ratings issued by established credit rating agencies, but to
supplement such ratings with its own independent and on-going review of credit
quality. The achievement of a fund's investment objective by investment in such
securities may be more dependent on the underlying fund's advisor's credit
analysis than is the case for higher quality bonds. Should the rating of a
portfolio security be downgraded, the underlying fund's advisor will determine
whether it is in the best interests of a fund to retain or dispose of such
security.

Prices for high-yield securities may be affected by legislative and regulatory
developments. Also, Congress has from time to time considered legislation which
would further restrict or eliminate the federal income tax deduction for
interest payments on these securities and regulate corporate restructurings.
Such legislation may significantly depress the prices of outstanding securities
of this type.

A portion of the high-yield securities acquired by a fund will be purchased upon
issuance, which may involve special risks because the securities so acquired are
new issues. In such instances a fund may be a substantial purchaser of the issue
and therefore have the opportunity to participate in structuring the terms of
the offering. Although this may enable a fund to seek to protect itself against
certain of such risks, the considerations discussed herein would nevertheless
remain applicable.

Illiquid Securities and Restricted Securities. A fund may purchase securities
that are subject to legal or contractual restrictions on resale ("restricted
securities"). Generally speaking, restricted securities may be sold (i) only to
qualified institutional buyers; (ii) in a privately negotiated transaction to a
limited number of purchasers; (iii) in limited quantities after they have been
held for a specified period of time and other conditions are met pursuant to an
exemption from registration; or (iv) in a public offering for which a
registration statement is in effect under the 1933 Act. Issuers of restricted
securities may not be subject to the disclosure and other investor protection
requirements that would be applicable if their securities were publicly traded.

Restricted securities are often illiquid, but they may also be liquid. For
example, restricted securities that are eligible for resale under Rule 144A are
often deemed to be liquid.

Each fund's Board has approved guidelines for use by its advisor in determining
whether a security is liquid or illiquid. Among the factors an advisor may
consider in reaching liquidity decisions relating to Rule 144A securities are:
(1) the frequency of trades and quotes for the security; (2) the number of
dealers wishing to purchase or sell the security and the number of other
potential purchasers; (3) dealer undertakings to make a market in the security;
and (4) the nature of the security and the nature of the market for the security
(i.e., the time needed to dispose of the security, the method of soliciting
offers, and the mechanics of the transfer. Issuers of restricted securities may
not be subject to the disclosure and other investor protection requirement that
would be applicable if their securities were publicly traded. Where a
registration statement is required for the resale of restricted securities, a
fund may be required to bear all or part of the registration expenses. A fund
may be deemed to be an "underwriter" for purposes of the 1933 Act, when selling
restricted securities to the public and, in such event, a fund may be liable to
purchasers of such securities if the registration statement prepared by the
issuer is materially inaccurate or misleading.

A fund may also purchase securities that are not subject to legal or contractual
restrictions on resale, but that are deemed illiquid. Such securities may be
illiquid, for example, because there is a limited trading market for them.

A fund may be unable to sell a restricted or illiquid security. In addition, it
may be more difficult to determine a market value for restricted or illiquid
securities. Moreover, if adverse market conditions were to develop during the
period between a fund's decision to sell a restricted or illiquid security and
the point at which a fund is permitted or able to sell such security, a fund
might obtain a price less favorable than the price that prevailed when it
decided to sell.

Inflation-Indexed Bonds. A fund may purchase inflation-indexed securities issued
by the US Treasury, US government agencies and instrumentalities other than the
US Treasury, and entities other than the US Treasury or US government agencies
and instrumentalities.

Inflation-indexed bonds are fixed income securities or other instruments whose
principal value is periodically adjusted according to the rate of inflation. Two
structures are common. The US Treasury and some other issuers use a structure
that accrues inflation on either a current or lagged basis into the principal
value of the bond. Most other issuers pay out the price index accruals as part
of a semi-annual coupon.

Inflation-indexed securities issued by the US Treasury have maturities of five,
ten or twenty years, although it is possible that securities with other
maturities will be issued in the future. The US Treasury securities pay interest
on a semi-annual basis, equal to a fixed percentage of the inflation-adjusted
principal amount. For example, if a fund purchased an inflation-indexed bond
with a par value of $1,000 and a 3% real rate of return coupon (payable 1.5%
semi-annually), and calculated inflation over the first six months was 1%, the
mid-year value of the bond would be $1,010 and the first semi-annual interest
payment would be $15.15 ($1,010 times 1.5%). If calculated inflation during the
second half of the year resulted in the whole year's inflation equaling 3%, the
end of year value of the bond would be $1,030 and the second semi-annual
interest payment would be $15.45 ($1,030 times 1.5%).

If the periodic adjustment rate measuring inflation falls, the principal value
of inflation-indexed bonds will be adjusted downward, and, consequently, the
interest payable on these securities (calculated with respect to a smaller
principal amount) will be reduced. Repayment of the original bond principal on
maturity (as adjusted for inflation) is guaranteed in the case of US Treasury
inflation-indexed bonds, even during a period of deflation. However, the current
market value of the bonds is not guaranteed and will fluctuate. A fund may also
invest in other inflation related bonds that may or may not provide a similar
guarantee. If a guarantee of principal is not provided, the adjusted principal
value of the bond repaid at maturity may be less than the original principal. In
addition, if a fund purchases inflation-indexed bonds offered by foreign
issuers, the rate of inflation measured by the foreign inflation index may not
be correlated to the rate of inflation in the US.

The value of inflation-indexed bonds is expected to change in response to
changes in real interest rates. Real interest rates, in turn, are tied to the
relationship between nominal interest rates and the rate of inflation.
Therefore, if inflation were to rise at a faster rate than nominal interest
rates, real interest rates might decline, leading to an increase in value of
inflation-indexed bonds. In contrast, if nominal interest rates increased at a
faster rate than inflation, real interest rates might rise, leading to a
decrease in value of inflation-indexed bonds. There can be no assurance,
however, that the value of inflation-indexed bonds will be directly correlated
to changes in interest rates.

While these securities are expected to be protected from long-term inflationary
trends, short-term increases in inflation may lead to a decline in value. If
interest rates rise due to reasons other than inflation (for example, due to
changes in currency exchange rates), investors in these securities may not be
protected to the extent that the increase is not reflected in the bond's
inflation measure.

In general, the measure used to determine the periodic adjustment of US
inflation-indexed bonds is the Consumer Price Index for Urban Consumers
("CPI-U"), which is calculated monthly by the US Bureau of Labor Statistics. The
CPI-U is a measurement of changes in the cost of living, made up of components
such as housing, food, transportation and energy. The inflation adjustment to
the securities references this index with a three month lag.

Inflation-indexed bonds issued by a foreign government are generally adjusted to
reflect a comparable inflation index calculate by the applicable government.
There can be no assurance that the CPI-U or any foreign inflation index will
accurately measure the real rate of inflation in the prices of goods and
services. Moreover, there can be no assurance that the rate of inflation in a
foreign country will be correlated to the rate of inflation in the US.

The taxation of inflation-indexed US Treasury securities is similar to the
taxation of conventional bonds. Both interest payments and the difference
between original principal and the inflation-adjusted principal will be treated
as interest income subject to taxation. Interest payments are taxable when
received or accrued. The inflation adjustment to the principal is subject to tax
in the year the adjustment is made, not at maturity of the security when the
cash from the repayment of principal is received. If an upward adjustment has
been made (which typically should happen), investors in non-tax-deferred
accounts will pay taxes on this amount currently. Decreases in the indexed
principal can be deducted only from current or previous interest payments
reported as income and is otherwise carried forward.

Inflation-indexed US Treasury securities therefore have a potential cash flow
mismatch to an investor, because investors must pay taxes on the
inflation-adjusted principal before the repayment of principal is received. It
is possible that, particularly for high income tax bracket investors,
inflation-indexed US Treasury securities would not generate enough income in a
given year to cover the tax liability they could create. This is similar to the
current tax treatment for zero-coupon bonds and other discount securities. If
inflation-indexed US Treasury securities are sold prior to maturity, capital
losses or gains are realized in the same manner as traditional bonds.

Inflation-indexed securities are designed to offer a return linked to inflation,
thereby protecting future purchasing power of the money invested in them.
However, inflation-indexed securities provide this protected return only if held
to maturity. In addition, inflation-indexed securities may not trade at par
value. Real interest rates (the market rate of interest less the anticipated
rate of inflation) change over time as a result of many factors, such as what
investors are demanding as a true value for money. When real rates do change,
inflation-indexed securities prices will be more sensitive to these changes than
conventional bonds, because these securities were sold originally based upon a
real interest rate that is no longer prevailing. Should market expectations for
real interest rates rise, the price of inflation-indexed securities and the
share price of a fund may fall. Investors in a fund should be prepared to accept
not only this share price volatility but also the possible adverse tax
consequences it may cause.

An investment in securities featuring inflation-adjusted principal and/or
interest involves factors not associated with more traditional fixed-principal
securities. Such factors include the possibility that the inflation index may be
subject to significant changes, that changes in the index may or may not
correlate to changes in interest rates generally or changes in other indices, or
that the resulting interest may be greater or less than that payable on other
securities of similar maturities. In the event of sustained deflation, it is
possible that the amount of semiannual interest payments, the inflation-adjusted
principal of the security and the value of the stripped components, will
decrease. If any of these possibilities are realized, a fund's net asset value
could be negatively affected.

Integrated Global Alpha Platform Strategy ("iGAP Strategy"). In addition to the
Portfolio's main investment strategy, the Advisor seeks to enhance returns by
employing a global tactical asset allocation overlay strategy. The global
tactical asset allocation strategy, which the Advisor calls iGAP, is a total
return strategy designed to add value by benefiting from short-term mis-pricings
within global equity, bond and currency markets. iGAP is expected to have a low
correlation to the performance of underlying DWS funds. The strategy will not be
used until the Portfolio obtains the minimum net asset requirement of $50
million. DWS Inflation Protected Plus Fund and DWS Floating Rate Plus Fund also
currently employ the iGAP strategy.

The iGAP Strategy combines diverse macro investment views from various
investment teams within Deutsche Asset Management. Because a single investment
approach rarely works in all market conditions, the teams are chosen to
diversify investment approaches thereby enhancing the expected return for a
given level of risk. The collective views are then used to determine iGAP's
positions using a disciplined, risk managed process. The result is a collection
of long and short investment positions within global equity, bond and currency
markets designed to generate excess returns that have little correlation to
major markets. The equity, bond and currency positions are then implemented by
the iGAP portfolio managers using futures and forward contracts. The iGAP
portfolio managers consider factors such as liquidity, cost, margin requirement
and credit quality when selecting the appropriate derivative or other
instrument. When used as a part of the iGAP Strategy, derivatives and other
instruments generally will not be used for hedging purposes.

For a more detailed discussion of the characteristics and risks of derivatives
and other instruments used in connection with the iGAP Strategy, see "Strategic
Transactions and Derivatives."

Investment of Uninvested Cash Balances. A fund may have cash balances that have
not been invested in portfolio securities ("Uninvested Cash"). Uninvested Cash
may result from a variety of sources, including dividends or interest received
from portfolio securities, unsettled securities transactions, reserves held for
investment strategy purposes, assets to cover a fund's open futures and other
derivatives positions, scheduled maturity of investments, liquidation of
investment securities to meet anticipated redemptions and dividend payments, and
new cash received from investors. Uninvested Cash may be invested directly in
money market instruments or other short-term debt obligations. A fund may use
Uninvested Cash to purchase shares of affiliated money market funds or shares of
Cash Management QP Trust, or other entities for which the Advisor may act as
investment advisor now or in the future that operate as cash management
investment vehicles but are excluded from the definition of "investment company"
pursuant to Section 3(c)(1) or 3(c)(7) of the 1940 Act (collectively, the
"Central Funds"), provided that any Central Fund will operate in accordance with
Rule 2a-7 under the 1940 Act. Investments in such cash management vehicles may
exceed the limits of Rule 12(d)(1)(A).

Interfund Borrowing and Lending Program. Each fund has received exemptive relief
from the SEC, which permits the funds to participate in an interfund-lending
program among certain investment companies advised by the Advisor. The
interfund-lending program allows the participating funds to borrow money from
and loan money to each other for temporary or emergency purposes. The program is
subject to a number of conditions designed to ensure fair and equitable
treatment of all participating funds, including the following: (1) no fund may
borrow money through the program unless it receives a more favorable interest
rate than a rate approximating the lowest interest rate at which bank loans
would be available to any of the participating funds under a loan agreement; and
(2) no fund may lend money through the program unless it receives a more
favorable return than that available from an investment in repurchase agreements
and, to the extent applicable, money market cash sweep arrangements. In
addition, a fund may participate in the program only if and to the extent that
such participation is consistent with a fund's investment objectives and
policies (for instance, money market funds would normally participate only as
lenders and tax exempt funds only as borrowers). Interfund loans and borrowings
may extend overnight, but could have a maximum duration of seven days. Loans may
be called on one day's notice. A fund may have to borrow from a bank at a higher
interest rate if an interfund loan is called or not renewed. Any delay in
repayment to a lending fund could result in a lost investment opportunity or
additional costs. The program is subject to the oversight and periodic review of
the Boards of the participating funds. To the extent the funds are actually
engaged in borrowing through the interfund lending program, such borrowings will
comply with each fund's non-fundamental policies.

Inverse Floaters. A Fund may invest in inverse floaters. Inverse floaters are
debt instruments with a floating rate of interest that bears an inverse
relationship to changes in short-term market interest rates. Investments in this
type of security involve special risks as compared to investments in, for
example, a fixed rate municipal security. A Fund could lose money and its NAV
could decline if movements in interest rates are incorrectly anticipated.
Moreover, the markets for securities of this type may be less developed and may
have less liquidity than the markets for more traditional municipal securities.

Investing in Emerging Markets. A fund's investments in foreign securities may be
in developed countries or in countries considered by a fund's advisor to have
developing or "emerging" markets, which involves exposure to economic structures
that are generally less diverse and mature than in the United States, and to
political systems that may be less stable. A developing or emerging market
country can be considered to be a country that is in the initial stages of its
industrialization cycle. Currently, emerging markets generally include every
country in the world other than the United States, Canada, Japan, Australia, New
Zealand, Hong Kong, Singapore and most Western European countries. Currently,
investing in many emerging markets may not be desirable or feasible because of
the lack of adequate custody arrangements for a fund's assets, overly burdensome
repatriation and similar restrictions, the lack of organized and liquid
securities markets, unacceptable political risks or other reasons. As
opportunities to invest in securities in emerging markets develop, a fund may
expand and further broaden the group of emerging markets in which it invests. In
the past, markets of developing or emerging market countries have been more
volatile than the markets of developed countries; however, such markets often
have provided higher rates of return to investors. The advisor believes that
these characteristics may be expected to continue in the future.

Most emerging securities markets have substantially less volume and are subject
to less governmental supervision than US securities markets. Securities of many
issuers in emerging markets may be less liquid and more volatile than securities
of comparable domestic issuers. In addition, there is less regulation of
securities exchanges, securities dealers, and listed and unlisted companies in
emerging markets than in the US.

Emerging markets also have different clearance and settlement procedures, and in
certain markets there have been times when settlements have not kept pace with
the volume of securities transactions. Delays in settlement could result in
temporary periods when a portion of the assets of a fund is uninvested and no
return is earned thereon. The inability of a fund to make intended security
purchases due to settlement problems could cause a fund to miss attractive
investment opportunities. Inability to dispose of portfolio securities due to
settlement problems could result either in losses to a fund due to subsequent
declines in value of the portfolio security or, if a fund has entered into a
contract to sell the security, could result in possible liability to the
purchaser. Costs associated with transactions in foreign securities are
generally higher than costs associated with transactions in US securities. Such
transactions also involve additional costs for the purchase or sale of foreign
currency.

Certain emerging markets require prior governmental approval of investments by
foreign persons, limit the amount of investment by foreign persons in a
particular company, limit the investment by foreign persons only to a specific
class of securities of a company that may have less advantageous rights than the
classes available for purchase by domiciliaries of the countries and/or impose
additional taxes on foreign investors. Certain emerging markets may also
restrict investment opportunities in issuers in industries deemed important to
national interest.

Certain emerging markets may require governmental approval for the repatriation
of investment income, capital or the proceeds of sales of securities by foreign
investors. In addition, if a deterioration occurs in an emerging market's
balance of payments or for other reasons, a country could impose temporary
restrictions on foreign capital remittances. A fund could be adversely affected
by delays in, or a refusal to grant, any required governmental approval for
repatriation of capital, as well as by the application to a fund of any
restrictions on investments.

In the course of investment in emerging markets, a fund will be exposed to the
direct or indirect consequences of political, social and economic changes in one
or more emerging markets. While a fund will manage its assets in a manner that
will seek to minimize the exposure to such risks, there can be no assurance that
adverse political, social or economic changes will not cause a fund to suffer a
loss of value in respect of the securities in a fund's portfolio.

The risk also exists that an emergency situation may arise in one or more
emerging markets as a result of which trading of securities may cease or may be
substantially curtailed and prices for a fund's securities in such markets may
not be readily available. A fund may suspend redemption of its shares for any
period during which an emergency exists, as determined by the SEC. Accordingly
if a fund believes that appropriate circumstances exist, it will promptly apply
to the SEC for a determination that an emergency is present. During the period
commencing from a fund's identification of such condition until the date of the
SEC action, a fund's securities in the affected markets will be valued at fair
value determined in good faith by or under the direction of a fund's Board.

Volume and liquidity in most foreign markets are less than in the US, and
securities of many foreign companies are less liquid and more volatile than
securities of comparable US companies. Fixed commissions on foreign securities
exchanges are generally higher than negotiated commissions on US exchanges,
although a fund endeavors to achieve the most favorable net results on its
portfolio transactions. There is generally less government supervision and
regulation of business and industry practices, securities exchanges, brokers,
dealers and listed companies than in the US. Mail service between the US and
foreign countries may be slower or less reliable than within the US, thus
increasing the risk of delayed settlements of portfolio transactions or loss of
certificates for certificated portfolio securities. In addition, with respect to
certain emerging markets, there is the possibility of expropriation or
confiscatory taxation, political or social instability, or diplomatic
developments which could affect a fund's investments in those countries.
Moreover, individual emerging market economies may differ favorably or
unfavorably from the US economy in such respects as growth of gross national
product, rate of inflation, capital reinvestment, resource self-sufficiency and
balance of payments position.

A fund may have limited legal recourse in the event of a default with respect to
certain debt obligations it holds. If the issuer of a fixed-income security
owned by a fund defaults, a fund may incur additional expenses to seek recovery.
Debt obligations issued by emerging market country governments differ from debt
obligations of private entities; remedies from defaults on debt obligations
issued by emerging market governments, unlike those on private debt, must be
pursued in the courts of the defaulting party itself. A fund's ability to
enforce its rights against private issuers may be limited. The ability to attach
assets to enforce a judgment may be limited. Legal recourse is therefore
somewhat diminished. Bankruptcy, moratorium and other similar laws applicable to
private issuers of debt obligations may be substantially different from those of
other countries. The political context, expressed as an emerging market
governmental issuer's willingness to meet the terms of the debt obligation, for
example, is of considerable importance. In addition, no assurance can be given
that the holders of commercial bank debt may not contest payments to the holders
of debt obligations in the event of default under commercial bank loan
agreements.

Income from securities held by a fund could be reduced by a withholding tax at
the source or other taxes imposed by the emerging market countries in which a
fund makes its investments. A fund's net asset value may also be affected by
changes in the rates or methods of taxation applicable to a fund or to entities
in which a fund has invested. The Advisor will consider the cost of any taxes in
determining whether to acquire any particular investments, but can provide no
assurance that the taxes will not be subject to change.

Many emerging markets have experienced substantial, and, in some periods,
extremely high rates of inflation for many years. Inflation and rapid
fluctuations in inflation rates have had and may continue to have adverse
effects on the economies and securities markets of certain emerging market
countries. In an attempt to control inflation, wage and price controls have been
imposed in certain countries. Of these countries, some, in recent years, have
begun to control inflation through prudent economic policies.

Emerging market governmental issuers are among the largest debtors to commercial
banks, foreign governments, international financial organizations and other
financial institutions. Certain emerging market governmental issuers have not
been able to make payments of interest on or principal of debt obligations as
those payments have come due. Obligations arising from past restructuring
agreements may affect the economic performance and political and social
stability of those issuers.

Governments of many emerging market countries have exercised and continue to
exercise substantial influence over many aspects of the private sector through
the ownership or control of many companies, including some of the largest in any
given country. As a result, government actions in the future could have a
significant effect on economic conditions in emerging markets, which in turn,
may adversely affect companies in the private sector, general market conditions
and prices and yields of certain of the securities in a fund's portfolio.
Expropriation, confiscatory taxation, nationalization, political, economic or
social instability or other similar developments have occurred frequently over
the history of certain emerging markets and could adversely affect a fund's
assets should these conditions recur.

The ability of emerging market country governmental issuers to make timely
payments on their obligations is likely to be influenced strongly by the
issuer's balance of payments, including export performance, and its access to
international credits and investments. An emerging market whose exports are
concentrated in a few commodities could be vulnerable to a decline in the
international prices of one or more of those commodities. Increased
protectionism on the part of an emerging market's trading partners could also
adversely affect the country's exports and diminish its trade account surplus,
if any. To the extent that emerging markets receive payment for its exports in
currencies other than dollars or non-emerging market currencies, its ability to
make debt payments denominated in dollars or non-emerging market currencies
could be affected.

Another factor bearing on the ability of emerging market countries to repay debt
obligations is the level of international reserves of the country. Fluctuations
in the level of these reserves affect the amount of foreign exchange readily
available for external debt payments and thus could have a bearing on the
capacity of emerging market countries to make payments on these debt
obligations.

To the extent that an emerging market country cannot generate a trade surplus,
it must depend on continuing loans from foreign governments, multilateral
organizations or private commercial banks, aid payments from foreign governments
and inflows of foreign investment. The access of emerging markets to these forms
of external funding may not be certain, and a withdrawal of external funding
could adversely affect the capacity of emerging market country governmental
issuers to make payments on their obligations. In addition, the cost of
servicing emerging market debt obligations can be affected by a change in
international interest rates since the majority of these obligations carry
interest rates that are adjusted periodically based upon international rates.

Investment Company Securities. A fund may acquire securities of other investment
companies to the extent consistent with its investment objective and the
limitations of the 1940 Act. Each Underlying DWS Fund that makes its shares
available to other DWS funds pursuant to a "fund-of-funds" arrangement has
adopted a non-fundamental policy that prohibits it from investing in other
investment companies in reliance on Sections 12(d)(1)(G) or 12(d)(1)(F). A fund
will indirectly bear its proportionate share of any management fees and other
expenses paid by such other investment companies.

For example, a fund may invest in a variety of investment companies which seek
to track the composition and performance of specific indexes or a specific
portion of an index. These index-based investments hold substantially all of
their assets in securities representing their specific index. Accordingly, the
main risk of investing in index-based investments is the same as investing in a
portfolio of equity securities comprising the index. The market prices of
index-based investments will fluctuate in accordance with both changes in the
market value of their underlying portfolio securities and due to supply and
demand for the instruments on the exchanges on which they are traded (which may
result in their trading at a discount or premium to their net asset values).
Index-based investments may not replicate exactly the performance of their
specified index because of transaction costs and because of the temporary
unavailability of certain component securities of the index.

Examples of index-based investments include:

SPDRs(R): SPDRs, an acronym for "Standard & Poor's Depositary Receipts," are
based on the S&P 500 Composite Stock Price Index. They are issued by the SPDR
Trust, a unit investment trust that holds shares of substantially all the
companies in the S&P 500 in substantially the same weighting and seeks to
closely track the price performance and dividend yield of the Index.

MidCap SPDRs(R): MidCap SPDRs are based on the S&P MidCap 400 Index. They are
issued by the MidCap SPDR Trust, a unit investment trust that holds a portfolio
of securities consisting of substantially all of the common stocks in the S&P
MidCap 400 Index in substantially the same weighting and seeks to closely track
the price performance and dividend yield of the Index.

Select Sector SPDRs(R): Select Sector SPDRs are based on a particular sector or
group of industries that are represented by a specified Select Sector Index
within the Standard & Poor's Composite Stock Price Index. They are issued by The
Select Sector SPDR Trust, an open-end management investment company with nine
portfolios that each seeks to closely track the price performance and dividend
yield of a particular Select Sector Index.

DIAMONDS(SM): DIAMONDS are based on the Dow Jones Industrial Average(SM). They
are issued by the DIAMONDS Trust, a unit investment trust that holds a portfolio
of all the component common stocks of the Dow Jones Industrial Average and seeks
to closely track the price performance and dividend yield of the Dow.

Nasdaq-100 Shares: Nasdaq-100 Shares are based on the Nasdaq 100 Index. They are
issued by the Nasdaq-100 Trust, a unit investment trust that holds a portfolio
consisting of substantially all of the securities, in substantially the same
weighting, as the component stocks of the Nasdaq-100 Index and seeks to closely
track the price performance and dividend yield of the Index.

Investment-Grade Bonds. When the Advisor believes that it is appropriate to do
so in order to achieve a fund's objectives, a fund may purchase
"investment-grade" bonds, which are those rated Aaa, Aa, A or Baa by Moody's or
AAA, AA, A or BBB by S&P or, if unrated, judged to be of equivalent quality as
determined by the Advisor. Moody's considers bonds it rates Baa to have
speculative elements as well as investment-grade characteristics. To the extent
that a fund invests in higher-grade securities, a fund will not be able to avail
itself of opportunities for higher income which may be available at lower
grades.

The principal risks involved with investments in bonds include interest rate
risk, credit risk and pre-payment risk. Interest rate risk refers to the likely
decline in the value of bonds as interest rates rise. Generally, longer-term
securities are more susceptible to changes in value as a result of interest-rate
changes than are shorter-term securities. Credit risk refers to the risk that an
issuer of a bond may default with respect to the payment of principal and
interest. The lower a bond is rated, the more it is considered to be a
speculative or risky investment. Pre-payment risk is commonly associated with
pooled debt securities, such as mortgage-backed securities and asset backed
securities, but may affect other debt securities as well. When the underlying
debt obligations are prepaid ahead of schedule, the return on the security will
be lower than expected. Pre-payment rates usually increase when interest rates
are falling.

IPO Risk. Securities issued through an initial public offering (IPO) can
experience an immediate drop in value if the demand for the securities does not
continue to support the offering price. Information about the issuers of IPO
securities is also difficult to acquire since they are new to the market and may
not have lengthy operating histories. A fund may engage in short-term trading in
connection with its IPO investments, which could produce higher trading costs
and adverse tax consequences. The number of securities issued in an IPO is
limited, so it is likely that IPO securities will represent a smaller component
of a fund's portfolio as the fund's assets increase (and thus have a more
limited effect on the fund's performance).

Lending of Portfolio Securities. A fund may lend its investment securities to
approved institutional borrowers who need to borrow securities in order to
complete certain transactions, such as covering short sales, avoiding failures
to deliver securities or completing arbitrage operations. By lending its
investment securities, a fund attempts to increase its net investment income
through the receipt of interest on the loan. Any gain or loss in the market
price of the securities loaned that might occur during the term of the loan
would belong to a fund. A fund may lend its investment securities so long as the
terms, structure and the aggregate amount of such loans are not inconsistent
with the 1940 Act or the rules and regulations or interpretations of the SEC
thereunder, which currently require, among other things, that (a) the borrower
pledge and maintain with a fund collateral consisting of liquid, unencumbered
assets having a value at all times not less than 100% of the value of the
securities loaned, (b) the borrower add to such collateral whenever the price of
the securities loaned rises (i.e., the borrower "marks to the market" on a daily
basis), (c) the loan be made subject to termination by a fund at any time, and
(d) a fund receives reasonable interest on the loan (which may include a fund
investing any cash collateral in interest bearing short-term investments), and
distributions on the loaned securities and any increase in their market value. A
fund will bear any losses incurred from the investment of the collateral it
receives. There may be risks of delay in recovery of the securities or even loss
of rights in the collateral should the borrower of the securities fail
financially. However, loans will be made only to borrowers selected by a fund's
delegate after a commercially reasonable review of relevant facts and
circumstances, including the creditworthiness of the borrower.

A fund may pay negotiated fees in connection with loaned securities, pursuant to
written contracts. In addition, voting rights may pass with the loaned
securities, but if a material event occurs affecting an investment on loan, the
loan must be called and the securities voted. Pursuant to an exemptive order
granted by the SEC, cash collateral received by a fund may be invested in a
money market fund managed by the Advisor (or one of its affiliates).

Micro-Cap Companies. While, historically, micro-capitalization company stocks
have outperformed the stocks of large companies, the former have customarily
involved more investment risk as well. There can be no assurance that this will
continue to be true in the future. Micro-capitalization companies may have
limited product lines, markets or financial resources; may lack management depth
or experience; and may be more vulnerable to adverse general market or economic
developments than large companies. The prices of micro-capitalization company
securities are often more volatile than prices associated with large company
issues, and can display abrupt or erratic movements at times, due to limited
trading volumes and less publicly available information.

Mortgage-Backed Securities and Mortgage Pass-Through Securities. Mortgage-backed
securities are interests in pools of mortgage loans, including mortgage loans
made by savings and loan institutions, mortgage bankers, commercial banks and
others. Pools of mortgage loans are assembled as securities for sale to
investors by various governmental, government-related and private organizations
as further described below. Underlying mortgages may be of a variety of types,
including adjustable rate, conventional 30-year, graduated payment and 15-year.

A decline in interest rates may lead to a faster rate of repayment of the
underlying mortgages, and may expose a fund to a lower rate of return upon
reinvestment. To the extent that such mortgage-backed securities are held by a
fund, the prepayment right will tend to limit to some degree the increase in net
asset value of a fund because the value of the mortgage-backed securities held
by a fund may not appreciate as rapidly as the price of non-callable debt
securities. Mortgage-backed securities are subject to the risk of prepayment and
the risk that the underlying loans will not be repaid. Because principal may be
prepaid at any time, mortgage-backed securities may involve significantly
greater price and yield volatility than traditional debt securities.

When interest rates rise, mortgage prepayment rates tend to decline, thus
lengthening the life of a mortgage-related security and increasing the price
volatility of that security, affecting the price volatility of a fund's shares.

Interests in pools of mortgage-backed securities differ from other forms of debt
securities, which normally provide for periodic payment of interest in fixed
amounts with principal payments at maturity or specified call dates. Instead,
these securities provide a monthly payment which consists of both interest and
principal payments. In effect, these payments are a "pass-through" of the
monthly payments made by the individual borrowers on their mortgage loans, net
of any fees paid to the issuer or guarantor of such securities. Additional
payments are caused by repayments of principal resulting from the sale of the
underlying property, refinancing or foreclosure, net of fees or costs which may
be incurred. Some mortgage-related securities (such as securities issued by
GNMA) are described as "modified pass-through." These securities entitle the
holder to receive all interest and principal payments owed on the mortgage pool,
net of certain fees, at the scheduled payment dates regardless of whether or not
the mortgagor actually makes the payment.

The principal governmental guarantor of mortgage-related securities is GNMA.
GNMA is a wholly owned US Government corporation within the Department of
Housing and Urban Development. GNMA is authorized to guarantee, with the full
faith and credit of the US Government, the timely payment of principal and
interest on securities issued by institutions approved by GNMA (such as savings
and loan institutions, commercial banks and mortgage bankers) and backed by
pools of FHA-insured or VA-guaranteed mortgages. These guarantees, however, do
not apply to the market value or yield of mortgage-backed securities or to the
value of fund shares. Also, GNMA securities often are purchased at a premium
over the maturity value of the underlying mortgages. This premium is not
guaranteed and will be lost if prepayment occurs.

Government-related guarantors (i.e., not backed by the full faith and credit of
the US Government) include Fannie Mae and FHLMC. Fannie Mae is a
government-sponsored corporation owned entirely by private stockholders. It is
subject to general regulation by the Secretary of Housing and Urban Development.
Fannie Mae purchases conventional (i.e., not insured or guaranteed by any
government agency) mortgages from a list of approved seller/servicers which
include state and federally chartered savings and loan associations, mutual
savings banks, commercial banks and credit unions and mortgage bankers.
Pass-through securities issued by Fannie Mae are guaranteed as to timely payment
of principal and interest by Fannie Mae but are not backed by the full faith and
credit of the US Government.

FHLMC is a corporate instrumentality of the US Government and was created by
Congress in 1970 for the purpose of increasing the availability of mortgage
credit for residential housing. Its stock is owned by the twelve Federal Home
Loan Banks. FHLMC issues Participation Certificates ("PCs") which represent
interests in conventional mortgages from FHLMC's national portfolio. FHLMC
guarantees the timely payment of interest and ultimate collection of principal,
but PCs are not backed by the full faith and credit of the US Government.

Mortgage-backed securities may be issued or guaranteed by GNMA, FNMA (also known
as Fannie Mae) and FHLMC (also known as Freddie Mac), but also may be issued or
guaranteed by other issuers, including private companies. GNMA is a
government-owned corporation that is an agency of the U.S. Department of Housing
and Urban Development. It guarantees, with the full faith and credit of the
United States, full and timely payment of all monthly principal and interest on
its mortgage-backed securities. Until recently, FNMA and FHLMC were
government-sponsored corporations owned entirely by private stockholders. Both
issue mortgage-related securities that contain guarantees as to timely payment
of interest and principal but that are not backed by the full faith and credit
of the U.S. government. The value of the companies' securities fell sharply in
2008 due to concerns that the firms did not have sufficient capital to offset
losses. In mid-2008, the U.S. Treasury was authorized to increase the size of
home loans that FNMA and FHLMC could purchase in certain residential areas and,
until 2009, to lend FNMA and FHLMC emergency funds and to purchase the
companies' stock. More recently, in September 2008, the U.S. Treasury announced
that FNMA and FHLMC had been placed in conservatorship by the Federal Housing
Finance Agency ("FHFA"), a newly created independent regulator. In addition to
placing the companies in conservatorship, the U.S. Treasury announced three
additional steps that it intended to take with respect to FNMA and FHLMC. First,
the U.S. Treasury has entered into preferred stock purchase agreements ("PSPAs")
under which, if the FHFA determines that FNMA's or FHLMC's liabilities have
exceeded its assets under generally accepted accounting principles, the U.S.
Treasury will contribute cash capital to the company in an amount equal to the
difference between liabilities and assets. The PSPAs are designed to provide
protection to the senior and subordinated debt and the mortgage-backed
securities issued by FNMA and FHLMC. Second, the U.S. Treasury established a new
secured lending credit facility that is available to FNMA and FHLMC until
December 2009. Third, the U.S. Treasury initiated a temporary program to
purchase FNMA and FHLMC mortgage-backed securities, which is expected to
continue until December 2009. No assurance can be given that the U.S. Treasury
initiatives discussed above with respect to the debt and mortgage-backed
securities issued by FNMA and FHLMC will be successful.

Commercial banks, savings and loan institutions, private mortgage insurance
companies, mortgage bankers and other secondary market issuers also create
pass-through pools of conventional mortgage loans. Such issuers may, in
addition, be the originators and/or servicers of the underlying mortgage loans
as well as the guarantors of the mortgage-related securities. Pools created by
such non-governmental issuers generally offer a higher rate of interest than
government and government-related pools because there are no direct or indirect
government or agency guarantees of payments. However, timely payment of interest
and principal of these pools may be supported by various forms of insurance or
guarantees, including individual loan, title, pool and hazard insurance and
letters of credit. The insurance and guarantees are issued by governmental
entities, private insurers and the mortgage poolers. Such insurance and
guarantees and the creditworthiness of the issuers thereof will be considered in
determining whether a mortgage-related security meets a fund's investment
quality standards. There can be no assurance that the private insurers or
guarantors can meet their obligations under the insurance policies or guarantee
arrangements. A fund may buy mortgage-related securities without insurance or
guarantees, if through an examination of the loan experience and practices of
the originators/servicers and poolers, the underlying fund's advisor determines
that the securities meet a fund's quality standards. Although the market for
such securities is becoming increasingly liquid, securities issued by certain
private organizations may not be readily marketable.

Participation Interests. A fund may purchase from financial institutions
participation interests in securities in which a fund may invest. A
participation interest gives a fund an undivided interest in the security in the
proportion that a fund's participation interest bears to the principal amount of
the security. These instruments may have fixed, floating or variable interest
rates. If the participation interest is unrated, or has been given a rating
below that which is permissible for purchase by a fund, the participation
interest will be backed by an irrevocable letter of credit or guarantee of a
bank, or the payment obligation otherwise will be collateralized by US
Government securities, or, in the case of unrated participation interest,
determined by the underlying fund's advisor to be of comparable quality to those
instruments in which a fund may invest. For certain participation interests, a
fund will have the right to demand payment, on not more than seven days notice,
for all or any part of a fund's participation interests in the security, plus
accrued interest. As to these instruments, a fund generally intends to exercise
its right to demand payment only upon a default under the terms of the security.

Preferred Stock. Preferred stock has a preference (i.e., ranks higher) in
liquidation (and generally dividends) over common stock but is subordinated
(i.e., ranks lower) in liquidation to fixed income securities. Dividends on
preferred stock may be cumulative, and in such cases, all cumulative dividends
usually must be paid prior to dividend payments to common stockholders. Because
of this preference, preferred stocks generally entail less risk than common
stocks. As a general rule the market value of preferred stocks with fixed
dividend rates and no conversion rights moves inversely with interest rates and
perceived credit risk, with the price determined by the dividend rate. Some
preferred stocks are convertible into other securities (e.g., common stock) at a
fixed price and ratio or upon the occurrence of certain events. The market price
of convertible preferred stocks generally reflects an element of conversion
value. Because many preferred stocks lack a fixed maturity date, these
securities generally fluctuate substantially in value when interest rates
change; such fluctuations often exceed those of long-term bonds of the same
issuer. Some preferred stocks pay an adjustable dividend that may be based on an
index, formula, auction procedure or other dividend rate reset mechanism. In the
absence of credit deterioration, adjustable rate preferred stocks tend to have
more stable market values than fixed rate preferred stocks.

All preferred stocks are also subject to the same types of credit risks as
corporate bonds. In addition, because preferred stock is subordinate to debt
securities and other obligations of an issuer, deterioration in the credit
rating of the issuer will cause greater changes in the value of a preferred
stock than in a more senior debt security with similar yield characteristics.
Preferred stocks may be rated by the Standard & Poor's Division of the
McGraw-Hill Companies ("S&P") and Moody's Investors Service, Inc. ("Moody's")
although there is no minimum rating which a preferred stock must have to be an
eligible investment for a fund. Generally, however, the preferred stocks in
which a fund invests will be rated at least CCC by S&P or Caa by Moody's or, if
unrated, of comparable quality in the opinion of the Advisor. Preferred stocks
rated CCC by S&P are regarded as predominantly speculative with respect to the
issuer's capacity to pay preferred stock obligations and represent the highest
degree of speculation among securities rated between BB and CCC; preferred
stocks rated Caa by Moody's are likely to be in arrears on dividend payments.
Moody's rating with respect to preferred stocks does not purport to indicate the
future status of payments of dividends.

Privatized Enterprises. Investments in foreign securities may include securities
issued by enterprises that have undergone or are currently undergoing
privatization. The governments of certain foreign countries have, to varying
degrees, embarked on privatization programs contemplating the sale of all or
part of their interests in state enterprises. A fund's investments in the
securities of privatized enterprises may include privately negotiated
investments in a government or state-owned or controlled company or enterprise
that has not yet conducted an initial equity offering, investments in the
initial offering of equity securities of a state enterprise or former state
enterprise and investments in the securities of a state enterprise following its
initial equity offering.

In certain jurisdictions, the ability of foreign entities, such as a fund, to
participate in privatizations may be limited by local law, or the price or terms
on which a fund may be able to participate may be less advantageous than for
local investors. Moreover, there can be no assurance that governments that have
embarked on privatization programs will continue to divest their ownership of
state enterprises, that proposed privatizations will be successful or that
governments will not re-nationalize enterprises that have been privatized.

In the case of the enterprises in which a fund may invest, large blocks of the
stock of those enterprises may be held by a small group of stockholders, even
after the initial equity offerings by those enterprises. The sale of some
portion or all of those blocks could have an adverse effect on the price of the
stock of any such enterprise.

Prior to making an initial equity offering, most state enterprises or former
state enterprises go through an internal reorganization or management. Such
reorganizations are made in an attempt to better enable these enterprises to
compete in the private sector. However, certain reorganizations could result in
a management team that does not function as well as an enterprise's prior
management and may have a negative effect on such enterprise. In addition, the
privatization of an enterprise by its government may occur over a number of
years, with the government continuing to hold a controlling position in the
enterprise even after the initial equity offering for the enterprise.

Prior to privatization, most of the state enterprises in which a fund may invest
enjoy the protection of and receive preferential treatment from the respective
sovereigns that own or control them. After making an initial equity offering,
these enterprises may no longer have such protection or receive such
preferential treatment and may become subject to market competition from which
they were previously protected. Some of these enterprises may not be able to
operate effectively in a competitive market and may suffer losses or experience
bankruptcy due to such competition.

Put Bonds. A fund may invest in "put" bonds (including securities with variable
interest rates) that may be sold back to the issuer of the security at face
value at the option of the holder prior to their stated maturity. The option to
"put" the bond back to the issuer before the stated final maturity can cushion
the price decline of the bond in a rising interest rate environment. However,
the premium paid, if any, for an option to put will have the effect of reducing
the yield otherwise payable on the underlying security. For the purpose of
determining the "maturity" of securities purchased subject to an option to put,
and for the purpose of determining a fund's dollar weighted average maturity, a
fund will consider "maturity" to be the first date on which it has the right to
demand payment from the issuer of the put although the final maturity of the
security is later than such date.

Real Estate Investment Trusts ("REITs"). REITs are sometimes informally
characterized as equity REITs, mortgage REITs and hybrid REITs. Investment in
REITs may subject a fund to risks associated with the direct ownership of real
estate, such as decreases in real estate values, overbuilding, increased
competition and other risks related to local or general economic conditions,
increases in operating costs and property taxes, changes in zoning laws,
casualty or condemnation losses, possible environmental liabilities, regulatory
limitations on rent and fluctuations in rental income. Equity REITs generally
experience these risks directly through fee or leasehold interests, whereas
mortgage REITs generally experience these risks indirectly through mortgage
interests, unless the mortgage REIT forecloses on the underlying real estate.
Changes in interest rates may also affect the value of a fund's investment in
REITs. For instance, during periods of declining interest rates, certain
mortgage REITs may hold mortgages that the mortgagors elect to prepay, which
prepayment may diminish the yield on securities issued by those REITs.

Certain REITs have relatively small market capitalizations, which may tend to
increase the volatility of the market price of their securities. Furthermore,
REITs are dependent upon specialized management skills, have limited
diversification and are, therefore, subject to risks inherent in operating and
financing a limited number of projects. REITs are also subject to heavy cash
flow dependency, defaults by borrowers and the possibility of failing to qualify
for tax-free pass-through of income under the Code and for exemption from the
registration requirements of the 1940 Act. By investing in REITs indirectly
through a fund, a shareholder will bear not only his or her proportionate share
of the expenses of a fund, but also, indirectly, similar expenses of the REITs.
In addition, REITs depend generally on their ability to generate cash flow to
make distributions to shareholders.

Repurchase Agreements. A fund may invest in repurchase agreements pursuant to
its investment guidelines. In a repurchase agreement, a fund acquires ownership
of a security and simultaneously commits to resell that security to the seller,
typically a bank or broker/dealer.

A repurchase agreement provides a means for a fund to earn income on funds for
periods as short as overnight. It is an arrangement under which the purchaser
(i.e., a fund) acquires a security ("Obligation") and the seller agrees, at the
time of sale, to repurchase the Obligation at a specified time and price.
Securities subject to a repurchase agreement are held in a segregated account
and the value of such securities is kept at least equal to the repurchase price
on a daily basis. The repurchase price may be higher than the purchase price,
the difference being income to a fund, or the purchase and repurchase prices may
be the same, with interest at a stated rate due to a fund together with the
repurchase price upon repurchase. In either case, the income to a fund is
unrelated to the interest rate on the Obligation itself. Obligations will be
held by the custodian or in the Federal Reserve Book Entry System.

It is not clear whether a court would consider the Obligation purchased by a
fund subject to a repurchase agreement as being owned by a fund or as being
collateral for a loan by a fund to the seller. In the event of the commencement
of bankruptcy or insolvency proceedings with respect to the seller of the
Obligation before repurchase of the Obligation under a repurchase agreement, a
fund may encounter delay and incur costs before being able to sell the security.
Delays may involve loss of interest or decline in price of the Obligation. If
the court characterizes the transaction as a loan and a fund has not perfected a
security interest in the Obligation, a fund may be required to return the
Obligation to the seller's estate and be treated as an unsecured creditor of the
seller. As an unsecured creditor, a fund would be at risk of losing some or all
of the principal and income involved in the transaction. As with any unsecured
debt Obligation purchased for a fund, the Advisor seeks to reduce the risk of
loss through repurchase agreements by analyzing the creditworthiness of the
obligor, in this case the seller of the Obligation. Apart from the risk of
bankruptcy or insolvency proceedings, there is also the risk that the seller may
fail to repurchase the Obligation, in which case a fund may incur a loss if the
proceeds to a fund of the sale to a third party are less than the repurchase
price. However, if the market value (including interest) of the Obligation
subject to the repurchase agreement becomes less than the repurchase price
(including interest), a fund will direct the seller of the Obligation to deliver
additional securities so that the market value (including interest) of all
securities subject to the repurchase agreement will equal or exceed the
repurchase price.

Reverse Repurchase Agreements. A fund may enter into "reverse repurchase
agreements," which are repurchase agreements in which a fund, as the seller of
the securities, agrees to repurchase such securities at an agreed time and
price. A fund maintains a segregated account in connection with outstanding
reverse repurchase agreements. A fund will enter into reverse repurchase
agreements only when the Advisor believes that the interest income to be earned
from the investment of the proceeds of the transaction will be greater than the
interest expense of the transaction. Such transactions may increase fluctuations
in the market value of fund assets and its yield and may be viewed as a form of
leverage.

Senior Loans. Senior Loans are direct obligations of corporations or other
business entities and are generally arranged by banks or other commercial
lending institutions and made generally to finance internal growth, mergers,
acquisitions, stock repurchases and leveraged buyouts. Senior Loans may include
restrictive covenants which must be maintained by the borrower. Such covenants,
in addition to the timely payment of interest and principal, may include
mandatory prepayment provisions arising from free cash flow, restrictions on
dividend payments and usually state that a borrower must maintain specific
minimum financial ratios as well as establishing limits on total debt. A breach
of covenant, which is not waived by the agent, is normally an event of
acceleration, i.e., the agent has the right to call the outstanding Senior Loan.
In addition, loan covenants may include mandatory prepayment provisions stemming
from free cash flow. Free cash flow is cash that is in excess of capital
expenditures plus debt service requirements of principal and interest. The free
cash flow shall be applied to prepay the Senior Loan in an order of maturity
described in the loan documents. Under certain interests in Senior Loans, a fund
may have an obligation to make additional loans upon demand by the borrower.

A fund's investment in Senior Loans may take the form of purchase of an
assignment or a portion of a Senior Loan from a third party ("assignment") or
acquiring a participation in a Senior Loan ("participation"). A fund may pay a
fee or forego a portion of interest payments to the lender selling a
participation or assignment under the terms of such participation or assignment.
When a fund is a purchaser of an assignment, it typically succeeds to all the
rights and obligations under the loan agreement of the assigning lender and
becomes a lender under the loan agreement with the same rights and obligations
as the assigning lender. Assignments are, however, arranged through private
negotiations between potential assignees and potential assignors, and the rights
and obligations acquired by the purchaser of an assignment may be more limited
than those held by the assigning lender. A fund may also invest in
participations in Senior Loans. With respect to any given Senior Loan, the
rights of a fund when it acquires a participation may be more limited than the
rights of the original lenders or of investors who acquire an assignment.
Participations may entail certain risks relating to the creditworthiness of the
parties from which the participations are obtained.

In a typical interest in a Senior Loan, the agent administers the loan and has
the right to monitor the collateral. The agent is also required to segregate the
principal and interest payments received from the borrower and to hold these
payments for the benefit of the lenders. A fund normally looks to the agent to
collect and distribute principal of and interest on a Senior Loan. Furthermore,
a fund looks to the agent to use normal credit remedies, such as to foreclose on
collateral; monitor credit loan covenants; and notify the lenders of any adverse
changes in the borrower's financial condition or declarations of insolvency. In
the event of a default by the borrower, it is possible, though unlikely, that a
fund could receive a portion of the borrower's collateral. If a fund receives
collateral other than cash, such collateral will be liquidated and the cash
received from such liquidation will be available for investment as part of a
fund's portfolio. At times a fund may also negotiate with the agent regarding
the agent's exercise of credit remedies under a Senior Loan. The agent is
compensated for these services by the borrower as is set forth in the loan
agreement. Such compensation may take the form of a fee or other amount paid
upon the making of the Senior Loan and/or an ongoing fee or other amount.

The loan agreement in connection with Senior Loans sets forth the standard of
care to be exercised by the agents on behalf of the lenders and usually provides
for the termination of the agent's agency status in the event that it fails to
act properly, becomes insolvent, enters FDIC receivership, or if not FDIC
insured, enters into bankruptcy or if the agent resigns. In the event an agent
is unable to perform its obligations as agent, another lender would generally
serve in that capacity.

A fund believes that the principal credit risk associated with acquiring Senior
Loans from another lender is the credit risk associated with the borrower of the
underlying Senior Loan. A fund may incur additional credit risk, however, when a
fund acquires a participation in a Senior Loan from another lender because a
fund must assume the risk of insolvency or bankruptcy of the other lender from
which the Senior Loan was acquired. However, in acquiring Senior Loans, a fund
conducts an analysis and evaluation of the financial condition of each such
lender. A fund has taken the following measures in an effort to reduce such
risks. Commercial paper rated A-1 by S&P indicates that the degree of safety
regarding timely payment is considered by S&P to be either overwhelming or very
strong and issues of commercial paper rated Prime-1 by Moody's are considered by
Moody's to have a superior ability for repayment of senior short-term debt
obligations.

Senior Loans, unlike certain bonds, usually do not have call protection. This
means that interests comprising a fund's portfolio, while having a stated one to
ten-year term, may be prepaid, often without penalty. A fund generally holds
Senior Loans to maturity unless it has become necessary to adjust a fund's
portfolio in accordance with the Advisor's view of current or expected economic
or specific industry or borrower conditions.

Senior Loans frequently require full or partial prepayment of a loan when there
are asset sales or a securities issuance. Prepayments on Senior Loans may also
be made by the borrower at its election. The rate of such prepayments may be
affected by, among other things, general business and economic conditions, as
well as the financial status of the borrower. Prepayment would cause the actual
duration of a Senior Loan to be shorter than its stated maturity. Prepayment may
be deferred by a fund. This should, however, allow a fund to reinvest in a new
loan and recognize as income any unamortized loan fees. This may result in a new
facility fee payable to a fund.

Under a Senior Loan, the borrower generally must pledge as collateral assets
which may include one or more of the following: cash; accounts receivable;
inventory; property, plant and equipment; both common and preferred stock in its
subsidiaries; trademarks, copyrights, patent rights; and franchise value. A fund
may also receive guarantees as a form of collateral. In some instances, a Senior
Loan may be secured only by stock in a borrower or its affiliates. A fund may
also invest in Senior Loans not secured by any collateral. The market value of
the assets serving as collateral (if any) will, at the time of investment, in
the opinion of the Advisor, equal or exceed the principal amount of the Senior
Loan. The valuations of these assets may be performed by an independent
appraisal. If the agent becomes aware that the value of the collateral has
declined, the agent may take action as it deemed necessary for the protection of
its own interests and the interests of the other lenders, including, for
example, giving the borrower an opportunity to provide additional collateral or
accelerating the loan. There is no assurance, however, that the borrower would
provide additional collateral or that the liquidation of the existing collateral
would satisfy the borrower's obligation in the event of nonpayment of scheduled
interest or principal, or that such collateral could be readily liquidated.

A fund may be required to pay and may receive various fees and commissions in
the process of purchasing, selling and holding Senior Loans. The fee component
may include any, or a combination of, the following elements: arrangement fees,
non-use fees, facility fees, letter of credit fees and ticking fees. Arrangement
fees are paid at the commencement of a loan as compensation for the initiation
of the transaction. A non-use fee is paid based upon the amount committed but
not used under the loan. Facility fees are on-going annual fees paid in
connection with a loan. Letter of credit fees are paid if a loan involves a
letter of credit. Ticking fees are paid from the initial commitment indication
until loan closing if for an extended period. The amount of fees is negotiated
at the time of transaction.

If legislation or state or federal regulators impose additional requirements or
restrictions on the ability of financial institutions to make loans that are
considered highly leveraged transactions, the availability of Senior Loans for
investment by a fund may be adversely affected. In addition, such requirements
or restrictions could reduce or eliminate sources of financing for certain
borrowers. This would increase the risk of default. If legislation or federal or
state regulators require financial institutions to dispose of Senior Loans that
are considered highly leveraged transactions or subject such Senior Loans to
increased regulatory scrutiny, financial institutions may determine to sell such
Senior Loans. Such sales could result in prices that, in the opinion of the
Advisor, do not represent fair value. If a fund attempts to sell a Senior Loan
at a time when a financial institution is engaging in such a sale, the price a
fund could get for the Senior Loan may be adversely affected.

Short Sales. When a fund takes a long position, it purchases a stock outright.
When a fund takes a short position, it sells at the current market price a stock
it does not own but has borrowed in anticipation that the market price of the
stock will decline. To complete, or close out, the short sale transaction, a
fund buys the same stock in the market and returns it to the lender. The price
at such time may be more or less than the price at which the security was sold
by a fund. Until the security is replaced, a fund is required to pay the lender
amounts equal to any dividends or interest, which accrue during the period of
the loan. To borrow the security, a fund may also be required to pay a premium,
which would increase the cost of the security sold. The proceeds of the short
sale will be retained by the broker, to the extent necessary to meet the margin
requirements, until the short position is closed out. A fund makes money when
the market price of the borrowed stock goes down and a fund is able to replace
it for less than it earned by selling it short. Alternatively if the price of
the stock goes up after the short sale and before the short position is closed,
a fund will lose money because it will have to pay more to replace the borrowed
stock than it received when it sold the stock short.

A fund may not always be able to close out a short position at a particular time
or at an acceptable price. A lender may request that the borrowed securities be
returned to it on short notice, and a fund may have to buy the borrowed
securities at an unfavorable price. If this occurs at a time that other short
sellers of the same security also want to close out their positions, a "short
squeeze" can occur. A short squeeze occurs when demand is greater than supply
for the stock sold short. A short squeeze makes it more likely that a fund will
have to cover its short sale at an unfavorable price. If that happens, a fund
will lose some or all of the potential profit from, or even incur a loss as a
result of, the short sale.

Until a fund closes its short position or replaces the borrowed security, a fund
will designate liquid assets it owns (other than the short sales proceeds) as
segregated assets to the books of the broker and/or its custodian in an amount
equal to its obligation to purchase the securities sold short, as required by
the 1940 Act. The amount segregated in this manner will be increased or
decreased each business day equal to the change in market value of a fund's
obligation to purchase the security sold short. If the lending broker requires a
fund to deposit additional collateral (in addition to the short sales proceeds
that the broker holds during the period of the short sale), which may be as much
as 50% of the value of the securities sold short, the amount of the additional
collateral may be deducted in determining the amount of cash or liquid assets a
fund is required to segregate to cover the short sale obligation pursuant to the
1940 Act. The amount segregated must be unencumbered by any other obligation or
claim than the obligation that is being covered. A fund believes that short sale
obligations that are covered, either by an offsetting asset or right (acquiring
the security sold short or having an option to purchase the security sold short
at exercise price that covers the obligation), or by a fund's segregated asset
procedures (or a combination thereof), are not senior securities under the 1940
Act and are not subject to a fund's borrowing restrictions. This requirement to
segregate assets limits a fund's leveraging of its investments and the related
risk of losses from leveraging. A fund also is required to pay the lender of the
security any dividends or interest that accrues on a borrowed security during
the period of the loan. Depending on the arrangements made with the broker or
custodian, a fund may or may not receive any payments (including interest) on
collateral it has deposited with the broker.

Short sales involve the risk that a fund will incur a loss by subsequently
buying a security at a higher price than the price at which a fund previously
sold the security short. Any loss will be increased by the amount of
compensation, interest or dividends, and transaction costs a fund must pay to a
lender of the security. In addition, because a fund's loss on a short sale stems
from increases in the value of the security sold short, the extent of such loss,
like the price of the security sold short, is theoretically unlimited. By
contrast, a fund's loss on a long position arises from decreases in the value of
the security held by a fund and therefore is limited by the fact that a
security's value cannot drop below zero.

The use of short sales, in effect, leverages a fund's portfolio, which could
increase a fund's exposure to the market, magnify losses and increase the
volatility of returns.

Although a fund's share price may increase if the securities in its long
portfolio increase in value more than the securities underlying its short
positions, a fund's share price may decrease if the securities underlying its
short positions increase in value more than the securities in its long
portfolio.

Small Companies. The Advisor believes that many small companies may have sales
and earnings growth rates which exceed those of larger companies, and that such
growth rates may in turn be reflected in more rapid share price appreciation
over time. However, investing in smaller company stocks involves greater risk
than is customarily associated with investing in larger, more established
companies. For example, smaller companies can have limited product lines,
markets, or financial and managerial resources. Smaller companies may also be
dependent on one or a few key persons, and may be more susceptible to losses and
risks of bankruptcy. Also, the securities of smaller companies may be thinly
traded (and therefore have to be sold at a discount from current market prices
or sold in small lots over an extended period of time). Transaction costs in
smaller company stocks may be higher than those of larger companies.

Supranational Entities. Supranational entities are international organizations
designated or supported by governmental entities to promote economic
reconstruction or development and international banking institutions and related
government agencies. Examples include the International Bank for Reconstruction
and Development (the World Bank), the European Coal and Steel Community, The
Asian Development Bank and the InterAmerican Development Bank. Obligations of
supranational entities are backed by the guarantee of one or more foreign
governmental parties which sponsor the entity.

TBA Purchase Commitments. TBA purchase commitments may be considered securities
in themselves, and involve a risk of loss if the value of the security to be
purchased declines prior to settlement date, which risk is in addition to the
risk of decline in the value of a fund's other assets. Unsettled TBA purchase
commitments are valued at the current market value of the underlying securities.

Temporary Defensive Investments. As a temporary defensive measure, a fund could
shift up to 100% of its assets into investments such as money market securities.

Trust Preferred Securities. A fund may invest in Trust Preferred Securities,
which are hybrid instruments issued by a special purpose trust (the "Special
Trust"), the entire equity interest of which is owned by a single issuer. The
proceeds of the issuance to a fund of Trust Preferred Securities are typically
used to purchase a junior subordinated debenture, and distributions from the
Special Trust are funded by the payments of principal and interest on the
subordinated debenture.

If payments on the underlying junior subordinated debentures held by the Special
Trust are deferred by the debenture issuer, the debentures would be treated as
original issue discount ("OID") obligations for the remainder of their term. As
a result, holders of Trust Preferred Securities, such as a fund, may be required
to accrue daily for federal income tax purposes their share of the OID on the
debentures (regardless of whether a fund receives any cash distributions from
the Special Trust), in addition to reporting the stated interest on the
debentures, and the value of Trust Preferred Securities would likely be
negatively affected. Interest payments on the underlying junior subordinated
debentures typically may only be deferred if dividends are suspended on both
common and preferred stock of the issuer. The underlying junior subordinated
debentures generally rank slightly higher in terms of payment priority than both
common and preferred securities of the issuer, but rank below other subordinated
debentures and debt securities. Trust Preferred Securities may be subject to
mandatory prepayment under certain circumstances. The market values of Trust
Preferred Securities may be more volatile than those of conventional debt
securities. Trust Preferred Securities may be issued in reliance on Rule 144A
under the 1933 Act, and, unless and until registered, are restricted securities;
there can be no assurance as to the liquidity of Trust Preferred Securities and
the ability of holders of Trust Preferred Securities, such as a fund, to sell
their holdings.

US Government Securities. There are two broad categories of US
Government-related debt instruments: (a) direct obligations of the US Treasury,
and (b) securities issued or guaranteed by US Government agencies.

Examples of direct obligations of the US Treasury are Treasury bills, notes,
bonds and other debt securities issued by the US Treasury. These instruments are
backed by the "full faith and credit" of the United States. They differ
primarily in interest rates, the length of maturities and the dates of issuance.
Treasury bills have original maturities of one year or less. Treasury notes have
original maturities of one to ten years and Treasury bonds generally have
original maturities of greater than ten years.

Some agency securities are backed by the full faith and credit of the United
States (such as Maritime Administration Title XI Ship Financing Bonds and Agency
for International Development Housing Guarantee Program Bonds) and others are
backed only by the rights of the issuer to borrow from the US Treasury (such as
FHLMC Bonds and FNMA Bonds), while still others, such as the securities of the
Federal Farm Credit Bank, are supported only by the credit of the issuer. With
respect to securities supported only by the credit of the issuing agency or by
an additional line of credit with the US Treasury, there is no guarantee that
the US Government will provide support to such agencies and such securities may
involve risk of loss of principal and interest.

US Government securities may include "zero coupon" securities that have been
stripped by the US Government of their unmatured interest coupons and
collateralized obligations issued or guaranteed by a US Government agency or
instrumentality.

Interest rates on US Government obligations may be fixed or variable. Interest
rates on variable rate obligations are adjusted at regular intervals, at least
annually, according to a formula reflecting then current specified standard
rates, such as 91-day US Treasury bill rates. These adjustments generally tend
to reduce fluctuations in the market value of the securities.

The government guarantee of the US Government securities in a fund's portfolio
does not guarantee the net asset value of the shares of a fund. There are market
risks inherent in all investments in securities and the value of an investment
in a fund will fluctuate over time. Normally, the value of investments in US
Government securities varies inversely with changes in interest rates. For
example, as interest rates rise the value of investments in US Government
securities will tend to decline, and as interest rates fall the value of a
fund's investments will tend to increase. In addition, the potential for
appreciation in the event of a decline in interest rates may be limited or
negated by increased principal prepayments with respect to certain
mortgage-backed securities, such as GNMA Certificates. Prepayments of high
interest rate mortgage-backed securities during times of declining interest
rates will tend to lower the return of a fund and may even result in losses to a
fund if some securities were acquired at a premium. Moreover, during periods of
rising interest rates, prepayments of mortgage-backed securities may decline,
resulting in the extension of a fund's average portfolio maturity. As a result,
a fund's portfolio may experience greater volatility during periods of rising
interest rates than under normal market conditions.

Variable and Floating Rate Instruments. A fund may invest in variable or
floating rate instruments and variable rate demand instruments, including
variable amount master demand notes. These instruments will normally involve
industrial development or revenue bonds that provide that the rate of interest
is set as a specific percentage of a designated base rate (such as the prime
rate) at a major commercial bank. In addition, the interest rate on these
securities may be reset daily, weekly or on some other reset period and may have
a floor or ceiling on interest rate changes. When holding such an instrument, a
fund can demand payment of the obligation at all times or at stipulated dates on
short notice (not to exceed 30 days) at par plus accrued interest.

Debt instruments purchased by a fund may be structured to have variable or
floating interest rates. These instruments may include variable amount master
demand notes that permit the indebtedness to vary in addition to providing for
periodic adjustments in the interest rates. The Advisor will consider the
earning power, cash flows and other liquidity ratios of the issuers and
guarantors of such instruments and, if the instrument is subject to a demand
feature, will continuously monitor their financial ability to meet payment on
demand. Where necessary to ensure that a variable or floating rate instrument is
equivalent to the quality standards applicable to a fund's fixed income
investments, the issuer's obligation to pay the principal of the instrument will
be backed by an unconditional bank letter or line of credit, guarantee or
commitment to lend. Any bank providing such a bank letter, line of credit,
guarantee or loan commitment will meet a fund's investment quality standards
relating to investments in bank obligations. The Advisor will also continuously
monitor the creditworthiness of issuers of such instruments to determine whether
a fund should continue to hold the investments.

The absence of an active secondary market for certain variable and floating rate
notes could make it difficult to dispose of the instruments, and a fund could
suffer a loss if the issuer defaults or during periods in which a fund is not
entitled to exercise its demand rights.

Variable and floating rate instruments held by a fund will be subject to a
fund's limitation on investments in illiquid securities when a reliable trading
market for the instruments does not exist and a fund may not demand payment of
the principal amount of such instruments within seven days.

Warrants. The holder of a warrant has the right, until the warrant expires, to
purchase a given number of shares of a particular issuer at a specified price.
Such investments can provide a greater potential for profit or loss than an
equivalent investment in the underlying security. Prices of warrants do not
necessarily move, however, in tandem with the prices of the underlying
securities and are, therefore, considered speculative investments. Warrants pay
no dividends and confer no rights other than a purchase option. Thus, if a
warrant held by a fund were not exercised by the date of its expiration, a fund
would lose the entire purchase price of the warrant.

When-Issued Securities. A fund may from time to time purchase equity and debt
securities on a "when-issued," "delayed delivery" or "forward delivery" basis.
The price of such securities, which may be expressed in yield terms, is fixed at
the time the commitment to purchase is made, but delivery and payment for the
securities takes place at a later date. During the period between purchase and
settlement, no payment is made by a fund to the issuer and no interest accrues
to a fund. When a fund purchases such securities, it immediately assumes the
risks of ownership, including the risk of price fluctuation. Failure to deliver
a security purchased on this basis may result in a loss or missed opportunity to
make an alternative investment.

To the extent that assets of a fund are held in cash pending the settlement of a
purchase of securities, a fund would earn no income. While such securities may
be sold prior to the settlement date, a fund intends to purchase them with the
purpose of actually acquiring them unless a sale appears desirable for
investment reasons. At the time a fund makes the commitment to purchase a
security on this basis, it will record the transaction and reflect the value of
the security in determining its net asset value. The market value of the
securities may be more or less than the purchase price. A fund will establish a
segregated account in which it will maintain cash and liquid securities equal in
value to commitments for such securities.

Zero Coupon Securities. A fund may invest in zero coupon securities, which pay
no cash income and are sold at substantial discounts from their value at
maturity. When held to maturity, their entire income, which consists of
accretion of discount, comes from the difference between the issue price and
their value at maturity. Zero coupon securities are subject to greater market
value fluctuations from changing interest rates than debt obligations of
comparable maturities which make current distributions of interest (cash). Zero
coupon securities which are convertible into common stock offer the opportunity
for capital appreciation as increases (or decreases) in market value of such
securities closely follow the movements in the market value of the underlying
common stock. Zero coupon convertible securities generally are expected to be
less volatile than the underlying common stocks as they usually are issued with
maturities of 15 years or less and are issued with options and/or redemption
features exercisable by the holder of the obligation entitling the holder to
redeem the obligation and receive a defined cash payment.

Zero coupon securities include municipal securities, securities issued directly
by the US Treasury, and US Treasury bonds or notes and their unmatured interest
coupons and receipts for their underlying principal ("coupons") which have been
separated by their holder, typically a custodian bank or investment brokerage
firm, from the underlying principal (the "corpus") of the US Treasury security.
A number of securities firms and banks have stripped the interest coupons and
receipts and then resold them in custodial receipt programs with a number of
different names, including TIGRS and CATS. The underlying US Treasury Bonds and
Notes themselves are held in book-entry form at the Federal Reserve Bank or, in
the case of bearer securities (i.e., unregistered securities which are owned
ostensibly by the bearer or holder thereof), in trust on behalf of the owners
thereof. Counsel to the underwriters of these certificates or other evidences of
ownership of the US Treasury securities have stated that, for federal income tax
and securities purposes, in their opinion purchasers of such certificates, such
as a fund, most likely will be deemed the beneficial holder of the underlying US
Government securities. A fund intends to adhere to the current SEC staff
position that privately stripped obligations should not be considered US
Government securities for the purpose of determining if a fund is "diversified"
under the 1940 Act.

The US Treasury has facilitated transfers of ownership of zero coupon securities
by accounting separately for the beneficial ownership of particular interest
coupon and corpus payments on Treasury securities through the Federal Reserve
book-entry record-keeping system. The Federal Reserve program, as established by
the Treasury Department, is known as "STRIPS" or "Separate Trading of Registered
Interest and Principal of Securities." Under the STRIPS program, a fund will be
able to have its beneficial ownership of zero coupon securities recorded
directly in the book-entry record-keeping system in lieu of having to hold
certificates or other evidences of ownership of the underlying US Treasury
securities.

When US Treasury obligations have been stripped of their unmatured interest
coupons by the holder, the principal or corpus is sold at a deep discount
because the buyer receives only the right to receive a future fixed payment on
the security and does not receive any rights to periodic interest (cash)
payments. Once stripped or separated, the corpus and coupons may be sold
separately. Typically, the coupons are sold separately or grouped with other
coupons with like maturity dates and sold bundled in such form. Purchasers of
stripped obligations acquire, in effect, discount obligations that are
economically identical to the zero coupon securities that the Treasury sells.

The Underlying DWS Funds

As noted in the Portfolio's prospectus, the Portfolio may invest in other DWS
funds ("Underlying DWS Funds"). The Portfolio will purchase or sell shares in
the Underlying DWS Funds to (a) accommodate purchases and sales of the
Portfolio's shares, (b) change the percentages of the Portfolio's assets
invested in each of the Underlying DWS Funds in response to changing market
conditions, and (c) maintain or modify the allocation of the Portfolio's assets
in accordance with the investment mixes described below. The shares that the
Portfolio purchases in the Underlying DWS Funds will be of the share class with
the lowest fees.

Portfolio managers will allocate Portfolio assets among the Underlying DWS Funds
in accordance with target percentage ranges - generally 0%-30% of the
Portfolio's assets.

Risk Factors of Underlying DWS Funds

In pursuing their investment objectives, each of the Underlying DWS Funds is
permitted investment strategies in a wide range of investment techniques. The
Underlying DWS Funds' risks are determined by the nature of the securities held
and the portfolio management strategies used by the Advisor. Further information
about the Underlying DWS Funds is contained in the prospectuses of such funds.
Shareholders of the Portfolio will be affected by the portfolio management
strategies and investment policies of the Underlying DWS Funds in direct
proportion to the amount of assets the Portfolio allocates to each Underlying
DWS Fund.

DIMA also serves as advisor to each of the Underlying DWS Funds.

The following is a list of the Underlying DWS Funds in which the Portfolio
currently may invest.

o DWS Commodity Securities Fund

o DWS Disciplined Market Neutral Fund

o DWS Emerging Markets Equity Fund

o DWS Emerging Markets Fixed Income Fund

o DWS Floating Rate Plus Fund

o DWS Gold & Precious Metals Fund

o DWS Inflation Protected Plus Fund

o DWS RREEF Global Infrastructure Fund

o DWS RREEF Global Real Estate Securities Fund

Initially, the Portfolio intends to make allocations ranging from approximately
0%-30% of its assets (exclusive of assets allocated to the iGAP Strategy) in
each of the following underlying funds:

DWS Commodity Securities Fund. The fund's investment objective is capital
appreciation. The fund seeks to achieve its investment objective by focusing on
commodities-related securities and equity-related securities, including
commodities-related structured notes and similar instruments that the Advisor
believes are undervalued but have favorable prospects for appreciation. The fund
is designed for investors who seek to diversify their overall portfolios by
adding exposure to the commodities markets.

DWS Disciplined Market Neutral Fund. The fund seeks capital appreciation
independent of stock market direction. It pursues its objective by investing,
under normal circumstances, in long and short positions of common stock of large
US companies. The managers buy, or take, long positions in common stock that the
managers believe are undervalued and sell, or take, short positions in common
stock that the managers believe are overvalued. The fund's investment strategy
is designed to maintain approximately equal dollar amounts invested in long and
short positions under normal circumstances. By employing this market neutral
strategy, the fund seeks to limit the fund's volatility relative to movements in
the overall stock market (that is, the fund's price movements are not expected
to correlate closely with the market's price movements). The managers attempt to
achieve returns for the fund that exceed the return on an investment in 3-month
US Treasury Bills.


DWS Emerging Markets Equity Fund. The fund seeks long term growth of capital.
Under normal circumstances, the fund invests at least 80% of net assets, plus
the amount of any borrowings for investment purposes, in emerging market
equities (equities traded mainly in emerging markets or issued by companies that
are organized in emerging markets or have more than half of their business
there). The fund considers "emerging markets" to include any country that is
defined as an emerging or developing economy by any one of the following: The
International Bank for Reconstruction and Development (i.e., the World Bank),
the International Finance Corporation or the United Nations or its authorities.

DWS Emerging Markets Fixed Income Fund. The fund seeks to provide high current
income and, secondarily, long term capital appreciation. Under normal
circumstances, the fund invests at least 80% of net assets, plus the amount of
any borrowings for investment purposes, in high yield bonds (also known as "junk
bonds") and other debt securities issued by governments and corporations in
emerging market countries (i.e., the issuer is traded mainly in an emerging
market, is organized under the laws of an emerging market country or is a
company with more than half of its business in emerging markets) or the return
on which is derived primarily from emerging markets. The fund considers
"emerging markets" to include any country that is defined as an emerging or
developing economy by any one of the following: The International Bank for
Reconstruction and Development (i.e., the World Bank), the International Finance
Corporation or the United Nations or its authorities. To help manage risk, the
fund invests at least 50% of total assets in US dollar-denominated securities.
The fund also does not invest more than 40% of total assets in any one country.
The fund may invest up to 20% of net assets, plus the amount of any borrowings
for investment purposes, in debt securities of issuers from the US or other
developed markets, including those that are rated below the fourth credit grade
(i.e., grade BB/Ba and below).


DWS Floating Rate Plus Fund. The fund seeks to provide high current income. The
fund invests, under normal market conditions, at least 80% of its total assets
in adjustable rate loans that have a senior right to payment ("Senior Loans")
and other floating rate debt securities. The fund may also borrow money in an
amount up to 33 1/3% of the fund's total assets for a range of purposes,
including to create investment leverage.

DWS Gold & Precious Metals Fund. The fund seeks maximum return (principal change
and income). The fund invests at least 80% of net assets, plus the amount of any
borrowings for investment purposes, in common stocks and other equities of US
and foreign companies engaged in activities related to gold, silver, platinum or
other precious metals, and in gold coin and bullion directly. These companies
may be involved in activities such as exploration, mining, fabrication,
processing and distribution. While the fund invests mainly in common stocks, it
may invest up to 20% of net assets in: high-quality debt securities of companies
in precious metals and minerals operations; and debt securities whose return is
linked to precious metals prices. The fund's equity investments are mainly
common stocks, but may also include other types of equities such as preferred or
convertible stocks.

DWS Inflation Protected Plus Fund. The fund seeks to provide maximum
inflation-adjusted return, consistent with preservation of capital. Under normal
circumstances, the fund will invest at least 80% of its net assets, plus any
borrowings for investment purposes, in inflation-indexed bonds of varying
maturities issued by the US government, non-US governments, their agencies or
instrumentalities, and corporations and derivatives related to these securities.
The fund may invest the remaining portion of its assets in other types of
fixed-income securities, cash or cash equivalents. In an attempt to enhance
return, the fund also employs a global asset allocation strategy, which invests
in instruments across domestic and international fixed-income and currency
markets.

DWS RREEF Global Infrastructure Fund. The fund seeks total return from both
capital appreciation and current income through investment in a global portfolio
of securities of infrastructure-related companies. The fund invests at least 80%
of its net assets in the securities of US and non-US infrastructure-related
companies. The fund considers a company to be an infrastructure-related company
if at least 50% of its assets are infrastructure assets or 50% of its gross
income or net profits are derived, directly or indirectly, from the ownership,
management, construction, operation, utilization or financing of infrastructure
assets. The fund primarily invests in common stock and may invest in convertible
and preferred stock, rights or warrants to purchase common stock, debt
securities and listed limited partnership interests. The fund allocates its
assets among various regions and countries, including exposure to emerging
market countries.

DWS RREEF Global Real Estate Securities Fund. The fund's investment objective is
to seek total return through a combination of current income and long-term
capital appreciation. The fund seeks to achieve this objective by investing
primarily in publicly listed real estate investment trusts (REITs) and real
estate operating companies on a global basis. Under normal circumstances, the
fund will invest at least 80% of its net assets, plus the amount of any
borrowing for investment purposes, in the equity securities of REITs and real
estate operating companies listed on recognized stock exchanges around the
world. Equity securities include common stock, preferred stock and securities
convertible into common stock.

As noted above, the Portfolio will invest in futures and forward contracts as
part of its iGAP investment strategy. The Portfolio may also engage in the
following derivatives transactions directly or indirectly through its
investments in the Underlying DWS Funds.

Strategic Transactions and Derivatives

A fund may, but is not required to, utilize various other investment strategies
as described below for a variety of purposes, such as hedging various market
risks, managing the effective maturity or duration of the fixed-income
securities in a fund's portfolio or enhancing potential gain. These strategies
may be executed through the use of derivative contracts.

In the course of pursuing these investment strategies, a fund may purchase and
sell exchange-listed and over-the-counter put and call options on securities,
equity and fixed-income indices and other instruments, purchase and sell futures
contracts and options thereon, enter into various transactions such as swaps,
caps, floors, collars, currency forward contracts, currency futures contracts,
currency swaps or options on currencies, or currency futures and various other
currency transactions (collectively, all the above are called "Strategic
Transactions"). In addition, certain Strategic Transactions may also include new
techniques, instruments or strategies that are permitted as regulatory changes
occur. Strategic Transactions may be used without limit (subject to certain
limits imposed by the 1940 Act) to attempt to protect against possible changes
in the market value of securities held in or to be purchased for a fund's
portfolio resulting from securities markets or currency exchange rate
fluctuations, to protect a fund's unrealized gains in the value of its portfolio
securities, to facilitate the sale of such securities for investment purposes,
to manage the effective maturity or duration of a fund's portfolio, or to
establish a position in the derivatives markets as a substitute for purchasing
or selling particular securities. Some Strategic Transactions may also be used
to enhance potential gain. Any or all of these investment techniques may be used
at any time and in any combination, and there is no particular strategy that
dictates the use of one technique rather than another, as use of any Strategic
Transaction is a function of numerous variables including market conditions. The
ability of a fund to utilize these Strategic Transactions successfully will
depend on the Advisor's ability to predict pertinent market movements, which
cannot be assured. A fund will comply with applicable regulatory requirements
when implementing these strategies, techniques and instruments. Strategic
Transactions will not be used to alter fundamental investment purposes and
characteristics of a fund, and a fund will segregate assets (or as provided by
applicable regulations, enter into certain offsetting positions) to cover its
obligations under options, futures and swaps to limit leveraging of a fund.

Strategic Transactions, including derivative contracts, have risks associated
with them including possible default by the other party to the transaction,
illiquidity and, to the extent the Advisor's view as to certain market movements
is incorrect, the risk that the use of such Strategic Transactions could result
in losses greater than if they had not been used. Use of put and call options
may result in losses to a fund, force the sale or purchase of portfolio
securities at inopportune times or for prices higher than (in the case of put
options) or lower than (in the case of call options) current market values,
limit the amount of appreciation a fund can realize on its investments or cause
a fund to hold a security it might otherwise sell. The use of currency
transactions can result in a fund incurring losses as a result of a number of
factors including the imposition of exchange controls, suspension of
settlements, or the inability to deliver or receive a specified currency. The
use of options and futures transactions entails certain other risks. In
particular, the variable degree of correlation between price movements of
futures contracts and price movements in the related portfolio position of a
fund creates the possibility that losses on the hedging instrument may be
greater than gains in the value of a fund's position. In addition, futures and
options markets may not be liquid in all circumstances and certain
over-the-counter options may have no markets. As a result, in certain markets, a
fund might not be able to close out a transaction without incurring substantial
losses, if at all. Although the use of futures and options transactions for
hedging should tend to minimize the risk of loss due to a decline in the value
of the hedged position, at the same time they tend to limit any potential gain
which might result from an increase in value of such position. Finally, the
daily variation margin requirements for futures contracts would create a greater
ongoing potential financial risk than would purchases of options, where the
exposure is limited to the cost of the initial premium. Losses resulting from
the use of Strategic Transactions would reduce net asset value, and possibly
income, and such losses can be greater than if the Strategic Transactions had
not been utilized.

General Characteristics of Options. Put options and call options typically have
similar structural characteristics and operational mechanics regardless of the
underlying instrument on which they are purchased or sold. Thus, the following
general discussion relates to each of the particular types of options discussed
in greater detail below. In addition, many Strategic Transactions involving
options require segregation of a fund's assets in special accounts, as described
in the section entitled "Asset Segregation."

A put option gives the purchaser of the option, upon payment of a premium, the
right to sell, and the writer the obligation to buy, the underlying security,
commodity, index, currency or other instrument at the exercise price. For
instance, each fund's purchase of a put option on a security might be designed
to protect its holdings in the underlying instrument (or, in some cases, a
similar instrument) against a substantial decline in the market value by giving
each fund the right to sell such instrument at the option exercise price. A call
option, upon payment of a premium, gives the purchaser of the option the right
to buy, and the seller the obligation to sell, the underlying instrument at the
exercise price. Each fund's purchase of a call option on a security, financial
future, index, currency or other instrument might be intended to protect each
fund against an increase in the price of the underlying instrument that it
intends to purchase in the future by fixing the price at which it may purchase
such instrument. An American style put or call option may be exercised at any
time during the option period while a European style put or call option may be
exercised only upon expiration or during a fixed period prior thereto. Each fund
is authorized to purchase and sell exchange listed options and over-the-counter
options ("OTC options"). Exchange listed options are issued by a regulated
intermediary such as the Options Clearing Corporation ("OCC"), which guarantees
the performance of the obligations of the parties to such options. The
discussion below uses the OCC as an example, but is also applicable to other
financial intermediaries. With certain exceptions, OCC issued and exchange
listed options generally settle by physical delivery of the underlying security
or currency, although in the future cash settlement may become available. Index
options and Eurodollar instruments are cash settled for the net amount, if any,
by which the option is "in-the-money" (i.e., where the value of the underlying
instrument exceeds, in the case of a call option, or is less than, in the case
of a put option, the exercise price of the option) at the time the option is
exercised. Frequently, rather than taking or making delivery of the underlying
instrument through the process of exercising the option, listed options are
closed by entering into offsetting purchase or sale transactions that do not
result in ownership of the new option.

Each fund's ability to close out its position as a purchaser or seller of an OCC
or exchange listed put or call option is dependent, in part, upon the liquidity
of the option market. Among the possible reasons for the absence of a liquid
option market on an exchange are: (i) insufficient trading interest in certain
options; (ii) restrictions on transactions imposed by an exchange; (iii) trading
halts, suspensions or other restrictions imposed with respect to particular
classes or series of options or underlying securities including reaching daily
price limits; (iv) interruption of the normal operations of the OCC or an
exchange; (v) inadequacy of the facilities of an exchange or OCC to handle
current trading volume; or (vi) a decision by one or more exchanges to
discontinue the trading of options (or a particular class or series of options),
in which event the relevant market for that option on that exchange would cease
to exist, although outstanding options on that exchange would generally continue
to be exercisable in accordance with their terms.

The hours of trading for listed options may not coincide with the hours during
which the underlying financial instruments are traded. To the extent that the
option markets close before the markets for the underlying financial
instruments, significant price and rate movements can take place in the
underlying markets that may not be reflected in the option markets.

OTC options are purchased from or sold to securities dealers, financial
institutions or other parties ("Counterparties") through direct bilateral
agreement with the Counterparty. In contrast to exchange listed options, which
generally have standardized terms and performance mechanics, all the terms of an
OTC option, including such terms as method of settlement, term, exercise price,
premium, guarantees and security, are set by negotiation of the parties. Each
fund expects generally to enter into OTC options that have cash settlement
provisions, although it is not required to do so.

Unless the parties provide for it, there is no central clearing or guaranty
function in an OTC option. As a result, if the Counterparty fails to make or
take delivery of the security, currency or other instrument underlying an OTC
option it has entered into with each fund or fails to make a cash settlement
payment due in accordance with the terms of that option, each fund will lose any
premium it paid for the option as well as any anticipated benefit of the
transaction. Accordingly, the Advisor must assess the creditworthiness of each
such Counterparty or any guarantor or credit enhancement of the Counterparty's
credit to determine the likelihood that the terms of the OTC option will be
satisfied. Each fund will engage in OTC option transactions only with US
government securities dealers recognized by the Federal Reserve Bank of New York
as "primary dealers" or broker/dealers, domestic or foreign banks or other
financial institutions which have received (or the guarantors of the obligation
of which have received) a short-term credit rating of A-1 from S&P or P-1 from
Moody's or an equivalent rating from any other nationally recognized statistical
rating organization ("NRSRO") or, in the case of OTC currency transactions, are
determined to be of equivalent credit quality by the Advisor. The staff of the
SEC currently takes the position that OTC options purchased by each fund, and
portfolio securities "covering" the amount of each fund's obligation pursuant to
an OTC option sold by it (the cost of any sell-back plus the in-the-money
amount, if any) are illiquid, and are subject to each fund's limitation on
investing no more than 15% of its net assets in illiquid securities.

If each fund sells a call option, the premium that it receives may serve as a
partial hedge, to the extent of the option premium, against a decrease in the
value of the underlying securities or instruments in its portfolio or will
increase each fund's income. The sale of put options can also provide income.

Each fund may purchase and sell call options on securities including, but not
limited to, US Treasury and agency securities, mortgage-backed securities,
foreign sovereign debt, corporate debt securities, equity securities (including
convertible securities), Eurodollar instruments that are traded on US and
foreign securities exchanges and in the over-the-counter markets, and on
securities indices, currencies and futures contracts, and for DWS Massachusetts
Tax-Free Fund, municipal obligations. All calls sold by each fund must be
"covered" (i.e., each fund must own the securities or futures contract subject
to the call) or must meet the asset segregation requirements described below as
long as the call is outstanding. Even though each fund will receive the option
premium to help protect it against loss, a call sold by each fund exposes each
fund during the term of the option to possible loss of opportunity to realize
appreciation in the market price of the underlying security or instrument and
may require each fund to hold a security or instrument which it might otherwise
have sold.

Each fund may purchase and sell put options on securities including, but not
limited to, US Treasury and agency securities, mortgage-backed securities,
foreign sovereign debt, corporate debt securities, equity securities (including
convertible securities), Eurodollar instruments (whether or not it holds the
above securities in its portfolio), and on securities indices, currencies and
futures contracts other than futures on individual corporate debt and individual
equity securities and for DWS Massachusetts Tax-Free Fund, municipal
obligations. Except for DWS Technology Fund, each fund will not sell put options
if, as a result, more than 50% of each fund's total assets would be required to
be segregated to cover its potential obligations under such put options other
than those with respect to futures and options thereon. In selling put options,
there is a risk that each fund may be required to buy the underlying security at
a disadvantageous price above the market price.

General Characteristics of Futures. A fund may enter into futures contracts or
purchase or sell put and call options on such futures as hedges against
anticipated interest rate, currency or equity market changes, and for duration
management, risk management and return enhancement purposes. Futures are
generally bought and sold on the commodities exchanges where they are listed
with payment of initial and variation margin as described below. The sale of a
futures contract creates a firm obligation by a fund, as seller, to deliver to
the buyer the specific type of financial instrument called for in the contract
at a specific future time for a specified price (or, with respect to index
futures and Eurodollar instruments, the net cash amount). Options on futures
contracts are similar to options on securities except that an option on a
futures contract gives the purchaser the right in return for the premium paid to
assume a position in a futures contract and obligates the seller to deliver such
position.

A fund's use of futures and options thereon will in all cases be consistent with
applicable regulatory requirements and in particular the rules and regulations
of the CFTC and will be entered into for bona fide hedging, risk management
(including duration management) or other portfolio and return enhancement
management purposes. Typically, maintaining a futures contract or selling an
option thereon requires a fund to deposit with a financial intermediary or
futures commission merchant as security for its obligations an amount of cash or
other specified assets (initial margin) which initially is typically 1% to 10%
of the face amount of the contract (but may be higher in some circumstances).
Additional cash or assets (variation margin) may be required to be deposited
thereafter on a daily basis as the mark to market value of the contract
fluctuates. The purchase of an option on financial futures involves payment of a
premium for the option without any further obligation on the part of a fund. If
a fund exercises an option on a futures contract it will be obligated to post
initial margin (and potential subsequent variation margin) for the resulting
futures position just as it would for any position. Futures contracts and
options thereon are generally settled by entering into an offsetting transaction
but there can be no assurance that the position can be offset prior to
settlement at an advantageous price, nor that delivery will occur. Each fund is
exempt from Commodity Pool Operator registration.

Hedging Strategies. A fund may use certain strategies designed to adjust the
overall risk of its investment portfolio. These "hedging" strategies involve
derivative contracts, including (but not limited to) US Treasury and Eurodollar
futures contracts and exchange-traded put and call options on such futures
contracts. New financial products and risk management techniques continue to be
developed and may be used if consistent with a fund's investment objective and
policies. Among other purposes, these hedging strategies may be used to
effectively maintain desired portfolio duration or to protect against market
risk should a fund change its investments among different types of fixed income
securities.

A fund might not use any hedging strategies, and there can be no assurance that
any strategy used will succeed. If the Advisor is incorrect in its judgment on
market values, interest rates or other economic factors in using a hedging
strategy, a fund may have lower net income and a net loss on the investment.
Each of these strategies involves certain risks, which include:

o    the fact that the skills needed to use hedging instruments are different
     from those needed to select securities for a fund;

o    the possibility of imperfect correlation, or even no correlation, between
     the price movements of hedging instruments and price movements of the
     securities or currencies being hedged;

o    possible constraints placed on a fund's ability to purchase or sell
     portfolio investments at advantageous times due to the need for a fund to
     maintain "cover" or to segregate securities; and

o    the possibility that a fund will be unable to close out or liquidate its
     hedged position.

A hedge is designed to offset a loss in a portfolio position with a gain in the
hedged position; at the same time, however, a properly correlated hedge will
result in a gain in the portfolio position being offset by a loss in the hedged
position. As a result, the use of options, futures and currency exchange
transactions for hedging purposes could limit any potential gain from an
increase in the value of the position hedged. With respect to futures contracts,
since the value of portfolio securities will far exceed the value of the futures
contracts sold by a fund, an increase in the value of the futures contracts
could only mitigate, but not totally offset, the decline in the value of a
fund's assets.

To the extent that a fund engages in the strategies described above, a fund may
experience losses greater than if these strategies had not been utilized. In
addition to the risks described above, these instruments may be illiquid and/or
subject to trading limits, and a fund may be unable to close out a position
without incurring substantial losses, if at all. A fund is also subject to the
risk of default by a counterparty to an off-exchange transaction.

Options on Securities Indices and Other Financial Indices. A fund also may
purchase and sell call and put options on securities indices and other financial
indices and in so doing can achieve many of the same objectives it would achieve
through the sale or purchase of options on individual securities or other
instruments. Options on securities indices and other financial indices are
similar to options on a security or other instrument except that, rather than
settling by physical delivery of the underlying instrument, they settle by cash
settlement, i.e., an option on an index gives the holder the right to receive,
upon exercise of the option, an amount of cash if the closing level of the index
upon which the option is based exceeds, in the case of a call, or is less than,
in the case of a put, the exercise price of the option (except if, in the case
of an OTC option, physical delivery is specified). This amount of cash is equal
to the excess of the closing price of the index over the exercise price of the
option, which also may be multiplied by a formula value. The seller of the
option is obligated, in return for the premium received, to make delivery of
this amount. The gain or loss on an option on an index depends on price
movements in the instruments making up the market, market segment, industry or
other composite on which the underlying index is based, rather than price
movements in individual securities, as is the case with respect to options on
securities.

Currency Transactions. A fund may engage in currency transactions with
counterparties primarily in order to hedge, or manage the risk of the value of
portfolio holdings denominated in particular currencies against fluctuations in
relative value. Currency transactions include forward currency contracts,
exchange listed currency futures, exchange listed and OTC options on currencies,
and currency swaps. A forward currency contract involves a privately negotiated
obligation to purchase or sell (with delivery generally required) a specific
currency at a future date, which may be any fixed number of days from the date
of the contract agreed upon by the parties, at a price set at the time of the
contract. A currency swap is an agreement to exchange cash flows based on the
notional difference among two or more currencies and operates similarly to an
interest rate swap, which is described below. A fund may enter into currency
transactions with counterparties which have received (or the guarantors of the
obligations which have received) a credit rating of A-1 or P-1 by S&P or
Moody's, respectively, or that have an equivalent rating from a NRSRO or (except
for OTC currency options) are determined to be of equivalent credit quality by
the underlying fund's advisor.

A fund's dealings in forward currency contracts and other currency transactions
such as futures, options, options on futures and swaps generally will be limited
to hedging involving either specific transactions or portfolio positions except
as described below. Transaction hedging is entering into a currency transaction
with respect to specific assets or liabilities of a fund, which will generally
arise in connection with the purchase or sale of its portfolio securities or the
receipt of income therefrom. Position hedging is entering into a currency
transaction with respect to portfolio security positions denominated or
generally quoted in that currency.

A fund generally will not enter into a transaction to hedge currency exposure to
an extent greater, after netting all transactions intended wholly or partially
to offset other transactions, than the aggregate market value (at the time of
entering into the transaction) of the securities held in its portfolio that are
denominated or generally quoted in or currently convertible into such currency,
other than with respect to proxy hedging or cross hedging as described below.

A fund may also cross-hedge currencies by entering into transactions to purchase
or sell one or more currencies that are expected to decline in value relative to
other currencies to which a fund has or in which a fund expects to have
portfolio exposure.

To reduce the effect of currency fluctuations on the value of existing or
anticipated holdings of portfolio securities, a fund may also engage in proxy
hedging. Proxy hedging is often used when the currency to which the fund's
portfolio is exposed is difficult to hedge or to hedge against the dollar. Proxy
hedging entails entering into a commitment or option to sell a currency whose
changes in value are generally considered to be correlated to a currency or
currencies in which some or all of a fund's portfolio securities are or are
expected to be denominated, in exchange for US dollars. The amount of the
commitment or option would not exceed the value of a fund's securities
denominated in correlated currencies. Currency hedging involves some of the same
risks and considerations as other transactions with similar instruments.
Currency transactions can result in losses to a fund if the currency being
hedged fluctuates in value to a degree or in a direction that is not
anticipated. Further, there is the risk that the perceived correlation between
various currencies may not be present or may not be present during the
particular time that a fund is engaging in proxy hedging. If a fund enters into
a currency hedging transaction, the fund will comply with the asset segregation
requirements described below.

Risks of Currency Transactions. Currency transactions are subject to risks
different from those of other portfolio transactions. Because currency control
is of great importance to the issuing governments and influences economic
planning and policy, purchases and sales of currency and related instruments can
be negatively affected by government exchange controls, blockages, and
manipulations or exchange restrictions imposed by governments. These can result
in losses to a fund if it is unable to deliver or receive currency or funds in
settlement of obligations and could also cause hedges it has entered into to be
rendered useless, resulting in full currency exposure as well as incurring
transaction costs. Buyers and sellers of currency futures are subject to the
same risks that apply to the use of futures generally. Further, settlement of a
currency futures contract for the purchase of most currencies must occur at a
bank based in the issuing nation. Trading options on currency futures is
relatively new, and the ability to establish and close out positions on such
options is subject to the maintenance of a liquid market which may not always be
available. Currency exchange rates may fluctuate based on factors extrinsic to
that country's economy.

Risks of Strategic Transactions Outside the US. When conducted outside the US,
Strategic Transactions may not be regulated as rigorously as in the US, may not
involve a clearing mechanism and related guarantees, and are subject to the risk
of governmental actions affecting trading in, or the prices of, foreign
securities, currencies and other instruments. The value of such positions also
could be adversely affected by: (i) other complex foreign political, legal and
economic factors, (ii) lesser availability than in the US of data on which to
make trading decisions, (iii) delays in a fund's ability to act upon economic
events occurring in foreign markets during non-business hours in the US, (iv)
the imposition of different exercise and settlement terms and procedures and
margin requirements than in the US, and (v) lower trading volume and liquidity.

Swaps, Caps, Floors and Collars. Among the Strategic Transactions into which a
fund may enter are interest rate, currency, index and other swaps and the
purchase or sale of related caps, floors and collars. A fund expects to enter
into these transactions primarily to preserve a return or spread on a particular
investment or portion of its portfolio, to protect against currency
fluctuations, as a duration management technique or to protect against any
increase in the price of securities a fund anticipates purchasing at a later
date. A fund will not sell interest rate caps or floors where it does not own
securities or other instruments providing the income stream a fund may be
obligated to pay. Interest rate swaps involve the exchange by a fund with
another party of their respective commitments to pay or receive interest, e.g.,
an exchange of floating rate payments for fixed rate payments with respect to a
notional amount of principal. A currency swap is an agreement to exchange cash
flows on a notional amount of two or more currencies based on the relative value
differential among them and an index swap is an agreement to swap cash flows on
a notional amount based on changes in the values of the reference indices. The
purchase of a cap entitles the purchaser to receive payments on a notional
principal amount from the party selling such cap to the extent that a specified
index exceeds a predetermined interest rate or amount. The purchase of a floor
entitles the purchaser to receive payments on a notional principal amount from
the party selling such floor to the extent that a specified index falls below a
predetermined interest rate or amount. A collar is a combination of a cap and a
floor that preserves a certain return within a predetermined range of interest
rates or values.

Swaps will be entered in on a net basis, i.e., the two payment streams are
netted out in a cash settlement on the payment date or dates specified in the
instrument, with each fund receiving or paying, as the case may be, only the net
amount of the two payments. Inasmuch as each fund will segregate assets (or
enter into offsetting positions) to cover its obligations under swaps, the
Advisor and the funds believe such obligations do not constitute senior
securities under the 1940 Act and, accordingly, will not treat them as being
subject to its borrowing restrictions. Each fund will not enter into any swap,
cap, floor or collar transaction unless, at the time of entering into such
transaction, the unsecured long-term debt of the counterparty, combined with any
credit enhancements, is rated at least A by S&P or Moody's or has an equivalent
rating from another NRSRO or is determined to be of equivalent credit quality by
the Advisor. If there is a default by the counterparty, each fund may have
contractual remedies pursuant to the agreements related to the transaction. The
swap market has grown substantially in recent years with a large number of banks
and investment banking firms acting both as principals and as agents utilizing
standardized swap documentation. As a result, the swap market has become
relatively liquid. Caps, floors and collars are more recent innovations for
which standardized documentation has not yet been fully developed and,
accordingly, they are less liquid than swaps.

A credit default swap is a contract between a buyer and a seller of protection
against a pre-defined credit event. The buyer of protection pays the seller a
fixed regular fee provided that no event of default on an underlying reference
obligation has occurred. If an event of default occurs, the seller must pay the
buyer the full notional value, or "par value," of the reference obligation in
exchange for the reference obligation. Credit default swaps are used as a means
of "buying" credit protection, i.e., attempting to mitigate the risk of default
or credit quality deterioration in some portion of a fund's holdings, or
"selling" credit protection, i.e., attempting to gain exposure to an underlying
issuer's credit quality characteristics without directly investing in that
issuer. Where a fund is a seller of credit protection, it effectively adds
leverage to its portfolio because, in addition to its total net assets, a fund
would be subject to investment exposure on the notional amount of the swap. A
fund will only sell credit protection with respect to securities in which it
would be authorized to invest directly. A fund currently considers credit
default swaps to be illiquid and treats the market value of the contract as
illiquid for purposes of determining compliance with a fund's restrictions on
investing in illiquid securities.

If a fund is a buyer of a credit default swap and no event of default occurs, a
fund will lose its investment and recover nothing. However, if a fund is a buyer
and an event of default occurs, a fund will receive the full notional value of
the reference obligation that may have little or no value. As a seller, the fund
receives a fixed rate of income through the term of the contract (typically
between six months and three years), provided that there is no default event. If
an event of default occurs, the seller must pay the buyer the full notional
value of the reference obligation. Credit default swaps involve greater risks
than if the fund had invested in the reference obligation directly.

A fund may use credit default swaps to gain exposure to particular issuers or
particular markets through investments in portfolios of credit default swaps,
such as Dow Jones CDX.NA.HY certificates. By investing in certificates
representing interests in a basket of credit default swaps, the fund is taking
credit risk with respect to an entity or group of entities and providing credit
protection to the swap counterparties. For example, the CDX EM is a tradable
basket of 19 credit default swaps on country credits which seeks to replicate
the returns on the indices of a broad group of emerging markets countries. The
credits are a subset of the countries represented by the JPMorgan Emerging
Markets Bond Index Global Diversified. By purchasing interests in CDX EM, the
fund is gaining emerging markets exposure through a single investment. Unlike
other types of credit default swaps which are generally considered illiquid,
credit default swap certificates generally can be sold within seven days and are
not subject to the fund's restrictions on investing in illiquid securities.

Combined Transactions. A fund may enter into multiple transactions, including
multiple options transactions, multiple futures transactions, multiple currency
transactions (including forward currency contracts) and multiple interest rate
transactions and any combination of futures, options, currency and interest rate
transactions ("component" transactions), instead of a single Strategic
Transaction, as part of a single or combined strategy when, in the opinion of
the Advisor, it is in the best interests of a fund to do so. A combined
transaction will usually contain elements of risk that are present in each of
its component transactions. Although combined transactions are normally entered
into based on the Advisor's judgment that the combined strategies will reduce
risk or otherwise more effectively achieve the desired portfolio management
goal, it is possible that the combination will instead increase such risks or
hinder achievement of the portfolio management objective.

Portfolio Holdings

In addition to the public disclosure of the Portfolio's portfolio holdings
through required SEC quarterly filings, the Portfolio may make its portfolio
holdings information publicly available on the DWS Funds' Web site as described
in the Portfolio's prospectus. The Portfolio does not disseminate non-public
information about portfolio holdings except in accordance with policies and
procedures adopted by the Portfolio.

The Portfolio's procedures permit non-public portfolio holdings information to
be shared with Deutsche Asset Management and its affiliates (collectively
"DeAM"), subadvisors, if any, custodians, independent registered public
accounting firms, attorneys, officers and trustees and each of their respective
affiliates and advisers who require access to this information to fulfill their
duties to the Portfolio and are subject to the duties of confidentiality,
including the duty not to trade on non-public information, imposed by law or
contract, or by the Portfolio's procedures. This non-public information may also
be disclosed, subject to the requirements described below, to certain third
parties, such as securities lending agents, financial printers, proxy voting
firms, mutual fund analysts and rating and tracking agencies, or to shareholders
in connection with in-kind redemptions (collectively, "Authorized Third
Parties").

Prior to any disclosure of the Portfolio's non-public portfolio holdings
information to Authorized Third Parties, a person authorized by the Portfolio's
Trustees must make a good faith determination in light of the facts then known
that the Portfolio has a legitimate business purpose for providing the
information, that the disclosure is in the best interest of the Portfolio, and
that the recipient assents or otherwise has a duty to keep the information
confidential and to not trade based on the information received while the
information remains non-public. No compensation is received by the Portfolio or
DeAM for disclosing non-public holdings information. Periodic reports regarding
these procedures will be provided to the Portfolio's Trustees.

Portfolio holdings information distributed by the trading desks of DeAM or a
subadvisor for the purpose of facilitating efficient trading of such securities
and receipt of relevant research is not subject to the foregoing requirements.
Non-public portfolio holding information does not include portfolio
characteristics (other than holdings or subsets of holdings) about the Portfolio
and information derived therefrom, including, but not limited to, how the
Portfolio's investments are divided among various sectors, industries,
countries, value and growth stocks, bonds, currencies and cash, types of bonds,
bond maturities, duration, bond coupons and bond credit quality ratings so long
as the identity of the Portfolio's holdings could not be derived from such
information.

Registered investment companies that are subadvised by DeAM may be subject to
different portfolio holdings disclosure policies, and neither DeAM nor the
Portfolio's Trustees exercise control over such policies. In addition, separate
account clients of DeAM have access to their portfolio holdings and are not
subject to the Portfolio's portfolio holdings disclosure policy. The portfolio
holdings of some of the funds subadvised by DeAM and some of the separate
accounts managed by DeAM may substantially overlap with the portfolio holdings
of the Portfolio.

DeAM also manages certain unregistered commingled trusts and creates model
portfolios, the portfolio holdings of which may substantially overlap with the
portfolio holdings of the Portfolio. To the extent that investors in these
commingled trusts or recipients of model portfolio holdings information may
receive portfolio holdings information of their trust or of a model portfolio on
a different basis from that on which fund portfolio holdings information is made
public, DeAM has implemented procedures reasonably designed to encourage such
investors and recipients to keep such information confidential, and to prevent
those investors from trading on the basis of non-public holdings information.

There is no assurance that the Portfolio's policies and procedures with respect
to the disclosure of portfolio holdings information will protect the Portfolio
from the potential misuse of portfolio holdings information by those in
possession of that information.

                           MANAGEMENT OF THE PORTFOLIO


Deutsche Investment Management Americas Inc. ("DIMA"), which is part of Deutsche
Asset Management ("DeAM"), is the Advisor for the Portfolio. Under the oversight
of the Fund's Board, DIMA, with headquarters at 345 Park Avenue, New York, New
York 10154, the subadvisor and the sub-subadvisors (each described below) make
the Portfolio's investment decisions, buy and sell securities for the Portfolio
and conduct research that leads to these purchase and sale decisions. The
Advisor may also provide consulting services to the subadvisors and
sub-subadvisors. The Advisor manages the Portfolio's daily investment and
business affairs subject to the policies established by the Board of Trustees.
DIMA and its predecessors have more than 80 years of experience managing mutual
funds. DIMA provides a full range of investment advisory services to
institutional and retail clients. The Advisor is also responsible for selecting
brokers and dealers and for negotiating brokerage commissions and dealer
charges.


DeAM is the marketing name in the US for the asset management activities of
Deutsche Bank AG, DIMA, Deutsche Bank Trust Company Americas and DWS Trust
Company. DeAM is a global asset management organization that offers a wide range
of investing expertise and resources, including hundreds of portfolio managers
and analysts and an office network that reaches the world's major investment
centers. This well-resourced global investment platform brings together a wide
variety of experience and investment insight, across industries, regions, asset
classes and investing styles. DIMA is an indirect, wholly owned subsidiary of
Deutsche Bank AG. Deutsche Bank AG is a major global banking institution that is
engaged in a wide range of financial services, including investment management,
mutual fund, retail, private and commercial banking, investment banking and
insurance. DWS Investments is part of Deutsche Bank's Asset Management division
and, within the US, represents the retail asset management activities of
Deutsche Bank AG, Deutsche Bank Trust Company Americas, Deutsche Investment
Management Americas Inc. and DWS Trust Company.


Pursuant to an investment management agreement between the Fund, on behalf of
the Portfolio, and DIMA (the "Investment Management Agreement"), the Advisor
provides continuing investment management of the assets of the Portfolio. In
addition to the investment management of the assets of the Portfolio, the
Advisor determines the investments to be made for the Portfolio, including what
portion of its assets remain uninvested in cash or cash equivalents, and with
whom the orders for investments are placed, consistent with the Portfolio's
policies as stated in its Prospectus and SAI, or as adopted by the Fund's Board.
The Advisor will also monitor, to the extent not monitored by the Portfolio's
administrator or other agent, the Portfolio's compliance with its investment and
tax guidelines and other compliance policies. The Investment Management
Agreement was approved by the Board on September 19, 2008, is effective until
September 30, 2010, and continues from year to year thereafter only if approved
annually by the vote of a majority of those Trustees who are not parties to such
Agreements or interested persons of the Advisor or the Fund ("Independent
Trustees" or "Non-interested Trustees"), cast in person at a meeting called for
the purpose of voting on such approval, and either by a vote of the Fund's
Trustees or of a majority of the outstanding voting securities of the Portfolio.


The Advisor provides assistance to the Fund's Board in valuing the securities
and other instruments held by the Portfolio, to the extent reasonably required
by valuation policies and procedures that may be adopted by the Portfolio.

Pursuant to the Investment Management Agreement, (unless otherwise provided in
the agreement or as determined by the Fund's Board and to the extent permitted
by applicable law), the Advisor pays the compensation and expenses of all the
Board members, officers, and executive employees of the Portfolio, including the
Portfolio's share of payroll taxes, who are affiliated persons of the Advisor.

For all services provided under the Investment Management Agreement, the
Portfolio pays the Advisor under the Investment Management Agreement a fee,
calculated daily and paid monthly, in the sum of: (i) 0.20% of the portfolio's
average daily net assets invested in other DWS funds; and (ii) 1.20% of the
Portfolio's average daily net assets invested in all other assets not considered
other DWS funds. For purposes of the management fee, "other DWS funds" means
US-registered investment companies with the Advisor serving as investment
advisor. The Advisor and its affiliates earn fees at varying rates for providing
services to the underlying DWS funds. The Advisor may therefore have a conflict
of interest in selecting the underlying DWS funds and in determining whether to
invest in an ETF, from which it will not receive any fees. However, the Advisor
is a fiduciary to the Portfolio and will select investments that it believes are
best suited to meet the Portfolio's investment objective.

Because the Portfolio commenced operations on January 20, 2009, the Portfolio
does not have any historical advisory fee information to report.

Through April 30, 2010, the Advisor has contractually agreed to waive all or a
portion of its management fee and reimburse or pay operating expenses to the
extent necessary to maintain "Total Annual Operating Expenses" at 0.21% for
Class A shares and 0.61% for Class B shares, excluding certain expenses such as
extraordinary expenses, taxes, brokerage, interest, and acquired funds
(underlying funds) fees and expenses (estimated at 1.35%).

The Investment Management Agreement provides that the Portfolio is generally
responsible for expenses that include: fees payable to the Advisor; outside
legal, accounting or auditing expenses, including with respect to expenses
related to negotiation, acquisition or distribution of portfolio investments;
maintenance of books and records that are maintained by the Portfolio, the
Portfolio's custodian, or other agents of the Portfolio; taxes and governmental
fees; fees and expenses of the Portfolio's accounting agent, custodian,
sub-custodians, depositories, transfer agents, dividend reimbursing agents and
registrars; payment for portfolio pricing or valuation services to pricing
agents, accountants, bankers and other specialists, if any; brokerage
commissions or other costs of acquiring or disposing of any portfolio securities
or other instruments of the Portfolio; and litigation expenses and other
extraordinary expenses not incurred in the ordinary course of the Portfolio's
business.

The Investment Management Agreement allows the Advisor to delegate any of its
duties under the Agreement to a subadvisor, subject to a majority vote of the
Board of the Fund, including a majority of the Board who are not interested
persons of the Fund, and, if required by applicable law, subject to a majority
vote of the Portfolio's shareholders.

The Investment Management Agreement provides that the Advisor shall not be
liable for any error of judgment or mistake of law or for any loss suffered by
the Portfolio in connection with matters to which the agreement relates, except
a loss resulting from willful malfeasance, bad faith or gross negligence on the
part of the Advisor in the performance of its duties or from reckless disregard
by the Advisor of its obligations and duties under the Investment Management
Agreement. The Investment Management Agreement may be terminated at any time,
without payment of penalty, by either party or by vote of a majority of the
outstanding voting securities of the Portfolio on 60 days' written notice.

Under a separate agreement between Deutsche Bank AG and the Portfolio, Deutsche
Bank AG has granted a license to the Portfolio to utilize the trademark "DWS."

Officers and employees of the Advisor from time to time may have transactions
with various banks, including the Portfolio's custodian bank. It is the
Advisor's opinion that the terms and conditions of those transactions which have
occurred were not influenced by existing or potential custodial or other
Portfolio relationships.

The Advisor may serve as advisor to other funds with investment objectives and
policies similar to those of the Portfolio that may have different distribution
arrangements or expenses, which may affect performance.

None of the officers or Trustees of the Fund may have dealings with the
Portfolio as principals in the purchase or sale of securities, except as
individual subscribers to or holders of shares of the Portfolio.

The Advisor may enter into arrangements with affiliates and third party service
providers to perform various administrative, back-office and other services
relating to client accounts. Such service providers may be located in the US or
in non-US jurisdictions.


From time to time, Deutsche Bank or an affiliate (collectively, "DB") may at its
sole discretion invest its own assets in shares of each Portfolio ("proprietary
investment") for such purposes it deems appropriate, including investments
designed to assist in the management of each Portfolio's portfolio. Any
proprietary investment may be hedged and, in that event, the return on the
proprietary investment, net of the effect of the hedge, would be expected to
differ from the return of each Portfolio. DB has no obligation to make any
proprietary investments and the amount of any proprietary investment this is
made may or may not be significant in comparison to the level of assets of each
Portfolio. In the event that a proprietary investment is made, except as
otherwise required under the Investment Company Act of 1940, DB would be
permitted to redeem the investment at such time that it deems appropriate.

In addition, the Board and the sole shareholder have approved a subadvisor
approval policy for the Fund (the "Subadvisor Approval Policy"). The Subadvisor
Approval Policy permits the Advisor, subject to the approval of the Board,
including a majority of its independent board members, to appoint and replace
subadvisors and to amend sub-advisory contracts without obtaining shareholder
approval. Under the Subadvisor Approval Policy, the Board, including its
independent board members, will continue to evaluate and approve all new
sub-advisory contracts between the Advisor and any subadvisor, as well as all
changes to any existing sub-advisory contract. The Fund cannot implement the
Subadvisor Approval Policy without the SEC either adopting revisions to current
rules (as it proposed to do in October 2003) or granting the Fund exemptive
relief from existing rules. The Fund and the Advisor would be subject to certain
conditions imposed by the SEC (and certain conditions that may be imposed in the
future within either exemptive relief or a rule) to ensure that the interests of
the Fund and its shareholders are adequately protected whenever the Advisor acts
under the Subadvisor Approval Policy, including any shareholder notice
requirements.

Subadvisor and Sub-Subadvisors

Subadvisor. RREEF America L.L.C. ("RREEF"), an investment advisor registered
with the SEC, is located at 875 N. Michigan Avenue, Chicago, Illinois 60611.
RREEF is an indirect wholly owned subsidiary of Deutsche Bank AG. RREEF has
provided real estate investment management services to institutional investors
since 1975 across a diversified portfolio of industrial properties, office
buildings, residential apartments and shopping centers. RREEF has also been an
investment advisor of real estate securities since 1993. While DIMA is the
investment advisor to the Portfolio, a portion the day-to-day activities of
managing the Portfolio have been delegated to RREEF. RREEF manages the
Portfolio's direct investments in global infrastructure and global real estate.
DIMA compensates RREEF out of the management fee it receives from the Portfolio.





RREEF provides sub-advisory services to the Portfolio pursuant to a sub-advisory
agreement with DIMA. The subadvisory agreement provides that the subadvisor will
not be liable for any error of judgment or mistake of law or for any loss
suffered by the Portfolio in connection with matters to which the subadvisory
agreement relates, except a loss resulting from willful misconduct, bad faith or
gross negligence on the part of the subadvisor in the performance of its duties
under the subadvisory agreement

The subadvisory agreement shall continue in effect until September 30, 2010 and
from year to year thereafter, but only as long as such continuance is
specifically approved at least annually (a) by a majority of the Trustees of the
Fund who are not parties to such agreement or interested persons of any such
party except in their capacity as Trustees, and (b) by the shareholders or the
Board of Trustees of the Fund. The subadvisory agreement may be terminated at
any time upon sixty days' notice by the subadvisor, DIMA or by the Board of
Trustees of the Fund or by majority vote of the outstanding shares of the
Portfolio, and will terminate automatically upon assignment or upon termination
of the Portfolio's Investment Management Agreement.


Sub-subadvisors. Pursuant to agreements between RREEF and RREEF Global Advisors
Limited ("RGAL"), Deutsche Asset Management (Hong Kong) Limited ("DeAM Hong
Kong") and DIAL (the "subsubadvisors"), these entities have been appointed to
act as sub-subadvisors to the Portfolio with respect to the Portfolio's direct
investments in global infrastructure and global real estate securities. RGAL
provides sub-subadvisory services related to European securities, DeAM Hong Kong
provides sub-subadvisory services related to Asian securities and DIAL provides
sub-subadvisory services related to Australian securities. The sub-subadvisors
are indirect, wholly owned subsidiaries of Deutsche Bank AG.

Deutsche Investments Australia Limited ("DIAL") is an indirect, wholly owned
subsidiary of Deutsche Bank AG. DIAL is located at Level 16, 126 Phillip Street,
Sydney NSW 200, Australia. DIAL serves as both subadvisor for mutual funds and
investment advisor for certain institutional accounts.

RGAL is located at 1 Great Winchester Street, London, United Kingdom, EC2N 2DB.
DeAM Hong Kong is located at 48/F Cheung Kong Center, 2 Queen's Road Central,
Hong Kong, China.

The sub-subadvisors are paid for their sub-subadvisory services by RREEF from
the subadvisory fee paid by DIMA to RREEF.

Compensation of Portfolio Managers

Portfolio managers are eligible for total compensation comprised of base salary
and variable compensation.

Base Salary - Base salary is linked to job functions, responsibilities and
financial services industry peer comparison through the use of extensive market
data surveys.

Variable Compensation - Generally, variable compensation comprises a greater
proportion of total compensation as a portfolio manager's seniority and
compensation levels increase. Variable Compensation may include a cash bonus
incentive, and potential participation in long-term incentive programs including
but not limited to, Deutsche Bank equity, equity linked vehicle, and restricted
cash. Variable compensation is determined based on an analysis of a number of
factors, including among other things, the performance of Deutsche Bank, the
performance of the Asset Management division, and the portfolio manager's
individual contribution. In evaluating individual contribution, management will
consider a combination of quantitative and qualitative factors. Top performing
investment professionals earn a total compensation package that is highly
competitive. As variable compensation increases, the percentage awarded in
long-term incentives also increases. Long-term incentives are subject to a
clawback provision for unvested portions only during the three-year life of the
plan should the individual engage in any conduct that is a significant breach of
DB policies and procedures.

o    The quantitative analysis of a portfolio manager's individual performance
     is based on, among other factors, performance of all of the accounts
     managed by the portfolio manager (which includes the portfolio 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 portfolio's prospectus to
     which the portfolio'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
     portfolio's assets due to the purchase or sale of portfolio shares is not
     considered a material factor.

o    The qualitative analysis of a portfolio manager's individual performance is
     based on, among other things, the results of an annual management and
     internal peer review process, and management's assessment of overall
     portfolio manager contributions to investor relations, the investment
     process and overall performance (distinct from portfolio and other account
     performance). Other factors, including contributions made to the investment
     team, as well as adherence to Compliance Policies and Procedures, Risk
     Management procedures, the firm's Code of Ethics and "living the values" of
     the Advisor are also factors.

The quantitative analysis of a portfolio manager's performance is given more
weight in determining variable compensation than the qualitative portion.

Portfolio Ownership of Portfolio Managers.


For Portfolios managed by the Advisor or an affiliated Advisor, the following
table shows the dollar range of shares owned beneficially and of record by each
member of the Portfolio's management team (except DWS Money Market VIP) in the
applicable Portfolio 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 Portfolio's most recent fiscal year end.


<TABLE>
<CAPTION>
                                               Dollar Range of                    Dollar Range of All
     Name of                                  Portfolio Shares                      DWS Fund Shares
     Portfolio Manager                              Owned                                Owned
     -----------------                              -----                                -----

<S>                                                <C>                                <C>
Inna Okounkova                                     $0(1)                              $100,001-$500,000
Robert Wang                                        $0(2)                              $100,001-$500,000
Thomas Picciochi                                   $0(3)                              $100,001-$500,000
</TABLE>

(1)      Although the Portfolio Manager does not have an investment in this
         variable annuity portfolio, the Portfolio Manager does hold $1-$10,000
         in DWS Alternative Asset Allocation Plus Fund, the retail mutual fund
         that has the same investment strategy. This investment is included in
         the "Dollar Range of All DWS Fund Shares Owned."

(2)      Although the Portfolio Manager does not have an investment in this
         variable annuity portfolio, the Portfolio Manager does hold $1-$10,000
         in DWS Alternative Asset Allocation Plus Fund, the retail mutual fund
         that has the same investment strategy. This investment is included in
         the "Dollar Range of All DWS Fund Shares Owned."

(3)      Although the Portfolio Manager does not have an investment in this
         variable annuity portfolio, the Portfolio Manager does hold
         $10,001-$50,000 in DWS Alternative Asset Allocation Plus Fund, the
         retail mutual fund that has the same investment strategy. This
         investment is included in the "Dollar Range of All DWS Fund Shares
         Owned."

Conflicts of Interest

In addition to managing the assets of the Portfolios, the 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 Portfolio, (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 Portfolios' most recent fiscal year end.

Other SEC Registered Investment Companies Managed:

<TABLE>
<CAPTION>
                                 Number of           Total Assets of        Number of Investment    Total Assets of
                                 Registered             Registered         Company Accounts with     Performance-
Name of Portfolio                Investment             Investment              Performance-           Based Fee
Manager                          Companies              Companies                Based Fee             Accounts
-------                          ---------              ---------                ---------             --------

<S>                                    <C>             <C>                           <C>                  <C>
Inna Okounkova                         16              $2,752,392,862                0                    $0
Robert Wang                            45             $11,754,316,153                0                    $0
Thomas Picciochi                       13              $6,292,952,939                0                    $0

Other Pooled Investment Vehicles Managed:
                                                                              Number of Pooled
                                 Number of                                   Investment Vehicle     Total Assets of
                                   Pooled                                      Accounts with         Performance-
Name of Portfolio                Investment       Total Assets of Pooled        Performance-           Based Fee
Manager                           Vehicles         Investment Vehicles           Based Fee             Accounts
-------                           --------         -------------------           ---------             --------

Inna Okounkova                           3              $58,377,538                  0                        $0
Robert Wang                             38           $1,528,682,925                  1                $4,184,315
Thomas Picciochi                        13             $570,623,604                  1                $4,184,315

Other Accounts Managed:

                                                                              Number of Other       Total Assets of
                                   Number                                      Accounts with         Performance-
Name of Portfolio                 of Other           Total Assets of            Performance-           Based Fee
Manager                           Accounts            Other Accounts             Based Fee             Accounts
-------                           --------            --------------             ---------             --------

Inna Okounkova                           0                        $0                 0                          $0
Robert Wang                             46            $6,324,034,835                 8                $211,118,336
Thomas Picciochi                        12              $939,669,114                 8                $211,118,336
</TABLE>

In addition to the accounts above, an investment professional may manage
accounts in a personal capacity that may include holdings that are similar to,
or the same as, those of the Portfolio. 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 Portfolio and other client accounts.

Real, potential or apparent conflicts of interest may arise when a portfolio
manager has day-to-day portfolio management responsibilities with respect to
more than one fund or account, including the following:

o    Certain investments may be appropriate for the Portfolio and also for other
     clients advised by the Advisor, including other client accounts managed by
     the Portfolio's management team. Investment decisions for the Portfolio 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 Portfolio 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 Portfolio. Purchase and sale orders for the Portfolio may be
     combined with those of other clients of the Advisor in the interest of
     achieving the most favorable net results to the Portfolio and the other
     clients.

o    To the extent that a portfolio manager has responsibilities for managing
     multiple client accounts, a portfolio manager will need to divide time and
     attention among relevant accounts. The Advisor attempts to minimize these
     conflicts by aligning its portfolio management teams by investment strategy
     and by employing similar investment models across multiple client accounts.

o    In some cases, an apparent conflict may arise where the Advisor has an
     incentive, such as a performance-based fee, in managing one account and not
     with respect to other accounts it manages. The Advisor will not determine
     allocations based on whether it receives a performance-based fee from the
     client. Additionally, the Advisor has in place supervisory oversight
     processes to periodically monitor performance deviations for accounts with
     like strategies.

o    The Advisor and its affiliates and the investment team of the Portfolio 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 Portfolio's
     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 Portfolio's Board of
Trustees.

Code of Ethics

The Portfolio has adopted a Code of Ethics pursuant to Rule 17j-1 under the 1940
Act, to ensure that the interests of the Portfolio's shareholders come before
the interests of the people who manage the Portfolio. Among other provisions,
the Code of Ethics prohibits portfolio managers and other investment personnel
from buying or selling any real estate securities or any securities sold in
private placements in which the person has, or by reason of the transaction
acquires, any direct or indirect beneficial ownership without the prior approval
of the Portfolio's compliance officer.

The Advisor and its affiliates (including the Portfolio's distributor, DWS
Investments Distributors, Inc. (the "Distributor")) have each adopted a Code of
Ethics pursuant to Rule 17j-1 under the 1940 Act (the "Consolidated Code"). The
Consolidated Code permits access persons to trade in securities that may be
purchased or held by the Portfolio for their own accounts, subject to compliance
with the Consolidated Code's pre-clearance requirements. In addition, the
Consolidated Code also provides for trading "blackout periods" that prohibit
trading by personnel within periods of trading by the Portfolio in the same
security. The Consolidated Code also prohibits short-term trading profits and
personal investment in initial public offerings and requires prior approval with
respect to purchases of securities in private placements.

                           PORTFOLIO SERVICE PROVIDERS

Administrator

The Advisor serves as the Portfolio's administrator and has entered into an
administrative services agreement with the Portfolio (the "Administrative
Services Agreement"), pursuant to which the Advisor provides administrative
services to the Portfolio including, among others, providing the Portfolio with
personnel, preparing and making required filings on behalf of the Portfolio,
maintaining books and records for the Portfolio, and monitoring the valuation of
Portfolio securities. For all services provided under the Administrative
Services Agreement, the Portfolio pays the Advisor a fee, computed daily and
paid monthly, of 0.100% of the Portfolio's average daily net assets.

Under the Administrative Services Agreement, the Advisor is obligated on a
continuous basis to provide such administrative services as the Board reasonably
deems necessary for the proper administration of the Portfolio. The Advisor
provides the Portfolio with personnel; arranges for the preparation and filing
of the Portfolio's tax returns; prepares and submits reports and meeting
materials to the Board and the shareholders; prepares and files updates to the
Portfolio's prospectus and statement of additional information as well as other
reports required to be filed by the SEC; maintains the Portfolio's records;
provides the Portfolio with office space, equipment and services; supervises,
negotiates the contracts of and monitors the performance of third parties
contractors; oversees the tabulation of proxies; monitors the valuation of
portfolio securities and monitors compliance with Board-approved valuation
procedures; assists in establishing the accounting and tax policies of the
Portfolio; assists in the resolution of accounting issues that may arise with
respect to the Portfolio; establishes and monitors the Portfolio's operating
expense budgets; reviews and processes the Portfolio's bills; assists in
determining the amount of dividends and distributions available to be paid by
the Portfolio, prepares and arranges dividend notifications and provides
information to agents to effect payments thereof; provides to the Board periodic
and special reports; provides assistance with investor and public relations
matters; and monitors the registration of shares under applicable federal and
state law. The Advisor also performs certain fund accounting services under the
Administrative Services Agreement. The Administrative Services Agreement
provides that the Advisor will not be liable under the Administrative Services
Agreement except for willful misfeasance, bad faith or negligence in the
performance of its duties or from the reckless disregard by it of its duties and
obligations thereunder.

Because the Portfolio commenced operations on January 20, 2009, the Portfolio
does not have any historical administrative services fee information to report.

Pursuant to an agreement between the Advisor and State Street Bank and Trust
Company ("SSB"), the Advisor has delegated certain administrative functions to
SSB. The costs and expenses of such delegation are borne by the Advisor, not by
the Portfolio.

Pursuant to DeAM procedures approved by the Boards on behalf of the DWS funds,
proof of claim forms are routinely filed on behalf of the DWS funds by a third
party service provider, with certain limited exceptions. The Boards of the DWS
funds receive periodic reports regarding the implementation of these procedures.

Distributor

DWS Investments Distributors, Inc. ("DIDI" or the "Distributor"), 222 South
Riverside Plaza, Chicago, Illinois 60606, a wholly owned subsidiary of the
Advisor, is the distributor and principal underwriter for shares of the
Portfolio pursuant to an Underwriting Agreement in the continuous offering of
its shares. Terms of continuation, termination and assignment under the
underwriting agreement are identical to those described above with regard to the
investment management agreements, except that termination other than upon
assignment requires sixty days' notice.

In addition, DIDI may, from time to time, from its own resources pay certain
firms additional amounts for ongoing administrative services and assistance
provided to their customers and clients who are shareholders of the Portfolio.

The Portfolio offers Class B shares and has adopted a distribution plan under
Rule 12b-1 (the "Plan") that provides for fees payable as an expense of the
Class B shares. Under the Plan, the Fund may make quarterly payments as
reimbursement to the Distributor for distribution and shareholder servicing
related expenses incurred or paid by the distributor or a participating
insurance company. No such payment shall be made with respect to any quarterly
period in excess of an amount determined for such period at the annual rate of
0.25% of the average daily net assets of Class B shares during that quarterly
period. The fee is payable by the Fund, on behalf of the Portfolio, of up to
0.25% of the average daily net assets attributable to the Class B shares of the
Portfolio. Because 12b-1 fees are paid out of Portfolio assets on an ongoing
basis, they will, over time, increase the cost of investment and may cost more
than other types of sales charges. The Plan and any Rule 12b-1-related agreement
that is entered into by the Fund or the Distributor in connection with the Plan
will continue in effect for a period of more than one year only so long as
continuance is specifically approved at least annually by a vote of a majority
of the Fund's Board of Trustees, and of a majority of the Trustees who are not
interested persons (as defined in the 1940 Act) of the Fund or the Portfolio
("Independent Trustees"), cast in person at a meeting called for the purpose of
voting on the Plan, or the Rule 12b-1 related agreement, as applicable. In
addition, the Plan and any Rule 12b-1 related agreement, may be terminated as to
Class B shares of the Portfolio at any time, without penalty, by vote of a
majority of the outstanding Class B shares of the Portfolio or by vote of a
majority of the Independent Trustees. The Plan and Underwriting Agreement also
provide that it may not be amended to increase materially the amount that may be
spent for distribution of Class B shares of the Portfolio without the approval
of Class B shareholders of the Portfolio.

Because the Portfolio commenced operations on January 20, 2009, the Portfolio
does not have any historical distribution fee information to report.

Recordkeeping


Technically, the shareholders of the Portfolio are the participating insurance
companies that offer the Portfolio as an investment option for holders of
certain variable annuity contracts and variable life insurance policies.
Effectively, ownership of Portfolio shares is passed through to insurance
company contract and policy holders. The holders of the shares of the Portfolio
on the records of the Fund are the participating insurance companies and no
information concerning the Portfolio holdings of specific contract and policy
holders is maintained by the Fund. The insurance companies place orders for the
purchase and redemption of Portfolio shares with the Fund reflecting the
investment of premiums paid, surrender and transfer requests and other matters
on a net basis; they maintain all records of the transactions and holdings of
Portfolio shares and distributions thereon for individual contract and policy
holders; and they prepare and mail to contract and policy holders confirmations
and periodic account statements reflecting such transactions and holdings.


Custodian

SSB, as custodian, will have custody of all securities and cash of the
Portfolio. The custodian attends to the collection of principal and income, and
payment for and collection of proceeds of securities bought and sold by the
Portfolio.

Transfer Agent

DWS Investments Service Company ("DISC" or the "Transfer Agent"), 210 West 10th
Street, Kansas City, Missouri 64105-1614, an affiliate of the Advisor, is the
Portfolio's transfer agent, dividend-paying agent and shareholder service agent.


The Transfer Agent receives an annual service fee for each account of the
Portfolio, based on the type of account. For open retail accounts, the fee is a
flat fee ranging from $20.00 to $27.50 per account, for open wholesale money
funds the fee is $35.05 per account, while for certain retirement accounts
serviced on the recordkeeping system of ADP, Inc., the fee is a flat fee up to
$3.80 per account (as of 2008, indexed to inflation) plus an asset based fee of
up to 0.25% of average net assets. 1/12th of the annual service charge for each
account is charged and payable to the Transfer Agent each month. A fee is
charged for any account which at any time during the month had a share balance
in the Portfolio. Smaller fees are also charged for closed accounts for which
information must be retained on the Transfer Agent's system for up to 18 months
after closing for tax reporting purposes.


Certain out-of-pocket expenses incurred by the Transfer Agent, including
expenses of printing and mailing routine fund disclosure documents, costs of
record retention and transaction processing costs are reimbursed by the
Portfolio or are paid directly by the Portfolio. Certain additional
out-of-pocket expenses, including costs of computer hardware and software, third
party record-keeping and processing of proxy statements, may only be reimbursed
by the Portfolio with the prior approval of the Board.

Pursuant to a sub-transfer agency agreement between DISC and DST Systems, Inc.
("DST"), DISC has delegated certain transfer agent and dividend paying agent
functions to DST. The costs and expenses of such delegation are borne by DISC,
not by the Portfolio.

Counsel

Vedder Price P.C., 222 N. LaSalle St., Chicago, Illinois, serves as legal
counsel to the Fund.

Ropes & Gray LLP, One International Place, Boston, MA, serves as counsel to the
Independent Trustees.

Independent Registered Public Accounting Firm


Ernst & Young LLP, 200 Clarendon Street, Boston, MA 02116, serves as the
Portfolio's independent registered public accounting firm, 200 Clarendon Street,
Boston, MA 02116. Ernst & Young LLP will audit the financial statements of the
Portfolio and provide other audit, tax and related services. Shareholders will
receive annual audited financial statements and semi-annual unaudited financial
statements.


Regulatory Matters and Legal Proceedings

On December 21, 2006, Deutsche Asset Management ("DeAM") settled proceedings
with the Securities and Exchange Commission ("SEC") and the New York Attorney
General on behalf of Deutsche Asset Management, Inc. ("DAMI") and DIMA, the
investment advisors to many of the DWS Investments funds, regarding allegations
of improper trading of fund shares at DeAM and at the legacy Scudder and Kemper
organizations prior to their acquisition by DeAM in April 2002. These regulators
alleged that although the prospectuses for certain funds in the regulators' view
indicated that the funds did not permit market timing, DAMI and DIMA breached
their fiduciary duty to those funds in that their efforts to limit trading
activity in the funds were not effective at certain times. The regulators also
alleged that DAMI and DIMA breached their fiduciary duty to certain funds by
entering into certain market timing arrangements with investors. These trading
arrangements originated in businesses that existed prior to the currently
constituted DeAM organization, which came together as a result of various
mergers of the legacy Scudder, Kemper and Deutsche fund groups, and all of the
arrangements were terminated prior to the start of the regulatory investigations
that began in the summer of 2003. No current DeAM employee approved these
trading arrangements. Under the terms of the settlements, DAMI and DIMA neither
admitted nor denied any wrongdoing.

The terms of the SEC settlement, which identified improper trading in the legacy
Deutsche and Kemper mutual funds only, provide for payment of disgorgement in
the amount of $17.2 million. The terms of the settlement with the New York
Attorney General provide for payment of disgorgement in the amount of $102.3
million, which is inclusive of the amount payable under the SEC settlement, plus
a civil penalty in the amount of $20 million. The total amount payable by DeAM,
approximately $122.3 million, will be distributed to shareholders of the
affected funds in accordance with a distribution plan to be developed by a
distribution consultant. The funds' investment advisors do not believe these
amounts will have a material adverse financial impact on them or materially
affect their ability to perform under their investment management agreements
with the DWS funds. The above-described amounts are not material to Deutsche
Bank, and have already been reserved.

Among the terms of the settled orders, DeAM is subject to certain undertakings
regarding the conduct of its business in the future, including formation of a
Code of Ethics Oversight Committee to oversee all matters relating to issues
arising under the advisors' Code of Ethics; establishment of an Internal
Compliance Controls Committee having overall compliance oversight responsibility
of the advisors; engagement of an Independent Compliance Consultant to conduct a
comprehensive review of the advisors' supervisory compliance and other policies
and procedures designed to prevent and detect breaches of fiduciary duty,
breaches of the Code of Ethics and federal securities law violations by the
advisors and their employees; and commencing in 2008, the advisors shall undergo
a compliance review by an independent third party.

In addition, DeAM is subject to certain further undertakings relating to the
governance of the mutual funds, including that at least 75% of the members of
the Boards of Trustees/Directors overseeing the DWS Funds continue to be
independent of DeAM; the Chairmen of the DWS Funds' Boards of Trustees/Directors
continue to be independent of DeAM; DeAM maintain existing management fee
reductions for certain funds for a period of five years and not increase
management fees for these certain funds during this period; the funds retain a
senior officer (or independent consultants, as applicable) responsible for
assisting in the review of fee arrangements and monitoring compliance by the
funds and the investment advisors with securities laws, fiduciary duties, codes
of ethics and other compliance policies, the expense of which shall be borne by
DeAM; and periodic account statements, fund prospectuses and the mutual funds'
web site contain additional disclosure and/or tools that assist investors in
understanding the fees and costs associated with an investment in the funds and
the impact of fees and expenses on fund returns.

DeAM has also settled proceedings with the Illinois Secretary of State regarding
market timing matters. The terms of the Illinois settlement provide for investor
education contributions totaling approximately $4 million and a payment in the
amount of $2 million to the Securities Audit and Enforcement Fund.

On September 28, 2006, the SEC and the National Association of Securities
Dealers ("NASD") (now known as the Financial Industry Regulatory Authority, or
"FINRA") announced final agreements in which Deutsche Investment Management
Americas Inc. ("DIMA"), Deutsche Asset Management, Inc. ("DAMI") and DWS Scudder
Distributors, Inc. (now known as DWS Investments Distributors, Inc. ("DIDI"))
settled administrative proceedings regarding disclosure of brokerage allocation
practices in connection with sales of the DWS Funds' (now known as the DWS
Investments Funds) shares during 2001-2003. The agreements with the SEC and NASD
are reflected in orders which state, among other things, that DIMA and DAMI
failed to disclose potential conflicts of interest to the funds' Boards and to
shareholders relating to DIDI's use of certain funds' brokerage commissions to
reduce revenue sharing costs to broker-dealer firms with whom it had
arrangements to market and distribute DWS Fund shares. These directed brokerage
practices were discontinued in October 2003.

Under the terms of the settlements, in which DIMA, DAMI and DIDI neither
admitted nor denied any of the regulators' findings, DIMA, DAMI and DIDI agreed
to pay disgorgement, prejudgment interest and civil penalties in the total
amount of $19.3 million. The portion of the settlements distributed to the funds
was approximately $17.8 million and was paid to the funds as prescribed by the
settlement orders based upon the amount of brokerage commissions from the
Portfolio used to satisfy revenue sharing agreements with broker-dealers who
sold fund shares.

As part of the settlements, DIMA, DAMI and DIDI also agreed to implement certain
measures and undertakings relating to revenue sharing payments including making
additional disclosures in the funds' Prospectuses or Statements of Additional
Information, adopting or modifying relevant policies and procedures and
providing regular reporting to the fund Boards.

Additional information announced by DeAM regarding the terms of the settlements
is available at www.dws-investments.com/regulatory_settlements.

The matters alleged in the regulatory settlements described above also serve as
the general basis of a number of private class action lawsuits involving the DWS
funds. These lawsuits name as defendants various persons, including certain DWS
funds, the funds' investment advisors and their affiliates, and certain
individuals, including in some cases fund Trustees/Directors, officers, and
other parties. Each DWS fund's investment advisor has agreed to indemnify the
applicable DWS funds in connection with these lawsuits, or other lawsuits or
regulatory actions that may be filed making similar allegations.

Based on currently available information, the funds' investment advisors believe
the likelihood that the pending lawsuits will have a material adverse financial
impact on a DWS fund is remote and such actions are not likely to materially
affect their ability to perform under their investment management agreements
with the DWS funds.

                             PORTFOLIO TRANSACTIONS

As a fund-of-funds, the Portfolio invests in shares of other DWS Funds, which
are purchased directly from the issuer. The following discussion applies to the
Portfolio's other investments.

The Advisor is generally responsible for placing the orders for the purchase and
sale of portfolio securities, including the allocation of brokerage. As
applicable, references in this section to the "Advisor" should be read to mean
the Sub-Advisor and the Sub-Subadvisors, as applicable, except as noted below.

The policy of the Advisor in placing orders for the purchase and sale of
securities for the Portfolio is to seek best execution, taking into account such
factors, among others, as price; commission (where applicable); the
broker-dealer's ability to ensure that securities will be delivered on
settlement date; the willingness of the broker-dealer to commit its capital and
purchase a thinly traded security for its own inventory; whether the
broker-dealer specializes in block orders or large program trades; the
broker-dealer's knowledge of the market and the security; the broker-dealer's
ability to maintain confidentiality; the broker-dealer's ability to provide
access to new issues; the broker-dealer's ability to provide support when
placing a difficult trade; the financial condition of the broker-dealer; and
whether the broker-dealer has the infrastructure and operational capabilities to
execute and settle the trade. The Advisor seeks to evaluate the overall
reasonableness of brokerage commissions with commissions charged on comparable
transactions and compares the brokerage commissions (if any) paid by the
Portfolio to reported commissions paid by others. The Advisor routinely reviews
commission rates, execution and settlement services performed and makes internal
and external comparisons.

Commission rates on transactions in equity securities on US securities exchanges
are subject to negotiation. Commission rates on transactions in equity
securities on foreign securities exchanges are generally fixed. Purchases and
sales of fixed-income securities and certain over-the-counter securities are
effected on a net basis, without the payment of brokerage commissions.
Transactions in fixed income and certain over-the-counter securities are
generally placed by the Advisor with the principal market makers for these
securities unless the Advisor reasonably believes more favorable results are
available elsewhere. Transactions with dealers serving as market makers reflect
the spread between the bid and asked prices. Purchases of underwritten issues
will include an underwriting fee paid to the underwriter. Money market
instruments are normally purchased in principal transactions directly from the
issuer or from an underwriter or market maker.

It is likely that the broker-dealers selected based on the considerations
described in this section will include firms that also sell shares of the
Portfolio to their customers. However, the Advisor does not consider sales of
shares of the Portfolio as a factor in the selection of broker-dealers to
execute portfolio transactions for the Portfolio and, accordingly, has
implemented policies and procedures reasonably designed to prevent its traders
from considering sales of shares of the Portfolio as a factor in the selection
of broker-dealers to execute portfolio transactions for the Portfolio.

The Advisor is permitted by Section 28(e) of the Securities Exchange Act of
1934, as amended ("1934 Act"), when placing portfolio transactions for the
Portfolio, to cause the Portfolio to pay brokerage commissions in excess of that
which another broker-dealer might charge for executing the same transaction in
order to obtain research and brokerage services if the Advisor determines that
such commissions are reasonable in relation to the overall services provided.
The Advisor may from time to time, in reliance on Section 28(e) of the 1934 Act,
execute portfolio transactions with broker-dealers that provide research and
brokerage services to the Advisor. Consistent with the Advisor's policy
regarding best execution, where more than one broker is believed to be capable
of providing best execution for a particular trade, the Advisor may take into
consideration the receipt of research and brokerage services in selecting the
broker-dealer to execute the trade. Although certain research and brokerage
services from broker-dealers may be useful to the Portfolio and to the Advisor,
it is the opinion of the Advisor that such information only supplements its own
research effort since the information must still be analyzed, weighed and
reviewed by the Advisor's staff. To the extent that research and brokerage
services of value are received by the Advisor, the Advisor may avoid expenses
that it might otherwise incur. Research and brokerage services received from a
broker-dealer may be useful to the Advisor and its affiliates in providing
investment management services to all or some of its clients, which includes the
Portfolio. Services received from broker-dealers that executed securities
transactions for the Portfolio will not necessarily be used by the Advisor
specifically to service such Portfolio.

Research and brokerage services provided by broker-dealers may include, but are
not limited to, information on the economy, industries, groups of securities,
individual companies, statistical information, accounting and tax law
interpretations, political developments, legal developments affecting portfolio
securities, technical market action, pricing and appraisal services, credit
analysis, risk measurement analysis, performance analysis and measurement and
analysis of corporate responsibility issues. Research and brokerage services are
typically received in the form of written or electronic reports, access to
specialized financial publications, telephone contacts and personal meetings
with security analysts, but may also be provided in the form of access to
various computer software and meetings arranged with corporate and industry
representatives.

The Advisor may also select broker-dealers and obtain from them research and
brokerage services that are used in connection with executing trades provided
that such services are consistent with interpretations under Section 28(e) of
the 1934 Act. Typically, these services take the form of computer software
and/or electronic communication services used by the Advisor to facilitate
trading activity with those broker-dealers.

Research and brokerage services may include products obtained from third parties
if the Advisor determines that such product or service constitutes brokerage and
research as defined in Section 28(e) and interpretations thereunder. Currently,
it is the Advisor's policy that Sub-Advisors may not execute portfolio
transactions on behalf of the Portfolio to obtain third party research and
brokerage services. The Advisor may, in the future, change this policy.
Regardless, certain Sub-Advisors may, as matter of internal policy, limit or
preclude third party research and brokerage services.

The Advisor may use brokerage commissions to obtain certain brokerage products
or services that have a mixed use (i.e., it also serves a function that does not
relate to the investment decision-making process). In those circumstances, the
Advisor will make a good faith judgment to evaluate the various benefits and
uses to which it intends to put the mixed use product or service and will pay
for that portion of the mixed use product or service that it reasonably believes
does not constitute research and brokerage services with its own resources.

DIMA will monitor regulatory developments and market practice in the use of
client commissions to obtain research and brokerage services and may adjust its
portfolio transactions policies in response thereto.

Investment decisions for the Portfolio and for other investment accounts managed
by the Advisor are made independently of each other in light of differing
conditions. However, the same investment decision may be made for two or more of
such accounts. In such cases, simultaneous transactions are inevitable. To the
extent permitted by law, the Advisor may aggregate the securities to be sold or
purchased for a Portfolio with those to be sold or purchased for other accounts
in executing transactions. Purchases or sales are then averaged as to price and
commission and allocated as to amount in a manner deemed equitable to each
account. While in some cases this practice could have a detrimental effect on
the price paid or received by, or on the size of the position obtained or
disposed of for, the Portfolio, in other cases it is believed that the ability
to engage in volume transactions will be beneficial to the Portfolio.

DIMA and its affiliates and the Portfolio's management team manage other mutual
funds and separate accounts, some of which use short sales of securities as a
part of its investment strategy. The simultaneous management of long and short
portfolios creates potential conflicts of interest including the risk that short
sale activity could adversely affect the market value of the long positions (and
vice versa), the risk arising from sequential orders in long and short
positions, and the risks associated with receiving opposing orders at the same
time.

DIMA has adopted procedures that it believes are reasonably designed to mitigate
these potential conflicts of interest. Incorporated in the procedures are
specific guidelines developed to ensure fair and equitable treatment for all
clients. DIMA and the investment team have established monitoring procedures and
a protocol for supervisory reviews, as well as compliance oversight to ensure
that potential conflicts of interest relating to this type of activity are
properly addressed.

Deutsche Bank AG or one of its affiliates (or in the case of a Sub-Advisor or a
Sub-Subadvisor, the Sub-Advisor or one of its affiliates) may act as a broker
for the Portfolio and receive brokerage commissions or other transaction-related
compensation from the Portfolio in the purchase and sale of securities, options
or futures contracts when, in the judgment of the Advisor, and in accordance
with procedures approved by the Board, the affiliated broker will be able to
obtain a price and execution at least as favorable as those obtained from other
qualified brokers and if, in the transaction, the affiliated broker charges the
Portfolio a rate consistent with that charged to comparable unaffiliated
customers in similar transactions.

                            PURCHASE AND REDEMPTIONS


The separate accounts of the Participating Insurance Companies purchase and
redeem shares of the Portfolio based on, among other things, the amount of
premium payments to be invested and surrender and transfer requests to be
effected on that day pursuant to variable annuity contracts and variable life
insurance policies, but only on days on which the Exchange is open for trading.
Such purchases and redemptions of the shares of the Portfolio are effected at
their respective net asset values per share, determined as of the close of
regular trading on the Exchange (normally 4 p.m. Eastern time) on that same day
(See "NET ASSET VALUE."). Payment for redemptions will be made by State Street
Bank and Trust Company, on behalf of the Fund and the Portfolio within seven
days thereafter. No fee is charged the separate accounts of the Participating
Insurance Companies when they redeem Fund shares.




The Portfolio may suspend or postpone redemptions as permitted pursuant to
Section 22(e) of the 1940 Act. Generally, those circumstances are when: 1) the
New York Stock Exchange is closed other than customary weekend or holiday
closings; 2) trading on the New York Stock Exchange is restricted; 3) an
emergency exists which makes the disposal of securities owned by a fund or the
fair determination of the value of the Portfolio's net assets not reasonably
practicable; or 4) the SEC, by order, permits the suspension of the right of
redemption. Redemption payments by wire may also be delayed in the event of a
non-routine closure of the Federal Reserve wire payment system.



Revenue Sharing

In light of recent regulatory developments, the Advisor, the Distributor and
their affiliates have undertaken to furnish certain additional information below
regarding the level of payments made by them to selected affiliated and
unaffiliated brokers, dealers, participating insurance companies or other
financial intermediaries ("financial advisors") in connection with the sale
and/or distribution of Portfolio shares or the retention and/or servicing of
investors and Portfolio shares ("revenue sharing").

The Advisor, the Distributor and/or their affiliates may pay additional
compensation, out of their own assets and not as an additional charge to each
Portfolio, to financial advisors in connection with the sale and/or distribution
of Portfolio shares or the retention and/or servicing of Portfolio investors and
Portfolio shares. Such revenue sharing payments are in addition to any
distribution or service fees payable under any Rule 12b-1 or service plan of any
portfolio, any record keeping/sub-transfer agency/networking fees payable by
each Portfolio (generally through the Distributor or an affiliate) and/or the
Distributor to certain financial advisors for performing such services and any
sales charges, commissions, non-cash compensation arrangements expressly
permitted under applicable rules of FINRA or other concessions described in the
fee table or elsewhere in the Prospectuses or the SAI as payable to all
financial advisors. For example, the Advisor, the Distributor and/or their
affiliates may compensate financial advisors for providing each Portfolio with
"shelf space" or access to a third party platform or portfolio offering list, or
other marketing programs including, without limitation, inclusion of each
Portfolio on preferred or recommended sales lists, mutual fund "supermarket"
platforms and other formal sales programs; granting the Distributor access to
the financial advisor's sales force; granting the Distributor access to the
financial advisor's conferences and meetings; assistance in training and
educating the financial advisor's personnel; and, obtaining other forms of
marketing support. The level of revenue sharing payments made to financial
advisors may be a fixed fee or based upon one or more of the following factors:
gross sales, current assets and/or number of accounts of each Portfolio
attributable to the financial advisor, the particular portfolio or portfolio
type or other measures as agreed to by the Advisor, the Distributor and/or their
affiliates and the financial advisors or any combination thereof. The amount of
these payments is determined at the discretion of the Advisor, the Distributor
and/or their affiliates from time to time, may be substantial, and may be
different for different financial advisors based on, for example, the nature of
the services provided by the financial advisor.

The Advisor, the Distributor and/or their affiliates currently make revenue
sharing payments from their own assets in connection with the sale and/or
distribution of DWS fund shares, or the retention and/or servicing of investors,
to financial advisors in amounts that generally range from .01% up to .50% of
assets of the Portfolio serviced and maintained by the financial advisor, .05%
to .25% of sales of the Portfolio attributable to the financial advisor, a flat
fee of $13,350 up to $500,000, or any combination thereof. These amounts are
annual figures typically paid on a quarterly basis and are subject to change at
the discretion of the Advisor, the Distributor and/or their affiliates. Receipt
of, or the prospect of receiving, this additional compensation, may influence
your financial advisor's recommendation of this Portfolio or of any particular
share class of the Portfolio. You should review your financial advisor's
compensation disclosure and/or talk to your financial advisor to obtain more
information on how this compensation may have influenced your financial
advisor's recommendation of this Portfolio.

The Advisor, the Distributor and/or their affiliates may also make such revenue
sharing payments to financial advisors under the terms discussed above in
connection with the distribution of both DWS funds and non-DWS funds by
financial advisors to retirement plans that obtain record keeping services from
ADP, Inc. on the DWS Investments branded retirement plan platform (the
"Platform") with the level of revenue sharing payments being based upon sales of
both the DWS funds and the non-DWS funds by the financial advisor on the
Platform or current assets of both the DWS funds and the non-DWS funds serviced
and maintained by the financial advisor on the Platform.

As of the date hereof, each Portfolio has been advised that the Advisor, the
Distributor and their affiliates expect that the following firms will receive
revenue sharing payments at different points during the coming year as described
above:

Channel: Broker-Dealers and Financial Advisors
AIG Advisors Group
Ameriprise
Cadaret, Grant & Co. Inc.
Capital Analyst, Incorporated
Citigroup Global Markets, Inc. (dba Smith Barney)
Commonwealth Equity Services, LLP (dba Commonwealth Financial Network)
Deutsche Bank Group
Ensemble Financial Services
First Allied Securities F
irst Clearing/Wachovia Securities
HD Vest Investment Securities, Inc.
ING Advisors Network
John Hancock Distributors LLC
LPL Financial
M.L. Stern & Co.
Meridien Financial Group
Merrill Lynch, Pierce, Fenner & Smith Inc.
Morgan Stanley
Oppenheimer & Co., Inc.
PlanMember Services
Prime Capital Inc.
Raymond James & Associates
Raymond James Financial Services
RBC Dain Rauscher, Inc
Securities America, Inc.
UBS Financial Services
Wells Fargo Investments, LLC

Channel: Cash Product Platform
------------------------------
Allegheny Investments LTD
Bank of America
Bank of New York (Hare & Co.)
BMO Capital Markets
Brown Brothers Harriman
Brown Investment Advisory & Trust Company
Cadaret Grant & Co.
Chicago Mercantile Exchange
D.A. Davidson & Company
Deutsche Bank Group
Emmett A. Larkin Company
Fiduciary Trust Co. - International
First Southwest Company
J.P. Morgan Clearing Corp.
Legent Clearing LLC
Lincoln Investment Planning
LPL Financial
Mellon Financial Markets LLC
Mesirow Financial, Inc.
Penson Financial Services
Pershing Choice Platform
ProFunds Distributors, Inc.
Ridge Clearing & Outsourcing Solutions
Robert W. Baird & Co.
Romano Brothers and Company
SAMCO Capital Markets
Smith Moore & Company
Sungard Institutional Brokerage Inc.
Treasury Curve LLC
US Bancorp
UBS Financial Services
William Blair & Company

Channel: Third Party Insurance Platforms
----------------------------------------
Allstate Life Insurance Company of New York
Ameritas Life Insurance Group
Annuity Investors Life Insurance Company
Columbus Life Insurance Company
Commonwealth Annuity and Life Insurance Company
Companion Life Insurance Company
Connecticut General Life Insurance Company
EquiTrust Life Insurance Company
Farm Bureau Life Insurance Company
Farmers New World Life Insurance Company
Fidelity Security Life Insurance Company
First Allmerica Financial Life Insurance Company
First Great West Life and Annuity Company
Genworth Life Insurance Company of New York
Genworth Life and Annuity Insurance Company
Great West Life and Annuity Insurance Company
Hartford Life Insurance Company
Integrity Life Insurance Company
John Hancock Life Insurance companies
Kemper Investors Life Insurance Company
Lincoln Benefit Life Insurance Company
Lincoln Life & Annuity Company of New York
Lincoln National Life Insurance Company
Massachusetts Mutual Life Insurance Group
MetLife Group
Minnesota Life Insurance Company
National Life Insurance Company
National Integrity Life Insurance Company
Nationwide Group
New York Life Insurance and Annuity Corporation
Phoenix Life Insurance Company
Protective Life Insurance
Provident Mutual Life Insurance
Prudential Insurance Company of America
Sun Life Group
Symetra Life Insurance Company
Transamerica Life Insurance Company
Union Central Life Insurance Company
United of Omaha Life Insurance Company
United Investors Life Insurance Company
Western Southern Life Assurance Company

Any additions, modifications or deletions to the financial advisors identified
above that have occurred since the date hereof are not reflected.

The Advisor, the Distributor or their affiliates may enter into additional
revenue sharing arrangements or change or discontinue existing arrangements with
financial advisors at any time without notice.

The prospect of receiving, or the receipt of additional compensation or
promotional incentives described above by financial advisors may provide such
financial advisors and/or their salespersons with an incentive to favor sales of
shares of the DWS funds or a particular DWS fund over sales of shares of mutual
funds (or non-mutual fund investments) with respect to which the financial
advisor does not receive additional compensation or promotional incentives, or
receives lower levels of additional compensation or promotional incentives.
Similarly, financial advisors may receive different compensation or incentives
that may influence their recommendation of any particular share class of the
Portfolio or of other portfolios. These payment arrangements, however, will not
change the price that an investor pays for Portfolio shares or the amount that
the Portfolio receives to invest on behalf of an investor and will not increase
Portfolio expenses. You may wish to take such payment arrangements into account
when considering and evaluating any recommendations relating to Portfolio shares
and you should discuss this matter with your financial advisor and review your
financial advisor's disclosures.

It is likely that broker-dealers that execute portfolio transactions for the
Portfolio will include firms that also sell shares of the DWS funds to their
customers. However, the Advisor will not consider sales of DWS fund shares as a
factor in the selection of broker-dealers to execute portfolio transactions for
the DWS funds. Accordingly, the Advisor has implemented policies and procedures
reasonably designed to prevent its traders from considering sales of DWS fund
shares as a factor in the selection of broker-dealers to execute portfolio
transactions for the Portfolio. In addition, the Advisor, the Distributor and/or
their affiliates will not use fund brokerage to pay for their obligation to
provide additional compensation to financial advisors as described above.

                           DIVIDENDS AND CAPITAL GAINS

The Portfolio normally follows the practice of declaring and distributing
substantially all the net investment income and any net short-term and long-term
capital gains at least annually.

The Fund may at any time vary the dividend practices with respect to the
Portfolio and, therefore, reserves the right from time to time to either
distribute or retain for reinvestment such of its net investment income and its
net short-term and long-term capital gains as the Board of Trustees of the Fund
determines appropriate under the then current circumstances.

                              FEDERAL INCOME TAXES

The Portfolio and each Underlying DWS fund intends to qualify as a regulated
investment company under subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code"), in order to avoid federal income taxation of the Portfolio
and the Underlying DWS funds.

Pursuant to the requirements of Section 817(h) of the Code, with certain limited
exceptions, the only shareholders of the Portfolio will be insurance companies
and their separate accounts that fund variable insurance and annuity contracts.
The prospectus that describes a particular variable insurance or annuity
contract should discuss the taxation of separate accounts and the owner of the
particular variable insurance or annuity contract. Potential insurance and
annuity contract holders should review such prospectuses carefully.

Section 817(h) of the Code and the regulations issued by the Treasury Department
impose certain diversification requirements affecting the securities in which
the Portfolio may invest. These diversification requirements are in addition to
the diversification requirements under subchapter M of the Code and the 1940
Act. A failure to meet the requirements of Section 817(h) could result in
federal income taxation of the insurance company offering the variable insurance
or annuity contract and treatment of the owner of the contract other than as
described in the prospectus for the contract. The Portfolio therefore intends to
comply with the requirements of Section 817(h) and related regulations.

Pursuant to a ruling issued by the IRS, for purposes of the diversification
requirements of Section 817(h), the Portfolio generally will be treated as
owning a pro rata portion of the investments of an underlying portfolio in which
the Portfolio holds an interest if (1) the underlying portfolio is a regulated
investment company for federal income tax purposes, (2) all of the beneficial
interests in the underlying portfolio are held directly or indirectly by one or
more insurance company segregated asset accounts and (3) subject to certain
exceptions, public access to the underlying portfolio is available exclusively
through the purchase of a variable contract. The Portfolio's investment in a
retail DWS fund or an exchange traded fund is not expected to satisfy these
requirements. If these requirements are not satisfied with respect to an
underlying portfolio, the Portfolio's investment in the underlying portfolio may
be treated as a single security for purposes of the Code Section 817(h)
diversification requirements. The Portfolio will take this rule into account in
determining whether it has satisfied the Section 817(h) diversification
requirements.

If owners of a variable insurance or annuity contract possess sufficient
incidents of ownership, they will be considered for federal income tax purposes
the owners of the assets of the separate accounts used to support their
contracts. In those circumstances, income and gains from the separate account's
assets for a taxable year will be included in the owner's gross income for the
current taxable year. In Revenue Ruling 2003-91, the IRS ruled that under a
specified set of facts the owners of variable insurance and annuity contracts
would not be considered the owners of the assets of the separate accounts used
to support the contracts, but Revenue Ruling 2003-91 did not address a situation
where the separate accounts invested in regulated investment companies that are
not publicly available, such as the Portfolio, which themselves invested in
regulated investment companies that are publicly available, such as some of the
underlying DWS funds. The Portfolio has obtained a private letter ruling from
the IRS that the Portfolio's investments in Underlying DWS Funds will not cause
the holders of variable annuity and variable life insurance contracts to be
treated as the owners of the Portfolio's shares for federal income tax purposes.

The preceding is a brief summary of certain of the relevant federal income tax
considerations applicable to an investment in the Portfolio. The summary is not
intended as a complete explanation or a substitute for careful tax planning and
consultation with individual tax advisors.

                                 NET ASSET VALUE

The net asset value of shares of the Portfolio is computed as of the close of
regular trading on the New York Stock Exchange (the "Exchange") on each day the
Exchange is open for trading (the "Value Time"). The Exchange is scheduled to be
closed on the following holidays: New Year's Day, Dr. Martin Luther King, Jr.
Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving and Christmas, and on the preceding Friday or subsequent Monday
when one of these holidays falls on a Saturday or Sunday, respectively. Net
asset value per share is determined separately for each class of shares by
dividing the value of the total assets of the Portfolio, less all liabilities
attributable to that class, by the total number of shares of that class
outstanding. The net asset value per share may be lower for certain classes of
the Portfolio because of higher expenses borne by these classes.

The net asset value of each Underlying DWS Fund is determined based upon the
nature of the securities as set forth in the prospectus and statement of
additional information of such Underlying DWS Fund. Shares of each Underlying
DWS Fund in which the Portfolio may invest are valued at the net asset value per
share of each Underlying DWS Fund as of the close of regular trading on the
Exchange on each day the Exchange is open for trading. The net asset value per
share of the Underlying DWS Funds will be calculated and reported to the
Portfolio by each Underlying DWS Fund's accounting agent. Short-term securities
with a remaining maturity of sixty days or less are valued by the amortized cost
method.

If market quotations for the Portfolio assets are not readily available or the
value of an asset as determined in accordance with Board approved procedures
does not represent the fair market value of the portfolio asset, the value of
the portfolio asset is taken to be an amount which, in the opinion of the
Portfolio's Pricing Committee (or, in some cases, the Board's Valuation
Committee), represents fair market value. The value of other portfolio holdings
owned by the Portfolio is determined in a manner which is intended to fairly
reflect the fair market value of the asset on the valuation date, based on
valuation procedures adopted by the Board and overseen primarily by the Fund's
Pricing Committee.

                           BOARD MEMBERS AND OFFICERS


The following table presents certain information regarding the Board Members of
the Fund. Each Board Member's year of birth is set forth in parentheses after
his or her name. Unless otherwise noted, (i) each Board Member has engaged in
the principal occupation(s) noted in the table for at least the most recent five
years, although not necessarily in the same capacity, and (ii) the address of
each Board Member that is not an "interested person" (as defined in the 1940
Act) of the Fund or the Advisor (each, an "Independent Board Member") is c/o
Dawn-Marie Driscoll, PO Box 100176, Cape Coral, FL 33904. The term of office for
each Board Member is until the election and qualification of a successor, or
until such Board Member sooner dies, resigns, is removed or as otherwise
provided in the governing documents of the Fund. Because the Portfolio does not
hold an annual meeting of shareholders, each Board Member will hold office for
an indeterminate period. The Board Members may also serve in similar capacities
with other funds in the DWS fund complex.


Independent Board Members


<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
 Name, Year of Birth, Position                                                                   Number of Funds
 with the Fund and Length of      Business Experience and                                        in DWS Fund
 Time Served(1)                   Directorships During the Past 5 Years                          Complex Overseen
--------------------------------------------------------------------------------------------------------------------


<S>                               <C>                                                                   <C>
Paul K. Freeman                   Consultant, World Bank/Inter-American Development Bank;               129
(1950)                            Governing Council of the Independent Directors Council
Chairperson since 2009, and       (governance, executive committees); formerly: Project Leader,
Board Member since 1993           International Institute for Applied Systems Analysis
                                  (1998-2001); Chief Executive Officer, The Eric Group, Inc.
                                  (environmental insurance) (1986-1998)
--------------------------------------------------------------------------------------------------------------------
John W. Ballantine (1946)         Retired; formerly: Executive Vice President and Chief Risk            129
Board Member since 1999           Management Officer, First Chicago NBD Corporation/The First
                                  National Bank of Chicago (1996-1998); Executive Vice
                                  President and Head of International Banking (1995-1996);
                                  Directorships: Healthways Inc. (provider of disease and care
                                  management services); Portland General Electric (utility
                                  company); Stockwell Capital Investments PLC (private equity);
                                  former Directorships: First Oak Brook Bancshares, Inc. and
                                  Oak Brook Bank
--------------------------------------------------------------------------------------------------------------------
 Henry P. Becton, Jr. (1943)      Vice Chair, WGBH Educational Foundation; Directorships:               129
 Board Member since               Association of Public Television Stations; Becton Dickinson
 1990                             and Company(2) (medical technology company); Belo
                                  Corporation(2) (media company); Boston Museum
                                  of Science; Public Radio International; PRX,
                                  The Public Radio Exchange; The PBS Foundation;
                                  former Directorships: American Public
                                  Television; Concord Academy; New England
                                  Aquarium; Mass. Corporation for Educational
                                  Telecommunications; Committee for Economic
                                  Development; Public Broadcasting Service
--------------------------------------------------------------------------------------------------------------------
Dawn-Marie Driscoll (1946)        President, Driscoll Associates (consulting firm); Executive           129
Board Member since 1987           Fellow, Center for Business Ethics, Bentley University;
                                  formerly: Partner, Palmer & Dodge (1988-1990); Vice President
                                  of Corporate Affairs and General Counsel, Filene's
                                  (1978-1988); Directorships: Trustee of 20 open-end mutual
                                  funds managed by Sun Capital Advisers, Inc. (since 2007);
                                  Director of ICI Mutual Insurance Company (since 2007);
                                  Advisory Board, Center for Business Ethics,
                                  Bentley University; Trustee, Southwest Florida
                                  Community Foundation (charitable
                                  organization); former Directorships:
                                  Investment Company Institute (audit,
                                  executive, nominating committees) and
                                  Independent Directors Council (governance,
                                  executive
                                  committees)
--------------------------------------------------------------------------------------------------------------------
Keith R. Fox (1954)               Managing General Partner, Exeter Capital Partners (a series           129
Board Member since                of private equity funds); Directorships: Progressive Holding
1996                              Corporation (kitchen goods importer and distributor); Natural
                                  History, Inc. (magazine publisher); Box Top Media Inc.
                                  (advertising); The Kennel Shop (retailer)
--------------------------------------------------------------------------------------------------------------------
Kenneth C. Froewiss               Clinical Professor of Finance, NYU Stern School of Business           129
(1945)                            (1997-present); Member, Finance Committee, Association for
Board Member since                Asian Studies (2002-present); Director, Mitsui Sumitomo
2001                              Insurance Group (US) (2004-present); prior thereto, Managing
                                  Director, J.P. Morgan (investment banking firm) (until 1996)
--------------------------------------------------------------------------------------------------------------------
Richard J. Herring                Jacob Safra Professor of International Banking and Professor,         129
(1946)                            Finance Department, The Wharton School, University of
Board Member since                Pennsylvania (since July 1972); Co-Director, Wharton
1990                              Financial Institutions Center (since July 2000); Director,
                                  Japan Equity Fund, Inc. (since September 2007), Thai Capital
                                  Fund, Inc. (since September 2007), Singapore Fund, Inc.
                                  (since September 2007); formerly: Vice Dean and Director,
                                  Wharton Undergraduate Division (July 1995-June 2000);
                                  Director, Lauder Institute of International Management
                                  Studies (July 2000-June 2006)
--------------------------------------------------------------------------------------------------------------------
William McClayton (1944)          Managing Director, Diamond Management & Technology                    129
Board Member since 2004           Consultants, Inc. (global management consulting firm)
                                  (2001-present); Directorship: Board of Managers, YMCA of
                                  Metropolitan Chicago; formerly: Senior Partner, Arthur
                                  Andersen LLP (accounting) (1966-2001); Trustee, Ravinia
                                  Festival
--------------------------------------------------------------------------------------------------------------------
Rebecca W. Rimel                  President and Chief Executive Officer, The Pew Charitable             129
(1951)                            Trusts (charitable organization) (1994 to present); Trustee,
Board Member since                Thomas Jefferson Foundation (charitable organization) (1994
1995                              to present); Trustee, Executive Committee, Philadelphia
                                  Chamber of Commerce (2001 to 2007); Trustee,
                                  Pro Publica (2007-present) (charitable
                                  organization); formerly: Executive Vice
                                  President, The Glenmede Trust Company
                                  (investment trust and wealth management) (1983
                                  to 2004); Board Member, Investor Education
                                  (charitable organization) (2004-2005);
                                  Director, Viasys Health Care(2) (January
                                  2007-June 2007)
--------------------------------------------------------------------------------------------------------------------
William N. Searcy, Jr.            Private investor since October 2003; Trustee of 20 open-end           129
(1946)                            mutual funds managed by Sun Capital Advisers, Inc. (since
Board Member since                October 1998); formerly: Pension & Savings Trust Officer,
1993                              Sprint Corporation(2) (telecommunications) (November
                                  1989-September 2003)
--------------------------------------------------------------------------------------------------------------------
Jean Gleason Stromberg            Retired; formerly: Consultant (1997-2001); Director, US               129
(1943)                            Government Accountability Office (1996-1997); Partner,
Board Member since                Fulbright & Jaworski, L.L.P. (law firm) (1978-1996);
1997                              Directorships: The William and Flora Hewlett Foundation;
                                  Business Leadership Council, Wellesley College; former
                                  Directorships: Service Source, Inc., Mutual Fund Directors
                                  Forum (2002-2004), American Bar Retirement Association
                                  (funding vehicle for retirement plans) (1987-1990 and
                                  1994-1996)
--------------------------------------------------------------------------------------------------------------------
Robert H. Wadsworth (1940)        President, Robert H. Wadsworth & Associates, Inc. (consulting         132
Board Member since 1999           firm) (1983 to present); Director, The Phoenix Boys Choir
                                  Association
--------------------------------------------------------------------------------------------------------------------

Interested Board Member


--------------------------------------------------------------------------------------------------------------------
 Name, Year of Birth, Position    Business Experience and                                        Number of Funds
 with the Trust and Length of                                                                    in DWS Fund
 Time Served(1)                   Directorships During the Past 5 Years                          Complex Overseen
--------------------------------------------------------------------------------------------------------------------

 Axel Schwarzer(3)                Managing Director(4), Deutsche Asset Management; Head of              129
 (1958)                           Deutsche Asset Management Americas; CEO of DWS Investments;
 Board Member since               formerly: board member of DWS Investments, Germany
 2006                             (1999-2005); Head of Sales and Product Management for the
                                  Retail and Private Banking Division of
                                  Deutsche Bank in Germany (1997-1999); various
                                  strategic and operational positions for
                                  Deutsche Bank Germany Retail and Private
                                  Banking Division in the field of investment
                                  funds, tax driven instruments and asset
                                  management for corporates (1989-1996)
--------------------------------------------------------------------------------------------------------------------

Officers((5))

--------------------------------------------------------------------------------------------------------------------
 Name, Year of Birth, Position    Business Experience and
 with the Fund and Length of
 Time Served(6)                   Directorships During the Past 5 Years
--------------------------------------------------------------------------------------------------------------------
 Michael G. Clark(7) (1965)       Managing Director(4), Deutsche Asset Management (2006-present); President of
 President, 2006-present          DWS family of funds; Director, ICI Mutual Insurance Company (since
                                  October 2007); formerly: Director of Fund Board Relations (2004-2006) and
                                  Director of Product Development (2000-2004), Merrill Lynch Investment Managers;
                                  Senior Vice President Operations, Merrill Lynch Asset Management (1999-2000)
--------------------------------------------------------------------------------------------------------------------
 John Millette(8) (1962)          Director(4), Deutsche Asset Management
 Vice President and Secretary,
 1999-present
--------------------------------------------------------------------------------------------------------------------
 Paul H. Schubert(7) (1963)       Managing Director(4), Deutsche Asset Management (since July 2004); formerly:
 Chief Financial Officer,         Executive Director, Head of Mutual Fund Services and Treasurer for UBS Family
 2004-present                     of Funds (1998-2004); Vice President and Director of Mutual Fund Finance at UBS
 Treasurer, 2005-present          Global Asset Management (1994-1998)
--------------------------------------------------------------------------------------------------------------------
 Caroline Pearson(8) (1962)       Managing Director(4), Deutsche Asset Management
 Assistant Secretary,
 1997-present
--------------------------------------------------------------------------------------------------------------------
 Rita Rubin(9) (1970)             Vice President and Counsel, Deutsche Asset Management (since October 2007);
 Assistant Secretary,             formerly, Vice President, Morgan Stanley Investment Management (2004-2007);
 2009-present                     Attorney, Shearman & Sterling LLP (2004); Vice President and Associate General
                Counsel, UBS Global Asset Management (2001-2004)
--------------------------------------------------------------------------------------------------------------------
 Paul Antosca(8)                  Director(4), Deutsche Asset Management (since 2006); formerly: Vice President,
 (1957)                           The Manufacturers Life Insurance Company (U.S.A.) (1990-2006)
 Assistant Treasurer,
 2007-present
--------------------------------------------------------------------------------------------------------------------
 Jack Clark (8)                   Director(4), Deutsche Asset Management (since 2007); formerly: Vice President,
 (1967)                           State Street Corporation (2002-2007)
 Assistant Treasurer,
 2007-present
--------------------------------------------------------------------------------------------------------------------
 Diane Kenneally(8)               Director(4), Deutsche Asset Management
 (1966)
 Assistant Treasurer,
 2007-present
--------------------------------------------------------------------------------------------------------------------
 Jason Vazquez(9) (1972)          Vice President, Deutsche Asset Management (since 2006); formerly: AML
 Anti-Money Laundering            Operations Manager for Bear Stearns (2004-2006); Supervising Compliance
 Compliance Officer,              Principal and Operations Manager for AXA Financial (1999-2004)
 2007-present
--------------------------------------------------------------------------------------------------------------------
 Robert Kloby(9) (1962)           Managing Director(4), Deutsche Asset Management (2004-present); formerly: Chief
 Chief Compliance Officer,        Compliance Officer/Chief Risk Officer, Robeco USA (2000-2004); Vice President,
 2006-present                     The Prudential Insurance Company of America (1988-2000); E.F. Hutton and
                                  Company (1984-1988)
--------------------------------------------------------------------------------------------------------------------
 J. Christopher Jackson(9) Director(4), Deutsche Asset Management
 (2006-present); formerly: Director, (1951) Senior Vice President, General
 Counsel, and Assistant Secretary, Hansberger Chief Legal Officer, Global
 Investors, Inc. (1996-2006); Director, National Society of Compliance
 2006-present                     Professionals (2002-2005) (2006-2009)
--------------------------------------------------------------------------------------------------------------------
</TABLE>


(1)  The length of time served represents the year in which the Board Member
     joined the board of one or more DWS funds currently overseen by the Board.

(2)  A publicly held company with securities registered pursuant to Section 12
     of the Securities Exchange Act of 1934.

(3)  The mailing address of Axel Schwarzer is c/o Deutsche Investment Management
     Americas Inc., 345 Park Avenue, New York, New York 10154. Mr. Schwarzer is
     an interested Board Member by virtue of his positions with Deutsche Asset
     Management. As an interested person, Mr. Schwarzer receives no compensation
     from the Portfolio.

(4)  Executive title, not a board directorship.

(5)  As a result of their respective positions held with the Advisor, these
     individuals are considered "interested persons" of the Advisor within the
     meaning of the 1940 Act. Interested persons receive no compensation from
     the Portfolio.

(6)  The length of time served represents the year in which the officer was
     first elected in such capacity for one or more DWS funds.

(7)  Address: 345 Park Avenue, New York, New York 10154.

(8)  Address: One Beacon Street, Boston, Massachusetts 02108.

(9)  Address: 280 Park Avenue, New York, New York 10017.

Certain officers hold similar positions for other investment companies for which
DIMA or an affiliate serves as the Advisor.

Officer's Role with Principal Underwriter:  DWS Investments Distributors, Inc.

 Paul H. Schubert:                   Vice President
 Jason Vazquez:                      Vice President and AML Compliance Officer
 Caroline Pearson:                   Secretary


Board Members' Responsibilities. The officers of the Fund manage its day-to-day
operations under the direction of the Board. The primary responsibility of the
Board is to represent the interests of the Portfolio and to provide oversight of
the management of the Portfolio.


Board Committees. The Board has established the following standing committees:
Audit Committee, Nominating and Governance Committee, Contract Committee, Equity
Oversight Committee, Fixed-Income and Quant Oversight Committee, Marketing and
Shareholder Services Committee, and Operations Committee. For each committee,
the Board has adopted a written charter setting forth each committee's
responsibilities. Each committee was reconstituted effective April 1, 2008.

Audit Committee: The Audit Committee, which consists entirely of Independent
Board Members, assists the Board in fulfilling its responsibility for oversight
of (1) the integrity of the financial statements, (2) the Portfolio's accounting
and financial reporting policies and procedures, (3) the Portfolio's compliance
with legal and regulatory requirements related to accounting and financial
reporting and (4) the qualifications, independence and performance of the
independent registered public accounting firm for the Portfolio. It also
approves and recommends to the Board the appointment, retention or termination
of the independent registered public accounting firm for the Portfolio, reviews
the scope of audit and internal controls, considers and reports to the Board on
matters relating to the Portfolio's accounting and financial reporting
practices, and performs such other tasks as the full Board deems necessary or
appropriate. The Audit Committee receives annual representations from the
independent registered public accounting firm as to its independence. The
members of the Audit Committee are William McClayton (Chair), Kenneth C.
Froewiss (Vice Chair), John W. Ballantine, Henry P. Becton, Jr., Keith R. Fox
and William N. Searcy, Jr. During the calendar year 2008, the Audit Committee of
the Portfolio's Board held six (6) meetings.

Nominating and Governance Committee: The Nominating and Governance Committee,
which consists entirely of Independent Board Members, recommends individuals for
membership on the Board, nominates officers, Board and committee chairs, vice
chairs and committee members, and oversees the operations of the Board. The
Nominating and Governance Committee also reviews recommendations by shareholders
for candidates for Board positions. Shareholders may recommend candidates for
Board positions by forwarding their correspondence by US mail or courier service
to Dawn-Marie Driscoll, P.O. Box 100176, Cape Coral, FL 33904. The members of
the Nominating and Governance Committee are Henry P. Becton, Jr. (Chair),
Rebecca W. Rimel (Vice Chair), Paul K. Freeman and William McClayton. During the
calendar year 2008, the Nominating and Governance Committee of the Portfolio's
Board held five (5) meetings.

Contract Committee: The Contract Committee, which consists entirely of
Independent Board Members, reviews at least annually, (a) the Portfolio's
financial arrangements with DIMA and its affiliates, and (b) the Portfolio's
expense ratios. The members of the Contract Committee are Robert H. Wadsworth
(Chair), Keith R. Fox (Vice Chair), Henry P. Becton, Jr., Richard J. Herring,
William McClayton and Jean Gleason Stromberg. During the calendar year 2008, the
Contract Review Committee of the Portfolio's Board held seven (7) meetings.

Equity Oversight Committee: The Equity Oversight Committee reviews the
investment operations of those portfolios that primarily invest in equity
securities (except for those funds managed by a quantitative investment team).
The members of the Equity Oversight Committee are John W. Ballantine (Chair),
William McClayton (Vice Chair), Henry P. Becton, Jr., Keith R. Fox, Richard J.
Herring and Rebecca W. Rimel. During the calendar year 2008, the Equity
Oversight Committee of the Portfolio's Board held five (5) meetings.

Fixed-Income and Quant Oversight Committee: The Fixed-Income and Quant Oversight
Committee reviews the investment operations of those portfolios that primarily
invest in fixed-income securities or are managed by a quantitative investment
team. The members of the Fixed-Income and Quant Oversight Committee are William
N. Searcy, Jr. (Chair), Jean Gleason Stromberg (Vice Chair), Dawn-Marie
Driscoll, Kenneth C. Froewiss and Robert H. Wadsworth. During the calendar year
2008, the Fixed-Income Oversight Committee of the Portfolio's Board held five
(5) meetings.

Marketing and Shareholder Services Committee: The Marketing and Shareholder
Services Committee reviews the Portfolio's marketing program, sales practices
and literature and shareholder services. The Marketing and Shareholder Services
Committee also considers matters relating to fund mergers and liquidations and
the organization of new funds. The members of the Marketing and Shareholder
Services Committee are Richard J. Herring (Chair), Dawn-Marie Driscoll (Vice
Chair), Rebecca W. Rimel, Jean Gleason Stromberg and Robert H. Wadsworth. During
the calendar year 2008, the Marketing/Distribution/Shareholder Service Committee
of the Portfolio's Board held four (4) meetings.

The Operations Committee: The Operations Committee reviews the administrative
operations, legal affairs and general compliance matters of the Portfolio. The
Operations Committee reviews administrative matters related to the operations of
the Portfolio, policies and procedures relating to portfolio transactions,
custody arrangements, fidelity bond and insurance arrangements, valuation of
Portfolio assets and securities and such other tasks as the full Board deems
necessary or appropriate. The Operations Committee also oversees the valuation
of the Portfolio's securities and other assets and determines, as needed, the
fair value of Portfolio securities or other assets under certain circumstances
as described in the Portfolio's Valuation Procedures. The Operations Committee
has appointed a Valuation Sub-Committee, which may make determinations of fair
value required when the Operations Committee is not in session. The members of
the Operations Committee are Dawn-Marie Driscoll (Chair), John W. Ballantine
(Vice Chair), Kenneth C. Froewiss, Rebecca W. Rimel and William N. Searcy, Jr.
The members of the Valuation Sub-Committee are Kenneth C. Froewiss (Chair), John
W. Ballantine, Dawn-Marie Driscoll (Alternate), Rebecca W. Rimel (Alternate) and
William N. Searcy, Jr. (Alternate). During the calendar year 2008, the
Operations Committee held five (5) meetings. The Portfolio commenced operations
in 2009; therefore, the Valuation Sub-Committee did not meet during calendar
year 2008.

Ad Hoc Committees. In addition to the standing committees described above, from
time to time the Board may also form ad hoc committees to consider specific
issues.

Remuneration. Each Independent Board Member receives compensation from the
Portfolio for his or her services, which includes retainer fees and specified
amounts for various committee services and for the Board Chairperson. No
additional compensation is paid to any Independent Board Member for travel time
to meetings, attendance at directors' educational seminars or conferences,
service on industry or association committees, participation as speakers at
directors' conferences or service on special fund industry director task forces
or subcommittees. Independent Board Members do not receive any employee benefits
such as pension or retirement benefits or health insurance from the Portfolio or
any fund in the DWS fund complex.

Board Members who are officers, directors, employees or stockholders of Deutsche
Asset Management or its affiliates receive no direct compensation from the
Portfolio, although they are compensated as employees of Deutsche Asset
Management, or its affiliates, and as a result may be deemed to participate in
fees paid by the Portfolio. The following tables show compensation from the
Portfolio and aggregate compensation from all of the funds in the DWS fund
complex received by each Independent Board Member during the calendar year 2008.
Mr. Schwarzer is an interested person of the Portfolio and received no
compensation from the Portfolio or any fund in the DWS fund complex during the
relevant periods.

<TABLE>
<CAPTION>
                                        Aggregate Compensation           Total Compensation
                                     from DWS Alternative Asset             from Fund and
  Name of Board Member                  Allocation Plus VIP(5)           DWS Fund Complex(1)
  --------------------                  ----------------------           -------------------

<S>                                               <C>                           <C>
  John W. Ballantine                              $0                            $237,500
  Henry P. Becton, Jr.(2)                         $0                            $246,000
  Dawn-Marie Driscoll(2)(3)                       $0                            $292,500
  Keith R. Fox(2)                                 $0                            $229,500
  Paul K. Freeman                                 $0                            $255,000
  Kenneth C. Froewiss                             $0                            $226,750
  Richard J. Herring(2)                           $0                            $240,000
  William McClayton(4)                            $0                            $257,500
  Rebecca W. Rimel(2)                             $0                            $233,500
  William N. Searcy, Jr.                          $0                            $238,000
  Jean Gleason Stromberg                          $0                            $225,500
  Robert H. Wadsworth                             $0                            $273,500
</TABLE>

(1)      The DWS fund complex is composed of 136 funds as of December 31, 2008.

(2)      Aggregate compensation includes amounts paid to the Board Members for
         special meetings of ad hoc committees of the Board in connection with
         the consolidation of the DWS fund boards and various funds, meetings
         for considering fund expense simplification initiatives, and
         consideration of issues specific to the Portfolio's direct shareholders
         (i.e., those shareholders who did not purchase shares through financial
         intermediaries). Such amounts totaled $8,000 for Mr. Becton, $2,000 for
         Ms. Driscoll, $2,000 for Mr. Fox, $2,000 for Dr. Herring and $8,000 for
         Ms. Rimel. These meeting fees were borne by the funds.

(3)      Includes $70,000 in annual retainer fees received by Ms. Driscoll as
         Chairperson of DWS funds.

(4)      Includes $15,000 paid to Mr. McClayton for numerous special meetings of
         an ad hoc committee of the former Chicago Board in connection with
         board consolidation initiatives.

(5)      The Portfolio commenced operations on January 20, 2009.

Board Member Ownership in the Portfolios

The following table shows the dollar range of equity securities beneficially
owned by each Board Member in the Portfolio and DWS fund complex as of December
31, 2008.


<TABLE>
<CAPTION>
                                            Dollar Range of Beneficial            Aggregate Dollar Range of
                                                     Ownership               Ownership in all Funds Overseen by
                                             in DWS Alternative Asset                   Board Member
Board Member                                  Allocation Plus VIP(2)             in the DWS Fund Complex(1)
------------                                  ----------------------             --------------------------

Independent Board Member:

<S>                                                     <C>                                 <C>
John W. Ballantine                                     None                                Over $100,000
Henry P. Becton, Jr.                                   None                                Over $100,000
Dawn-Marie Driscoll                                    None                                Over $100,000
Keith R. Fox                                           None                                Over $100,000
Paul K. Freeman                                        None                                Over $100,000
Kenneth C. Froewiss(3)                                 None                                Over $100,000
Richard J. Herring                                     None                                Over $100,000
William McClayton                                      None                                Over $100,000
Rebecca W. Rimel                                       None                                Over $100,000
William N. Searcy, Jr.                                 None                                Over $100,000
Jean Gleason Stromberg(3)                              None                                Over $100,000
Robert H. Wadsworth                                    None                                Over $100,000


Interested Board Member:

Axel Schwarzer                                         None                                Over $100,000
</TABLE>

(1)      Securities beneficially owned as defined under the 1934 Act include
         direct and/or indirect ownership of securities where the Board Member's
         economic interest is tied to the securities, employment ownership and
         securities when the Board Member can exert voting power, and when the
         Board Member has authority to sell the securities. The dollar ranges
         are: None, $1-$10,000, $10,001-$50,000, $50,001-$100,000 and over
         $100,000.


(2)      The Portfolio commenced operations on January 20, 2009.

(3)      Although the Board Members do not have an investment in this variable
         annuity portfolio, .Kenneth C. Froewiss does hold $1-$10,000 and Jean
         Gleason Stromberg does hold $10,001-$50,000 in DWS Alternative Asset
         Allocation Plus Fund, the retail mutual fund that has the same
         investment strategy. This investment is included in the "Dollar Range
         of All DWS Fund Shares Owned."


Ownership in Securities of the Advisor and Related Companies

As reported to the Portfolio, the information in the following table reflects
ownership by the Independent Board Members and their immediate family members of
certain securities as of December 31, 2008. Immediate family members can be a
spouse, children residing in the same household including step and adoptive
children, and any dependents. The securities represent ownership in the Advisor
or principal underwriter of the Portfolio and any persons (other than a
registered investment company) directly or indirectly controlling, controlled
by, or under common control with the Advisor or principal underwriter of the
Portfolio (including Deutsche Bank AG).

<TABLE>
<CAPTION>
                                                                                   Value of        Percent of
                                   Owner and                                     Securities on     Class on an
Independent                     Relationship to                     Title of     an Aggregate       Aggregate
Board Member                      Board Member         Company        Class          Basis            Basis
------------                      ------------         -------        -----          -----            -----

<S>                                <C>                   <C>           <C>            <C>              <C>
John W. Ballantine                                      None
Henry P. Becton, Jr.                                    None
Dawn-Marie Driscoll                                     None
Keith R. Fox                                            None
Paul K. Freeman                                         None
Kenneth C. Froewiss                                     None
Richard J. Herring                                      None
William McClayton                                       None
Rebecca W. Rimel                                        None
William N. Searcy, Jr.                                  None
Jean Gleason Stromberg                                  None
Robert H. Wadsworth                                     None
</TABLE>

Securities Beneficially Owned


As of April 3, 2009, the Board Members and officers of the Fund owned, as a
group, less than 1% of the outstanding shares of each Portfolio.

To the best of the Portfolio's knowledge, as of April 3, 2009, no person owned
of record or beneficially 5% or more of any class of the Portfolio's outstanding
shares.


Agreement to Indemnify Independent Trustees for Certain Expenses

In connection with litigation or regulatory action related to possible improper
market timing or other improper trading activity or possible improper marketing
and sales activity in certain DWS Funds (the "Affected Funds"), DIMA has agreed
to indemnify and hold harmless the Affected Funds ("Fund Indemnification
Agreement") against any and all loss, damage, liability and expense, arising
from market timing or marketing and sales matters alleged in any enforcement
actions brought by governmental authorities involving or potentially affecting
the Affected Funds or DIMA ("Enforcement Actions") or that are the basis for
private actions brought by shareholders of the Affected Funds against the
Affected Funds, their directors and officers, DIMA and/or certain other parties
("Private Litigation"), or any proceedings or actions that may be threatened or
commenced in the future by any person (including governmental authorities),
arising from or similar to the matters alleged in the Enforcement Actions or
Private Litigation. In recognition of its undertaking to indemnify the Affected
Funds and in light of the rebuttable presumption generally afforded to
independent directors/trustees of investment companies that they have not
engaged in disabling conduct, DIMA has also agreed, subject to applicable law
and regulation, to indemnify certain (or, with respect to certain Affected
Funds, all) of the Independent Trustees of the Affected Funds, against certain
liabilities the Independent Trustees may incur from the matters alleged in any
Enforcement Actions or Private Litigation or arising from or similar to the
matters alleged in the Enforcement Actions or Private Litigation, and advance
expenses that may be incurred by the Independent Trustees in connection with any
Enforcement Actions or Private Litigation. DIMA is not, however, required to
provide indemnification and advancement of expenses: (1) with respect to any
proceeding or action which the Affected Funds' Board determines that the
Independent Trustees ultimately would not be entitled to indemnification or (2)
for any liability of the Independent Trustees to the Affected Funds or their
shareholders to which the Independent Trustee would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence or reckless disregard
of the Independent Trustee's duties as a director or trustee of the Affected
Funds as determined in a final adjudication in such action or proceeding. The
estimated amount of any expenses that may be advanced to the Independent
Trustees or indemnity that may be payable under the indemnity agreements is
currently unknown. These agreements by DIMA will survive the termination of the
investment management agreements between DIMA and the Affected Funds.


                                FUND ORGANIZATION

The Fund was organized as a business trust under the laws of Massachusetts on
January 22, 1987 and is governed by an Amended and Restated Declaration of
Trust, approved by shareholders in the second quarter of 2008, as may be further
amended from time to time (the "Declaration of Trust"). On February 6, 2006 the
Fund changed its name from "Scudder Variable Series II" to "DWS Variable Series
II." The Fund may issue an unlimited number of shares of beneficial interest all
having no par value. Since the Fund offers multiple portfolios, it is known as a
"series company." The Portfolio offered herein offers two classes of shares:
Class A and Class B. All shares issued and outstanding are fully paid and
nonassessable, transferable, have no pre-emptive or conversion rights (except as
may be determined by the Board of Trustees) and are redeemable as described in
the SAI and the Portfolio's prospectus. Each share has equal rights with each
other share of the same class of the Portfolio as to voting, dividends,
exchanges, conversion features and liquidation. Shareholders are entitled to one
vote for each full share held and fractional votes for fractional shares held.




Information about the Portfolio's investment performance will be contained in
the Fund's 2008 Annual Report to Shareholders, which may be obtained without
charge from the Fund or from Participating Insurance Companies which offer the
Portfolio.


The Portfolio generally is not required to hold meetings of its shareholders.
Under the Declaration of Trust, however, shareholder meetings will be held in
connection with the following matters to the extent and as provided in the
Declaration of Trust and as required by applicable law: (a) the election or
removal of trustees if a meeting is called for such purpose; (b) the termination
of the Fund or the Portfolio; (c) an amendment of the Declaration of Trust; and
(d) such additional matters as may be required by law or as the Trustees may
determine to be necessary or desirable. Shareholders also vote upon changes in
fundamental policies or restrictions.





Under current interpretations of the 1940 Act, the Fund expects that
Participating Insurance Company shareholders will offer VLI and VA contract
holders the opportunity to instruct them as to how Portfolio shares attributable
to such contracts will be voted with respect to the matters described above. The
separate prospectuses describing the VLI and VA contracts include additional
disclosure of how contract holder voting rights are computed.

The Declaration of Trust provides that shareholder meeting quorum requirements
shall be established in the Fund's By-laws. The By-laws currently in effect
provide that the presence in person or by proxy of the holders of thirty percent
of the shares entitled to vote at a meeting (or of an individual series or class
if required to vote separately) shall constitute a quorum for the transaction of
business at meetings of shareholders of the Fund.

On any matter submitted to a vote of shareholders, all shares of the Fund
entitled to vote shall, except as otherwise provided in the Fund's By-Laws, be
voted in the aggregate as a single class without regard to series or classes of
shares, except (a) when required by applicable law or when the Trustees shall
have determined that the matter affects one or more series or classes of shares
materially differently, shares shall be voted by individual series or class; and
(b) when the Trustees have determined that the matter affects only the interests
of one or more series or classes, only shareholders of such series or classes
shall be entitled to vote thereon.

The Declaration of Trust provides that the Board of Trustees may, in its
discretion, establish minimum investment amounts for shareholder accounts,
impose fees on accounts that do not exceed a minimum investment amount and
involuntarily redeem shares in any such account in payment of such fees. The
Board of Trustees, in its sole discretion, also may cause the Fund to redeem all
of the shares of the Fund or one or more series or classes held by any
shareholder for any reason, to the extent permissible by the 1940 Act, including
(a) if the shareholder owns shares having an aggregate net asset value of less
than a specified minimum amount, (b) if a particular shareholder's ownership of
shares would disqualify a series from being a regulated investment company, (c)
upon a shareholder's failure to provide sufficient identification to permit the
Fund to verify the shareholder's identity, (d) upon a shareholder's failure to
pay for shares or meet or maintain the qualifications for ownership of a
particular class or series of shares, (e) if the Board of Trustees determines
(or pursuant to policies established by the Board it is determined) that share
ownership by a particular shareholder is not in the best interests of remaining
shareholders, (f) when the Portfolio is requested or compelled to do so by
governmental authority or applicable law and (g) upon a shareholder's failure to
comply with a request for information with respect to the direct or indirect
ownership of shares of the Fund. The Declaration of Trust also authorizes the
Board of Trustees to terminate the Portfolio or any class without shareholder
approval, and the Fund may suspend the right of shareholders to require the Fund
to redeem shares to the extent permissible under the 1940 Act.

Upon the termination of the Fund or any series, after paying or adequately
providing for the payment of all liabilities which may include the establishment
of a liquidating trust or similar vehicle, and upon receipt of such releases,
indemnities and refunding agreements as they deem necessary for their
protection, the Trustees may distribute the remaining Fund property or property
of the series, in cash or in kind or partly each, to the shareholders of the
Fund or the series involved, ratably according to the number of shares of the
Fund or such series held by the several shareholders of the Fund or such series
on the date of termination, except to the extent otherwise required or permitted
by the preferences and special or relative rights and privileges of any classes
of shares of a series involved, provided that any distribution to the
shareholders of a particular class of shares shall be made to such shareholders
pro rata in proportion to the number of shares of such class held by each of
them. The composition of any such distribution (e.g., cash, securities or other
assets) shall be determined by the Fund in its sole discretion, and may be
different among shareholders (including differences among shareholders in the
same series or class).

Under Massachusetts law, shareholders of a Massachusetts business trust could,
under certain circumstances, be held personally liable for obligations of the
Portfolio. The Declaration of Trust, however, disclaims shareholder liability
for acts or obligations of the Portfolio and requires that notice of such
disclaimer be given in each agreement, obligation, or instrument entered into or
executed by the Portfolio or the Portfolio's trustees. Moreover, the Declaration
of Trust provides for indemnification out of Portfolio property for all losses
and expenses of any shareholder held personally liable for the obligations of
the Portfolio and the Portfolio may be covered by insurance which the Trustees
consider adequate to cover foreseeable tort claims. Thus, the risk of a
shareholder incurring financial loss on account of shareholder liability is
considered by the Advisor remote and not material, since it is limited to
circumstances in which a disclaimer is inoperative and the Portfolio itself is
unable to meet its obligations.




                             PROXY VOTING GUIDELINES


The Fund has delegated proxy voting responsibilities to the Advisor, subject to
the Board's general oversight. The Advisor votes proxies pursuant to the proxy
voting policy and guidelines set forth in Appendix A to this SAI).


You may obtain information about how the Portfolio voted proxies related to its
portfolio securities during the 12-month period ended June 30 by visiting the
Securities and Exchange Commission's Web site at www.sec.gov or by visiting our
Web site at: www.dws-investments.com (click on "proxy voting" at the bottom of
the page).

                              FINANCIAL STATEMENTS


Because the Portfolio commenced operations on January 20, 2009, no financial
statements are available.


                             ADDITIONAL INFORMATION


The CUSIP numbers of the classes of the Portfolio offered herein are:


DWS Alternative Asset Allocation Plus VIP Class A:    23338H 370


DWS Alternative Asset Allocation Plus VIP Class B:    23338H 362




DWS Alternative Asset Allocation Plus VIP has a fiscal year ending December 31.

Many of the investment changes in the Portfolio will be made at prices different
from those prevailing at the time they may be reflected in a regular report to
shareholders of the Portfolio. These transactions will reflect investment
decisions made by the Advisor in light of the Portfolio's investment objective
and policies, its other portfolio holdings and tax considerations, and should
not be construed as recommendations for similar action by other investors.

The Portfolio's Prospectus and this Statement of Additional Information omit
certain information contained in the Registration Statement which the Portfolio
has filed with the SEC under the 1933 Act and reference is hereby made to the
Registration Statement for further information with respect to the Portfolio and
the securities offered hereby. This Registration Statement and its amendments
are available for inspection by the public at the SEC in Washington, D.C.


                      APPENDIX A -- PROXY VOTING GUIDELINES

       Deutsche Asset Management ("AM") Proxy Voting Policy and Guidelines


I.       INTRODUCTION

AM has adopted and implemented the following policies and procedures, which it
believes are reasonably designed to ensure that proxies are voted in the best
economic interest of clients, in accordance with its fiduciary duties and local
regulation. These Proxy Voting Policies, Procedures and Guidelines shall apply
to all accounts managed by US domiciled advisers and to all US client accounts
managed by non US regional offices. Non US regional offices are required to
maintain procedures and to vote proxies as may be required by law on behalf of
their non US clients. In addition, AM's proxy policies reflect the fiduciary
standards and responsibilities for ERISA accounts.

The attached guidelines represent a set of global recommendations that were
determined by the Global Proxy Voting Sub-Committee ("the GPVSC"). These
guidelines were developed to provide AM with a comprehensive list of
recommendations that represent how AM will generally vote proxies for its
clients. The recommendations derived from the application of these guidelines
are not intended to influence the various AM legal entities either directly or
indirectly by parent or affiliated companies. In addition, the organizational
structures and documents of the various AM legal entities allows, where
necessary or appropriate, the execution by individual AM subsidiaries of the
proxy voting rights independently of any DB parent or affiliated company. This
applies in particular to non U.S. fund management companies. The individuals
that make proxy voting decisions are also free to act independently, subject to
the normal and customary supervision by the management/boards of these AM legal
entities.


II.      AM'S PROXY VOTING RESPONSIBILITIES

Proxy votes are the property of AM's advisory clients.(1) As such, AM's
authority and responsibility to vote such proxies depend upon its contractual
relationships with its clients. AM has delegated responsibility for effecting
its advisory clients' proxy votes to Institutional Shareholder Services ("ISS"),
an independent third-party proxy voting specialist. ISS votes AM's advisory
clients' proxies in accordance with AM's proxy guidelines or AM's specific
instructions. Where a client has given specific instructions as to how a proxy
should be voted, AM will notify ISS to carry out those instructions. Where no
specific instruction exists, AM will follow the procedures in voting the proxies
set forth in this document. Certain Taft-Hartley clients may direct AM to have
ISS vote their proxies in accordance with Taft Hartley voting Guidelines

_____________________

(1)      For purposes of these Policies and Procedures, "clients" refers to
         persons or entities: for which AM serves as investment adviser or
         sub-adviser; for which AM votes proxies; and that have an economic or
         beneficial ownership interest in the portfolio securities of issuers
         soliciting such proxies.

Clients may in certain instances contract with their custodial agent and notify
AM that they wish to engage in securities lending transactions. In such cases,
it is the responsibility of the custodian to deduct the number of shares that
are on loan so that they do not get voted twice.


III.     POLICIES

1.       Proxy voting activities are conducted in the best economic interest of
         clients

AM has adopted the following policies and procedures to ensure that proxies are
voted in accordance with the best economic interest of its clients, as
determined by AM in good faith after appropriate review.

2.       The Global Proxy Voting Sub-Committee

The Global Proxy Voting Sub-Committee (the "GPVSC") is an internal working group
established by the applicable AM's Investment Risk Oversight Committee pursuant
to a written charter. The GPVSC is responsible for overseeing AM's proxy voting
activities, including:

(i)    adopting, monitoring and updating guidelines, attached as Exhibit A (the
       "Guidelines"), that provide how AM will generally vote proxies pertaining
       to a comprehensive list of common proxy voting matters;

(ii)   voting proxies where (A) the issues are not covered by specific client
       instruction or the Guidelines; (B) the Guidelines specify that the issues
       are to be determined on a case-by-case basis; or (C) where an exception
       to the Guidelines may be in the best economic interest of AM's clients;
       and

(iii)  monitoring the Proxy Vendor Oversight's proxy voting activities (see
       below).

AM's Proxy Vendor Oversight, a function of AM's Operations Group, is responsible
for coordinating with ISS to administer AM's proxy voting process and for voting
proxies in accordance with any specific client instructions or, if there are
none, the Guidelines, and overseeing ISS' proxy responsibilities in this regard.

3.       Availability of Proxy Voting Policies and Procedures and proxy voting
         record

Copies of these Policies and Procedures, as they may be updated from time to
time, are made available to clients as required by law and otherwise at AM's
discretion. Clients may also obtain information on how their proxies were voted
by AM as required by law and otherwise at AM's discretion; however, AM must not
selectively disclose its investment company clients' proxy voting records. The
Proxy Vendor Oversight will make proxy voting reports available to advisory
clients upon request. The investment companies' proxy voting records will be
disclosed to shareholders by means of publicly-available annual filings of each
company's proxy voting record for 12-month periods ended June 30 (see
"Recordkeeping" below), if so required by relevant law.


IV.      PROCEDURES

The key aspects of AM's proxy voting process are as follows:

1.       The GPVSC's Proxy Voting Guidelines

The Guidelines set forth the GPVSC's standard voting positions on a
comprehensive list of common proxy voting matters. The GPVSC has developed, and
continues to update the Guidelines based on consideration of current corporate
governance principles, industry standards, client feedback, and the impact of
the matter on issuers and the value of the investments.

The GPVSC will review the Guidelines as necessary to support the best economic
interests of AM's clients and, in any event, at least annually. The GPVSC will
make changes to the Guidelines, whether as a result of the annual review or
otherwise, taking solely into account the best economic interests of clients.
Before changing the Guidelines, the GPVSC will thoroughly review and evaluate
the proposed change and the reasons therefore, and the GPVSC Chair will ask
GPVSC members whether anyone outside of the AM organization (but within Deutsche
Bank and its affiliates) or any entity that identifies itself as a AM advisory
client has requested or attempted to influence the proposed change and whether
any member has a conflict of interest with respect to the proposed change. If
any such matter is reported to the GPVSC Chair, the Chair will promptly notify
the Conflicts of Interest Management Sub-Committee (see below) and will defer
the approval, if possible. Lastly, the GPVSC will fully document its rationale
for approving any change to the Guidelines.

The Guidelines may reflect a voting position that differs from the actual
practices of the public company(ies) within the Deutsche Bank organization or of
the investment companies for which AM or an affiliate serves as investment
adviser or sponsor. Investment companies, particularly closed-end investment
companies, are different from traditional operating companies. These differences
may call for differences in voting positions on the same matter. Further, the
manner in which AM votes investment company proxies may differ from proposals
for which a AM-advised or sponsored investment company solicits proxies from its
shareholders. As reflected in the Guidelines, proxies solicited by closed-end
(and open-end) investment companies are generally voted in accordance with the
pre-determined guidelines of ISS. See Section IV.3.B.

Funds ("Underlying Funds") in which Topiary Fund Management Fund of Funds (each,
a "Fund") invest, may from time to time seek to revise their investment terms
(i.e. liquidity, fees, etc.) or investment structure. In such event, the
Underlying Funds may require approval/consent from its investors to effect the
relevant changes. Topiary Fund Management has adopted Proxy Voting Procedures
which outline the process for these approvals.

2.       Specific proxy voting decisions made by the GPVSC

The Proxy Vendor Oversight will refer to the GPVSC all proxy proposals (i) that
are not covered by specific client instructions or the Guidelines; or (ii) that,
according to the Guidelines, should be evaluated and voted on a case-by-case
basis.

Additionally, if, the Proxy Vendor Oversight, the GPVSC Chair or any member of
the GPVSC, a portfolio manager, a research analyst or a sub-adviser believes
that voting a particular proxy in accordance with the Guidelines may not be in
the best economic interests of clients, that individual may bring the matter to
the attention of the GPVSC Chair and/or the Proxy Vendor Oversight.(2)

_____________________

(2)      The Proxy Vendor Oversight generally monitors upcoming proxy
         solicitations for heightened attention from the press or the industry
         and for novel or unusual proposals or circumstances, which may prompt
         the Proxy Vendor Oversight to bring the solicitation to the attention
         of the GPVSC Chair. AM portfolio managers, AM research analysts and
         sub-advisers also may bring a particular proxy vote to the attention of
         the GPVSC Chair, as a result of their ongoing monitoring of portfolio
         securities held by advisory clients and/or their review of the periodic
         proxy voting record reports that the GPVSC Chair distributes to AM
         portfolio managers and AM research analysts.

If the Proxy Vendor Oversight refers a proxy proposal to the GPVSC or the GPVSC
determines that voting a particular proxy in accordance with the Guidelines is
not in the best economic interests of clients, the GPVSC will evaluate and vote
the proxy, subject to the procedures below regarding conflicts.

The GPVSC endeavors to hold meetings to decide how to vote particular proxies
sufficiently before the voting deadline so that the procedures below regarding
conflicts can be completed before the GPVSC's voting determination.

3.       Certain proxy votes may not be cast

In some cases, the GPVSC may determine that it is in the best economic interests
of its clients not to vote certain proxies. If the conditions below are met with
regard to a proxy proposal, AM will abstain from voting:

o        Neither the Guidelines nor specific client instructions cover an issue;

o        ISS does not make a recommendation on the issue;

o        The GPVSC cannot convene on the proxy proposal at issue to make a
         determination as to what would be in the client's best interest. (This
         could happen, for example, if the Conflicts of Interest Management
         Sub-committee found that there was a material conflict or if despite
         all best efforts being made, the GPVSC quorum requirement could not be
         met).

In addition, it is AM's policy not to vote proxies of issuers subject to laws of
those jurisdictions that impose restrictions upon selling shares after proxies
are voted, in order to preserve liquidity. In other cases, it may not be
possible to vote certain proxies, despite good faith efforts to do so. For
example, some jurisdictions do not provide adequate notice to shareholders so
that proxies may be voted on a timely basis. Voting rights on securities that
have been loaned to third-parties transfer to those third-parties, with loan
termination often being the only way to attempt to vote proxies on the loaned
securities. Lastly, the GPVSC may determine that the costs to the client(s)
associated with voting a particular proxy or group of proxies outweighs the
economic benefits expected from voting the proxy or group of proxies.

The Proxy Vendor Oversight will coordinate with the GPVSC Chair regarding any
specific proxies and any categories of proxies that will not or cannot be voted.
The reasons for not voting any proxy shall be documented.

4.       Conflict of Interest Procedures

A. Procedures to Address Conflicts of Interest and Improper Influence

Overriding Principle. In the limited circumstances where the GPVSC votes
proxies,(3) the GPVSC will vote those proxies in accordance with what it, in
good faith, determines to be the best economic interests of AM's clients.(4)

_____________________

(3)      As mentioned above, the GPVSC votes proxies (i) where neither a
         specific client instruction nor a Guideline directs how the proxy
         should be voted, (ii) where the Guidelines specify that an issue is to
         be determined on a case by case basis or (iii) where voting in
         accordance with the Guidelines may not be in the best economic
         interests of clients.

(4)      The Proxy Vendor Oversight, who serves as the non-voting secretary of
         the GPVSC, may receive routine calls from proxy solicitors and other
         parties interested in a particular proxy vote. Any contact that
         attempts to exert improper pressure or influence shall be reported to
         the Conflicts of Interest Management Sub-Committee.

Independence of the GPVSC. As a matter of Compliance policy, the GPVSC and the
Proxy Vendor Oversight are structured to be independent from other parts of
Deutsche Bank. Members of the GPVSC and the employee responsible for Proxy
Vendor Oversight are employees of AM. As such, they may not be subject to the
supervision or control of any employees of Deutsche Bank Corporate and
Investment Banking division ("CIB"). Their compensation cannot be based upon
their contribution to any business activity outside of AM without prior approval
of Legal and Compliance. They can have no contact with employees of Deutsche
Bank outside of the Private Client and Asset Management division ("PCAM")
regarding specific clients, business matters or initiatives without the prior
approval of Legal and Compliance. They furthermore may not discuss proxy votes
with any person outside of AM (and within AM only on a need to know basis).

Conflict Review Procedures. There will be a committee (the "Conflicts of
Interest Management Sub-Committee") established within AM that will monitor for
potential material conflicts of interest in connection with proxy proposals that
are to be evaluated by the GPVSC. Promptly upon a determination that a vote
shall be presented to the GPVSC, the GPVSC Chair shall notify the Conflicts of
Interest Management Sub-Committee. The Conflicts of Interest Management
Sub-Committee shall promptly collect and review any information deemed
reasonably appropriate to evaluate, in its reasonable judgment, if AM or any
person participating in the proxy voting process has, or has the appearance of,
a material conflict of interest. For the purposes of this policy, a conflict of
interest shall be considered "material" to the extent that a reasonable person
could expect the conflict to influence, or appear to influence, the GPVSC's
decision on the particular vote at issue. GPVSC should provide the Conflicts of
Interest Management Sub-Committee a reasonable amount of time (no less than 24
hours) to perform all necessary and appropriate reviews. To the extent that a
conflicts review can not be sufficiently completed by the Conflicts of Interest
Management Sub-Committee the proxies will be voted in accordance with the
standard guidelines.

The information considered by the Conflicts of Interest Management Sub-Committee
may include without limitation information regarding (i) AM client
relationships; (ii) any relevant personal conflict known by the Conflicts of
Interest Management Sub-Committee or brought to the attention of that
sub-committee; (iii) and any communications with members of the GPVSC (or anyone
participating or providing information to the GPVSC) and any person outside of
the AM organization (but within Deutsche Bank and its affiliates) or any entity
that identifies itself as a AM advisory client regarding the vote at issue. In
the context of any determination, the Conflicts of Interest Management
Sub-Committee may consult with, and shall be entitled to rely upon, all
applicable outside experts, including legal counsel.

Upon completion of the investigation, the Conflicts of Interest Management
Sub-Committee will document its findings and conclusions. If the Conflicts of
Interest Management Sub-Committee determines that (i) AM has a material conflict
of interest that would prevent it from deciding how to vote the proxies
concerned without further client consent or (ii) certain individuals should be
recused from participating in the proxy vote at issue, the Conflicts of Interest
Management Sub-Committee will so inform the GPVSC chair.

If notified that AM has a material conflict of interest as described above, the
GPVSC chair will obtain instructions as to how the proxies should be voted
either from (i) if time permits, the effected clients, or (ii) in accordance
with the standard guidelines. If notified that certain individuals should be
recused from the proxy vote at issue, the GPVSC Chair shall do so in accordance
with the procedures set forth below.

Note: Any AM employee who becomes aware of a potential, material conflict of
interest in respect of any proxy vote to be made on behalf of clients shall
notify Compliance. Compliance shall call a meeting of the conflict review
committee to evaluate such conflict and determine a recommended course of
action.

Procedures to be followed by the GPVSC. At the beginning of any discussion
regarding how to vote any proxy, the GPVSC Chair (or his or her delegate) will
inquire as to whether any GPVSC member (whether voting or ex officio) or any
person participating in the proxy voting process has a personal conflict of
interest or has actual knowledge of an actual or apparent conflict that has not
been reported to the Conflicts of Interest Management Sub-Committee.

The GPVSC Chair also will inquire of these same parties whether they have actual
knowledge regarding whether any director, officer or employee outside of the AM
organization (but within Deutsche Bank and its affiliates) or any entity that
identifies itself as a AM advisory client, has: (i) requested that AM, the Proxy
Vendor Oversight (or any member thereof) or a GPVSC member vote a particular
proxy in a certain manner; (ii) attempted to influence AM, the Proxy Vendor
Oversight (or any member thereof), a GPVSC member or any other person in
connection with proxy voting activities; or (iii) otherwise communicated with a
GPVSC member or any other person participating or providing information to the
GPVSC regarding the particular proxy vote at issue, and which incident has not
yet been reported to the Conflicts of Interest Management Sub- Committee.

If any such incidents are reported to the GPVSC Chair, the Chair will promptly
notify the Conflicts of Interest Management Sub-Committee and, if possible, will
delay the vote until the Conflicts of Interest Management Sub-Committee can
complete the conflicts report. If a delay is not possible, the Conflicts of
Interest Management Sub-Committee will instruct the GPVSC whether anyone should
be recused from the proxy voting process, or whether AM should vote the proxy in
accordance with the standard guidelines, seek instructions as to how to vote the
proxy at issue from ISS or, if time permits, the effected clients. These
inquiries and discussions will be properly reflected in the GPVSC's minutes.

Duty to Report. Any AM employee, including any GPVSC member (whether voting or
ex officio), that is aware of any actual or apparent conflict of interest
relevant to, or any attempt by any person outside of the AM organization (but
within Deutsche Bank and its affiliates) or any entity that identifies itself as
a AM advisory client to influence, how AM votes its proxies has a duty to
disclose the existence of the situation to the GPVSC Chair (or his or her
designee) and the details of the matter to the Conflicts of Interest Management
Sub-Committee. In the case of any person participating in the deliberations on a
specific vote, such disclosure should be made before engaging in any activities
or participating in any discussion pertaining to that vote.

Recusal of Members. The GPVSC will recuse from participating in a specific proxy
vote any GPVSC members (whether voting or ex officio) and/or any other person
who (i) are personally involved in a material conflict of interest; or (ii) who,
as determined by the Conflicts of Interest Management Sub-Committee, have actual
knowledge of a circumstance or fact that could effect their independent
judgment, in respect of such vote. The GPVSC will also exclude from
consideration the views of any person (whether requested or volunteered) if the
GPVSC or any member thereof knows, or if the Conflicts of Interest Management
Sub-Committee has determined, that such other person has a material conflict of
interest with respect to the particular proxy, or has attempted to influence the
vote in any manner prohibited by these policies.

If, after excluding all relevant GPVSC voting members pursuant to the paragraph
above, there are three or more GPVSC voting members remaining, those remaining
GPVSC members will determine how to vote the proxy in accordance with these
Policies and Procedures. If there are fewer than three GPVSC voting members
remaining, the GPVSC Chair will vote the proxy in accordance with the standard
guidelines, will obtain instructions as to how to have the proxy voted from, if
time permits, the effected clients and otherwise from ISS.

B.       Investment Companies and Affiliated Public Companies

Investment Companies. As reflected in the Guidelines, all proxies solicited by
open-end and closed-end investment companies are voted in accordance with the
pre-determined guidelines of ISS, unless the investment company client directs
AM to vote differently on a specific proxy or specific categories of proxies.
However, regarding investment companies for which AM or an affiliate serves as
investment adviser or principal underwriter, such proxies are voted in the same
proportion as the vote of all other shareholders (i.e., "mirror" or "echo"
voting). Master fund proxies solicited from feeder funds are voted in accordance
with applicable provisions of Section 12 of the Investment Company Act of 1940.

Subject to participation agreements with certain Exchange Traded Funds ("ETF")
issuers that have received exemptive orders from the U.S. Securities and
Exchange Commission allowing investing DWS funds to exceed the limits set forth
in Section 12(d)(1)(A) and (B) of the Investment Company Act of 1940, DeAM will
echo vote proxies for ETFs in which Deutsche Bank holds more than 25% of
outstanding voting shares globally when required to do so by participation
agreements and SEC orders.

Affiliated Public Companies. For proxies solicited by non-investment company
issuers of or within the Deutsche Bank organization, e.g., Deutsche bank itself,
these proxies will be voted in the same proportion as the vote of other
shareholders (i.e., "mirror" or "echo" voting).

Note: With respect to the QP Trust (not registered under the Investment Company
Act of 1940), the Fund is not required to engage in echo voting and the
investment adviser will use these Guidelines, and may determine, with respect to
the QP Trust, to vote contrary to the positions in the Guidelines, consistent
with the Fund's best interest.

C.       Other Procedures That Limit Conflicts of Interest

AM and other entities in the Deutsche Bank organization have adopted a number of
policies, procedures and internal controls that are designed to avoid various
conflicts of interest, including those that may arise in connection with proxy
voting, including:

o        Deutsche Bank Americas Restricted Activities Policy. This policy
         provides for, among other things, independence of AM employees from
         CIB, and information barriers between AM and other affiliates.
         Specifically, no AM employee may be subject to the supervision or
         control of any employee of CIB. No AM employee shall have his or her
         compensation based upon his or her contribution to any business
         activity within the Bank outside of the business of AM, without the
         prior approval of Legal or Compliance. Further, no employee of CIB
         shall have any input into the compensation of a AM employee without the
         prior approval of Legal or Compliance. Under the information barriers
         section of this policy, as a general rule, AM employees who are
         associated with the investment process should have no contact with
         employees of Deutsche Bank or its affiliates, outside of PCAM,
         regarding specific clients, business matters, or initiatives. Further,
         under no circumstances should proxy votes be discussed with any
         Deutsche Bank employee outside of AM (and should only be discussed on a
         need-to-know basis within AM).

Other relevant internal policies include the Deutsche Bank Americas Code of
Professional Conduct, the Deutsche Asset Management Information Sharing
Procedures, the Deutsche Asset Management Code of Ethics, the Sarbanes-Oxley
Senior Officer Code of Ethics, and the Deutsche Bank Group Code of Conduct. The
GPVSC expects that these policies, procedures and internal controls will greatly
reduce the chance that the GPVSC (or, its members) would be involved in, aware
of or influenced by, an actual or apparent conflict of interest.


V.       RECORDKEEPING

At a minimum, the following types of records must be properly maintained and
readily accessible in order to evidence compliance with this policy.

o        AM will maintain a record of each vote cast by AM that includes among
         other things, company name, meeting date, proposals presented, vote
         cast and shares voted.

o        The Proxy Vendor Oversight maintains records for each of the proxy
         ballots it votes. Specifically, the records include, but are not
         limited to:

         -        The proxy statement (and any additional solicitation
                  materials) and relevant portions of annual statements.

         -        Any additional information considered in the voting process
                  that may be obtained from an issuing company, its agents or
                  proxy research firms.

         -        Analyst worksheets created for stock option plan and share
                  increase analyses.

         -        Proxy Edge print-screen of actual vote election.

o        AM will retain these Policies and Procedures and the Guidelines; will
         maintain records of client requests for proxy voting information; and
         will retain any documents the Proxy Vendor Oversight or the GPVSC
         prepared that were material to making a voting decision or that
         memorialized the basis for a proxy voting decision.

o        The GPVSC also will create and maintain appropriate records documenting
         its compliance with these Policies and Procedures, including records of
         its deliberations and decisions regarding conflicts of interest and
         their resolution.

o        With respect to AM's investment company clients, ISS will create and
         maintain records of each company's proxy voting record for 12-month
         periods ended June 30. AM will compile the following information for
         each matter relating to a portfolio security considered at any
         shareholder meeting held during the period covered by the report and
         with respect to which the company was entitled to vote:

         -        The name of the issuer of the portfolio security;

         -        The exchange ticker symbol of the portfolio security (if
                  symbol is available through reasonably practicable means);

         -        The Council on Uniform Securities Identification Procedures
                  number for the portfolio security (if the number is available
                  through reasonably practicable means);

         -        The shareholder meeting date;

         -        A brief identification of the matter voted on;

         -        Whether the matter was proposed by the issuer or by a security
                  holder;

         -        Whether the company cast its vote on the matter;

         -        How the company cast its vote (e.g., for or against proposal,
                  or abstain; for or withhold regarding election of directors);
                  and

         -        Whether the company cast its vote for or against management.

Note: This list is intended to provide guidance only in terms of the records
that must be maintained in accordance with this policy. In addition, please note
that records must be maintained in accordance with the applicable AM Records
Management Policy.

With respect to electronically stored records, "properly maintained" is defined
as complete, authentic (unalterable) usable and backed-up. At a minimum, records
should be retained for a period of not less than six years (or longer, if
necessary to comply with applicable regulatory requirements), the first three
years in an appropriate AM office.


VI.      THE GPVSC'S OVERSIGHT ROLE

In addition to adopting the Guidelines and making proxy voting decisions on
matters referred to it as set forth above, the GPVSC will monitor the proxy
voting process by reviewing summary proxy information presented by ISS. The
GPVSC will use this review process to determine, among other things, whether any
changes should be made to the Guidelines. This review will take place at least
quarterly and will be documented in the GPVSC's minutes.


                 Attachment A - Global Proxy Voting Guidelines


                               Table of contents

I        Board Of Directors And Executives

         A        Election Of Directors

         B        Classified Boards Of Directors

         C        Board And Committee Independence

         D        Liability And Indemnification Of Directors

         E        Qualifications Of Directors

         F        Removal Of Directors And Filling Of Vacancies

         G        Proposals To Fix The Size Of The Board

         H        Proposals to Restrict Chief Executive Officer's Service on

                  Multiple Boards

         I        Proposals to Restrict Supervisory Board Members Service on

                  Multiple Boards

         J        Proposals to Establish Audit Committees

II       Capital Structure

         A        Authorization Of Additional Shares

         B        Authorization Of "Blank Check" Preferred Stock

         C        Stock Splits/Reverse Stock Splits

         D        Dual Class/Supervoting Stock

         E        Large Block Issuance

         F        Recapitalization Into A Single Class Of Stock

         G        Share Repurchases

         H        Reductions In Par Value

III      Corporate Governance Issues

         A        Confidential Voting

         B        Cumulative Voting

         C        Supermajority Voting Requirements

         D        Shareholder Right To Vote

IV       Compensation

         A        Establishment of a Remuneration Committee

         B        Executive And Director Stock Option Plans

         C        Employee Stock Option/Purchase Plans

         D        Golden Parachutes

         E        Proposals To Limit Benefits Or Executive Compensation

         F        Option Expensing

         G        Management board election and motion

         H        Remuneration (variable pay)

         I        Long-term incentive plans

         J        Shareholder Proposals Concerning "Pay For Superior
                  Performance"

         K        Executive Compensation Advisory

V        Anti-Takeover Related Issues

         A        Shareholder Rights Plans ("Poison Pills")

         B        Reincorporation

         C        Fair-Price Proposals

         D        Exemption From State Takeover Laws

         E        Non-Financial Effects Of Takeover Bids

VI       Mergers & Acquisitions

VII      Social & Political Issues

         A        Labor & Human Rights

         B        Diversity & Equality

         C        Health & Safety

         D        Government/Military

         E        Tobacco

VIII     Environmental Issues

IX       Miscellaneous Items

         A        Ratification Of Auditors

         B        Limitation Of Non-Audit Services Provided By Independent
                  Auditor

         C        Audit Firm Rotation

         D        Transaction Of Other Business

         E        Motions To Adjourn The Meeting

         F        Bundled Proposals

         G        Change Of Company Name

         H        Proposals Related To The Annual Meeting

         I        Reimbursement Of Expenses Incurred From Candidate Nomination

         J        Investment Company Proxies

         K        International Proxy Voting


These Guidelines may reflect a voting position that differs from the actual
practices of the public company (ies) within the Deutsche Bank organization or
of the investment companies for which AM or an affiliate serves as investment
adviser or sponsor.

NOTE: Because of the unique structure and regulatory scheme applicable to
closed-end investment companies, the voting guidelines (particularly those
related to governance issues) generally will be inapplicable to holdings of
closed-end investment companies. As a result, determinations on the appropriate
voting recommendation for closed-end investment company shares will be made on a
case-by-case basis.


I.       Board of Directors and Executives

A.       Election of Directors

Routine: AM Policy is to vote "for" the uncontested election of directors. Votes
for a director in an uncontested election will be withheld in cases where a
director has shown an inability to perform his/her duties in the best interests
of the shareholders.

Proxy contest: In a proxy contest involving election of directors, a
case-by-case voting decision will be made based upon analysis of the issues
involved and the merits of the incumbent and dissident slates of directors. AM
will incorporate the decisions of a third party proxy research vendor,
currently, Institutional Shareholder Services ("ISS") subject to review by the
Proxy Voting Sub-Committee (GPVSC) as set forth in the AM's Proxy Voting
Policies and Procedures.

Rationale: The large majority of corporate directors fulfill their fiduciary
obligation and in most cases support for management's nominees is warranted. As
the issues relevant to a contested election differ in each instance, those cases
must be addressed as they arise.

B.       Classified Boards of Directors

AM policy is to vote against proposals to classify the board and for proposals
to repeal classified boards and elect directors annually.

Rationale: Directors should be held accountable on an annual basis. By
entrenching the incumbent board, a classified board may be used as an
anti-takeover device to the detriment of the shareholders in a hostile take-over
situation.

C.       Board and Committee Independence

AM policy is to vote:

1.       "For" proposals that require that a certain percentage (majority up to
         66 2/3%) of members of a board of directors be comprised of independent
         or unaffiliated directors.

2.       "For" proposals that require all members of a company's compensation,
         audit, nominating, or other similar committees be comprised of
         independent or unaffiliated directors.

3.       "Against" shareholder proposals to require the addition of special
         interest, or constituency, representatives to boards of directors.

4.       "For" separation of the Chairman and CEO positions.

5.       "Against" proposals that require a company to appoint a Chairman who is
         an independent director.

Rationale: Board independence is a cornerstone of effective governance and
accountability. A board that is sufficiently independent from management assures
that shareholders' interests are adequately represented. However, the Chairman
of the board must have sufficient involvement in and experience with the
operations of the company to perform the functions required of that position and
lead the company.

No director qualifies as 'independent' unless the board of directors
affirmatively determines that the director has no material relationship with the
listed company (either directly or as a partner, shareholder or officer of an
organization that has a relationship with the company).

Whether a director is in fact not "independent" will depend on the laws and
regulations of the primary market for the security and the exchanges, if any, on
which the security trades.

D.       Liability and Indemnification of Directors

AM policy is to vote "for" management proposals to limit directors' liability
and to broaden the indemnification of directors, unless broader indemnification
or limitations on directors' liability would effect shareholders' interests in
pending litigation.

Rationale: While shareholders want directors and officers to be responsible for
their actions, it is not in the best interests of the shareholders for them to
be to risk averse. If the risk of personal liability is too great, companies may
not be able to find capable directors willing to serve. We support expanding
coverage only for actions taken in good faith and not for serious violations of
fiduciary obligation or negligence.

E.       Qualifications of Directors

AM policy is to follow management's recommended vote on either management or
shareholder proposals that set retirement ages for directors or require specific
levels of stock ownership by directors.

Rationale: As a general rule, the board of directors, and not the shareholders,
is most qualified to establish qualification policies.

F.       Removal of Directors and Filling of Vacancies

AM policy is to vote "against" proposals that include provisions that directors
may be removed only for cause or proposals that include provisions that only
continuing directors may fill board vacancies.

Rationale: Differing state statutes permit removal of directors with or without
cause. Removal of directors for cause usually requires proof of self-dealing,
fraud or misappropriation of corporate assets, limiting shareholders' ability to
remove directors except under extreme circumstances. Removal without cause
requires no such showing.

Allowing only incumbent directors to fill vacancies can serve as an
anti-takeover device, precluding shareholders from filling the board until the
next regular election.

G.       Proposals to Fix the Size of the Board

AM policy is to vote:

1.       "For" proposals to fix the size of the board unless: (a) no specific
         reason for the proposed change is given; or (b) the proposal is part of
         a package of takeover defenses.

2.       "Against" proposals allowing management to fix the size of the board
         without shareholder approval.

Rationale: Absent danger of anti-takeover use, companies should be granted a
reasonable amount of flexibility in fixing the size of its board.

H.       Proposals to Restrict Chief Executive Officer's Service on Multiple
         Boards

AM policy is to vote "For" proposals to restrict a Chief Executive Officer from
serving on more than three outside boards of directors.

Rationale: Chief Executive Officer must have sufficient time to ensure that
shareholders' interests are represented adequately.

Note: A director's service on multiple closed-end fund boards within a fund
complex are treated as service on a single Board for the purpose of the proxy
voting guidelines.

I.       Proposals to Restrict Supervisory Board Members Service on Multiple
         Boards (For FFT Securities)

AM policy is to vote "for" proposals to restrict a Supervisory Board Member from
serving on more than five supervisory boards.

Rationale: We consider a strong, independent and knowledgeable supervisory board
as important counter-balance to executive management to ensure that the
interests of shareholders are fully reflected by the company.

Full information should be disclosed in the annual reports and accounts to allow
all shareholders to judge the success of the supervisory board controlling their
company.

Supervisory Board Member must have sufficient time to ensure that shareholders'
interests are represented adequately.

Note: A director's service on multiple closed-end fund boards within a fund
complex are treated as service on a single Board for the purpose of the proxy
voting guidelines.

J.       Proposals to Establish Audit Committees (For FFT and U.S. Securities)
         AM policy is to vote "for" proposals that require the establishment of
         audit committees.

Rationale: The audit committee should deal with accounting and risk management
related questions, verifies the independence of the auditor with due regard to
possible conflicts of interest. It also should determine the procedure of the
audit process.


II.      Capital Structure

A.       Authorization of Additional Shares (For U.S. Securities)

AM policy is to vote "for" proposals to increase the authorization of existing
classes of stock that do not exceed a 3:1 ratio of shares authorized to shares
outstanding for a large cap company, and do not exceed a 4:1 ratio of shares
authorized to shares outstanding for a small-midcap company (companies having a
market capitalization under one billion U.S. dollars.).

Rationale: While companies need an adequate number of shares in order to carry
on business, increases requested for general financial flexibility must be
limited to protect shareholders from their potential use as an anti-takeover
device. Requested increases for specifically designated, reasonable business
purposes (stock split, merger, etc.) will be considered in light of those
purposes and the number of shares required.

B.       Authorization of "Blank Check" Preferred Stock (For U.S. Securities)

AM policy is to vote:

1.   "Against" proposals to create blank check preferred stock or to increase
     the number of authorized shares of blank check preferred stock unless the
     company expressly states that the stock will not be used for anti-takeover
     purposes and will not be issued without shareholder approval.

2.   "For" proposals mandating shareholder approval of blank check stock
     placement.

Rationale: Shareholders should be permitted to monitor the issuance of classes
of preferred stock in which the board of directors is given unfettered
discretion to set voting, dividend, conversion and other rights for the shares
issued.

C.       Stock Splits/Reverse Stock Splits

AM policy is to vote "for" stock splits if a legitimate business purpose is set
forth and the split is in the shareholders' best interests. A vote is cast "for"
a reverse stock split only if the number of shares authorized is reduced in the
same proportion as the reverse split or if the effective increase in authorized
shares (relative to outstanding shares) complies with the proxy guidelines for
common stock increases (see, Section II.A, above.)

Rationale: Generally, stock splits do not detrimentally effect shareholders.
Reverse stock splits, however, may have the same result as an increase in
authorized shares and should be analyzed accordingly.

D.       Dual Class/Supervoting Stock

AM policy is to vote "against" proposals to create or authorize additional
shares of super-voting stock or stock with unequal voting rights.

Rationale: The "one share, one vote" principal ensures that no shareholder
maintains a voting interest exceeding their equity interest in the company.

E.       Large Block Issuance (For U.S. Securities)

AM policy is to address large block issuances of stock on a case-by-case basis,
incorporating the recommendation of an independent third party proxy research
firm (currently ISS) subject to review by the GPVSC as set forth in AM's Proxy
Policies and Procedures.

Additionally, AM supports proposals requiring shareholder approval of large
block issuances.

Rationale: Stock issuances must be reviewed in light of the business
circumstances leading to the request and the potential impact on shareholder
value.

F.       Recapitalization into a Single Class of Stock

AM policy is to vote "for" recapitalization plans to provide for a single class
of common stock, provided the terms are fair, with no class of stock being
unduly disadvantaged.

Rationale: Consolidation of multiple classes of stock is a business decision
that may be left to the board and/management if there is no adverse effect on
shareholders.

G.       Share Repurchases

AM policy is to vote "for" share repurchase plans provided all shareholders are
able to participate on equal terms.

Rationale: Buybacks are generally considered beneficial to shareholders because
they tend to increase returns to the remaining shareholders.

H.       Reductions in Par Value

AM policy is to vote "for" proposals to reduce par value, provided a legitimate
business purpose is stated (e.g., the reduction of corporate tax
responsibility.)

Rationale: Usually, adjustments to par value are a routine financial decision
with no substantial impact on shareholders.


III.     Corporate Governance Issues

A.       Confidential Voting

AM policy is to vote "for" proposals to provide for confidential voting and
independent tabulation of voting results and to vote "against" proposals to
repeal such provisions.

Rationale: Confidential voting protects the privacy rights of all shareholders.
This is particularly important for employee-shareholders or shareholders with
business or other affiliations with the company, who may be vulnerable to
coercion or retaliation when opposing management. Confidential voting does not
interfere with the ability of corporations to communicate with all shareholders,
nor does it prohibit shareholders from making their views known directly to
management.

B.       Cumulative Voting (For U.S. Securities)

AM policy is to vote "against" shareholder proposals requesting cumulative
voting and "for"management proposals to eliminate it. The protections afforded
shareholders by cumulative voting are not necessary when a company has a history
of good performance and does not have a concentrated ownership interest.
Accordingly, a vote is cast "against" cumulative voting and "for" proposals to
eliminate it if:

a)       The company has a five year return on investment greater than the
         relevant industry index,

b)       All directors and executive officers as a group beneficially own less
         than 10% of the outstanding stock, and

c)       No shareholder (or voting block) beneficially owns 15% or more of the
         company.

Thus, failure of any one of the three criteria results in a vote for cumulative
voting in accordance with the general policy.

Rationale: Cumulative voting is a tool that should be used to ensure that
holders of a significant number of shares may have board representation;
however, the presence of other safeguards may make their use unnecessary.

C.       Supermajority Voting Requirements

AM policy is to vote "against" management proposals to require a supermajority
vote to amend the charter or bylaws and to vote "for" shareholder proposals to
modify or rescind existing supermajority requirements.

*Exception made when company holds a controlling position and seeks to lower
threshold to maintain control and/or make changes to corporate by-laws.

Rationale: Supermajority voting provisions violate the democratic principle that
a simple majority should carry the vote. Setting supermajority requirements may
make it difficult or impossible for shareholders to remove egregious by-law or
charter provisions. Occasionally, a company with a significant insider held
position might attempt to lower a supermajority threshold to make it easier for
management to approve provisions that may be detrimental to shareholders. In
that case, it may not be in the shareholders interests to lower the
supermajority provision.

D.       Shareholder Right to Vote

AM policy is to vote "against" proposals that restrict the right of shareholders
to call special meetings, amend the bylaws, or act by written consent. Policy is
to vote "for" proposals that remove such restrictions.

Rationale: Any reasonable means whereby shareholders can make their views known
to management or effect the governance process should be supported.


IV.      Compensation

Annual Incentive Plans or Bonus Plans are often submitted to shareholders for
approval. These plans typically award cash to executives based on company
performance. Deutsche Bank believes that the responsibility for executive
compensation decisions rest with the board of directors and/or the compensation
committee, and its policy is not to second-guess the board's award of cash
compensation amounts to executives unless a particular award or series of awards
is deemed excessive. If stock options are awarded as part of these bonus or
incentive plans, the provisions must meet Deutsche Bank's criteria regarding
stock option plans, or similar stock-based incentive compensation schemes, as
set forth below.

A.       Establishment of a Remuneration Committee (For FFT Securities)

AM policy is to vote "for" proposals that require the establishment of a
remuneration committee.

Rationale: Corporations should disclose in each annual report or proxy statement
their policies on remuneration. Essential details regarding executive
remuneration including share options, long-term incentive plans and bonuses,
should be disclosed in the annual report, so that investors can judge whether
corporate pay policies and practices meet the standard.

The remuneration committee shall not comprise any board members and should be
sensitive to the wider scene on executive pay. It should ensure that
performance-based elements of executive pay are designed to align the interests
of shareholders.

B.       Executive and Director Stock Option Plans

AM policy is to vote "for" stock option plans that meet the following criteria:

(1)      The resulting dilution of existing shares is less than (a) 15 percent
         of outstanding shares for large capital corporations or (b) 20 percent
         of outstanding shares for small-mid capital companies (companies having
         a market capitalization under one billion U.S. dollars.)

(2)      The transfer of equity resulting from granting options at less than FMV
         is no greater than 3% of the over-all market capitalization of large
         capital corporations, or 5% of market cap for small-mid capital
         companies.

(3)      The plan does not contain express repricing provisions and, in the
         absence of an express statement that options will not be repriced; the
         company does not have a history of repricing options.

(4)      The plan does not grant options on super-voting stock.

AM will support performance-based option proposals as long as a) they do not
mandate that all options granted by the company must be performance based, and
b) only certain high-level executives are subject to receive the performance
based options.

AM will support proposals to eliminate the payment of outside director pensions.

Rationale: Determining the cost to the company and to shareholders of
stock-based incentive plans raises significant issues not encountered with
cash-based compensation plans. These include the potential dilution of existing
shareholders' voting power, the transfer of equity out of the company resulting
from the grant and execution of options at less than FMV and the authority to
reprice or replace underwater options. Our stock option plan analysis model
seeks to allow reasonable levels of flexibility for a company yet still protect
shareholders from the negative impact of excessive stock compensation.
Acknowledging that small mid-capital corporations often rely more heavily on
stock option plans as their main source of executive compensation and may not be
able to compete with their large capital competitors with cash compensation, we
provide slightly more flexibility for those companies.

C.       Employee Stock Option/Purchase Plans

AM policy is to vote for employee stock purchase plans (ESPP's) when the plan
complies with Internal Revenue Code 423, allowing non-management employees to
purchase stock at 85% of FMV.

AM policy is to vote "for" employee stock option plans (ESOPs) provided they
meet the standards for stock option plans in general. However, when computing
dilution and transfer of equity, ESOPs are considered independently from
executive and director option plans.

Rationale: ESOPs and ESPP's encourage rank-and-file employees to acquire an
ownership stake in the companies they work for and have been shown to promote
employee loyalty and improve productivity.

D.       Golden Parachutes

AM policy is to vote "for" proposals to require shareholder approval of golden
parachutes and for proposals that would limit golden parachutes to no more than
three times base compensation. Policy is to vote "against" more restrictive
shareholder proposals to limit golden parachutes.

Rationale: In setting a reasonable limitation, AM considers that an effective
parachute should be less attractive than continued employment and that the IRS
has opined that amounts greater than three times annual salary, are excessive.

E.       Proposals to Limit Benefits or Executive Compensation

AM policy is to vote "against"

1.   Proposals to limit benefits, pensions or compensation and

2.   Proposals that request or require disclosure of executive compensation
     greater than the disclosure required by Securities and Exchange Commission
     (SEC) regulations.

Rationale: Levels of compensation and benefits are generally considered to be
day-to-day operations of the company, and are best left unrestricted by
arbitrary limitations proposed by shareholders.

F.       Option Expensing

AM policy is to support proposals requesting companies to expense stock options.

Rationale: Although companies can choose to expense options voluntarily, the
Financial Accounting Standards Board (FASB) does not yet require it, instead
allowing companies to disclose the theoretical value of options as a footnote.
Because the expensing of stock options lowers earnings, most companies elect not
to do so. Given the fact that options have become an integral component of
compensation and their exercise results in a transfer of shareholder value, AM
agrees that their value should not be ignored and treated as "no cost"
compensation. The expensing of stock options would promote more modest and
appropriate use of stock options in executive compensation plans and present a
more accurate picture of company operational earnings.

G.        Management board election and motion (For FFT Securities)

AM policy is to vote "against":

o        the election of board members with positions on either remuneration or
         audit committees;

o        the election of supervisory board members with too many supervisory
         board mandates;

o        "automatic" election of former board members into the supervisory
         board.

Rationale: Management as an entity, and each of its members, are responsible for
all actions of the company, and are - subject to applicable laws and regulations
- accountable to the shareholders as a whole for their actions.

Sufficient information should be disclosed in the annual company report and
account to allow shareholders to judge the success of the company.

H.       Remuneration (variable pay): (For FFT Securities)

Executive remuneration for Management Board

AM policy is to vote "for" remuneration for Management Board that is transparent
and linked to results.

Rationale: Executive compensation should motivate management and align the
interests of management with the shareholders. The focus should be on criteria
that prevent excessive remuneration; but enable the company to hire and retain
first-class professionals.

Shareholder interests are normally best served when management is remunerated to
optimise long-term returns. Criteria should include suitable measurements like
return on capital employed or economic value added.

Interests should generally also be correctly aligned when management own shares
in the company - even more so if these shares represent a substantial portion of
their own wealth.

Its disclosure shall differentiate between fixed pay, variable (performance
related) pay and long-term incentives, including stock option plans with
valuation ranges as well as pension and any other significant arrangements.

Executive remuneration for Supervisory Board

AM policy is to vote "for" remuneration for Supervisory Board that is at least
50% in fixed form.

Rationale: It would normally be preferable if performance linked compensation
were not based on dividend payments, but linked to suitable result based
parameters. Consulting and procurement services should also be published in the
company report.

I.       Long-term incentive plans (For FFT Securities)

AM policy is to vote "for" long-term incentive plans for members of a management
board that reward for above average company performance.

Rationale: Incentive plans will normally be supported if they:

o        directly align the interests of members of management boards with those
         of shareholders;

o        establish challenging performance criteria to reward only above average
         performance;

o        measure performance by total shareholder return in relation to the
         market or a range of comparable companies;

o        are long-term in nature and encourage long-term ownership of the shares
         once exercised through minimum holding periods;

o        do not allow a repricing of the exercise price in stock option plans.

J.       Shareholder Proposals Concerning "Pay for Superior Performance"

AM policy is to address pay for superior performance proposals on a case-by-case
basis, incorporating the recommendation of an independent third party proxy
research firm (currently ISS) subject to review by the GPVSC as set forth in
AM's Proxy Policies and Procedures.

Rationale: While AM agrees that compensation issues are better left to the
discretion of management, they appreciate the need to monitor for excessive
compensation practices on a case by case basis. If, after a review of the ISS
metrics, AM is comfortable with ISS's applying this calculation and will vote
according to their recommendation.

K.       Executive Compensation Advisory

AM policy is to follow management's recommended vote on shareholder proposals to
propose an advisory resolution seeking to ratify the compensation of the
company's named executive officers (NEOs) on an annual basis.

Rationale: AM believes that controls exist within senior management and
corporate compensation committees, ensuring fair compensation to executives.
This might allow shareholders to require approval for all levels of management's
compensation.

V.       Anti-Takeover Related Issues

A.       Shareholder Rights Plans ("Poison Pills")

AM policy is to vote "for" proposals to require shareholder ratification of
poison pills or that request boards to redeem poison pills, and to vote
"against" the adoption of poison pills if they are submitted for shareholder
ratification.

Rationale: Poison pills are the most prevalent form of corporate takeover
defenses and can be (and usually are) adopted without shareholder review or
consent. The potential cost of poison pills to shareholders during an attempted
takeover outweighs the benefits.

B.       Reincorporation

AM policy is to examine reincorporation proposals on a case-by-case basis. The
voting decision is based on: (1) differences in state law between the existing
state of incorporation and the proposed state of incorporation; and (2)
differences between the existing and the proposed charter/bylaws/articles of
incorporation and their effect on shareholder rights. If changes resulting from
the proposed reincorporation violate the corporate governance principles set
forth in these guidelines, the reincorporation will be deemed contrary to
shareholder's interests and a vote cast "against."

Rationale: Reincorporations can be properly analyzed only by looking at the
advantages and disadvantages to their shareholders. Care must be taken that
anti-takeover protection is not the sole or primary result of a proposed change.

C.       Fair-Price Proposals

AM policy is to vote "for" management fair-price proposals, provided that: (1)
the proposal applies only to two-tier offers; (2) the proposal sets an objective
fair-price test based on the highest price that the acquirer has paid for a
company's shares; (3) the supermajority requirement for bids that fail the
fair-price test is no higher than two-thirds of the outstanding shares; (4) the
proposal contains no other anti-takeover provisions or provisions that restrict
shareholders rights.

A vote is cast for shareholder proposals that would modify or repeal existing
fair-price requirements that do not meet these standards.

Rationale: While fair price provisions may be used as anti-takeover devices, if
adequate provisions are included, they provide some protection to shareholders
who have some say in their application and the ability to reject those
protections if desired.

D.       Exemption from state takeover laws

AM policy is to vote "for" shareholder proposals to opt out of state takeover
laws and to vote "against" management proposals requesting to opt out of state
takeover laws.

Rationale: Control share statutes, enacted at the state level, may harm
long-term share value by entrenching management. They also unfairly deny certain
shares their inherent voting rights.

E.       Non-financial Effects of Takeover Bids

Policy is to vote "against" shareholder proposals to require consideration of
non-financial effects of merger or acquisition proposals.

Rationale: Non-financial effects may often be subjective and are secondary to
AM's stated purpose of acting in its client's best economic interest.


VI.      Mergers & Acquisitions

Evaluation of mergers, acquisitions and other special corporate transactions
(i.e., takeovers, spin-offs, sales of assets, reorganizations, restructurings
and recapitalizations) are performed on a case-by-case basis incorporating
information from an independent proxy research source (currently ISS.)
Additional resources including portfolio management and research analysts may be
considered as set forth in AM's Policies and Procedures.


VII.     Social, Environmental & Political Issues

Social and environmental issues are becoming increasingly important to corporate
success. We incorporate social and environmental considerations into both our
investment decisions and our proxy voting decisions - particularly if the
financial performance of the company could be impacted.

With increasing frequency, shareholder proposals are submitted relating to
social and political responsibility issues. Almost universally, the company
management will recommend a vote "against" these proposals. These types of
proposals cover an extremely wide range of issues. Many of the issues tend to be
controversial and are subject to more than one reasonable, yet opposing, theory
of support. More so than with other types of proxy proposals, social and
political responsibility issues may not have a connection to the economic and
corporate governance principles effecting shareholders' interests. AM's policy
regarding social and political responsibility issues, as with any other issue,
is designed to protect our client shareholders' economic interests.

Occasionally, a distinction is made between a shareholder proposal requesting
direct action on behalf of the board and a request for a report on (or
disclosure of) some information. In order to avoid unduly burdening any company
with reporting requirements, AM's policy is to vote against shareholder
proposals that demand additional disclosure or reporting than is required by the
Securities and Exchange Commission unless it appears there is a legitimate issue
and the company has not adequately addressed shareholders' concerns.

A.       Labor & Human Rights

AM policy is to vote "against" adopting global codes of conduct or workplace
standards exceeding those mandated by law.

Rationale: Additional requirements beyond those mandated by law are deemed
unnecessary and potentially burdensome to companies

B.       Diversity & Equality

1.       AM policy is to vote "against" shareholder proposals to force equal
         employment opportunity, affirmative action or board diversity.

Rationale: Compliance with State and Federal legislation along with information
made available through filings with the EEOC provides sufficient assurance that
companies act responsibly and make information public.

2.       AM policy is also to vote "against" proposals to adopt the Mac Bride
         Principles. The Mac Bride Principles promote fair employment,
         specifically regarding religious discrimination.

Rationale: Compliance with the Fair Employment Act of 1989 makes adoption of the
Mac Bride Principles redundant. Their adoption could potentially lead to charges
of reverse discrimination.

C.       Health & Safety

1.       AM policy is to vote "against" adopting a pharmaceutical price
         restraint policy or reporting pricing policy changes.

Rationale: Pricing is an integral part of business for pharmaceutical companies
and should not be dictated by shareholders (particularly pursuant to an
arbitrary formula.) Disclosing pricing policies may also jeopardize a company's
competitive position in the marketplace.

2.       AM policy is to vote "against" shareholder proposals to control the use
         or labeling of and reporting on genetically engineered products.

Rationale: Additional requirements beyond those mandated by law are deemed
unnecessary and potentially burdensome to companies.

D.       Government/Military

1.       AM policy is to vote against shareholder proposals regarding the
         production or sale of military arms or nuclear or space-based weapons,
         including proposals seeking to dictate a company's interaction with a
         particular foreign country or agency.

Rationale: Generally, management is in a better position to determine what
products or industries a company can and should participate in. Regulation of
the production or distribution of military supplies is, or should be, a matter
of government policy.

2.       AM policy is to vote "against" shareholder proposals regarding
         political contributions and donations.

Rationale: The Board of Directors and Management, not shareholders, should
evaluate and determine the recipients of any contributions made by the company.

3.       AM policy is to vote "against" shareholder proposals regarding
         charitable contributions and donations.

Rationale: The Board of Directors and Management, not shareholders, should
evaluate and determine the recipients of any contributions made by the company.

E.       Tobacco

1.       AM policy is to vote "against" shareholder proposals requesting
         additional standards or reporting requirements for tobacco companies as
         well as "against" requesting companies to report on the intentional
         manipulation of nicotine content.

Rationale: Where a tobacco company's actions meet the requirements of legal and
industry standards, imposing additional burdens may detrimentally effect a
company's ability to compete. The disclosure of nicotine content information
could affect the company's rights in any pending or future litigation.

2.       Shareholder requests to spin-off or restructure tobacco businesses will
         be opposed.

Rationale: These decisions are more appropriately left to the Board and
management, and not to shareholder mandate.


VIII.    Environmental Issues

AM policy is to follow management's recommended vote on CERES Principles or
other similar environmental mandates (e.g., those relating to Greenhouse gas
emissions or the use of nuclear power).

Rationale: Environmental issues are extensively regulated by outside agencies
and compliance with additional requirements often involves significant cost to
companies.


IX.      Miscellaneous Items

A.       Ratification of Auditors

AM policy is to vote "for" a) the management recommended selection of auditors
and b) proposals to require shareholder approval of auditors.

Rationale: Absent evidence that auditors have not performed their duties
adequately, support for management's nomination is warranted.

B.       Limitation of non-audit services provided by independent auditor

AM policy is to support proposals limiting non-audit fees to 50% of the
aggregate annual fees earned by the firm retained as a company's independent
auditor.

Rationale: In the wake of financial reporting problems and alleged audit
failures at a number of companies, AM supports the general principle that
companies should retain separate firms for audit and consulting services to
avoid potential conflicts of interest. However, given the protections afforded
by the recently enacted Sarbanes-Oxley Act of 2002 (which requires Audit
Committee pre-approval for non-audit services and prohibits auditors from
providing specific types of services), and the fact that some non-audit services
are legitimate audit-related services, complete separation of audit and
consulting fees may not be warranted. A reasonable limitation is appropriate to
help ensure auditor independence and it is reasonable to expect that audit fees
exceed non-audit fees.

C.       Audit firm rotation

AM policy is to support proposals seeking audit firm rotation unless the
rotation period sought is less than five years.

Rationale: While the Sarbanes-Oxley Act mandates that the lead audit partner be
switched every five years, AM believes that rotation of the actual audit firm
would provide an even stronger system of checks and balances on the audit
function.

D.       Transaction of Other Business

AM policy is to vote against "transaction of other business" proposals.

Rationale: This is a routine item to allow shareholders to raise other issues
and discuss them at the meeting. As the nature of these issues may not be
disclosed prior to the meeting, we recommend a vote against these proposals.
This protects shareholders voting by proxy (and not physically present at a
meeting) from having action taken at the meeting that they did not receive
proper notification of or sufficient opportunity to consider.

E.       Motions to Adjourn the Meeting

AM Policy is to vote against proposals to adjourn the meeting.

Rationale: Management may seek authority to adjourn the meeting if a favorable
outcome is not secured. Shareholders should already have had enough information
to make a decision. Once votes have been cast, there is no justification for
management to continue spending time and money to press shareholders for
support.

F.       Bundled Proposals

AM policy is to vote against bundled proposals if any bundled issue would
require a vote against it if proposed individually.

Rationale: Shareholders should not be forced to "take the good with the bad" in
cases where the proposals could reasonably have been submitted separately.

G.       Change of Company Name

AM policy is to support management on proposals to change the company name.

Rationale: This is generally considered a business decision for a company.

H.       Proposals Related to the Annual Meeting

AM Policy is to vote in favor of management for proposals related to the conduct
of the annual meeting (meeting time, place, etc.)

Rationale: These are considered routine administrative proposals.

I.       Reimbursement of Expenses Incurred from Candidate Nomination

AM policy is to follow management's recommended vote on shareholder proposals
related to the amending of company bylaws to provide for the reimbursement of
reasonable expenses incurred in connection with nominating one or more
candidates in a contested election of directors to the corporation's board of
directors.

Rationale: Corporations should not be liable for costs associated with
shareholder proposals for directors.

J.       Investment Company Proxies

Proxies solicited by investment companies are voted in accordance with the
recommendations of an independent third party, currently ISS. However, regarding
investment companies for which AM or an affiliate serves as investment adviser
or principal underwriter, such proxies are voted in the same proportion as the
vote of all other shareholders. Proxies solicited by master funds from feeder
funds will be voted in accordance with applicable provisions of Section 12 of
the Investment Company Act of 1940.

Investment companies, particularly closed-end investment companies, are
different from traditional operating companies. These differences may call for
differences in voting positions on the same matter. For example, AM could vote
"for" staggered boards of closed-end investment companies, although AM generally
votes "against" staggered boards for operating companies. Further, the manner in
which AM votes investment company proxies may differ from proposals for which a
AM-advised investment company solicits proxies from its shareholders. As
reflected in the Guidelines, proxies solicited by closed-end (and open-end)
investment companies are voted in accordance with the pre-determined guidelines
of an independent third-party.

Subject to participation agreements with certain Exchange Traded Funds ("ETF")
issuers that have received exemptive orders from the U.S. Securities and
Exchange Commission allowing investing DWS funds to exceed the limits set forth
in Section 12(d)(1)(A) and (B) of the Investment Company Act of 1940, DeAM will
echo vote proxies for ETFs in which Deutsche Bank holds more than 25% of
outstanding voting shares globally when required to do so by participation
agreements and SEC orders.

Note: With respect to the QP Trust (not registered under the Investment Company
Act of 1940), the Fund is not required to engage in echo voting and the
investment adviser will use these Guidelines, and may determine, with respect to
the QP Trust, to vote contrary to the positions in the Guidelines, consistent
with the Fund's best interest.


K.       International Proxy Voting

The above guidelines pertain to issuers organized in the United States, Canada
and Germany. Proxies solicited by other issuers are voted in accordance with
international guidelines or the recommendation of ISS and in accordance with
applicable law and regulation.





--------------------------------------------------------------------------------
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.
--------------------------------------------------------------------------------




                      APPENDIX B -- RATINGS OF INVESTMENTS

BOND AND COMMERCIAL PAPER RATINGS

Set forth below are descriptions of ratings which represent opinions as to the
quality of the securities. It should be emphasized, however, that ratings are
relative and subjective and are not absolute standards of quality.

MOODY'S INVESTORS SERVICE, INC. -- CORPORATE BOND RATINGS

Aaa: Bonds which are rated Aaa are judged to be of the highest quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt-edged." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.

Aa: Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuations of protective elements
may be of greater amplitude or there may be other elements present which make
the long-term risk appear somewhat larger than in Aaa securities.

A: Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper--medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.

Baa: Bonds which are rated Baa are considered as medium grade obligations,
(i.e., they are neither highly protected nor poorly secured). Interest payments
and principal security appear adequate for the present, but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.

Ba: Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safe-guarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.

B: Bonds which are rated B are considered speculative and generally lack
characteristics of the desirable investment. Assurance of interest and principal
payments or of maintenance of other terms of the contract over any long period
of time may be small.

Caa: Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.

Ca: Bonds which are rated Ca represent obligations which are highly speculative.
Such issues are often in default or have other marked shortcomings.

C: Bonds which are rated C are the lowest rated class of bonds, typically are in
default and can be regarded as having extremely poor prospects of ever attaining
any real investment standing.

Note: Moody's appends numerical modifiers 1, 2 and 3 to each generic rating
classification from Aa through Caa in its corporate bond rating system. The
modifier 1 indicates that the issue ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking; and the modifier
3 indicates that the issue ranks in the lower end of its generic rating
category.

MOODY'S INVESTORS SERVICE, INC. -- SHORT-TERM RATINGS

Moody's short-term debt ratings are opinions of the ability of issuers to honor
short-term financial obligations. Ratings may be assigned to issuers, short-term
programs or to individual short-term debt instruments. Such obligations
generally have an original maturity not exceeding thirteen months, unless
explicitly noted. Issuers rated Prime-1 or P-1 (or supporting institutions) have
a superior ability for repayment of short-term debt obligations. Prime-1 or P-1
repayment ability will often be evidenced by many of the following
characteristics:

Leading market positions in well established industries.

High rates of return on funds employed.

Conservative capitalization structure with moderate reliance on debt and ample
asset protection.

Broad margins in earnings coverage of fixed financial charges and high internal
cash generation.

Well established access to a range of financial markets and assured sources of
alternate liquidity.

Issuers rated Prime-2 or P-2 (or supporting institutions) have a strong ability
for repayment of short-term debt obligations. This will normally be evidenced by
many of the characteristics cited above but to a lesser degree. Earnings trends
and coverage ratios, while sound, may be more subject to variation.
Capitalization characteristics, while still appropriate, may be more affected by
external conditions. Ample alternate liquidity is maintained.

STANDARD & POOR'S RATINGS SERVICES -- CORPORATE BOND RATINGS

INVESTMENT GRADE

AAA: Debt rated AAA has the highest rating assigned by S&P's to a debt
obligation. Capacity to pay interest and repay principal is extremely strong.

AA: Debt rated AA has a very strong capacity to pay interest and repay principal
and differs from the higher rated issues only in small degree.

A: Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than bonds in higher rated categories.

BBB: Debt rated BBB has an adequate capacity to pay interest and repay
principal. Whereas it normally exhibits adequate protection parameters, adverse
economic conditions or changing circumstances are more likely to lead to a
weakened capacity to pay interest and repay principal for debt in this category
than in higher rated categories.

SPECULATIVE GRADE

Debt rated BB, B, CCC, CC, and C has significant speculative characteristics
with respect to capacity to pay interest and repay principal. BB indicates the
least degree of speculation and C the highest. While such debt will likely have
some quality and protective characteristics, these may be outweighed by large
uncertainties or major exposures to adverse conditions.

BB: Debt rated BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments.

The BB rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BBB- rating.

B: Debt rated B has a greater vulnerability to default but currently has the
capacity to meet interest payments and principal repayments. Adverse business,
financial, or economic conditions will likely impair capacity or willingness to
pay interest and repay principal.

The B rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BB or BB- rating.

CCC: Debt rated CCC has a current vulnerability to default, and is dependent
upon favorable business, financial, and economic conditions to meet timely
payment of interest and repayment of principal. In the event of adverse
business, financial, or economic conditions, it is not likely to have the
capacity to pay interest and repay principal.

The CCC rating category is also used for debt subordinated to senior debt that
is assigned an actual or implied B or B- rating.

CC: Debt rated CC has a current high vulnerability to default, and is dependent
upon favorable business, financial, and economic conditions to meet timely
payment of interest and repayment of principal.

The rating CC is also applied to debt subordinated to senior debt which is
assigned an actual or implied CCC debt rating.

C: The rating C is typically applied to debt subordinated to senior debt which
is assigned an actual or implied CCC- debt rating. The C rating may be used to
cover a situation where a bankruptcy petition has been filed, but debt service
payments are continued.

C1: The Rating C1 is reserved for income bonds on which no interest is being
paid.

D: Debt rated D is in payment default. The D rating category is used when
interest payments or principal payments are not made on the date due even if the
applicable grace period has not expired, unless Standard & Poor's believes that
such payments will be made during such grace period. The D rating also will be
used upon the filing of a bankruptcy petition if debt service payments are
jeopardized.

Plus (+) or Minus (-): The ratings from AA to CCC may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.

R: Debt rated 'R' is under regulatory supervision owing to its financial
condition. During the pendency of the regulatory supervision, the regulators may
have the power to favor one class of obligations over others or pay some
obligations and not others.

N.R.: Bonds may lack a S&P's rating because no public rating has been requested,
because there is insufficient information on which to base a rating, or because
S&P's does not rate a particular type of obligation as a matter of policy.

STANDARD & POOR'S RATINGS SERVICES -- SHORT-TERM RATINGS

S&P's commercial paper rating is a current assessment of the likelihood of
timely payment of debt considered short-term in the relevant market.

A-1: This highest category indicates that the degree of safety regarding timely
payment is strong. Those issues determined to possess extremely strong safety
characteristics are denoted with a plus (+) sign designation.

A-2: Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as for
issues designated A-1.

A-3: Issues carrying this designation have adequate capacity for timely payment.
However, adverse economic conditions or changing circumstances are more likely
to lead to a weakened capacity of the issuer to meet its financial commitments.

FITCH INVESTORS SERVICE, INC. -- BOND RATINGS

INVESTMENT GRADE

AAA: Bonds considered to be investment grade and of the highest credit quality.
The obligor has an exceptionally strong ability to pay interest and repay
principal, which is unlikely to be affected by reasonably foreseeable events.

AA: Bonds considered to be investment grade and of very high credit quality. The
obligor's ability to pay interest and repay principal is very strong, although
not quite as strong as bonds rated AAA. Bonds rated in the AAA and AA categories
are not significantly vulnerable to foreseeable events.

A: Bonds considered to be investment grade and of high credit quality. The
obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions and
circumstances than bonds with higher ratings.

BBB: Bonds considered to be investment grade and of good credit quality. The
obligor's ability to pay interest and repay principal is considered to be
adequate. Adverse changes in economic conditions and circumstances, however, are
more likely to have adverse impact on these bonds, and therefore, impair timely
payment. The likelihood that the ratings of these bonds will fall below
investment grade is higher than for bonds with higher ratings.

SPECULATIVE GRADE

BB: Bonds are considered speculative. The obligor's ability to pay interest and
repay principal may be affected over time by adverse economic changes. However,
business or financial alternatives may be available which could assist the
obligor in satisfying its debt service requirements.

B: Bonds are considered highly speculative. While bonds in this class are
currently meeting debt service requirements, the probability of continued timely
payment of principal and interest reflects the obligor's limited margin of
safety and the need for reasonable business and economic activity throughout the
life of the issue.

CCC: Bonds have certain identifiable characteristics which, if not remedied, may
lead to default. The ability to meet obligations requires an advantageous
business and economic environment.

CC: Bonds are minimally protected. Default in payment of interest and/or
principal seems probable over time.

C: Bonds are in imminent default in payment of interest or principal.

DDD, DD and D: Bonds are in default of interest and/or principal payments. Such
bonds are extremely speculative and should be valued on the basis of their
ultimate recovery value in liquidation or reorganization of the obligor. DDD
represents the highest potential for recovery on these bonds, and D represents
the lowest potential for recovery.

Plus (+) or Minus (-): The ratings from AA to CC may be appended by the addition
of a plus or minus sign to denote the relative status within the rating
category.

NR: Indicates that Fitch Rating does not publicly rate the specific issue.

FITCH INVESTORS SERVICE, INC. -- SHORT-TERM RATINGS

Fitch's short-term ratings apply to debt obligations that are payable on demand
or have original maturities of generally up to three years, including commercial
paper, certificates of deposit, medium-term notes, and municipal and investment
notes.

F-1+: Exceptionally Strong Credit Quality. Issues assigned this rating are
regarded as having the strongest capacity for timely payment.

F-1: Very Strong Credit Quality. Issues assigned this rating reflect a capacity
for timely payment only slightly less than issues rated F-1+.

F-2: Good Credit Quality. Issues assigned this rating have a satisfactory
capacity for timely payment, but the margin of safety is not as great as the
F-1+ and F-1 categories.

F-3: Fair Credit Quality. Issues assigned this rating have characteristics
suggesting that the capacity for timely payment is adequate; however, near-term
adverse changes could cause these securities to be rated below investment grade.

B: Speculative. Minimal capacity for timely payment of financial commitments,
plus vulnerability to near-term adverse changes in financial and economic
conditions.

C: High default risk. Default is a real possibility. Capacity for meeting
financial commitments is solely reliant upon a sustained, favorable business and
economic environment.

D: Default. Denotes actual or imminent payment default.


<PAGE>


                       STATEMENT OF ADDITIONAL INFORMATION
                                   May 1, 2009


                                 CLASS B SHARES

                             DWS VARIABLE SERIES II


                    345 Park Avenue, New York, New York 10154
                                 1-800-778-1482

This combined Statement of Additional Information is not a prospectus. It should
be read in conjunction with the applicable prospectus of DWS Variable Series II
(the "Fund") dated May 1, 2009, as amended from time to time. The prospectus may
be obtained without charge from the Fund by calling the toll-free number listed
above, and is also available along with other related materials on the
Securities and Exchange Commission ("SEC") Internet Web site
(http://www.sec.gov). The prospectus is also available from the participating
insurance companies ("Participating Insurance Companies").

The Fund offers a choice of 20 portfolios, three of which are described herein
(each a "Portfolio," collectively, the "Portfolios"), to holders of certain
variable annuity contracts and variable life insurance policies offered by
Participating Insurance Companies.

The Portfolios described herein are:

DWS CONSERVATIVE ALLOCATION VIP
DWS GROWTH ALLOCATION VIP
DWS MODERATE ALLOCATION VIP




                                TABLE OF CONTENTS
                                                                            Page
                                                                            ----

INVESTMENT RESTRICTIONS........................................................1
         Portfolio Holdings....................................................2

INVESTMENT POLICIES AND TECHNIQUES FOR THE PORTFOLIOS..........................3

INVESTMENT POLICIES AND TECHNIQUES FOR THE UNDERLYING PORTFOLIOS..............17

INVESTMENT POLICIES AND TECHNIQUES FOR THE FUNDS..............................76

INVESTMENT POLICIES AND TECHNIQUES OF THE UNDERLYING DWS FUNDS................85
         Portfolio Holdings .................................................136

MANAGEMENT OF THE FUND.......................................................144
         Investment Advisor..................................................144


FUND SERVICE PROVIDERS.......................................................160
         Administrator.......................................................160
         Distributor.........................................................161
         Custodian...........................................................162
         Transfer Agent......................................................162
         Legal Counsel.......................................................162
         Independent Registered Public Accounting Firm.......................163
         Fund Accounting Agent...............................................163

PORTFOLIO TRANSACTIONS.......................................................163


PURCHASE AND REDEMPTIONS.....................................................167

DIVIDENDS AND CAPITAL GAINS..................................................172

FEDERAL INCOME TAXES.........................................................172

NET ASSET VALUE..............................................................173

BOARD MEMBERS AND OFFICERS...................................................174

FUND ORGANIZATION............................................................183

PROXY VOTING GUIDELINES......................................................185

ADDITIONAL INFORMATION.......................................................185

FINANCIAL STATEMENTS.........................................................186

APPENDIX A -- PROXY VOTING GUIDELINES........................................187

APPENDIX B -- RATINGS OF INVESTMENTS.........................................212



                             INVESTMENT RESTRICTIONS

Except as otherwise indicated, each Portfolio's investment objective and
policies are not fundamental and may be changed without a vote of shareholders.
There can be no assurance that a Portfolio's investment objective will be met.

If a percentage restriction is adhered to at the time of the investment, a later
increase or decrease in percentage beyond the specified limit resulting from a
change in values or net assets will not be considered a violation.

The Fund has adopted for each Portfolio certain fundamental investment
restrictions that cannot be changed without approval by a "majority" of the
outstanding voting shares of that Portfolio. As defined in the Investment
Company Act of 1940, as amended (the "1940 Act"), this means the lesser of the
vote of (a) 67% of the shares of a Portfolio present at a meeting where more
than 50% of the outstanding shares are present in person or by proxy or (b) more
than 50% of the outstanding shares of a Portfolio.


Each Portfolio is classified as a diversified series of the Fund, an open-end
management investment company. A diversified portfolio may not, with respect to
75% of total assets, invest more than 5% of total assets in the securities of a
single issuer or invest in more than 10% of the outstanding voting securities of
such issuer.


Each Portfolio may not, as a fundamental policy:

(1)  borrow money, except as permitted under the 1940 Act, and as interpreted or
     modified by regulatory authority having jurisdiction, from time to time;

(2)  issue senior  securities,  except as  permitted  under the 1940 Act, and as
     interpreted or modified by regulatory authority having  jurisdiction,  from
     time to time;

(3)  concentrate its investments in a particular industry,  as that term is used
     in the 1940 Act, and as  interpreted  or modified by  regulatory  authority
     having jurisdiction, from time to time;

(4)  engage in the business of underwriting  securities issued by others, except
     to the extent  that the  Portfolio  may be deemed to be an  underwriter  in
     connection with the disposition of portfolio securities;

(5)  purchase or sell real  estate,  which term does not include  securities  of
     companies which deal in real estate or mortgages or investments  secured by
     real  estate or  interests  therein,  except  that the  Portfolio  reserves
     freedom of action to hold and to sell real  estate  acquired as a result of
     the Portfolio's ownership of securities;

(6)  purchase  or sell  commodities,  except as  permitted  by the 1940 Act,  as
     amended,  and as interpreted or modified by the regulatory authority having
     jurisdiction from time to time; or

(7)  make loans except as permitted  under the 1940 Act, and as  interpreted  or
     modified by regulatory authority having jurisdiction, from time to time.

With regard to Restriction (3) above, for purposes of determining the percentage
of each Portfolio's total assets invested in securities of issuers having their
principal business activities in a particular industry, asset-backed securities
will be classified as a single industry.

The Fund has also adopted the following non-fundamental policies, which may be
changed or eliminated for each Portfolio by the Fund's Board of Trustees without
a vote of the shareholders:

As a matter of non-fundamental policy, each Portfolio does not intend to:

(1)  borrow money in an amount  greater than 5% of its total assets,  except (i)
     for  temporary  or  emergency  purposes  and (ii) by  engaging  in  reverse
     repurchase  agreements,  dollar rolls, or other investments or transactions
     described in the Portfolio's  registration statement which may be deemed to
     be borrowings;

(2)  purchase  securities on margin or make short sales,  except (i) short sales
     against the box, (ii) in connection with arbitrage transactions,  (iii) for
     margin  deposits in  connection  with futures  contracts,  options or other
     permitted  investments,  (iv) that  transactions  in futures  contracts and
     options shall not be deemed to constitute selling securities short, and (v)
     that the  Portfolio  may obtain  such  short-term  credits as may be deemed
     necessary for the clearance of securities transactions;

(3)  purchase  options,  unless the aggregate  premiums paid on all such options
     held by a Portfolio at any time do not exceed 20% of its total  assets;  or
     sell put options,  if as a result,  the aggregate  value of the obligations
     underlying such put options would exceed 50% of its total assets;

(4)  enter into futures contracts or purchase options thereon unless immediately
     after the purchase,  the value of the aggregate initial margin with respect
     to such futures  contracts  entered  into on behalf of a Portfolio  and the
     premium  paid for such options on futures  contracts  does not exceed 5% of
     the fair market value of a Portfolio's  total assets;  provided that in the
     case of an option that is in-the-money at the time of purchase,  the in-the
     money amount may be excluded in computing the 5% limit;

(5)  purchase  warrants if as a result,  such securities,  taken at the lower of
     cost or  market  value,  would  represent  more  than 5% of the  value of a
     Portfolio's  total assets (for this purpose,  warrants acquired in units or
     attached to securities will be deemed to have no value);

(6)  invest more than 15% of net assets in illiquid securities; and

(7)  lend portfolio  securities in an amount greater than one third of its total
     assets.

Portfolio Holdings

In addition to the public disclosure of portfolio holdings through required SEC
quarterly filings, a Portfolio may make its portfolio holdings information
publicly available on the DWS Funds' Web site as described in each Portfolio's
prospectus. Each Portfolio does not disseminate non-public information about
portfolio holdings except in accordance with policies and procedures adopted by
each Portfolio.

Each Portfolio's procedures permit non-public portfolio holdings information to
be shared with Deutsche Asset Management and its affiliates (collectively
"DeAM"), subadvisors, if any, custodians, independent registered public
accounting firms, attorneys, officers and trustees/directors and each of their
respective affiliates and advisers who require access to this information to
fulfill their duties to each Portfolio and are subject to the duties of
confidentiality, including the duty not to trade on non-public information,
imposed by law or contract, or by each Portfolio's procedures. This non-public
information may also be disclosed, subject to the requirements described below,
to certain third parties, such as securities lending agents, financial printers,
proxy voting firms, mutual fund analysts and rating and tracking agencies, or to
shareholders in connection with in-kind redemptions (collectively, "Authorized
Third Parties").

Prior to any disclosure of each Portfolio's non-public portfolio holdings
information to Authorized Third Parties, a person authorized by each Portfolio's
Trustees must make a good faith determination in light of the facts then known
that a Portfolio has a legitimate business purpose for providing the
information, that the disclosure is in the best interest of each Portfolio, and
that the recipient assents or otherwise has a duty to keep the information
confidential and to not trade based on the information received while the
information remains non-public. No compensation is received by each Portfolio or
DeAM for disclosing non-public holdings information. Periodic reports regarding
these procedures will be provided to each Portfolio's Trustees.

Portfolio holdings information distributed by the trading desks of DeAM or a
subadvisor for the purpose of facilitating efficient trading of such securities
and receipt of relevant research is not subject to the foregoing requirements.
Non-public portfolio holding information does not include portfolio
characteristics (other than holdings or subsets of holdings) about each
Portfolio and information derived therefrom, including, but not limited to, how
each Portfolio's investments are divided among various sectors, industries,
countries, value and growth stocks, bonds, currencies and cash, types of bonds,
bond maturities, duration, bond coupons and bond credit quality ratings so long
as each Portfolio's holdings could not be derived from such information.

Registered investment companies that are subadvised by DeAM may be subject to
different portfolio holdings disclosure policies, and neither DeAM nor the
fund's Trustees exercise control over such policies. In addition, separate
account clients of DeAM have access to their portfolio holdings and are not
subject to a Portfolio's portfolio holdings disclosure policy. The portfolio
holdings of some of the funds subadvised by DeAM and some of the separate
accounts managed by DeAM may substantially overlap with the portfolio holdings
of a Portfolio.

DeAM also manages certain unregistered commingled trusts and creates model
portfolios, the portfolio holdings of which may substantially overlap with the
portfolio holdings of a Portfolio. To the extent that investors in these
commingled trusts or recipients of model portfolio holdings information may
receive portfolio holdings information of their trust or of a model portfolio on
a different basis from that on which portfolio holdings information is made
public, DeAM has implemented procedures reasonably designed to encourage such
investors and recipients to keep such information confidential, and to prevent
those investors from trading on the basis of non-public holdings information.

There is no assurance that a Portfolio's policies and procedures with respect to
the disclosure of portfolio holdings information will protect a Portfolio from
the potential misuse of portfolio holdings information by those in possession of
that information.


Master-feeder Fund Structure. The Fund's Board of Trustees has the discretion
with respect to each Portfolio to retain the current distribution arrangement
for a Portfolio while investing in a master fund in a master-feeder fund
structure as described below.


A master-feeder fund structure is one in which a fund (a "feeder fund"), instead
of investing directly in a portfolio of securities, invests most or all of its
investment assets in a separate registered investment company (the "master
fund") with substantially the same investment objective and policies as the
feeder fund. Such a structure permits the pooling of assets of two or more
feeder funds, preserving separate identities or distribution channels at the
feeder fund level. Based on the premise that certain of the expenses of
operating an investment portfolio are relatively fixed, a larger investment
portfolio may eventually achieve a lower ratio of operating expenses to average
net assets. An existing investment company is able to convert to a feeder fund
by selling all of its investments, which involves brokerage and other
transaction costs and realization of a taxable gain or loss, or by contributing
its assets to the master fund and avoiding transaction costs and, if proper
procedures are followed, the realization of taxable gain or loss.

              INVESTMENT POLICIES AND TECHNIQUES FOR THE PORTFOLIOS

General Investment Policies


Each Portfolio is a diversified series of an open-end management investment
company which continuously offers and redeems shares at net asset value. One
class of shares of each Portfolio described herein is currently offered through
Participating Insurance Companies. Class B shares are offered at net asset value
and are subject to a Rule12b-1 fee.


Descriptions in this Statement of Additional Information of a particular
investment practice or technique in which a Portfolio may engage (such as short
selling, hedging, etc.) or a financial instrument which a Portfolio may purchase
(such as options, forward foreign currency contracts, etc.) are meant to
describe the spectrum of investments that Deutsche Investment Management
Americas Inc. ("DIMA" or the "Advisor"), in its discretion, might, but is not
required to, use in managing each Portfolio's assets. The Advisor may, in its
discretion, at any time employ such practice, technique or instrument for one or
more Portfolios but not for all investment companies advised by it. Furthermore,
it is possible that certain types of financial instruments or investment
techniques described herein may not be available, permissible, economically
feasible or effective for their intended purposes in all markets. Certain
practices, techniques or instruments may not be principal activities of a
Portfolio but, to the extent employed, could from time to time have a material
impact on a Portfolio's performance.

It is possible that certain investment practices and techniques described below
may not be permissible for a Portfolio based on its investment restrictions, as
described herein, and in a Portfolio's applicable prospectus.

The Portfolios are professionally managed portfolios which allocate their
investments among select funds in the DWS Family of Funds (the "Underlying DWS
Funds") and securities of non-affiliated investment companies (e.g., Exchange
Traded Funds) as well as underlying DWS portfolios (the "underlying portfolios")
of DWS Variable Series I, DWS Variable Series II and DWS Investments VIT Funds.
Each Portfolio is designed for investors seeking a distinct investment style: a
balance of growth and income ("DWS Moderate Allocation VIP"), growth of capital
("DWS Growth Allocation VIP") or a balance of income and growth ("DWS
Conservative Allocation VIP"). The Portfolios have been created in response to
increasing demand by investors for a simple and effective means of structuring a
diversified investment program suited to their general needs. As has been well
documented in the financial press, the proliferation of funds over the last
several years has left many investors confused and in search of a simpler means
to manage their investments. Many investors realize the value of diversifying
their investments in a number of portfolios (e.g., a money market portfolio for
liquidity and price stability, a growth portfolio for long-term appreciation, an
income portfolio for current income and relative safety of principal), but need
professional management to decide such questions as which portfolios to select,
how much of their assets to commit to each portfolio and when to allocate their
selections. The Portfolios will allow investors to rely on the Advisor to
determine (within clearly explained parameters) the amount to invest in each of
several underlying portfolios and the timing of such investments.


Asset Segregation. Certain investment transactions expose a Portfolio to an
obligation to make future payments to third parties. Examples of these types of
transactions, include, but are not limited to, reverse repurchase agreements,
short sales, dollar rolls, when-issued, delayed-delivery or forward commitment
transactions and certain derivatives such as swaps, futures, forwards, and
options. To the extent that the Portfolio engages in such transactions, a
Portfolio will (to the extent required by applicable law) either (1) segregate
cash or liquid assets in the prescribed amount or (2) otherwise "cover" its
future obligations under the transaction, such as by holding an offsetting
investment. If a Portfolio segregates sufficient cash or other liquid assets or
otherwise "covers" its obligations under such transactions, a Portfolio will not
consider the transactions to be borrowings for purposes of its investment
restrictions or "senior securities" under the Investment Company Act of 1940, as
amended (the "1940 Act"), and therefore, such transactions will not be subject
to the 300% asset coverage requirement under the 1940 Act otherwise applicable
to borrowings by a Portfolio.

In some cases (e.g., with respect to futures and forwards that are contractually
required to "cash-settle"), a Portfolio will segregate cash or other liquid
assets with respect to the amount of the daily net (marked-to-market) obligation
arising from the transaction, rather than the notional amount of the underlying
contract. By segregating assets in an amount equal to the net obligation rather
than the notional amount, a Portfolio will have the ability to employ leverage
to a greater extent than if it set aside cash or other liquid assets equal to
the notional amount of the contract, which may increase the risk associated with
such transactions.

A Portfolio may utilize methods of segregating assets or otherwise "covering"
transactions that are currently or in the future permitted under the 1940 Act,
the rules and regulation thereunder, or orders issued by the Securities and
Exchange Commission ("SEC") thereunder. For these purposes, interpretations and
guidance provided by the SEC staff may be taken into account when deemed
appropriate by a Portfolio.

Assets used as segregation or cover cannot be sold while the position in the
corresponding transaction is open, unless they are replaced with other
appropriate assets. As a result, the commitment of a large portion of a
Portfolio's assets for segregation and cover purposes could impede portfolio
management or a Portfolio's ability to meet redemption requests or other current
obligations.


Segregating assets or otherwise "covering" for these purposes does not
necessarily limit the percentage of the assets of the Portfolio that may be at
risk with respect to certain derivative transactions.

Derivatives Strategy. It is expected that, in the future, the managers may
invest in instruments, commonly called "derivatives," including, but not limited
to, futures and forward currency exchange contracts, to attempt to manage risk
and enhance returns. Derivatives may be used to hedge a Portfolio against price
fluctuations and otherwise reduce risk. Derivatives may also be used to increase
a Portfolio's exposure to certain markets in an attempt to enhance returns.
These strategies may be used separately or in combination. The managers may also
use these derivatives strategies to help maintain cash reserves or otherwise
liquid assets to meet shareholder redemptions, or for other needs, while
maintaining exposure to the markets. The managers will determine which
derivatives instruments to purchase by using a quantitative strategy that
incorporates data from various international markets. The strategy seeks to
shift the emphasis on a Portfolio's holdings in response to short- and
medium-term changes in global markets. The use of the strategy is subject to
Board approval. Shareholders will be notified prior to the use of the strategy.

The derivative disclosure below reflects only the derivative strategies which
may, upon Board approval, be employed by the Portfolios. The underlying
portfolios will utilize derivatives differently as described more fully in the
"Investment Policies and Techniques for the Underlying Portfolios" section.

General. It is expected that, in the future, the Portfolios may invest in
various instruments that are commonly known as "derivatives." Generally, a
derivative is a financial arrangement, the value of which is based on, or
"derived" from, a traditional security, asset or market index. Some
"derivatives" such as mortgage-related and other asset-backed securities are in
many respects like any other investment, although they may be more volatile
and/or less liquid than more traditional debt securities. There are, in fact,
many different types of derivatives and many different ways to use them. There
are a range of risks associated with those uses. For example, the Portfolios may
use futures and options as a low-cost method of gaining exposure to a particular
securities market without investing directly in those securities and for
traditional hedging purposes to attempt to protect the Portfolios from exposure
to changing interest rates, securities prices or currency exchange rates and for
cash management or other investment purposes. The use of derivatives may result
in leverage, which tends to magnify the effects of an instrument's price changes
as market conditions change. Leverage involves the use of a small amount of
money to control a large amount of financial assets, and can in some
circumstances, lead to significant losses. The Portfolios will limit the
leverage created by its use of derivatives for investment purposes by "covering"
such positions as required by the SEC. The Advisor may use derivatives in
circumstances where the Advisor believes they offer an economical means of
gaining exposure to a particular asset class. The use of derivatives for
non-hedging purposes may be considered speculative.

The Portfolios' investment in options, futures or forward contracts, and similar
strategies depend on the Advisor's judgment as to the potential risks and
rewards of different types of strategies. Options and futures can be volatile
investments, and may not perform as expected. If the Advisor applies a hedge at
an inappropriate time or judges price trends incorrectly, options and futures
strategies may lower the Portfolios' return. The Portfolios could also
experience losses if the prices of options and futures positions were poorly
correlated with other investments, or if it could not close out its positions
because of an illiquid secondary market. Options and futures traded on foreign
exchanges generally are not regulated by US authorities, and may offer less
liquidity and less protection to the Portfolios in the event of default by the
other party to the contract.

Options on Securities. A Portfolio may purchase and write (sell) put and call
options on stocks. A call option gives the purchaser of the option the right to
buy, and obligates the writer to sell, the underlying stock at the exercise
price at any time during the option period. Similarly, a put option gives the
purchaser of the option the right to sell, and obligates the writer to buy, the
underlying stock at the exercise price at any time during the option period.

A Portfolio may write (sell) covered call and put options to a limited extent on
its portfolio securities ("covered options") in an attempt to increase income
through the premiums it receives for writing the option(s). However, in return
for the premium, a Portfolio may forgo the benefits of appreciation on
securities sold or may pay more than the market price on securities acquired
pursuant to call and put options written by a Portfolio.

A call option written by a Portfolio is "covered" if the portfolio owns the
underlying security covered by the call or has an absolute and immediate right
to acquire that security without additional cash consideration (or for
additional cash consideration held in a segregated account by its custodian)
upon conversion or exchange of other securities held in its portfolio. A call
option is also covered if the portfolio holds a call option on the same security
and in the same principal amount as the written call option where the exercise
price of the call option so held (a) is equal to or less than the exercise price
of the written call option or (b) is greater than the exercise price of the
written call option if the difference is segregated by the Portfolios in cash or
liquid securities.

When a Portfolio writes a covered call option, it gives the purchaser of the
option the right to buy the underlying security at the price specified in the
option (the "exercise price") by exercising the option at any time during the
option period. If the option expires unexercised, the portfolio will realize
income in an amount equal to the premium received for writing the option. If the
option is exercised, a decision over which the portfolio has no control, the
Portfolio must sell the underlying security to the option holder at the exercise
price. By writing a covered call option, a Portfolio foregoes, in exchange for
the premium less the commission ("net premium"), the opportunity to profit
during the option period from an increase in the market value of the underlying
security above the exercise price. In addition, a Portfolio may continue to hold
a stock which might otherwise have been sold to protect against depreciation in
the market price of the stock.

A put option written by a Portfolio is "covered" when, among other things, cash
or liquid securities acceptable to the broker are placed in a segregated account
to fulfill the obligations undertaken. When a Portfolio writes a covered put
option, it gives the purchaser of the option the right to sell the underlying
security to the Portfolio at the specified exercise price at any time during the
option period. If the option expires unexercised, the Portfolio will realize
income in the amount of the net premium received for writing the option. If the
put option is exercised, a decision over which the Portfolio has no control, the
Portfolio must purchase the underlying security from the option holder at the
exercise price. By writing a covered put option, a Portfolio, in exchange for
the net premium received, accepts the risk of a decline in the market value of
the underlying security below the exercise price. A Portfolio will only write
put options involving securities for which a determination is made at the time
the option is written that the Portfolio wishes to acquire the securities at the
exercise price.

A Portfolio may terminate its obligation as the writer of a call or put option
by purchasing an option with the same exercise price and expiration date as the
option previously written. This transaction is called a "closing purchase
transaction." A Portfolio will realize a profit or loss on a closing purchase
transaction if the amount paid to purchase an option is less or more, as the
case may be, than the amount received from the sale thereof. To close out a
position as a purchaser of an option, a Portfolio may enter into a "closing sale
transaction" which involves liquidating the portfolio's position by selling the
option previously purchased. Where a Portfolio cannot effect a closing purchase
transaction, it may be forced to incur brokerage commissions or dealer spreads
in selling securities it receives or it may be forced to hold underlying
securities until an option is exercised or expires.

When a Portfolio writes an option, an amount equal to the net premium received
by the Portfolio is included in the liability section of the Portfolio's
statement of assets and liabilities as a deferred credit. The amount of the
deferred credit will be subsequently marked to market to reflect the current
market value of the option written. The current market value of a traded option
is the last sale price or, in the absence of a sale, the mean between the
closing bid and asked price. If an option expires on its stipulated expiration
date or if a Portfolio enters into a closing purchase transaction, the Portfolio
will realize a gain (or loss if the cost of a closing purchase transaction
exceeds the premium received when the option was sold), and the deferred credit
related to such option will be eliminated. If a call option is exercised, a
Portfolio will realize a gain or loss from the sale of the underlying security
and the proceeds of the sale will be increased by the premium originally
received. The writing of covered call options may be deemed to involve the
pledge of the securities against which the option is being written. Securities
against which call options are written will be identified on a Portfolio's
books.

A Portfolio may also purchase call and put options on any securities in which it
may invest. A Portfolio would normally purchase a call option in anticipation of
an increase in the market value of such securities. The purchase of a call
option would entitle a Portfolio, in exchange for the premium paid, to purchase
a security at a specified price during the option period. A Portfolio would
ordinarily have a gain if the value of the securities increased above the
exercise price sufficiently to cover the premium and would have a loss if the
value of the securities remained at or below the exercise price during the
option period.

A Portfolio would normally purchase put options in anticipation of a decline in
the market value of securities in its portfolio ("protective puts") or
securities of the type in which it is permitted to invest. The purchase of a put
option would entitle a Portfolio, in exchange for the premium paid, to sell a
security, which may or may not be held by the portfolio at a specified price
during the option period. The purchase of protective puts is designed merely to
offset or hedge against a decline in the market value of the portfolio. Put
options also may be purchased by a portfolio for the purpose of affirmatively
benefiting from a decline in the price of securities that the portfolio does not
own. A Portfolio would ordinarily recognize a gain if the value of the
securities decreased below the exercise price sufficiently to cover the premium
and would recognize a loss if the value of the securities remained at or above
the exercise price. Gains and losses on the purchase of protective put options
would tend to be offset by countervailing changes in the value of underlying
portfolio securities.

The hours of trading for options on securities may not conform to the hours
during which the underlying securities are traded. To the extent that the option
markets close before the markets for the underlying securities, significant
price and rate movements can take place in the underlying securities markets
that cannot be reflected in the option markets. It is impossible to predict the
volume of trading that may exist in such options, and there can be no assurance
that viable exchange markets will develop or continue.

A Portfolio may also engage in options transactions in the over-the-counter
("OTC") market with broker-dealers who make markets in these options. At
present, approximately ten broker-dealers, including several of the largest
primary dealers in US government securities, make markets in OTC options. The
ability to terminate OTC option positions is more limited than with
exchange-traded option positions because the predominant market is the issuing
broker rather than an exchange, and may involve the risk that broker-dealers
participating in such transactions will not fulfill their obligations. To reduce
this risk, a portfolio will purchase such options only from broker-dealers who
are primary US government securities dealers recognized by the Federal Reserve
Bank of New York and who agree to (and are expected to be capable of) entering
into closing transactions, although there can be no guarantee that any such
option will be liquidated at a favorable price prior to expiration. The Advisor
will monitor the creditworthiness of dealers with whom the Portfolios enter into
such options transactions under the general supervision of the Fund's Board of
Trustees. Unless the Board concludes otherwise, the Portfolios intend to treat
OTC options purchased and the assets used to "cover" OTC options written as not
readily marketable and therefore subject to the Portfolios' limit on investments
in illiquid securities.

Options on Securities Indices. A Portfolio may also purchase and write
exchange-listed and OTC put and call options on securities indices. A securities
index measures the movement of a certain group of securities by assigning
relative values to the securities included in the index, fluctuating with
changes in the market values of the securities included in the index. Some
securities index options are based on a broad market index, such as the NYSE
Composite Index, or a narrower market index such as the Standard & Poor's 100
S&P (which consists of the 100 companies with the largest market capitalizations
of the companies in the Standard & Poor's 500 Index). Indexes may also be based
on a particular industry or market segment.

Options on securities indices are similar to options on securities except that
(1) the expiration cycles of securities index options are monthly, while those
of securities options are currently quarterly, and (2) the delivery requirements
are different. Instead of giving the right to take or make delivery of stock at
a specified price, an option on a securities index gives the holder the right to
receive a cash "exercise settlement amount" equal to (a) the amount, if any, by
which the fixed exercise price of the option exceeds (in the case of a put) or
is less than (in the case of a call) the closing value of the underlying index
on the date of exercise, multiplied by (b) a fixed "index multiplier." Receipt
of this cash amount will depend upon the closing level of the securities index
upon which the option is based being greater than, in the case of a call, or
less than, in the case of a put, the exercise price of the index and the
exercise price of the option times a specified multiple. The writer of the
option is obligated, in return for the premium received, to make delivery of
this amount. Securities index options may be offset by entering into closing
transactions as described above for securities options.

As discussed in "Options on Securities," a Portfolio would normally purchase a
call option in anticipation of an increase in the market value of the relevant
index. The purchase of a call option would entitle the Portfolio, in exchange
for the premium paid, to purchase the underlying securities at a specified price
during the option period. A Portfolio would ordinarily have a gain if the value
of the underlying securities increased above the exercise price sufficiently to
cover the premium and would have a loss if the value of the securities remained
at or below the exercise price during the option period.

As discussed in "Options on Securities," a Portfolio would normally purchase put
options in anticipation of a decline in the market value of the relevant index
("protective puts"). The purchase of a put option would entitle the portfolio,
in exchange for the premium paid, to sell the underlying securities at a
specified price during the option period. The purchase of protective puts is
designed merely to offset or hedge against a decline in the market value of the
index. A Portfolio would ordinarily recognize a gain if the value of the index
decreased below the exercise price sufficiently to cover the premium and would
recognize a loss if the value of the index remained at or above the exercise
price. Gains and losses on the purchase of protective put options would tend to
be offset by countervailing changes in the value of the index.

Because the value of an index option depends upon movements in the level of the
index rather than the price of a particular stock, whether a Portfolio will
realize a gain or loss from the purchase or writing of options on an index
depends upon movements in the level of stock prices in the stock market
generally or, in the case of certain indices, in an industry or market segment,
rather than movements in the price of a particular stock. Accordingly,
successful use by a portfolio of options on stock indices will be subject to the
Advisor's ability to predict correctly movements in the direction of the stock
market generally or of a particular industry. This requires different skills and
techniques than predicting changes in the price of individual stocks.

Options on securities indices entail risks in addition to the risks of options
on securities. The absence of a liquid secondary market to close out options
positions on securities indices is more likely to occur, although a Portfolio
generally will only purchase or write such an option if the Advisor believes the
option can be closed out. Use of options on securities indices also entails the
risk that trading in such options may be interrupted if trading in certain
securities included in the index is interrupted. A Portfolio will not purchase
such options unless the Advisor believes the market is sufficiently developed
such that the risk of trading in such options is no greater than the risk of
trading in options on securities.

Price movements in a Portfolio's investment portfolio may not correlate
precisely with movements in the level of an index and, therefore, the use of
options on indices cannot serve as a complete hedge. Because options on
securities indices require settlement in cash, the Advisor may be forced to
liquidate portfolio securities to meet settlement obligations. A Portfolio's
activities in index options may also be restricted by the requirements of the
Internal Revenue Code of 1986, as amended (the "Code"), for qualification as a
regulated investment company.

In addition, the hours of trading for options on the securities indices may not
conform to the hours during which the underlying securities are traded. To the
extent that the option markets close before the markets for the underlying
securities, significant price and rate movements can take place in the
underlying securities markets that cannot be reflected in the option markets. It
is impossible to predict the volume of trading that may exist in such options,
and there can be no assurance that viable exchange markets will develop or
continue.

Hedging Strategies. A Portfolio may use certain strategies designed to adjust
the overall risk of its investment portfolio. These "hedging" strategies involve
derivative contracts, including (but not limited to) US Treasury and Eurodollar
futures contracts and exchange-traded put and call options on such futures
contracts. New financial products and risk management techniques continue to be
developed and may be used if consistent with a portfolio's investment objective
and policies. Among other purposes, these hedging strategies may be used to
effectively maintain desired portfolio duration or to protect against market
risk should a portfolio change its investments among different types of fixed
income, equity or other securities. In this respect, these hedging strategies
are designed for different purposes than the investments in wrapper agreements
(contracts with financial institutions such as banks and insurance companies).

A Portfolio might not use any hedging strategies, and there can be no assurance
that any strategy used will succeed. If the Advisor is incorrect in its judgment
on market values, interest rates or other economic factors in using a hedging
strategy, a Portfolio may have lower net income and a net loss on the
investment. Each of these strategies involves certain risks, which include:

o    the fact that the skills  needed to use hedging  instruments  are different
     from those needed to select securities for a Portfolio;

o    the possibility of imperfect correlation,  or even no correlation,  between
     the price  movements  of hedging  instruments  and price  movements  of the
     securities or currencies being hedged;

o    possible  constraints  placed on a Portfolio's  ability to purchase or sell
     portfolio investments at advantageous times due to the need for a Portfolio
     to maintain "cover" or to segregate securities; and

o    the  possibility  that a Portfolio will be unable to close out or liquidate
     its hedged position.

A hedge is designed to offset a loss in a Portfolio's position with a gain in
the hedged position; at the same time, however, a properly correlated hedge will
result in a gain in the portfolio position being offset by a loss in the hedged
position. As a result, the use of options, futures and currency exchange
transactions for hedging purposes could limit any potential gain from an
increase in the value of the position hedged. With respect to futures contracts,
since the value of portfolio securities will far exceed the value of the futures
contracts sold by a Portfolio, an increase in the value of the futures contracts
could only mitigate, but not totally offset, the decline in the value of a
Portfolio's assets.

To the extent that a Portfolio engages in the strategies described above, that
Portfolio may experience losses greater than if these strategies had not been
utilized. In addition to the risks described above, these instruments may be
illiquid and/or subject to trading limits, and a portfolio may be unable to
close out a position without incurring substantial losses, if at all. A
portfolio is also subject to the risk of default by a counterparty to an
off-exchange transaction. See "Illiquid Securities."

Futures Contracts and Options on Futures Contracts. A Portfolio may enter into
futures contracts on equity securities, fixed income securities, securities
indices, foreign currencies and interest rates, and purchase and write (sell)
options thereon which are traded on exchanges designated by the Commodity
Futures Trading Commission (the "CFTC") or, if consistent with CFTC regulations,
on foreign exchanges. These futures contracts are standardized contracts for the
future delivery of, among other things, a commodity, a non-US currency, an
interest rate sensitive security or, in the case of index futures contracts or
certain other futures contracts, a cash settlement with reference to a specified
multiplier times the change in the index. An option on a futures contract gives
the purchaser the right, in return for the premium paid, to assume a position in
a futures contract.

A Portfolio may enter into futures contracts and options on futures contracts on
equity securities, fixed income securities, securities indices and currencies
both to manage its exposure to changing interest rates, security prices and
currency exchange rates and as an efficient means of managing allocations
between asset classes. Aggregate initial margin and premiums required to
establish positions other than those considered by the CFTC to be "bona fide
hedging" will not exceed 5% of the portfolios' net asset value.

The successful use of futures contracts and options thereon draws upon the
Advisor's skill and experience with respect to such instruments and are subject
to special risk considerations. A liquid secondary market for any futures or
options contract may not be available when a futures or options position is
sought to be closed. In addition, there may be an imperfect correlation between
movements in the securities or currency in a Portfolio. Successful use of
futures or options contracts is further dependent on the Advisor's ability to
predict correctly movements in the securities or foreign currency markets and no
assurance can be given that its judgment will be correct.

Futures Contracts. Futures contracts are contracts to purchase or sell a fixed
amount of an underlying instrument, commodity or index at a fixed time and place
in the future. US futures contracts have been designed by exchanges which have
been designated "contracts markets" by the CFTC, and must be executed through a
futures commission merchant, or brokerage firm, which is a member of the
relevant contract market. Futures contracts trade on a number of exchange
markets, and, through their clearing corporations, the exchanges guarantee
performance of the contracts as between the clearing members of the exchange. A
portfolio may enter into contracts for the purchase or sale for future delivery
of equity securities, fixed-income securities, foreign currencies, or financial
indices including any index of US government securities, foreign government
securities or corporate debt securities. A portfolio may enter into futures
contracts which are based on debt securities that are backed by the full faith
and credit of the US government, such as long-term US Treasury Bonds, Treasury
Notes and US Treasury Bills. A portfolio may also enter into futures contracts
which are based on bonds issued by governments other than the US government.
Futures contracts on foreign currencies may be used to hedge against securities
that are denominated in foreign currencies.

At the same time a futures contract is entered into, a Portfolio must allocate
cash or liquid securities as a deposit payment ("initial margin"). Daily
thereafter, the futures contract is valued and the payment of "variation margin"
may be required, since each day a Portfolio would provide or receive cash that
reflects any decline or increase in the contract's value.

At the time of delivery of securities pursuant to such a contract, adjustments
are made to recognize differences in value arising from the delivery of
securities with a different interest rate from that specified in the contract.
In some, but not many cases, securities called for by a futures contract may not
have been issued when the contract was written.

Although futures contracts (other than those that settle in cash, such as index
futures) by their terms call for the actual delivery or acquisition of the
instrument underlying the contract, in most cases the contractual obligation is
fulfilled by offset before the date of the contract without having to make or
take delivery of the instrument underlying the contract. The offsetting of a
contractual obligation is accomplished by entering into an opposite position in
an identical futures contract on the commodities exchange on which the futures
contract was entered into (or a linked exchange) calling for delivery in the
same month. Such a transaction, which is effected through a member of an
exchange, cancels the obligation to make or take delivery of the instrument
underlying the contract. Since all transactions in the futures market are made,
offset or fulfilled through a clearinghouse associated with the exchange on
which the contracts are traded, the portfolios will incur brokerage fees when it
enters into futures contracts.

The purpose of the acquisition or sale of a futures contract, in cases where a
Portfolio holds or intends to acquire equity securities or fixed-income
securities, is to attempt to protect a Portfolio from fluctuations in interest
or foreign exchange rates without actually buying or selling fixed-income
securities or foreign currencies. For example, if interest rates were expected
to increase (which thus would cause the prices of debt securities to decline),
the portfolios might enter into futures contracts for the sale of debt
securities. Such a sale would have much the same effect as selling an equivalent
value of the debt securities owned by a Portfolio. If interest rates did
increase, the value of the debt security in the Portfolio would decline, but the
value of the futures contracts to the portfolio would increase at approximately
the same rate, thereby keeping the net asset value of the Portfolio from
declining as much as it otherwise would have. The Portfolios could accomplish
similar results by selling debt securities and investing in bonds with short
maturities when interest rates are expected to increase. However, since the
futures market is more liquid than the cash market, the use of futures contracts
as an investment technique allows the portfolios to maintain a defensive
position without having to sell its portfolio securities.

Similarly, when it is expected that interest rates may decline (thus increasing
the value of debt securities), futures contracts may be purchased to attempt to
hedge against anticipated purchases of debt securities at higher prices. Since
the fluctuations in the value of futures contracts should be similar to those of
debt securities, the portfolios could take advantage of the anticipated rise in
the value of debt securities without actually buying them until the market had
stabilized. At that time, the futures contracts could be liquidated and a
Portfolio could then buy debt securities on the cash market. The segregated
assets maintained to cover a Portfolio's obligations with respect to such
futures contracts will consist of cash or liquid securities acceptable to the
broker from its portfolio in an amount equal to the difference between the
fluctuating market value of such futures contracts and the aggregate value of
the initial and variation margin payments made by a Portfolio with respect to
such futures contracts.

The ordinary spreads between prices in the cash and futures market, due to
differences in the nature of those markets, are subject to distortions. First,
all participants in the futures market are subject to initial deposit and
variation margin requirements. Rather than meeting additional variation margin
requirements, investors may close futures contracts through offsetting
transactions which could distort the normal relationship between the cash and
futures markets. Second, the liquidity of the futures market depends on most
participants entering into offsetting transactions rather than making or taking
delivery. To the extent that many participants decide to make or take delivery,
liquidity in the futures market could be reduced, thus producing distortion.
Third, from the point of view of speculators, the margin deposit requirements in
the futures market are less onerous than margin requirements in the securities
market. Therefore, increased participation by speculators in the futures market
may cause temporary price distortions. Due to the possibility of distortion, a
correct forecast of securities price, general interest rate or currency exchange
rate trends by the Advisor may still not result in a successful transaction.

In addition, futures contracts entail significant risks. Although the Advisor
believes that use of such contracts will benefit the Portfolios, if the
Advisor's investment judgment about the general direction of interest rates or
an index is incorrect, the Portfolios' overall performance would be poorer than
if it had not entered into any such contract. For example, if a Portfolio has
hedged against the possibility of an increase in interest rates or a decrease in
an index which would adversely affect the value of securities held in its
portfolio and interest rates decrease or securities prices increase instead, a
Portfolio will lose part or all of the benefit of the increased value of its
securities which it has hedged because it will have offsetting losses in its
futures positions. In addition, in such situations, if a Portfolio has
insufficient cash, it may have to sell securities from its portfolio to meet
daily variation margin requirements. Such sales of securities may be, but will
not necessarily be, at increased prices which reflect the rising market. A
Portfolio may have to sell securities at a time when it may be disadvantageous
to do so.

Futures Contracts on Securities Indices. A Portfolio may also enter into futures
contracts providing for the making and acceptance of a cash settlement based
upon changes in the value of an index of US or non-US securities. This
investment technique may be used as a low-cost method of gaining exposure to a
particular securities market without investing directly in those securities or
to hedge against anticipated future change in general market prices which
otherwise might either adversely affect the value of securities held by the
Portfolios or adversely affect the prices of securities which are intended to be
purchased at a later date for the Portfolios or as an efficient means of
managing allocation between asset classes. A futures contract may also be
entered into to close out or offset an existing futures position.

When used for hedging purposes, each futures contract on a securities index
transaction involves the establishment of a position which, the Advisor
believes, will move in a direction opposite to that of the investment being
hedged. If these hedging transactions are successful, the futures positions
taken for a Portfolio will rise in value by an amount which approximately
offsets the decline in value of the portion of a Portfolio's investments that
are being hedged. Should general market prices move in an unexpected manner, the
full anticipated benefits of futures contracts may not be achieved or a loss may
be realized.

Options on Futures Contracts (including Futures Contracts on Securities
Indices). A Portfolio may purchase and write (sell) options on futures contracts
for hedging purposes. For example, as with the purchase of futures contracts,
when a Portfolio is not fully invested, it may purchase a call option on an
interest rate sensitive futures contract to hedge against a potential price
increase on debt securities due to declining interest rates.

The purchase of a call option on a futures contract is similar in some respects
to the purchase of a call option on an index or individual security. Depending
on the pricing of the option compared to either the price of the futures
contract upon which it is based or the price of the underlying debt securities,
it may or may not be less risky than ownership of the futures contract or
underlying debt securities.

The writing of a call option on a futures contract may constitute a partial
hedge against declining prices of the underlying portfolio securities which are
the same as or correlate with the security or foreign currency that is
deliverable upon exercise of the futures contract. If the futures price at
expiration of the option is below the price specified in the premium received
for writing the option ("exercise price"), a portfolio will retain the full
amount of the net premium (the premium received for writing the option less any
commission), which provides a partial hedge against any decline that may have
occurred in a Portfolio's holdings.

The writing of a put option on an index futures contract may constitute a
partial hedge against increasing prices of the underlying securities or foreign
currency that are deliverable upon exercise of the futures contract. If the
futures price at expiration of the option is higher than the exercise price, a
portfolio will retain the full amount of the option net premium, which provides
a partial hedge against any increase in the price of securities that a portfolio
intends to purchase.

If a put or call option a Portfolio has written is exercised, the Portfolio will
incur a loss that will be reduced by the amount of the net premium it receives.
Depending on the degree of correlation between changes in the value of its
portfolio securities and changes in the value of its futures positions, a
Portfolio's losses from existing options on futures may to some extent be
reduced or increased by changes in the value of portfolio securities.

The purchase of a call or put option on a futures contract with respect to an
index is similar in some respects to the purchase of a call or protective put
option on an index. For example, a Portfolio may purchase a put option on an
index futures contract to hedge against the risk of lowering securities values.

The amount of risk the portfolios assume when they purchases an option on a
futures contract with respect to an index is the premium paid for the option
plus related transaction costs. In addition to the correlation risks discussed
above, the purchase of such an option also entails the risk that changes in the
value of the underlying futures contract will not be fully reflected in the
value of the option purchased.

Global Asset Allocation Strategy ("GAA Strategy"). In connection with the GAA
Strategy and in addition to the securities described above, a Portfolio may
invest in indexed securities, futures contracts on securities indices,
securities of foreign issuers (e.g., ADRs, GDRs and EDRs), options on stocks,
options on futures contracts, foreign currency exchange transactions and options
on foreign currencies. These are discussed below, to the extent not already
described above.

Indexed Securities. The indexed securities in which a Portfolio may invest
include debt securities whose value at maturity is determined by reference to
the relative prices of various currencies or to the price of a stock index. The
value of such securities depends on the price of foreign currencies, securities
indices or other financial values or statistics. These securities may be
positively or negatively indexed; that is, their value may increase or decrease
if the underlying instrument appreciates.

Currency Exchange Contracts. Because a Portfolio may buy and sell securities
denominated in currencies other than the US dollar and receives interest,
dividends and sale proceeds in currencies other than the US dollar, the
Portfolios from time to time may enter into currency exchange transactions to
convert to and from different foreign currencies and to convert foreign
currencies to and from the US dollar. A Portfolio either enters into these
transactions on a spot (i.e., cash) basis at the spot rate prevailing in the
foreign currency exchange market or uses forward contracts to purchase or sell
foreign currencies.

Forward Currency Exchange Contracts. A forward currency exchange contract is an
obligation by a Portfolio to purchase or sell a specific currency at a future
date, which may be any fixed number of days from the date of the contract.
Forward currency exchange contracts establish an exchange rate at a future date.
These contracts are transferable in the interbank market conducted directly
between currency traders (usually large commercial banks and brokerages) and
their customers. A forward currency exchange contract may not have a deposit
requirement and may be traded at a net price without commission. A Portfolio
maintains with its custodian a segregated account of cash or liquid securities
in an amount at least equal to its obligations under each forward currency
exchange contract. Neither spot transactions nor forward currency exchange
contracts eliminate fluctuations in the prices of a Portfolio's securities or in
foreign exchange rates, or prevent loss if the prices of these securities should
decline.

A Portfolio may enter into foreign currency hedging transactions in an attempt
to protect against changes in currency exchange rates between the trade and
settlement dates of specific securities transactions or changes in currency
exchange rates that would adversely affect the portfolios' position or an
anticipated investment position. Since consideration of the prospect for
currency parities will be incorporated into the Advisor's long-term investment
decisions, a portfolio will not routinely enter into currency hedging
transactions with respect to security transactions; however, the Advisor
believes that it is important to have the flexibility to enter into currency
hedging transactions when it determines that the transactions would be in a
portfolio's best interest. Although these transactions tend to minimize the risk
of loss due to a decline in the value of the hedged currency, at the same time
they tend to limit any potential gain that might be realized should the value of
the hedged currency increase. The precise matching of the forward contract
amounts and the value of the securities involved will not generally be possible
because the future value of such securities in foreign currencies will change as
a consequence of market movements in the value of such securities between the
date the forward contract is entered into and the date it matures. The
projection of currency market movements is extremely difficult, and the
successful execution of a hedging strategy is highly uncertain.

While these contracts are not presently regulated by the CFTC, the CFTC may in
the future assert authority to regulate forward contracts. In such event a
portfolio's ability to utilize forward contracts may be restricted. Forward
contracts may reduce the potential gain from a positive change in the
relationship between the US dollar and foreign currencies. Unanticipated changes
in currency prices may result in poorer overall performance for a portfolio than
if it had not entered into such contracts. The use of currency forward contracts
may not eliminate fluctuations in the underlying US dollar equivalent value of
the prices of or rates of return on a portfolio's foreign currency denominated
portfolio securities and the use of such techniques will subject a portfolio to
certain risks.

The Underlying Portfolios

The Portfolios will always invest in the share class of the underlying portfolio
with the lowest fees and expenses. Each Portfolio will purchase or sell
securities to: (a) accommodate purchases and sales of a Portfolio's shares, (b)
change the percentages of the Portfolio's assets invested in each of the
underlying portfolios in response to changing market conditions, and (c)
maintain or modify the allocation of a Portfolio's assets in accordance with the
Portfolio's target investment allocations.

The following is a list of the underlying portfolios in which the Portfolios may
invest:

  DWS Variable Series I Portfolios:
  DWS Bond VIP
  DWS Capital Growth VIP
  DWS Global Opportunities VIP
  DWS Growth & Income VIP
  DWS Health Care VIP
  DWS International VIP

  DWS Variable Series II Portfolios:
  DWS Balanced VIP
  DWS Blue Chip VIP
  DWS Core Fixed Income VIP
  DWS Global Thematic VIP
  DWS Government & Agency Securities VIP
  DWS High Income VIP
  DWS Diversified International Equity VIP (formerly known as DWS International
  Select Equity VIP)
  DWS Dreman Small Mid Cap Value VIP
  DWS Large Cap Value VIP
  DWS Mid Cap Growth VIP
  DWS Money Market VIP
  DWS Small Cap Growth VIP
  DWS Strategic Value VIP (formerly DWS Dreman High Return Equity VIP)
  DWS Technology VIP
  DWS Turner Mid Cap Growth VIP

  DWS Investments VIT Funds:
  DWS Equity 500 Index VIP
  DWS Small Cap Index VIP

  Cash Management QP Trust


The following is a brief discussion of the investment goals and policies for
each underlying portfolio:


DWS Variable Series I: DWS Bond VIP. The portfolio seeks to maximize total
return consistent with preservation of capital and prudent investment
management, by investing for both current income and capital appreciation. Under
normal circumstances, the portfolio invests at least 80% of net assets, plus the
amount of any borrowings for investment purposes, in bonds of any maturity. The
portfolio primarily invests in US dollar-denominated fixed income securities,
including corporate bonds, US government and agency bonds and mortgage- and
asset-backed securities. A significant portion of the portfolio's assets may
also be allocated among foreign investment grade fixed income securities, high
yield bonds of US and foreign issuers (including high yield bonds of issuers in
countries with new or emerging securities markets), or, to maintain liquidity,
in cash or money market instruments.


DWS Variable Series I: DWS Capital Growth VIP. The portfolio seeks to provide
long-term growth of capital. The portfolio normally invests at least 65% of
total assets in equities, mainly common stocks of US companies. Although the
portfolio can invest in companies of any size, it intends to invest primarily in
companies whose market capitalizations are similar in size to the companies in
the Standard & Poor's 500(R) Composite Stock Price Index or the Russell 1000(R)
Growth Index.

DWS Variable Series I: DWS Global Opportunities VIP. The portfolio seeks
above-average capital appreciation over the long term. The portfolio invests at
least 65% of total assets in common stocks and other equities of small companies
throughout the world (companies with market values similar to the smallest 20%
of the S&P/Citigroup Extended Market Index - World). While the portfolio may
invest in securities in any country, it generally focuses on countries with
developed economies (including in the US).

DWS Variable Series I: DWS Growth & Income VIP. The portfolio seeks long-term
growth of capital, current income and growth of income. The portfolio invests at
least 65% of total assets in equities, mainly common stocks. Although the
portfolio can invest in companies of any size and from any country, it invests
primarily in large US companies. Portfolio management may favor securities from
different industries and companies at different times.

DWS Variable Series I: DWS Health Care VIP. The portfolio seeks long-term growth
of capital by investing, under normal circumstances, at least 80% of total
assets, plus the amount of any borrowings for investment purposes, in common
stocks of companies in the health care sector. The industries in the health care
sector include pharmaceuticals, biotechnology, medical products and supplies,
and health care services.


DWS Variable Series I: DWS International VIP. The portfolio seeks long-term
growth of capital primarily through diversified holdings of marketable foreign
equity investments (equities issued by foreign-based companies and listed on
foreign exchanges). Although the portfolio can invest in companies of any size
and from any country (other than the United States), it invests mainly in common
stocks of established companies in countries with developed economies.

DWS Variable Series II: DWS Balanced VIP. The portfolio seeks high total return,
a combination of income and capital appreciation. The portfolio can buy many
types of securities, among them common stocks, convertible securities, corporate
bonds, government bonds, mortgage- and asset-backed securities and certain
derivatives. The portfolio normally invests approximately 60% of its net assets
in common stocks and other equity securities and approximately 40% of its net
assets in fixed-income securities, including lower-quality high-yield debt
securities. The portfolio may also invest in Exchange Traded Funds ("ETFs").

DWS Variable Series II: DWS Blue Chip VIP. The portfolio seeks growth of capital
and income. Under normal circumstances, the portfolio invests at least 80% of
net assets, plus the amount of any borrowings for investment purposes, in common
stocks of large US companies that are similar in size to the companies in the
Standard & Poor's 500(R) Composite Stock Price Index and that portfolio
management considers to be "blue chip" companies. Blue chip companies are large,
well-known companies that typically have an established earnings and dividends
history, easy access to credit, solid positions in their industry and strong
management.

DWS Variable Series II: DWS Core Fixed Income VIP. The portfolio seeks high
current income. The portfolio invests for current income, not capital
appreciation. Under normal circumstances, the portfolio invests at least 80% of
its assets, plus the amount of any borrowings for investment purposes,
determined at the time of purchase, in fixed income securities. The portfolio
invests primarily in investment-grade fixed income securities.


DWS Variable Series II: DWS Global Thematic VIP. The portfolio seeks long-term
capital growth. Under normal circumstances, the portfolio invests at least 80%
of net assets, plus the amount of any borrowings for investment purposes, in
common stocks and other equities of companies throughout the world that
portfolio management considers to be "blue chip" companies. Blue chip companies
are large, well known companies that typically have an established earnings and
dividends history, easy access to credit, solid positions in their industries
and strong management.

DWS Variable Series II: DWS Government & Agency Securities VIP. The portfolio
seeks high current income consistent with preservation of capital. Under normal
circumstances, the portfolio invests at least 80% of net assets, plus the amount
of any borrowings for investment purposes, in US government securities and
repurchase agreements of US government securities.

DWS Variable Series II: DWS High Income VIP. The portfolio seeks to provide a
high level of current income. Under normal circumstances, the portfolio
generally invests at least 65% of net assets, plus the amount of any borrowings
for investment purposes, in junk bonds, which are those rated below the fourth
highest credit rating category (i.e., grade BB/Ba and below). Compared to
investment-grade bonds, junk bonds may pay higher yields, have higher volatility
and higher risk of default on payments of interest or principal. The portfolio
may invest up to 50% of total assets in bonds denominated in US dollars or
foreign currencies from foreign issuers.

DWS Variable Series II: DWS Diversified International Equity VIP (formerly DWS
International Select Equity VIP). The portfolio seeks capital appreciation.
Under normal circumstances, the portfolio invests at least 80% of its assets,
determined at the time of purchase, in equity securities and other securities
with equity characteristics. Although the portfolio can invest in companies of
any size and from any country, it invests mainly in common stocks of established
companies in countries with developed economies (other than the United States).
At least 50% of the portfolio's assets will be invested in securities that are
represented in the MSCI EAFE(R) Index. The MSCI EAFE(R) Index tracks stocks in
Australia, Austria, Belgium, Denmark, Finland, France, Germany, Hong Kong,
Ireland, Italy, Japan, Malaysia, the Netherlands, New Zealand, Norway, Portugal,
Singapore, Spain, Sweden, Switzerland and the United Kingdom.

DWS Variable Series II: DWS Large Cap Value VIP. The portfolio seeks to achieve
a high rate of total return. Under normal circumstances, the portfolio invests
at least 80% of net assets, plus the amount of any borrowings for investment
purposes, in common stocks and other equity securities of large US companies
that are similar in size to the companies in the Russell 1000(R) Value Index and
that portfolio management believes are undervalued. The portfolio may invest
more than 25% of total assets in a single sector.

DWS Variable Series II: DWS Mid Cap Growth VIP. The portfolio seeks long-term
capital growth. Under normal circumstances, the portfolio invests at least 80%
of its net assets, plus the amount of any borrowings for investment purposes,
determined at the time of purchase, in companies with market capitalizations
within the market capitalization range of the Russell Midcap(R) Growth Index or
securities with equity characteristics that provide exposure to those companies.

DWS Variable Series II: DWS Money Market VIP. The portfolio seeks maximum
current income to the extent consistent with stability of principal. The
portfolio pursues its objective by investing exclusively in high quality
short-term securities, as well as certain repurchase agreements that are backed
by high-quality securities.

DWS Variable Series II: DWS Small Cap Growth VIP. The portfolio seeks maximum
appreciation of investors' capital. Under normal circumstances, the portfolio
invests at least 80% of net assets, plus the amount of any borrowings for
investment purposes, in small capitalization stocks similar in size to those
comprising the Russell 2000(R) Growth Index.

DWS Variable Series II: DWS Technology VIP. The portfolio seeks growth of
capital. Under normal circumstances, the portfolio invests at least 80% of net
assets, plus the amount of any borrowings for investment purposes, in common
stocks of companies in the technology sector. The portfolio may invest in
companies of any size. In addition, the portfolio may invest in initial public
offerings. While the portfolio invests mainly in US stocks, it could invest up
to 35% of its net assets in foreign securities.

DWS Variable Series II: DWS Strategic Value VIP (formerly DWS Dreman High Return
Equity VIP). The portfolio seeks to achieve a high rate of total return. Under
normal circumstances, the portfolio invests at least 80% of net assets, plus the
amount of any borrowings for investment purposes, in common stocks and other
equity securities. The portfolio focuses on stocks of large US companies that
are similar in size to the companies in the Standard & Poor's 500(R) Composite
Stock Price Index and that portfolio management believes are undervalued.

DWS Variable Series II: DWS Dreman Small Mid Cap Value VIP. The portfolio seeks
long-term capital appreciation. Under normal circumstances, the portfolio
invests at least 80% of net assets, plus the amount of any borrowings for
investment purposes, in undervalued common stocks of small (similar in size to
those in the Russell 2000(R) Value Index) and mid-size (similar in size to those
in the Russell MidCap(R) Value Index) US companies.

DWS Variable Series II: DWS Turner Mid Cap Growth VIP. The portfolio seeks
capital appreciation. The portfolio pursues its objective by investing in common
stocks and other equity securities of US companies with medium market
capitalizations that portfolio management believes have strong earnings growth
potential.

DWS Equity 500 Index VIP (a series of DWS Investments VIT Funds). The portfolio
seeks to replicate, as closely as possible, before the deduction of expenses,
the performance of the Standard & Poor's 500 Composite Stock Price Index, which
emphasizes stocks of large US companies. The portfolio invests for capital
appreciation, not income; any dividend and interest income is incidental to the
pursuit of its objective.

DWS Small Cap Index VIP (a series of DWS Investments VIT Funds). The portfolio
seeks to replicate, as closely as possible, before the deduction of expenses,
the performance of the Russell 2000(R) Index, which emphasizes stocks of small
US companies. The Russell 2000(R) Index measures the performance of the 2,000
smallest companies in the Russell 3000(R) Index. The portfolio invests for
capital appreciation, not income; any dividend and interest income is incidental
to the pursuit of its objective.

Risk Factors of Underlying Portfolios. In pursuing their investment objectives,
each of the underlying portfolios is permitted a wide range of investment
techniques. The underlying portfolios' risks are determined by the nature of the
securities held and the management strategies used by the Advisor. Further
information about the underlying portfolios is contained in the prospectuses of
such portfolios. Because each Portfolio invests in certain of the underlying
portfolios, shareholders of each Portfolio will be affected by the management
strategies and investment policies of the underlying portfolios in direct
proportion to the amount of assets a Portfolio allocates to each underlying
portfolio.

Investment of Uninvested Cash Balances. Each Portfolio may have cash balances
that have not been invested in portfolio securities ("Uninvested Cash").
Uninvested Cash may result from a variety of sources, including dividends or
interest received from portfolio securities, unsettled securities transactions,
reserves held for investment strategy purposes, scheduled maturity of
investments, liquidation of investment securities to meet anticipated
redemptions and dividend payments, and new cash received from investors.
Uninvested Cash may be invested directly in money market instruments or other
short-term debt obligations. Pursuant to an Exemptive Order issued by the SEC,
each Portfolio may use Uninvested Cash to purchase shares of affiliated funds
including money market funds, short-term bond funds and Cash Management QP Trust
or one or more future entities for which DIMA acts as trustee or investment
advisor that operate as cash management investment vehicles and that are
excluded from the definition of investment company pursuant to Section 3(c)(1)
or 3(c)(7) of the 1940 Act (collectively, the "Central Funds") in excess of the
limitations of Section 12(d)(1) of the 1940 Act. Investment by each Portfolio in
shares of the Central Funds will be in accordance with the Portfolio's
investment policies and restrictions as set forth in its registration statement.

Certain of the Central Funds comply with Rule 2a-7 under the Act. The other
Central Funds are or will be short-term bond funds that invest in fixed-income
securities and maintain a dollar-weighted average maturity of three years or
less. Each of the Central Funds will be managed specifically to maintain a
highly liquid portfolio, and access to them will enhance each Portfolio's
ability to manage Uninvested Cash.

Each Portfolio will invest Uninvested Cash in Central Funds only to the extent
that each Portfolio's aggregate investment in the Central Funds does not exceed
25% of its total assets in shares of the Central Funds. Purchase and sales of
shares of Central Funds are made at net asset value.

        INVESTMENT POLICIES AND TECHNIQUES FOR THE UNDERLYING PORTFOLIOS

DWS Variable Series I Underlying Portfolios

Asset-Backed Securities. Asset backed securities may include pools of mortgages
("mortgage-backed securities"), loans, receivables or other assets. Payment of
principal and interest may be largely dependent upon the cash flows generated by
the assets backing the securities. For purposes of determining the percentage of
a Portfolio's total assets invested in securities of issuers having their
principal business activities in a particular industry, asset backed securities
will be classified separately. Asset-backed securities present certain risks
that are not presented by mortgage-backed securities. Primarily, these
securities may not have the benefit of any security interest in the related
assets. Credit card receivables are generally unsecured and the debtors are
entitled to the protection of a number of state and federal consumer credit
laws, many of which give such debtors the right to set off certain amounts owed
on the credit cards, thereby reducing the balance due. There is the possibility
that recoveries on repossessed collateral may not, in some cases, be available
to support payments on these securities. Asset-backed securities are often
backed by a pool of assets representing the obligations of a number of different
parties. To lessen the effect of failures by obligors on underlying assets to
make payments, the securities may contain elements of credit support which fall
into two categories: (i) liquidity protection, and (ii) protection against
losses resulting from ultimate default by an obligor on the underlying assets.
Liquidity protection refers to the provision of advances, generally by the
entity administering the pool of assets, to ensure that the receipt of payments
on the underlying pool occurs in a timely fashion. Protection against losses
results from payment of the insurance obligations on at least a portion of the
assets in the pool. This protection may be provided through guarantees, policies
or letters of credit obtained by the issuer or sponsor from third parties,
through various means of structuring the transaction or through a combination of
such approaches. The Portfolios will not pay any additional or separate fees for
credit support. The degree of credit support provided for each issue is
generally based on historical information respecting the level of credit risk
associated with the underlying assets. Delinquency or loss in excess of that
anticipated or failure of the credit support could adversely affect the return
on an investment in such a security. The availability of asset-backed securities
may be affected by legislative or regulatory developments. It is possible that
such developments may require the funds to dispose of any then existing holdings
of such securities.


Asset Segregation. Certain investment transactions expose a Portfolio to an
obligation to make future payments to third parties. Examples of these types of
transactions, include, but are not limited to, reverse repurchase agreements,
short sales, dollar rolls, when-issued, delayed-delivery or forward commitment
transactions and certain derivatives such as swaps, futures, forwards, and
options. To the extent that a Portfolio engages in such transactions, a
Portfolio will (to the extent required by applicable law) either (1) segregate
cash or liquid assets in the prescribed amount or (2) otherwise "cover" its
future obligations under the transaction, such as by holding an offsetting
investment. If the Portfolio segregates sufficient cash or other liquid assets
or otherwise "covers" its obligations under such transactions, the Portfolio
will not consider the transactions to be borrowings for purposes of its
investment restrictions or "senior securities" under the 1940 Act, and
therefore, such transactions will not be subject to the 300% asset coverage
requirement under the 1940 Act otherwise applicable to borrowings by the
Portfolio.

In some cases (e.g., with respect to futures and forwards that are contractually
required to "cash-settle"), a Portfolio will segregate cash or other liquid
assets with respect to the amount of the daily net (marked-to-market) obligation
arising from the transaction, rather than the notional amount of the underlying
contract. By segregating assets in an amount equal to the net obligation rather
than the notional amount, the Portfolio will have the ability to employ leverage
to a greater extent than if it set aside cash or other liquid assets equal to
the notional amount of the contract, which may increase the risk associated with
such transactions.

A Portfolio may utilize methods of segregating assets or otherwise "covering"
transactions that are currently or in the future permitted under the 1940 Act,
the rules and regulation thereunder, or orders issued by the SEC thereunder. For
these purposes, interpretations and guidance provided by the SEC staff may be
taken into account when deemed appropriate by a Portfolio.

Assets used as segregation or cover cannot be sold while the position in the
corresponding transaction is open, unless they are replaced with other
appropriate assets. As a result, the commitment of a large portion of a
Portfolio's assets for segregation and cover purposes could impede portfolio
management or the Portfolio's ability to meet redemption requests or other
current obligations.

Segregating assets or otherwise "covering" for these purposes does not
necessarily limit the percentage of the assets of the Portfolio that may be at
risk with respect to certain derivative transactions.


Asset-Indexed Securities. DWS Health Care VIP may purchase asset-indexed
securities which are debt securities usually issued by companies in precious
metals related businesses such as mining, the principal amount, redemption
terms, or interest rates of which are related to the market price of a specified
precious metal. The Portfolio will only enter into transactions in publicly
traded asset-indexed securities. Market prices of asset-indexed securities will
relate primarily to changes in the market prices of the precious metals to which
the securities are indexed rather than to changes in market rates of interest.
However, there may not be a perfect correlation between the price movements of
the asset-indexed securities and the underlying precious metals. Asset-indexed
securities typically bear interest or pay dividends at below market rates (and
in certain cases at nominal rates). The Portfolio may purchase asset-indexed
securities to the extent permitted by law.

Bank and Savings and Loan Obligations. These obligations include negotiable
certificates of deposit, bankers' acceptances, deposit notes, fixed time
deposits or other short-term bank obligations. Certificates of deposit are
negotiable certificates evidencing the obligations of a bank to repay funds
deposited with it for a specified period of time. The Portfolios may invest in
certificates of deposit of large domestic banks and their foreign branches,
large US regulated subsidiaries of large foreign banks (i.e., banks which at the
time of their most recent annual financial statements show total assets in
excess of $1 billion) and smaller banks as described below. Although the
Portfolios recognize that the size of a bank is important, this fact alone is
not necessarily indicative of its creditworthiness. Investment in certificates
of deposit issued by foreign branches of domestic banks involves investment
risks that are different in some respects from those associated with investment
in certificates of deposit issued by domestic branches of domestic banks,
including the possible imposition of withholding taxes on interest income, the
possible adoption of foreign governmental restrictions which might adversely
affect the payment of principal and interest on such certificates of deposit, or
other adverse political or economic developments. In addition, it might be more
difficult to obtain and enforce a judgment against a foreign branch of a
domestic bank. Further, foreign branches of foreign banks are not regulated by
US banking authorities, and generally are not bound by accounting, auditing and
financial reporting standards comparable to US banks.

Borrowing. As a matter of fundamental policy, each Portfolio will not borrow
money, except as permitted under the 1940 Act, and as interpreted by regulatory
authority having jurisdiction, from time to time. While the Trustees do not
currently intend to borrow for investment leveraging purposes, if such a
strategy were implemented in the future it would increase a Portfolio's
volatility and the risk of loss in a declining market. Borrowing by a Portfolio
will involve special risk considerations. Although the principal of a
Portfolio's borrowings will be fixed, the Portfolio's assets may change in value
during the time that a borrowing is outstanding, thus increasing exposure to
capital risk.

Certificates of Deposit and Bankers' Acceptances. Certificates of deposit are
receipts issued by a depository institution in exchange for the deposit of
funds. The issuer agrees to pay the amount deposited plus interest to the bearer
of the receipt on the date specified on the certificate. The certificate usually
can be traded in the secondary market prior to maturity. Bankers' acceptances
typically arise from short-term credit arrangements designed to enable
businesses to obtain funds to finance commercial transactions. Generally, an
acceptance is a time draft drawn on a bank by an exporter or an importer to
obtain a stated amount of funds to pay for specific merchandise. The draft is
then "accepted" by a bank that, in effect, unconditionally guarantees to pay the
face value of the instrument on its maturity date. The acceptance may then be
held by the accepting bank as an earning asset or it may be sold in the
secondary market at the going rate of discount for a specific maturity. Although
maturities for acceptances can be as long as 270 days, most acceptances have
maturities of six months or less.

Banker's acceptances are credit instruments evidencing the obligations of a bank
to pay a draft drawn on it by a customer. These instruments reflect the
obligation both of the bank and of the drawer to pay the face amount of the
instrument upon maturity.

Time deposits are non-negotiable deposits maintained in a banking institution
for a specified period of time at a stated interest rate. Time deposits which
may be held by a Portfolio will not benefit from insurance from the Bank
Insurance Fund or the Savings Association Insurance Fund administered by the
Federal Deposit Insurance Corporation. Fixed time deposits may be withdrawn on
demand by the investor, but may be subject to early withdrawal penalties that
vary with market conditions and the remaining maturity of the obligation. Fixed
time deposits subject to withdrawal penalties maturing in more than seven
calendar days are subject to a fund's limitation on investments in illiquid
securities.

Collateralized Mortgage Obligations ("CMOs"). CMOs are hybrids between a
mortgage-backed bond and mortgage pass-through securities. Similar to a bond,
interest and prepaid principal are paid, in most cases, semiannually. CMOs may
be collateralized by whole mortgage loans but are more typically collateralized
by portfolios of mortgage pass-through securities guaranteed by GNMA, FHLMC, or
Fannie Mae, and their income streams.

CMOs are structured into multiple classes, each bearing a different stated
maturity. Actual maturity and average life will depend upon the prepayment
experience of the collateral. CMOs provide for a modified form of call
protection through a de facto breakdown of the underlying pool of mortgages
according to how quickly the loans are repaid. Monthly payment of principal
received from the pool of underlying mortgages, including prepayments, is first
returned to investors holding the shortest maturity class. Investors holding the
longer maturity classes receive principal only after the first class has been
retired. An investor is partially guarded against a sooner than desired return
of principal because of the sequential payments. The prices of certain CMOs,
depending on their structure and the rate of prepayments, can be volatile. Some
CMOs may also not be as liquid as other securities.

In a typical CMO transaction, a corporation issues multiple series, (e.g., A, B,
C, Z) of CMO bonds ("Bonds"). Proceeds of the Bond offering are used to purchase
mortgages or mortgage pass-through certificates ("Collateral"). The Collateral
is pledged to a third party trustee as security for the Bonds. Principal and
interest payments from the Collateral are used to pay principal on the Bonds in
the order A, B, C, Z. The Series A, B, and C bonds all bear current interest.
Interest on the Series Z Bond is accrued and added to principal and a like
amount is paid as principal on the Series A, B, or C Bond currently being paid
off. When the Series A, B, and C Bonds are paid in full, interest and principal
on the Series Z Bond begins to be paid currently. With some CMOs, the issuer
serves as a conduit to allow loan originators (primarily builders or savings and
loan associations) to borrow against their loan portfolios.

Commercial Paper. Commercial paper consists of short-term, unsecured promissory
notes issued to finance short-term credit needs. The commercial paper purchased
by a fund will consist only of direct obligations issued by domestic and foreign
entities.

Common Stocks. DWS Growth & Income VIP, DWS Capital Growth VIP, DWS Global
Opportunities VIP, DWS International VIP and DWS Health Care VIP invest in
common stocks. Common stock is issued by companies to raise cash for business
purposes and represents a proportionate interest in the issuing companies.
Therefore, the Portfolios may participate in the success or failure of any
company in which it holds stock. The market values of common stock can fluctuate
significantly, reflecting the business performance of the issuing company,
investor perception and general economic or financial market movements. Despite
the risk of price volatility, however, common stocks have historically offered a
greater potential for long-term gain on investment, compared to other classes of
financial assets such as bonds or cash equivalents, although there can be no
assurance that this will be true in the future.

Convertible Securities. Each Portfolio may invest in convertible securities;
that is, bonds, notes, debentures, preferred stocks and other securities which
are convertible into common stock. Investments in convertible securities can
provide an opportunity for capital appreciation and/or income through interest
and dividend payments by virtue of their conversion or exchange features.

The convertible securities in which a Portfolio may invest include fixed-income
or zero coupon debt securities which may be converted or exchanged at a stated
or determinable exchange ratio into underlying shares of common stock. The
exchange ratio for any particular convertible security may be adjusted from time
to time due to stock splits, dividends, spin-offs, other corporate distributions
or scheduled changes in the exchange ratio. Convertible securities and
convertible preferred stocks, until converted, have general characteristics
similar to both debt and equity securities. Although to a lesser extent than
with debt securities generally, the market values of convertible securities
tends to decline as interest rates increase and, conversely, tend to increase as
interest rates decline. In addition, because of the conversion or exchange
feature, the market values of convertible securities typically changes as the
market value of the underlying common stocks changes, and, therefore, also tend
to follow movements in the general market for equity securities. A unique
feature of convertible securities is that as the market price of the underlying
common stock declines, convertible securities tend to trade increasingly on a
yield basis, and so may not experience market value declines to the same extent
as the underlying common stock. When the market price of the underlying common
stock increases, the prices of the convertible securities tend to rise as a
reflection of the value of the underlying common stock, although typically not
as much as the underlying common stock. While no securities investments are
without risk, investments in convertible securities generally entail less risk
than investments in common stock of the same issuer.

As debt securities, convertible securities are investments which provide for a
stream of income (or in the case of zero coupon securities, accretion of income)
with generally higher yields than common stocks. Convertible securities
generally offer lower yields than non-convertible securities of similar quality
because of their conversion or exchange features.

Of course, like all debt securities, there can be no assurance of income or
principal payments because the issuers of the convertible securities may default
on their obligations.

Convertible securities are generally subordinated to other similar but
non-convertible securities of the same issuer, although convertible bonds, as
corporate debt obligations, enjoy seniority in right of payment to all equity
securities, and convertible preferred stock is senior to common stock, of the
same issuer. However, because of the subordination feature, convertible bonds
and convertible preferred stock typically have lower ratings than similar
non-convertible securities. Convertible securities may be issued as fixed income
obligations that pay current income or as zero coupon notes and bonds, including
Liquid Yield Option Notes ("LYONs").

Corporate Obligations. Investment in corporate debt obligations involves credit
and interest rate risk. The value of fixed-income investments will fluctuate
with changes in interest rates and bond market conditions, tending to rise as
interest rates decline and to decline as interest rates rise. Corporate debt
obligations generally offer less current yield than securities of lower quality,
but lower-quality securities generally have less liquidity, greater credit and
market risk, and as a result, more price volatility. Longer-term bonds are,
however, generally more volatile than bonds with shorter maturities.

Depositary Receipts. DWS Global Opportunities VIP, DWS International VIP and DWS
Health Care VIP may each invest in sponsored or unsponsored American Depositary
Receipts ("ADRs"), European Depositary Receipts ("EDRs"), Global Depositary
Receipts ("GDRs"), International Depositary Receipts ("IDRs") and other types of
Depositary Receipts (which, together with ADRs, EDRs, GDRs and IDRs are
hereinafter referred to as "Depositary Receipts"). Depositary receipts provide
indirect investment in securities of foreign issuers. Prices of unsponsored
Depositary Receipts may be more volatile than if they were sponsored by the
issuer of the underlying securities. Depositary Receipts may not necessarily be
denominated in the same currency as the underlying securities into which they
may be converted. In addition, the issuers of the stock of unsponsored
Depositary Receipts are not obligated to disclose material information in the
United States and, therefore, there may not be a correlation between such
information and the market value of the Depositary Receipts. ADRs are Depositary
Receipts which are bought and sold in the United States and are typically issued
by a bank or trust company which evidence ownership of underlying securities
issued by a foreign corporation. GDRs and IDRs and other types of Depositary
Receipts are typically issued by foreign banks or trust companies, although they
also may be issued by United States banks or trust companies, and evidence
ownership of underlying securities issued by either a foreign or a United States
corporation. Generally, Depositary Receipts in registered form are designed for
use in the United States securities markets and Depositary Receipts in bearer
form are designed for use in securities markets outside the United States. For
purposes of the DWS Growth & Income VIP, DWS Capital Growth VIP and DWS
International VIP investment policies, the Portfolios' investments in ADRs, GDRs
and other types of Depositary Receipts will be deemed to be investments in the
underlying securities. Depositary Receipts including those denominated in US
dollars will be subject to foreign currency exchange rate risk. However, by
investing in US dollar-denominated ADRs rather than directly in foreign issuers'
stock, a Portfolio avoids currency risks during the settlement period. In
general, there is a large, liquid market in the United States for most ADRs.
However, certain Depositary Receipts may not be listed on an exchange and
therefore may be illiquid securities.

Direct Debt Instruments. Direct debt instruments are interests in amounts owed
by a corporate, governmental or other borrower to lenders (direct loans), to
suppliers of goods or services (trade claims or other receivables) or to other
parties. DWS Bond VIP may invest in all types of direct debt investments, but
among these investments the Portfolio currently intends to invest primarily in
direct loans and trade claims.

When the Portfolio participates in a direct loan it will be lending money
directly to an issuer. Direct loans generally do not have an underwriter or
agent bank, but instead, are negotiated between a company's management team and
a lender or group of lenders. Direct loans typically offer better security and
structural terms than other types of high yield securities. Direct debt
obligations are often the most senior-obligations in an issuer's capital
structure or are well-collateralized so that overall risk is lessened.

Trade claims are unsecured rights of payment arising from obligations other than
borrowed funds. Trade claims include vendor claims and other receivables that
are adequately documented and available for purchase from high yield
broker-dealers. Trade claims typically may sell at a discount. In addition to
the risks otherwise associated with low-quality obligations, trade claims have
other risks, including the possibility that the amount of the claim may be
disputed by the obligor. Trade claims normally would be considered illiquid and
pricing can be volatile.

Direct debt instruments involve a risk of loss in case of default or insolvency
of the borrower. The Portfolio will rely primarily upon the creditworthiness of
the borrower and/or the collateral for payment of interest and repayment of
principal. The value of the Portfolio's investments may be adversely affected if
scheduled interest or principal payments are not made. Because most direct loans
will be secured, there will be a smaller risk of loss with direct loans than
with an investment in unsecured high yield bonds or trade claims. Indebtedness
of borrowers whose creditworthiness is poor involves substantially greater risks
and may be highly speculative. Borrowers that are in bankruptcy or restructuring
may never pay off their indebtedness or may pay only a small fraction of the
amount owed. Investments in direct debt instruments also involve interest rate
risk and liquidity risk. However, interest rate risk is lessened by the
generally short-term nature of direct debt instruments and their interest rate
structure, which typically floats. To the extent the direct debt instruments in
which the Portfolio invests are considered illiquid, the lack of a liquid
secondary market (1) will have an adverse impact on the value of such
instruments, (2) will have an adverse impact on the Portfolio's ability to
dispose of them when necessary to meet the Portfolio's liquidity needs or in
response to a specific economic event, such as a decline in creditworthiness of
the issuer, and (3) may make it more difficult for the Portfolio to assign a
value of these instruments for purposes of valuing the Portfolio's portfolio and
calculating its net asset value. In order to lessen liquidity risk, the
Portfolio anticipates investing primarily in direct debt instruments that are
quoted and traded in the high yield market and will not invest in these
instruments if it would cause more than 15% of the Portfolio's net assets to be
illiquid. Trade claims may also present a tax risk to the Portfolio. The
Portfolio will not invest in trade claims if it effects the Portfolio's
qualification as a regulated investment company under Subchapter M of the Code.

Dollar Roll Transactions. Dollar roll transactions consist of the sale by a
Portfolio to a bank or broker/dealer (the "counterparty") of GNMA certificates
or other mortgage-backed securities together with a commitment to purchase from
the counterparty similar, but not identical, securities at a future date, at the
same price. The counterparty receives all principal and interest payments,
including prepayments, made on the security while it is the holder. A Portfolio
receives a fee from the counterparty as consideration for entering into the
commitment to purchase. Dollar rolls may be renewed over a period of several
months with a different purchase and repurchase price fixed and a cash
settlement made at each renewal without physical delivery of securities.
Moreover, the transaction may be preceded by a firm commitment agreement
pursuant to which a Portfolio agrees to buy a security on a future date.

Each Portfolio will segregate cash, US Government securities or other liquid
assets in an amount sufficient to meet their purchase obligations under the
transactions.

Dollar rolls may be treated for purposes of the 1940 Act, as amended, as
borrowings of each Portfolio because they involve the sale of a security coupled
with an agreement to repurchase. A dollar roll involves costs to the Portfolio.
For example, while a Portfolio receives a fee as consideration for agreeing to
repurchase the security, the Fund forgoes the right to receive all principal and
interest payments while the counterparty holds the security. These payments to
the counterparty may exceed the fee received by the Portfolio, thereby
effectively charging the Portfolio interest on its borrowing. Further, although
a Portfolio can estimate the amount of expected principal prepayment over the
term of the dollar roll, a variation in the actual amount of prepayment could
increase or decrease the cost of the Portfolio's borrowing.

The entry into dollar rolls involves potential risks of loss that are different
from those related to the securities underlying the transactions. For example,
if the counterparty becomes insolvent, a Portfolio's right to purchase from the
counterparty might be restricted. Additionally, the value of such securities may
change adversely before a Fund is able to purchase them. Similarly, a Portfolio
may be required to purchase securities in connection with a dollar roll at a
higher price than may otherwise be available on the open market. Since, as noted
above, the counterparty is required to deliver a similar, but not identical
security to a Portfolio, the security that the Portfolio is required to buy
under the dollar roll may be worth less than an identical security. Finally,
there can be no assurance that each Portfolio's use of the cash that it receives
from a dollar roll will provide a return that exceeds borrowing costs.

Eurodollar Instruments. Each Portfolio may make investments in Eurodollar
instruments. Eurodollar instruments are US dollar-denominated futures contracts
or options thereon which are linked to the London Interbank Offered Rate
("LIBOR"), although foreign currency-denominated instruments are available from
time to time. Eurodollar futures contracts enable purchasers to obtain a fixed
rate for the lending of funds and sellers to obtain a fixed rate for borrowings.
Each Portfolio might use Eurodollar futures contracts and options thereon to
hedge against changes in LIBOR, to which many interest rate swaps and fixed
income instruments are linked.

Eurodollar Obligations. Eurodollar bank obligations are US dollar-denominated
certificates of deposit and time deposits issued outside the US capital markets
by foreign branches of US banks and US branches of foreign banks. Eurodollar
obligations are subject to the same risks that pertain to domestic issues,
notably credit risk, market risk and liquidity risk. Additionally, Eurodollar
obligations are subject to certain sovereign risks.

FHLMC Collateralized Mortgage Obligations. Federal Home Loan Mortgage
Corporation ("FHLMC") CMOs are debt obligations of FHLMC issued in multiple
classes having different maturity dates which are secured by the pledge of a
pool of conventional mortgage loans purchased by FHLMC. Unlike FHLMC
Participation Certificates ("PCs"), payments of principal and interest on the
CMOs are made semiannually, as opposed to monthly. The amount of principal
payable on each semiannual payment date is determined in accordance with FHLMC's
mandatory sinking fund schedule, which, in turn, is equal to approximately 100%
of FHA prepayment experience applied to the mortgage collateral pool. All
sinking fund payments in the CMOs are allocated to the retirement of the
individual classes of bonds in the order of their stated maturities. Payment of
principal on the mortgage loans in the collateral pool in excess of the amount
of FHLMC's minimum sinking fund obligation for any payment date are paid to the
holders of the CMOs as additional sinking fund payments. Because of the
"pass-through" nature of all principal payments received on the collateral pool
in excess of FHLMC's minimum sinking fund requirement, the rate at which
principal of the CMOs is actually repaid is likely to be such that each class of
bonds will be retired in advance of its scheduled maturity date.

If collection of principal (including prepayments) on the mortgage loans during
any semiannual payment period is not sufficient to meet FHLMC's minimum sinking
fund obligation on the next sinking fund payment date, FHLMC agrees to make up
the deficiency from its general funds.

Criteria for the mortgage loans in the pool backing the CMOs are identical to
those of FHLMC PCs. FHLMC has the right to substitute collateral in the event of
delinquencies and/or defaults.

Foreign Currencies. Because investments in foreign securities usually will
involve currencies of foreign countries, and because a Portfolio may hold
foreign currencies and forward contracts, futures contracts and options on
foreign currencies and foreign currency futures contracts, the value of the
assets of a Portfolio as measured in U.S. dollars may be affected favorably or
unfavorably by changes in foreign currency exchange rates and exchange control
regulations, and a Portfolio may incur costs and experience conversion
difficulties and uncertainties in connection with conversions between various
currencies. Fluctuations in exchange rates may also affect the earning power and
asset value of the foreign entity issuing the security.

The strength or weakness of the U.S. dollar against these currencies is
responsible for part of a Portfolio's investment performance. If the dollar
falls in value relative to the Japanese yen, for example, the dollar value of a
Japanese stock held in the portfolio will rise even though the price of the
stock remains unchanged. Conversely, if the dollar rises in value relative to
the yen, the dollar value of the Japanese stock will fall. Many foreign
currencies have experienced significant devaluation relative to the dollar.

Although each Portfolio values its assets daily in terms of U.S. dollars, it
does not intend to convert its holdings of foreign currencies into U.S. dollars
on a daily basis. It will do so from time to time, and investors should be aware
of the costs of currency conversion. Although foreign exchange dealers do not
charge a fee for conversion, they do realize a profit based on the difference
(the "spread") between the prices at which they are buying and selling various
currencies. Thus, a dealer may offer to sell a foreign currency to a Portfolio
at one rate, while offering a lesser rate of exchange should a Portfolio desire
to resell that currency to the dealer. A Portfolio will conduct its foreign
currency exchange transactions either on a spot (i.e., cash) basis at the spot
rate prevailing in the foreign currency exchange market, or through entering
into options or forward or futures contracts to purchase or sell foreign
currencies.

Foreign Fixed Income Securities. Since most foreign fixed income securities are
not rated, a Portfolio will invest in foreign fixed income securities based on
the Advisor's analysis without relying on published ratings. Since such
investments will be based upon the Advisor's analysis rather than upon published
ratings, achievement of a Portfolio's goals may depend more upon the abilities
of the Advisor than would otherwise be the case.

The value of the foreign fixed income securities held by a Portfolio, and thus
the net asset value of a Portfolio's shares, generally will fluctuate with (a)
changes in the perceived creditworthiness of the issuers of those securities,
(b) movements in interest rates, and (c) changes in the relative values of the
currencies in which a Portfolio's investments in fixed income securities are
denominated with respect to the US dollar. The extent of the fluctuation will
depend on various factors, such as the average maturity of a Portfolio's
investments in foreign fixed income securities, and the extent to which a
Portfolio hedges its interest rate, credit and currency exchange rate risks. A
longer average maturity generally is associated with a higher level of
volatility in the market value of such securities in response to changes in
market conditions.

Investments in sovereign debt, including Brady Bonds (Brady Bonds are debt
securities issued under a plan implemented to allow debtor nations to
restructure their outstanding commercial bank indebtedness), involve special
risks. Foreign governmental issuers of debt or the governmental authorities that
control the repayment of the debt may be unable or unwilling to repay principal
or pay interest when due. In the event of default, there may be limited or no
legal recourse in that, generally, remedies for defaults must be pursued in the
courts of the defaulting party. Political conditions, especially a sovereign
entity's willingness to meet the terms of its fixed income securities, are of
considerable significance. Also, there can be no assurance that the holders of
commercial bank loans to the same sovereign entity may not contest payments to
the holders of sovereign debt in the event of default under commercial bank loan
agreements. In addition, there is no bankruptcy proceeding with respect to
sovereign debt on which a sovereign has defaulted, and a Portfolio may be unable
to collect all or any part of its investment in a particular issue. Foreign
investment in certain sovereign debt is restricted or controlled to varying
degrees, including requiring governmental approval for the repatriation of
income, capital or proceeds of sales by foreign investors. These restrictions or
controls may at times limit or preclude foreign investment in certain sovereign
debt or increase the costs and expenses of a Portfolio.

Sovereign debt of emerging market governmental issuers is to be considered
speculative. Emerging market governmental issuers are among the largest debtors
to commercial banks, foreign governments, international financial organizations
and other financial institutions. Certain emerging market governmental issuers
have not been able to make payments of interest on or principal of debt
obligations as those payments have come due. There is a history of defaults with
respect to commercial bank loans by public and private entities issuing
sovereign debt. All or a portion of the interest payments and/or principal
repayment with respect to sovereign debt may be uncollateralized. Obligations
arising from past restructuring agreements may affect the economic performance
and political and social stability of those issuers.

The ability of emerging market country governmental issuers to make timely
payments on their obligations is likely to be influenced strongly by the
issuer's balance of payments, including export performance, and its access to
international credits and investments. An emerging market whose exports are
concentrated in a few commodities could be vulnerable to a decline in the
international prices of one or more of those commodities. Increased
protectionism on the part of an emerging market's trading partners could also
adversely affect the country's exports and diminish its trade account surplus,
if any. To the extent that emerging markets receive payment for its exports in
currencies other than dollars or non-emerging market currencies, its ability to
make debt payments denominated in dollars or non-emerging market currencies
could be affected.

Another factor bearing on the ability of emerging market countries to repay debt
obligations is the level of international reserves of the country. Fluctuations
in the level of these reserves affect the amount of foreign exchange readily
available for external debt payments and thus could have a bearing on the
capacity of emerging market countries to make payments on these debt
obligations.

To the extent that an emerging market country cannot generate a trade surplus,
it must depend on continuing loans from foreign governments, multilateral
organizations or private commercial banks, aid payments from foreign governments
and inflows of foreign investment. The access of emerging markets to these forms
of external funding may not be certain, and a withdrawal of external funding
could adversely affect the capacity of emerging market country governmental
issuers to make payments on their obligations. In addition, the cost of
servicing emerging market debt obligations can be affected by a change in
international interest rates since the majority of these obligations carry
interest rates that are adjusted periodically based upon international rates.

Foreign Investment. DWS Bond VIP, DWS Growth & Income VIP, DWS Capital Growth
VIP, DWS Global Opportunities VIP and DWS International VIP may each invest,
except as applicable to debt securities generally, in US dollar-denominated
foreign debt securities (including those issued by the Dominion of Canada and
its provinces and other debt securities which meet the criteria applicable to
the Portfolio's domestic investments), and in certificates of deposit issued by
foreign banks and foreign branches of United States banks, to any extent deemed
appropriate by the Advisor. DWS Bond VIP may invest up to 25% of its assets in
non-US dollar-denominated foreign debt securities. DWS Growth & Income VIP may
invest up to 25% of its assets in non-US dollar denominated equity securities of
foreign issuers. DWS Capital Growth VIP may invest up to 25% of its assets, and
DWS Global Opportunities VIP and DWS International VIP may invest without limit,
in non-US dollar-denominated equity securities of foreign issuers.

Foreign Securities. Foreign securities are normally denominated and traded in
foreign currencies. As a result, the value of the fund's foreign investments and
the value of its shares may be affected favorably or unfavorably by changes in
currency exchange rates relative to the US dollar. There may be less information
publicly available about a foreign issuer than about a US issuer, and foreign
issuers may not be subject to accounting, auditing and financial reporting
standards and practices comparable to those in the US. The securities of some
foreign issuers are less liquid and at times more volatile than securities of
comparable US issuers. Foreign brokerage commissions and other fees are also
generally higher than in the US. Foreign settlement procedures and trade
regulations may involve certain risks (such as delay in payment or delivery of
securities or in the recovery of the fund's assets held abroad) and expenses not
present in the settlement of investments in US markets. Payment for securities
without delivery may be required in certain foreign markets.

In addition, foreign securities may be subject to the risk of nationalization or
expropriation of assets, imposition of currency exchange controls or
restrictions on the repatriation of foreign currency, confiscatory taxation,
political or financial instability and diplomatic developments which could
affect the value of the fund's investments in certain foreign countries.
Governments of many countries have exercised and continue to exercise
substantial influence over many aspects of the private sector through the
ownership or control of many companies, including some of the largest in these
countries. As a result, government actions in the future could have a
significant effect on economic conditions which may adversely affect prices of
certain portfolio securities. There is also generally less government
supervision and regulation of stock exchanges, brokers, and listed companies
than in the US. Dividends or interest on, or proceeds from the sale of, foreign
securities may be subject to foreign withholding taxes, and special US tax
considerations may apply. Moreover, foreign economies may differ favorably or
unfavorably from the US economy in such respects as growth of gross national
product, rate of inflation, capital reinvestment, resource self-sufficiency and
balance of payments position.

Legal remedies available to investors in certain foreign countries may be more
limited than those available with respect to investments in the US or in other
foreign countries. The laws of some foreign countries may limit the fund's
ability to invest in securities of certain issuers organized under the laws of
those foreign countries.

Of particular importance, many foreign countries are heavily dependent upon
exports, particularly to developed countries, and, accordingly, have been and
may continue to be adversely affected by trade barriers, managed adjustments in
relative currency values, and other protectionist measures imposed or negotiated
by the US and other countries with which they trade. These economies also have
been and may continue to be negatively impacted by economic conditions in the US
and other trading partners, which can lower the demand for goods produced in
those countries.

The risks described above, including the risks of nationalization or
expropriation of assets, typically are increased in connection with investments
in "emerging markets." For example, political and economic structures in these
countries may be in their infancy and developing rapidly, and such countries may
lack the social, political and economic stability characteristic of more
developed countries (including amplified risk of war and terrorism). Certain of
these countries have in the past failed to recognize private property rights and
have at times nationalized and expropriated the assets of private companies.
Investments in emerging markets may be considered speculative.

The currencies of certain emerging market countries have experienced
devaluations relative to the US dollar, and future devaluations may adversely
affect the value of assets denominated in such currencies. In addition, currency
hedging techniques may be unavailable in certain emerging market countries. Many
emerging market countries have experienced substantial, and in some periods
extremely high, rates of inflation or deflation for many years, and future
inflation may adversely affect the economies and securities markets of such
countries.

In addition, unanticipated political or social developments may affect the value
of investments in emerging markets and the availability of additional
investments in these markets. Any change in the leadership or politics of
emerging market countries, or the countries that exercise a significant
influence over those countries, may halt the expansion of or reverse the
liberalization of foreign investment policies now occurring and adversely affect
existing investment opportunities. The small size, limited trading volume and
relative inexperience of the securities markets in these countries may make
investments in securities traded in emerging markets illiquid and more volatile
than investments in securities traded in more developed countries. For example,
limited market size may cause prices to be unduly influenced by traders who
control large positions. In addition, the fund may be required to establish
special custodial or other arrangements before making investments in securities
traded in emerging markets. There may be little financial or accounting
information available with respect to issuers of emerging market securities, and
it may be difficult as a result to assess the value of prospects of an
investment in such securities.

The risk also exists that an emergency situation may arise in one or more
emerging markets as a result of which trading of securities may cease or may be
substantially curtailed and prices for a fund's securities in such markets may
not be readily available. A fund may suspend redemption of its shares for any
period during which an emergency exists, as determined by the SEC. Accordingly
if a fund believes that appropriate circumstances exist, it will promptly apply
to the SEC for a determination that an emergency is present. During the period
commencing from a fund's identification of such condition until the date of the
SEC action, a fund's securities in the affected markets will be valued at fair
value determined in good faith by or under the direction of a fund's Board.

Certain of the foregoing risks may also apply to some extent to securities of US
issuers that are denominated in foreign currencies or that are traded in foreign
markets, or securities of US issuers having significant foreign operations.

High Yield/High Risk Bonds. DWS Bond VIP, DWS Capital Growth VIP and DWS Global
Opportunities VIP may also purchase debt securities which are rated below
investment-grade (commonly referred to as "junk bonds"), that is, rated below Ba
by Moody's or below BB by S&P and unrated securities judged to be of equivalent
quality as determined by the Advisor. These securities usually entail greater
risk (including the possibility of default or bankruptcy of the issuers of such
securities), generally involve greater volatility of price and risk to principal
and income, and may be less liquid, than securities in the higher rating
categories. The lower the ratings of such debt securities, the more their risks
render them like equity securities. Securities rated D may be in default with
respect to payment of principal or interest. See the Appendix to this Statement
of Additional Information for a more complete description of the ratings
assigned by ratings organizations and their respective characteristics.

Issuers of such high yielding securities often are highly leveraged and may not
have available to them more traditional methods of financing. Therefore, the
risk associated with acquiring the securities of such issuers generally is
greater than is the case with higher rated securities. For example, during an
economic downturn or a sustained period of rising interest rates, highly
leveraged issuers of high yield securities may experience financial stress.
During such periods, such issuers may not have sufficient revenues to meet their
interest payment obligations. The issuer's ability to service its debt
obligations may also be adversely affected by specific corporate developments,
or the issuer's inability to meet specific projected business forecasts, or the
unavailability of additional financing. The risk of loss from default by the
issuer is significantly greater for the holders of high yield securities because
such securities are generally unsecured and are often subordinated to other
creditors of the issuer. Prices and yields of high yield securities will
fluctuate over time and, during periods of economic uncertainty, volatility of
high yield securities may adversely affect a Portfolio's net asset value. In
addition, investments in high yield zero coupon or pay-in-kind bonds, rather
than income-bearing high yield securities, may be more speculative and may be
subject to greater fluctuations in value due to changes in interest rates.

A Portfolio may have difficulty disposing of certain high yield (high risk)
securities because they may have a thin trading market. Because not all dealers
maintain markets in all high yield securities, a Portfolio anticipates that such
securities could be sold only to a limited number of dealers or institutional
investors. The lack of a liquid secondary market may have an adverse effect on
the market price and a Portfolio's ability to dispose of particular issues and
may also make it more difficult for a Portfolio to obtain accurate market
quotations for purposes of valuing a Portfolio's assets. Market quotations
generally are available on many high yield issues only from a limited number of
dealers and may not necessarily represent firm bids of such dealers or prices
for actual sales. Adverse publicity and investor perceptions may decrease the
values and liquidity of high yield securities. These securities may also involve
special registration responsibilities, liabilities and costs, and liquidity and
valuation difficulties.

Credit quality in the high-yield securities market can change suddenly and
unexpectedly, and even recently issued credit ratings may not fully reflect the
actual risks posed by a particular high-yield security. For these reasons, it is
generally the policy of the Advisor not to rely exclusively on ratings issued by
established credit rating agencies, but to supplement such ratings with its own
independent and on-going review of credit quality. The achievement of a
Portfolio's investment objective by investment in such securities may be more
dependent on the Advisor's credit analysis than is the case for higher quality
bonds. Should the rating of a portfolio security be downgraded, the Advisor will
determine whether it is in the best interests of the Fund to retain or dispose
of such security.

Prices for below investment-grade securities may be affected by legislative and
regulatory developments. Also, Congress has from time to time considered
legislation which would restrict or eliminate the federal income tax deduction
for interest payments on these securities and regulate corporate restructurings.
Such legislation may significantly depress the prices of outstanding securities
of this type.

Illiquid Securities and Restricted Securities. A Portfolio may purchase
securities that are subject to legal or contractual restrictions on resale
("restricted securities"). Generally speaking, restricted securities may be sold
(i) only to qualified institutional buyers; (ii) in a privately negotiated
transaction to a limited number of purchasers; (iii) in limited quantities after
they have been held for a specified period of time and other conditions are met
pursuant to an exemption from registration; or (iv) in a public offering for
which a registration statement is in effect under the Securities Act of 1933, as
amended. Issuers of restricted securities may not be subject to the disclosure
and other investor protection requirements that would be applicable if their
securities were publicly traded.

Restricted securities are often illiquid, but they may also be liquid. For
example, restricted securities that are eligible for resale under Rule 144A are
often deemed to be liquid.

A Portfolio's Board has approved guidelines for use by the Advisor in
determining whether a security is liquid or illiquid. Among the factors the
Advisor may consider in reaching liquidity decisions relating to Rule 144A
securities are: (1) the frequency of trades and quotes for the security; (2) the
number of dealers wishing to purchase or sell the security and the number of
other potential purchasers; (3) dealer undertakings to make a market in the
security; and (4) the nature of the security and the nature of the market for
the security (i.e., the time needed to dispose of the security, the method of
soliciting offers, and the mechanics of the transfer). Issuers of restricted
securities may not be subject to the disclosure and other investor protection
requirement that would be applicable if their securities were publicly traded.
Where a registration statement is required for the resale of restricted
securities, a Portfolio may be required to bear all or part of the registration
expenses. A Portfolio may be deemed to be an "underwriter" for purposes of the
Securities Act of 1933, as amended when selling restricted securities to the
public and, in such event, a Portfolio may be liable to purchasers of such
securities if the registration statement prepared by the issuer is materially
inaccurate or misleading.

A Portfolio may also purchase securities that are not subject to legal or
contractual restrictions on resale, but that are deemed illiquid. Such
securities may be illiquid, for example, because there is a limited trading
market for them.

A Portfolio may be unable to sell a restricted or illiquid security. In
addition, it may be more difficult to determine a market value for restricted or
illiquid securities. Moreover, if adverse market conditions were to develop
during the period between a Portfolio's decision to sell a restricted or
illiquid security and the point at which a Portfolio is permitted or able to
sell such security, a Portfolio might obtain a price less favorable than the
price that prevailed when it decided to sell. This investment practice,
therefore, could have the effect of increasing the level of illiquidity of a
Portfolio.

Impact of Sub-Prime Mortgage Market. A Portfolio may invest in mortgage-backed,
asset-backed and other fixed-income securities whose value and liquidity may be
adversely affected by the critical downturn in the sub-prime mortgage lending
market in the US. Sub-prime loans, which, have higher interest rates, are made
to borrowers with low credit ratings or other factors that increase the risk of
default. Concerns about widespread defaults on sub-prime loans have also created
heightened volatility and turmoil in the general credit markets. As a result, a
Portfolio's investments in certain fixed-income securities may decline in value,
their market value may be more difficult to determine, and a Portfolio may have
more difficulty disposing of them.

Impact of Large Redemptions and Purchases of Portfolio Shares. From time to
time, shareholders of a Portfolio (which may include affiliated and/or
non-affiliated registered investment companies that invest in a Portfolio) may
make relatively large redemptions or purchases of Portfolio shares. These
transactions may cause a Portfolio to have to sell securities or invest
additional cash, as the case may be. While it is impossible to predict the
overall impact of these transactions over time, there could be adverse effects
on a Portfolio's performance to the extent that a Portfolio may be required to
sell securities or invest cash at times when it would not otherwise do so. These
transactions could also accelerate the realization of taxable income if sales of
securities resulted in capital gains or other income and could also increase
transaction costs, which may impact a Portfolio's expense ratio.

Indexed Securities. DWS Bond VIP may invest in indexed securities, the value of
which is linked to currencies, interest rates, commodities, indices or other
financial indicators ("reference instruments"). Most indexed securities have
maturities of three years or less.

Indexed securities differ from other types of debt securities in which a
Portfolio may invest in several respects. First, the interest rate or, unlike
other debt securities, the principal amount payable at maturity of an indexed
security may vary based on changes in one or more specified reference
instruments, such as an interest rate compared with a fixed interest rate or the
currency exchange rates between two currencies (neither of which need be the
currency in which the instrument is denominated). The reference instrument need
not be related to the terms of the indexed security. For example, the principal
amount of a US dollar denominated indexed security may vary based on the
exchange rate of two foreign currencies. An indexed security may be positively
or negatively indexed; that is, its value may increase or decrease if the value
of the reference instrument increases. Further, the change in the principal
amount payable or the interest rate of an indexed security may be a multiple of
the percentage change (positive or negative) in the value of the underlying
reference instrument(s).

Investment in indexed securities involves certain risks. In addition to the
credit risk of the security's issuer and the normal risks of price changes in
response to changes in interest rates, the principal amount of indexed
securities may decrease as a result of changes in the value of reference
instruments. Further, in the case of certain indexed securities in which the
interest rate is linked to a reference instrument, the interest rate may be
reduced to zero, and any further declines in the value of the security may then
reduce the principal amount payable on maturity. Finally, indexed securities may
be more volatile than the reference instruments underlying indexed securities.

Interfund Borrowing and Lending Program. The Fund, on behalf of each Portfolio,
has received exemptive relief from the Securities and Exchange Commission
("SEC") which permits the Portfolios to participate in an interfund lending
program among certain investment companies advised by the Advisor. The interfund
lending program allows the participating funds to borrow money from and loan
money to each other for temporary or emergency purposes. The program is subject
to a number of conditions designed to ensure fair and equitable treatment of all
participating funds, including the following: (1) no fund may borrow money
through the program unless it receives a more favorable interest rate than a
rate approximating the lowest interest rate at which bank loans would be
available to any of the participating funds under a loan agreement; and (2) no
fund may lend money through the program unless it receives a more favorable
return than that available from an investment in repurchase agreements and, to
the extent applicable, money market cash sweep arrangements. In addition, a fund
may participate in the program only if and to the extent that such participation
is consistent with the fund's investment objectives and policies (for instance,
money market funds would normally participate only as lenders and tax exempt
funds only as borrowers). Interfund loans and borrowings may extend overnight,
but could have a maximum duration of seven days. Loans may be called on one
day's notice. A fund may have to borrow from a bank at a higher interest rate if
an interfund loan is called or not renewed. Any delay in repayment to a lending
fund could result in a lost investment opportunity or additional costs. The
program is subject to the oversight and periodic review of the Boards of the
participating funds. To the extent a Portfolio is actually engaged in borrowing
through the interfund lending program, the Portfolio, as a matter of
nonfundamental policy, may not borrow for other than temporary or emergency
purposes (and not for leveraging), except that a Portfolio may engage in reverse
repurchase agreements and dollar rolls for any purpose.

Investment Company Securities. Each Portfolio may acquire securities of other
investment companies to the extent consistent with its investment objective and
subject to the limitations of the 1940 Act. Each Portfolio will indirectly bear
its proportionate share of any management fees and other expenses paid by such
other investment companies.

For example, a Portfolio may invest in a variety of investment companies which
seek to track the composition and performance of specific indexes or a specific
portion of an index. These index-based investments hold substantially all of
their assets in securities representing their specific index. Accordingly, the
main risk of investing in index-based investments is the same as investing in a
portfolio of equity securities comprising the index. The market prices of
index-based investments will fluctuate in accordance with both changes in the
market value of their underlying portfolio securities and due to supply and
demand for the instruments on the exchanges on which they are traded (which may
result in their trading at a discount or premium to their Net Asset Value
("NAVs"). Index-based investments may not replicate exactly the performance of
their specified index because of transaction costs and because of the temporary
unavailability of certain component securities of the index.

Examples of index-based investments include:

SPDRs(R): SPDRs, an acronym for "Standard & Poor's Depositary Receipts," are
based on the S&P 500. They are issued by the SPDR Trust, a unit investment trust
that holds shares of substantially all the companies in the S&P 500 in
substantially the same weighting and seeks to closely track the price
performance and dividend yield of the Index.

MidCap SPDRs(R): MidCap SPDRs are based on the S&P MidCap 400 Index. They are
issued by the MidCap SPDR Trust, a unit investment trust that holds a portfolio
of securities consisting of substantially all of the common stocks in the S&P
MidCap 400 Index in substantially the same weighting and seeks to closely track
the price performance and dividend yield of the Index.

Select Sector SPDRs(R): Select Sector SPDRs are based on a particular sector or
group of industries that are represented by a specified Select Sector Index
within the S&P 500. They are issued by The Select Sector SPDR Trust, an open-end
management investment company with nine portfolios that each seeks to closely
track the price performance and dividend yield of a particular Select Sector
Index.

DIAMONDS(SM):  DIAMONDS are based on the Dow Jones Industrial Average(SM).  They
are issued by the DIAMONDS Trust, a unit investment trust that holds a portfolio
of all the component common stocks of the Dow Jones Industrial Average and seeks
to closely track the price performance and dividend yield of the Dow.

Nasdaq-100 Shares: Nasdaq-100 Shares are based on the Nasdaq 100 Index. They are
issued by the Nasdaq-100 Trust, a unit investment trust that holds a portfolio
consisting of substantially all of the securities, in substantially the same
weighting, as the component stocks of the Nasdaq-100 Index and seeks to closely
track the price performance and dividend yield of the Index.

Investment-Grade Bonds. Each Portfolio may purchase "investment-grade" bonds,
which are those rated Aaa, Aa, A or Baa by Moody's or AAA, AA, A or BBB by S&P
or, if unrated, judged to be of equivalent quality as determined by the Advisor.
Moody's considers bonds it rates Baa to have speculative elements as well as
investment-grade characteristics. To the extent that a Portfolio invests in
higher-grade securities, a Portfolio will not be able to avail itself of
opportunities for higher income which may be available at lower grades.

Investment of Uninvested Cash Balances. Each Portfolio may have cash balances
that have not been invested in portfolio securities ("Uninvested Cash").
Uninvested Cash may result from a variety of sources, including dividends or
interest received from portfolio securities, unsettled securities transactions,
reserves held for investment strategy purposes, scheduled maturity of
investments, liquidation of investment securities to meet anticipated
redemptions and dividend payments, and new cash received from investors.
Uninvested Cash may be invested directly in money market instruments or other
short-term debt obligations. Pursuant to an Exemptive Order issued by the SEC,
each Portfolio may use Uninvested Cash to purchase shares of affiliated funds
including money market funds, short-term bond funds and Cash Management QP Trust
and DWS Trust Company, or one or more future entities for which Deutsche Asset
Management acts as trustee or investment advisor that operate as cash management
investment vehicles and that are excluded from the definition of investment
company pursuant to section 3(c)(1) or 3(c)(7) of the 1940 Act (collectively,
the "Central Funds") in excess of the limitations of Section 12(d)(1) of the
1940 Act. Investment by a Portfolio in shares of the Central Funds will be in
accordance with the Portfolio's investment policies and restrictions as set
forth in its registration statement.

Certain of the Central Funds comply with rule 2a-7 under the Act. The other
Central Funds are or will be short-term bond funds that invest in fixed-income
securities and maintain a dollar weighted average maturity of three years or
less. Each of the Central Funds will be managed specifically to maintain a
highly liquid portfolio, and access to them will enhance a Portfolio's ability
to manage Uninvested Cash.

Each Portfolio will invest Uninvested Cash in Central Funds only to the extent
that the Portfolio's aggregate investment in the Central Funds does not exceed
25% of its total assets in shares of the Central Funds. Purchase and sales of
shares of Central Funds are made at net asset value.

IPO Risk. Securities issued through an initial public offering (IPO) can
experience an immediate drop in value if the demand for the securities does not
continue to support the offering price. Information about the issuers of IPO
securities is also difficult to acquire since they are new to the market and may
not have lengthy operating histories. The DWS Health Care VIP may engage in
short-term trading in connection with its IPO investments, which could produce
higher trading costs and adverse tax consequences. The number of securities
issued in an IPO is limited, so it is likely that IPO securities will represent
a smaller component of the Portfolio's portfolio as its assets increase (and
thus have a more limited effect on the Portfolio's performance).

Lending of Portfolio Securities. Each Portfolio may lend its investment
securities to approved institutional borrowers who need to borrow securities in
order to complete certain transactions, such as covering short sales, avoiding
failures to deliver securities or completing arbitrage operations. By lending
its investment securities, a portfolio attempts to increase its net investment
income through the receipt of interest on the loan. Any gain or loss in the
market price of the securities loaned that might occur during the term of the
loan would belong to a portfolio. A portfolio may lend its investment securities
so long as the terms, structure and the aggregate amount of such loans are not
inconsistent with the 1940 Act or the rules and regulations or interpretations
of the SEC thereunder, which currently require, among other things, that (a) the
borrower pledge and maintain with the portfolio collateral consisting of liquid,
unencumbered assets having a value at all times not less than 100% of the value
of the securities loaned, (b) the borrower add to such collateral whenever the
price of the securities loaned rises (i.e., the borrower "marks to the market"
on a daily basis), (c) the loan be made subject to termination by a portfolio at
any time, and (d) a portfolio receives reasonable interest on the loan (which
may include the portfolio investing any cash collateral in interest bearing
short-term investments), and distributions on the loaned securities and any
increase in their market value. The Portfolio will bear any losses incurred from
the investment of the collateral it receives. There may be risks of delay in
recovery of the securities or even loss of rights in the collateral should the
borrower of the securities fail financially. However, loans will be made only to
borrowers selected by a portfolio's delegate after a commercially reasonable
review of relevant facts and circumstances, including the creditworthiness of
the borrower.

The Fund may pay negotiated fees in connection with loaned securities, pursuant
to written contracts. In addition, voting rights may pass with the loaned
securities, but if a material event occurs affecting an investment on loan, the
loan must be called and the securities voted. Pursuant to an exemptive order
granted by the SEC, cash collateral received by a portfolio may be invested in a
money market fund managed by the Advisor (or one of its affiliates).

Letters of Credit. Municipal obligations, including certificates of
participation, commercial paper and other short-term obligations, may be backed
by an irrevocable letter of credit of a bank which assumes the obligation for
payment of principal and interest in the event of default by the issuer. Only
banks which, in the opinion of the Advisor, are of investment quality comparable
to other permitted investments of the Fund may be used for letter of credit
backed investments.

Micro-Cap Company Risk. While, historically, micro-capitalization company stocks
have outperformed the stocks of large companies, the former have customarily
involved more investment risk as well. There can be no assurance that this will
continue to be true in the future. Micro-capitalization companies may have
limited product lines, markets or financial resources; may lack management depth
or experience; and may be more vulnerable to adverse general market or economic
developments than large companies. The prices of micro-capitalization company
securities are often more volatile than prices associated with large company
issues, and can display abrupt or erratic movements at times, due to limited
trading volumes and less publicly available information.

Also, because micro-capitalization companies normally have fewer shares
outstanding and these shares trade less frequently than large companies, it may
be more difficult for a fund to buy and sell significant amounts of such shares
without an unfavorable impact on prevailing market prices.

Some of the companies in which a fund may invest may distribute, sell or produce
products which have recently been brought to market and may be dependent on key
personnel. The securities of micro-capitalization companies are often traded
over-the-counter and may not be traded in the volumes typical on a national
securities exchange. Consequently, in order to sell this type of holding, a fund
may need to discount the securities from recent prices or dispose of the
securities over a long period of time.

Mortgage-Backed Securities and Mortgage Pass-Through Securities. DWS Bond VIP,
DWS Global Opportunities VIP and DWS Growth & Income VIP may also invest in
mortgage-backed securities, which are interests in pools of mortgage loans,
including mortgage loans made by savings and loan institutions, mortgage
bankers, commercial banks, and others. Pools of mortgage loans are assembled as
securities for sale to investors by various governmental, government-related,
and private organizations as further described below. Underlying mortgages may
be of a variety of types, including adjustable rate, conventional 30-year,
graduated payment and 15-year.

A decline in interest rates will often lead to a faster rate of repayment of the
underlying mortgages, and expose the Portfolios to a lower rate of return upon
reinvestment. To the extent that such mortgage-backed securities are held by the
Portfolios, the prepayment right will tend to limit to some degree the increase
in net asset value of the Portfolios because the value of the mortgage-backed
securities held by the Portfolios may not appreciate as rapidly as the price of
non-callable debt securities. Mortgage-backed securities are subject to the risk
of prepayment and the risk that the underlying loans will not be repaid. Because
principal may be prepaid at any time, mortgage-backed securities may involve
significantly greater price and yield volatility than traditional debt
securities.

When interest rates rise, mortgage prepayment rates tend to decline, thus
lengthening the life of mortgage-related securities and increasing their
volatility, affecting the price volatility of the Fund's shares.

Interests in pools of mortgage-backed securities differ from other forms of debt
securities, which normally provide for periodic payment of interest in fixed
amounts with principal payments at maturity or specified call dates. Instead,
these securities provide a monthly payment which consists of both interest and
principal payments. In effect, these payments are a "pass-through" of the
monthly payments made by the individual borrowers on their mortgage loans, net
of any fees paid to the issuer or guarantor of such securities. Additional
payments are caused by repayments of principal resulting from the sale of the
underlying property, refinancing or foreclosure, net of fees or costs which may
be incurred. Some mortgage-related securities such as securities issued by the
"GNMA" are described as "modified pass-through." These securities entitle the
holder to receive all interest and principal payments owed on the mortgage pool,
net of certain fees, at the scheduled payment dates regardless of whether or not
the mortgagor actually makes the payment.

The principal governmental guarantor of mortgage-related securities is GNMA.
GNMA is a wholly owned US Government corporation within the Department of
Housing and Urban Development. GNMA is authorized to guarantee, with the full
faith and credit of the US Government, the timely payment of principal and
interest on securities issued by institutions approved by GNMA (such as savings
and loan institutions, commercial banks, and mortgage bankers) and backed by
pools of FHA-insured or VA-guaranteed mortgages. These guarantees, however, do
not apply to the market value or yield of mortgage-backed securities or to the
value of Portfolio shares. Also, GNMA securities often are purchased at a
premium over the maturity value of the underlying mortgages. This premium is not
guaranteed and will be lost if prepayment occurs.

Government-related guarantors (i.e., not backed by the full faith and credit of
the US Government) include Fannie Mae and the "FHLMC." Fannie Mae is a
government-sponsored corporation owned entirely by private stockholders. It is
subject to general regulation by the Secretary of Housing and Urban Development.
Fannie Mae purchases conventional (i.e., not insured or guaranteed by any
governmental agency) mortgages from a list of approved seller/servicers which
include state and federally chartered savings and loan associations, mutual
savings banks, commercial banks, credit unions, and mortgage bankers.
Pass-through securities issued by Fannie Mae are guaranteed as to timely payment
of principal and interest by Fannie Mae but are not backed by the full faith and
credit of the US Government.

FHLMC is a corporate instrumentality of the US Government and was created by
Congress in 1970 for the purpose of increasing the availability of mortgage
credit for residential housing. Its stock is owned by the twelve Federal Home
Loan Banks. FHLMC issues PCs which represent interests in conventional mortgages
from FHLMC's national portfolio. FHLMC guarantees the timely payment of interest
and ultimate collection of principal, but PCs are not backed by the full faith
and credit of the US Government.


Mortgage-backed securities may be issued or guaranteed by GNMA, FNMA (also know
as Fannie Mae) and FHLMC (also known as Freddie Mac), but also may be issued or
guaranteed by other issuers, including private companies. GNMA is a
government-owned corporation that is an agency of the U.S. Department of Housing
and Urban Development. It guarantees, with the full faith and credit of the
United States, full and timely payment of all monthly principal and interest on
its mortgage-backed securities. Until recently, FNMA and FHLMC were
government-sponsored corporations owned entirely by private stockholders. Both
issue mortgage-related securities that contain guarantees as to timely payment
of interest and principal but that are not backed by the full faith and credit
of the U.S. government. The value of the companies' securities fell sharply in
2008 due to concerns that the firms did not have sufficient capital to offset
losses. In mid-2008, the U.S. Treasury was authorized to increase the size of
home loans that FNMA and FHLMC could purchase in certain residential areas and,
until 2009, to lend FNMA and FHLMC emergency funds and to purchase the
companies' stock. More recently, in September 2008, the U.S. Treasury announced
that FNMA and FHLMC had been placed in conservatorship by the Federal Housing
Finance Agency ("FHFA"), a newly created independent regulator. In addition to
placing the companies in conservatorship, the U.S. Treasury announced three
additional steps that it intended to take with respect to FNMA and FHLMC. First,
the U.S. Treasury has entered into preferred stock purchase agreements ("PSPAs")
under which, if the FHFA determines that FNMA's or FHLMC's liabilities have
exceeded its assets under generally accepted accounting principles, the U.S.
Treasury will contribute cash capital to the company in an amount equal to the
difference between liabilities and assets. The PSPAs are designed to provide
protection to the senior and subordinated debt and the mortgage-backed
securities issued by FNMA and FHLMC. Second, the U.S. Treasury established a new
secured lending credit facility that is available to FNMA and FHLMC until
December 2009. Third, the U.S. Treasury initiated a temporary program to
purchase FNMA and FHLMC mortgage-backed securities, which is expected to
continue until December 2009. No assurance can be given that the U.S. Treasury
initiatives discussed above with respect to the debt and mortgage-backed
securities issued by FNMA and FHLMC will be successful.


Commercial banks, savings and loan institutions, private mortgage insurance
companies, mortgage bankers, and other secondary market issuers also create
pass-through pools of conventional mortgage loans. Such issuers may, in
addition, be the originators and/or servicers of the underlying mortgage loans
as well as the guarantors of the mortgage-related securities. Pools created by
such non-governmental issuers generally offer a higher rate of interest than
governmental and government-related pools because there are no direct or
indirect government or agency guarantees of payments. However, timely payment of
interest and principal of these pools may be supported by various forms of
insurance or guarantees, including individual loan, title, pool and hazard
insurance, and letters of credit. The insurance and guarantees are issued by
governmental entities, private insurers, and the mortgage poolers. Such
insurance and guarantees and the creditworthiness of the issuers thereof will be
considered in determining whether a mortgage-related security meets the
Portfolios' investment quality standards. There can be no assurance that the
private insurers or guarantors can meet their obligations under the insurance
policies or guarantee arrangements. The Portfolios may buy mortgage-related
securities without insurance or guarantees, if through an examination of the
loan experience and practices of the originators/servicers and poolers, the
Advisor determines that the securities meet the Portfolios' quality standards.
Although the market for such securities is becoming increasingly liquid,
securities issued by certain private organizations may not be readily
marketable.

Other Mortgage-Backed Securities. The Advisor expects that governmental,
government-related, or private entities may create mortgage loan pools and other
mortgage-related securities offering mortgage pass-through and
mortgage-collateralized investments in addition to those described above. The
mortgages underlying these securities may include alternative mortgage
instruments, that is, mortgage instruments whose principal or interest payments
may vary or whose terms to maturity may differ from customary long-term fixed
rate mortgages. DWS Bond VIP will not purchase mortgage-backed securities or any
other assets which, in the opinion of the Advisor, are illiquid if, as a result,
more than 15% of the value of the Portfolio's net assets will be illiquid. As
new types of mortgage-related securities are developed and offered to investors,
the Advisor will, consistent with the Portfolio's investment objectives,
policies, and quality standards, consider making investments in such new types
of mortgage-related securities.

Mortgage Dollar Rolls. DWS Bond VIP may enter into mortgage dollar rolls in
which the Portfolio sells mortgage-backed securities for delivery in the current
month and simultaneously contracts to repurchase similar, but not identical,
securities on a fixed date. The Portfolio receives compensation as consideration
for entering into the commitment to repurchase. The compensation is paid in the
form of a fee which is recorded as deferred income and amortized to income over
the roll period, or alternatively, a lower price for the security upon its
repurchase. Mortgage dollar rolls may be renewed with a new sale and repurchase
price and a cash settlement made at each renewal without physical delivery of
the securities subject to the contract.

Municipal Obligations. DWS Bond VIP may invest in municipal obligations.
Municipal obligations are issued by or on behalf of states, territories and
possessions of the United States and their political subdivisions, agencies and
instrumentalities and the District of Columbia to obtain funds for various
public purposes. The interest on these obligations is generally exempt from
federal income tax in the hands of most investors. The two principal
classifications of municipal obligations are "notes" and "bonds." Municipal
notes are generally used to provide for short-term capital needs and generally
have maturities of one year or less. Municipal notes include: Tax Anticipation
Notes; Revenue Anticipation Notes; Bond Anticipation Notes; and Construction
Loan Notes.

Tax Anticipation Notes are sold to finance working capital needs of
municipalities. They are generally payable from specific tax revenues expected
to be received at a future date. Revenue Anticipation Notes are issued in
expectation of receipt of other types of revenue. Tax Anticipation Notes and
Revenue Anticipation Notes are generally issued in anticipation of various
seasonal revenue such as income, sales, use and business taxes. Bond
Anticipation Notes are sold to provide interim financing and Construction Loan
Notes are sold to provide construction financing. These notes are generally
issued in anticipation of long-term financing in the market. In most cases,
these monies provide for the repayment of the notes. After the projects are
successfully completed and accepted, many projects receive permanent financing
through the FHA under Fannie Mae or GNMA. There are, of course, a number of
other types of notes issued for different purposes and secured differently than
those described above.

Municipal bonds, which meet longer-term capital needs and generally have
maturities of more than one year when issued, have two principal
classifications: "general obligation" bonds and "revenue" bonds.

Issuers of general obligation bonds include states, counties, cities, towns and
regional districts. The proceeds of these obligations are used to fund a wide
range of public projects including the construction or improvement of schools,
highways and roads, water and sewer systems and a variety of other public
purposes. The basic security behind general obligation bonds is the issuer's
pledge of its full faith, credit, and taxing power for the payment of principal
and interest. The taxes that can be levied for the payment of debt service may
be limited or unlimited as to rate or amount or special assessments.

The principal security for a revenue bond is generally the net revenues derived
from a particular facility or group of facilities or, in some cases, from the
proceeds of a special excise or other specific revenue source. Revenue bonds
have been issued to fund a wide variety of capital projects including: electric,
gas, water and sewer systems; highways, bridges and tunnels; port and airport
facilities; colleges and universities; and hospitals. Although the principal
security behind these bonds varies widely, many provide additional security in
the form of a debt service reserve fund whose monies may also be used to make
principal and interest payments on the issuer's obligations. Housing finance
authorities have a wide range of security including partially or fully-insured,
rent-subsidized and/or collateralized mortgages, and/or the net revenues from
housing or other public projects. In addition to a debt service reserve fund,
some authorities provide further security in the form of a state's ability
(without obligation) to make up deficiencies in the debt reserve fund. Lease
rental bonds issued by a state or local authority for capital projects are
secured by annual lease rental payments from the state or locality to the
authority sufficient to cover debt service on the authority's obligations.

Some issues of municipal bonds are payable from United States Treasury bonds and
notes held in escrow by a trustee, frequently a commercial bank. The interest
and principal on these US Government securities are sufficient to pay all
interest and principal requirements of the municipal securities when due. Some
escrowed Treasury securities are used to retire municipal bonds at their
earliest call date, while others are used to retire municipal bonds at their
maturity.

Securities purchased for a Portfolio may include variable/floating rate
instruments, variable mode instruments, put bonds, and other obligations which
have a specified maturity date but also are payable before maturity after notice
by the holder ("demand obligations"). Demand obligations are considered for a
Portfolio's purposes to mature at the demand date.

There are, in addition, a variety of hybrid and special types of municipal
obligations as well as numerous differences in the security of municipal
obligations both within and between the two principal classifications (i.e.,
notes and bonds) discussed above.

An entire issue of municipal securities may be purchased by one or a small
number of institutional investors such as a Portfolio. Thus, such an issue may
not be said to be publicly offered. Unlike the equity securities of operating
companies or mutual funds which must be registered under the Securities Act of
1933 prior to offer and sale unless an exemption from such registration is
available, municipal securities, whether publicly or privately offered, may
nevertheless be readily marketable. A secondary market exists for municipal
securities which have been publicly offered as well as securities which have not
been publicly offered initially but which may nevertheless be readily
marketable. Municipal securities purchased for a Portfolio are subject to the
limitations on holdings of securities which are not readily marketable based on
whether it may be sold in a reasonable time consistent with the customs of the
municipal markets (usually seven days) at a price (or interest rate) which
accurately reflects its recorded value. A Portfolio believes that the quality
standards applicable to their investments enhance marketability. In addition,
stand-by commitments, participation interests and demand obligations also
enhance marketability.

Provisions of the federal bankruptcy statutes relating to the adjustment of
debts of political subdivisions and authorities of states of the United States
provide that, in certain circumstances, such subdivisions or authorities may be
authorized to initiate bankruptcy proceedings without prior notice to or consent
of creditors, which proceedings could result in material and adverse
modification or alteration of the rights of holders of obligations issued by
such subdivisions or authorities.

Litigation challenging the validity under state constitutions of present systems
of financing public education has been initiated or adjudicated in a number of
states, and legislation has been introduced to effect changes in public school
finances in some states. In other instances there has been litigation
challenging the issuance of pollution control revenue bonds or the validity of
their issuance under state or federal law which litigation could ultimately
affect the validity of those Municipal Securities or the tax-free nature of the
interest thereon.

For the purpose of a Portfolio's investment restrictions, the identification of
the "issuer" of municipal obligations which are not general obligation bonds is
made by the Advisor on the basis of the characteristics of the obligation as
described above, the most significant of which is the source of funds for the
payment of principal and interest on such obligations.

DWS Bond VIP may acquire municipal obligations when, due to disparities in the
debt securities markets, the anticipated total return on such obligations is
higher than that on taxable obligations. DWS Bond VIP has no current intention
of purchasing tax-exempt municipal obligations that would amount to greater than
5% of the Portfolio's total assets.

Participation Interests. A Portfolio may purchase from financial institutions
participation interests in securities in which a Portfolio may invest. A
participation interest gives a Portfolio an undivided interest in the security
in the proportion that a Portfolio's participation interest bears to the
principal amount of the security. These instruments may have fixed, floating or
variable interest rates, with remaining maturities of 397 days or less. If the
participation interest is unrated, or has been given a rating below that which
is permissible for purchase by a Portfolio, the participation interest will be
backed by an irrevocable letter of credit or guarantee of a bank, or the payment
obligation otherwise will be collateralized by US Government securities, or, in
the case of unrated participation interest, determined by the Advisor to be of
comparable quality to those instruments in which a Portfolio may invest. For
certain participation interests, a Portfolio will have the right to demand
payment, on not more than seven days' notice, for all or any part of a
Portfolio's participation interests in the security, plus accrued interest. As
to these instruments, a Portfolio generally intends to exercise its right to
demand payment only upon a default under the terms of the security.

Privatized Enterprises. Investments in foreign securities may include securities
issued by enterprises that have undergone or are currently undergoing
privatization. The governments of certain foreign countries have, to varying
degrees, embarked on privatization programs contemplating the sale of all or
part of their interests in state enterprises. A Portfolio's investments in the
securities of privatized enterprises may include privately negotiated
investments in a government or state-owned or controlled company or enterprise
that has not yet conducted an initial equity offering, investments in the
initial offering of equity securities of a state enterprise or former state
enterprise and investments in the securities of a state enterprise following its
initial equity offering.

In certain jurisdictions, the ability of foreign entities, such as a Portfolio,
to participate in privatizations may be limited by local law, or the price or
terms on which a Portfolio may be able to participate may be less advantageous
than for local investors. Moreover, there can be no assurance that governments
that have embarked on privatization programs will continue to divest their
ownership of state enterprises, that proposed privatizations will be successful
or that governments will not re-nationalize enterprises that have been
privatized.

In the case of the enterprises in which a Portfolio may invest, large blocks of
the stock of those enterprises may be held by a small group of stockholders,
even after the initial equity offerings by those enterprises. The sale of some
portion or all of those blocks could have an adverse effect on the price of the
stock of any such enterprise.

Prior to making an initial equity offering, most state enterprises or former
state enterprises go through an internal reorganization of management. Such
reorganizations are made in an attempt to better enable these enterprises to
compete in the private sector. However, certain reorganizations could result in
a management team that does not function as well as an enterprise's prior
management and may have a negative effect on such enterprise. In addition, the
privatization of an enterprise by its government may occur over a number of
years, with the government continuing to hold a controlling position in the
enterprise even after the initial equity offering for the enterprise.

Prior to privatization, most of the state enterprises in which a Portfolio may
invest enjoy the protection of and receive preferential treatment from the
respective sovereigns that own or control them. After making an initial equity
offering, these enterprises may no longer have such protection or receive such
preferential treatment and may become subject to market competition from which
they were previously protected. Some of these enterprises may not be able to
operate effectively in a competitive market and may suffer losses or experience
bankruptcy due to such competition.

Other Asset-Backed Securities. The securitization techniques used to develop
mortgaged-backed securities are now being applied to a broad range of assets.
Through the use of trusts and special purpose corporations, various types of
assets, including automobile loans, computer leases and credit card receivables,
are being securitized in pass-through structures similar to the mortgage
pass-through structures or in a structure similar to the CMO structure. In
general, the collateral supporting these securities is of shorter maturity than
mortgage loans and is less likely to experience substantial prepayments with
interest rate fluctuations.

Several types of asset-backed securities have already been offered to investors,
including  Certificates for Automobile  Receivables(SM)  ("CARS(SM)").  CARS(SM)
represent  undivided  fractional  interests in a trust whose assets consist of a
pool of motor vehicle retail  installment sales contracts and security interests
in the vehicles  securing the  contracts.  Payments of principal and interest on
CARS(SM) are passed through monthly to certificate  holders,  and are guaranteed
up to certain amounts and for a certain time period by a letter of credit issued
by a financial  institution  unaffiliated  with the trustee or originator of the
trust. An investor's  return on CARS(SM) may be affected by early  prepayment of
principal on the underlying vehicle sales contracts.  If the letter of credit is
exhausted,  the trust may be prevented  from  realizing the full amount due on a
sales contract because of state law  requirements  and restrictions  relating to
foreclosure  sales  of  vehicles  and  the  obtaining  of  deficiency  judgments
following  such sales or because of  depreciation,  damage or loss of a vehicle,
the  application of federal and state  bankruptcy and insolvency  laws, or other
factors.  As a result,  certificate holders may experience delays in payments or
losses if the letter of credit is exhausted.

Asset-backed securities present certain risks that are not presented by
mortgage-backed securities. Primarily, these securities may not have the benefit
of any security interest in the related assets. Credit card receivables are
generally unsecured and the debtors are entitled to the protection of a number
of state and federal consumer credit laws, many of which give such debtors the
right to set off certain amounts owed on the credit cards, thereby reducing the
balance due. There is the possibility that recoveries on repossessed collateral
may not, in some cases, be available to support payments on these securities.

Asset-backed securities are often backed by a pool of assets representing the
obligations of a number of different parties. To lessen the effect of failures
by obligors on underlying assets to make payments, the securities may contain
elements of credit support which fall into two categories: (i) liquidity
protection, and (ii) protection against losses resulting from ultimate default
by an obligor on the underlying assets. Liquidity protection refers to the
provision of advances, generally by the entity administering the pool of assets,
to ensure that the receipt of payments on the underlying pool occurs in a timely
fashion. Protection against losses results from payment of the insurance
obligations on at least a portion of the assets in the pool. This protection may
be provided through guarantees, policies or letters of credit obtained by the
issuer or sponsor from third parties, through various means of structuring the
transaction or through a combination of such approaches. DWS Bond VIP will not
pay any additional or separate fees for credit support. The degree of credit
support provided for each issue is generally based on historical information
respecting the level of credit risk associated with the underlying assets.
Delinquency or loss in excess of that anticipated, or failure of the credit
support could adversely affect the return on an investment in such a security.

DWS Bond VIP may also invest in residual interests in asset-backed securities.
In the case of asset-backed securities issued in a pass-through structure, the
cash flow generated by the underlying assets is applied to make required
payments on the securities and to pay related administrative expenses. The
residual interest in an asset-backed security pass-through structure represents
the interest in any excess cash flow remaining after making the foregoing
payments. The amount of residual cash flow resulting from a particular issue of
asset-backed securities will depend on, among other things, the characteristics
of the underlying assets, the coupon rates on the securities, prevailing
interest rates, the amount of administrative expenses and the actual prepayment
experience on the underlying assets. Asset-backed security residuals not
registered under the Securities Act of 1933 may be subject to certain
restrictions on transferability. In addition, there may be no liquid market for
such securities.

The availability of asset-backed securities may be affected by legislative or
regulatory developments. It is possible that such developments may require DWS
Bond VIP to dispose of any then existing holdings of such securities.

Real Estate Investment Trusts ("REITs"). DWS Bond VIP, DWS Growth & Income VIP,
DWS Global Opportunities VIP and DWS Health Care VIP may each invest in REITs.
REITs are sometimes informally categorized as equity REITs, mortgage REITs and
hybrid REITs. Investment in REITs may subject a Portfolio to risks associated
with the direct ownership of real estate, such as decreases in real estate
values, overbuilding, increased competition and other risks related to local or
general economic conditions, increases in operating costs and property taxes,
changes in zoning laws, casualty or condemnation losses, possible environmental
liabilities, regulatory limitations on rent and fluctuations in rental income.
Equity REITs generally experience these risks directly through fee or leasehold
interests, whereas mortgage REITs generally experience these risks indirectly
through mortgage interests, unless the mortgage REIT forecloses on the
underlying real estate. Equity REITs may also realize capital gains by selling
properties that have appreciated in value. Changes in interest rates may also
affect the value of a Portfolio's investment in REITs. For instance, during
periods of declining interest rates, certain mortgage REITs may hold mortgages
that the mortgagors elect to prepay, which prepayment may diminish the yield on
securities issued by those REITs.

Certain REITs have relatively small market capitalizations, which may tend to
increase the volatility of the market prices of their securities. Furthermore,
REITs are dependent upon specialized management skills, have limited
diversification and are, therefore, subject to risks inherent in operating and
financing a limited number of projects. REITs are also subject to heavy cash
flow dependency, defaults by borrowers and the possibility of failing to qualify
for tax-free pass-through of income under the Code, and for exemption from the
registration requirements of the 1940 Act, as amended. By investing in REITs
indirectly through a Portfolio, a shareholder will bear not only his or her
proportionate share of the expenses of a Portfolio, but also, indirectly,
similar expenses of the REITs. In addition, REITs depend generally on their
ability to generate cash flow to make distributions to shareholders.

Repurchase Agreements. On behalf of a Portfolio, the Fund may invest in
repurchase agreements pursuant to its investment guidelines. In a repurchase
agreement, the Fund acquires ownership of a security and simultaneously commits
to resell that security to the seller, typically a bank or broker/dealer.

A repurchase agreement provides a means for a Portfolio to earn income on funds
for periods as short as overnight. It is an arrangement under which the
purchaser (i.e., the Portfolio) acquires a security ("Obligation") and the
seller agrees, at the time of sale, to repurchase the Obligation at a specified
time and price. Securities subject to a repurchase agreement are held in a
segregated account and, as described in more detail below, the value of such
securities is kept at least equal to the repurchase price on a daily basis. The
repurchase price may be higher than the purchase price, the difference being
income to a Portfolio, or the purchase and repurchase prices may be the same,
with interest at a stated rate due to a Portfolio together with the repurchase
price upon repurchase. In either case, the income to a Portfolio is unrelated to
the interest rate on the Obligation itself. Obligations will be held by the
custodian or in the Federal Reserve Book Entry system.

It is not clear whether a court would consider the Obligation purchased by a
Portfolio subject to a repurchase agreement as being owned by a Portfolio or as
being collateral for a loan by a Portfolio to the seller. In the event of the
commencement of bankruptcy or insolvency proceedings with respect to the seller
of the Obligation before repurchase of the Obligation under a repurchase
agreement, a Portfolio may encounter delay and incur costs before being able to
sell the security. Delays may involve loss of interest or decline in price of
the Obligation. If the court characterizes the transaction as a loan and a
Portfolio has not perfected a security interest in the Obligation, a Portfolio
may be required to return the Obligation to the seller's estate and be treated
as an unsecured creditor of the seller. As an unsecured creditor, a Portfolio
would be at risk of losing some or all of the principal and income involved in
the transaction. As with any unsecured debt Obligation purchased for the
Portfolio, the Fund seeks to reduce the risk of loss through repurchase
agreements by analyzing the creditworthiness of the obligor, in this case the
seller of the Obligation. Apart from the risk of bankruptcy or insolvency
proceedings, there is also the risk that the seller may fail to repurchase the
Obligation, in which case a Portfolio may incur a loss if the proceeds to a
Portfolio of the sale to a third party are less than the repurchase price.
However, if the market value (including interest) of the Obligation subject to
the repurchase agreement becomes less than the repurchase price (including
interest), a Portfolio will direct the seller of the Obligation to deliver
additional securities so that the market value (including interest) of all
securities subject to the repurchase agreement will equal or exceed the
repurchase price.

Restructuring Instruments. DWS Bond VIP hold distressed securities, which are
securities that are in default or in risk of being in default. In connection
with an exchange or workout of such securities, the Portfolio may accept various
instruments if the investment adviser determines it is in the best interests of
the Portfolio and consistent with the portfolio's investment objective and
policies. Such instruments may include, but not limited to, warrants, rights,
participation interests in assets sales and contingent-interest obligations.

Reverse Repurchase Agreements. Each Portfolio may enter into "reverse repurchase
agreements," which are repurchase agreements in which a Portfolio, as the seller
of the securities, agrees to repurchase such securities at an agreed upon time
and price. The Portfolio maintains a segregated account in connection with
outstanding reverse repurchase agreements. Each Portfolio will enter into
reverse repurchase agreements only when the Advisor believes that the interest
income to be earned from the investment of the proceeds of the transaction will
be greater than the interest expense of the transaction. Such transactions may
increase fluctuations in the market value of Portfolio assets and its yield.

Short Sales Against the Box. DWS Health Care VIP may make short sales of common
stocks if, at all times when a short position is open, a Portfolio owns the
stock or owns preferred stocks or debt securities convertible or exchangeable,
without payment of further consideration, into the shares of common stock sold
short. Short sales of this kind are referred to as short sales "against the
box." The portfolio will incur a loss as a result of the short sale if the price
of the security increases between the dates of the short sale and the date on
which the Portfolio replaces the borrowed security. The broker/dealer that
executes a short sale generally invests cash proceeds of the sale until they are
paid to the Portfolio. Arrangements may be made with the broker/dealer to obtain
a portion of the interest earned by the broker on the investment of short sale
proceeds. The Portfolio will segregate the common stock or convertible or
exchangeable preferred stock or debt securities in a special account with the
custodian. The Portfolio will incur transaction costs, including interest
expenses in connection with opening, maintaining, and closing short sales
against the box. Uncertainty regarding the tax effects of short sales of
appreciated investments may limit the extent to which a Portfolio may enter into
short sales against the box.

Small Company Risk. The Advisor believes that many small companies often have
sales and earnings growth rates which exceed those of larger companies, and that
such growth rates may in turn be reflected in more rapid share price
appreciation over time. However, investing in smaller company stocks involves
greater risk than is customarily associated with investing in larger, more
established companies. For example, smaller companies can have limited product
lines, markets, or financial and managerial resources. Smaller companies may
also be dependent on one or a few key persons, and may be more susceptible to
losses and risks of bankruptcy. Also, the securities of smaller companies may be
thinly traded (and therefore have to be sold at a discount from current market
prices or sold in small lots over an extended period of time). Transaction costs
in smaller company stocks may be higher than those of larger companies.

Sovereign Debt. Investment in sovereign debt can involve a high degree of risk.
The governmental entity that controls the repayment of sovereign debt may not be
able or willing to repay the principal and/or interest when due in accordance
with the terms of such debt. A governmental entity's willingness or ability to
repay principal and interest due in a timely manner may be affected by, among
other factors, its cash flow situation, the extent of its foreign reserves, the
availability of sufficient foreign exchange on the date a payment is due, the
relative size of the debt service burden to the economy as a whole, the
governmental entity's policy toward the International Monetary Fund, and the
political constraints to which a governmental entity may be subject.
Governmental entities may also be dependent on expected disbursements from
foreign governments, multilateral agencies and others abroad to reduce principal
and interest arrearages on their debt. The commitment on the part of these
governments, agencies and others to make such disbursements may be conditioned
on a governmental entity's implementation of economic reforms and/or economic
performance and the timely service of such debtor's obligations. Failure to
implement such reforms, achieve such levels of economic performance or repay
principal or interest when due may result in the cancellation of such third
parties commitments to lend funds to the governmental entity, which may further
impair such debtor's ability or willingness to service its debts in a timely
manner. Consequently, governmental entities may default on their sovereign debt.
Holders of sovereign debt may be requested to participate in the rescheduling of
such debt and to extend further loans to governmental entities. There is no
bankruptcy proceeding by which sovereign debt on which governmental entities
have defaulted may be collected in whole or in part.

Stripped Zero Coupon Securities. Zero coupon securities include securities
issued directly by the US Treasury, and US Treasury bonds or notes and their
unmatured interest coupons and receipts for their underlying principal
("coupons") which have been separated by their holder, typically a custodian
bank or investment brokerage firm. A holder will separate the interest coupons
from the underlying principal (the "corpus") of the US Treasury security. A
number of securities firms and banks have stripped the interest coupons and
receipts and then resold them in custodial receipt programs with a number of
different names, including "Treasury Income Growth Receipts" ("TIGRS(TM)") and
Certificate of Accrual on Treasuries ("CATS(TM)"). The underlying US Treasury
bonds and notes themselves are held in book-entry form at the Federal Reserve
Bank or, in the case of bearer securities (i.e., unregistered securities which
are owned ostensibly by the bearer or holder thereof), in trust on behalf of the
owners thereof. The Treasury has facilitated transfers of ownership of zero
coupon securities by accounting separately for the beneficial ownership of
particular interest coupons and corpus payments on Treasury securities through
the Federal Reserve book-entry record-keeping system. The Federal Reserve
program as established by the Treasury Department is known as "STRIPS" or
"Separate Trading of Registered Interest and Principal of Securities." Under the
STRIPS program, the Portfolio will be able to have its beneficial ownership of
zero coupon securities recorded directly in the book-entry record-keeping system
in lieu of having to hold certificates or other evidences of ownership of the
underlying US Treasury securities.

When US Treasury obligations have been stripped of their unmatured interest
coupons by the holder, the principal or corpus is sold at a deep discount
because the buyer receives only the right to receive a future fixed payment on
the security and does not receive any rights to periodic interest (i.e. cash)
payments. Once stripped or separated, the corpus and coupons may be sold
separately. Typically, the coupons are sold separately or grouped with other
coupons with like maturity dates and sold in such bundled form. Purchasers of
stripped obligations acquire, in effect, discount obligations that are
economically identical to the zero coupon securities that the Treasury sells
itself.

Supranational Entities. Supranational entities are international organizations
designated or supported by governmental entities to promote economic
reconstruction or development and international banking institutions and related
government agencies. Examples include the International Bank for Reconstruction
and Development (the World Bank), the European Coal and Steel Community, The
Asian Development Bank and the InterAmerican Development Bank. Obligations of
supranational entities are backed by the guarantee of one or more foreign
governmental parties which sponsor the entity.

Trust Preferred Securities. DWS Bond VIP may invest in Trust Preferred
Securities, which are hybrid instruments issued by a special purpose trust (the
"Special Trust"), the entire equity interest of which is owned by a single
issuer. The proceeds of the issuance to the Portfolios of Trust Preferred
Securities are typically used to purchase a junior subordinated debenture, and
distributions from the Special Trust are funded by the payments of principal and
interest on the subordinated debenture.

If payments on the underlying junior subordinated debentures held by the Special
Trust are deferred by the debenture issuer, the debentures would be treated as
original issue discount ("OID") obligations for the remainder of their term. As
a result, holders of Trust Preferred Securities, such as the Portfolios, would
be required to accrue daily for federal income tax purposes, their share of the
OID on the debentures (regardless of whether a Portfolio receives any cash
distributions from the Special Trust), in addition to reporting the stated
interest on the debenture, and the value of Trust Preferred Securities would
likely be negatively affected. Interest payments on the underlying junior
subordinated debentures typically may only be deferred if dividends are
suspended on both common and preferred stock of the issuer. The underlying
junior subordinated debentures generally rank slightly higher in terms of
payment priority than both common and preferred securities of the issuer, but
rank below other subordinated debentures and debt securities. Trust Preferred
Securities may be subject to mandatory prepayment under certain circumstances.
The market values of Trust Preferred Securities may be more volatile than those
of conventional debt securities. Trust Preferred Securities may be issued in
reliance on Rule 144A under the Securities Act of 1933, as amended, and, unless
and until registered, are restricted securities; there can be no assurance as to
the liquidity of Trust Preferred Securities and the ability of holders of Trust
Preferred Securities, such as the Portfolios, to sell their holdings.

US Government Securities. There are two broad categories of US
Government-related debt instruments: (a) direct obligations of the US Treasury,
and (b) securities issued or guaranteed by US Government agencies.

Examples of direct obligations of the US Treasury are Treasury Bills, Notes,
Bonds and other debt securities issued by the US Treasury. These instruments are
backed by the "full faith and credit" of the United States. They differ
primarily in interest rates, the length of maturities and the dates of issuance.
Treasury bills have original maturities of one year or less. Treasury notes have
original maturities of one to ten years and Treasury bonds generally have
original maturities of greater than ten years.

Some agency securities are backed by the full faith and credit of the United
States (such as Maritime Administration Title XI Ship Financing Bonds and Agency
for International Development Housing Guarantee Program Bonds) and others are
backed only by the rights of the issuer to borrow from the US Treasury (such as
Federal Home Loan Bank Bonds and Federal National Mortgage Association Bonds),
while still others, such as the securities of the Federal Farm Credit Bank, are
supported only by the credit of the issuer. With respect to securities supported
only by the credit of the issuing agency or by an additional line of credit with
the US Treasury, there is no guarantee that the US Government will provide
support to such agencies and such securities may involve risk of loss of
principal and interest.

US Government Securities may include "zero coupon" securities that have been
stripped by the US Government of their unmatured interest coupons and
collateralized obligations issued or guaranteed by a US Government agency or
instrumentality.

Interest rates on US Government obligations may be fixed or variable. Interest
rates on variable rate obligations are adjusted at regular intervals, at least
annually, according to a formula reflecting then current specified standard
rates, such as 91-day US Treasury bill rates. These adjustments generally tend
to reduce fluctuations in the market value of the securities.

The government guarantee of the US Government Securities in a Portfolio's
portfolio does not guarantee the net asset value of the shares of a fund. There
are market risks inherent in all investments in securities and the value of an
investment in a fund will fluctuate over time. Normally, the value of
investments in US Government Securities varies inversely with changes in
interest rates. For example, as interest rates rise the value of investments in
US Government Securities will tend to decline, and as interest rates fall the
value of a fund's investments will tend to increase. In addition, the potential
for appreciation in the event of a decline in interest rates may be limited or
negated by increased principal prepayments with respect to certain
Mortgage-Backed Securities, such as GNMA Certificates. Prepayments of high
interest rate Mortgage-Backed Securities during times of declining interest
rates will tend to lower the return of a fund and may even result in losses to a
fund if some securities were acquired at a premium. Moreover, during periods of
rising interest rates, prepayments of Mortgage-Backed Securities may decline,
resulting in the extension of a Portfolio's average portfolio maturity. As a
result, a Portfolio's portfolio may experience greater volatility during periods
of rising interest rates than under normal market conditions.

Warrants. Each Portfolio may invest in warrants up to 5% of the value of its
total assets. The holder of a warrant has the right, until the warrant expires,
to purchase a given number of shares of a particular issuer at a specified
price. Such investments can provide a greater potential for profit or loss than
an equivalent investment in the underlying security. Prices of warrants do not
necessarily move, however, in tandem with the prices of the underlying
securities and are, therefore, considered speculative investments. Warrants pay
no dividends and confer no rights other than a purchase option. Thus, if a
warrant held by a Portfolio were not exercised by the date of its expiration,
the Portfolio would lose the entire purchase price of the warrant.

When-Issued Securities. A Portfolio may from time to time purchase securities on
a "when-issued" or "forward delivery" basis. Debt securities are often issued on
this basis. The price of such securities, which may be expressed in yield terms,
is generally fixed at the time a commitment to purchase is made, but delivery
and payment for the when-issued or forward delivery securities take place at a
later date. During the period between purchase and settlement, no payment is
made by the Portfolio and no interest accrues to the Portfolio. When a Portfolio
purchases such securities, it immediately assumes the risks of ownership,
including the risk of price fluctuation. Failure to deliver a security purchased
on this basis may result in a loss or missed opportunity to make an alternative
investment.

To the extent that assets of a Portfolio are held in cash pending the settlement
of a purchase of securities, that Portfolio would earn no income. While such
securities may be sold prior to the settlement date, a Portfolio intends to
purchase them with the purpose of actually acquiring them unless a sale appears
desirable for investment reasons. At the time a Portfolio makes the commitment
to purchase a security on this basis, it will record the transaction and reflect
the value of the security in determining its net asset value. The market value
of the securities may be more or less than the purchase price. A Portfolio will
establish a segregated account in which it will maintain cash and liquid
securities equal in value to commitments for such securities.

Zero Coupon Securities. DWS Bond VIP, DWS Growth & Income VIP, DWS Capital
Growth VIP and DWS Global Opportunities VIP may each invest in zero coupon
securities which pay no cash income and are sold at substantial discounts from
their value at maturity. When held to maturity, their entire income, which
consists of accretion of discount, comes from the difference between the issue
price and their value at maturity. The effect of owning instruments which do not
make current interest payments is that a fixed yield is earned not only on the
original investment but also, in effect, on all discount accretion during the
life of the obligation. This implicit reinvestment of earnings at the same rate
eliminates the risk of being unable to reinvest distributions at a rate as high
as the implicit yield on the zero coupon bond, but at the same time eliminates
any opportunity to reinvest earnings at higher rates. For this reason, zero
coupon bonds are subject to substantially greater price fluctuations during
periods of changing market interest rates than those of comparable securities
that pay interest currently, which fluctuation is greater as the period to
maturity is longer. Zero coupon securities which are convertible into common
stock offer the opportunity for capital appreciation (or depreciation) as
increases (or decreases) in market value of such securities closely follow the
movements in the market value of the underlying common stock. Zero coupon
convertible securities generally are expected to be less volatile than the
underlying common stocks, as they usually are issued with maturities of 15 years
or less and are issued with options and/or redemption features exercisable by
the holder of the obligation entitling the holder to redeem the obligation and
receive a defined cash payment.


Strategic Transactions and Derivatives. A Portfolio may, but is not required to,
utilize various other investment strategies as described below for a variety of
purposes, such as hedging various market risks, managing the effective maturity
or duration of fixed-income securities in its portfolio, or enhancing potential
gain. These strategies may be executed through the use of derivative contracts.

In the course of pursuing these investment strategies, a Portfolio may purchase
and sell exchange-listed and over-the-counter put and call options on
securities, equity and fixed-income indices and other instruments, purchase and
sell futures contracts and options thereon, enter into various transactions such
as swaps, caps, floors, collars, currency forward contracts, currency futures
contracts, currency swaps or options on currencies, or currency futures and
various other currency transactions (collectively, all the above are called
"Strategic Transactions"). In addition, strategic transactions may also include
new techniques, instruments or strategies that are permitted as regulatory
changes occur. Strategic Transactions may be used without limit (subject to
certain limitations imposed by the 1940 Act and/or, potentially, the Code) to
attempt to protect against possible changes in the market value of securities
held in or to be purchased for a Portfolio's portfolio resulting from securities
markets or currency exchange rate fluctuations, to protect a Portfolio's
unrealized gains in the value of its portfolio securities, to facilitate the
sale of such securities for investment purposes, to manage the effective
maturity or duration of fixed-income securities in a Portfolio's portfolio, or
to establish a position in the derivatives markets as a substitute for
purchasing or selling particular securities. Some Strategic Transactions may
also be used to enhance potential gain although, for all Portfolios except DWS
Bond VIP, no more than 5% of the Portfolio's assets will be committed to
Strategic Transactions entered into for non-hedging purposes.

Any or all of these investment techniques may be used at any time and in any
combination, and there is no particular strategy that dictates the use of one
technique rather than another, as use of any Strategic Transaction is a function
of numerous variables including market conditions. The ability of a Portfolio to
utilize these Strategic Transactions successfully will depend on the Advisor's
ability to predict pertinent market movements, which cannot be assured. Each
Portfolio will comply with applicable regulatory requirements when implementing
these strategies, techniques and instruments. Strategic Transactions will not be
used to alter fundamental investment purposes and characteristics of a
Portfolio, and a Portfolio will segregate assets (or as provided by applicable
regulations, enter into certain offsetting positions) as required by law.

Strategic Transactions, including derivative contracts, have risks associated
with them including possible default by the other party to the transaction,
illiquidity and, to the extent the Advisor's view as to certain market movements
is incorrect, the risk that the use of such Strategic Transactions could result
in losses greater than if they had not been used. Use of put and call options
may result in losses to a Portfolio, force the sale or purchase of portfolio
securities at inopportune times or for prices higher than (in the case of put
options) or lower than (in the case of call options) current market values,
limit the amount of appreciation a Portfolio can realize on its investments or
cause a Portfolio to hold a security it might otherwise sell. The use of
currency transactions can result in a Portfolio incurring losses as a result of
a number of factors including the imposition of exchange controls, suspension of
settlements, or the inability to deliver or receive a specified currency. The
use of options and futures transactions entails certain other risks. In
particular, the variable degree of correlation between price movements of
futures contracts and price movements in the related portfolio position of a
Portfolio creates the possibility that losses on the hedging instrument may be
greater than gains in the value of a Portfolio's position. In addition, futures
and options markets may not be liquid in all circumstances and certain
over-the-counter options may have no markets. As a result, in certain markets, a
Portfolio might not be able to close out a transaction without incurring
substantial losses, if at all. Although the use of futures and options
transactions for hedging should tend to minimize the risk of loss due to a
decline in the value of the hedged position, at the same time they tend to limit
any potential gain which might result from an increase in value of such
position. Finally, the daily variation margin requirements for futures contracts
would create a greater ongoing potential financial risk than would purchases of
options, where the exposure is limited to the cost of the initial premium.
Losses resulting from the use of Strategic Transactions would reduce net asset
value, and possibly income, and such losses can be greater than if the Strategic
Transactions had not been utilized.




General Characteristics of Options. Put options and call options typically have
similar structural characteristics and operational mechanics regardless of the
underlying instrument on which they are purchased or sold. Thus, the following
general discussion relates to each of the particular types of options discussed
in greater detail below. In addition, many Strategic Transactions involving
options require segregation of a Portfolio's assets in special accounts, as
described in the section entitled "Asset Segregation."

A put option gives the purchaser of the option, upon payment of a premium, the
right to sell, and the writer the obligation to buy, the underlying security,
commodity, index, currency or other instrument at the exercise price. For
instance, each Portfolio's purchase of a put option on a security might be
designed to protect its holdings in the underlying instrument (or, in some
cases, a similar instrument) against a substantial decline in the market value
by giving each Portfolio the right to sell such instrument at the option
exercise price. A call option, upon payment of a premium, gives the purchaser of
the option the right to buy, and the seller the obligation to sell, the
underlying instrument at the exercise price. Each Portfolio's purchase of a call
option on a security, financial future, index, currency or other instrument
might be intended to protect each Portfolio against an increase in the price of
the underlying instrument that it intends to purchase in the future by fixing
the price at which it may purchase such instrument. An American style put or
call option may be exercised at any time during the option period while a
European style put or call option may be exercised only upon expiration or
during a fixed period prior thereto. Each Portfolio is authorized to purchase
and sell exchange listed options and over-the-counter options ("OTC options").
Exchange listed options are issued by a regulated intermediary such as the
Options Clearing Corporation ("OCC"), which guarantees the performance of the
obligations of the parties to such options. The discussion below uses the OCC as
an example, but is also applicable to other financial intermediaries.

With certain exceptions, OCC issued and exchange listed options generally settle
by physical delivery of the underlying security or currency, although in the
future cash settlement may become available. Index options and Eurodollar
instruments are cash settled for the net amount, if any, by which the option is
"in the-money" (i.e., where the value of the underlying instrument exceeds, in
the case of a call option, or is less than, in the case of a put option, the
exercise price of the option) at the time the option is exercised. Frequently,
rather than taking or making delivery of the underlying instrument through the
process of exercising the option, listed options are closed by entering into
offsetting purchase or sale transactions that do not result in ownership of the
new option.

Each Portfolio's ability to close out its position as a purchaser or seller of
an OCC or exchange listed put or call option is dependent, in part, upon the
liquidity of the option market. Among the possible reasons for the absence of a
liquid option market on an exchange are: (i) insufficient trading interest in
certain options; (ii) restrictions on transactions imposed by an exchange; (iii)
trading halts, suspensions or other restrictions imposed with respect to
particular classes or series of options or underlying securities including
reaching daily price limits; (iv) interruption of the normal operations of the
OCC or an exchange; (v) inadequacy of the facilities of an exchange or OCC to
handle current trading volume; or (vi) a decision by one or more exchanges to
discontinue the trading of options (or a particular class or series of options),
in which event the relevant market for that option on that exchange would cease
to exist, although outstanding options on that exchange would generally continue
to be exercisable in accordance with their terms.

The hours of trading for listed options may not coincide with the hours during
which the underlying financial instruments are traded. To the extent that the
option markets close before the markets for the underlying financial
instruments, significant price and rate movements can take place in the
underlying markets that may not be reflected in the option markets.

OTC options are purchased from or sold to securities dealers, financial
institutions or other parties ("Counterparties") through direct bilateral
agreement with the Counterparty. In contrast to exchange listed options, which
generally have standardized terms and performance mechanics, all the terms of an
OTC option, including such terms as method of settlement, term, exercise price,
premium, guarantees and security, are set by negotiation of the parties. Each
Portfolio expects generally to enter into OTC options that have cash settlement
provisions, although it is not required to do so.

Unless the parties provide for it, there is no central clearing or guaranty
function in an OTC option. As a result, if the Counterparty fails to make or
take delivery of the security, currency or other instrument underlying an OTC
option it has entered into with each Portfolio or fails to make a cash
settlement payment due in accordance with the terms of that option, each
Portfolio will lose any premium it paid for the option as well as any
anticipated benefit of the transaction. Accordingly, the Advisor must assess the
creditworthiness of each such Counterparty or any guarantor or credit
enhancement of the Counterparty's credit to determine the likelihood that the
terms of the OTC option will be satisfied. Each Portfolio will engage in OTC
option transactions only with US government securities dealers recognized by the
Federal Reserve Bank of New York as "primary dealers" or broker/dealers,
domestic or foreign banks or other financial institutions which have received
(or the guarantors of the obligation of which have received) a short-term credit
rating of A-1 from S&P or P-1 from Moody's or an equivalent rating from any
other nationally recognized statistical rating organization ("NRSRO") or, in the
case of OTC currency transactions, are determined to be of equivalent credit
quality by the Advisor. The staff of the SEC currently takes the position that
OTC options purchased by each Portfolio, and portfolio securities "covering" the
amount of each Portfolio's obligation pursuant to an OTC option sold by it (the
cost of any sell-back plus the in-the-money amount, if any) are illiquid, and
are subject to each Portfolio's limitation on investing no more than 15% of its
net assets in illiquid securities.

If each Portfolio sells a call option, the premium that it receives may serve as
a partial hedge, to the extent of the option premium, against a decrease in the
value of the underlying securities or instruments in its portfolio or will
increase each Portfolio's income. The sale of put options can also provide
income.

Each Portfolio may purchase and sell call options on securities including, but
not limited to, US Treasury and agency securities, mortgage-backed securities,
foreign sovereign debt, corporate debt securities, equity securities (including
convertible securities) and Eurodollar instruments that are traded on US and
foreign securities exchanges and in the over-the-counter markets, and on
securities indices, currencies and futures contracts. All calls sold by each
Portfolio must be "covered" (i.e., each Portfolio must own the securities or
futures contract subject to the call) or must meet the asset segregation
requirements described below as long as the call is outstanding. Even though
each Portfolio will receive the option premium to help protect it against loss,
a call sold by each Portfolio exposes each Portfolio during the term of the
option to possible loss of opportunity to realize appreciation in the market
price of the underlying security or instrument and may require each Portfolio to
hold a security or instrument which it might otherwise have sold.

Each Portfolio may purchase and sell put options on securities including, but
not limited to, US Treasury and agency securities, mortgage-backed securities,
foreign sovereign debt, corporate debt securities, equity securities (including
convertible securities), Eurodollar instruments (whether or not it holds the
above securities in its portfolio), and on securities indices, currencies and
futures contracts other than futures on individual corporate debt and individual
equity securities. Each Portfolio will not sell put options if, as a result,
more than 50% of each Portfolio's total assets would be required to be
segregated to cover its potential obligations under such put options other than
those with respect to futures and options thereon. In selling put options, there
is a risk that each Portfolio may be required to buy the underlying security at
a disadvantageous price above the market price.

General Characteristics of Futures. Each Portfolio may enter into futures
contracts or purchase or sell put and call options on such futures as a hedge
against anticipated interest rate, currency or equity market changes, and for
duration management, risk management and return enhancement purposes. Futures
are generally bought and sold on the commodities exchanges where they are listed
with payment of initial and variation margin as described below. The sale of a
futures contract creates a firm obligation by a Portfolio, as seller, to deliver
to the buyer the specific type of financial instrument called for in the
contract at a specific future time for a specified price (or, with respect to
index futures and Eurodollar instruments, the net cash amount). Options on
futures contracts are similar to options on securities except that an option on
a futures contract gives the purchaser the right in return for the premium paid
to assume a position in a futures contract and obligates the seller to deliver
such position. In particular cases, however, when it is economically
advantageous to the Portfolio, a long futures position may be terminated (or any
option may expire) without the corresponding purchase of securities.

The Portfolios have claimed exclusion from the definition of the term "commodity
pool operator" under the regulations of the Commodity Futures Trading
Commission. Therefore, the Portfolios are not subject to commodity pool operator
registration and regulation under the Commodity Exchange Act. Futures and
options on futures may be entered into for bona fide hedging, risk management
(including duration management) or other portfolio and return enhancement
management purposes to the extent consistent with the exclusion from commodity
pool operator registration. Typically, maintaining a futures contract or selling
an option thereon requires a Portfolio to deposit with a financial intermediary
as security for its obligations an amount of cash or other specified assets
(initial margin) which initially is typically 1% to 10% of the face amount of
the contract (but may be higher in some circumstances). Additional cash or
assets (variation margin) may be required to be deposited thereafter on a daily
basis as the marked to market value of the contract fluctuates. The purchase of
an option on financial futures involves payment of a premium for the option
without any further obligation on the part of a Portfolio. If a Portfolio
exercises an option on a futures contract it will be obligated to post initial
margin (and potential subsequent variation margin) for the resulting futures
position just as it would for any position. Futures contracts and options
thereon are generally settled by entering into an offsetting transaction but
there can be no assurance that the position can be offset prior to settlement at
an advantageous price, nor that delivery will occur.

Options on Securities Indices and Other Financial Indices. Each Portfolio also
may purchase and sell call and put options on securities indices and other
financial indices and in so doing can achieve many of the same objectives it
would achieve through the sale or purchase of options on individual securities
or other instruments. Options on securities indices and other financial indices
are similar to options on a security or other instrument except that, rather
than settling by physical delivery of the underlying instrument, they settle by
cash settlement, i.e., an option on an index gives the holder the right to
receive, upon exercise of the option, an amount of cash if the closing level of
the index upon which the option is based exceeds, in the case of a call, or is
less than, in the case of a put, the exercise price of the option (except if, in
the case of an OTC option, physical delivery is specified). This amount of cash
is equal to the excess of the closing price of the index over the exercise price
of the option, which also may be multiplied by a formula value. The seller of
the option is obligated, in return for the premium received, to make delivery of
this amount. The gain or loss on an option on an index depends on price
movements in the instruments making up the market, market segment, industry or
other composite on which the underlying index is based, rather than price
movements in individual securities, as is the case with respect to options on
securities.


Currency Transactions. Each Portfolio (subject to the limitations pertaining to
certain Portfolios described below) may engage in currency transactions with
Counterparties primarily in order to hedge, or manage the risk of the value of
portfolio holdings denominated in particular currencies against fluctuations in
relative value. Currency transactions include forward currency contracts,
exchange listed currency futures, exchange listed and OTC options on currencies,
and currency swaps. A forward currency contract involves a privately negotiated
obligation to purchase or sell (with delivery generally required) a specific
currency at a future date, which may be any fixed number of days from the date
of the contract agreed upon by the parties, at a price set at the time of the
contract. A currency swap is an agreement to exchange cash flows based on the
notional difference among two or more currencies and operates similarly to an
interest rate swap, which is described below. Each Portfolio may enter into
currency transactions with Counterparties which have received (or the guarantors
of the obligations which have received) a credit rating of A-1 or P-1 by S&P or
Moody's, respectively, or that have an equivalent rating from a NRSRO or (except
for OTC currency options) are determined to be of equivalent credit quality by
the Advisor.

Each Portfolio's dealings in forward currency contracts and other currency
transactions such as futures, options, options on futures and swaps generally
will be limited to hedging involving either specific transactions or portfolio
positions except as described below. Transaction hedging is entering into a
currency transaction with respect to specific assets or liabilities of a
Portfolio, which will generally arise in connection with the purchase or sale of
its portfolio securities or the receipt of income therefrom. Position hedging is
entering into a currency transaction with respect to portfolio security
positions denominated or generally quoted in that currency.

Each Portfolio generally will not enter into a transaction to hedge currency
exposure to an extent greater, after netting all transactions intended wholly or
partially to offset other transactions, than the aggregate market value (at the
time of entering into the transaction) of the securities held in its portfolio
that are denominated or generally quoted in or currently convertible into such
currency, other than with respect to proxy hedging or cross hedging as described
below.

Each Portfolio may also cross-hedge currencies by entering into transactions to
purchase or sell one or more currencies that are expected to decline in value
relative to other currencies to which a Portfolio has or in which a Portfolio
expects to have portfolio exposure.

DWS Bond VIP will limit its currency exposure to 15% of its total assets
measured by the market value of non-U.S. dollar holdings netted with the market
value of currency forward contracts.

To reduce the effect of currency fluctuations on the value of existing or
anticipated holdings of portfolio securities, each Portfolio may also engage in
proxy hedging. Proxy hedging is often used when the currency to which a
Portfolio's portfolio is exposed is difficult to hedge against the dollar. Proxy
hedging entails entering into a commitment or option to sell a currency whose
changes in value are generally considered to be correlated to a currency or
currencies in which some or all of a Portfolio's portfolio securities are or are
expected to be denominated, in exchange for US dollars. Currency hedging
involves some of the same risks and considerations as other transactions with
similar instruments. Currency transactions can result in losses to a Portfolio
if the currency being hedged fluctuates in value to a degree or in a direction
that is not anticipated. Further, there is the risk that the perceived
correlation between various currencies may not be present or may not be present
during the particular time that a Portfolio is engaging in proxy hedging. If a
Portfolio enters into a currency transaction, a Portfolio will comply with the
asset segregation requirements described below.



Risks of Currency Transactions. Currency transactions are subject to risks
different from those of other portfolio transactions. Because currency control
is of great importance to the issuing governments and influences economic
planning and policy, purchases and sales of currency and related instruments can
be negatively affected by government exchange controls, blockages, and
manipulations or exchange restrictions imposed by governments. These can result
in losses to a Portfolio if it is unable to deliver or receive currency or funds
in settlement of obligations and could also cause hedges it has entered into to
be rendered useless, resulting in full currency exposure as well as incurring
transaction costs. Buyers and sellers of currency futures are subject to the
same risks that apply to the use of futures generally. Further, settlement of a
currency futures contract for the purchase of most currencies must occur at a
bank based in the issuing nation. Trading options on currency futures is
relatively new, and the ability to establish and close out positions on such
options is subject to the maintenance of a liquid market which may not always be
available. Currency exchange rates may fluctuate based on factors extrinsic to
that country's economy.


Swaps, Caps, Floors and Collars. Among the Strategic Transactions into which the
Portfolios may enter are, currency, and other types of swaps and the purchase or
sale of related caps, floors and collars. The Portfolios expect to enter into
these transactions primarily to preserve a return or spread on a particular
investment or portion of its portfolio, to protect against currency
fluctuations, as a duration management technique or to protect against any
increase in the price of securities the Portfolio anticipates purchasing at a
later date. A Portfolio will not sell interest rate caps or floors where it does
not own securities or other instruments providing the income stream a Portfolio
may be obligated to pay. Interest rate swaps involve the exchange by a Portfolio
with another party of their respective commitments to pay or receive interest,
e.g., an exchange of floating rate payments for fixed rate payments with respect
to a notional amount of principal. A currency swap is an agreement to exchange
cash flows on a notional amount of two or more currencies based on the relative
value differential among them and an index swap is an agreement to swap cash
flows on a notional amount based on changes in the values of the reference
indices. The purchase of a cap entitles the purchaser to receive payments on a
notional principal amount from the party selling such cap to the extent that a
specified index exceeds a predetermined interest rate or amount. The purchase of
a floor entitles the purchaser to receive payments on a notional principal
amount from the party selling such floor to the extent that a specified index
falls below a predetermined interest rate or amount. A collar is a combination
of a cap and a floor that preserves a certain return within a predetermined
range of interest rates or values.

A Portfolio will usually enter into swaps on a net basis, i.e., the two payment
streams are netted out in a cash settlement on the payment date or dates
specified in the instrument, with a Portfolio receiving or paying, as the case
may be, only the net amount of the two payments. Inasmuch as a Portfolio will
segregate assets (or enter into offsetting positions) to cover its obligations
under swaps, the Advisor and a Portfolio believe such obligations do not
constitute senior securities under the 1940 Act and, accordingly, will not treat
them as being subject to its borrowing restrictions. A Portfolio will not enter
into any swap, cap, floor or collar transaction unless, at the time of entering
into such transaction, the unsecured long-term debt of the Counterparty,
combined with any credit enhancements, is rated at least A by S&P or Moody's or
has an equivalent rating from a NRSRO or is determined to be of equivalent
credit quality by the Advisor. If there is a default by the Counterparty, a Fund
may have contractual remedies pursuant to the agreements related to the
transaction. The swap market has grown substantially in recent years with a
large number of banks and investment banking firms acting both as principals and
as agents utilizing standardized swap documentation. As a result, the swap
market has become relatively liquid. Caps, floors and collars are more recent
innovations for which standardized documentation has not yet been fully
developed and, accordingly, they are less liquid than swaps.

A credit default swap is a contract between a buyer and a seller of protection
against a pre-defined credit event. The buyer of protection pays the seller a
fixed regular fee provided that no event of default on an underlying reference
obligation has occurred. If an event of default occurs, the seller must pay the
buyer the full notional value, or "par value", of the reference obligation in
exchange for the reference obligation. Credit default swaps are used as a means
of "buying" credit protection, i.e., attempting to mitigate the risk of default
or credit quality deterioration in some portion of the Portfolio's holdings, or
"selling" credit protection, i.e., attempting to gain exposure to an underlying
issuer's credit quality characteristics without directly investing in that
issuer. For all Portfolios, except DWS Bond VIP, no more than 5% of a
Portfolio's assets may be invested in credit default swaps for purposes of
buying credit protection if the Portfolio does not own the individual security
or securities at the time of investment. Where the Portfolio is a seller of
credit protection, it effectively adds leverage to its portfolio because, in
addition to its total net assets, the Portfolio would be subject to investment
exposure on the notional amount of the swap. The Portfolio will only sell credit
protection with respect to securities in which it would be authorized to invest
directly. The Portfolio currently considers credit default swaps to be illiquid
and treats the market value of the contract as illiquid for purposes of
determining compliance with the Portfolio's restrictions on investing in
illiquid securities.

If the Portfolio is a buyer of a credit default swap and no event of default
occurs, the Portfolio will lose its investment and recover nothing. However, if
the Portfolio is a buyer and an event of default occurs, the Portfolio will
receive the full notional value of the reference obligation that may have little
or no value. As a seller, the Portfolio receives a fixed rate of income through
the term of the contract (typically between six months and three years),
provided that there is no default event. If an event of default occurs, the
seller must pay the buyer the full notional value of the reference obligation.
Credit default swaps involve greater risks than if the Portfolio had invested in
the reference obligation directly.

The Portfolio may use credit default swaps to gain exposure to particular
issuers or particular markets through investments in portfolios of credit
default swaps, such as Dow Jones CDX.NA.HY certificates. By investing in
certificates representing interests in a basket of credit default swaps, the
Fund is taking credit risk with respect to an entity or group of entities and
providing credit protection to the swap counterparties. For example, the CDX EM
is a tradable basket of 19 credit default swaps on country credits which seeks
to replicate the returns on the indices of a broad group of emerging markets
countries. The credits are a subset of the countries represented by the JPMorgan
Emerging Markets Bond Index Global Diversified. By purchasing interests in CDX
EM, the Portfolio is gaining emerging markets exposure through a single
investment. Unlike other types of credit default swaps which are generally
considered illiquid, credit default swap certificates generally can be sold
within seven days and are not subject to the Portfolio's restrictions on
investing in illiquid securities.



Risks of Strategic Transactions Outside the US. When conducted outside the US,
Strategic Transactions may not be regulated as rigorously as in the US, may not
involve a clearing mechanism and related guarantees, and are subject to the risk
of governmental actions affecting trading in, or the prices of, foreign
securities, currencies and other instruments. The value of such positions also
could be adversely affected by: (i) other complex foreign political, legal and
economic factors, (ii) lesser availability than in the US of data on which to
make trading decisions, (iii) delays in a Portfolio's ability to act upon
economic events occurring in foreign markets during non-business hours in the
US, (iv) the imposition of different exercise and settlement terms and
procedures and margin requirements than in the US, and (v) lower trading volume
and liquidity.

Combined Transactions. Each Portfolio may enter into multiple transactions,
including multiple options transactions, multiple futures transactions, multiple
currency transactions (including forward currency contracts) and multiple
interest rate transactions and any combination of futures, options, currency and
interest rate transactions ("component" transactions), instead of a single
Strategic Transaction, as part of a single or combined strategy when, in the
opinion of the Advisor, it is in the best interests of a Portfolio to do so. A
combined transaction will usually contain elements of risk that are present in
each of its component transactions. Although combined transactions are normally
entered into based on the Advisor's judgment that the combined strategies will
reduce risk or otherwise more effectively achieve the desired portfolio
management goal, it is possible that the combination will instead increase such
risks or hinder achievement of the portfolio management objective.

DWS Variable Series II Underlying Portfolios

Asset-Backed Securities. Asset-backed securities may include pools of mortgages
("mortgage-backed securities"), loans, receivables or other assets. Payment of
principal and interest may be largely dependent upon the cash flows generated by
the assets backing the securities. Asset-backed securities present certain risks
that are not presented by mortgage-backed securities. Primarily, these
securities may not have the benefit of any security interest in the related
assets. Credit card receivables are generally unsecured and the debtors are
entitled to the protection of a number of state and federal consumer credit
laws, many of which give such debtors the right to set off certain amounts owed
on the credit cards, thereby reducing the balance due. There is the possibility
that recoveries on repossessed collateral may not, in some cases, be available
to support payments on these securities. Asset-backed securities are often
backed by a pool of assets representing the obligations of a number of different
parties. To lessen the effect of failures by obligors on underlying assets to
make payments, the securities may contain elements of credit support which fall
into two categories: (i) liquidity protection, and (ii) protection against
losses resulting from ultimate default by an obligor on the underlying assets.
Liquidity protection refers to the provision of advances, generally by the
entity administering the pool of assets, to ensure that the receipt of payments
on the underlying pool occurs in a timely fashion. Protection against losses
results from payment of the insurance obligations on at least a portion of the
assets in the pool. This protection may be provided through guarantees, policies
or letters of credit obtained by the issuer or sponsor from third parties,
through various means of structuring the transaction or through a combination of
such approaches. A Portfolio will not pay any additional or separate fees for
credit support. The degree of credit support provided for each issue is
generally based on historical information respecting the level of credit risk
associated with the underlying assets. Delinquency or loss in excess of that
anticipated or failure of the credit support could adversely affect the return
on an investment in such a security. The availability of asset-backed securities
may be affected by legislative or regulatory developments. It is possible that
such developments may require the Portfolios to dispose of any then existing
holdings of such securities. The Portfolios, except DWS Balanced VIP, DWS Core
Fixed Income VIP and DWS Money Market VIP, do not intend to invest more than 5%
of its total assets in asset-backed securities. DWS Balanced VIP and DWS Core
Fixed Income VIP currently do not intend to invest more than 25% of its total
assets in asset-backed securities. DWS Money Market VIP may not invest more than
50% of its assets in asset-backed securities.


Asset Segregation (all Portfolios except DWS Money Market VIP). Certain
investment transactions expose a Portfolio to an obligation to make future
payments to third parties. Examples of these types of transactions, include, but
are not limited to, reverse repurchase agreements, short sales, dollar rolls,
when-issued, delayed-delivery or forward commitment transactions and certain
derivatives such as swaps, futures, forwards, and options. To the extent that a
Portfolio engages in such transactions, a Portfolio will (to the extent required
by applicable law) either (1) segregate cash or liquid assets in the prescribed
amount or (2) otherwise "cover" its future obligations under the transaction,
such as by holding an offsetting investment. If the Portfolio segregates
sufficient cash or other liquid assets or otherwise "covers" its obligations
under such transactions, the Portfolio will not consider the transactions to be
borrowings for purposes of its investment restrictions or "senior securities"
under the 1940 Act, and therefore, such transactions will not be subject to the
300% asset coverage requirement under the 1940 Act otherwise applicable to
borrowings by the Portfolio.

In some cases (e.g., with respect to futures and forwards that are contractually
required to "cash-settle"), a Portfolio will segregate cash or other liquid
assets with respect to the amount of the daily net (marked-to-market) obligation
arising from the transaction, rather than the notional amount of the underlying
contract. By segregating assets in an amount equal to the net obligation rather
than the notional amount, the Portfolio will have the ability to employ leverage
to a greater extent than if it set aside cash or other liquid assets equal to
the notional amount of the contract, which may increase the risk associated with
such transactions.

A Portfolio may utilize methods of segregating assets or otherwise "covering"
transactions that are currently or in the future permitted under the 1940 Act,
the rules and regulation thereunder, or orders issued by the SEC thereunder. For
these purposes, interpretations and guidance provided by the SEC staff may be
taken into account when deemed appropriate by a Portfolio.

Assets used as segregation or cover cannot be sold while the position in the
corresponding transaction is open, unless they are replaced with other
appropriate assets. As a result, the commitment of a large portion of a
Portfolio's assets for segregation and cover purposes could impede portfolio
management or the Portfolio's ability to meet redemption requests or other
current obligations.

Segregating assets or otherwise "covering" for these purposes does not
necessarily limit the percentage of the assets of the Portfolio that may be at
risk with respect to certain derivative transactions.


Bank Loans. DWS Balanced VIP and DWS High Income VIP may each invest in bank
loans, which are typically senior debt obligations of borrowers (issuers) and as
such, are considered to hold a senior position in the capital structure of the
borrower. These may include loans which hold the most senior position, that hold
an equal ranking with other senior debt, or loans that are, in the judgment of
the Advisor, in the category of senior debt of the borrower. This capital
structure position generally gives the holders of these loans a priority claim
on some or all of the borrower's assets in the event of a default. In most
cases, these loans are either partially or fully collateralized by the assets of
a corporation, partnership, limited liability company or other business entity,
or by cash flow that the Advisor believes has a market value at the time of
acquisition that equals or exceeds the principal amount of the loan. These loans
are often issued in connection with recapitalizations, acquisitions, leveraged
buy-outs and refinancings. It is important to note that Moody's and S&P
generally rate bank loans a notch or two higher than high yield bonds of the
same issuer to reflect their more senior position. A Portfolio may invest in
both fixed- and floating-rate loans. In addition, bank loans can trade either as
an "assignment" or "participation." When a Portfolio buys an assignment, it is
essentially becoming a party to the bank agreement. The vast majority of all
trades are assignments and would therefore generally represent the preponderance
of bank loans held by a Portfolio. In certain cases, a Portfolio may buy bank
loans on a participation basis, if for example, a Portfolio did not want to
become party to the bank agreement. However, in all cases, a Portfolio will not
purchase bank loans where Deutsche Bank, or an affiliate, serves as an agent
bank.

Participations and assignments involve credit risk, interest rate risk,
liquidity risk, and the risk of being a lender. If a Portfolio purchases a
participation, it may only be able to enforce its rights through the lender, and
may assume the credit risk of both the lender and the borrower.

Investments in loans through direct assignment of a financial institution's
interests with respect to a loan may involve additional risks. For example, if a
loan is foreclosed, the purchaser could become part owner of any collateral, and
would bear the costs and liabilities associated with owning and disposing of the
collateral. In addition, it is at least conceivable that under emerging legal
theories of lender liability, a purchaser could be held liable as a co-lender.

In the case of loans administered by a bank or other financial institution that
acts as agent for all holders, if assets held by the agent for the benefit of a
purchaser are determined to be subject to the claims of the agent's general
creditors, the purchaser might incur certain costs and delays in realizing
payment on the loan or loan participation and could suffer a loss of principal
or interest.

In the case of loan participations where a bank or other lending institution
serves as financial intermediary between a fund and the borrower, if the
participation does not shift to the portfolio the direct debtor-creditor
relationship with the borrower, SEC interpretations require the portfolios, in
some circumstances, to treat both the lending bank or other lending institution
and the borrower as issuers for purposes of a Portfolio's investment policies.
Treating a financial intermediary as an issuer of indebtedness may restrict a
Portfolio's ability to invest in indebtedness related to a single financial
intermediary, or a group of intermediaries engaged in the same industry, even if
the underlying borrowers represent many different companies and industries.

Borrowing. Each Portfolio will borrow only when the Advisor or a Subadvisor
believes that borrowing will benefit a Portfolio after taking into account all
considerations such as the costs of the borrowing relative to the expected
return. DWS High Income VIP may borrow up to 5% of its net assets against called
and tendered bonds held by the Portfolio. Any borrowing, including borrowing
against called and tendered bonds, is subject to the Portfolio's fundamental and
non-fundamental investment policies.

Borrowing by a Portfolio will involve special risk considerations. To the extent
a Portfolio borrows money, positive or negative performance by a Portfolio's
investments may be magnified. Any gain in the value of securities purchased with
borrowed money, or income earned on such securities, that exceeds the interest
paid on the amount borrowed would cause the net asset value of a Portfolio's
shares to increase more rapidly than otherwise would be the case. Conversely,
any decline in the value of securities purchased, or cost in excess of income
earned, would cause the net asset value of a Portfolio's shares to decrease more
rapidly than otherwise would be the case. Borrowed money thus creates an
opportunity for greater capital gain but at the same time increases exposure to
capital risk. Money borrowed will be subject to interest costs which may or may
not be recovered by appreciation of the securities purchased or from income
received as a holder of those securities. A Portfolio also may be required to
maintain minimum average balances in connection with such borrowing or to pay a
commitment or other fee to maintain a line of credit; either of these
requirements would increase the cost of borrowing over the stated interest rate.

Certificates of Deposit and Bankers' Acceptances. Certificates of deposit are
receipts issued by a depository institution in exchange for the deposit of
funds. The issuer agrees to pay the amount deposited plus interest to the bearer
of the receipt on the date specified on the certificate. The certificate usually
can be traded in the secondary market prior to maturity. Bankers' acceptances
typically arise from short-term credit arrangements designed to enable
businesses to obtain funds to finance commercial transactions. Generally, an
acceptance is a time draft drawn on a bank by an exporter or an importer to
obtain a stated amount of funds to pay for specific merchandise. The draft is
then "accepted" by a bank that, in effect, unconditionally guarantees to pay the
face value of the instrument on its maturity date. The acceptance may then be
held by the accepting bank as an earning asset or it may be sold in the
secondary market at the going rate of discount for a specific maturity. Although
maturities for acceptances can be as long as 270 days, most acceptances have
maturities of six months or less.

Banker's acceptances are credit instruments evidencing the obligations of a bank
to pay a draft drawn on it by a customer. These instruments reflect the
obligation both of the bank and of the drawer to pay the face amount of the
instrument upon maturity.

Time deposits are non-negotiable deposits maintained in a banking institution
for a specified period of time at a stated interest rate. Time deposits which
may be held by the Portfolios will not benefit from insurance from the Bank
Insurance Fund or the Savings Association Insurance Fund administered by the
Federal Deposit Insurance Corporation. Fixed time deposits may be withdrawn on
demand by the investor, but may be subject to early withdrawal penalties that
vary with market conditions and the remaining maturity of the obligation. Fixed
time deposits subject to withdrawal penalties maturing in more than seven
calendar days are subject to a Portfolio's limitation on investments in illiquid
securities.

Collateralized Obligations. Subject to its investment objectives and policies, a
Portfolio may purchase collateralized obligations, including interest only
("IO") and principal only ("PO") securities. A collateralized obligation is a
debt security issued by a corporation, trust or custodian, or by a US government
agency or instrumentality that is collateralized by a portfolio or pool of
mortgages, mortgage-backed securities, US government securities or other assets.
The issuer's obligation to make interest and principal payments is secured by
the underlying pool or portfolio of securities. Collateralized obligations
issued or guaranteed by a US government agency or instrumentality, such as the
Federal Home Loan Mortgage Corporation, are considered US government securities.
Privately-issued collateralized obligations collateralized by a portfolio of US
government securities are not direct obligations of the US government or any of
its agencies or instrumentalities and are not considered US government
securities. A variety of types of collateralized obligations are available
currently and others may become available in the future.

Collateralized obligations, depending on their structure and the rate of
prepayments, can be volatile. Some collateralized obligations may not be as
liquid as other securities. Since collateralized obligations may be issued in
classes with varying maturities and interest rates, the investor may obtain
greater predictability of maturity than with direct investments in
mortgage-backed securities. Classes with shorter maturities may have lower
volatility and lower yield while those with longer maturities may have higher
volatility and higher yield. This provides the investor with greater control
over the characteristics of the investment in a changing interest rate
environment. With respect to interest only and principal only securities, an
investor has the option to select from a pool of underlying collateral the
portion of the cash flows that most closely corresponds to the investor's
forecast of interest rate movements. These instruments tend to be highly
sensitive to prepayment rates on the underlying collateral and thus place a
premium on accurate prepayment projections by the investor.

A Portfolio, other than DWS Money Market VIP, may invest in collateralized
obligations whose yield floats inversely against a specified index rate. These
"inverse floaters" are more volatile than conventional fixed or floating rate
collateralized obligations and the yield thereon, as well as the value thereof,
will fluctuate in inverse proportion to changes in the index upon which rate
adjustments are based. As a result, the yield on an inverse floater will
generally increase when market yields (as reflected by the index) decrease and
decrease when market yields increase. The extent of the volatility of inverse
floaters depends on the extent of anticipated changes in market rates of
interest. Generally, inverse floaters provide for interest rate adjustments
based upon a multiple of the specified interest index, which further increases
their volatility. The degree of additional volatility will be directly
proportional to the size of the multiple used in determining interest rate
adjustments. Currently, none of the Portfolios intends to invest more than 5% of
its net assets in inverse floaters. DWS Money Market VIP does not invest in
inverse floaters.

A Portfolio will currently invest in only those collateralized obligations that
are fully collateralized and that meet the quality standards otherwise
applicable to a Portfolio's investments. Fully collateralized means that the
collateral will generate cash flows sufficient to meet obligations to holders of
the collateralized obligations under even the most conservative prepayment and
interest rate projections. Thus, the collateralized obligations are structured
to anticipate a worst case prepayment condition and to minimize the reinvestment
rate risk for cash flows between coupon dates for the collateralized
obligations. A worst case prepayment condition generally assumes immediate
prepayment of all securities purchased at a premium and zero prepayment of all
securities purchased at a discount. Reinvestment rate risk may be minimized by
assuming very conservative reinvestment rates and by other means such as by
maintaining the flexibility to increase principal distributions in a low
interest rate environment. The effective credit quality of the collateralized
obligations in such instances is the credit quality of the issuer of the
collateral. The requirements as to collateralization are determined by the
issuer or sponsor of the collateralized obligation in order to satisfy rating
agencies, if rated. Payments of principal and interest on the underlying
collateral securities are not passed through directly to the holders of the
collateralized obligations as such. Collateralized obligations, depending on
their structure and the rate of prepayments, can be volatile. Some
collateralized obligations may not be as liquid as other securities.

Collateralized obligations often are issued in two or more classes with varying
maturities and stated rates of interest. Because interest and principal payments
on the underlying securities are not passed through directly to holders of
collateralized obligations, such obligations of varying maturities may be
secured by a single portfolio or pool of securities, the payments on which are
used to pay interest on each class and to retire successive maturities in
sequence. These relationships may in effect "strip" the interest payments from
principal payments of the underlying securities and allow for the separate
purchase of either the interest or the principal payments. Collateralized
obligations are designed to be retired as the underlying securities are repaid.
In the event of prepayment on or call of such securities, the class of
collateralized obligation first to mature generally will be paid down first.
Therefore, although in most cases the issuer of collateralized obligations will
not supply additional collateral in the event of such prepayment, there will be
sufficient collateral to secure collateralized obligations that remain
outstanding. It is anticipated that no more than 5% of a Portfolio's net assets
will be invested in IO and PO securities. Governmentally-issued and
privately-issued IO's and PO's will be considered illiquid for purposes of a
Portfolio's limitation on illiquid securities, however, the Board of Trustees
may adopt guidelines under which governmentally-issued IO's and PO's may be
determined to be liquid.

Common Stocks. Common stock is issued by companies to raise cash for business
purposes and represents a proportionate interest in the issuing companies.
Therefore, a Portfolio participates in the success or failure of any company in
which it holds stock. The market values of common stock can fluctuate
significantly, reflecting the business performance of the issuing company,
investor perception and general economic or financial market movements. Despite
the risk of price volatility, however, common stocks have historically offered a
greater potential for long-term gain on investment, compared to other classes of
financial assets, such as bonds or cash equivalents, although there can be no
assurance that this will be true in the future.

Convertible Securities. Subject to its investment objectives and policies, each
Portfolio (except DWS Money Market VIP) may invest in convertible securities,
that is, bonds, notes, debentures, preferred stocks and other securities which
are convertible into common stock. Investments in convertible securities can
provide an opportunity for capital appreciation and/or income through interest
and dividend payments and/or by virtue of their conversion or exchange features.

The convertible securities in which a Portfolio may invest include fixed-income
or zero coupon debt securities which may be converted or exchanged at a stated
or determinable exchange ratio into underlying shares of common stock including
Liquid Yield Option Notes ("LYONs"(TM)). The exchange ratio for any particular
convertible security may be adjusted from time to time due to stock splits,
dividends, spin-offs, other corporate distributions or scheduled changes in the
exchange ratio. Convertible debt securities and convertible preferred stocks,
until converted, have general characteristics similar to both debt and equity
securities. Although to a lesser extent than with debt securities generally, the
market value of convertible securities tends to decline as interest rates
increase and, conversely, tends to increase as interest rates decline. In
addition, because of the conversion or exchange feature, the market value of
convertible securities typically changes as the market value of the underlying
common stocks changes, and, therefore, also tends to follow movements in the
general market for equity securities. A unique feature of convertible securities
is that as the market price of the underlying common stock declines, convertible
securities tend to trade increasingly on a yield basis, and so may not
experience market value declines to the same extent as the underlying common
stock. When the market price of the underlying common stock increases, the
prices of the convertible securities tend to rise as a reflection of the value
of the underlying common stock, although typically not as much as the underlying
common stock. While no securities investments are without risk, investments in
convertible securities generally entail less risk than investments in common
stock of the same issuer.

Convertible securities often provide for a stream of income (or in the case of
zero coupon securities, accretion of income) with generally higher yields than
common stocks. Convertible securities generally offer lower yields than
non-convertible securities of similar quality because of their conversion or
exchange features. Of course, like all debt securities, there can be no
assurance of income or principal payments because the issuers of the convertible
securities may default on their obligations.

Convertible securities generally are subordinated to other similar but
non-convertible securities of the same issuer, although convertible bonds, as
corporate debt obligations, enjoy seniority in right of payment to all equity
securities, and convertible preferred stock is senior to common stock of the
same issuer. However, because of the subordination feature, convertible bonds
and convertible preferred stock typically have lower ratings than similar
non-convertible securities.


Delayed Delivery Transactions. DWS Balanced VIP, DWS Core Fixed Income VIP, DWS
Global Thematic VIP, DWS Government & Agency Securities VIP, DWS High Income
VIP, DWS Mid Cap Growth VIP, DWS Strategic Value VIP, DWS Technology VIP and DWS
Turner Mid Cap Growth VIP may purchase or sell portfolio securities on a
when-issued or delayed delivery basis. When-issued or delayed delivery
transactions arise when securities are purchased by the Portfolio with payment
and delivery to take place in the future in order to secure what is considered
to be an advantageous price and yield to the Portfolio at the time of entering
into the transaction. When the Portfolio enters into a delayed delivery
transaction, it becomes obligated to purchase securities and it has all of the
rights and risks attendant to ownership of a security, although delivery and
payment occur at a later date. The value of fixed-income securities to be
delivered in the future will fluctuate as interest rates vary. At the time a
Portfolio makes the commitment to purchase a security on a when-issued or
delayed delivery basis, it will record the transaction and reflect the liability
for the purchase and the value of the security in determining its net asset
value. Likewise, at the time a Portfolio makes the commitment to sell a security
on a delayed delivery basis, it will record the transaction and include the
proceeds to be received in determining its net asset value; accordingly, any
fluctuations in the value of the security sold pursuant to a delayed delivery
commitment are ignored in calculating net asset value so long as the commitment
remains in effect. The Portfolio generally has the ability to close out a
purchase obligation on or before the settlement date, rather than take delivery
of the security.


Depositary Receipts. Investments in securities of foreign issuers may be in the
form of sponsored or unsponsored American Depositary Receipts ("ADRs"), European
Depositary Receipts ("EDRs"), Global Depositary Receipts ("GDRs"), International
Depositary Receipts ("IDRs") and other types of Depositary Receipts (which,
together with ADRs, EDRs, GDRs and IDRs are hereinafter referred to as
"Depositary Receipts"). Depositary Receipts provide indirect investment in
securities of foreign issuers. Prices of unsponsored Depositary Receipts may be
more volatile than if they were sponsored by the issuer of the underlying
securities. Depositary Receipts may not necessarily be denominated in the same
currency as the underlying securities into which they may be converted. In
addition, the issuers of the stock of unsponsored Depositary Receipts are not
obligated to disclose material information in the United States and, therefore,
there may not be a correlation between such information and the market value of
the Depositary Receipts. ADRs are Depository Receipts typically issued by a US
bank or trust company which evidence ownership of underlying securities issued
by a foreign corporation. GDRs, IDRs and other types of Depositary Receipts are
typically issued by foreign banks or trust companies, although they also may be
issued by United States banks or trust companies, and evidence ownership of
underlying securities issued by either a foreign or a United States corporation.
Generally, Depositary Receipts in registered form are designed for use in the
United States securities markets and Depositary Receipts in bearer form are
designed for use in securities markets outside the United States. For purposes
of a Portfolio's investment policies, a Portfolio's investments in ADRs, GDRs
and other types of Depositary Receipts will be deemed to be investments in the
underlying securities. Depositary Receipts, including those denominated in US
dollars, will be subject to foreign currency exchange rate risk. However, by
investing in US dollar-denominated ADRs rather than directly in foreign issuers'
stock, a Portfolio avoids currency risks during the settlement period. In
general, there is a large, liquid market in the United States for most ADRs.
However, certain Depositary Receipts may not be listed on an exchange and
therefore may be illiquid securities.

Direct Debt Instruments. Direct debt instruments are interests in amounts owed
by a corporate, governmental or other borrower to lenders (direct loans), to
suppliers of goods or services (trade claims or other receivables) or to other
parties. DWS Balanced VIP and DWS High Income VIP may invest in all types of
direct debt investments, but among these investments each Portfolio currently
intends to invest primarily in direct loans and trade claims.

When a Portfolio participates in a direct loan it will be lending money directly
to an issuer. Direct loans generally do not have an underwriter or agent bank,
but instead, are negotiated between a company's management team and a lender or
group of lenders. Direct loans typically offer better security and structural
terms than other types of high yield securities. Direct debt obligations are
often the most senior-obligations in an issuer's capital structure or are
well-collateralized so that overall risk is lessened.

Trade claims are unsecured rights of payment arising from obligations other than
borrowed funds. Trade claims include vendor claims and other receivables that
are adequately documented and available for purchase from high yield
broker-dealers. Trade claims typically may sell at a discount. In addition to
the risks otherwise associated with low-quality obligations, trade claims have
other risks, including the possibility that the amount of the claim may be
disputed by the obligor. Trade claims normally would be considered illiquid and
pricing can be volatile.

Direct debt instruments involve a risk of loss in case of default or insolvency
of the borrower. A Portfolio will rely primarily upon the creditworthiness of
the borrower and/or the collateral for payment of interest and repayment of
principal. The value of a Portfolio's investments may be adversely affected if
scheduled interest or principal payments are not made. Because most direct loans
will be secured, there will be a smaller risk of loss with direct loans than
with an investment in unsecured high yield bonds or trade claims. Indebtedness
of borrowers whose creditworthiness is poor involves substantially greater risks
and may be highly speculative. Borrowers that are in bankruptcy or restructuring
may never pay off their indebtedness or may pay only a small fraction of the
amount owed. Investments in direct debt instruments also involve interest rate
risk and liquidity risk. However, interest rate risk is lessened by the
generally short-term nature of direct debt instruments and their interest rate
structure, which typically floats. To the extent the direct debt instruments in
which a Portfolio invests are considered illiquid, the lack of a liquid
secondary market (1) will have an adverse impact on the value of such
instruments, (2) will have an adverse impact on the Portfolio's ability to
dispose of them when necessary to meet the Portfolio's liquidity needs or in
response to a specific economic event, such as a decline in creditworthiness of
the issuer, and (3) may make it more difficult for the Portfolio to assign a
value of these instruments for purposes of valuing the Portfolio's portfolio and
calculating its net asset value. In order to lessen liquidity risk, each
Portfolio anticipates investing primarily in direct debt instruments that are
quoted and traded in the high yield market and will not invest in these
instruments if it would cause more than 15% of the Portfolio's net assets to be
illiquid. Trade claims may also present a tax risk to a Portfolio. The
Portfolios will not invest in trade claims if it affects the Portfolio's
qualification as a regulated investment company under the Code.

Foreign Fixed-Income Securities. Since most foreign fixed-income securities are
not rated, a Portfolio will invest in foreign fixed-income securities based upon
the Advisor's or subadvisor's analysis without relying on published ratings.
Since such investments will be based upon the Advisor or subadvisor's analysis
rather than upon published ratings, achievement of a Portfolio's goals may
depend more upon the abilities of the Advisor or subadvisor than would otherwise
be the case.

The value of the foreign fixed-income securities held by a Portfolio, and thus
the net asset value of the Portfolio's shares, generally will fluctuate with (a)
changes in the perceived creditworthiness of the issuers of those securities,
(b) movements in interest rates, and (c) changes in the relative values of the
currencies in which a Portfolio's investments in fixed-income securities are
denominated with respect to the US dollar. The extent of the fluctuation will
depend on various factors, such as the average maturity of a Portfolio's
investments in foreign fixed-income securities, and the extent to which a
Portfolio hedges against its interest rate, credit and currency exchange rate
risks. Many of the foreign fixed-income obligations in which a Portfolio will
invest will have long maturities. A longer average maturity generally is
associated with a higher level of volatility in the market value of such
securities in response to changes in market conditions.

Investment in sovereign debt, including Brady Bonds, can involve a high degree
of risk. The governmental entity that controls the repayment of sovereign debt
may not be able or willing to repay the principal and/or interest when due in
accordance with the terms of such debt. A governmental entity's willingness or
ability to repay principal and interest due in a timely manner may be affected
by, among other factors, its cash flow situation, the extent of its foreign
reserves, the availability of sufficient foreign exchange on the date a payment
is due, the relative size of the debt service burden to the economy as a whole,
the governmental entity's policy toward the International Monetary Fund, and the
political constraints to which a governmental entity may be subject.
Governmental entities may also be dependent on expected disbursements from
foreign governments, multilateral agencies and others abroad to reduce principal
and interest arrearages on their debt. The commitment on the part of these
governments, agencies and others to make such disbursements may be conditioned
on a governmental entity's implementation of economic reforms and/or economic
performance and the timely service of such debtor's obligations. Failure to
implement such reforms, achieve such levels of economic performance or repay
principal or interest when due may result in the cancellation of such third
parties commitments to lend funds to the governmental entity, which may further
impair such debtor's ability or willingness to service its debts in a timely
manner. Consequently, governmental entities may default on their sovereign debt.
Holders of sovereign debt may be requested to participate in the rescheduling of
such debt and to extend further loans to governmental entities. There is no
bankruptcy proceeding by which sovereign debt on which governmental entities
have defaulted may be collected in whole or in part.

Brady Bonds are debt securities issued under a plan implemented to allow debtor
nations to restructure their outstanding commercial bank indebtedness. Foreign
governmental issuers of debt or the governmental authorities that control the
repayment of the debt may be unable or unwilling to repay principal or pay
interest when due. In the event of default, there may be limited or no legal
recourse in that, generally, remedies for defaults must be pursued in the courts
of the defaulting party. Political conditions, especially a sovereign entity's
willingness to meet the terms of its fixed-income securities, are of
considerable significance. Also, there can be no assurance that the holders of
commercial bank loans to the same sovereign entity may not contest payments to
the holders of sovereign debt in the event of default under commercial bank loan
agreements. In addition, there is no bankruptcy proceeding with respect to
sovereign debt on which a sovereign has defaulted, and a Portfolio may be unable
to collect all or any part of its investment in a particular issue.

Foreign investment in certain sovereign debt is restricted or controlled to
varying degrees, including requiring governmental approval for the repatriation
of income, capital or proceeds of sales by foreign investors. These restrictions
or controls may at times limit or preclude foreign investment in certain
sovereign debt or increase the costs and expenses of a Portfolio. A significant
portion of the sovereign debt in which a Portfolio may invest is issued as part
of debt restructuring and such debt is to be considered speculative. There is a
history of defaults with respect to commercial bank loans by public and private
entities issuing Brady Bonds. All or a portion of the interest payments and/or
principal repayment with respect to Brady Bonds may be uncollateralized.


Foreign Securities. DWS Mid Cap Growth VIP and DWS Blue Chip VIP invest mainly
in US common stocks, but may invest up to 20% of its net assets in foreign
securities. DWS Small Cap Growth VIP invests mainly in US common stocks, but may
invest up to 25% of its total assets in foreign securities. DWS High Income VIP
generally invests in US bonds or instruments, but up to 50% of its total assets
could be in bonds from foreign issuers. DWS Core Fixed Income VIP generally
invests in US bonds or instruments, but up to 25% of its total assets could be
in bonds from foreign issuers. DWS Technology VIP invests mainly in US stocks,
but may invest up to 35% and 20%, respectively, of net assets in foreign
securities. DWS Strategic Value VIP and DWS Dreman Small Mid Cap Value VIP may
invest up to 20% of net assets in US dollar-denominated American Depositary
Receipts ("ADRs") and in securities of foreign companies traded principally in
securities markets outside the US. DWS Balanced VIP may invest without limit in
foreign securities. DWS Money Market VIP and DWS Government & Agency Securities
VIP, each within its quality standards, may also invest in securities of foreign
issuers. However, such investments will be in US dollar-denominated instruments.


Investing in foreign securities involves certain special considerations,
including those set forth below, which are not typically associated with
investing in US securities and which may favorably or unfavorably affect a
Portfolio's performance. As foreign companies are not generally subject to
uniform accounting, auditing and financial reporting standards, practices and
requirements comparable to those applicable to domestic companies, there may be
less publicly available information about a foreign company than about a
domestic company. Many foreign securities markets, while growing in volume of
trading activity, have substantially less volume than the US market, and
securities of some foreign issuers are less liquid and more volatile than
securities of domestic issuers. Similarly, volume and liquidity in most foreign
bond markets is less than in the US and, at times, volatility of price can be
greater than in the US. Fixed commissions on some foreign securities exchanges
and bid to asked spreads in foreign bond markets are generally higher than
commissions or bid to asked spreads on US markets, although the Advisor and a
subadvisor will endeavor to achieve the most favorable net results on its
portfolio transactions. There is generally less governmental supervision and
regulation of securities exchanges, brokers and listed companies in foreign
countries than in the US. It may be more difficult for a Portfolio's agents to
keep currently informed about corporate actions in foreign countries which may
affect the prices of portfolio securities. Communications between the US and
foreign countries may be less reliable than within the US, thus increasing the
risk of delayed settlements of portfolio transactions or loss of certificates
for portfolio securities. Payment for securities without delivery may be
required in certain foreign markets. In addition, with respect to certain
foreign countries, there is the possibility of expropriation or confiscatory
taxation, political or social instability, or diplomatic developments which
could affect US investments in those countries. Moreover, individual foreign
economies may differ favorably or unfavorably from the US economy in such
respects as growth of gross national product, rate of inflation, capital
reinvestment, resource self-sufficiency and balance of payments position. The
management of a Portfolio seeks to mitigate the risks associated with the
foregoing considerations through continuous professional management.

High Yield, High Risk Bonds. Certain Portfolios may also purchase debt
securities which are rated below investment-grade (commonly referred to as "junk
bonds" or "high yield"), that is, rated below Baa by Moody's or below BBB by S&P
or judged to be of equivalent quality as determined by the Advisor or
subadvisor. These securities usually entail greater risk (including the
possibility of default or bankruptcy of the issuers of such securities),
generally involve greater volatility of price and risk to principal and income,
and may be less liquid, than securities in the higher rating categories. The
lower the ratings of such debt securities, the more their risks render them like
equity securities. Securities rated D may be in default with respect to payment
of principal or interest. See the Appendix to this Statement of Additional
Information for a more complete description of the ratings assigned by ratings
organizations and their respective characteristics.

Issuers of such high yielding securities often are highly leveraged and may not
have available to them more traditional methods of financing. Therefore, the
risk associated with acquiring the securities of such issuers generally is
greater than is the case with higher rated securities. For example, during an
economic downturn or a sustained period of rising interest rates, highly
leveraged issuers of high yield securities may experience financial stress.
During such periods, such issuers may not have sufficient revenues to meet their
interest payment obligations. The issuer's ability to service its debt
obligations may also be adversely affected by specific corporate developments,
or the issuer's inability to meet specific projected business forecasts, or the
unavailability of additional financing. The risk of loss from default by the
issuer is significantly greater for the holders of high yield securities because
such securities are generally unsecured and are often subordinated to other
creditors of the issuer. Prices and yields of high yield securities will
fluctuate over time and, during periods of economic uncertainty, volatility of
high yield securities may adversely affect a Portfolio's net asset value. In
addition, investments in high yield zero coupon or pay-in-kind bonds, rather
than income-bearing high yield securities, may be more speculative and may be
subject to greater fluctuations in value due to changes in interest rates.

A Portfolio may have difficulty disposing of certain high yield (high risk)
securities because they may have a thin trading market. Because not all dealers
maintain markets in all high yield securities, a Portfolio anticipates that such
securities could be sold only to a limited number of dealers or institutional
investors. The lack of a liquid secondary market may have an adverse effect on
the market price and a Portfolio's ability to dispose of particular issues and
may also make it more difficult for a Portfolio to obtain accurate market
quotations for purposes of valuing a Portfolio's assets. Market quotations
generally are available on many high yield issues only from a limited number of
dealers and may not necessarily represent firm bids of such dealers or prices
for actual sales. Adverse publicity and investor perceptions may decrease the
values and liquidity of high yield securities. These securities may also involve
special registration responsibilities, liabilities and costs, and liquidity and
valuation difficulties.

Credit quality in the high-yield securities market can change suddenly and
unexpectedly, and even recently-issued credit ratings may not fully reflect the
actual risks posed by a particular high-yield security. For these reasons, it is
generally the policy of the Advisor and Subadvisors not to rely exclusively on
ratings issued by established credit rating agencies, but to supplement such
ratings with their own independent and ongoing review of credit quality. The
achievement of a Portfolio's investment objective by investment in such
securities may be more dependent on the Advisor's or Subadvisor's credit
analysis than is the case for higher quality bonds. Should the rating of a
portfolio security be downgraded, the Advisor or Subadvisor will determine
whether it is in the best interests of the Portfolio to retain or dispose of
such security.

Prices for below investment-grade securities may be affected by legislative and
regulatory developments. Also, Congress has from time to time considered
legislation which would restrict or eliminate the corporate tax deduction for
interest payments in these securities and regulate corporate restructurings.
Such legislation may significantly depress the prices of outstanding securities
of this type.

DWS Core Fixed Income VIP will not invest more than 5% of its net assets in junk
bonds.


Integrated Global Alpha Platform Strategy ("iGAP Strategy") (for DWS Balanced
VIP). The Advisor seeks to enhance returns by employing a global tactical asset
allocation overlay strategy. The global tactical asset allocation strategy,
which the Advisor calls iGAP, is a total return strategy designed to add value
by benefiting from short-term and mid-term mis-pricings within global equity,
bond and currency markets. iGAP is expected to have a low correlation to the
performance of the Portfolio's investments in bond holdings.

The iGAP strategy combines diverse macro investment views from various
investment teams within Deutsche Asset Management. Because a single investment
approach rarely works in all market conditions, the teams are chosen to
diversify investment approaches thereby enhancing the expected return for a
given level of risk. The collective views are then used to determine iGAP's
positions using a disciplined, risk managed process. The result is a collection
of long and short investment positions within global equity, bond and currency
markets designed to generate excess returns that have little correlation to
major securities markets. The equity, bond and currency positions are then
implemented by the iGAP portfolio managers using exchange-traded futures and
over-the-counter forward currency transactions. The iGAP portfolio managers
consider factors such as liquidity, cost, margin requirement and credit quality
when selecting the appropriate derivative or other instrument. When used as a
part of the iGAP strategy, derivatives and other instruments generally will not
be used for hedging purposes.





Impact of Sub-Prime Mortgage Market. A Portfolio may invest in mortgage-backed,
asset-backed and other fixed-income securities whose value and liquidity may be
adversely affected by the critical downturn in the sub-prime mortgage lending
market in the US. Sub-prime loans, which, have higher interest rates, are made
to borrowers with low credit ratings or other factors that increase the risk of
default. Concerns about widespread defaults on sub-prime loans have also created
heightened volatility and turmoil in the general credit markets. As a result, a
Portfolio's investments in certain fixed-income securities may decline in value,
their market value may be more difficult to determine, and a Portfolio may have
more difficulty disposing of them.

Impact of Large Redemptions and Purchases of Portfolio Shares. From time to
time, shareholders of a Portfolio (which may include affiliated and/or
non-affiliated registered investment companies that invest in a Portfolio) may
make relatively large redemptions or purchases of Portfolio shares. These
transactions may cause a Portfolio to have to sell securities or invest
additional cash, as the case may be. While it is impossible to predict the
overall impact of these transactions over time, there could be adverse effects
on a Portfolio's performance to the extent that a Portfolio may be required to
sell securities or invest cash at times when it would not otherwise do so. These
transactions could also accelerate the realization of taxable income if sales of
securities resulted in capital gains or other income and could also increase
transaction costs, which may impact a Portfolio's expense ratio.

Inflation-Indexed Bonds. DWS Balanced VIP may purchase inflation-indexed
securities issued by the US Treasury, US government agencies and
instrumentalities other than the US Treasury, and entities other than the US
Treasury or US government agencies and instrumentalities.

Inflation-indexed bonds are fixed income securities or other instruments whose
principal value is periodically adjusted according to the rate of inflation. Two
structures are common. The US Treasury and some other issuers use a structure
that accrues inflation on either a current or lagged basis into the principal
value of the bond. Most other issuers pay out the price index accruals as part
of a semi-annual coupon.

Inflation-indexed securities issued by the US Treasury have maturities of five,
ten or twenty years, although it is possible that securities with other
maturities will be issued in the future. The US Treasury securities pay interest
on a semi-annual basis, equal to a fixed percentage of the inflation-adjusted
principal amount. For example, if the Portfolio purchased an inflation-indexed
bond with a par value of $1,000 and a 3% real rate of return coupon (payable
1.5% semi-annually), and calculated inflation over the first six months was 1%,
the mid-year value of the bond would be $1,010 and the first semi-annual
interest payment would be $15.15 ($1,010 times 1.5%). If calculated inflation
during the second half of the year resulted in the whole year's inflation
equaling 3%, the end of year value of the bond would be $1,030 and the second
semi-annual interest payment would be $15.45 ($1,030 times 1.5%).

If the periodic adjustment rate measuring inflation falls, the principal value
of inflation-indexed bonds will be adjusted downward, and, consequently, the
interest payable on these securities (calculated with respect to a smaller
principal amount) will be reduced. Repayment of the original bond principal on
maturity (as adjusted for inflation) is guaranteed in the case of US Treasury
inflation-indexed bonds, even during a period of deflation. However, the current
market value of the bonds is not guaranteed and will fluctuate. The Portfolio
may also invest in other inflation related bonds that may or may not provide a
similar guarantee. If a guarantee of principal is not provided, the adjusted
principal value of the bond repaid at maturity may be less than the original
principal. In addition, if the Portfolio purchases inflation-indexed bonds
offered by foreign issuers, the rate of inflation measured by the foreign
inflation index may not be correlated to the rate of inflation in the US.

The value of inflation-indexed bonds is expected to change in response to
changes in real interest rates. Real interest rates, in turn, are tied to the
relationship between nominal interest rates and the rate of inflation.
Therefore, if inflation were to rise at a faster rate than nominal interest
rates, real interest rates might decline, leading to an increase in value of
inflation-indexed bonds. In contrast, if nominal interest rates increased at a
faster rate than inflation, real interest rates might rise, leading to a
decrease in value of inflation-indexed bonds. There can be no assurance,
however, that the value of inflation-indexed bonds will be directly correlated
to changes in interest rates.

While these securities are expected to be protected from long-term inflationary
trends, short-term increases in inflation may lead to a decline in value. If
interest rates rise due to reasons other than inflation (for example, due to
changes in currency exchange rates), investors in these securities may not be
protected to the extent that the increase is not reflected in the bond's
inflation measure.

In general, the measure used to determine the periodic adjustment of US
inflation-indexed bonds is the Consumer Price Index for Urban Consumers
("CPI-U"), which is calculated monthly by the US Bureau of Labor Statistics. The
CPI-U is a measurement of changes in the cost of living, made up of components
such as housing, food, transportation and energy. The inflation adjustment to
the securities references this index with a three month lag. Inflation-indexed
bonds issued by a foreign government are generally adjusted to reflect a
comparable inflation index calculate by the applicable government. There can be
no assurance that the CPI-U or any foreign inflation index will accurately
measure the real rate of inflation in the prices of goods and services.
Moreover, there can be no assurance that the rate of inflation in a foreign
country will be correlated to the rate of inflation in the US. Finally, income
distributions of the Portfolio are likely to fluctuate more than those of a
conventional bond fund.

The taxation of inflation-indexed US Treasury securities is similar to the
taxation of conventional bonds. Both interest payments and the difference
between original principal and the inflation-adjusted principal will be treated
as interest income subject to taxation. Interest payments are taxable when
received or accrued. The inflation adjustment to the principal is subject to tax
in the year the adjustment is made, not at maturity of the security when the
cash from the repayment of principal is received. If an upward adjustment has
been made (which typically should happen), investors in non-tax-deferred
accounts will pay taxes on this amount currently. Decreases in the indexed
principal can be deducted only from current or previous interest payments
reported as income and is otherwise carried forward.

Inflation-indexed US Treasury securities therefore have a potential cash flow
mismatch to an investor, because investors must pay taxes on the
inflation-adjusted principal before the repayment of principal is received. It
is possible that, particularly for high income tax bracket investors,
inflation-indexed US Treasury securities would not generate enough income in a
given year to cover the tax liability they could create. This is similar to the
current tax treatment for zero-coupon bonds and other discount securities. If
inflation-indexed US Treasury securities are sold prior to maturity, capital
losses or gains are realized in the same manner as traditional bonds See "Taxes"
below.

Inflation-indexed securities are designed to offer a return linked to inflation,
thereby protecting future purchasing power of the money invested in them.
However, inflation-indexed securities provide this protected return only if held
to maturity. In addition, inflation-indexed securities may not trade at par
value. Real interest rates (the market rate of interest less the anticipated
rate of inflation) change over time as a result of many factors, such as what
investors are demanding as a true value for money. When real rates do change,
inflation-indexed securities prices will be more sensitive to these changes than
conventional bonds, because these securities were sold originally based upon a
real interest rate that is no longer prevailing. Should market expectations for
real interest rates rise, the price of inflation-indexed securities and the
share price of the Portfolio may fall. Investors in the Portfolio should be
prepared to accept not only this share price volatility but also the possible
adverse tax consequences it may cause.

An investment in securities featuring inflation-adjusted principal and/or
interest involves factors not associated with more traditional fixed-principal
securities. Such factors include the possibility that the inflation index may be
subject to significant changes, that changes in the index may or may not
correlate to changes in interest rates generally or changes in other indices, or
that the resulting interest may be greater or less than that payable on other
securities of similar maturities. In the event of sustained deflation, it is
possible that the amount of semiannual interest payments, the inflation-adjusted
principal of the security and the value of the stripped components, will
decrease. If any of these possibilities are realized, the Portfolio's net asset
value could be negatively affected.


Interfund Borrowing and Lending Program. The Fund has received exemptive relief
from the SEC which permits a Portfolio to participate in an interfund lending
program among certain investment companies advised by the Advisor. The interfund
lending program allows the participating portfolios to borrow money from and
loan money to each other for temporary or emergency purposes. The program is
subject to a number of conditions designed to ensure fair and equitable
treatment of all participating funds, including the following: (1) no Portfolio
may borrow money through the program unless it receives a more favorable
interest rate than a rate approximating the lowest interest rate at which bank
loans would be available to any of the participating portfolio under a loan
agreement; and (2) no Portfolio may lend money through the program unless it
receives a more favorable return than that available from an investment in
repurchase agreements and, to the extent applicable, money market cash sweep
arrangements. In addition, a Portfolio may participate in the program only if
and to the extent that such participation is consistent with the Portfolio's
investment objectives and policies (for instance, money market funds would
normally participate only as lenders and tax exempt funds only as borrowers).
Interfund loans and borrowings may extend overnight, but could have a maximum
duration of seven days. Loans may be called on one day's notice. A Portfolio may
have to borrow from a bank at a higher interest rate if an interfund loan is
called or not renewed. Any delay in repayment to a lending Portfolio could
result in a lost investment opportunity or additional costs. The program is
subject to the oversight and periodic review by the Boards of Trustees.
Borrowings through the interfund lending program are subject to each Portfolio's
policies on borrowing.

Investment Company Securities. Each Portfolio may acquire securities of other
investment companies to the extent consistent with its investment objective and
policies and subject to the limitations of the 1940 Act. The Portfolio will
indirectly bear its proportionate share of any management fees and other
expenses paid by such other investment companies. For example, a Portfolio may
invest in a variety of investment companies which seek to track the composition
and performance of specific indexes or a specific portion of an index. These
index-based investments hold substantially all of their assets in securities
representing their specific index or a specific portion of an index.
Accordingly, the main risk of investing in index-based investments is the same
as investing in a portfolio of equity securities comprising the index. The
market prices of index-based investments will fluctuate in accordance with both
changes in the market value of their underlying portfolio securities and due to
supply and demand for the instruments on the exchanges on which they are traded
(which may result in their trading at a discount or premium to their NAVs).
Index-based investments may not replicate exactly the performance of their
specified index because of transaction costs and because of the temporary
unavailability of certain component securities of the index.

Examples of index-based investments include:

SPDRs(R): SPDRs, an acronym for "Standard & Poor's Depositary Receipts," are
based on the S&P 500 Composite Stock Price Index. They are issued by the SPDR
Trust, a unit investment trust that holds shares of substantially all the
companies in the S&P 500 in substantially the same weighting and seeks to
closely track the price performance and dividend yield of the Index.

MidCap SPDRs(R): MidCap SPDRs are based on the S&P MidCap 400 Index. They are
issued by the MidCap SPDR Trust, a unit investment trust that holds a portfolio
of securities consisting of substantially all of the common stocks in the S&P
MidCap 400 Index in substantially the same weighting and seeks to closely track
the price performance and dividend yield of the S&P Mid Cap 400 Index.

Select Sector SPDRs(R): Select Sector SPDRs are based on a particular sector or
group of industries that are represented by a specified Select Sector Index
within the Standard & Poor's Composite Stock Price Index. They are issued by The
Select Sector SPDR Trust, an open-end management investment company with nine
portfolios that each seeks to closely track the price performance and dividend
yield of a particular Select Sector Index.

DIAMONDS(SM):  DIAMONDS are based on the Dow Jones Industrial Average(SM). They
are issued by the DIAMONDS Trust, a unit investment trust that holds a portfolio
of all the component common stocks of the Dow Jones Industrial Average and seeks
to closely track the price performance and dividend yield of the Dow.

Nasdaq-100 Shares: Nasdaq-100 Shares are based on the Nasdaq 100 Index. They are
issued by the Nasdaq-100 Trust, a unit investment trust that holds a portfolio
consisting of substantially all of the securities, in substantially the same
weighting, as the component stocks of the Nasdaq-100 Index and seeks to closely
track the price performance and dividend yield of the Nasdaq-100 Index.

Investment-Grade Bonds. "Investment-grade" bonds are those rated Aaa, Aa, A or
Baa by Moody's or AAA, AA, A or BBB by S&P or, if unrated, judged to be of
equivalent quality as determined by the Advisor or a Subadvisor. Moody's
considers bonds it rates Baa to have speculative elements as well as
investment-grade characteristics. To the extent that a Portfolio invests in
higher-grade securities, a Portfolio will not be able to avail itself of
opportunities for higher income which may be available at lower grades.

Investment of Uninvested Cash Balances. Each Portfolio may have cash balances
that have not been invested in portfolio securities ("Uninvested Cash").
Uninvested Cash may result from a variety of sources, including dividends or
interest received from portfolio securities, unsettled securities transactions,
reserves held for investment strategy purposes, scheduled maturity of
investments, liquidation of investment securities to meet anticipated
redemptions and dividend payments, and new cash received from investors.
Uninvested Cash may be invested directly in money market instruments or other
short-term debt obligations. Pursuant to an Exemptive Order issued by the SEC,
each Portfolio (except DWS Money Market VIP) may use Uninvested Cash to purchase
shares of affiliated funds including money market funds, short-term bond funds
and Cash Management QP Trust or one or more future entities for which DIMA acts
as trustee or investment advisor that operate as cash management investment
vehicles and that are excluded from the definition of investment company
pursuant to Section 3(c)(1) or 3(c)(7) of the 1940 Act (collectively, the
"Central Funds") in excess of the limitations of Section 12(d)(1) of the 1940
Act. Investment by each Portfolio in shares of the Central Funds will be in
accordance with the Portfolio's investment policies and restrictions as set
forth in its registration statement. Currently, DWS Money Market VIP does not
intend to invest in Central Funds.

Certain of the Central Funds comply with Rule 2a-7 under the 1940 Act. The other
Central Funds are or will be short-term bond funds that invest in fixed-income
securities and maintain a dollar-weighted average maturity of three years or
less. Each of the Central Funds will be managed specifically to maintain a
highly liquid portfolio, and access to them will enhance each Portfolio's
ability to manage Uninvested Cash.

Each Portfolio will invest Uninvested Cash in Central Funds only to the extent
that each Portfolio's aggregate investment in the Central Funds does not exceed
25% of its total assets (except DWS Core Fixed Income VIP cannot exceed 20% of
its total assets) in shares of the Central Funds. Purchase and sales of shares
of Central Funds are made at net asset value.


Lending of Portfolio Securities. Each Portfolio (with the exception of DWS Money
Market VIP) may lend its investment securities to approved institutional
borrowers who need to borrow securities in order to complete certain
transactions, such as covering short sales, avoiding failures to deliver
securities or completing arbitrage operations. By lending their investment
securities, the Portfolios attempt to increase their net investment income
through the receipt of interest on the loan. Any gain or loss in the market
price of the securities loaned that might occur during the term of the loan
would belong to a Portfolio. A Portfolio may lend its investment securities so
long as the terms, structure and the aggregate amount of such loans are not
inconsistent with the 1940 Act or the rules and regulations or interpretations
of the SEC thereunder, which currently require that (a) the borrower pledge and
maintain with a Portfolio collateral consisting of liquid, unencumbered assets
having a value at all times not less than 100% of the value of the securities
loaned, (b) the borrower add to such collateral whenever the price of the
securities loaned rises (i.e., the borrower "marks to the market" on a daily
basis), (c) the loan be made subject to termination by a Portfolio at any time,
and (d) a Portfolio receives reasonable interest on the loan (which may include
the Portfolio investing any cash collateral in interest bearing short-term
investments), and distributions on the loaned securities and any increase in
their market value. A Portfolio will bear any losses incurred from the
investment of the collateral it receives. There may be risks of delay in
recovery of the securities or even loss of rights in the collateral should the
borrower of the securities fail financially. However, loans will be made only to
borrowers selected by a Portfolio's delegate after a commercially reasonable
review of relevant facts and circumstances, including the creditworthiness of
the borrower.


At the present time, the staff of the SEC does not object if an investment
company pays reasonable negotiated fees in connection with loaned securities, so
long as such fees are set forth in a written contract and approved by the
investment company's Board of Trustees/Directors. In addition, voting rights may
pass with the loaned securities, but if a material event occurs affecting an
investment on loan, the loan must be called and the securities voted. Pursuant
to an exemptive order granted by the SEC, cash collateral received by a
Portfolio may be invested in a money market fund managed by the Advisor or a
subadvisor (or one of its affiliates).

Maintenance of $1.00 Net Asset Value, Credit Quality and Portfolio Maturity. DWS
Money Market VIP effects sales, redemptions and repurchases at the net asset
value per share, normally $1.00. In fulfillment of its responsibilities under
Rule 2a-7 of the 1940 Act, the Portfolio's Board has approved policies
established by the Portfolio's Advisor reasonably calculated to prevent the
Portfolio's net asset value per share from deviating from $1.00 except under
unusual or extraordinary circumstances and the Portfolio's Board will
periodically review the Advisor's operations under such policies at regularly
scheduled Board meetings. Those policies include a weekly monitoring by the
Advisor of unrealized gains and losses in the Portfolio's portfolio, and when
necessary, in an effort to avoid deviation, taking corrective action, such as
adjusting the maturity of the portfolio, or, if possible, realizing gains or
losses to offset in part unrealized losses or gains. The result of those
policies may be that the yield on shares of the Portfolio will be lower than
would be the case if the policies were not in effect. Such policies also provide
for certain action to be taken with respect to portfolio securities which
experience a downgrade in rating or suffer a default.

Mortgage-Backed and Asset-Backed Securities

General. Each Portfolio may invest in mortgage-backed securities, which
represent direct or indirect participations in, or are collateralized by and
payable from, mortgage loans secured by real property. Each Portfolio may also
invest in asset-backed securities, which represent participations in, or are
secured by and payable from, assets such as motor vehicle installment sales,
installment loan contracts, leases of various types of real and personal
property and receivables from revolving credit (credit card) agreements and
other categories of receivables. Such securities are generally issued by trusts
and special purpose corporations.

Mortgage-backed and asset-backed securities are often subject to more rapid
repayment than their stated maturity date would indicate as a result of the
pass-through of prepayments of principal on the underlying loans. During periods
of declining interest rates, prepayment of loans underlying mortgage-backed and
asset-backed securities can be expected to accelerate, and thus impair Each
Portfolio's ability to reinvest the returns of principal at comparable yields.
Accordingly, the market values of such securities will vary with changes in
market interest rates generally and in yield differentials among various kinds
of US Government securities and other mortgage-backed and asset-backed
securities. Asset-backed securities present certain risks that are not presented
by mortgage-backed securities because asset-backed securities generally do not
have the benefit of a security interest in collateral that is comparable to
mortgage assets. In addition, there is the possibility that, in some cases,
recoveries on repossessed collateral may not be available to support payments on
these securities. Many mortgage and asset-backed securities may be considered
derivative instruments.


Mortgage-Backed. Each Portfolio may invest in mortgage-backed securities,
including derivative instruments. Mortgage-backed securities represent direct or
indirect participations in or obligations collateralized by and payable from
mortgage loans secured by real property. Each Portfolio may invest in
mortgage-backed securities issued or guaranteed by US Government agencies or
instrumentalities such as the Government National Mortgage Association ("GNMA"),
the Federal National Mortgage Association ("FNMA") (also known as Fannie Mae)
and the Federal Home Loan Mortgage Corporation ("FHLMC") (also known as Freddie
Mac). Obligations of GNMA are backed by the full faith and credit of the US
Government. Obligations of FNMA and FHLMC are not backed by the full faith and
credit of the US Government. The market value and yield of these mortgage-backed
securities can vary due to market interest rate fluctuations and early
prepayments of underlying mortgages. These securities represent ownership in a
pool of federally insured mortgage loans with a maximum maturity of 30 years.
The scheduled monthly interest and principal payments relating to mortgages in
the pool will be "passed through" to investors. Government mortgage-backed
securities differ from conventional bonds in that principal is paid back to the
certificate holders over the life of the loan rather than at maturity. As a
result, there will be monthly scheduled payments of principal and interest.


Each Portfolio may invest in mortgage-backed securities issued by
non-governmental entities including collateralized mortgage obligations ("CMOs")
and real estate mortgage investment conduits ("REMICs"). CMOs are securities
collateralized by mortgages, mortgage pass-throughs, mortgage pay-through bonds
(bonds representing an interest in a pool of mortgages where the cash flow
generated from the mortgage collateral pool is dedicated to bond repayment), and
mortgage-backed bonds (general obligations of the issuers payable out of the
issuers' general funds and additionally secured by a first lien on a pool of
single family detached properties). Many CMOs are issued with a number of
classes or series that have different maturities and are retired in sequence.
Investors purchasing such CMOs in the shortest maturities receive or are
credited with their pro rata portion of the unscheduled prepayments of principal
up to a predetermined portion of the total CMO obligation. Until that portion of
such CMO obligation is repaid, investors in the longer maturities receive
interest only. Accordingly, the CMOs in the longer maturity series are less
likely than other mortgage pass-throughs to be prepaid prior to their stated
maturity. Although some of the mortgages underlying CMOs may be supported by
various types of insurance, and some CMOs may be backed by GNMA certificates or
other mortgage pass-throughs issued or guaranteed by US Government agencies or
instrumentalities, the CMOs themselves are not generally guaranteed.

REMICs are private entities formed for the purpose of holding a fixed pool of
mortgages secured by an interest in real property. REMICs are similar to CMOs in
that they issue multiple classes of securities, including "regular" interests
and "residual" interests. Each Portfolio does not intend to acquire residual
interests in REMICs, due to certain disadvantages for regulated investment
companies that acquire such interests. Mortgage-backed securities are subject to
unscheduled principal payments representing prepayments on the underlying
mortgages. Although these securities may offer yields higher than those
available from other types of securities, mortgage-backed securities may be less
effective than other types of securities as a means of "locking in" attractive
long-term rates because of the prepayment feature. For instance, when interest
rates decline, the value of these securities likely will not rise as much as
comparable debt securities due to the prepayment feature. In addition, these
prepayments can cause the price of a mortgage-backed security originally
purchased at a premium to decline in price to its par value, which may result in
a loss.

Due to prepayments of the underlying mortgage instruments, mortgage-backed
securities do not have a known actual maturity. In the absence of a known
maturity, market participants generally refer to an estimated average life. The
Advisor believes that the estimated average life is the most appropriate measure
of the maturity of a mortgage-backed security. Accordingly, in order to
determine whether such security is a permissible investment, it will be deemed
to have a remaining maturity of three years or less if the average life, as
estimated by the Advisor, is three years or less at the time of purchase of the
security by each Portfolio. An average life estimate is a function of an
assumption regarding anticipated prepayment patterns. The assumption is based
upon current interest rates, current conditions in the relevant housing markets
and other factors. The assumption is necessarily subjective, and thus different
market participants could produce somewhat different average life estimates with
regard to the same security. Although the Advisor will monitor the average life
of the portfolio securities of each Portfolio with a portfolio maturity policy
and make needed adjustments to comply with each Portfolio's policy as to average
dollar weighted portfolio maturity, there can be no assurance that the average
life of portfolio securities as estimated by the Advisor will be the actual
average life of such securities.


Mortgage-backed securities may be issued or guaranteed by GNMA, FNMA and FHLMC,
but also may be issued or guaranteed by other issuers, including private
companies. GNMA is a government-owned corporation that is an agency of the U.S.
Department of Housing and Urban Development. It guarantees, with the full faith
and credit of the United States, full and timely payment of all monthly
principal and interest on its mortgage-backed securities. Until recently, FNMA
and FHLMC were government-sponsored corporations owned entirely by private
stockholders. Both issue mortgage-related securities that contain guarantees as
to timely payment of interest and principal but that are not backed by the full
faith and credit of the U.S. government. The value of the companies' securities
fell sharply in 2008 due to concerns that the firms did not have sufficient
capital to offset losses. In mid-2008, the U.S. Treasury was authorized to
increase the size of home loans that FNMA and FHLMC could purchase in certain
residential areas and, until 2009, to lend FNMA and FHLMC emergency funds and to
purchase the companies' stock. More recently, in September 2008, the U.S.
Treasury announced that FNMA and FHLMC had been placed in conservatorship by the
Federal Housing Finance Agency ("FHFA"), a newly created independent regulator.
In addition to placing the companies in conservatorship, the U.S. Treasury
announced three additional steps that it intended to take with respect to FNMA
and FHLMC. First, the U.S. Treasury has entered into preferred stock purchase
agreements ("PSPAs") under which, if the FHFA determines that FNMA's or FHLMC's
liabilities have exceeded its assets under generally accepted accounting
principles, the U.S. Treasury will contribute cash capital to the company in an
amount equal to the difference between liabilities and assets. The PSPAs are
designed to provide protection to the senior and subordinated debt and the
mortgage-backed securities issued by FNMA and FHLMC. Second, the U.S. Treasury
established a new secured lending credit facility that is available to FNMA and
FHLMC until December 2009. Third, the U.S. Treasury initiated a temporary
program to purchase FNMA and FHLMC mortgage-backed securities, which is expected
to continue until December 2009. No assurance can be given that the U.S.
Treasury initiatives discussed above with respect to the debt and
mortgage-backed securities issued by FNMA and FHLMC will be successful.


Non-Diversified Portfolios. DWS Technology VIP is classified as a
"non-diversified" portfolio so that it will be able to invest to a greater
degree in the securities of a single issuer, subject to the diversification
requirements for qualification as a regulated investment company under the Code.
This allows the Portfolio, as to 50% of its assets, to invest more than 5% of
its assets, but not more than 25%, in the securities of an individual foreign
government or corporate issuer. Since the Portfolio may invest a relatively high
percentage of its assets in the securities (i.e., these funds purchase stock) of
a limited number of issuers, the Portfolio may be more susceptible to any single
economic, political or regulatory occurrence than a diversified portfolio.

Privatized Enterprises. Investments in foreign securities may include securities
issued by enterprises that have undergone or are currently undergoing
privatization. The governments of certain foreign countries have, to varying
degrees, embarked on privatization programs contemplating the sale of all or
part of their interests in state enterprises. A Portfolio's investments in the
securities of privatized enterprises may include privately negotiated
investments in a government or state-owned or controlled company or enterprise
that has not yet conducted an initial equity offering, investments in the
initial offering of equity securities of a state enterprise or former state
enterprise and investments in the securities of a state enterprise following its
initial equity offering.

In certain jurisdictions, the ability of foreign entities, such as a Portfolio,
to participate in privatizations may be limited by local law, or the price or
terms on which a Portfolio may be able to participate may be less advantageous
than for local investors. Moreover, there can be no assurance that governments
that have embarked on privatization programs will continue to divest their
ownership of state enterprises, that proposed privatizations will be successful
or that governments will not re-nationalize enterprises that have been
privatized.

In the case of the enterprises in which a Portfolio may invest, large blocks of
the stock of those enterprises may be held by a small group of stockholders,
even after the initial equity offerings by those enterprises. The sale of some
portion or all of those blocks could have an adverse effect on the price of the
stock of any such enterprise.

Prior to making an initial equity offering, most state enterprises or former
state enterprises go through an internal reorganization or management. Such
reorganizations are made in an attempt to better enable these enterprises to
compete in the private sector. However, certain reorganizations could result in
a management team that does not function as well as the enterprise's prior
management and may have a negative effect on such enterprise. In addition, the
privatization of an enterprise by its government may occur over a number of
years, with the government continuing to hold a controlling position in the
enterprise even after the initial equity offering for the enterprise.

Prior to privatization, most of the state enterprises in which a Portfolio may
invest enjoy the protection of and receive preferential treatment from the
respective sovereigns that own or control them. After making an initial equity
offering these enterprises may no longer have such protection or receive such
preferential treatment and may become subject to market competition from which
they were previously protected. Some of these enterprises may not be able to
effectively operate in a competitive market and may suffer losses or experience
bankruptcy due to such competition.

Real Estate Investment Trusts (REITs). Certain Portfolios may invest in REITs.
REITs are sometimes informally characterized as equity REITs, mortgage REITs and
hybrid REITs. Investment in REITs may subject the Portfolio to risks associated
with the direct ownership of real estate, such as decreases in real estate
values, overbuilding, increased competition and other risks related to local or
general economic conditions, increases in operating costs and property taxes,
changes in zoning laws, casualty or condemnation losses, possible environmental
liabilities, regulatory limitations on rent and fluctuations in rental income.
Equity REITs generally experience these risks directly through fee or leasehold
interests, whereas mortgage REITs generally experience these risks indirectly
through mortgage interests, unless the mortgage REIT forecloses on the
underlying real estate. Changes in interest rates may also affect the value of
the Portfolio's investment in REITs. For instance, during periods of declining
interest rates, certain mortgage REITs may hold mortgages that the mortgagors
elect to prepay, which prepayment may diminish the yield on securities issued by
those REITs.

Certain REITs have relatively small market capitalization, which may tend to
increase the volatility of the market price of their securities. Furthermore,
REITs are dependent upon specialized management skills, have limited
diversification and are, therefore, subject to risks inherent in operating and
financing a limited number of projects. REITs are also subject to heavy cash
flow dependency, defaults by borrowers and the possibility of failing to qualify
for tax-free pass-through of income under the Code and for exemption from the
registration requirements of the 1940 Act. By investing in REITs indirectly
through the Portfolio, a shareholder will bear not only his or her proportionate
share of the expenses of the Portfolio, but also, indirectly, similar expenses
of the REITs. In addition, REITs depend generally on their ability to generate
cash flow to make distributions to shareholders.

Repurchase Agreements. Each Portfolio may invest in repurchase agreements
pursuant to its investment guidelines. In a repurchase agreement, the Portfolio
acquires ownership of a security and simultaneously commits to resell that
security to the seller, typically a bank or broker/dealer.

A repurchase agreement provides a means for a Portfolio to earn income on funds
for periods as short as overnight. It is an arrangement under which the
purchaser (i.e., the Portfolio) acquires a security ("Obligation") and the
seller agrees, at the time of sale, to repurchase the Obligation at a specified
time and price. Securities subject to a repurchase agreement are held in a
segregated account and, as described in more detail below, the value of such
securities is kept at least equal to the repurchase price on a daily basis. The
repurchase price may be higher than the purchase price, the difference being
income to a Portfolio, or the purchase and repurchase prices may be the same,
with interest at a stated rate due to a Portfolio together with the repurchase
price upon repurchase. In either case, the income to a Portfolio is unrelated to
the interest rate on the Obligation itself. Obligations will be held by the
custodian or in the Federal Reserve Book Entry System.

It is not clear whether a court would consider the Obligation purchased by a
Portfolio subject to a repurchase agreement as being owned by a Portfolio or as
being collateral for a loan by a Portfolio to the seller. In the event of the
commencement of bankruptcy or insolvency proceedings with respect to the seller
of the Obligation before repurchase of the Obligation under a repurchase
agreement, a Portfolio may encounter delay and incur costs before being able to
sell the security. Delays may involve loss of interest or decline in price of
the Obligation. If the court characterizes the transaction as a loan and a
Portfolio has not perfected a security interest in the Obligation, a Portfolio
may be required to return the Obligation to the seller's estate and be treated
as an unsecured creditor of the seller. As an unsecured creditor, a Portfolio
would be at risk of losing some or all of the principal and income involved in
the transaction. As with any unsecured debt Obligation purchased for a
Portfolio, the Advisor or a subadvisor seeks to reduce the risk of loss through
repurchase agreements by analyzing the creditworthiness of the obligor, in this
case the seller of the Obligation. Apart from the risk of bankruptcy or
insolvency proceedings, there is also the risk that the seller may fail to
repurchase the Obligation, in which case a Portfolio may incur a loss if the
proceeds to a Portfolio of the sale to a third party are less than the
repurchase price. However, if the market value (including interest) of the
Obligation subject to the repurchase agreement becomes less than the repurchase
price (including interest), a Portfolio will direct the seller of the Obligation
to deliver additional securities so that the market value (including interest)
of all securities subject to the repurchase agreement will equal or exceed the
repurchase price.

Restructuring Instruments. DWS Balanced VIP and DWS High Income VIP may hold
distressed securities, which are securities that are in default or in risk of
being in default. In connection with an exchange or workout of such securities,
a Portfolio may accept various instruments if the investment adviser determines
it is in the best interests of a Portfolio and consistent with a Portfolio's
investment objective and policies. Such instruments may include, but not limited
to, warrants, rights, participation interests in assets sales and
contingent-interest obligations.


Securities as a Result of Exchanges or Workouts (DWS Balanced VIP and DWS High
Income VIP only): Consistent with the Portfolio's investment objectives,
policies and restrictions, the Portfolio may hold various instruments received
in an exchange or workout of a distressed security (i.e., a low-rated debt
security that is in default or at risk of becoming in default). Such instruments
may include, but are not limited to, equity securities, warrants, rights,
participation interests in sales of assets and contingent-interest obligations.


Reverse Repurchase Agreements. Each Portfolio (except DWS Money Market VIP) may
enter into "reverse repurchase agreements," which are repurchase agreements in
which a Portfolio, as the seller of the securities, agrees to repurchase such
securities at an agreed time and price. Each Portfolio maintains a segregated
account in connection with outstanding reverse repurchase agreements. A
Portfolio will enter into reverse repurchase agreements only when the Advisor or
Subadvisor believes that the interest income to be earned from the investment of
the proceeds of the transaction will be greater than the interest expense of the
transaction. Such transactions may increase fluctuations in the market value of
a Portfolio's assets and its yield.

Section 4(2) Paper. Subject to its investment objectives and policies, each
Portfolio may invest in commercial paper issued under the Securities Act of 1933
in reliance on the exemption from registration afforded by Section 3(a)(3)
thereof. Such commercial paper may be issued only to finance current
transactions and must mature in nine months or less. Trading of such commercial
paper is conducted primarily by institutional investors through investment
dealers, and individual investor participation in the commercial paper market is
very limited. A Portfolio also may invest in commercial paper issued in reliance
on the so-called "private placement" exemption from registration afforded by
Section 4(2) of the Securities Act of 1933 ("Section 4(2) paper"). Section 4(2)
paper is restricted as to disposition under the federal securities laws, and
generally is sold to institutional investors such as a Portfolio who agree that
they are purchasing the paper for investment and not with a view to public
distribution. Any resale by the purchaser must be in an exempt transaction.
Section 4(2) paper normally is resold to other institutional investors like the
Portfolio through or with the assistance of the issuer or investment dealers who
make a market in the Section 4(2) paper, thus providing liquidity. The Advisor
or Subadvisor considers the legally restricted but readily saleable Section 4(2)
paper to be liquid; however, pursuant to procedures approved by the Board of
Trustees of the Fund, if a particular investment in Section 4(2) paper is not
determined to be liquid, that investment will be included within the limitation
of the particular Portfolio on illiquid securities. The Advisor or Subadvisor
monitors the liquidity of each Portfolio's investments in Section 4(2) paper on
a continuing basis.


Small Company Risk. DWS Small Cap Growth VIP, DWS Balanced VIP and DWS Dreman
Small Mid Cap Value VIP intend to invest a substantial portion of their assets
in small capitalization stocks similar in size to those comprising the Russell
2000 Growth Index, for DWS Small Cap Growth VIP and the Russell 2000 Value
Index, for DWS Dreman Small Mid Cap VIP. Other Portfolios may invest in small
capitalization stocks to a lesser degree. Many small companies may have sales
and earnings growth rates which exceed those of larger companies and such growth
rates may in turn be reflected in more rapid share price appreciation over time;
however, investing in smaller company stocks involves greater risk than is
customarily associated with investing in larger, more established companies. For
example, smaller companies can have limited product lines, markets, or financial
and managerial resources. Smaller companies may also be dependent on one or a
few key persons, and may be more susceptible to losses and risks of bankruptcy.
Also, the securities of smaller companies may be thinly traded (and therefore
have to be sold at a discount from current market prices or sold in small lots
over an extended period of time). Transaction costs in smaller company stocks
may be higher than those of larger companies. Investors should therefore expect
that the value of the shares of the DWS Small Cap Growth VIP and DWS Dreman
Small Mid Cap Value VIP may be more volatile than the shares of a portfolio that
invests in larger capitalization stocks.


Short Sales Against-the-Box. All Portfolios (except DWS Money Market VIP) may
make short sales against-the-box for the purpose of, but not limited to,
deferring realization of loss when deemed advantageous for federal income tax
purposes. A short sale "against-the-box" is a short sale in which a Portfolio
owns at least an equal amount of the securities sold short or securities
convertible into or exchangeable for, without payment of any further
consideration, securities of the same issue as, and at least equal in amount to,
the securities sold short. A Portfolio will incur a loss as a result of the
short sale if the price of the security increases between the dates of the short
sale and the date on which a Portfolio replaces the borrowed security. A
Portfolio will incur transaction costs, including interest expenses in
connection with opening, maintaining, and closing short sales against the box.
Each Portfolio does not currently intend to engage in such short sales to the
extent that more than 5% of its net assets will be held as collateral.

Variable Rate Securities. DWS Money Market VIP may invest in Variable Rate
Securities, instruments having rates of interest that are adjusted periodically
or that "float" continuously according to formulae intended to minimize
fluctuation in values of the instruments. The interest rate of Variable Rate
Securities ordinarily is determined by reference to or is a percentage of an
objective standard such as a bank's prime rate, the 90-day US Treasury Bill
rate, or the rate of return on commercial paper or bank certificates of deposit.
Generally, the changes in the interest rate on Variable Rate Securities reduce
the fluctuation in the market value of such securities. Accordingly, as interest
rates decrease or increase, the potential for capital appreciation or
depreciation is less than for fixed-rate obligations. Some Variable Rate
Securities ("Variable Rate Demand Securities") have a demand feature entitling
the purchaser to resell the securities at an amount approximately equal to
amortized cost or the principal amount thereof plus accrued interest. As is the
case for other Variable Rate Securities, the interest rate on Variable Rate
Demand Securities varies according to some objective standard intended to
minimize fluctuation in the values of the instruments. The Portfolio determines
the maturity of Variable Rate Securities in accordance with Rule 2a-7 which
allows the Portfolio to consider certain of such instruments as having
maturities shorter than the maturity date on the face of the instrument.

Strategic Transactions and Derivatives (all Portfolios except DWS Money Market
VIP). A Portfolio may, but is not required to, utilize various other investment
strategies as described below for a variety of purposes, such as hedging various
market risks, managing the effective maturity or duration of fixed-income
securities in a portfolio, or enhancing potential gain. These strategies may be
executed through the use of derivative contracts.

In the course of pursuing these investment strategies, a Portfolio may purchase
and sell exchange-listed and over-the-counter put and call options on
securities, equity and fixed-income indices and other instruments, purchase and
sell futures contracts and options thereon, enter into various transactions such
as swaps, caps, floors, collars, currency forward contracts, currency futures
contracts, currency swaps or options on currencies, or currency futures and
various other currency transactions (collectively, all the above are called
"Strategic Transactions"). In addition, Strategic Transactions may also include
new techniques, instruments or strategies that are permitted as regulatory
changes occur. Strategic Transactions may be used without limit (subject to
certain limitations imposed by the 1940 Act) to attempt to protect against
possible changes in the market value of securities held in or to be purchased
for a Portfolio resulting from securities markets or currency exchange rate
fluctuations, to protect a Portfolio's unrealized gains in the value of its
portfolio securities, to facilitate the sale of such securities for investment
purposes, to manage the effective maturity or duration of fixed-income
securities in a portfolio, or to establish a position in the derivatives markets
as a substitute for purchasing or selling particular securities. Some Strategic
Transactions may also be used to enhance potential gain although no more than 5%
of a Portfolio's assets will be committed to certain Strategic Transactions
entered into for non-hedging purposes, unless permitted by the investment
objective and policies of a Portfolio. Any or all of these investment techniques
may be used at any time and in any combination, and there is no particular
strategy that dictates the use of one technique rather than another, as use of
any Strategic Transaction is a function of numerous variables including market
conditions. The ability of a Portfolio to utilize these Strategic Transactions
successfully will depend on the Advisor's ability to predict pertinent market
movements, which cannot be assured. A Portfolio will comply with applicable
regulatory requirements when implementing these strategies, techniques and
instruments. Strategic Transactions will not be used to alter fundamental
investment purposes and characteristics of a Portfolio, and the Portfolio will
segregate assets (or as provided by applicable regulations, enter into certain
offsetting positions) to cover its obligations under options, futures and swaps
to limit leveraging of a Portfolio.

Strategic Transactions, including derivative contracts, have risks associated
with them including possible default by the other party to the transaction,
illiquidity and, to the extent the Advisor's or a subadvisor's view as to
certain market movements is incorrect, the risk that the use of such Strategic
Transactions could result in losses greater than if they had not been used. Use
of put and call options may result in losses to a Portfolio, force the sale or
purchase of portfolio securities at inopportune times or for prices higher than
(in the case of put options) or lower than (in the case of call options) current
market values, limit the amount of appreciation a Portfolio can realize on its
investments or cause a Portfolio to hold a security it might otherwise sell. The
use of currency transactions can result in a Portfolio incurring losses as a
result of a number of factors including the imposition of exchange controls,
suspension of settlements, or the inability to deliver or receive a specified
currency. The use of options and futures transactions entails certain other
risks. In particular, the variable degree of correlation between price movements
of futures contracts and price movements in the related portfolio position of a
Portfolio creates the possibility that losses on the hedging instrument may be
greater than gains in the value of a Portfolio's position. In addition, futures
and options markets may not be liquid in all circumstances and certain
over-the-counter options may have no markets. As a result, in certain markets, a
Portfolio might not be able to close out a transaction without incurring
substantial losses, if at all. Although the use of futures and options
transactions for hedging should tend to minimize the risk of loss due to a
decline in the value of the hedged position, at the same time they tend to limit
any potential gain which might result from an increase in value of such
position. Finally, the daily variation margin requirements for futures contracts
would create a greater ongoing potential financial risk than would purchases of
options, where the exposure is limited to the cost of the initial premium.
Losses resulting from the use of Strategic Transactions would reduce net asset
value, and possibly income, and such losses can be greater than if the Strategic
Transactions had not been utilized.


General Characteristics of Options. Put options and call options typically have
similar structural characteristics and operational mechanics regardless of the
underlying instrument on which they are purchased or sold. Thus, the following
general discussion relates to each of the particular types of options discussed
in greater detail below. In addition, many Strategic Transactions involving
options require segregation of each Portfolio's assets in special accounts, as
described in the section entitled "Asset Segregation."

A put option gives the purchaser of the option, upon payment of a premium, the
right to sell, and the writer the obligation to buy, the underlying security,
commodity, index, currency or other instrument at the exercise price. For
instance, each Portfolio's purchase of a put option on a security might be
designed to protect its holdings in the underlying instrument (or, in some
cases, a similar instrument) against a substantial decline in the market value
by giving each Portfolio the right to sell such instrument at the option
exercise price. A call option, upon payment of a premium, gives the purchaser of
the option the right to buy, and the seller the obligation to sell, the
underlying instrument at the exercise price. Each Portfolio's purchase of a call
option on a security, financial future, index, currency or other instrument
might be intended to protect each Portfolio against an increase in the price of
the underlying instrument that it intends to purchase in the future by fixing
the price at which it may purchase such instrument. An American style put or
call option may be exercised at any time during the option period while a
European style put or call option may be exercised only upon expiration or
during a fixed period prior thereto. Each Portfolio is authorized to purchase
and sell exchange listed options and over-the-counter options ("OTC options").
Exchange listed options are issued by a regulated intermediary such as the
Options Clearing Corporation ("OCC"), which guarantees the performance of the
obligations of the parties to such options. The discussion below uses the OCC as
an example, but is also applicable to other financial intermediaries.


With certain exceptions, OCC issued and exchange listed options generally settle
by physical delivery of the underlying security or currency, although in the
future cash settlement may become available. Index options and Eurodollar
instruments are cash settled for the net amount, if any, by which the option is
"in-the-money" (i.e., where the value of the underlying instrument exceeds, in
the case of a call option, or is less than, in the case of a put option, the
exercise price of the option) at the time the option is exercised. Frequently,
rather than taking or making delivery of the underlying instrument through the
process of exercising the option, listed options are closed by entering into
offsetting purchase or sale transactions that do not result in ownership of the
new option.


Each Portfolio's ability to close out its position as a purchaser or seller of
an OCC or exchange listed put or call option is dependent, in part, upon the
liquidity of the option market. Among the possible reasons for the absence of a
liquid option market on an exchange are: (i) insufficient trading interest in
certain options; (ii) restrictions on transactions imposed by an exchange; (iii)
trading halts, suspensions or other restrictions imposed with respect to
particular classes or series of options or underlying securities including
reaching daily price limits; (iv) interruption of the normal operations of the
OCC or an exchange; (v) inadequacy of the facilities of an exchange or OCC to
handle current trading volume; or (vi) a decision by one or more exchanges to
discontinue the trading of options (or a particular class or series of options),
in which event the relevant market for that option on that exchange would cease
to exist, although outstanding options on that exchange would generally continue
to be exercisable in accordance with their terms.


The hours of trading for listed options may not coincide with the hours during
which the underlying financial instruments are traded. To the extent that the
option markets close before the markets for the underlying financial
instruments, significant price and rate movements can take place in the
underlying markets that cannot be reflected in the option markets.


OTC options are purchased from or sold to securities dealers, financial
institutions or other parties ("Counterparties") through direct bilateral
agreement with the Counterparty. In contrast to exchange listed options, which
generally have standardized terms and performance mechanics, all the terms of an
OTC option, including such terms as method of settlement, term, exercise price,
premium, guarantees and security, are set by negotiation of the parties. Each
Portfolio expects generally to enter into OTC options that have cash settlement
provisions, although it is not required to do so.

Unless the parties provide for it, there is no central clearing or guaranty
function in an OTC option. As a result, if the Counterparty fails to make or
take delivery of the security, currency or other instrument underlying an OTC
option it has entered into with each Portfolio or fails to make a cash
settlement payment due in accordance with the terms of that option, each
Portfolio will lose any premium it paid for the option as well as any
anticipated benefit of the transaction. Accordingly, the Advisor or a subadvisor
must assess the creditworthiness of each such Counterparty or any guarantor or
credit enhancement of the Counterparty's credit to determine the likelihood that
the terms of the OTC option will be satisfied. Each Portfolio will engage in OTC
option transactions only with US government securities dealers recognized by the
Federal Reserve Bank of New York as "primary dealers" or broker/dealers,
domestic or foreign banks or other financial institutions which have received
(or the guarantors of the obligation of which have received) a short-term credit
rating of A-1 from S&P or P-1 from Moody's or an equivalent rating from any
other nationally recognized statistical rating organization ("NRSRO") or, in the
case of OTC currency transactions, are determined to be of equivalent credit
quality by the Advisor. The staff of the SEC currently takes the position that
OTC options purchased by each Portfolio, and portfolio securities "covering" the
amount of each Portfolio's obligation pursuant to an OTC option sold by it (the
cost of any sell-back plus the in-the-money amount, if any) are illiquid, and
are subject to each Portfolio's limitation on investing no more than 15% of its
net assets in illiquid securities.

If each Portfolio sells a call option, the premium that it receives may serve as
a partial hedge, to the extent of the option premium, against a decrease in the
value of the underlying securities or instruments in its portfolio or will
increase each Portfolio's income. The sale of put options can also provide
income.

Each Portfolio may purchase and sell call options on securities including, but
not limited to, US Treasury and agency securities, mortgage-backed securities,
foreign sovereign debt, corporate debt securities, equity securities (including
convertible securities) and Eurodollar instruments that are traded on US and
foreign securities exchanges and in the over-the-counter markets, and on
securities indices, currencies and futures contracts. All calls sold by each
Portfolio must be "covered" (i.e., a Portfolio must own the securities or
futures contract subject to the call) or must meet the asset segregation
requirements described below as long as the call is outstanding. Even though
each Portfolio will receive the option premium to help protect it against loss,
a call sold by each Portfolio exposes each Portfolio during the term of the
option to possible loss of opportunity to realize appreciation in the market
price of the underlying security or instrument and may require each Portfolio to
hold a security or instrument which it might otherwise have sold.

Each Portfolio may purchase and sell put options on securities including, but
not limited to, US Treasury and agency securities, mortgage-backed securities,
foreign sovereign debt, corporate debt securities, equity securities (including
convertible securities) and Eurodollar instruments (whether or not it holds the
above securities in its portfolio), and on securities indices, currencies and
futures contracts other than futures on individual corporate debt and individual
equity securities. Each Portfolio will not sell put options if, as a result,
more than 50% of each Portfolio's total assets would be required to be
segregated to cover its potential obligations under such put options other than
those with respect to futures and options thereon. In selling put options, there
is a risk that each Portfolio may be required to buy the underlying security at
a disadvantageous price above the market price.


General Characteristics of Futures. A Portfolio may enter into futures contracts
or purchase or sell put and call options on such futures as a hedge against
anticipated interest rate, currency or equity market changes, and for duration
management, risk management and return enhancement purposes. Futures are
generally bought and sold on the commodities exchanges where they are listed
with payment of initial and variation margin as described below. The sale of a
futures contract creates a firm obligation by a Portfolio, as seller, to deliver
to the buyer the specific type of financial instrument called for in the
contract at a specific future time for a specified price (or, with respect to
index futures and Eurodollar instruments, the net cash amount). Options on
futures contracts are similar to options on securities except that an option on
a futures contract gives the purchaser the right in return for the premium paid
to assume a position in a futures contract and obligates the seller to deliver
such position.

The Advisor has claimed an exclusion with respect to the Portfolios and the
Portfolios are excluded from the definition of the term "commodity pool
operator" under the Commodity Exchange Act and therefore are not subject to
commodity pool operator registration and regulation under the Commodity Exchange
Act. Futures and options on futures may be entered into for bona fide hedging,
risk management (including duration management) or other portfolio and return
enhancement management purposes to the extent consistent with the exclusion from
commodity pool operator registration. Typically, maintaining a futures contract
or selling an option thereon requires a Portfolio to deposit with a financial
intermediary or futures commission merchant as security for its obligations an
amount of cash or other specified assets (initial margin) which initially is
typically 1% to 10% of the face amount of the contract (but may be higher in
some circumstances). Additional cash or assets (variation margin) may be
required to be deposited thereafter on a daily basis as the mark to market value
of the contract fluctuates. The purchase of an option on financial futures
involves payment of a premium for the option without any further obligation on
the part of a Portfolio. If a Portfolio exercises an option on a futures
contract it will be obligated to post initial margin (and potential subsequent
variation margin) for the resulting futures position just as it would for any
position. Futures contracts and options thereon are generally settled by
entering into an offsetting transaction but there can be no assurance that the
position can be offset prior to settlement at an advantageous price, nor that
delivery will occur.

Options on Securities Indices and Other Financial Indices. A Portfolio also may
purchase and sell call and put options on securities indices and other financial
indices and in so doing can achieve many of the same objectives it would achieve
through the sale or purchase of options on individual securities or other
instruments. Options on securities indices and other financial indices are
similar to options on a security or other instrument except that, rather than
settling by physical delivery of the underlying instrument, they settle by cash
settlement, i.e., an option on an index gives the holder the right to receive,
upon exercise of the option, an amount of cash if the closing level of the index
upon which the option is based exceeds, in the case of a call, or is less than,
in the case of a put, the exercise price of the option (except if, in the case
of an OTC option, physical delivery is specified). This amount of cash is equal
to the excess of the closing price of the index over the exercise price of the
option, which also may be multiplied by a formula value. The seller of the
option is obligated, in return for the premium received, to make delivery of
this amount. The gain or loss on an option on an index depends on price
movements in the instruments making up the market, market segment, industry or
other composite on which the underlying index is based, rather than price
movements in individual securities, as is the case with respect to options on
securities.

Currency Transactions. A Portfolio may engage in currency transactions with
Counterparties primarily in order to hedge, or manage the risk of the value of
portfolio holdings denominated in particular currencies against fluctuations in
relative value or to enhance returns. Currency transactions include forward
currency contracts, exchange listed currency futures, exchange listed and OTC
options on currencies, and currency swaps. A forward currency contract involves
a privately negotiated obligation to purchase or sell (with delivery generally
required) a specific currency at a future date, which may be any fixed number of
days from the date of the contract agreed upon by the parties, at a price set at
the time of the contract. A currency swap is an agreement to exchange cash flows
based on the notional difference among two or more currencies and operates
similarly to an interest rate swap, which is described below. A Portfolio may
enter into currency transactions with Counterparties which have received (or the
guarantors of the obligations which have received) a credit rating of A-1 or P-1
by S&P or Moody's, respectively, or that have an equivalent rating from a NRSRO
or (except for OTC currency options) are determined to be of equivalent credit
quality by the Advisor or a subadvisor.

With respect to hedging, a Portfolio's dealings in forward currency contracts
and other currency transactions such as futures, options, options on futures and
swaps may involve hedging either specific transactions or portfolio positions
except as described below. Transaction hedging is entering into a currency
transaction with respect to specific assets or liabilities of a Portfolio, which
will generally arise in connection with the purchase or sale of its portfolio
securities or the receipt of income therefrom. Position hedging is entering into
a currency transaction with respect to portfolio security positions denominated
in, exposed to or generally quoted in that currency.

A Portfolio generally will not enter into a transaction to hedge currency
exposure to an extent greater, after netting all transactions intended wholly or
partially to offset other transactions, than the aggregate market value (at the
time of entering into the transaction) of the securities held in its portfolio
that are denominated in, exposed to or generally quoted in or currently
convertible into such currency, other than with respect to proxy hedging or
cross hedging as described below.

A Portfolio may also cross-hedge currencies by entering into transactions to
purchase or sell one or more currencies that are expected to decline in value
relative to other currencies to which a Portfolio has or in which a Portfolio
expects to have portfolio exposure.

To reduce the effect of currency fluctuations on the value of existing or
anticipated holdings of portfolio securities, a Portfolio may also engage in
proxy hedging. Proxy hedging is often used when the currency to which a
Portfolio's portfolio is exposed is difficult to hedge or to hedge against the
dollar. Proxy hedging entails entering into a commitment or option to sell a
currency whose changes in value are generally considered to be correlated to a
currency or currencies in which some or all of a Portfolio's portfolio
securities are or are expected to be denominated, in exchange for US dollars.
The amount of the commitment or option would not exceed the value of a
Portfolio's securities denominated in correlated currencies. Currency hedging
involves some of the same risks and considerations as other transactions with
similar instruments. Currency transactions can result in losses to a Portfolio
if the currency being hedged fluctuates in value to a degree or in a direction
that is not anticipated. Further, there is the risk that the perceived
correlation between various currencies may not be present or may not be present
during the particular time that a Portfolio is engaging in proxy hedging. If a
Portfolio enters into a currency hedging transaction, a Portfolio will comply
with the asset segregation requirements described below.

Risks of Currency Transactions. Currency transactions are subject to risks
different from those of other portfolio transactions. Because currency control
is of great importance to the issuing governments and influences economic
planning and policy, purchases and sales of currency and related instruments can
be negatively affected by government exchange controls, blockages, and
manipulations or exchange restrictions imposed by governments. These can result
in losses to a Portfolio if it is unable to deliver or receive currency or funds
in settlement of obligations and could also cause hedges it has entered into to
be rendered useless, resulting in full currency exposure as well as incurring
transaction costs. Buyers and sellers of currency futures are subject to the
same risks that apply to the use of futures generally. Further, settlement of a
currency futures contract for the purchase of most currencies must occur at a
bank based in the issuing nation. Trading options on currency futures is
relatively new, and the ability to establish and close out positions on such
options is subject to the maintenance of a liquid market which may not always be
available. Currency exchange rates may fluctuate based on factors extrinsic to
that country's economy.


Swaps, Caps, Floors and Collars. Among the Strategic Transactions into which a
Portfolio may enter are interest rate, credit default, currency, index and other
swaps and the purchase or sale of related caps, floors and collars. A Portfolio
expects to enter into these transactions primarily to preserve a return or
spread on a particular investment or portion of its portfolio, to protect
against currency fluctuations, as a duration management technique or to protect
against any increase in the price of securities a Portfolio anticipates
purchasing at a later date or to enhance returns. A Portfolio will not sell
interest rate caps or floors where it does not own securities or other
instruments providing the income stream a Portfolio may be obligated to pay.
Interest rate swaps involve the exchange by a Portfolio with another party of
their respective commitments to pay or receive interest, e.g., an exchange of
floating rate payments for fixed rate payments with respect to a notional amount
of principal. A currency swap is an agreement to exchange cash flows on a
notional amount of two or more currencies based on the relative value
differential among them and an index swap is an agreement to swap cash flows on
a notional amount based on changes in the values of the reference indices. The
purchase of a cap entitles the purchaser to receive payments on a notional
principal amount from the party selling such cap to the extent that a specified
index exceeds a predetermined interest rate or amount. The purchase of a floor
entitles the purchaser to receive payments on a notional principal amount from
the party selling such floor to the extent that a specified index falls below a
predetermined interest rate or amount. A collar is a combination of a cap and a
floor that preserves a certain return within a predetermined range of interest
rates or values.

A Portfolio will usually enter into swaps on a net basis, i.e., the two payment
streams are netted out in a cash settlement on the payment date or dates
specified in the instrument, with a Portfolio receiving or paying, as the case
may be, only the net amount of the two payments. Inasmuch as a Portfolio will
segregate assets (or enter into offsetting positions) to cover its obligations
under swaps, the Advisor and a Portfolio believe such obligations do not
constitute senior securities under the 1940 Act and, accordingly, will not treat
them as being subject to its borrowing restrictions. A Portfolio will not enter
into any swap, cap, floor or collar transaction unless, at the time of entering
into such transaction, the unsecured long-term debt of the Counterparty,
combined with any credit enhancements, is rated at least A by S&P or Moody's or
has an equivalent rating from another NRSRO or is determined to be of equivalent
credit quality by the Advisor. If there is a default by the Counterparty, a
Portfolio may have contractual remedies pursuant to the agreements related to
the transaction. The swap market has grown substantially in recent years with a
large number of banks and investment banking firms acting both as principals and
as agents utilizing standardized swap documentation. As a result, the swap
market has become relatively liquid. Caps, floors and collars are more recent
innovations for which standardized documentation has not yet been fully
developed and, accordingly, they are less liquid than swaps.

DWS Balanced VIP may invest up to 15% of its total assets in credit default
swaps (measured by the notional amount of the credit default swap). A credit
default swap is a contract between a buyer and a seller of protection against a
pre-defined credit event. The buyer of protection pays the seller a fixed
regular fee provided that no event of default on an underlying reference
obligation has occurred. If an event of default occurs, the seller must pay the
buyer the full notional value, or "par value," of the reference obligation in
exchange for the reference obligation. Credit default swaps are used as a means
of "buying" credit protection, i.e., attempting to mitigate the risk of default
or credit quality deterioration in some portion of the Portfolio's holdings, or
"selling" credit protection, i.e., attempting to gain exposure to an underlying
issuer's credit quality characteristics without directly investing in that
issuer. No more than 5% of DWS Balanced VIP 's total assets may be invested in
credit default swaps for purposes of buying credit protection on individual
securities if the Portfolio does not own the underlying security or securities
at the time of investment. Where the Portfolio is a seller of credit protection,
it effectively adds leverage to its portfolio because, in addition, to its total
net assets, the Portfolio would be subject to investment exposure on the
notional amount of the swap. The Portfolio will only sell credit protection with
respect to securities in which it would be authorized to invest directly. The
Portfolio currently considers credit default swaps to be illiquid and treats the
market value of the contract as illiquid for purposes of determining compliance
with the Portfolio's restrictions on investing in illiquid securities.

If the Portfolio is a buyer of a credit default swap and no event of default
occurs, the Portfolio will lose its investment and recover nothing. However, if
the Portfolio is a buyer and an event of default occurs, the Portfolio will
receive the full notional value of the reference obligation that may have little
or no value. As a seller, the Portfolio receives a fixed rate of income through
the term of the contract (typically between six months and three years),
provided that there is no default event. If an event of default occurs, the
seller must pay the buyer the full notional value of the reference obligation.
Credit default swaps involve greater risks than if the Portfolio had invested in
the reference obligation directly.

The Portfolio may use credit default swaps to gain exposure to particular
issuers or particular markets through investments in portfolios of credit
default swaps, such as Dow Jones CDX.NA.HY certificates. By investing in
certificates representing interests in a basket of credit default swaps, the
Portfolio is taking credit risk with respect to an entity or group of entities
and providing credit protection to the swap counterparties. For example, the CDX
EM is a tradable basket of 19 credit default swaps on country credits which
seeks to replicate the returns on the indices of a broad group of emerging
markets countries. The credits are a subset of the countries represented by the
JPMorgan Emerging Markets Bond Index Global Diversified. By purchasing interests
in CDX EM, the Portfolio is gaining emerging markets exposure through a single
investment. Unlike other types of credit default swaps which are generally
considered illiquid, credit default swap certificates generally can be sold
within seven days and are not subject to the Portfolio's restrictions on
investing in illiquid securities.





Commodity-Linked Derivative Instruments. DWS Balanced VIP may invest in
commodity-linked derivative instruments, in particular in structured notes. The
value of a commodity-linked derivative instrument typically is based on the
price movements of a physical commodity, a commodity futures contract or
commodity index, or some other readily measurable economic variable dependent
upon changes in the value of commodities or the commodities markets. The
Portfolio invests in commodity-linked derivative investments that are hybrid
instruments excluded from regulation under the Commodity Exchange Act and the
rules thereunder. Additionally, from time to time the Portfolio may invest in
other hybrid instruments that do not qualify for exemption from regulation under
the Commodity Exchange Act.

The Portfolio will invest in derivative debt instruments with principal and/or
coupon payments linked to the value of commodities, commodity futures contracts,
or the performance of commodity indices. These are "commodity-linked" or
"index-linked" notes. They are sometimes referred to as "structured notes"
because the terms of the debt instrument may be structured by the issuer of the
note and the purchaser of the note, such as the Portfolio. These notes may be
issued by banks, brokerage firms, insurance companies and other corporations.

The values of these notes will rise and fall in response to changes in the
underlying commodity or related index or investment. These notes expose the
Portfolio economically to movements in commodity prices, but a particular note
is primarily a debt obligation. These notes also are subject to credit and
interest rate risks that in general affect the value of debt securities.
Therefore, at the maturity of the note, the Portfolio may receive more or less
principal than it originally invested. The Portfolio might receive interest
payments on the note that are more or less than the stated coupon interest rate
payments.

The structured notes the Portfolio enters into are expected to involve leverage,
meaning that the value of the instrument will be calculated as a multiple of the
upward or downward price movement of the underlying index. The prices of
commodity-linked instruments may move in different directions than investments
in traditional equity and debt securities in periods of rising inflation. Of
course, there can be no guarantee that the Portfolio's commodity-linked
investments would not be correlated with traditional financial assets under any
particular market conditions.

Commodity-linked structured notes may be issued by US and foreign banks,
brokerage firms, insurance companies and other corporations. These notes are
debt securities of the issuer and so, in addition to fluctuating in response to
changes in the underlying commodity index, will be subject to credit and
interest rate risks that typically affect debt securities.

The commodity-linked instruments the Portfolio invests in may be wholly
principal protected, partially principal protected or offer no principal
protection. With a wholly principal protected instrument, the Portfolio will
receive at maturity the greater of the par value of the note or the increase in
value of the underlying index. Partially protected instruments may suffer some
loss of principal up to a specified limit if the underlying index declines in
value during the term of the instrument. For instruments without principal
protection, there is a risk that the instrument could lose all of its value if
the index declines sufficiently. The Advisor's decision on whether and to what
extent to use principal protection depends in part on the cost of the
protection. In addition, the ability of the Portfolio to take advantage of any
protection feature depends on the creditworthiness of the issuer of the
instrument.

Derivative strategies and the writing of uncovered (or so-called "naked")
options are speculative and may hurt a Portfolio's performance. The Portfolio
may attempt to hedge its investments in order to mitigate risk, but it is not
required to do so. The benefits to be derived from a Portfolio's derivatives and
options strategy are dependent upon the Advisor's ability to discern pricing
inefficiencies and predict trends in the commodities and other markets, which
decisions could prove to be inaccurate. This requires different skills and
techniques than predicting changes in the price of individual stocks or
fixed-income securities, and there can be no assurance that the use of this
strategy will be successful.


Eurodollar Instruments. A Portfolio may make investments in Eurodollar
instruments for hedging purposes or to enhance potential gain. Eurodollar
instruments are US dollar-denominated futures contracts or options thereon which
are linked to the London Interbank Offered Rate ("LIBOR"), although foreign
currency-denominated instruments are available from time to time. Eurodollar
futures contracts enable purchasers to obtain a fixed rate for the lending of
funds and sellers to obtain a fixed rate for borrowings. A Portfolio might use
Eurodollar futures contracts and options thereon to hedge against changes in
LIBOR, to which many interest rate swaps and fixed income instruments are
linked.

Risks of Strategic Transactions Outside the US. When conducted outside the US,
Strategic Transactions may not be regulated as rigorously as in the US, may not
involve a clearing mechanism and related guarantees, and are subject to the risk
of governmental actions affecting trading in, or the prices of, foreign
securities, currencies and other instruments. The value of such positions also
could be adversely affected by: (i) other complex foreign political, legal and
economic factors, (ii) lesser availability than in the US of data on which to
make trading decisions, (iii) delays in a Portfolio's ability to act upon
economic events occurring in foreign markets during non-business hours in the
US, (iv) the imposition of different exercise and settlement terms and
procedures and margin requirements than in the US, and (v) lower trading volume
and liquidity.



Combined Transactions. A Portfolio may enter into multiple transactions,
including multiple options transactions, multiple futures transactions, multiple
currency transactions (including forward currency contracts) and multiple
interest rate transactions and any combination of futures, options, currency and
interest rate transactions ("component" transactions), instead of a single
Strategic Transaction, as part of a single or combined strategy when, in the
opinion of the Advisor or Subadvisor, it is in the best interests of a Portfolio
to do so. A combined transaction will usually contain elements of risk that are
present in each of its component transactions. Although combined transactions
are normally entered into based on the Advisor's or a subadvisor's judgment that
the combined strategies will reduce risk or otherwise more effectively achieve
the desired portfolio management goal, it is possible that the combination will
instead increase such risks or hinder achievement of the portfolio management
objective.



Warrants. Each Portfolio (except DWS Money Market VIP) may invest in warrants up
to five percent of the value of its respective net assets. The holder of a
warrant has the right, until the warrant expires, to purchase a given number of
shares of a particular issuer at a specified price. Such investments can provide
a greater potential for profit or loss than an equivalent investment in the
underlying security. Prices of warrants do not necessarily move, however, in
tandem with the prices of the underlying securities and are, therefore,
considered speculative investments. Warrants pay no dividends and confer no
rights other than a purchase option. Thus, if a warrant held by a Portfolio were
not exercised by the date of its expiration, a Portfolio would lose the entire
purchase price of the warrant.

Zero Coupon Government Securities. Subject to its investment objective and
policies, a Portfolio may invest in zero coupon US Government securities. Zero
coupon bonds are purchased at a discount from the face amount. The buyer
receives only the right to receive a fixed payment on a certain date in the
future and does not receive any periodic interest payments. These securities may
include those created directly by the US Treasury and those created as
collateralized obligations through various proprietary custodial, trust or other
relationships. The effect of owning instruments which do not make current
interest payments is that a fixed yield is earned not only on the original
investment but also, in effect, on all discount accretion during the life of the
obligations. This implicit reinvestment of earnings at the same rate eliminates
the risk of being unable to reinvest distributions at a rate as high as the
implicit yield on the zero coupon bond, but at the same time eliminates any
opportunity to reinvest earnings at higher rates. For this reason, zero coupon
bonds are subject to substantially greater price fluctuations during periods of
changing market interest rates than those of comparable securities that pay
interest currently, which fluctuation is greater as the period to maturity is
longer. Zero coupon bonds created as collateralized obligations are similar to
those created through the US Treasury, but the former investments do not provide
absolute certainty of maturity or of cash flows after prior classes of the
collateralized obligations are retired. No Portfolio currently intends to invest
more than 20% of its net assets in zero coupon US Government securities.

The Underlying Funds

The Portfolios will always invest in the share class of the underlying funds
with the lowest fees and expenses. Each Portfolio will purchase or sell
securities to: (a) accommodate purchases and sales of a Portfolio's shares, (b)
change the percentages of the Portfolio's assets invested in each of the
underlying funds in response to changing market conditions, and (c) maintain or
modify the allocation of a Portfolio's assets in accordance with the Portfolio's
target investment allocations.

The following is a list of the underlying funds in which the Portfolios may
invest:
<TABLE>


<S>                                                         <C>
DWS Emerging Markets Fixed Income Fund                      DWS Japan Equity Fund
DWS Global Bond Fund                                        DWS Large Company Growth Fund
DWS GNMA Fund                                               DWS RREEF Global Real Estate Securities Fund
DWS High Income Plus Fund                                   DWS Enhanced S&P 500 Index Fund
DWS Inflation Protected Plus Fund                           DWS Small Cap Core Fund
DWS Short Duration Fund                                     DWS Small Cap Value Fund
DWS Short Duration Plus Fund                                DWS Dreman Mid Cap Value Fund
DWS Floating Rate Plus Fund                                 DWS Dreman Small Cap Value Fund
DWS Commodity Securities Fund                               DWS RREEF Global Infrastructure Fund
DWS Disciplined Market Neutral Fund                         DWS RREEF Real Estate Securities Fund
DWS Disciplined Long/Short Growth Fund                      DWS U.S. Bond Index Fund
DWS Emerging Markets Equity Fund
DWS Communications Fund
DWS Equity Partners Fund
DWS Latin America Equity Fund
DWS Gold & Precious Metals Fund
DWS Europe Equity Fund
DWS International Value Opportunities Fund


</TABLE>

                INVESTMENT POLICIES AND TECHNIQUES FOR THE FUNDS

General Investment Objectives and Policies

Except as otherwise indicated, each Fund's investment objectives and policies
are not fundamental and may be changed without a vote of shareholders. If there
is a change in a Fund's investment objective, shareholders should consider
whether the Fund remains an appropriate investment in light of their then
current financial position and needs. There can be no assurance that each Fund's
objectives will be met.

Descriptions in this Statement of Additional Information of a particular
investment practice or technique in which the Underlying DWS Funds may engage
(such as short selling, hedging, etc.) or a financial instrument which the
Underlying DWS Funds may purchase (such as options, etc.) are meant to describe
the spectrum of investments that the Advisor in its discretion, might, but is
not required to, use in managing a fund's assets. The Advisor may, in its
discretion, at any time employ such practice, technique or instrument for one or
more funds, but not for all funds advised by it. Furthermore, it is possible
that certain types of financial instruments or investment techniques described
herein may not be available, permissible, economically feasible or effective for
their intended purposes in all markets. Certain practices, techniques, or
instruments may not be principal activities of a fund, but, to the extent
employed, could from time to time have a material impact on a fund's
performance. It is possible that certain investment practices and techniques
described below may not be permissible for a Fund based on its investment
restrictions, as described herein, and in the Fund's applicable prospectus.

The Funds may each borrow money for temporary, emergency or other purposes,
including investment leverage purposes, as determined by the Trustees. The 1940
Act requires borrowings to have 300% asset coverage. The Funds may each also
enter into reverse repurchase agreements.

Exchange Traded Funds. In addition to investing in DWS Funds (the "underlying
funds"), the Funds may invest in ETFs up to the maximum amount allowable under
the 1940 Act, when the desired economic exposure to a particular market or
sector is not available through a DWS Fund. ETFs are typically open-end
investment companies, unit investment trusts or depositary receipts, listed on a
stock exchange. The Funds might do so as a way of gaining exposure to the
segment of the equity or fixed-income markets represented by the ETFs'
portfolio. Each Fund will indirectly bear its proportionate share of any
management or other fees by an ETF in which it invests.

For example, a Fund may invest in a variety of ETFs which seek to track the
composition and performance of specific indexes or a specific portion of an
index. These index-based investments hold substantially all of their assets in
securities representing their specific index. Accordingly, the main risk of
investing in index-based investments is the same as investing in a portfolio of
equity securities comprising the index. The market prices of index-based
investments will fluctuate in accordance with both changes in the market value
of their underlying portfolio securities and due to supply and demand for the
instruments on the exchanges on which they are traded (which may result in their
trading at a discount or premium to their NAVs). Index-based investments may not
replicate exactly the performance of their specified index because of
transaction costs and because of the temporary unavailability of certain
component securities of the index. In addition, an index-based investment
tracking a specific sector may be adversely affected by the performance of that
specific sector or group of industries on which it is based.

Examples of index-based ETFs include:

SPDRs(R): SPDRs, an acronym for "Standard & Poor's Depositary Receipts," are
based on the S&P 500 Composite Stock Price Index. They are issued by the SPDR
Trust, a unit investment trust that holds shares of substantially all the
companies in the S&P 500 Index in substantially the same weighting and seeks to
closely track the price performance and dividend yield of the Index.

MidCap SPDRs(R): MidCap SPDRs are based on the S&P MidCap 400 Index. They are
issued by the MidCap SPDR Trust, a unit investment trust that holds a portfolio
of securities consisting of substantially all of the common stocks in the S&P
MidCap 400 Index in substantially the same weighting and seeks to closely track
the price performance and dividend yield of the Index.

Select Sector SPDRs(R): Select Sector SPDRs are based on a particular sector or
group of industries that are represented by a specified Select Sector Index
within the Standard & Poor's Composite Stock Price Index. They are issued by The
Select Sector SPDR Trust, an open-end management investment company with nine
portfolios that each seeks to closely track the price performance and dividend
yield of a particular Select Sector Index.

DIAMONDS(SM):  DIAMONDS are based on the Dow Jones Industrial Average(SM).  They
are issued by the DIAMONDS Trust, a unit investment trust that holds a portfolio
of all the component common stocks of the Dow Jones Industrial Average and seeks
to closely track the price performance and dividend yield of the Dow.

Nasdaq-100 Shares: Nasdaq-100 Shares are based on the Nasdaq 100 Index. They are
issued by the Nasdaq-100 Trust, a unit investment trust that holds a portfolio
consisting of substantially all of the securities, in substantially the same
weighting, as the component stocks of the Nasdaq-100 Index and seeks to closely
track the price performance and dividend yield of the Index.

In addition, each Fund may allocate cash balances for cash management purposes
or as part of its investment strategy among affiliated funds including money
market funds, short-term bond funds and Cash Management QP Trust or one or more
affiliated entities as described below.

Investment of Uninvested Cash Balances. The Funds may each have cash balances
that have not been invested in portfolio securities, as appropriate, or in the
underlying portfolios ("Uninvested Cash"). Uninvested Cash may result from a
variety of sources, including dividends or interest received from investments,
unsettled securities transactions, reserves held for investment strategy
purposes, scheduled maturity of investments, liquidation of investment
securities to meet anticipated redemptions and dividend payments, and new cash
received from investors. In addition, the Funds may invest a portion of their
assets in money market securities or other short term obligations as part of
their investment strategy. Pursuant to an Exemptive Order issued by the SEC,
each Fund may use Uninvested Cash to purchase shares of affiliated funds
including money market funds, short-term bond funds and Cash Management QP Trust
or one or more future entities for which DIMA acts as trustee or investment
advisor that operate as cash management investment vehicles and that are
excluded from the definition of investment company pursuant to Section 3(c)(1)
or 3(c)(7) of the 1940 Act (collectively, the "Central Funds") in excess of the
limitations of Section 12(d)(1) of the 1940 Act. Investment by each Fund in
shares of the Central Funds will be in accordance with Fund's investment
policies and restrictions as set forth in its registration statement.

Certain of the Central Funds comply with Rule 2a-7 under the Act. The other
Central Funds are or will be short-term bond funds that invest in fixed-income
securities and maintain a dollar-weighted average maturity of three years or
less. Each of the Central Funds will be managed specifically to maintain a
highly liquid portfolio, and access to them will enhance each Fund's ability to
manage Uninvested Cash.

Each Fund will invest Uninvested Cash in Central Funds only to the extent that
each Fund's aggregate direct investment in the Central Funds does not exceed 25%
of its total assets in shares of the Central Funds, which would not include
investments in the Central Funds that may be made by underlying portfolios in
which the Funds invest. Purchase and sales of shares of Central Funds are made
at net asset value.

Master/feeder Fund Structure. The Board of Trustees has the discretion to retain
the current distribution arrangement for the Funds while investing in a master
fund in a master/feeder fund structure as described below.

A master/feeder fund structure is one in which a fund (a "feeder fund"), instead
of investing directly in a portfolio of securities, invests most or all of its
investment assets in a separate registered investment company (the "master
fund") with substantially the same investment objective and policies as the
feeder fund. Such a structure permits the pooling of assets of two or more
feeder funds, preserving separate identities or distribution channels at the
feeder fund level. Based on the premise that certain of the expenses of
operating an investment portfolio are relatively fixed, a larger investment
portfolio may eventually achieve a lower ratio of operating expenses to average
net assets through a master/feeder fund structure. An existing investment
company is able to convert to a feeder fund by selling all of its investments,
which involves brokerage and other transaction costs and realization of a
taxable gain or loss, or by contributing its assets to the master fund and
avoiding transaction costs and, if proper procedures are followed, the
realization of taxable gain or loss.

The Underlying DWS Funds

Each Fund will purchase or sell shares in the Underlying DWS Funds to: (a)
accommodate purchases and sales of the Fund's shares, (b) change the percentages
of the Fund's assets invested in each of the Underlying DWS Funds in response to
changing market conditions, and (c) maintain or modify the allocation of the
Fund's assets in accordance with the Fund's target date.

The managers will allocate Fund assets among Underlying DWS Funds based on the
Fund's target investment horizon, current or expected market conditions or to
manage risk. The Underlying DWS Funds have been selected to represent a broad
spectrum of investment options for the Funds.

Risk Factors of Underlying DWS Funds

In pursuing their investment objectives, each of the Underlying DWS Funds is
permitted investment strategies in a wide range of investment techniques. The
Underlying DWS Funds' risks are determined by the nature of the securities held
and the portfolio management strategies used by the Advisor. Further information
about the Underlying DWS Funds is contained in the prospectuses of such funds.
Because each Fund invests in certain of the Underlying DWS Funds, shareholders
of each Fund will be affected by the portfolio management strategies and
investment policies of the Underlying DWS Funds in direct proportion to the
amount of assets the Fund allocates to each Underlying DWS Fund.

The following are the Underlying DWS Funds in which the Funds may invest.


DWS Commodity Securities Fund. The fund's investment objective is capital
appreciation. The fund seeks to achieve its investment objective by focusing on
commodities-related securities and equity-related securities, including
commodities-related structured notes and similar instruments that the Advisor
believes are undervalued but have favorable prospects for appreciation.

DWS Disciplined Market Neutral Fund. The fund seeks capital appreciation
independent of stock market direction. It pursues its objective by investing,
under normal circumstances, in long and short positions of common stock of large
US companies. The managers buy, or take, long positions in common stock that the
managers believe are undervalued and sell, or take, short positions in common
stock that the managers believe are overvalued. The fund's investment strategy
is designed to maintain approximately equal dollar amounts invested in long and
short positions under normal circumstances. By employing this market neutral
strategy, the fund seeks to limit the fund's volatility relative to movements in
the overall stock market (that is, the fund's price movements are not expected
to correlate closely with the market's price movements). The managers attempt to
achieve returns for the fund that exceed the return on an investment in 3-month
US Treasury Bills.



DWS Disciplined Long/Short Growth Fund. The fund seeks capital appreciation. The
fund intends to hold approximately 80%-130% of its net assets in long positions
in stocks that the managers believe will outperform the market and approximately
0%-30% of its net assets in short positions in stocks that the managers believe
will underperform the market. In addition, the fund intends to borrow up to 30%
of its net assets for investment purposes. The fund's equity investments are
mainly common stocks, but may also include other types of equities such as
preferred stocks or convertible securities.




DWS Emerging Markets Equity Fund. The fund seeks long-term growth of capital.
Under normal circumstances, the fund invests at least 80% of net assets, plus
the amount of any borrowings for investment purposes, in emerging market
equities (equities traded mainly in emerging markets or issued by companies that
are organized in emerging markets or have more than half of their business
there).The fund considers "emerging markets" to include any country that is
defined as an emerging or developing economy by any one of the following: The
International Bank for Reconstruction and Development (i.e., the World Bank),
the International Finance Corporation or the United Nations or its authorities.
The fund may invest up to 20% of net assets in equities from the US or other
developed markets. The fund may also invest up to 20% of net assets in US or
emerging market debt securities when portfolio management believes these
securities may perform at least as well as equities. The fund's equity
investments are mainly common stocks, but may also include other types of
equities such as preferred stocks or convertible securities.

DWS Emerging Markets Fixed Income Fund. The fund seeks to provide high current
income and, secondarily, long-term capital appreciation. Under normal
circumstances, the fund invests at least 80% of net assets, plus the amount of
any borrowings for investment purposes, in high yield bonds (also known as "junk
bonds") and other debt securities issued by governments and corporations in
emerging market countries (i.e., the issuer is traded mainly in an emerging
market, is organized under the laws of an emerging market country or is a
company with more than half of its business in emerging markets) or the return
on which is derived primarily from emerging markets. The fund considers
"emerging markets" to include any country that is defined as an emerging or
developing economy by any one of the following: The International Bank for
Reconstruction and Development (i.e., the World Bank), the International Finance
Corporation or the United Nations or its authorities. To help manage risk, the
fund invests at least 50% of total assets in US dollar-denominated securities.
The fund also does not invest more than 40% of total assets in any one country.
The fund may invest up to 20% of net assets, plus the amount of any borrowings
for investment purposes, in debt securities of issuers from the US or other
developed markets, including those that are rated below the fourth credit grade
(i.e., grade BB/Ba and below).




DWS Latin America Equity Fund. The fund seeks long-term capital appreciation.
Under normal circumstances, the fund invests at least 80% of net assets, plus
the amount of any borrowings for investment purposes, in Latin American common
stocks and other equities (equities that are traded mainly on Latin American
markets, issued or guaranteed by a Latin American government or issued by a
company organized under the laws of a Latin American country or any company with
more than half of its business in Latin America). Latin America is defined as
Mexico, Central America, South America and the Spanish speaking islands of the
Caribbean. Although the fund may invest in any Latin American country, it
expects to invest primarily in common stocks of established companies in
Argentina, Brazil, Chile, Colombia, Mexico, Panama and Peru. While most of the
fund's equities are common stocks, some may be other types of equities, such as
convertible stocks or preferred stocks. The fund may invest up to 20% of net
assets in debt securities including junk bonds (i.e., grade BB and below),
including as much as 10% of net assets in securities rated B or lower. Compared
to investment-grade bonds, junk bonds may pay higher yields and have higher
volatility and higher risk of default. Portfolio management will normally sell a
stock when it believes the stock's price is unlikely to go much higher, its
fundamentals have deteriorated, other investments offer better opportunities or
in the course of adjusting the fund's exposure to a given country.


DWS Communications Fund. The fund seeks to maximize total return. Under normal
circumstances, the fund will invest at least 80% of its net assets, plus the
amount of any borrowings for investment purposes (measured at the time of
investment), in securities of companies in the communications field. The fund
normally focuses on the securities of US and foreign companies that are engaged
in the research, development, manufacture or sale of communications services,
technology, equipment or products. The fund may also invest in convertible
securities and in bonds and short-term cash equivalents. Convertible securities
are bonds or preferred stocks that give purchasers the right to exchange the
convertible security for a specified number of shares of a company's common
stock at specified prices within a certain period of time. Purchasers receive
regular interest payments until they exercise their exchange right. The fund may
also invest without limit in stocks and other securities of companies not
publicly traded in the United States, including securities of emerging markets.

DWS Floating Rate Plus Fund. The fund seeks to provide high current income. The
fund invests, under normal circumstances, at least 80% of its total assets in
adjustable rate loans that have a senior right to payment ("Senior Loans") and
other floating rate debt securities. The fund may also borrow money in an amount
up to 33 1/3% of the fund's total assets for a range of purposes, including to
create investment leverage.


DWS Global Bond Fund.  The fund seeks total return,  with an emphasis on current
income;  capital  appreciation is a secondary goal. Under normal  circumstances,
the fund invests at least 80% of net assets,  plus the amount of any  borrowings
for investment  purposes,  in bonds of issuers from around the world,  including
the United  States.  The fund  normally  invests at least 65% of total assets in
investment-grade  bonds.  The  fund  can  buy  many  types  of  income-producing
securities,  among them US and foreign  government  bonds,  corporate  bonds and
mortgage- and asset-backed securities.

DWS GNMA Fund. The fund seeks to produce a high level of income. It does this by
investing, under normal circumstances, at least 80% of net assets, plus the
amount of any borrowings for investment purposes, in "Ginnie Maes," which are
mortgage-backed securities that are issued or guaranteed by the Government
National Mortgage Association (GNMA). The balance of the fund's assets, among
other permitted investments, may be invested in securities issued by the US
government, its agencies or instrumentalities. These securities may not be
guaranteed by the US Treasury or backed by the full faith and credit of the US
government. The fund may also hold up to 10% of its total net assets in
uninvested cash, cash equivalents such as money market securities, repurchase
agreements or shares of money market funds or short-term bond funds, which
investments may not be issued or guaranteed by the US government, its agencies
or instrumentalities.

DWS Gold & Precious Metals Fund. The fund seeks maximum return (principal change
and income). The fund invests at least 80% of net assets, plus the amount of any
borrowings for investment purposes, in common stocks and other equities of US
and foreign companies engaged in activities related to gold, silver, platinum or
other precious metals, and in gold coin and bullion directly. These companies
may be involved in activities such as exploration, mining, fabrication,
processing and distribution. While the fund invest mainly in common stocks, it
may invest up to 20% of net assets in high-quality debt securities of companies
in precious metals and minerals operations, and debt securities whose return is
linked to precious metals prices. The fund's equity investments are mainly
common stocks, but may also include other types of equities such as preferred or
convertible stocks.

DWS Europe Equity Fund. The fund seeks long-term growth of capital. Under normal
circumstances the fund invests at least 80% of its total assets in European
common stocks and other equities (equities that are traded mainly on European
markets or are issued by companies organized under the laws of Europe or do more
than half of their business there). Although the fund may invest in equities of
any size or European country, it tends to focus on common stocks of
multinational companies in industrialized Western and Southern European
countries such as France, Italy, Germany, the Netherlands and the United
Kingdom. While most of the fund's equities are common stock, some may be other
types of equities, such as convertible stocks or preferred stocks. The fund may
invest up to 20% of its total assets in European debt securities, including junk
bonds (i.e., grade BB and below).

DWS High Income Plus Fund. The fund seeks high current income and, as a
secondary objective, capital appreciation. Under normal conditions, the fund
invests at least 65% of its total assets in US dollar-denominated, domestic and
foreign below investment grade fixed income securities (junk bonds), including
those whose issuers are located in countries with new or emerging securities
markets. The fund considers an emerging securities market to be one where the
sovereign debt issued by the government in local currency terms is rated below
investment grade. The fund's investments in fixed income securities may be of
any credit quality and may include securities not paying interest currently and
securities in default. The fund may invest up to 25% of its total assets in
non-US dollar denominated, below investment-grade fixed income securities. The
fund may invest up to 35% of its total assets in cash or money market
instruments in order to maintain liquidity, or in the event that the portfolio
manager determines that securities meeting the fund's investment objectives are
not readily available for purchase.

DWS Inflation Protected Plus Fund. The fund seeks to provide maximum
inflation-adjusted return, consistent with preservation of capital. Under normal
circumstances, the fund will invest at least 80% of its net assets, plus any
borrowings for investment purposes, in inflation-indexed bonds of varying
maturities issued by the US government, non-US governments, their agencies or
instrumentalities, and corporations and derivatives related to these securities.
The fund may invest the remaining portion of its assets in other types of
fixed-income securities, cash or cash equivalents. In an attempt to enhance
return, the fund also employs a global asset allocation strategy, which invests
in instruments across domestic and international fixed-income and currency
markets.

DWS International Value Opportunities Fund. The fund seeks long-term capital
appreciation, with current income as a secondary objective. Under normal
circumstances, the fund invests at least 80% of its assets, determined at the
time of purchase, in the stocks and other securities with equity characteristics
of companies in developed countries outside the United States. Almost all the
companies in which the fund invests are based in the developed foreign countries
that make up the Morgan Stanley Capital International Europe, Australia and Ear
East Index. The fund may also invest a portion of its assets in companies based
in emerging markets of Latin America, the Middle East, Europe, Asia and Africa
if the portfolio managers believe that their return potential more than
compensates for the extra risks associated with these markets. The fund may also
invest up to 20% of its assets in cash equivalents, US investment-grade
fixed-income securities, and US stocks and other equities.

DWS Japan Equity Fund. The fund seeks high capital appreciation. Under normal
circumstances, the fund seeks to achieve its objective by investing at least 80%
of its assets, measured at the time a security is purchased, in Japanese equity
securities (securities issued by companies organized under the laws of Japan or
their affiliates, or by a company that derives more than half of its revenues
from Japan). The fund invests primarily in common stocks of companies of any
size, including up to 30% of net assets in smaller companies that are traded
over-the-counter.

DWS Large Company Growth Fund. The fund seeks long-term growth of capital by
investing, under normal circumstances, at least 80% of its net assets, plus the
amount of any borrowings for investment purposes, in large US companies that are
similar in size to the companies in the Russell 1000(R) Growth Index (as of
March 31, 2008, the Russell 1000(R) Growth Index had a median market
capitalization of $5.27 billion). The fund intends to invest primarily in
companies whose market capitalizations fall within the normal range of the
Index. The fund's equity investments are mainly common stocks, but may also
include other types of equities such as preferred stocks or convertible
securities.




DWS RREEF Global Real Estate Securities Fund. The fund's investment objective is
to seek total return through a combination of current income and long-term
capital appreciation. The fund seeks to achieve this objective by investing
primarily in publicly listed real estate investment trusts (REITs) and real
estate operating companies on a global basis. Under normal circumstances, the
fund will invest at least 80% of its net assets, plus the amount of any
borrowing for investment purposes (calculated at the time of any investment), in
the equity securities of REITs and real estate operating companies listed on
recognized stock exchanges around the world. Equity securities include common
stock, preferred stock and securities convertible into common stock.




DWS S&P 500 Plus Fund (formerly DWS Enhanced S&P 500 Index Fund). The fund seeks
long-term growth and income. The fund's investment program has two main
components or strategies. The fund's primary strategy seeks to replicate the
performance of the Standard & Poor's 500 Composite Stock Price Index (the "S&P
500 Index"). The fund also employs a global tactical asset allocation overlay
component (the "iGAP strategy"), which seeks to enhance the returns provided by
the Index Strategy. Under normal circumstances, the fund intends to invest at
least 80% of its total assets, determined at the time of purchase, in stocks of
companies included in the S&P 500 Index.



DWS Short Duration Fund. The fund seeks to maximize total return consistent with
preservation of capital and prudent investment management, by investing for both
current income and capital appreciation. Under normal circumstances, the fund
invests at least 80% of its assets, determined at the time of purchase, in fixed
income securities. The fund invests in US Treasury, corporate, mortgage-backed
and asset-backed securities, taxable municipal and tax-exempt municipal bonds.
The fund invests primarily in investment-grade short-term fixed income
securities rated within the top three credit rating categories. The fund may
invest up to 15% of its total assets in investment-grade fixed income securities
rated within the fourth highest credit rating category. The fund may invest up
to 25% of its total assets in US dollar-denominated securities of foreign
issuers and governments. The fund's investments in foreign issuers are limited
to US dollar-denominated securities to avoid currency risk. The fund may hold up
to 20% of its total assets in cash or money market instruments in order to
maintain liquidity, or in the event the portfolio managers determine that
securities meeting the fund's investment objective are not otherwise readily
available for purchase. The fund may invest up to 40% of its total assets in
asset-backed securities.

DWS Short Duration Plus Fund. The fund's investment objective is to provide high
income while also seeking to maintain a high degree of stability of
shareholders' capital. The fund invests in securities of varying maturities and
normally seeks to maintain an average portfolio duration of no longer than three
years. The fund invests, under normal market conditions, at least 65% of its
total assets in fixed income securities rated, at the time of purchase, within
the top four long-term rating categories by a nationally recognized statistical
rating organization (a "NRSRO") (or, if unrated, determined by us to be of
similar quality) The fund may invest up to 10% of its assets in US
dollar-denominated, domestic and foreign below investment-grade fixed income
securities (junk bonds) rated in the fifth and sixth long-term rating categories
by a NRSRO (or, if unrated, determined by us to be of similar quality),
including those whose issuers are located in countries with new or emerging
securities markets. The fund considers an emerging securities market to be one
where the sovereign debt issued by the government in local currency terms is
rated below investment-grade. A portion of high yield securities purchased for
the fund may consist of non-US dollar denominated, below investment-grade fixed
income securities. The fund can invest up to 15% of its net assets in illiquid
securities. In an attempt to enhance return, the fund also employs a global
allocation strategy, which invests in instruments across domestic and
international fixed income and currency markets.


DWS Small Cap Core Fund. The fund seeks to provide long-term capital growth.
Under normal circumstances, the fund invests at least 80% of net assets, plus
the amount of any borrowings for investment purposes, in common stocks of small
US companies with potential for above-average long-term capital growth. These
companies are similar in size to the companies in the Russell 2000 Index (as of
December 31, 2008, the Russell 2000 Index had a median market capitalization of
$319 million). The fund intends to invest in companies whose market
capitalizations fall within the normal range of the Russell 2000 Index. While
the fund invests primarily in common stocks, it may invest up to 20% of total
assets in US government securities. The fund may also invest in other types of
equity securities such as preferred stocks or convertible securities.



DWS Dreman Mid Cap Value Fund. The fund seeks long-term capital appreciation.
Under normal circumstances, the fund invests at least 80% of net assets, plus
the amount of any borrowings for investment purposes, in common stocks of
mid-cap companies that the portfolio managers believe are undervalued, but have
favorable prospects for appreciation. The fund defines mid-cap companies as
companies that have a market capitalization similar to that of the Russell
Midcap Value Index with a market capitalization which usually ranges from $1
billion to $20 billion. The fund may invest up to 20% of total assets in foreign
securities. The fund's equity investments are mainly common stocks, but may also
include other types of equities such as preferred or convertible stocks.

DWS Dreman Small Cap Value Fund. The fund seeks long-term capital appreciation.
Under normal circumstances, the fund invests at least 80% of net assets, plus
the amount of any borrowings for investment purposes, in undervalued common
stocks of small US companies, which the fund defines as companies that are
similar in market value to those in the Russell 2000 Index (as of March 31,
2008, the Russell 2000 Index had a median market capitalization of $515
million). The fund intends to invest primarily in companies whose market
capitalizations fall within the normal range of the Index. While the fund
invests mainly in US stocks, it could invest up to 20% of total assets in
foreign securities. The fund's equity investments are mainly common stocks, but
may also include other types of equities such as preferred or convertible
stocks.

DWS RREEF Global Infrastructure Fund. The fund seeks total return from both
capital appreciation and current income through investment in a global portfolio
of securities of infrastructure-related companies. Under normal circumstances,
the fund invests at least 80% of its net assets in the securities of US and
non-US infrastructure related companies. The fund considers a company to be an
infrastructure-related company if at least 50% of its noncash assets are
infrastructure assets or 50% of its gross income or net profits are derived,
directly or indirectly, from the ownership, management, construction, operation,
utilization or financing of infrastructure assets. Under normal circumstances,
the fund invests principally in equity securities, though the fun may also
invest in fixed-income securities without limitation. The fund may invest in
common and preferred stock (including convertible securities), rights or
warrants to purchase common stock, debt securities and listed limited
partnership interests. Under normal circumstances, the majority of the fund's
assets are invested in securities of issuers organized or located outside the US
or doing a substantial amount of business outside the US. The fund allocates its
assets among various regions and countries, including exposure to emerging
market countries.

DWS RREEF Real Estate Securities Fund. The fund's investment objective is
long-term capital appreciation and current income. The fund invests primarily in
real estate securities. Under normal circumstances, the fund will invest at
least 80% of its net assets, plus the amount of any borrowing for investment
purposes (calculated at the time of any investment), in equity securities of
real estate investment trusts ("REITs") and real estate companies. A company is
considered to be a real estate company if, in the opinion of the portfolio
managers, at least 50% of its revenues or 50% of the market value of its assets
at the time its securities are purchased by the fund are attributed to the
ownership, construction, management or sale of real estate. The fund's equity
investments are mainly common stocks, but may also include other types of
equities, such as preferred or convertible stocks.

DWS U.S. Bond Index Fund. The fund seeks to replicate, as closely as possible,
before the deduction of expenses, the performance of the Lehman Brothers U.S.
Aggregate Index, which emphasizes government mortgage-backed securities and
corporate investment grade debt securities. The fund pursues its objective by
investing primarily in the debt securities of the companies included in the
Lehman Brothers U.S. Aggregate Index and derivative instruments, such as futures
contracts and options, that provide exposure to the securities in the Lehman
Brothers U.S. Aggregate Index.

         INVESTMENT POLICIES AND TECHNIQUES OF THE UNDERLYING DWS FUNDS

The Underlying Funds may engage in certain practices not described herein.


Asset Segregation. Certain investment transactions expose a fund to an
obligation to make future payments to third parties. Examples of these types of
transactions, include, but are not limited to, reverse repurchase agreements,
short sales, dollar rolls, when-issued, delayed-delivery or forward commitment
transactions and certain derivatives such as swaps, futures, forwards, and
options. To the extent that a fund engages in such transactions, a fund will (to
the extent required by applicable law) either (1) segregate cash or liquid
assets in the prescribed amount or (2) otherwise "cover" its future obligations
under the transaction, such as by holding an offsetting investment. If the
Portfolio segregates sufficient cash or other liquid assets or otherwise
"covers" its obligations under such transactions, the Portfolio will not
consider the transactions to be borrowings for purposes of its investment
restrictions or "senior securities" under the 1940 Act, and therefore, such
transactions will not be subject to the 300% asset coverage requirement under
the 1940 Act otherwise applicable to borrowings by the Portfolio.

In some cases (e.g., with respect to futures and forwards that are contractually
required to "cash-settle"), a fund will segregate cash or other liquid assets
with respect to the amount of the daily net (marked-to-market) obligation
arising from the transaction, rather than the notional amount of the underlying
contract. By segregating assets in an amount equal to the net obligation rather
than the notional amount, the Portfolio will have the ability to employ leverage
to a greater extent than if it set aside cash or other liquid assets equal to
the notional amount of the contract, which may increase the risk associated with
such transactions.

A fund may utilize methods of segregating assets or otherwise "covering"
transactions that are currently or in the future permitted under the 1940 Act,
the rules and regulation thereunder, or orders issued by the SEC thereunder. For
these purposes, interpretations and guidance provided by the SEC staff may be
taken into account when deemed appropriate by a fund.

Assets used as segregation or cover cannot be sold while the position in the
corresponding transaction is open, unless they are replaced with other
appropriate assets. As a result, the commitment of a large portion of a fund's
assets for segregation and cover purposes could impede portfolio management or
the Portfolio's ability to meet redemption requests or other current
obligations.

Segregating assets or otherwise "covering" for these purposes does not
necessarily limit the percentage of the assets of the Portfolio that may be at
risk with respect to certain derivative transactions.


Adjustable Rate Securities. The interest rates paid on the adjustable rate
securities in which a fund invests generally are readjusted at intervals of one
year or less to an increment over some predetermined interest rate index. There
are three main categories of indices: those based on US Treasury securities,
those derived from a calculated measure such as a cost of funds index and those
based on a moving average of mortgage rates. Commonly used indices include the
one-year, three-year and five-year constant maturity Treasury rates, the
three-month Treasury bill rate, the 180-day Treasury bill rate, rates on
longer-term Treasury securities, the 11th District Federal Home Loan Bank Cost
of Funds, the National Median Cost of Funds, the one-month, three-month,
six-month or one-year London Interbank Offered Rate ("LIBOR"), the prime rate of
a specific bank or commercial paper rates. Some indices, such as the one-year
constant maturity Treasury rate, closely mirror changes in market interest rate
levels. Others, such as the 11th District Home Loan Bank Cost of Funds index,
tend to lag behind changes in market rate levels and tend to be somewhat less
volatile.

The Mortgage-Backed Securities either issued or guaranteed by GNMA, FHLMC or
FNMA ("Certificates") are called pass-through Certificates because a pro rata
share of both regular interest and principal payments (less GNMA's, FHLMC's or
FNMA's fees and any applicable loan servicing fees), as well as unscheduled
early prepayments on the underlying mortgage pool, are passed through monthly to
the holder of the Certificate (i.e., a fund). The principal and interest on GNMA
securities are guaranteed by GNMA and backed by the full faith and credit of the
US Government. FNMA guarantees full and timely payment of all interest and
principal, while FHLMC guarantees timely payment of interest and ultimate
collection of principal. Mortgage-Backed Securities from FNMA and FHLMC are not
backed by the full faith and credit of the United States; however, they are
generally considered to offer minimal credit risks. The yields provided by these
Mortgage-Backed Securities have historically exceeded the yields on other types
of US Government Securities with comparable maturities in large measure due to
the prepayment risk discussed below.

If prepayments of principal are made on the underlying mortgages during periods
of rising interest rates, a fund generally will be able to reinvest such amounts
in securities with a higher current rate of return. However, a fund will not
benefit from increases in interest rates to the extent that interest rates rise
to the point where they cause the current coupon of adjustable rate mortgages
held as investments by a fund to exceed the maximum allowable annual or lifetime
reset limits (or "cap rates") for a particular mortgage. Also, a fund's net
asset value could vary to the extent that current yields on Mortgage-Backed
Securities are different than market yields during interim periods between
coupon reset dates.

During periods of declining interest rates, of course, the coupon rates may
readjust downward, resulting in lower yields to a fund. Further, because of this
feature, the value of adjustable rate mortgages is unlikely to rise during
periods of declining interest rates to the same extent as fixed-rate
instruments. As with other Mortgage-Backed Securities, interest rate declines
may result in accelerated prepayment of mortgages, and the proceeds from such
prepayments must be reinvested at lower prevailing interest rates.

One additional difference between adjustable rate mortgages and fixed rate
mortgages is that for certain types of adjustable rate mortgage securities, the
rate of amortization of principal, as well as interest payments, can and does
change in accordance with movements in a specified, published interest rate
index. The amount of interest due to an adjustable rate mortgage security holder
is calculated by adding a specified additional amount, the "margin," to the
index, subject to limitations or "caps" on the maximum and minimum interest that
is charged to the mortgagor during the life of the mortgage or to maximum and
minimum changes to that interest rate during a given period.

Advance Refunded Bonds. DWS Floating Rate Plus Fund may purchase Municipal
Securities that are subsequently refunded by the issuance and delivery of a new
issue of bonds prior to the date on which the outstanding issue of bonds can be
redeemed or paid. The proceeds from the new issue of bonds are typically placed
in an escrow fund consisting of US Government obligations that are used to pay
the interest, principal and call premium on the issue being refunded. The Fund
may also purchase Municipal Securities that have been refunded prior to purchase
by a fund.

Asset-Backed Securities. Asset backed securities may include pools of mortgages
("mortgage-backed securities"), loans, receivables or other assets. Payment of
principal and interest may be largely dependent upon the cash flows generated by
the assets backing the securities. For purposes of determining the percentage of
a fund's total assets invested in securities of issuers having their principal
business activities in a particular industry, asset backed securities will be
classified separately, based on the nature of the underlying assets, according
to the following categories: captive auto, diversified, retail and consumer
loans, captive equipment and business, business trade receivables, nuclear fuel
and capital and mortgage lending. Asset-backed securities present certain risks
that are not presented by mortgage-backed securities. Primarily, these
securities may not have the benefit of any security interest in the related
assets. Credit card receivables are generally unsecured and the debtors are
entitled to the protection of a number of state and federal consumer credit
laws, many of which give such debtors the right to set off certain amounts owed
on the credit cards, thereby reducing the balance due. There is the possibility
that recoveries on repossessed collateral may not, in some cases, be available
to support payments on these securities. Asset-backed securities are often
backed by a pool of assets representing the obligations of a number of different
parties. To lessen the effect of failures by obligors on underlying assets to
make payments, the securities may contain elements of credit support which fall
into two categories: (i) liquidity protection, and (ii) protection against
losses resulting from ultimate default by an obligor on the underlying assets.
Liquidity protection refers to the provision of advances, generally by the
entity administering the pool of assets, to ensure that the receipt of payments
on the underlying pool occurs in a timely fashion. Protection against losses
results from payment of the insurance obligations on at least a portion of the
assets in the pool. This protection may be provided through guarantees, policies
or letters of credit obtained by the issuer or sponsor from third parties,
through various means of structuring the transaction or through a combination of
such approaches. The funds will not pay any additional or separate fees for
credit support. The degree of credit support provided for each issue is
generally based on historical information respecting the level of credit risk
associated with the underlying assets. Delinquency or loss in excess of that
anticipated or failure of the credit support could adversely affect the return
on an investment in such a security. The availability of asset-backed securities
may be affected by legislative or regulatory developments. It is possible that
such developments may require the funds to dispose of any then existing holdings
of such securities.

Asset-Indexed Securities. A fund may purchase asset-indexed securities which are
debt securities usually issued by companies in precious metals related
businesses such as mining, the principal amount, redemption terms, or interest
rates of which are related to the market price of a specified precious metal. A
fund will only enter into transactions in publicly traded asset-indexed
securities. Market prices of asset-indexed securities will relate primarily to
changes in the market prices of the precious metals to which the securities are
indexed rather than to changes in market rates of interest. However, there may
not be a perfect correlation between the price movements of the asset-indexed
securities and the underlying precious metals. Asset-indexed securities
typically bear interest or pay dividends at below market rates (and in certain
cases at nominal rates). A fund may purchase asset-indexed securities to the
extent permitted by law.

Auction Rate Securities. Auction rate securities in which a fund may invest
consist of auction rate municipal securities and auction rate preferred
securities issued by closed-end investment companies that invest primarily in
municipal securities. Provided that the auction mechanism is successful, auction
rate securities usually permit the holder to sell the securities in an auction
at par value at specified intervals. The dividend is reset by "Dutch" auction in
which bids are made by broker-dealers and other institutions for a certain
amount of securities at a specified minimum yield. The dividend rate set by the
auction is the lowest interest or dividend rate that covers all securities
offered for sale. While this process is designed to permit auction rate
securities to be traded at par value, there is the risk that an auction will
fail due to insufficient demand for the securities. Dividends on auction rate
preferred securities issued by a closed-end fund may be designated as exempt
from federal income tax to the extent they are attributable to tax-exempt
interest income earned by a fund on the securities in its portfolio and
distributed to holders of the preferred securities, provided that the preferred
securities are treated as equity securities for federal income tax purposes and
the closed-end fund complies with certain requirements under the Code. A fund's
investments in auction rate preferred securities of closed-end funds are subject
to limitations on investments in other US registered investment companies, which
limitations are prescribed by the 1940 Act. These limitations include
prohibitions against acquiring more than 3% of the voting securities of any
other such investment company, and investing more than 5% of a fund's assets in
securities of any one such investment company or more than 10% of its assets in
securities of all such investment companies.

Bank and Savings and Loan Obligations. These obligations include negotiable
certificates of deposit, bankers' acceptances, deposit notes, fixed time
deposits or other short-term bank obligations. Certificates of deposit are
negotiable certificates evidencing the obligations of a bank to repay funds
deposited with it for a specified period of time. A fund may invest in
certificates of deposit of large domestic banks and their foreign branches,
large US regulated subsidiaries of large foreign banks (i.e., banks which at the
time of their most recent annual financial statements show total assets in
excess of $1 billion), and of smaller banks as described below. Although a fund
recognizes that the size of a bank is important, this fact alone is not
necessarily indicative of its creditworthiness. Investment in certificates of
deposit issued by foreign branches of domestic banks involves investment risks
that are different in some respects from those associated with investment in
certificates of deposit issued by domestic branches of domestic banks, including
the possible imposition of withholding taxes on interest income, the possible
adoption of foreign governmental restrictions which might adversely affect the
payment of principal and interest on such certificates of deposit, or other
adverse political or economic developments. In addition, it might be more
difficult to obtain and enforce a judgment against a foreign branch of a
domestic bank.

A fund may also invest in certificates of deposit issued by banks and savings
and loan institutions which had, at the time of their most recent annual
financial statements, total assets of less than $1 billion, provided that (i)
the principal amounts of such certificates of deposit are insured by an agency
of the US Government, (ii) at no time will a fund hold more than $100,000
principal amount of certificates of deposit of any one such bank, and (iii) at
the time of acquisition, no more than 10% of a fund's assets (taken at current
value) are invested in certificates of deposit of such banks having total assets
not in excess of $1 billion.

Banker's acceptances are credit instruments evidencing the obligations of a bank
to pay a draft drawn on it by a customer. These instruments reflect the
obligation both of the bank and of the drawer to pay the face amount of the
instrument upon maturity.

Time deposits are non-negotiable deposits maintained in a banking institution
for a specified period of time at a stated interest rate. Time deposits which
may be held by a fund will not benefit from insurance from the Bank Insurance
Fund or the Savings Association Insurance Fund administered by the Federal
Deposit Insurance Corporation. Fixed time deposits may be withdrawn on demand by
the investor, but may be subject to early withdrawal penalties that vary with
market conditions and the remaining maturity of the obligation. Fixed time
deposits subject to withdrawal penalties maturing in more than seven calendar
days are subject to a fund's limitation on investments in illiquid securities.

Bank Loans. Bank loans are typically senior debt obligations of borrowers
(issuers) and as such, are considered to hold a senior position in the capital
structure of the borrower. These may include loans which hold the most senior
position, that hold an equal ranking with other senior debt, or loans that are,
in the judgment of the Advisor, in the category of senior debt of the borrower.
This capital structure position generally gives the holders of these loans a
priority claim on some or all of the borrower's assets in the event of a
default. In most cases, these loans are either partially or fully collateralized
by the assets of a corporation, partnership, limited liability company or other
business entity, or by cash flow that the Advisor believes has a market value at
the time of acquisition that equals or exceeds the principal amount of the loan.
These loans are often issued in connection with recapitalizations, acquisitions,
leveraged buy-outs and refinancings. It is important to note that Moody's and
S&P may rate bank loans higher than high yield bonds of the same issuer to
reflect their more senior position. The fund may invest in both fixed- and
floating-rate loans. In addition, bank loans can trade either as an "assignment"
or "participation." When the Fund buys an assignment, it is essentially becoming
a party to the bank agreement. The vast majority of all trades are assignments
and would therefore generally represent the preponderance of bank loans held by
the Fund. In certain cases, the Fund may buy bank loans on a participation
basis, if for example, the Fund did not want to become party to the bank
agreement. However, in all cases, the Fund will not purchase bank loans where
Deutsche Bank, or an affiliate, serves as an agent bank.

Participations and assignments involve credit risk, interest rate risk,
liquidity risk, and the risk of being a lender. If the Fund purchases a
participation, it may only be able to enforce its rights through the lender, and
may assume the credit risk of both the lender and the borrower.

Investments in loans through direct assignment of a financial institution's
interests with respect to a loan may involve additional risks. For example, if a
loan is foreclosed, the purchaser could become part owner of any collateral, and
would bear the costs and liabilities associated with owning and disposing of the
collateral. In addition, it is at least conceivable that under emerging legal
theories of lender liability, a purchaser could be held liable as a co-lender.

In the case of loans administered by a bank or other financial institution that
acts as agent for all holders, if assets held by the agent for the benefit of a
purchaser are determined to be subject to the claims of the agent's general
creditors, the purchaser might incur certain costs and delays in realizing
payment on the loan or loan participation and could suffer a loss of principal
or interest.

In the case of loan participations where a bank or other lending institution
serves as financial intermediary between a fund and the borrower, if the
participation does not shift to the fund the direct debtor-creditor relationship
with the borrower, SEC interpretations require the fund, in some circumstances,
to treat both the lending bank or other lending institution and the borrower as
issuers for purposes of the fund's investment policies. Treating a financial
intermediary as an issuer of indebtedness may restrict a fund's ability to
invest in indebtedness related to a single financial intermediary, or a group of
intermediaries engaged in the same industry, even if the underlying borrowers
represent many different companies and industries.

Borrowing. As a matter of fundamental policy, certain funds will not borrow
money, except as permitted under the 1940 Act, and as interpreted or modified by
regulatory authority having jurisdiction, from time to time. While such funds'
Board of Directors/Trustees does not currently intend to borrow for investment
leveraging purposes, if such a strategy were implemented in the future it would
increase the funds' volatility and the risk of loss in a declining market.
Borrowing by a fund will involve special risk considerations. Although the
principal of a fund's borrowings will be fixed, a fund's assets may change in
value during the time a borrowing is outstanding, thus increasing exposure to
capital risk.


DWS Disciplined Long/Short Growth Fund and DWS Floating Rate Plus Fund may each
borrow money from banks for investment purposes to the extent permitted by the
1940 Act. This practice is known as leverage. Currently, under the 1940 Act, the
funds may borrow up to one-third of their total assets (including the amount
borrowed) provided that it maintains continuous asset coverage of 300% with
respect to such borrowings and sells (within three days) sufficient portfolio
holdings to restore such coverage if it should decline to less than 300% due to
market fluctuations or otherwise, even if disadvantageous from an investment
standpoint. The funds may borrow through other means to the extent permitted by
the 1940 Act. In addition to borrowing for leverage purposes, the funds also may
borrow money to meet redemptions in order to avoid forced, unplanned sales of
portfolio securities or for other temporary or emergency purposes. This allows
the funds greater flexibility to buy and sell portfolio securities for
investment or tax considerations, rather than for cash flow considerations.


The use of borrowing by the funds involves special risk considerations that may
not be associated with other funds having similar policies. Because
substantially all of the funds' assets fluctuate in value, whereas the interest
obligation resulting from a borrowing may be fixed by the terms of the fund's
agreement with its lender, the net asset value per share of the funds will tend
to increase more when its portfolio securities increase in value and decrease
more when its portfolio securities decrease in value than would otherwise be the
case if the funds did not borrow funds. In addition, interest costs on
borrowings may fluctuate with changing market rates of interest and may
partially offset or exceed the return earned on borrowed funds. Under adverse
market conditions, the funds might have to sell portfolio securities to meet
interest or principal payments at a time when fundamental investment
considerations would not favor such sales. The interest that the funds must pay
on borrowed money, together with any additional fees to establish and maintain a
borrowing facility, are additional costs that will reduce or eliminate any net
investment income and may also offset any potential capital gains. Unless
appreciation and income, if any, on assets acquired with borrowed funds exceed
the costs of borrowing, the use of leverage will diminish the investment
performance of the funds compared with what it would have been without leverage.

Brady Bonds. Brady Bonds are securities created through the exchange of existing
commercial bank loans to public and private entities in certain emerging markets
for new bonds in connection with debt restructurings under a debt
restructuring-plan introduced by former US Secretary of the Treasury, Nicholas
F. Brady (the "Brady Plan"). Brady Plan debt restructurings have been
implemented in Argentina, Brazil, Bulgaria, Costa Rica, the Dominican Republic,
Ecuador, Jordan, Mexico, Nigeria, the Philippines, Poland and Uruguay. Brady
Bonds have been issued fairly recently, and for that reason do not have a long
payment history. Brady Bonds may be collateralized or uncollateralized, are
issued in various currencies (but primarily the dollar) and are actively traded
in over-the-counter secondary markets. Dollar-denominated, collateralized Brady
Bonds, which may be fixed-rate bonds or floating-rate bonds, are generally
collateralized in full as to principal by US Treasury zero coupon bonds having
the same maturity as the bonds. Interest payments on these Brady Bonds generally
are collateralized by cash or securities in an amount that, in the case of fixed
rate bonds, is equal to at least one year of rolling interest payments or, in
the case of floating rate bonds, initially is equal to at least one year's
rolling interest payments based on the applicable interest rate at that time and
is adjusted at regular intervals thereafter. Brady Bonds are often viewed as
having three or four valuation components: the collateralized repayment of
principal at final maturity; the collateralized interest payments; the
uncollateralized interest payments; and any uncollateralized repayment of
principal at maturity (these uncollateralized amounts constitute the "residual
risk"). In light of the residual risk of Brady Bonds and the history of defaults
of countries issuing Brady Bonds, with respect to commercial bank loans by
public and private entities, investments in Brady Bonds may be viewed as
speculative. Approximately $152 billion in Brady Bonds have been issued in
Africa, Asia, Eastern Europe, Latin America and the Middle East, with over 90%
of these Brady Bonds being denominated in US dollars.

Certificates of Deposit and Bankers' Acceptances. Certificates of deposit are
receipts issued by a depository institution in exchange for the deposit of
funds. The issuer agrees to pay the amount deposited plus interest to the bearer
of the receipt on the date specified on the certificate. The certificate usually
can be traded in the secondary market prior to maturity. Bankers' acceptances
typically arise from short-term credit arrangements designed to enable
businesses to obtain funds to finance commercial transactions. Generally, an
acceptance is a time draft drawn on a bank by an exporter or an importer to
obtain a stated amount of funds to pay for specific merchandise. The draft is
then "accepted" by a bank that, in effect, unconditionally guarantees to pay the
face value of the instrument on its maturity date. The acceptance may then be
held by the accepting bank as an earning asset or it may be sold in the
secondary market at the going rate of discount for a specific maturity. Although
maturities for acceptances can be as long as 270 days, most acceptances have
maturities of six months or less.

Collateralized Mortgage Obligations ("CMOs"). CMOs are hybrids between
mortgage-backed bonds and mortgage pass-through securities. Similar to a bond,
interest and prepaid principal are paid, in most cases, semiannually. CMOs may
be collateralized by whole mortgage loans but are more typically collateralized
by portfolios of mortgage pass-through securities guaranteed by GNMA, FHLMC, or
Fannie Mae, and their income streams.

CMOs are structured into multiple classes, each bearing a different stated
maturity. Actual maturity and average life will depend upon the prepayment
experience of the collateral. CMOs provide for a modified form of call
protection through a de facto breakdown of the underlying pool of mortgages
according to how quickly the loans are repaid. Monthly payment of principal
received from the pool of underlying mortgages, including prepayments, is first
returned to investors holding the shortest maturity class. Investors holding the
longer maturity classes receive principal only after the first class has been
retired. An investor is partially guarded against a sooner than desired return
of principal because of the sequential payments. The prices of certain CMOs,
depending on their structure and the rate of prepayments, can be volatile. Some
CMOs may also not be as liquid as other securities.

In a typical CMO transaction, a corporation issues multiple series (e.g., A, B,
C, Z) of CMO bonds ("Bonds"). Proceeds of the Bond offering are used to purchase
mortgages or mortgage pass-through certificates ("Collateral"). The Collateral
is pledged to a third party trustee as security for the Bonds. Principal and
interest payments from the Collateral are used to pay principal on the Bonds in
the order A, B, C, Z. The Series A, B, and C Bonds all bear current interest.
Interest on the Series Z Bond is accrued and added to principal and a like
amount is paid as principal on the Series A, B, or C Bond currently being paid
off. When the Series A, B, and C Bonds are paid in full, interest and principal
on the Series Z Bond begins to be paid currently. With some CMOs, the issuer
serves as a conduit to allow loan originators (primarily builders or savings and
loan associations) to borrow against their loan portfolios.

The principal risk of CMOs results from the rate of prepayments on underlying
mortgages serving as collateral and from the structure of the deal. An increase
or decrease in prepayment rates will affect the yield, average life and price of
CMOs.

Commercial Paper. Subject to its investment objectives and policies, a fund may
invest in commercial paper issued by major corporations under the 1933 Act in
reliance on the exemption from registration afforded by Section 3(a)(3) thereof.
Such commercial paper may be issued only to finance current transactions and
must mature in nine months or less. Trading of such commercial paper is
conducted primarily by institutional investors through investment dealers, and
individual investor participation in the commercial paper market is very
limited. A fund also may invest in commercial paper issued in reliance on the
so-called "private placement" exemption from registration afforded by Section
4(2) of the 1933 Act ("Section 4(2) paper"). Section 4(2) paper is restricted as
to disposition under the federal securities laws, and generally is sold to
institutional investors such as a fund who agree that they are purchasing the
paper for investment and not with a view to public distribution. Any resale by
the purchaser must be in an exempt transaction. Section 4(2) paper normally is
resold to other institutional investors like a fund through or with the
assistance of the issuer or investment dealers who make a market in the Section
4(2) paper, thus providing liquidity. The Advisor considers the legally
restricted but readily saleable Section 4(2) paper to be liquid; however,
pursuant to procedures approved by a fund's Board, if a particular investment in
Section 4(2) paper is not determined to be liquid, that investment will be
included within the limitation of a fund on illiquid securities. The Advisor
monitors the liquidity of its investments in Section 4(2) paper on a continuing
basis.

Common Stocks. Common stock is issued by companies to raise cash for business
purposes and represents a proportionate interest in the issuing companies.
Therefore, a fund participates in the success or failure of any company in which
it holds stock. The market values of common stock can fluctuate significantly,
reflecting the business performance of the issuing company, investor perception
and general economic and financial market movements. Despite the risk of price
volatility, however, common stocks have historically offered a greater potential
for long-term gain on investment, compared to other classes of financial assets
such as bonds or cash equivalents, although there can be no assurance that this
will be true in the future.

Convertible Securities. A fund may invest in convertible securities, that is,
bonds, notes, debentures, preferred stocks and other securities which are
convertible into common stock. Investments in convertible securities can provide
an opportunity for capital appreciation and/or income through interest and
dividend payments by virtue of their conversion or exchange features.

The convertible securities in which a fund may invest are either fixed income or
zero coupon debt securities which may be converted or exchanged at a stated or
determinable exchange ratio into underlying shares of common stock. The exchange
ratio for any particular convertible security may be adjusted from time to time
due to stock splits, dividends, spin-offs, other corporate distributions or
scheduled changes in the exchange ratio. Convertible debt securities and
convertible preferred stocks, until converted, have general characteristics
similar to both debt and equity securities. Although to a lesser extent than
with debt securities generally, the market value of convertible securities tends
to decline as interest rates increase and, conversely, tends to increase as
interest rates decline. In addition, because of the conversion or exchange
feature, the market value of convertible securities typically changes as the
market value of the underlying common stocks changes, and, therefore, also tends
to follow movements in the general market for equity securities. A unique
feature of convertible securities is that as the market price of the underlying
common stock declines, convertible securities tend to trade increasingly on a
yield basis, and so may not experience market value declines to the same extent
as the underlying common stock. When the market price of the underlying common
stock increases, the prices of the convertible securities tend to rise as a
reflection of the value of the underlying common stock, although typically not
as much as the underlying common stock. While no securities investments are
without risk, investments in convertible securities generally entail less risk
than investments in common stock of the same issuer.

As debt securities, convertible securities are investments which provide for a
stream of income (or in the case of zero coupon securities, accretion of income)
with generally higher yields than common stocks. Convertible securities
generally offer lower yields than non-convertible securities of similar quality
because of their conversion or exchange features.

Of course, like all debt securities, there can be no assurance of income or
principal payments because the issuers of the convertible securities may default
on their obligations.

Convertible securities generally are subordinated to other similar but
non-convertible securities of the same issuer, although convertible bonds, as
corporate debt obligations, enjoy seniority in right of payment to all equity
securities, and convertible preferred stock is senior to common stock, of the
same issuer. However, because of the subordination feature, convertible bonds
and convertible preferred stock typically have lower ratings than similar
non-convertible securities. Convertible securities may be issued as fixed income
obligations that pay current income or as zero coupon notes and bonds, including
Liquid Yield Option Notes ("LYONs"(TM)).

Correlation of Gold and Gold Securities. The underlying fund's advisor believes
that the value of the securities of firms that deal in gold will correspond
generally, over time, with the prices of the underlying metal. At any given
time, however, changes in the price of gold may not strongly correlate with
changes in the value of securities related to gold, which are expected to
constitute the principal part of a fund's assets. In fact, there may be periods
in which the price of gold stocks and gold will move in different directions.
The reason for this potential disparity is that political and economic factors,
including behavior of the stock market, may have differing impacts on gold
versus gold stocks.

Corporate Obligations. Investment in corporate debt obligations involves credit
and interest rate risk. The value of fixed-income investments will fluctuate
with changes in interest rates and bond market conditions, tending to rise as
interest rates decline and to decline as interest rates rise. Corporate debt
obligations generally offer less current yield than securities of lower quality,
but lower-quality securities generally have less liquidity, greater credit and
market risk, and as a result, more price volatility. Longer-term bonds are,
however, generally more volatile than bonds with shorter maturities.

Custodial Receipts. Custodial receipts are interests in separately traded
interest and principal component parts of US Government securities that are
issued by banks or brokerage firms and are created by depositing US Government
securities into a special account at a custodian bank. The custodian holds the
interest and principal payments for the benefit of the registered owners of the
certificates or receipts. The custodian arranges for the issuance of the
certificates or receipts evidencing ownership and maintains the register.
Custodial receipts include Treasury Receipts ("TRs"), Treasury Investment Growth
Receipts ("TIGRs"), and Certificates of Accrual on Treasury Securities ("CATS").
TIGRs and CATS are interests in private proprietary accounts while TRs and
STRIPS (see "US Government Securities" above) are interests in accounts
sponsored by the US Treasury. Receipts are sold as zero coupon securities; for
more information, see "Zero Coupon Securities."

A fund may acquire US Government securities and their unmatured interest coupons
that have been separated ("stripped") by their holder, typically a custodian
bank or investment brokerage firm. Having separated the interest coupons from
the underlying principal of the US Government securities, the holder will resell
the stripped securities in custodial receipt programs with a number of different
names, including TIGRs and CATS. The stripped coupons are sold separately from
the underlying principal, which is usually sold at a deep discount because the
buyer receives only the right to receive a future fixed payment on the security
and does not receive any rights to periodic interest (cash) payments. The
underlying US Treasury bonds and notes themselves are generally held in
book-entry form at a Federal Reserve Bank. Counsel to the underwriters of these
certificates or other evidences of ownership of US Treasury securities have
stated that, in their opinion, purchasers of the stripped securities most likely
will be deemed the beneficial holders of the underlying US Government securities
for federal tax and securities purposes. In the case of CATS and TIGRS, the
Internal Revenue Service (the "IRS") has reached this conclusion for the purpose
of applying the tax diversification requirements applicable to regulated
investment companies such as the Fund. CATS and TIGRS are not considered US
Government securities by the staff of the SEC. Further, the IRS conclusion noted
above is contained only in a general counsel memorandum, which is an internal
document of no precedential value or binding effect, and a private letter
ruling, which also may not be relied upon by the Fund. The Trust is not aware of
any binding legislative, judicial or administrative authority on this issue.

Depositary Receipts. A fund may invest in sponsored or unsponsored American
Depositary Receipts ("ADRs"), European Depositary Receipts ("EDRs"), Global
Depositary Receipts ("GDRs"), International Depositary Receipts ("IDRs") and
other types of Depositary Receipts (which, together with ADRs, GDRs and IDRs are
hereinafter referred to as "Depositary Receipts"). Depositary receipts provide
indirect investment in securities of foreign issuers. Prices of unsponsored
Depositary Receipts may be more volatile than if they were sponsored by the
issuer of the underlying securities. Depositary Receipts may not necessarily be
denominated in the same currency as the underlying securities into which they
may be converted. In addition, the issuers of the stock of unsponsored
Depositary Receipts are not obligated to disclose material information in the
United States and, therefore, there may not be a correlation between such
information and the market value of the Depositary Receipts. ADRs are Depositary
Receipts which are bought and sold in the United States and are typically issued
by a US bank or trust company which evidence ownership of underlying securities
by a foreign corporation. GDRs, IDRs and other types of Depositary Receipts are
typically issued by foreign banks or trust companies, although they may also be
issued by United States banks or trust companies, and evidence ownership of
underlying securities issued by either a foreign or a United States corporation.
Generally, Depositary Receipts in registered form are designed for use in the
United States securities markets and Depositary Receipts in bearer form are
designed for use in securities markets outside the United States. For purposes
of a fund's investment policies, a fund's investments in ADRs, GDRs and other
types of Depositary Receipts will be deemed to be investments in the underlying
securities. Depositary Receipts, including those denominated in US dollars will
be subject to foreign currency exchange rate risk. However, by investing in US
dollar-denominated ADRs rather than directly in foreign issuers' stock, a fund
avoids currency risks during the settlement period. In general, there is a
large, liquid market in the United States for most ADRs. However, certain
Depositary Receipts may not be listed on an exchange and therefore may be
illiquid securities.

Direct Debt Instruments. DWS Floating Rate Plus Fund may invest in direct debt
instruments. Direct debt instruments are interests in amounts owed by a
corporate, governmental or other borrower to lenders (direct loans), to
suppliers of goods or services (trade claims or other receivables) or to other
parties.

When the fund participates in a direct loan it will be lending money directly to
an issuer. Direct loans generally do not have an underwriter or agent bank, but
instead, are negotiated between a company's management team and a lender or
group of lenders. Direct loans typically offer better security and structural
terms than other types of high yield securities. Direct debt obligations are
often the most senior-obligations in an issuer's capital structure or are
well-collateralized so that overall risk is lessened.

Trade claims are unsecured rights of payment arising from obligations other than
borrowed funds. Trade claims include vendor claims and other receivables that
are adequately documented and available for purchase from high yield
broker-dealers. Trade claims typically may sell at a discount. In addition to
the risks otherwise associated with low-quality obligations, trade claims have
other risks, including the possibility that the amount of the claim may be
disputed by the obligor. Trade claims normally would be considered illiquid and
pricing can be volatile.

Direct debt instruments involve a risk of loss in case of default or insolvency
of the borrower. The fund will rely primarily upon the creditworthiness of the
borrower and/or the collateral for payment of interest and repayment of
principal. The value of the fund's investments may be adversely affected if
scheduled interest or principal payments are not made. Because most direct loans
will be secured, there will be a smaller risk of loss with direct loans than
with an investment in unsecured high yield bonds or trade claims. Indebtedness
of borrowers whose creditworthiness is poor involves substantially greater risks
and may be highly speculative. Borrowers that are in bankruptcy or restructuring
may never pay off their indebtedness or may pay only a small fraction of the
amount owed. Investments in direct debt instruments also involve interest rate
risk and liquidity risk. However, interest rate risk is lessened by the
generally short-term nature of direct debt instruments and their interest rate
structure, which typically floats. To the extent the direct debt instruments in
which the fund invests are considered illiquid, the lack of a liquid secondary
market (1) will have an adverse impact on the value of such instruments, (2)
will have an adverse impact on the fund's ability to dispose of them when
necessary to meet the fund's liquidity needs or in response to a specific
economic event, such as a decline in creditworthiness of the issuer, and (3) may
make it more difficult for the fund to assign a value of these instruments for
purposes of valuing the fund's portfolio and calculating its net asset value. In
order to lessen liquidity risk, the fund anticipates investing primarily in
direct debt instruments that are quoted and traded in the high yield market and
will not invest in these instruments if it would cause more than 15% of the
fund's net assets to be illiquid. Trade claims may also present a tax risk to
the fund.

The fund will not invest in trade claims if it effects the fund's qualification
as a regulated investment company under Subchapter M of the Code.

Dollar Roll Transactions. Dollar roll transactions consist of the sale by a fund
to a bank or broker/dealer (the "counterparty") of GNMA certificates or other
mortgage-backed securities together with a commitment to purchase from the
counterparty similar, but not identical, securities at a future date, at the
same price. The counterparty receives all principal and interest payments,
including prepayments, made on the security while it is the holder. A fund
receives a fee from the counterparty as consideration for entering into the
commitment to purchase. Dollar rolls may be renewed over a period of several
months with a different purchase and repurchase price fixed and a cash
settlement made at each renewal without physical delivery of securities.
Moreover, the transaction may be preceded by a firm commitment agreement
pursuant to which a fund agrees to buy a security on a future date.

A fund will segregate cash, US government securities or other liquid assets in
an amount sufficient to meet their purchase obligations under the transactions.

Dollar rolls may be treated for purposes of the 1940 Act, as borrowings of a
fund because they involve the sale of a security coupled with an agreement to
repurchase. A dollar roll involves costs to a fund. For example, while a fund
receives a fee as consideration for agreeing to repurchase the security, a fund
forgoes the right to receive all principal and interest payments while the
counterparty holds the security. These payments to the counterparty may exceed
the fee received by a fund, thereby effectively charging a fund interest on its
borrowing. Further, although a fund can estimate the amount of expected
principal prepayment over the term of the dollar roll, a variation in the actual
amount of prepayment could increase or decrease the cost of a fund's borrowing.

The entry into dollar rolls involves potential risks of loss that are different
from those related to the securities underlying the transactions. For example,
if the counterparty becomes insolvent, a fund's right to purchase from the
counterparty might be restricted. Additionally, the value of such securities may
change adversely before a fund is able to purchase them. Similarly, a fund may
be required to purchase securities in connection with a dollar roll at a higher
price than may otherwise be available on the open market. Since, as noted above,
the counterparty is required to deliver a similar, but not identical security to
a fund, the security that a fund is required to buy under the dollar roll may be
worth less than an identical security. Finally, there can be no assurance that a
fund's use of the cash that it receives from a dollar roll will provide a return
that exceeds borrowing costs.

Equities as a result of workouts. A fund may hold equity securities received in
an exchange or workout of distressed lower-rated debt securities. A distressed
security is a security that is in default or in risk of being in default.

Eurodollar Instruments. A fund may make investments in Eurodollar instruments.
Eurodollar instruments are US dollar-denominated futures contracts or options
thereon which are linked to the London Interbank Offered Rate ("LIBOR"),
although foreign currency-denominated instruments are available from time to
time. Eurodollar futures contracts enable purchasers to obtain a fixed rate for
the lending of funds and sellers to obtain a fixed rate for borrowings. A Fund
might use Eurodollar futures contracts and options thereon to hedge against
changes in LIBOR, to which many interest rate swaps and fixed income instruments
are linked or for any other purpose.

Eurodollar Obligations. Eurodollar bank obligations are US dollar-denominated
certificates of deposit and time deposits issued outside the US capital markets
by foreign branches of US banks and US branches of foreign banks. Eurodollar
obligations are subject to the same risks that pertain to domestic issues,
notably credit risk, market risk and liquidity risk. Additionally, Eurodollar
obligations are subject to certain sovereign risks.


Fixed Income Security Risk. Fixed income securities generally expose the fund to
five types of risk: (1) interest rate risk (the potential for fluctuations in
bond prices due to changing interest rates); (2) income risk (the potential for
a decline in the fund's income due to falling market interest rates); (3) credit
risk (the possibility that a bond issuer will fail to make timely payments of
either interest or principal to the fund); (4) prepayment risk or call risk (the
likelihood that, during periods of falling interest rates, securities with high
stated interest rates will be prepaid, or "called" prior to maturity, requiring
the fund to invest the proceeds at generally lower interest rates); and (5)
extension risk (the likelihood that as interest rates increase, slower than
expected principal payments may extend the average life of fixed income
securities, which will have the effect of locking in a below-market interest
rate, increasing the security's duration and reducing the value of the
security).

Foreign Currencies. Because investments in foreign securities will usually
involve currencies of foreign countries, and because a fund may hold foreign
currencies and forward foreign currency exchange contracts ("forward
contracts"), futures contracts, options on futures contracts on foreign
currencies and other currency-related instruments, the value of the assets of a
fund as measured in US dollars may be affected favorably or unfavorably by
changes in foreign currency exchange rates and exchange control regulations, and
a fund may incur costs in connection with conversions between various
currencies.


The strength or weakness of the US dollar against these currencies is
responsible for part of a fund's investment performance. If the dollar falls in
value relative to the Japanese yen, for example, the dollar value of a Japanese
stock held in the portfolio will rise even though the price of the stock in yen
remains unchanged. Conversely, if the dollar rises in value relative to the yen,
the dollar value of the Japanese stock will fall. Many foreign currencies have
experienced significant devaluation relative to the dollar.

Although a fund values its assets daily in terms of US dollars, it does not
intend to convert its holdings of foreign currencies into US dollars on a daily
basis. It will do so from time to time, and investors should be aware of the
costs of currency conversion. Although foreign exchange dealers do not charge a
fee for conversion, they do realize a profit based on the difference (the
"spread") between the prices at which they are buying and selling various
currencies. Thus, a dealer may offer to sell a foreign currency to a fund at one
rate, while offering a lesser rate of exchange should a fund desire to resell
that currency to the dealer. A fund will conduct its foreign currency exchange
transactions either on a spot (i.e., cash) basis at the spot rate prevailing in
the foreign currency exchange market, or through entering into forward contracts
(or options thereon) to purchase or sell foreign currencies.
(See "Strategic Transactions and Derivatives" below.)

Foreign Fixed Income Securities. Since most foreign fixed income securities are
not rated, a fund will invest in foreign fixed income securities based on the
underlying funds' advisor's analysis without relying on published ratings. Since
such investments will be based upon the underlying funds' advisor's analysis
rather than upon published ratings, achievement of a fund's goals may depend
more upon the abilities of the underlying funds' advisor than would otherwise be
the case.

The value of the foreign fixed income securities held by a fund, and thus the
net asset value of a fund's shares, generally will fluctuate with (a) changes in
the perceived creditworthiness of the issuers of those securities, (b) movements
in interest rates, and (c) changes in the relative values of the currencies in
which a fund's investments in fixed income securities are denominated with
respect to the US Dollar. The extent of the fluctuation will depend on various
factors, such as the average maturity of a fund's investments in foreign fixed
income securities, and the extent to which a fund hedges its interest rate,
credit and currency exchange rate risks. A longer average maturity generally is
associated with a higher level of volatility in the market value of such
securities in response to changes in market conditions.

Investments in sovereign debt, including Brady Bonds, involve special risks.
Brady Bonds are debt securities issued under a plan implemented to allow debtor
nations to restructure their outstanding commercial bank indebtedness. Foreign
governmental issuers of debt or the governmental authorities that control the
repayment of the debt may be unable or unwilling to repay principal or pay
interest when due. In the event of default, there may be limited or no legal
recourse in that, generally, remedies for defaults must be pursued in the courts
of the defaulting party. Political conditions, especially a sovereign entity's
willingness to meet the terms of its fixed income securities, are of
considerable significance. Also, there can be no assurance that the holders of
commercial bank loans to the same sovereign entity may not contest payments to
the holders of sovereign debt in the event of default under commercial bank loan
agreements. In addition, there is no bankruptcy proceeding with respect to
sovereign debt on which a sovereign has defaulted, and a fund may be unable to
collect all or any part of its investment in a particular issue. Foreign
investment in certain sovereign debt is restricted or controlled to varying
degrees, including requiring governmental approval for the repatriation of
income, capital or proceed of sales by foreign investors. These restrictions or
controls may at times limit or preclude foreign investment in certain sovereign
debt or increase the costs and expenses of a fund. Sovereign debt may be issued
as part of debt restructuring and such debt is to be considered speculative.
There is a history of defaults with respect to commercial bank loans by public
and private entities issuing Brady Bonds. All or a portion of the interest
payments and/or principal repayment with respect to Brady Bonds may be
uncollateralized.

Foreign Investment. Foreign securities are normally denominated and traded in
foreign currencies. As a result, the value of the fund's foreign investments and
the value of its shares may be affected favorably or unfavorably by changes in
currency exchange rates relative to the US dollar. There may be less information
publicly available about a foreign issuer than about a US issuer, and foreign
issuers may not be subject to accounting, auditing and financial reporting
standards and practices comparable to those in the US. The securities of some
foreign issuers are less liquid and at times more volatile than securities of
comparable US issuers. Foreign brokerage commissions and other fees are also
generally higher than in the US. Foreign settlement procedures and trade
regulations may involve certain risks (such as delay in payment or delivery of
securities or in the recovery of the fund's assets held abroad) and expenses not
present in the settlement of investments in US markets. Payment for securities
without delivery may be required in certain foreign markets.

In addition, foreign securities may be subject to the risk of nationalization or
expropriation of assets, imposition of currency exchange controls or
restrictions on the repatriation of foreign currency, confiscatory taxation,
political or financial instability and diplomatic developments which could
affect the value of the fund's investments in certain foreign countries.
Governments of many countries have exercised and continue to exercise
substantial influence over many aspects of the private sector through the
ownership or control of many companies, including some of the largest in these
countries. As a result, government actions in the future could have a
significant effect on economic conditions which may adversely affect prices of
certain portfolio securities. There is also generally less government
supervision and regulation of stock exchanges, brokers, and listed companies
than in the US. Dividends or interest on, or proceeds from the sale of, foreign
securities may be subject to foreign withholding taxes, and special US tax
considerations may apply. Moreover, foreign economies may differ favorably or
unfavorably from the US economy in such respects as growth of gross national
product, rate of inflation, capital reinvestment, resource self-sufficiency and
balance of payments position.

Legal remedies available to investors in certain foreign countries may be more
limited than those available with respect to investments in the US or in other
foreign countries. The laws of some foreign countries may limit the fund's
ability to invest in securities of certain issuers organized under the laws of
those foreign countries.

Of particular importance, many foreign countries are heavily dependent upon
exports, particularly to developed countries, and, accordingly, have been and
may continue to be adversely affected by trade barriers, managed adjustments in
relative currency values, and other protectionist measures imposed or negotiated
by the US and other countries with which they trade. These economies also have
been and may continue to be negatively impacted by economic conditions in the US
and other trading partners, which can lower the demand for goods produced in
those countries.

The risks described above, including the risks of nationalization or
expropriation of assets, typically are increased in connection with investments
in "emerging markets." For example, political and economic structures in these
countries may be in their infancy and developing rapidly, and such countries may
lack the social, political and economic stability characteristic of more
developed countries (including amplified risk of war and terrorism). Certain of
these countries have in the past failed to recognize private property rights and
have at times nationalized and expropriated the assets of private companies.
Investments in emerging markets may be considered speculative.

The currencies of certain emerging market countries have experienced
devaluations relative to the US dollar, and future devaluations may adversely
affect the value of assets denominated in such currencies. In addition, currency
hedging techniques may be unavailable in certain emerging market countries. Many
emerging market countries have experienced substantial, and in some periods
extremely high, rates of inflation or deflation for many years, and future
inflation may adversely affect the economies and securities markets of such
countries.

In addition, unanticipated political or social developments may affect the value
of investments in emerging markets and the availability of additional
investments in these markets. Any change in the leadership or politics of
emerging market countries, or the countries that exercise a significant
influence over those countries, may halt the expansion of or reverse the
liberalization of foreign investment policies now occurring and adversely affect
existing investment opportunities. The small size, limited trading volume and
relative inexperience of the securities markets in these countries may make
investments in securities traded in emerging markets illiquid and more volatile
than investments in securities traded in more developed countries. For example,
limited market size may cause prices to be unduly influenced by traders who
control large positions. In addition, the fund may be required to establish
special custodial or other arrangements before making investments in securities
traded in emerging markets. There may be little financial or accounting
information available with respect to issuers of emerging market securities, and
it may be difficult as a result to assess the value of prospects of an
investment in such securities.

The risk also exists that an emergency situation may arise in one or more
emerging markets as a result of which trading of securities may cease or may be
substantially curtailed and prices for a fund's securities in such markets may
not be readily available. A fund may suspend redemption of its shares for any
period during which an emergency exists, as determined by the SEC. Accordingly
if a fund believes that appropriate circumstances exist, it will promptly apply
to the SEC for a determination that an emergency is present. During the period
commencing from a fund's identification of such condition until the date of the
SEC action, a fund's securities in the affected markets will be valued at fair
value determined in good faith by or under the direction of a fund's Board.

Foreign Securities. Investments in foreign securities involves certain special
considerations, including those set forth below, which are not typically
associated with investing in US securities and which may favorably or
unfavorably affect a fund's performance. As foreign companies are not generally
subject to uniform accounting, auditing and financial reporting standards,
practices and requirements comparable to those applicable to domestic companies,
there may be less publicly available information about a foreign company than
about a domestic company. Many foreign stock markets, while growing in volume of
trading activity, have substantially less volume than the New York Stock
Exchange, Inc. (the "Exchange"), and securities of some foreign companies are
less liquid and more volatile than securities of domestic companies. Similarly,
volume and liquidity in most foreign bond markets is less than in the US and at
times, volatility of price can be greater than in the US. Further, foreign
markets have different clearance and settlement procedures and in certain
markets there have been times when settlements have been unable to keep pace
with the volume of securities transactions, making it difficult to conduct such
transactions. Delays in settlement could result in temporary periods when assets
of a fund are uninvested and no return is earned thereon. The inability of a
fund to make intended security purchases due to settlement problems could cause
a fund to miss attractive investment opportunities. Inability to dispose of
portfolio securities due to settlement problems either could result in losses to
a fund due to subsequent declines in value of the portfolio security or, if a
fund has entered into a contract to sell the security, could result in a
possible liability to the purchaser. Payment for securities without delivery may
be required in certain foreign markets. Fixed commissions on some foreign stock
exchanges are generally higher than negotiated commissions on US exchanges,
although a fund will endeavor to achieve the most favorable net results on its
portfolio transactions. Further, a fund may encounter difficulties or be unable
to pursue legal remedies and obtain judgments in foreign courts. There is
generally less government supervision and regulation of business and industry
practices, stock exchanges, brokers and listed companies than in the US. It may
be more difficult for a fund's agents to keep currently informed about corporate
actions such as stock dividends or other matters which may affect the prices of
portfolio securities. Communications between the US and foreign countries may be
less reliable than within the US, thus increasing the risk of delayed
settlements of portfolio transactions or loss of certificates for portfolio
securities. In addition, with respect to certain foreign countries, there is the
possibility of expropriation or confiscatory taxation, political or social
instability, or diplomatic developments which could affect US investments in
those countries. Moreover, individual foreign economies may differ favorably or
unfavorably from the US economy in such respects as growth of gross national
product, rate of inflation, capital reinvestment, resource self-sufficiency and
balance of payments position. The management of a fund seeks to mitigate the
risks associated with the foregoing considerations through diversification and
continuous professional management.


Government Guaranteed Mortgage-Backed Securities. A fund's investments in
mortgage backed securities may include securities issued or guaranteed by the US
government or one of its agencies, authorities, instrumentalities or sponsored
enterprises, such as Ginnie Mae, Fannie Mae and Freddie Mac. There are several
types of guaranteed mortgage-backed securities currently available, including
guaranteed mortgage pass through certificates and multiple class securities,
which include guaranteed Real Estate Mortgage Investment Conduit Certificates
("REMIC Certificates"), collateralized mortgage obligations and stripped
mortgage-backed securities. The fund is permitted to invest in other types of
mortgage-backed securities that may be available in the future to the extent
consistent with its investment policies and objective.

Ginnie Mae Certificates. Ginnie Mae is a wholly owned corporate instrumentality
of the United States within the Department of Housing and Urban Development. The
National Housing Act of 1934, as amended (the "Housing Act"), authorizes Ginnie
Mae to guarantee the timely payment of the principal of and interest on
certificates that are based on and backed by a pool of mortgage loans insured by
the Federal Housing Administration under the Housing Act, or Title V of the
Housing Act of 1949 ("FHA Loans"), or guaranteed by the Department of Veterans
Affairs under the Servicemen's Readjustment Act of 1944, as amended ("VA
Loans"), or by pools of other eligible mortgage loans. The Housing Act provides
that the full faith and credit of the US government is pledged to the payment of
all amounts that may be required to be paid under any Ginnie Mae guaranty. In
order to meet its obligations under such guaranty, Ginnie Mae is authorized to
borrow from the US Treasury with no limitations as to amount.


The Ginnie Mae Certificates in which the fund may invest will represent a pro
rata interest in one or more pools of the following types of mortgage loans: (1)
fixed-rate level payment mortgage loans; (2) fixed-rate graduated payment
mortgage loans; (3) fixed-rate growing equity mortgage loans; (4) fixed-rate
mortgage loans secured by manufactured (mobile) homes; (5) mortgage loans on
multifamily residential properties under construction; (6) mortgage loans on
completed multifamily projects; (7) fixed-rate mortgage loans as to which
escrowed funds are used to reduce the borrower's monthly payments during the
early years of the mortgage loans ("buy down" mortgage loans); (8) mortgage
loans that provide for adjustments in payments based on periodic changes in
interest rates or in other payment terms of the mortgage loans; and (9)
mortgage-backed serial notes.


Fannie Mae Certificates. Fannie Mae is a federally chartered and privately owned
corporation organized and existing under the Federal National Mortgage
Association Charter Act of 1938. The obligations of Fannie Mae are not backed by
the full faith and credit of the US government. Each Fannie Mae Certificate will
represent a pro rata interest in one or more pools of FHA Loans, VA Loans or
conventional mortgage loans (i.e., mortgage loans that are not insured or
guaranteed by any governmental agency) of the following types: (1) fixed-rate
level payment mortgage loans; (2) fixed-rate growing equity mortgage loans; (3)
fixed-rate graduated payment mortgage loans; (4) variable rate mortgage loans;
(5) other adjustable rate mortgage loans; and (6) fixed-rate and adjustable
mortgage loans secured by multifamily projects.

Freddie Mac Certificates. Freddie Mac is a federally chartered and privately
owned corporation created pursuant to the Emergency Home Finance Act of 1970, as
amended (the "FHLMC Act"). The obligations of Freddie Mac are obligations solely
of Freddie Mac and are not backed by the full faith and credit of the US
government. Freddie Mac Certificates represent a pro rata interest in a group of
mortgage loans (a "Freddie Mac Certificate group") purchased by Freddie Mac. The
mortgage loans underlying the Freddie Mac Certificates will consist of
fixed-rate or adjustable rate mortgage loans with original terms to maturity of
between ten and thirty years, substantially all of which are secured by first
liens on one- to four family residential properties or multifamily projects.
Each mortgage loan must meet the applicable standards set forth in the FHLMC
Act. A Freddie Mac Certificate group may include whole loans, participating
interests in whole loans and undivided interests in whole loans and
participations comprising another Freddie Mac Certificate group.


Gold or Precious Metals Custody. Gold and other precious metals held by or on
behalf of a fund may be held on either an allocated or an unallocated basis
inside or outside the US. Placing gold or precious metals in an allocated
custody account gives the fund a direct interest in specified gold bars or
precious metals, whereas an unallocated deposit does not and instead gives the
Fund a right only to compel the counterparty to deliver a specific amount of
gold or precious metals, as applicable. Consequently, a fund could experience a
loss if the counterparty to an unallocated deposit arrangement becomes bankrupt
or fails to deliver the gold or precious metals as requested. An allocated gold
or precious metals custody account also involves the risk that the gold or
precious metals will be stolen or damaged while in transit. Both allocated and
unallocated arrangements require a fund as seller to deliver, either by book
entry or physically, the gold or precious metals sold in advance of the receipt
of payment.

High Yield/High Risk Bonds. A fund may also purchase debt securities which are
rated below investment-grade (commonly referred to as "junk bonds"), that is,
rated below Baa by Moody's or below BBB by S&P and unrated securities judged to
be of equivalent quality as determined by the underlying fund's advisor. These
securities usually entail greater risk (including the possibility of default or
bankruptcy of the issuers of such securities), generally involve greater
volatility of price and risk to principal and income, and may be less liquid,
than securities in the higher rating categories. The lower the ratings of such
debt securities, the more their risks render them like equity securities.
Securities rated D may be in default with respect to payment of principal or
interest.

Issuers of such high yield securities often are highly leveraged and may not
have available to them more traditional methods of financing. Therefore, the
risk associated with acquiring the securities of such issuers generally is
greater than is the case with higher rated securities. For example, during an
economic downturn or a sustained period of rising interest rates, highly
leveraged issuers of high yield securities may experience financial stress.
During such periods, such issuers may not have sufficient revenues to meet their
interest payment obligations. The issuer's ability to service its debt
obligations may also be adversely affected by specific corporate developments,
or the issuer's inability to meet specific projected business forecasts, or the
unavailability of additional financing. The risk of loss from default by the
issuer is significantly greater for the holders of high yield securities because
such securities are generally unsecured and are often subordinated to other
creditors of the issuer. Prices and yields of high yield securities will
fluctuate over time and, during periods of economic uncertainty, volatility of
high yield securities may adversely affect a fund's net asset value. In
addition, investments in high yield zero coupon or pay-in-kind bonds, rather
than income-bearing high yield securities, may be more speculative and may be
subject to greater fluctuations in value due to changes in interest rates.

A fund may have difficulty disposing of certain high yield securities because
they may have a thin trading market. Because not all dealers maintain markets in
all high yield securities, a fund anticipates that such securities could be sold
only to a limited number of dealers or institutional investors. The lack of a
liquid secondary market may have an adverse effect on the market price and a
fund's ability to dispose of particular issues and may also make it more
difficult for a fund to obtain accurate market quotations for purposes of
valuing a fund's assets. Market quotations generally are available on many high
yield issues only from a limited number of dealers and may not necessarily
represent firm bids of such dealers or prices for actual sales. Adverse
publicity and investor perceptions may decrease the values and liquidity of high
yield securities. These securities may also involve special registration
responsibilities, liabilities and costs, and liquidity and valuation
difficulties.

Credit quality in the high-yield securities market can change suddenly and
unexpectedly, and even recently issued credit ratings may not fully reflect the
actual risks posed by a particular high-yield security. For these reasons, it is
generally the policy of the underlying fund's advisor not to rely exclusively on
ratings issued by established credit rating agencies, but to supplement such
ratings with its own independent and on-going review of credit quality. The
achievement of a fund's investment objective by investment in such securities
may be more dependent on the underlying fund's advisor's credit analysis than is
the case for higher quality bonds. Should the rating of a portfolio security be
downgraded, the underlying funds' advisor will determine whether it is in the
best interests of a fund to retain or dispose of such security.

Prices for high-yield may be affected by legislative and regulatory
developments. Also, Congress has from time to time considered legislation which
would restrict or eliminate the federal income tax deduction for interest
payments on these securities and regulate corporate restructurings. Such
legislation may significantly depress the prices of outstanding securities of
this type.

A portion of the high-yield acquired by a fund will be purchased upon issuance,
which may involve special risks because the securities so acquired are new
issues. In such instances a fund may be a substantial purchaser of the issue and
therefore have the opportunity to participate in structuring the terms of the
offering. Although this may enable a fund to seek to protect itself against
certain of such risks, the considerations discussed herein would nevertheless
remain applicable.

Illiquid Securities and Restricted Securities. A fund may purchase securities
that are subject to legal or contractual restrictions on resale ("restricted
securities"). Generally speaking, restricted securities may be sold (i) to
qualified institutional buyers; (ii) in a privately negotiated transaction to a
limited number of purchasers; (iii) in limited quantities after they have been
held for a specified period of time and other conditions are met pursuant to an
exemption from registration; or (iv) in a public offering for which a
registration statement is in effect under the Securities Act of 1933, as amended
(the "1933 Act"). Issuers of restricted securities may not be subject to the
disclosure and other investor protection requirements that would be applicable
if their securities were publicly traded.

Restricted securities are often illiquid, but they may also be liquid. For
example, restricted securities that are eligible for resale under Rule 144A are
often deemed to be liquid.

Each fund's Board has approved guidelines for use by its advisor in determining
whether a security is liquid or illiquid. Among the factors an advisor may
consider in reaching liquidity decisions relating to Rule 144A securities are:
(1) the frequency of trades and quotes for the security; (2) the number of
dealers wishing to purchase or sell the security and the number of other
potential purchasers; (3) dealer undertakings to make a market in the security;
and (4) the nature of the security and the nature of the market for the security
(i.e., the time needed to dispose of the security, the method of soliciting
offers, and the mechanics of the transfer. Issuers of restricted securities may
not be subject to the disclosure and other investor protection requirement that
would be applicable if their securities were publicly traded. Where a
registration statement is required for the resale of restricted securities, a
fund may be required to bear all or part of the registration expenses. A fund
may be deemed to be an "underwriter" for purposes of the 1933 Act, when selling
restricted securities to the public and, in such event, a fund may be liable to
purchasers of such securities if the registration statement prepared by the
issuer is materially inaccurate or misleading.

A fund may also purchase securities that are not subject to legal or contractual
restrictions on resale, but that are deemed illiquid. Such securities may be
illiquid, for example, because there is a limited trading market for them.

A fund may be unable to sell a restricted or illiquid security. In addition, it
may be more difficult to determine a market value for restricted or illiquid
securities. Moreover, if adverse market conditions were to develop during the
period between a fund's decision to sell a restricted or illiquid security and
the point at which a fund is permitted or able to sell such security, a fund
might obtain a price less favorable than the price that prevailed when it
decided to sell.

Impact of Large Redemptions and Purchases of Fund Shares. From time to time,
shareholders of a Fund or an Underlying DWS Fund (which may include affiliated
and/or non-affiliated registered investment companies that invest in a Fund or
an Underlying DWS Fund) may make relatively large redemptions or purchases of
fund shares. These transactions may cause a fund to have to sell securities or
invest additional cash, as the case may be. While it is impossible to predict
the overall impact of these transactions over time, there could be adverse
effects on a fund's performance to the extent that a fund may be required to
sell securities or invest cash at times when it would not otherwise do so. These
transactions could also accelerate the realization of taxable income if sales of
securities resulted in capital gains and could also increase transaction costs,
which may impact a fund's expense ratio.


Impact of Sub-Prime Mortgage Market. A fund may invest in mortgage-backed,
asset-backed and other fixed-income securities whose value and liquidity may be
adversely affected by the critical downturn in the sub-prime mortgage lending
market in the US. Sub-prime loans, which, have higher interest rates, are made
to borrowers with low credit ratings or other factors that increase the risk of
default. Concerns about widespread defaults on sub-prime loans have also created
heightened volatility and turmoil in the general credit markets. As a result, a
fund's investments in certain fixed-income securities may decline in value,
their market value may be more difficult to determine, and a fund may have more
difficulty disposing of them.


Indexed Securities. A fund may invest in indexed securities, the value of which
is linked to currencies, interest rates, commodities, indices or other financial
indicators ("reference instruments"). Most indexed securities have maturities of
three years or less.

Indexed securities differ from other types of debt securities in which a fund
may invest in several respects. First, the interest rate or, unlike other debt
securities, the principal amount payable at maturity of an indexed security may
vary based on changes in one or more specified reference instruments, such as an
interest rate compared with a fixed interest rate or the currency exchange rates
between two currencies (neither of which need be the currency in which the
instrument is denominated). The reference instrument need not be related to the
terms of the indexed security. For example, the principal amount of a US dollar
denominated indexed security may vary based on the exchange rate of two foreign
currencies. An indexed security may be positively or negatively indexed; that
is, its value may increase or decrease if the value of the reference instrument
increases. Further, the change in the principal amount payable or the interest
rate of an indexed security may be a multiple of the percentage change (positive
or negative) in the value of the underlying reference instrument(s).

Investment in indexed securities involves certain risks. In addition to the
credit risk of the security's issuer and the normal risks of price changes in
response to changes in interest rates, the principal amount of indexed
securities may decrease as a result of changes in the value of reference
instruments. Further, in the case of certain indexed securities in which the
interest rate is linked to a reference instrument, the interest rate may be
reduced to zero, and any further declines in the value of the security may then
reduce the principal amount payable on maturity. Finally, indexed securities may
be more volatile than the reference instruments underlying the indexed
securities.

Inflation-Indexed Instruments. A fund may purchase inflation-indexed securities
issued by the US Treasury, US government agencies and instrumentalities other
than the US Treasury, and entities other than the US Treasury or US government
agencies and instrumentalities.

Inflation-indexed bonds are fixed income securities or other instruments whose
principal value is periodically adjusted according to the rate of inflation. Two
structures are common. The US Treasury and some other issuers use a structure
that accrues inflation on either a current or lagged basis into the principal
value of the bond. Most other issuers pay out the price index accruals as part
of a semi-annual coupon.

Inflation-indexed securities issued by the US Treasury have maturities of five,
ten or thirty years, although it is possible that securities with other
maturities will be issued in the future. The US Treasury securities pay interest
on a semi-annual basis, equal to a fixed percentage of the inflation-adjusted
principal amount. For example, if a Fund purchased an inflation-indexed bond
with a par value of $1,000 and a 3% real rate of return coupon (payable 1.5%
semi-annually), and calculated inflation over the first six months was 1%, the
mid-year value of the bond would be $1,010 and the first semi-annual interest
payment would be $15.15 ($1,010 times 1.5%). If calculated inflation during the
second half of the year resulted in the whole year's inflation equaling 3%, the
end of year value of the bond would be $1,030 and the second semi-annual
interest payment would be $15.45 ($1,030 times 1.5%).

If the periodic adjustment rate measuring inflation falls, the principal value
of inflation-indexed bonds will be adjusted downward, and, consequently, the
interest payable on these securities (calculated with respect to a smaller
principal amount) will be reduced. Repayment of the original bond principal on
maturity (as adjusted for inflation) is guaranteed in the case of US Treasury
inflation-indexed bonds, even during a period of deflation. However, the current
market value of the bonds is not guaranteed and will fluctuate. A fund may also
invest in other inflation related bonds that may or may not provide a similar
guarantee. If a guarantee of principal is not provided, the adjusted principal
value of the bond repaid at maturity may be less than the original principal. In
addition, if a fund purchases inflation-indexed bonds offered by foreign
issuers, the rate of inflation measured by the foreign inflation index may not
be correlated to the rate of inflation in the US.

The value of inflation-indexed bonds is expected to change in response to
changes in real interest rates. Real interest rates, in turn, are tied to the
relationship between nominal interest rates and the rate of inflation.
Therefore, if inflation were to rise at a faster rate than nominal interest
rates, real interest rates might decline, leading to an increase in value of
inflation-indexed bonds. In contrast, if nominal interest rates increased at a
faster rate than inflation, real interest rates might rise, leading to a
decrease in value of inflation-indexed bonds. There can be no assurance,
however, that the value of inflation-indexed bonds will be directly correlated
to changes in interest rates.

While these securities are expected to be protected from long-term inflationary
trends, short-term increases in inflation may lead to a decline in value. If
interest rates rise due to reasons other than inflation (for example, due to
changes in currency exchange rates), investors in these securities may not be
protected to the extent that the increase is not reflected in the bond's
inflation measure.

In general, the measure used to determine the periodic adjustment of US
inflation-indexed bonds is the Consumer Price Index for Urban Consumers
("CPI-U"), which is calculated monthly by the US Bureau of Labor Statistics. The
CPI-U is a measurement of changes in the cost of living, made up of components
such as housing, food, transportation and energy. The inflation adjustment to
the securities references this index with a three month lag. Inflation-indexed
bonds issued by a foreign government are generally adjusted to reflect a
comparable inflation index calculate by the applicable government. There can be
no assurance that the CPI-U or any foreign inflation index will accurately
measure the real rate of inflation in the prices of goods and services.
Moreover, there can be no assurance that the rate of inflation in a foreign
country will be correlated to the rate of inflation in the US. Finally, income
distributions of a fund are likely to fluctuate more than those of a
conventional bond fund.

The taxation of inflation-indexed US Treasury securities is similar to the
taxation of conventional bonds. Both interest payments and the difference
between original principal and the inflation-adjusted principal will be treated
as interest income subject to taxation. Interest payments are taxable when
received or accrued. The inflation adjustment to the principal is subject to tax
in the year the adjustment is made, not at maturity of the security when the
cash from the repayment of principal is received. If an upward adjustment has
been made (which typically should happen), investors in non-tax-deferred
accounts will pay taxes on this amount currently. Decreases in the indexed
principal can be deducted only from current or previous interest payments
reported as income.

Inflation-indexed US Treasury securities therefore have a potential cash flow
mismatch to an investor, because investors must pay taxes on the
inflation-adjusted principal before the repayment of principal is received. It
is possible that, particularly for high income tax bracket investors,
inflation-indexed US Treasury securities would not generate enough income in a
given year to cover the tax liability they could create. This is similar to the
current tax treatment for zero-coupon bonds and other discount securities. If
inflation-indexed US Treasury securities are sold prior to maturity, capital
losses or gains are realized in the same manner as traditional bonds.

Inflation-indexed securities are designed to offer a return linked to inflation,
thereby protecting future purchasing power of the money invested in them.
However, inflation-indexed securities provide this protected return only if held
to maturity. In addition, inflation-indexed securities may not trade at par
value. Real interest rates (the market rate of interest less the anticipated
rate of inflation) change over time as a result of many factors, such as what
investors are demanding as a true value for money. When real rates do change,
inflation-indexed securities prices will be more sensitive to these changes than
conventional bonds, because these securities were sold originally based upon a
real interest rate that is no longer prevailing. Should market expectations for
real interest rates rise, the price of inflation-indexed securities and the
share price of a Fund may fall. Investors in the fund should be prepared to
accept not only this share price volatility but also the possible adverse tax
consequences it may cause.

An investment in securities featuring inflation-adjusted principal and/or
interest involves factors not associated with more traditional fixed-principal
securities. Such factors include the possibility that the inflation index may be
subject to significant changes, that changes in the index may or may not
correlate to changes in interest rates generally or changes in other indices, or
that the resulting interest may be greater or less than that payable on other
securities of similar maturities. In the event of sustained deflation, it is
possible that the amount of semiannual interest payments, the inflation-adjusted
principal of the security and the value of the stripped components, will
decrease. If any of these possibilities are realized, a Fund's net asset value
could be negatively affected.

Interfund Borrowing and Lending Program. Each fund has received exemptive relief
from the SEC, which permits the funds to participate in an interfund-lending
program among certain investment companies advised by the Advisor. The
interfund-lending program allows the participating funds to borrow money from
and loan money to each other for temporary or emergency purposes. The program is
subject to a number of conditions designed to ensure fair and equitable
treatment of all participating funds, including the following: (1) no fund may
borrow money through the program unless it receives a more favorable interest
rate than a rate approximating the lowest interest rate at which bank loans
would be available to any of the participating funds under a loan agreement; and
(2) no fund may lend money through the program unless it receives a more
favorable return than that available from an investment in repurchase agreements
and, to the extent applicable, money market cash sweep arrangements. In
addition, a fund may participate in the program only if and to the extent that
such participation is consistent with a fund's investment objectives and
policies (for instance, money market funds would normally participate only as
lenders and tax exempt funds only as borrowers). Interfund loans and borrowings
may extend overnight, but could have a maximum duration of seven days. Loans may
be called on one day's notice. A fund may have to borrow from a bank at a higher
interest rate if an interfund loan is called or not renewed. Any delay in
repayment to a lending fund could result in a lost investment opportunity or
additional costs. The program is subject to the oversight and periodic review of
the Boards of the participating funds. To the extent the funds are actually
engaged in borrowing through the interfund lending program, such borrowings will
comply with each fund's non-fundamental policies.

Inverse Floaters. A fund may invest in inverse floaters. Inverse floaters are
debt instruments with a floating rate of interest that bears an inverse
relationship to changes in short-term market interest rates. Investments in this
type of security involve special risks as compared to investments in, for
example, a fixed rate municipal security. A fund could lose money and its NAV
could decline if movements in interest rates are incorrectly anticipated.
Moreover, the markets for securities of this type may be less developed and may
have less liquidity than the markets for more traditional municipal securities.

Investing in Emerging Markets. A fund's investments in foreign securities may be
in developed countries or in countries considered by a fund's advisor to have
developing or "emerging" markets, which involves exposure to economic structures
that are generally less diverse and mature than in the United States, and to
political systems that may be less stable. A developing or emerging market
country can be considered to be a country that is in the initial stages of its
industrialization cycle. Currently, emerging markets generally include every
country in the world other than the United States, Canada, Japan, Australia, New
Zealand, Hong Kong, Singapore and most Western European countries. Currently,
investing in many emerging markets may not be desirable or feasible because of
the lack of adequate custody arrangements for a fund's assets, overly burdensome
repatriation and similar restrictions, the lack of organized and liquid
securities markets, unacceptable political risks or other reasons. As
opportunities to invest in securities in emerging markets develop, a fund may
expand and further broaden the group of emerging markets in which it invests. In
the past, markets of developing or emerging market countries have been more
volatile than the markets of developed countries; however, such markets often
have provided higher rates of return to investors. The advisor believes that
these characteristics may be expected to continue in the future.

Most emerging securities markets have substantially less volume and are subject
to less governmental supervision than US securities markets. Securities of many
issuers in emerging markets may be less liquid and more volatile than securities
of comparable domestic issuers. In addition, there is less regulation of
securities exchanges, securities dealers, and listed and unlisted companies in
emerging markets than in the US.

Emerging markets also have different clearance and settlement procedures, and in
certain markets there have been times when settlements have not kept pace with
the volume of securities transactions. Delays in settlement could result in
temporary periods when a portion of the assets of a fund is uninvested and no
return is earned thereon. The inability of a fund to make intended security
purchases due to settlement problems could cause a fund to miss attractive
investment opportunities. Inability to dispose of portfolio securities due to
settlement problems could result either in losses to a fund due to subsequent
declines in value of the portfolio security or, if a fund has entered into a
contract to sell the security, could result in possible liability to the
purchaser. Costs associated with transactions in foreign securities are
generally higher than costs associated with transactions in US securities. Such
transactions also involve additional costs for the purchase or sale of foreign
currency.

Certain emerging markets require prior governmental approval of investments by
foreign persons, limit the amount of investment by foreign persons in a
particular company, limit the investment by foreign persons only to a specific
class of securities of a company that may have less advantageous rights than the
classes available for purchase by domiciliaries of the countries and/or impose
additional taxes on foreign investors. Certain emerging markets may also
restrict investment opportunities in issuers in industries deemed important to
national interest.

Certain emerging markets may require governmental approval for the repatriation
of investment income, capital or the proceeds of sales of securities by foreign
investors. In addition, if a deterioration occurs in an emerging market's
balance of payments or for other reasons, a country could impose temporary
restrictions on foreign capital remittances. A fund could be adversely affected
by delays in, or a refusal to grant, any required governmental approval for
repatriation of capital, as well as by the application to a fund of any
restrictions on investments.

In the course of investment in emerging markets, a fund will be exposed to the
direct or indirect consequences of political, social and economic changes in one
or more emerging markets. While a fund will manage its assets in a manner that
will seek to minimize the exposure to such risks, there can be no assurance that
adverse political, social or economic changes will not cause a fund to suffer a
loss of value in respect of the securities in a fund's portfolio.

The risk also exists that an emergency situation may arise in one or more
emerging markets as a result of which trading of securities may cease or may be
substantially curtailed and prices for a fund's securities in such markets may
not be readily available. A fund may suspend redemption of its shares for any
period during which an emergency exists, as determined by the SEC. Accordingly
if a fund believes that appropriate circumstances exist, it may apply to the SEC
for a determination that an emergency is present. During the period commencing
from a fund's identification of such condition until the date of the SEC action,
a fund's securities in the affected markets will be valued at fair value
determined in good faith by or under the direction of a fund's Board.

Volume and liquidity in most foreign markets are less than in the US, and
securities of many foreign companies are less liquid and more volatile than
securities of comparable US companies. Fixed commissions on foreign securities
exchanges are generally higher than negotiated commissions on US exchanges,
although a fund endeavors to achieve the most favorable net results on its
portfolio transactions. There is generally less government supervision and
regulation of business and industry practices, securities exchanges, brokers,
dealers and listed companies than in the US Mail service between the US and
foreign countries may be slower or less reliable than within the US, thus
increasing the risk of delayed settlements of portfolio transactions or loss of
certificates for certificated portfolio securities. In addition, with respect to
certain emerging markets, there is the possibility of expropriation or
confiscatory taxation, political or social instability, or diplomatic
developments which could affect a fund's investments in those countries.
Moreover, individual emerging market economies may differ favorably or
unfavorably from the US economy in such respects as growth of gross national
product, rate of inflation, capital reinvestment, resource self-sufficiency and
balance of payments position.

A fund may have limited legal recourse in the event of a default with respect to
certain debt obligations it holds. If the issuer of a fixed-income security
owned by a fund defaults, a fund may incur additional expenses to seek recovery.
Debt obligations issued by emerging market country governments differ from debt
obligations of private entities; remedies from defaults on debt obligations
issued by emerging market governments, unlike those on private debt, must be
pursued in the courts of the defaulting party itself. A fund's ability to
enforce its rights against private issuers may be limited. The ability to attach
assets to enforce a judgment may be limited. Legal recourse is therefore
somewhat diminished. Bankruptcy, moratorium and other similar laws applicable to
private issuers of debt obligations may be substantially different from those of
other countries. The political context, expressed as an emerging market
governmental issuer's willingness to meet the terms of the debt obligation, for
example, is of considerable importance. In addition, no assurance can be given
that the holders of commercial bank debt may not contest payments to the holders
of debt obligations in the event of default under commercial bank loan
agreements.

Income from securities held by a fund could be reduced by a withholding tax at
the source or other taxes imposed by the emerging market countries in which a
fund makes its investments. A fund's net asset value may also be affected by
changes in the rates or methods of taxation applicable to a fund or to entities
in which a fund has invested. The Advisor will consider the cost of any taxes in
determining whether to acquire any particular investments, but can provide no
assurance that the taxes will not be subject to change.

Many emerging markets have experienced substantial, and, in some periods,
extremely high rates of inflation for many years. Inflation and rapid
fluctuations in inflation rates have had and may continue to have adverse
effects on the economies and securities markets of certain emerging market
countries. In an attempt to control inflation, wage and price controls have been
imposed in certain countries. Of these countries, some, in recent years, have
begun to control inflation through prudent economic policies.

Emerging market governmental issuers are among the largest debtors to commercial
banks, foreign governments, international financial organizations and other
financial institutions. Certain emerging market governmental issuers have not
been able to make payments of interest on or principal of debt obligations as
those payments have come due. Obligations arising from past restructuring
agreements may affect the economic performance and political and social
stability of those issuers.

Governments of many emerging market countries have exercised and continue to
exercise substantial influence over many aspects of the private sector through
the ownership or control of many companies, including some of the largest in any
given country. As a result, government actions in the future could have a
significant effect on economic conditions in emerging markets, which in turn,
may adversely affect companies in the private sector, general market conditions
and prices and yields of certain of the securities in a fund's portfolio.
Expropriation, confiscatory taxation, nationalization, political, economic or
social instability or other similar developments have occurred frequently over
the history of certain emerging markets and could adversely affect a fund's
assets should these conditions recur.

The ability of emerging market country governmental issuers to make timely
payments on their obligations is likely to be influenced strongly by the
issuer's balance of payments, including export performance, and its access to
international credits and investments. An emerging market whose exports are
concentrated in a few commodities could be vulnerable to a decline in the
international prices of one or more of those commodities. Increased
protectionism on the part of an emerging market's trading partners could also
adversely affect the country's exports and diminish its trade account surplus,
if any. To the extent that emerging markets receive payment for its exports in
currencies other than dollars or non-emerging market currencies, its ability to
make debt payments denominated in dollars or non-emerging market currencies
could be affected.

Another factor bearing on the ability of emerging market countries to repay debt
obligations is the level of international reserves of the country. Fluctuations
in the level of these reserves affect the amount of foreign exchange readily
available for external debt payments and thus could have a bearing on the
capacity of emerging market countries to make payments on these debt
obligations.

To the extent that an emerging market country cannot generate a trade surplus,
it must depend on continuing loans from foreign governments, multilateral
organizations or private commercial banks, aid payments from foreign governments
and inflows of foreign investment. The access of emerging markets to these forms
of external funding may not be certain, and a withdrawal of external funding
could adversely affect the capacity of emerging market country governmental
issuers to make payments on their obligations. In addition, the cost of
servicing emerging market debt obligations can be affected by a change in
international interest rates since the majority of these obligations carry
interest rates that are adjusted periodically based upon international rates.

Investment Company Securities. A fund may acquire securities of other investment
companies to the extent consistent with its investment objective and the
limitations of the 1940 Act. A fund will indirectly bear its proportionate share
of any management fees and other expenses paid by such other investment
companies.

For example, a fund may invest in a variety of investment companies which seek
to track the composition and performance of specific indexes or a specific
portion of an index. These index-based investments hold substantially all of
their assets in securities representing their specific index. Accordingly, the
main risk of investing in index-based investments is the same as investing in a
portfolio of equity securities comprising the index. The market prices of
index-based investments will fluctuate in accordance with both changes in the
market value of their underlying portfolio securities and due to supply and
demand for the instruments on the exchanges on which they are traded (which may
result in their trading at a discount or premium to their NAVs). Index-based
investments may not replicate exactly the performance of their specified index
because of transaction costs and because of the temporary unavailability of
certain component securities of the index. In addition, an index-based
investment tracking a specific sector may be adversely affected by the
performance of that specific sector or group of industries on which it is based.

Investment-Grade Bonds. When the Advisor believes that it is appropriate to do
so in order to achieve a fund's objectives, a fund may purchase
"investment-grade" bonds, which are those rated Aaa, Aa, A or Baa by Moody's or
AAA, AA, A or BBB by S&P or, if unrated, judged to be of equivalent quality as
determined by the Advisor. Moody's considers bonds it rates Baa to have
speculative elements as well as investment-grade characteristics. To the extent
that a fund invests in higher-grade securities, a fund will not be able to avail
itself of opportunities for higher income which may be available at lower
grades.

The principal risks involved with investments in bonds include interest rate
risk, credit risk and pre-payment risk. Interest rate risk refers to the likely
decline in the value of bonds as interest rates rise. Generally, longer-term
securities are more susceptible to changes in value as a result of interest-rate
changes than are shorter-term securities. Credit risk refers to the risk that an
issuer of a bond may default with respect to the payment of principal and
interest. The lower a bond is rated, the more it is considered to be a
speculative or risky investment. Pre-payment risk is commonly associated with
pooled debt securities, such as mortgage-backed securities and asset backed
securities, but may affect other debt securities as well. When the underlying
debt obligations are prepaid ahead of schedule, the return on the security will
be lower than expected. Pre-payment rates usually increase when interest rates
are falling.

IPO Risk. Securities issued through an initial public offering (IPO) can
experience an immediate drop in value if the demand for the securities does not
continue to support the offering price. Information about the issuers of IPO
securities is also difficult to acquire since they are new to the market and may
not have lengthy operating histories. The fund may engage in short-term trading
in connection with its IPO investments, which could produce higher trading costs
and adverse tax consequences. The number of securities issued in an IPO is
limited, so it is likely that IPO securities will represent a smaller component
of a fund's portfolio as the fund's assets increase (and thus have a more
limited effect on the fund's performance).

Lending of Portfolio Securities. A fund may lend its investment securities to
approved institutional borrowers, including those who need to borrow securities
in order to complete certain transactions, such as covering short sales,
avoiding failures to deliver securities or completing arbitrage operations. By
lending its investment securities, a fund attempts to increase its net
investment income through the receipt of interest on the loan. Any gain or loss
in the market price of the securities loaned that might occur during the term of
the loan would belong to a fund. A fund may lend its investment securities so
long as the terms, structure and the aggregate amount of such loans are not
inconsistent with the 1940 Act or the rules and regulations or interpretations
of the SEC thereunder, which currently require that (a) the borrower pledge and
maintain with a fund collateral consisting of liquid, unencumbered assets having
a value at all times not less than 100% of the value of the securities loaned,
(b) the borrower add to such collateral whenever the price of the securities
loaned rises (i.e., the borrower "marks to the market" on a daily basis), (c)
the loan be made subject to termination by a fund at any time, and (d) a fund
receives reasonable interest on the loan (which may include a fund investing any
cash collateral in interest bearing short-term investments), and distributions
on the loaned securities and any increase in their market value. There may be
risks of delay in recovery of the securities or even loss of rights in the
collateral should the borrower of the securities fail financially. However,
loans will be made only to borrowers selected by a fund's delegate after a
commercially reasonable review of relevant facts and circumstances, including
the creditworthiness of the borrower.

At the present time, the staff of the SEC does not object if an investment
company pays reasonable negotiated fees in connection with loaned securities, so
long as such fees are set forth in a written contract and approved by the
investment company's Board of Directors/Trustees. In addition, voting rights may
pass with the loaned securities, but if a material event occurs affecting an
investment on loan, the loan must be called and the securities voted. Pursuant
to an exemptive order granted by the SEC, cash collateral received by a fund may
be invested in a money market fund managed by a fund's advisor (or one of its
affiliates).

Letters of Credit. Municipal obligations, including certificates of
participation, commercial paper and other short-term obligations, may be backed
by an irrevocable letter of credit of a bank which assumes the obligation for
payment of principal and interest in the event of default by the issuer. Only
banks which, in the opinion of the Advisor, are of investment quality comparable
to other permitted investments of a fund may be used for letter of credit backed
investments.

Loan Participations and Assignments. A fund may invest in fixed- and
floating-rate loans ("Loans") arranged through private negotiations between an
issuer of emerging market debt instruments and one or more financial
institutions ("Lenders"). A fund's investments in Loans are expected in most
instances to be in the form of participations in Loans ("Participations") and
assignments of portions of Loans ("Assignments") from third parties.
Participations typically will result in a fund having a contractual relationship
only with the Lender and not with the borrower. A fund will have the right to
receive payments of principal, interest and any fees to which it is entitled
only from the Lender selling the Participation and only upon receipt by the
Lender of the payments from the borrower. In connection with purchasing
Participations, a fund generally will have no right to enforce compliance by the
borrower with the terms of the loan agreement relating to the Loan, nor any
rights of set-off against the borrower, and a fund may not directly benefit from
any collateral supporting the Loan in which it has purchased the Participation.
As a result, a fund will assume the credit risk of both the borrower and the
Lender that is selling the Participation. In the event of the insolvency of the
Lender selling a Participation, a fund may be treated as a general creditor of
the Lender and may not benefit from any set-off between the Lender and the
borrower. A fund will acquire Participations only if the Lender interpositioned
between a fund and the borrower is determined by the Advisor to be creditworthy.

When a fund purchases Assignments from Lenders, it will acquire direct rights
against the borrower on the Loan. Because Assignments are arranged through
private negotiations between potential assignees and potential assignors,
however, the rights and obligations acquired by a fund as the purchaser of an
Assignment may differ from, and may be more limited than, those held by the
assigning Lender.

A fund may have difficulty disposing of Assignments and Participations. Because
no liquid market for these obligations typically exists, a fund anticipates that
these obligations could be sold only to a limited number of institutional
investors. The lack of a liquid secondary market will have an adverse effect on
a fund's ability to dispose of particular Assignments or Participations when
necessary to meet a fund's liquidity needs or in response to a specific economic
event, such as a deterioration in the creditworthiness of the borrower. The lack
of a liquid secondary market for Assignments and Participations may also make it
more difficult for a fund to assign a value to those securities for purposes of
valuing a fund's portfolio and calculating its net asset value.

Maintenance of $1.00 Net Asset Value, Credit Quality and Portfolio Maturity.
Pursuant to Rule 2a-7 of the 1940 Act, money market funds effect sales,
redemptions and repurchases at the net asset value per share, normally $1.00. In
fulfillment of their responsibilities under that Rule, a fund's Board has
approved policies established by a fund's Advisor reasonably calculated to
prevent a fund's net asset value per share from deviating from $1.00 except
under unusual or extraordinary circumstances and a fund's Board will
periodically review the Advisor's operations under such policies at regularly
scheduled Board meetings. Those policies include a weekly monitoring by the
Advisor of unrealized gains and losses in a fund's portfolio, and when
necessary, in an effort to avoid deviation, taking corrective action, such as
adjusting the maturity of the portfolio, or, if possible, realizing gains or
losses to offset in part unrealized losses or gains. The result of those
policies may be that the yield on shares of a fund will be lower than would be
the case if the policies were not in effect. Such policies also provide for
certain action to be taken with respect to portfolio securities which experience
a downgrade in rating or suffer a default.

Securities eligible for investment by a fund are those securities which are
generally rated (or issued by an issuer with comparable securities rated) in the
highest short-term rating category by at least two rating services (or by one
rating service, if no other rating agency has issued a rating with respect to
that security). These securities are known as "first tier securities."
Securities generally rated (or issued by an issuer with comparable securities
rated) in the top two categories by at least two rating agencies (or one, if
only one rating agency has rated the security) which do not qualify as first
tier securities are known as "second tier securities." To ensure diversity of a
fund's investments, a fund will not invest more than 5% of its total assets in
the securities of a single issuer, other than the US Government. A fund may,
however, invest more than 5% of its total assets in the first tier securities of
a single issuer for a period of up to three business days after purchase,
although a fund may not make more than one such investment at any time during
such period. A fund may not invest more than 5% of its total assets in
securities which were second tier securities when acquired by a fund. Further, a
fund may not invest more than the greater of (1) 1% of its total assets, or (2)
one million dollars, in the securities of a single issuer which were second tier
securities when acquired by a fund.

The assets of a fund consist entirely of cash items and investments having a
stated maturity date of 397 calendar days or less from the date of purchase
(including investment in repurchase agreements, in which case maturity is
measured by the repurchase date, without respect to the maturity of the
obligation). The term "Government securities," as used herein, means securities
issued or guaranteed as to principal or interest by the US Government, its
agencies or instrumentalities. The portfolio of a fund will be managed so that
the average maturity of all instruments (on a dollar-weighted basis) will be 90
days or less. The average maturity of a fund will vary according to the
management's appraisal of money market conditions. A fund will invest only in
securities determined by or under the direction of the Board to be of high
quality with minimal credit risks.

Micro-Cap Company Risk. While, historically, micro-capitalization company stocks
have outperformed the stocks of large companies, the former have customarily
involved more investment risk as well. There can be no assurance that this will
continue to be true in the future. Micro-capitalization companies may have
limited product lines, markets or financial resources; may lack management depth
or experience; and may be more vulnerable to adverse general market or economic
developments than large companies. The prices of micro-capitalization company
securities are often more volatile than prices associated with large company
issues, and can display abrupt or erratic movements at times, due to limited
trading volumes and less publicly available information.

Also, because micro-capitalization companies normally have fewer shares
outstanding and these shares trade less frequently than large companies, it may
be more difficult for a fund to buy and sell significant amounts of such shares
without an unfavorable impact on prevailing market prices.

Some of the companies in which a fund may invest may distribute, sell or produce
products which have recently been brought to market and may be dependent on key
personnel. The securities of micro-capitalization companies are often traded
over-the-counter and may not be traded in the volumes typical on a national
securities exchange. Consequently, in order to sell this type of holding, a fund
may need to discount the securities from recent prices or dispose of the
securities over a long period of time.

Mining and Exploration. The business of gold mining by its nature involves
significant risks and hazards, including environmental hazards, industrial
accidents, labor disputes, discharge of toxic chemicals, fire, drought, flooding
and natural acts. The occurrence of any of these hazards can delay production,
increase production costs and result in liability to the operator of the mines.
A mining operation may become subject to liability for pollution or other
hazards against which it has not insured or cannot insure, including those in
respect of past mining activities for which it was not responsible.

Exploration for gold and other precious metals is speculative in nature,
involves many risks and frequently is unsuccessful. There can be no assurance
that any mineralisation discovered will result in an increase in the proven and
probable reserves of a mining operation. If reserves are developed, it can take
a number of years from the initial phases of drilling and identification of
mineralisation until production is possible, during which time the economic
feasibility of production may change. Substantial expenditures are required to
establish ore reserves properties and to construct mining and processing
facilities. As a result of these uncertainties, no assurance can be given that
the exploration programs undertaken by a particular mining operation will
actually result in any new commercial mining.

Mortgage-Backed Securities and Mortgage Pass-Through Securities. Mortgage-backed
securities are interests in pools of mortgage loans, including mortgage loans
made by savings and loan institutions, mortgage bankers, commercial banks and
others. Pools of mortgage loans are assembled as securities for sale to
investors by various governmental, government-related and private organizations
as further described below. Underlying mortgages may be of a variety of types,
including adjustable rate, conventional 30-year, graduated payment and 15-year.

A decline in interest rates may lead to a faster rate of repayment of the
underlying mortgages, and may expose a fund to a lower rate of return upon
reinvestment. To the extent that such mortgage-backed securities are held by a
fund, the prepayment right will tend to limit to some degree the increase in net
asset value of a fund because the value of the mortgage-backed securities held
by a fund may not appreciate as rapidly as the price of non-callable debt
securities. Mortgage-backed securities are subject to the risk of prepayment and
the risk that the underlying loans will not be repaid. Because principal may be
prepaid at any time, mortgage-backed securities may involve significantly
greater price and yield volatility than traditional debt securities.

When interest rates rise, mortgage prepayment rates tend to decline, thus
lengthening the life of a mortgage-related security and increasing the price
volatility of that security, affecting the price volatility of a fund's shares.

Interests in pools of mortgage-backed securities differ from other forms of debt
securities, which normally provide for periodic payment of interest in fixed
amounts with principal payments at maturity or specified call dates. Instead,
these securities provide a monthly payment which consists of both interest and
principal payments. In effect, these payments are a "pass-through" of the
monthly payments made by the individual borrowers on their mortgage loans, net
of any fees paid to the issuer or guarantor of such securities. Additional
payments are caused by repayments of principal resulting from the sale of the
underlying property, refinancing or foreclosure, net of fees or costs which may
be incurred. Some mortgage-related securities (such as securities issued by the
Government National Mortgage Association ("GNMA")) are described as "modified
pass-through." These securities entitle the holder to receive all interest and
principal payments owed on the mortgage pool, net of certain fees, at the
scheduled payment dates regardless of whether or not the mortgagor actually
makes the payment.

The principal governmental guarantor of mortgage-related securities is GNMA.
GNMA is a wholly owned US Government corporation within the Department of
Housing and Urban Development. GNMA is authorized to guarantee, with the full
faith and credit of the US Government, the timely payment of principal and
interest on securities issued by institutions approved by GNMA (such as savings
and loan institutions, commercial banks and mortgage bankers) and backed by
pools of FHA-insured or VA-guaranteed mortgages. These guarantees, however, do
not apply to the market value or yield of mortgage-backed securities or to the
value of fund shares. Also, GNMA securities often are purchased at a premium
over the maturity value of the underlying mortgages. This premium is not
guaranteed and will be lost if prepayment occurs.

Government-related guarantors (i.e., not backed by the full faith and credit of
the US Government) include Fannie Mae and the Federal Home Loan Mortgage
Corporation ("FHLMC"). Fannie Mae is a government-sponsored corporation owned
entirely by private stockholders. It is subject to general regulation by the
Secretary of Housing and Urban Development. Fannie Mae purchases conventional
(i.e., not insured or guaranteed by any government agency) mortgages from a list
of approved seller/servicers which include state and federally chartered savings
and loan associations, mutual savings banks, commercial banks and credit unions
and mortgage bankers. Pass-through securities issued by Fannie Mae are
guaranteed as to timely payment of principal and interest by Fannie Mae but are
not backed by the full faith and credit of the US Government.

FHLMC is a corporate instrumentality of the US Government and was created by
Congress in 1970 for the purpose of increasing the availability of mortgage
credit for residential housing. Its stock is owned by the twelve Federal Home
Loan Banks. FHLMC issues Participation Certificates ("PCs") which represent
interests in conventional mortgages from FHLMC's national portfolio. FHLMC
guarantees the timely payment of interest and ultimate collection of principal,
but PCs are not backed by the full faith and credit of the US Government.


Mortgage-backed securities may be issued or guaranteed by GNMA, FNMA (also known
as Fannie Mae) and FHLMC (also known as Freddie Mac), but also may be issued or
guaranteed by other issuers, including private companies. GNMA is a
government-owned corporation that is an agency of the U.S. Department of Housing
and Urban Development. It guarantees, with the full faith and credit of the
United States, full and timely payment of all monthly principal and interest on
its mortgage-backed securities. Until recently, FNMA and FHLMC were
government-sponsored corporations owned entirely by private stockholders. Both
issue mortgage-related securities that contain guarantees as to timely payment
of interest and principal but that are not backed by the full faith and credit
of the U.S. government. The value of the companies' securities fell sharply in
2008 due to concerns that the firms did not have sufficient capital to offset
losses. In mid-2008, the U.S. Treasury was authorized to increase the size of
home loans that FNMA and FHLMC could purchase in certain residential areas and,
until 2009, to lend FNMA and FHLMC emergency funds and to purchase the
companies' stock. More recently, in September 2008, the U.S. Treasury announced
that FNMA and FHLMC had been placed in conservatorship by the Federal Housing
Finance Agency ("FHFA"), a newly created independent regulator. In addition to
placing the companies in conservatorship, the U.S. Treasury announced three
additional steps that it intended to take with respect to FNMA and FHLMC. First,
the U.S. Treasury has entered into preferred stock purchase agreements ("PSPAs")
under which, if the FHFA determines that FNMA's or FHLMC's liabilities have
exceeded its assets under generally accepted accounting principles, the U.S.
Treasury will contribute cash capital to the company in an amount equal to the
difference between liabilities and assets. The PSPAs are designed to provide
protection to the senior and subordinated debt and the mortgage-backed
securities issued by FNMA and FHLMC. Second, the U.S. Treasury established a new
secured lending credit facility that is available to FNMA and FHLMC until
December 2009. Third, the U.S. Treasury initiated a temporary program to
purchase FNMA and FHLMC mortgage-backed securities, which is expected to
continue until December 2009. No assurance can be given that the U.S. Treasury
initiatives discussed above with respect to the debt and mortgage-backed
securities issued by FNMA and FHLMC will be successful.


Commercial banks, savings and loan institutions, private mortgage insurance
companies, mortgage bankers and other secondary market issuers also create
pass-through pools of conventional mortgage loans. Such issuers may, in
addition, be the originators and/or servicers of the underlying mortgage loans
as well as the guarantors of the mortgage-related securities. Pools created by
such non-governmental issuers generally offer a higher rate of interest than
government and government-related pools because there are no direct or indirect
government or agency guarantees of payments. However, timely payment of interest
and principal of these pools may be supported by various forms of insurance or
guarantees, including individual loan, title, pool and hazard insurance and
letters of credit. The insurance and guarantees are issued by governmental
entities, private insurers and the mortgage poolers. Such insurance and
guarantees and the creditworthiness of the issuers thereof will be considered in
determining whether a mortgage-related security meets a fund's investment
quality standards. There can be no assurance that the private insurers or
guarantors can meet their obligations under the insurance policies or guarantee
arrangements. A fund may buy mortgage-related securities without insurance or
guarantees, if through an examination of the loan experience and practices of
the originators/servicers and poolers, the underlying fund's advisor determines
that the securities meet a fund's quality standards. Although the market for
such securities is becoming increasingly liquid, securities issued by certain
private organizations may not be readily marketable.

Mortgage Dollar Rolls. A fund may enter into mortgage "dollar rolls" in which a
fund sells securities for delivery in the current month and simultaneously
contracts to repurchase substantially similar, but not identical (same type,
coupon and maturity), securities on a specified future date. During the roll
period, a fund forgoes principal and interest paid on the securities. A fund is
compensated by the difference between the current sales price and the lower
forward price for the future purchase (often referred to as the "drop") or fee
income and by the interest earned on the cash proceeds of the initial sale. A
"covered roll" is a specific type of dollar roll for which there is an
offsetting cash position or a cash equivalent security position which matures on
or before the forward settlement date of the dollar roll transaction. A fund may
enter into both covered and uncovered rolls. At the time a Fund enters into a
dollar roll transaction, it will segregate with an approved custodian cash or
liquid securities having a value not less than the repurchase price (including
accrued interest) and will subsequently monitor the segregated assets to ensure
that its value is maintained.

Municipal Securities. A fund may invest to a limited extent in municipal
securities. Municipal securities consist of bonds, notes and other instruments
issued by or on behalf of states, territories and possessions of the US
(including the District of Columbia) and their political subdivisions, agencies
or instrumentalities, the interest on which is exempt from regular federal
income tax (i.e., excluded from gross income for federal income tax purposes but
not necessarily exempt from the federal alternative minimum tax or from state
and local taxes). Municipal securities may also be issued on a taxable basis
(i.e., the interest on such securities is not exempt from regular federal income
tax).

Municipal securities are often issued to obtain funds for various public
purposes, including the construction of a wide range of public facilities such
as bridges, highways, housing, hospitals, mass transportation, schools, streets
and water and sewer works. Other public purposes for which municipal securities
may be issued include refunding outstanding obligations, obtaining funds for
general operating expenses, and obtaining funds to lend to other public
institutions and facilities. Municipal securities also include "private
activity" or industrial development bonds, which are issued by or on behalf of
public authorities to provide financing aid to acquire sites or construct or
equip facilities within a municipality for privately or publicly owned
corporations.

The two principal classifications of municipal securities are "general
obligations" and "revenue obligations". General obligations are secured by the
issuer's pledge of its full faith and credit for the payment of principal and
interest although the characteristics and enforcement of general obligations may
vary according to the law applicable to the particular issuer. Revenue
obligations, which include, but are not limited to, private activity bonds,
resource recovery bonds, certificates of participation and certain municipal
notes, are not backed by the credit and taxing authority of the issuer and are
payable solely from the revenues derived from a particular facility or class of
facilities or, in some cases, from the proceeds of a special excise or other
specific revenue source. Nevertheless, the obligations of the issuer may also be
backed by a letter of credit, guarantee or insurance. General obligations and
revenue obligations may be issued in a variety of forms, including commercial
paper, fixed, variable and floating rate securities, tender option bonds,
auction rate bonds and capital appreciation bonds.

In addition to general obligations and revenue obligations, there are a variety
of hybrid and special types of municipal securities. There are also numerous
differences in the credit backing of municipal securities both within and
between these two principal classifications.

For the purpose of applying a fund's investment restrictions, the identification
of the issuer of a municipal security which is not a general obligation is made
by the Advisor based on the characteristics of the municipal security, the most
important of which is the source of funds for the payment of principal and
interest on such securities.

One or a small number of institutional investors such as a fund may purchase an
entire issue of municipal securities. Thus, the issue may not be said to be
publicly offered. Unlike some securities that are not publicly offered, a
secondary market exists for many municipal securities that were not publicly
offered initially and such securities can be readily marketable.

The obligations of an issuer to pay the principal of and interest on a municipal
security are subject to the provisions of bankruptcy, insolvency and other laws
affecting the rights and remedies of creditors, such as the Federal Bankruptcy
Act, and laws, if any, that may be enacted by Congress or state legislatures
extending the time for payment of principal or interest or imposing other
constraints upon the enforcement of such obligations. There is also the
possibility that, because of litigation or other conditions, the power or
ability of the issuer to pay when due principal of or interest on a municipal
security may be materially affected.

Municipal Leases, Certificates of Participation and other Participation
Interests. A municipal lease is an obligation in the form of a lease or
installment purchase contract that is issued by a state or local government to
acquire equipment and facilities. Income from such obligations is generally
exempt from state and local taxes in the state of issuance (as well as regular
federal income tax). Municipal leases frequently involve special risks not
normally associated with general obligation or revenue bonds. Leases and
installment purchase or conditional sale contracts (which normally provide for
title to the leased asset to pass eventually to the governmental issuer) have
evolved as a means for governmental issuers to acquire property and equipment
without meeting the constitutional and statutory requirements for the issuance
of debt. The debt issuance limitations are deemed to be inapplicable because of
the inclusion in many leases or contracts of `non-appropriation' clauses that
relieve the governmental issuer of any obligation to make future payments under
the lease or contract unless money is appropriated for such purpose by the
appropriate legislative body on a yearly or other periodic basis. Thus, a fund's
investment in municipal leases will be subject to the special risk that the
governmental issuer may not appropriate funds for lease payments.

In addition, such leases or contracts may be subject to the temporary abatement
of payments in the event the issuer is prevented from maintaining occupancy of
the leased premises or utilizing the leased equipment. Although the obligations
may be secured by the leased equipment or facilities, the disposition of the
property in the event of nonappropriation or foreclosure might prove difficult,
time consuming and costly, and result in an unsatisfactory or delayed recoupment
of a fund's original investment.

Certificates of participation represent undivided interests in municipal leases,
installment purchase contracts or other instruments. The certificates are
typically issued by a trust or other entity that has received an assignment of
the payments to be made by the state or political subdivision under such leases
or installment purchase contracts.

Certain municipal lease obligations and certificates of participation may be
deemed illiquid for the purpose of a fund's limitations on investments in
illiquid securities. Other municipal lease obligations and certificates of
participation acquired by a fund may be determined by the Advisor, pursuant to
guidelines adopted by the Trustees of the Trust, to be liquid securities for the
purpose of a fund's limitation on investments in illiquid securities. In
determining the liquidity of municipal lease obligations and certificates of
participation, the Advisor will consider a variety of factors including: (1) the
willingness of dealers to bid for the security; (2) the number of dealers
willing to purchase or sell the obligation and the number of other potential
buyers; (3) the frequency of trades or quotes for the obligation; and (4) the
nature of the marketplace trades. In addition, the Advisor will consider factors
unique to particular lease obligations and certificates of participation
affecting the marketability thereof. These include the general creditworthiness
of the issuer, the importance to the issuer of the property covered by the lease
and the likelihood that the marketability of the obligation will be maintained
throughout the time the obligation is held by a fund. A fund may not invest more
than 5% of its net assets in municipal leases.

A fund may purchase participations in municipal securities held by a commercial
bank or other financial institution. Such participations provide a fund with the
right to a pro rata undivided interest in the underlying municipal securities.
In addition, such participations generally provide a fund with the right to
demand payment, on not more than seven days notice, of all or any part of a
fund's participation interest in the underlying municipal security, plus accrued
interest.

Municipal Notes. Municipal securities in the form of notes generally are used to
provide for short-term capital needs, in anticipation of an issuer's receipt of
other revenues or financing, and typically have maturities of up to three years.
Such instruments may include Tax Anticipation Notes, Revenue Anticipation Notes,
Bond Anticipation Notes, Tax and Revenue Anticipation Notes and Construction
Loan Notes. Tax Anticipation Notes are issued to finance the working capital
needs of governments. Generally, they are issued in anticipation of various tax
revenues, such as income, sales, property, use and business taxes, and are
payable from these specific future taxes. Revenue Anticipation Notes are issued
in expectation of receipt of other kinds of revenue, such as federal revenues
available under federal revenue sharing programs. Bond Anticipation Notes are
issued to provide interim financing until long-term bond financing can be
arranged. In most cases, the long-term bonds then provide the funds needed for
repayment of the notes. Tax and Revenue Anticipation Notes combine the funding
sources of both Tax Anticipation Notes and Revenue Anticipation Notes.
Construction Loan Notes are sold to provide construction financing. These notes
are secured by mortgage notes insured by the Federal Housing Authority; however,
the proceeds from the insurance may be less than the economic equivalent of the
payment of principal and interest on the mortgage note if there has been a
default. The obligations of an issuer of municipal notes are generally secured
by the anticipated revenues from taxes, grants or bond financing. An investment
in such instruments, however, presents a risk that the anticipated revenues will
not be received or that such revenues will be insufficient to satisfy the
issuer's payment obligations under the notes or that refinancing will be
otherwise unavailable.

Non-diversification. DWS RREEF Global Infrastructure Fund is classified as a
non-diversified management investment company under the 1940 Act, which means
that the fund is not limited by the 1940 Act in the proportion of its assets
that it may invest in the obligations of a single issuer. The investment of a
large percentage of the fund's assets in the securities of a small number of
issuers may cause the fund's share price to fluctuate more than that of a
diversified fund.

Obligations of Banks and Other Financial Institutions. The fund may invest in US
dollar-denominated fixed rate or variable rate obligations of US or foreign
financial institutions, including banks. Obligations of domestic and foreign
financial institutions in which the fund may invest include (but are not limited
to) certificates of deposit, bankers' acceptances, bank time deposits,
commercial paper, and other US dollar-denominated instruments issued or
supported by the credit of US or foreign financial institutions, including
banks.

For purposes of a fund's investment policies with respect to bank obligations,
the assets of a bank will be deemed to include the assets of its domestic and
foreign branches. Obligations of foreign branches of US banks and foreign banks
may be general obligations of the parent bank in addition to the issuing bank or
may be limited by the terms of a specific obligation and by government
regulation. The fund may invest in obligations of foreign banks or foreign
branches of US banks, which include banks located in the United Kingdom, Grand
Cayman Island, Nassau, Japan and Canada.

Investments in these obligations may entail risks that are different from those
of investments in obligations of US domestic banks because of differences in
political, regulatory and economic systems and conditions. These risks include
future political and economic developments, currency blockage, the possible
imposition of withholding taxes on interest payments, possible seizure or
nationalization of foreign deposits, difficulty or inability of pursuing legal
remedies and obtaining judgments in foreign courts, possible establishment of
exchange controls or the adoption of other foreign governmental restrictions
that might affect adversely the payment of principal and interest on bank
obligations. Foreign branches of US banks and foreign banks may also be subject
to less stringent reserve requirements and to different accounting, auditing,
reporting and record keeping standards than those applicable to domestic
branches of US banks.

Other Asset-Backed Securities. The securitization techniques used to develop
mortgage-backed securities are now being applied to a broad range of assets.
Through the use of trusts and special purpose corporations, various types of
assets, including automobile loans, computer leases and credit card receivables,
are being securitized in pass-through structures similar to mortgage
pass-through structures or in a structure similar to the CMO structure. In
general, the collateral supporting these securities is of shorter maturity than
mortgage loans and is less likely to experience substantial prepayments with
interest rate fluctuations.

Several types of asset-backed securities have already been offered to investors,
including  Certificates  of Automobile  Receivables(SM)  ("CARS(SM)").  CARS(SM)
represent  undivided  fractional  interests in a trust whose assets consist of a
pool of motor vehicle retail  installment sales contracts and security interests
in the vehicles  securing the  contracts.  Payments of principal and interest on
CARS(SM) are passed through monthly to certificate  holders,  and are guaranteed
up to certain amounts and for a certain time period by a letter of credit issued
by a financial  institution  unaffiliated  with the trustee or originator of the
trust. An investor's  return on CARS(SM) may be affected by early  prepayment of
principal on the underlying vehicle sales contracts.  If the letter of credit is
exhausted,  the trust may be prevented  from  realizing the full amount due on a
sales contract because of state law  requirements  and restrictions  relating to
foreclosure  sales  of  vehicles  and  the  obtaining  of  deficiency  judgments
following  such sales or because of  depreciation,  damage or loss of a vehicle,
the  application of federal and state  bankruptcy and insolvency  laws, or other
factors.  As a result,  certificate holders may experience delays in payments or
losses if the letter of credit is exhausted.

Asset-backed securities present certain risks that are not presented by
mortgage-backed securities. Primarily, these securities may not have the benefit
of any security interest in the related assets. Credit card receivables are
generally unsecured and the debtors are entitled to the protection of a number
of state and federal consumer credit laws, many of which give such debtors the
right to set off certain amounts owed on the credit cards, thereby reducing the
balance due. There is the possibility that recoveries on repossessed collateral
may not, in some cases, be available to support payments on these securities.

Asset-backed securities are often backed by a pool of assets representing the
obligations of a number of different parties. To lessen the effect of failures
by obligors on underlying assets to make payments, the securities may contain
elements of credit support which fall into two categories: (i) liquidity
protection, and (ii) protection against losses resulting from ultimate default
by an obligor on the underlying assets. Liquidity protection refers to the
provision of advances, generally by the entity administering the pool of assets,
to ensure that the receipt of payments on the underlying pool occurs in a timely
fashion. Protection against losses results from payment of the insurance
obligations on at least a portion of the assets in the pool. This protection may
be provided through guarantees, policies or letters of credit obtained by the
issuer or sponsor from third parties, through various means of structuring the
transaction or through a combination of such approaches. A fund will not pay any
additional or separate fees for credit support. The degree of credit support
provided for each issue is generally based on historical information respecting
the level of credit risk associated with the underlying assets. Delinquency or
loss in excess of that anticipated or failure of the credit support could
adversely affect the return on an investment in such a security.

A fund may also invest in residual interests in asset-backed securities. In the
case of asset-backed securities issued in a pass-through structure, the cash
flow generated by the underlying assets is applied to make required payments on
the securities and to pay related administrative expenses. The residual in an
asset-backed security pass-through structure represents the interest in any
excess cash flow remaining after making the foregoing payments. The amount of
residual cash flow resulting from a particular issue of asset-backed securities
will depend on, among other things, the characteristics of the underlying
assets, the coupon rates on the securities, prevailing interest rates, the
amount of administrative expenses and the actual prepayment experience on the
underlying assets. Asset-backed security residuals not registered under the 1933
Act may be subject to certain restrictions on transferability. In addition,
there may be no liquid market for such securities.

The availability of asset-backed securities may be affected by legislative or
regulatory developments. It is possible that such developments may require a
fund to dispose of any then-existing holdings of such securities.

Participation Interests. A fund may purchase from financial institutions
participation interests in securities in which the fund may invest. A
participation interest gives a fund an undivided interest in the security in the
proportion that the fund's participation interest bears to the principal amount
of the security. These instruments may have fixed, floating or variable interest
rates. If the participation interest is unrated, or has been given a rating
below that which is permissible for purchase by a fund, the participation
interest will be backed by an irrevocable letter of credit or guarantee of a
bank, or the payment obligation otherwise will be collateralized by US
Government securities, or, in the case of unrated participation interest,
determined by the underlying fund's advisor to be of comparable quality to those
instruments in which a fund may invest. For certain participation interests, a
fund will have the right to demand payment, on not more than seven days' notice,
for all or any part of a fund's participation interests in the security, plus
accrued interest. As to these instruments, the fund generally intends to
exercise its right to demand payment only upon a default under the terms of the
security.

Pre-Refunded Municipal Securities. The principal of and interest on municipal
securities that have been pre-refunded are no longer paid from the original
revenue source for the securities. Instead, after pre-refunding the source of
such payments of the principal of and interest on these securities are typically
paid from an escrow fund consisting of obligations issued or guaranteed by the
US Government. The assets in the escrow fund are derived from the proceeds of
refunding bonds issued by the same issuer as the pre-refunded municipal
securities. Issuers of municipal securities use this advance refunding technique
to obtain more favorable terms with respect to securities that are not yet
subject to call or redemption by the issuer. For example, advance refunding
enables an issuer to refinance debt at lower market interest rates, restructure
debt to improve cash flow or eliminate restrictive covenants in the indenture or
other governing instrument for the pre-refunded municipal securities. However,
except for a change in the revenue source from which principal and interest
payments are made, the pre-refunded municipal securities remain outstanding on
their original terms until they mature or are redeemed by the issuer.
Pre-refunded municipal securities are usually purchased at a price which
represents a premium over their face value.

Private Activity Bonds. Certain types of municipal securities, generally
referred to as industrial development bonds (and referred to under current tax
law as private activity bonds), are issued by or on behalf of public authorities
to obtain funds for privately-operated housing facilities, airport, mass transit
or port facilities, sewage disposal, solid waste disposal or hazardous waste
treatment or disposal facilities and certain local facilities for water supply,
gas or electricity. Other types of industrial development bonds, the proceeds of
which are used for the construction, equipment, repair or improvement of
privately operated industrial or commercial facilities, may constitute municipal
securities, although the current federal tax laws place substantial limitations
on the size of such issues. The interest from certain private activity bonds
owned by a fund (including a fund's distributions attributable to such interest)
may be a preference item for purposes of the alternative minimum tax.

Privatized Enterprises. Investments in foreign securities may include securities
issued by enterprises that have undergone or are currently undergoing
privatization. The governments of certain foreign countries have, to varying
degrees, embarked on privatization programs contemplating the sale of all or
part of their interests in state enterprises. A fund's investments in the
securities of privatized enterprises may include privately negotiated
investments in a government or state-owned or controlled company or enterprise
that has not yet conducted an initial equity offering, investments in the
initial offering of equity securities of a state enterprise or former state
enterprise and investments in the securities of a state enterprise following its
initial equity offering.

In certain jurisdictions, the ability of foreign entities, such as a fund, to
participate in privatizations may be limited by local law, or the price or terms
on which a fund may be able to participate may be less advantageous than for
local investors. Moreover, there can be no assurance that governments that have
embarked on privatization programs will continue to divest their ownership of
state enterprises, that proposed privatizations will be successful or that
governments will not re-nationalize enterprises that have been privatized.

In the case of the enterprises in which a fund may invest, large blocks of the
stock of those enterprises may be held by a small group of stockholders, even
after the initial equity offerings by those enterprises. The sale of some
portion or all of those blocks could have an adverse effect on the price of the
stock of any such enterprise.

Prior to making an initial equity offering, most state enterprises or former
state enterprises go through an internal reorganization or management. Such
reorganizations are made in an attempt to better enable these enterprises to
compete in the private sector. However, certain reorganizations could result in
a management team that does not function as well as an enterprise's prior
management and may have a negative effect on such enterprise. In addition, the
privatization of an enterprise by its government may occur over a number of
years, with the government continuing to hold a controlling position in the
enterprise even after the initial equity offering for the enterprise.

Prior to privatization, most of the state enterprises in which a fund may invest
enjoy the protection of and receive preferential treatment from the respective
sovereigns that own or control them. After making an initial equity offering,
these enterprises may no longer have such protection or receive such
preferential treatment and may become subject to market competition from which
they were previously protected. Some of these enterprises may not be able to
operate effectively in a competitive market and may suffer losses or experience
bankruptcy due to such competition.


Precious Metals. DWS Gold & Precious Metals Fund "concentrates" (for the
purposes of the 1940 Act) its assets in securities of companies that are
primarily engaged in the exploration, mining, fabrication, processing or
distribution of gold and other precious metals and in gold, silver, platinum and
palladium bullion and coins. As a result, the fund may be subject to greater
market fluctuation than a fund which has securities representing a broader range
of investment alternatives. The subsidiaries will incur expenses for the storage
and insurance of precious metals purchased. However, the subsidiaries may
realize capital gains from the sale of metals and may pay distributions to the
fund from such gains. Effective February 2, 2009, the name of the fund's
subsidiary was changed to DWS Cayman Precious Metals Fund, Inc. (the
"Subsidiary"). In monitoring compliance with its investment restrictions, the
fund will consider the assets of the Subsidiary to be assets of the fund. The
Subsidiary must, however, comply with the asset segregation requirements
(described elsewhere in the SAI) with respect to its investments in
commodity-linked swaps and other commodity-linked derivatives. In general, in
order to qualify for special tax treatment as a regulated investment company,
the fund must, among other things, derive 90% of its gross income from certain
specified sources ("good income"). The fund's investment in the Subsidiary is
expected to generate good income. However, there is a risk that the Internal
Revenue Service could recharacterize this investment in such a manner that it
could generate bad income. If this were to occur, the fund could be subject to
federal income tax at regular corporate rates, reducing the yield to you. The
fund believes that the risk of such a recharacterization is remote. Investments
in precious metals and in precious metals-related securities and companies
involve a relatively high degree of risk. Prices of gold and other precious
metals can be influenced by a variety of global economic, financial and
political factors and may fluctuate markedly over short periods of time. Among
other things, precious metals values can be affected by changes in inflation,
investment speculation, metal sales by governments or central banks, changes in
industrial and commercial demand, and any governmental restrictions on private
ownership of gold or other precious metals. In addition, when market conditions
warrant, the fund reserves the freedom to concentrate its assets in securities
related to other precious metals and in those metals directly. The means by
which the fund seeks exposure to commodities, both directly and indirectly,
including through derivatives, may be limited by the Fund's intention to qualify
as a regulated investment company under the Code.

The fund's assets may be invested in wholly-owned subsidiaries of DWS Mutual
Funds, Inc. that invest in gold, silver, platinum coin and bullion and other
precious metals and commodity-linked derivative instruments, such as swaps and
futures. With respect to 30% of its assets, the fund may make short sales of
common stocks if, at all times when a short position is open, the fund owns the
stock or owns preferred stocks or debt securities convertible or exchangeable,
without payment of further consideration, into the shares of common stock sold
short. Short sales of this kind are referred to as short sales "against the
box." The fund may engage in short sales against-the-box, although it is the
fund's current intention that no more than 5% of its net assets will be at risk.


Real Estate Investment Trusts ("REITs"). REITs are sometimes informally
characterized as equity REITs, mortgage REITs and hybrid REITs. Investment in
REITs may subject a fund to risks associated with the direct ownership of real
estate, such as decreases in real estate values, overbuilding, increased
competition and other risks related to local or general economic conditions,
increases in operating costs and property taxes, changes in zoning laws,
casualty or condemnation losses, possible environmental liabilities, regulatory
limitations on rent and fluctuations in rental income. Equity REITs generally
experience these risks directly through fee or leasehold interests, whereas
mortgage REITs generally experience these risks indirectly through mortgage
interests, unless the mortgage REIT forecloses on the underlying real estate.
Changes in interest rates may also affect the value of a fund's investment in
REITs. For instance, during periods of declining interest rates, certain
mortgage REITs may hold mortgages that the mortgagors elect to prepay, which
prepayment may diminish the yield on securities issued by those REITs.

Certain REITs have relatively small market capitalizations, which may tend to
increase the volatility of the market price of their securities. Furthermore,
REITs are dependent upon specialized management skills, have limited
diversification and are, therefore, subject to risks inherent in operating and
financing a limited number of projects. REITs are also subject to heavy cash
flow dependency, defaults by borrowers and the possibility of failing to qualify
for tax-free pass-through of income under the Code, and for exemption from the
registration requirements of the 1940 Act. By investing in REITs indirectly
through the fund, a shareholder will bear not only his or her proportionate
share of the expenses of a fund, but also, indirectly, similar expenses of the
REITs. In addition, REITs depend generally on their ability to generate cash
flow to make distributions to shareholders.

Repurchase Agreements. A fund may invest in repurchase agreements pursuant to
its investment guidelines. In a repurchase agreement, a fund acquires ownership
of a security and simultaneously commits to resell that security to the seller,
typically a bank or broker/dealer.

A repurchase agreement provides a means for a fund to earn income on funds for
periods as short as overnight. It is an arrangement under which the purchaser
(i.e., a fund) acquires a security ("Obligation") and the seller agrees, at the
time of sale, to repurchase the Obligation at a specified time and price.
Securities subject to a repurchase agreement are held in a segregated account
and the value of such securities is kept at least equal to the repurchase price
on a daily basis. The repurchase price may be higher than the purchase price,
the difference being income to a fund, or the purchase and repurchase prices may
be the same, with interest at a stated rate due to a fund together with the
repurchase price upon repurchase. In either case, the income to a fund is
unrelated to the interest rate on the Obligation itself. Obligations will be
held by the custodian or in the Federal Reserve Book Entry System.

It is not clear whether a court would consider the Obligation purchased by a
fund subject to a repurchase agreement as being owned by a fund or as being
collateral for a loan by a fund to the seller. In the event of the commencement
of bankruptcy or insolvency proceedings with respect to the seller of the
Obligation before repurchase of the Obligation under a repurchase agreement, a
fund may encounter delay and incur costs before being able to sell the security.
Delays may involve loss of interest or decline in price of the Obligation. If
the court characterizes the transaction as a loan and a fund has not perfected a
security interest in the Obligation, a fund may be required to return the
Obligation to the seller's estate and be treated as an unsecured creditor of the
seller. As an unsecured creditor, a fund would be at risk of losing some or all
of the principal and income involved in the transaction. As with any unsecured
debt Obligation purchased for a fund, the Advisor seeks to reduce the risk of
loss through repurchase agreements by analyzing the creditworthiness of the
obligor, in this case the seller of the Obligation. Apart from the risk of
bankruptcy or insolvency proceedings, there is also the risk that the seller may
fail to repurchase the Obligation, in which case a fund may incur a loss if the
proceeds to a fund of the sale to a third party are less than the repurchase
price. However, if the market value (including interest) of the Obligation
subject to the repurchase agreement becomes less than the repurchase price
(including interest), a fund will direct the seller of the Obligation to deliver
additional securities so that the market value (including interest) of all
securities subject to the repurchase agreement will equal or exceed the
repurchase price.

Repurchase Commitments. A fund may enter into repurchase commitments with any
party deemed creditworthy by a fund's advisor, including foreign banks and
broker/dealers, if the transaction is entered into for investment purposes and
the counterparty's creditworthiness is at least equal to that of issuers of
securities which a fund may purchase. Such transactions may not provide a fund
with collateral marked-to-market during the term of the commitment.

Reverse Repurchase Agreements. A fund may enter into "reverse repurchase
agreements," which are repurchase agreements in which a fund, as the seller of
the securities, agrees to repurchase such securities at an agreed time and
price. A fund maintains a segregated account in connection with outstanding
reverse repurchase agreements. A fund will enter into reverse repurchase
agreements only when the advisor believes that the interest income to be earned
from the investment of the proceeds of the transaction will be greater than the
interest expense of the transaction. Such transactions may increase fluctuations
in the market value of fund assets and its yield and may be viewed as a form of
leverage.

Securities Backed by Guarantees. A fund may invest in securities backed by
guarantees from banks, insurance companies and other financial institutions. A
money market fund's ability to maintain a stable share price may depend upon
such guarantees, which are not supported by federal deposit insurance.
Consequently, changes in the credit quality of these institutions could have an
adverse impact on securities they have guaranteed or backed, which could cause
losses to a fund and affect its share price.

Securities with Put Rights. A fund may enter into put transactions with respect
to obligations held in its portfolio with broker/dealers pursuant to a rule
under the 1940 Act, and with commercial banks.

The right of a fund to exercise a put is unconditional and unqualified. A put is
not transferable by a fund, although a fund may sell the underlying securities
to a third party at any time. If necessary and advisable, a fund may pay for
certain puts either separately in cash or by paying a higher price for portfolio
securities that are acquired subject to such a put (thus reducing the yield to
maturity otherwise available for the same securities). A fund expects, however,
that puts generally will be available without the payment of any direct or
indirect consideration.

A fund may enter into puts only with banks or broker/dealers that, in the
opinion of the advisor, present minimal credit risks. The ability of a fund to
exercise a put will depend on the ability of the bank or broker/dealer to pay
for the underlying securities at the time the put is exercised. In the event
that a bank or broker/dealer should default on its obligation to repurchase an
underlying security, a fund might be unable to recover all or a portion of any
loss sustained from having to sell the security elsewhere.

A fund intends to enter into puts solely to maintain liquidity and does not
intend to exercise its rights thereunder for trading purposes. The puts will
only be for periods of substantially less than the life of the underlying
security. The acquisition of a put will not affect the valuation by a fund of
the underlying security. The actual put will be valued at zero in determining
net asset value of a fund. Where a fund pays directly or indirectly for a put,
its cost will be reflected in realized gain or loss when the put is exercised or
expires. If the value of the underlying security increases, the potential for
unrealized or realized gain is reduced by the cost of the put. The maturity of
an obligation purchased by a fund will not be considered shortened by any put to
which such obligation is subject.

Senior Loans. DWS Floating Rate Plus Fund may invest in Senior Loans. Senior
Loans are direct obligations of corporations or other business entities and are
generally arranged by banks or other commercial lending institutions and made
generally to finance internal growth, mergers, acquisitions, stock repurchases
and leveraged buyouts. Senior Loans may include restrictive covenants which must
be maintained by the borrower. Such covenants, in addition to the timely payment
of interest and principal, may include mandatory prepayment provisions arising
from free cash flow, restrictions on dividend payments and usually state that a
borrower must maintain specific minimum financial ratios as well as establishing
limits on total debt. A breach of covenant, which is not waived by the agent, is
normally an event of acceleration, i.e., the agent has the right to call the
outstanding Senior Loan. In addition, loan covenants may include mandatory
prepayment provisions stemming from free cash flow. Free cash flow is cash that
is in excess of capital expenditures plus debt service requirements of principal
and interest. The free cash flow shall be applied to prepay the Senior Loan in
an order of maturity described in the loan documents. Under certain interests in
Senior Loans, the fund may have an obligation to make additional loans upon
demand by the borrower. The fund intends to reserve against such contingent
obligations by segregating sufficient assets in high quality short-term liquid
investments or borrowing to cover such obligations.

The fund's investment in Senior Loans may take the form of purchase of an
assignment or a portion of a Senior Loan from a third party ("assignment") or
acquiring a participation in a Senior Loan ("participation"). The fund may pay a
fee or forego a portion of interest payments to the lender selling a
participation or assignment under the terms of such participation or assignment.
When the fund is a purchaser of an assignment, it typically succeeds to all the
rights and obligations under the loan agreement of the assigning lender and
becomes a lender under the loan agreement with the same rights and obligations
as the assigning lender. Assignments are, however, arranged through private
negotiations between potential assignees and potential assignors, and the rights
and obligations acquired by the purchaser of an assignment may be more limited
than those held by the assigning lender. The fund may also invest in
participations in Senior Loans. With respect to any given Senior Loan, the
rights of the fund when it acquires a participation may be more limited than the
rights of the original lenders or of investors who acquire an assignment.
Participations may entail certain risks relating to the creditworthiness of the
parties from which the participations are obtained.

In a typical interest in a Senior Loan, the agent administers the loan and has
the right to monitor the collateral. The agent is also required to segregate the
principal and interest payments received from the borrower and to hold these
payments for the benefit of the lenders. The fund normally looks to the agent to
collect and distribute principal of and interest on a Senior Loan. Furthermore,
the fund looks to the agent to use normal credit remedies, such as to foreclose
on collateral; monitor credit loan covenants; and notify the lenders of any
adverse changes in the borrower's financial condition or declarations of
insolvency. In the event of a default by the borrower, it is possible, though
unlikely, that the fund could receive a portion of the borrower's collateral. If
the fund receives collateral other than cash, such collateral will be liquidated
and the cash received from such liquidation will be available for investment as
part of the fund's portfolio. At times the fund may also negotiate with the
agent regarding the agent's exercise of credit remedies under a Senior Loan. The
agent is compensated for these services by the borrower as is set forth in the
loan agreement. Such compensation may take the form of a fee or other amount
paid upon the making of the Senior Loan and/or an ongoing fee or other amount.

The loan agreement in connection with Senior Loans sets forth the standard of
care to be exercised by the agents on behalf of the lenders and usually provides
for the termination of the agent's agency status in the event that it fails to
act properly, becomes insolvent, enters FDIC receivership, or if not FDIC
insured, enters into bankruptcy or if the agent resigns. In the event an agent
is unable to perform its obligations as agent, another lender would generally
serve in that capacity.

The fund believes that the principal credit risk associated with acquiring
Senior Loans from another lender is the credit risk associated with the borrower
of the underlying Senior Loan. The fund may incur additional credit risk,
however, when the fund acquires a participation in a Senior Loan from another
lender because the fund must assume the risk of insolvency or bankruptcy of the
other lender from which the Senior Loan was acquired. However, in acquiring
Senior Loans, the fund conducts an analysis and evaluation of the financial
condition of each such lender. The fund has taken the following measures in an
effort to reduce such risks. The fund will only acquire participations in Senior
Loans if the lender selling the participation, and any other persons
interpositioned between the fund and the lender, at the time of investment has
outstanding debt or deposit obligations rated investment grade (BBB or A-3 or
higher by Standards & Poor's Ratings Group ("S&P") or Baa or P-3 or higher by
Moody's Investors Service ("Moody's")) or determined by the Advisor to be of
comparable quality. Long-term debt rated BBB by S&P is regarded by S&P as having
adequate capacity to pay interest and repay principal and debt rated Baa by
Moody's is regarded by Moody's as a medium grade obligation, i.e., it is neither
highly protected nor poorly secured. Commercial paper rated A-1 by S&P indicates
that the degree of safety regarding timely payment is considered by S&P to be
either overwhelming or very strong and issues of commercial paper rated Prime-1
by Moody's are considered by Moody's to have a superior ability for repayment of
senior short-term debt obligations.

Senior Loans, unlike certain bonds, usually do not have call protection. This
means that interests comprising the Fund's portfolio, while having a stated one
to ten-year term, may be prepaid, often without penalty. The fund generally
holds Senior Loans to maturity unless it has become necessary to sell them to
adjust the fund's portfolio in accordance with the Advisor's view of current or
expected economic or specific industry or borrower conditions.

Senior Loans frequently require full or partial prepayment of a loan when there
are asset sales or a securities issuance. Prepayments on Senior Loans may also
be made by the borrower at its election. The rate of such prepayments may be
affected by, among other things, general business and economic conditions, as
well as the financial status of the borrower. Prepayment would cause the actual
duration of a Senior Loan to be shorter than its stated maturity. Prepayment may
be deferred by the fund. This should, however, allow the Fund to reinvest in a
new loan and recognize as income any unamortized loan fees. This may result in a
new facility fee payable to the Fund.

Because interest rates paid on these Senior Loans periodically fluctuate with
the market, it is expected that the prepayment and a subsequent purchase of a
new Senior Loan by the fund will not have a material adverse impact on the yield
of the portfolio. See "Portfolio Transactions."

Under a Senior Loan, the borrower generally must pledge as collateral assets
which may include one or more of the following: cash; accounts receivable;
inventory; property, plant and equipment; both common and preferred stock in its
subsidiaries; trademarks, copyrights, patent rights; and franchise value. The
fund may also receive guarantees as a form of collateral. In some instances, a
Senior Loan may be secured only by stock in a borrower or its affiliates. The
fund may also invest in Senior Loans not secured by any collateral. The market
value of the assets serving as collateral (if any) will, at the time of
investment, in the opinion of the Advisor, equal or exceed the principal amount
of the Senior Loan. The valuations of these assets may be performed by an
independent appraisal. If the agent becomes aware that the value of the
collateral has declined, the agent may take action as it deemed necessary for
the protection of its own interests and the interests of the other lenders,
including, for example, giving the borrower an opportunity to provide additional
collateral or accelerating the loan. There is no assurance, however, that the
borrower would provide additional collateral or that the liquidation of the
existing collateral would satisfy the borrower's obligation in the event of
nonpayment of scheduled interest or principal, or that such collateral could be
readily liquidated.

The fund may be required to pay and may receive various fees and commissions in
the process of purchasing, selling and holding Senior Loans. The fee component
may include any, or a combination of, the following elements: arrangement fees,
non-use fees, facility fees, letter of credit fees and ticking fees. Arrangement
fees are paid at the commencement of a loan as compensation for the initiation
of the transaction. A non-use fee is paid based upon the amount committed but
not used under the loan. Facility fees are on-going annual fees paid in
connection with a loan. Letter of credit fees are paid if a loan involves a
letter of credit. Ticking fees are paid from the initial commitment indication
until loan closing if for an extended period. The amount of fees is negotiated
at the time of transaction.

If legislation or state or federal regulators impose additional requirements or
restrictions on the ability of financial institutions to make loans that are
considered highly leveraged transactions, the availability of Senior Loans for
investment by the fund may be adversely affected. In addition, such requirements
or restrictions could reduce or eliminate sources of financing for certain
borrowers. This would increase the risk of default. If legislation or federal or
state regulators require financial institutions to dispose of Senior Loans that
are considered highly leveraged transactions or subject such Senior Loans to
increased regulatory scrutiny, financial institutions may determine to sell such
Senior Loans. Such sales could result in prices that, in the opinion of the
Advisor, do not represent fair value. If the fund attempts to sell a Senior Loan
at a time when a financial institution is engaging in such a sale, the price the
fund could get for the Senior Loan may be adversely affected.


Short Sales. When DWS Disciplined Market Neutral Fund, DWS Disciplined
Long/Short Growth Fund or DWS RREEF Global Real Estate Securities Fund takes a
long position, it purchases a stock outright. When a fund takes a short
position, it sells at the current market price a stock it does not own but has
borrowed in anticipation that the market price of the stock will decline. To
complete, or close out, the short sale transaction, a fund buys the same stock
in the market and returns it to the lender. The price at such time may be more
or less than the price at which the security was sold by a fund. Until the
security is replaced, a fund is required to pay the lender amounts equal to any
dividends or interest, which accrue during the period of the loan. To borrow the
security, a fund may also be required to pay a premium, which would increase the
cost of the security sold. The proceeds of the short sale will be retained by
the broker, to the extent necessary to meet the margin requirements, until the
short position is closed out. A fund makes money when the market price of the
borrowed stock goes down and a fund is able to replace it for less than it
earned by selling it short. Alternatively if the price of the stock goes up
after the short sale and before the short position is closed, a fund will lose
money because it will have to pay more to replace the borrowed stock than it
received when it sold the stock short.


A fund may not always be able to close out a short position at a particular time
or at an acceptable price. A lender may request that the borrowed securities be
returned to it on short notice, and a fund may have to buy the borrowed
securities at an unfavorable price. If this occurs at a time that other short
sellers of the same security also want to close out their positions, a "short
squeeze" can occur. A short squeeze occurs when demand is greater than supply
for the stock sold short. A short squeeze makes it more likely that a fund will
have to cover its short sale at an unfavorable price. If that happens, a fund
will lose some or all of the potential profit from, or even incur a loss as a
result of, the short sale.

Until a fund closes its short position or replaces the borrowed security, a fund
will designate liquid assets it owns (other than the short sales proceeds) as
segregated assets to the books of the broker and/or its custodian in an amount
equal to its obligation to purchase the securities sold short, as required by
the 1940 Act. The amount segregated in this manner will be increased or
decreased each business day equal to the change in market value of a fund's
obligation to purchase the security sold short. If the lending broker requires a
fund to deposit additional collateral (in addition to the short sales proceeds
that the broker holds during the period of the short sale), which may be as much
as 50% of the value of the securities sold short, the amount of the additional
collateral may be deducted in determining the amount of cash or liquid assets a
fund is required to segregate to cover the short sale obligation pursuant to the
1940 Act. The amount segregated must be unencumbered by any other obligation or
claim than the obligation that is being covered. Each fund believes that short
sale obligations that are covered, either by an offsetting asset or right
(acquiring the security sold short or having an option to purchase the security
sold short at exercise price that covers the obligation), or by a fund's
segregated asset procedures (or a combination thereof), are not senior
securities under the 1940 Act and are not subject to a fund's borrowing
restrictions. This requirement to segregate assets limits a fund's leveraging of
its investments and the related risk of losses from leveraging. A fund also is
required to pay the lender of the security any dividends or interest that
accrues on a borrowed security during the period of the loan. Depending on the
arrangements made with the broker or custodian, a fund may or may not receive
any payments (including interest) on collateral it has deposited with the
broker.

Short sales involve the risk that a fund will incur a loss by subsequently
buying a security at a higher price than the price at which a fund previously
sold the security short. Any loss will be increased by the amount of
compensation, interest or dividends, and transaction costs a fund must pay to a
lender of the security. In addition, because a fund's loss on a short sale stems
from increases in the value of the security sold short, the extent of such loss,
like the price of the security sold short, is theoretically unlimited. By
contrast, a fund's loss on a long position arises from decreases in the value of
the security held by a fund and therefore is limited by the fact that a
security's value cannot drop below zero.

The use of short sales, in effect, leverages a fund's portfolio, which could
increase a fund's exposure to the market, magnify losses and increase the
volatility of returns.

Although a fund's share price may increase if the securities in its long
portfolio increase in value more than the securities underlying its short
positions, a fund's share price may decrease if the securities underlying its
short positions increase in value more than the securities in its long
portfolio.

While the Advisor has extensive experience managing mutual funds and
institutional accounts, it has not previously managed a long/short strategy.
Although the Adviser believes that its stock selection strategy will be
effective in selecting short positions, there is no assurance that the Adviser
will be successful in applying this approach to a long/short strategy.

Short Sales Against the Box. A fund may make short sales of common stocks if, at
all times when a short position is open, a fund owns the stock or owns preferred
stocks or debt securities convertible or exchangeable, without payment of
further consideration, into the shares of common stock sold short. Short sales
of this kind are referred to as short sales "against the box." The broker/dealer
that executes a short sale generally invests cash proceeds of the sale until
they are paid to a fund. Arrangements may be made with the broker/dealer to
obtain a portion of the interest earned by the broker on the investment of short
sale proceeds. A fund will segregate the common stock or convertible or
exchangeable preferred stock or debt securities in a special account with the
custodian. Uncertainty regarding the tax effects of short sales of appreciated
investments may limit the extent to which a fund may enter into short sales
against the box.

Short-Term Instruments. When the fund experiences large cash inflows, for
example, through the sale of securities or of their shares and attractive
investments are unavailable in sufficient quantities, the fund may hold
short-term investments (or shares of money market mutual funds) for a limited
time pending availability of such investments.

Short-term instruments consist of foreign and domestic: (1) short-term
obligations of sovereign governments, their agencies, instrumentalities,
authorities or political subdivisions; (2) other investment grade short-term
debt securities; (3) investment grade commercial paper; (4) bank obligations,
including negotiable certificates of deposit, time deposits and bankers'
acceptances; and (5) repurchase agreements. At the time a fund invests in
commercial paper, bank obligations or repurchase agreements, the issuer or the
issuer's parent must have outstanding debt, commercial paper or bank obligations
rated investment grade; or, if no such ratings are available, the instrument
must be deemed to be of comparable quality in the opinion of the portfolio
management team. These instruments may be denominated in US dollars or in
foreign currencies.

At the time the fund invests in commercial paper, bank obligations or repurchase
agreements, the issuer of the issuer's parent must have outstanding debt rated
AA or higher by S&P or Aa or higher by Moody's or outstanding commercial paper
or bank obligations rated A-1 by S&P or Prime-1 by Moody's; or, if no such
ratings are available, the instrument must be of comparable quality in the
opinion of the portfolio management team. These instruments may be denominated
in US dollars or in foreign currencies.

Small Companies. The advisor believes that many small companies may have sales
and earnings growth rates which exceed those of larger companies, and that such
growth rates may in turn be reflected in more rapid share price appreciation
over time. However, investing in smaller company stocks involves greater risk
than is customarily associated with investing in larger, more established
companies. For example, smaller companies can have limited product lines,
markets, or financial and managerial resources. Smaller companies may also be
dependent on one or a few key persons, and may be more susceptible to losses and
risks of bankruptcy. Also, the securities of smaller companies may be thinly
traded (and therefore have to be sold at a discount from current market prices
or sold in small lots over an extended period of time). Transaction costs in
smaller company stocks may be higher than those of larger companies.

Sovereign Debt. Investment in sovereign debt can involve a high degree of risk.
The governmental entity that controls the repayment of sovereign debt may not be
able or willing to repay the principal and/or interest when due in accordance
with the terms of such debt. A governmental entity's willingness or ability to
repay principal and interest due in a timely manner may be affected by, among
other factors, its cash flow situation, the extent of its foreign reserves, the
availability of sufficient foreign exchange on the date a payment is due, the
relative size of the debt service burden to the economy as a whole, the
governmental entity's policy toward the International Monetary Fund, and the
political constraints to which a governmental entity may be subject.
Governmental entities may also be dependent on expected disbursements from
foreign governments, multilateral agencies and others abroad to reduce principal
and interest arrearages on their debt. The commitment on the part of these
governments, agencies and others to make such disbursements may be conditioned
on a governmental entity's implementation of economic reforms and/or economic
performance and the timely service of such debtor's obligations. Failure to
implement such reforms, achieve such levels of economic performance or repay
principal or interest when due may result in the cancellation of such third
parties commitments to lend funds to the governmental entity, which may further
impair such debtor's ability or willingness to service its debts in a timely
manner. Consequently, governmental entities may default on their sovereign debt.
Holders of sovereign debt may be requested to participate in the rescheduling of
such debt and to extend further loans to governmental entities. There is no
bankruptcy proceeding by which sovereign debt on which governmental entities
have defaulted may be collected in whole or in part.

Stand-by Commitments. A stand-by commitment is a right acquired by a fund, when
it purchases a municipal obligation from a broker, dealer or other financial
institution ("seller"), to sell up to the same principal amount of such
securities back to the seller, at a fund's option, at a specified price.
Stand-by commitments are also known as "puts." The exercise by a fund of a
stand-by commitment is subject to the ability of the other party to fulfill its
contractual commitment.

Stand-by commitments acquired by a fund will have the following features: (1)
they will be in writing and will be physically held by a fund's custodian; (2) a
fund's right to exercise them will be unconditional and unqualified; (3) they
will be entered into only with sellers which in the Advisor's opinion present a
minimal risk of default; (4) although stand-by commitments will not be
transferable, municipal obligations purchased subject to such commitments may be
sold to a third party at any time, even though the commitment is outstanding;
and (5) their exercise price will be (i) a fund's acquisition cost (excluding
any accrued interest which a fund paid on their acquisition), less any amortized
market premium or plus any amortized original issue discount during the period a
fund owned the securities, plus (ii) all interest accrued on the securities
since the last interest payment date.

A fund expects that stand-by commitments generally will be available without the
payment of any direct or indirect consideration. However, if necessary or
advisable, a fund will pay for stand-by commitments, either separately in cash
or by paying a higher price for portfolio securities which are acquired subject
to the commitments.

It is difficult to evaluate the likelihood of use or the potential benefit of a
stand-by commitment. Therefore, it is expected that the Advisor will determine
that stand-by commitments ordinarily have a "fair value" of zero, regardless of
whether any direct or indirect consideration was paid. However, if the market
price of the security subject to the stand-by commitment is less than the
exercise price of the stand-by commitment, such security will ordinarily be
valued at such exercise price. Where a fund has paid for a stand-by commitment,
its cost will be reflected as unrealized depreciation for the period during
which the commitment is held.

The IRS has issued a favorable revenue ruling to the effect that, under
specified circumstances, a registered investment company will be the owner of
tax-exempt municipal obligations acquired subject to a put option. The IRS has
also issued private letter rulings to certain taxpayers (which do not serve as
precedent for other taxpayers) to the effect that tax-exempt interest received
by a regulated investment company with respect to such obligations will be
tax-exempt in the hands of the company and may be distributed to its
shareholders as exempt-interest dividends. The IRS has subsequently announced
that it will not ordinarily issue advance ruling letters as to the identity of
the true owner of property in cases involving the sale of securities or
participation interests therein if the purchaser has the right to cause the
security, or the participation interest therein, to be purchased by either the
seller or a third party. A fund intends to take the position that it owns any
municipal obligations acquired subject to a stand-by commitment and that
tax-exempt interest earned with respect to such municipal obligations will be
tax-exempt in its hands. There is no assurance that the IRS will agree with such
position in any particular case.


Stripped Mortgage-Backed Securities. Stripped mortgage-backed securities
("SMBS") are derivative multi-class mortgage securities. The market value of the
class consisting entirely of principal payments generally is unusually volatile
in response to changes in interest rates. The yields on a class of SMBS that
receives all or most of the interest from the mortgaged assets are generally
higher than prevailing market yields on other mortgage-backed securities because
their cash flow patterns are more volatile and there is a greater risk that the
initial investment will not be fully recouped. See "Illiquid Securities."


In accordance with a requirement imposed by the staff of the Securities and
Exchange Commission (the "SEC"), the portfolio management team will consider
privately issued fixed rate IOs and POs to be illiquid securities for purposes
of the Fund's limitation on investments in illiquid securities. Unless the
portfolio management team determines that a particular government-issued fixed
rate IO or PO is liquid, it will also consider these IOs and Pos to be illiquid.


Adjustable Rate Mortgages-Interest Rate Indices. Adjustable rate mortgages may
be adjusted on the basis of one of several indices. The One Year Treasury Index
is the figure derived from the average weekly quoted yield on US Treasury
securities adjusted to a constant maturity of one year.


The Cost of Funds Index reflects the monthly weighted average cost of funds of
savings and loan associations and savings banks whose home offices are located
in Arizona, California and Nevada (the "FHLB Eleventh District") that are member
institutions of the Federal Home Loan Bank of San Francisco (the "FHLB of San
Francisco"), as computed from statistics tabulated and published by the FHLB of
San Francisco. The FHLB of San Francisco normally announces the Cost of Funds
Index on the last working day of the month following the month in which the cost
of funds was incurred.

A number of factors affect the performance of the Cost of Funds Index and may
cause the Cost of Funds Index to move in a manner different from indices based
upon specific interest rates, such as the One Year Treasury Index.

Because of the various origination dates and maturities of the liabilities of
members of the FHLB Eleventh District upon which the Cost of Funds Index is
based, among other things, at any time the Cost of Funds Index may not reflect
the average prevailing market interest rates on new liabilities of similar
maturities. There can be no assurance that the Cost of Funds Index will
necessarily move in the same direction or at the same rate as prevailing
interest rates, since as longer term deposits or borrowings mature and are
renewed at market interest rates, the Cost of Funds Index will rise or fall
depending upon the differential between the prior and the new rates on such
deposits and borrowings. In addition, dislocations in the thrift industry in
recent years have caused and may continue to cause the cost of funds of thrift
institutions to change for reasons unrelated to changes in general interest rate
levels.

Furthermore, any movement in the Cost of Funds Index as compared to other
indices based upon specific interest rates may be affected by changes instituted
by the FHLB of San Francisco in the method used to calculate the Cost of Funds
Index. To the extent that the Cost of Funds Index may reflect interest changes
on a more delayed basis than other indices, in a period of rising interest
rates, any increase may produce a higher yield later than would be produced by
such other indices, and in a period of declining interest rates, the Cost of
Funds Index may remain higher than other market interest rates which may result
in a higher level of principal prepayments on mortgage loans which adjust in
accordance with the Cost of Funds Index than mortgage loans which adjust in
accordance with other indices.

LIBOR, the London InterBank Offered Rate, is the interest rate that the most
creditworthy international banks dealing in US dollar-denominated deposits and
loans charge each other for large dollar-denominated loans. LIBOR is also
usually the base rate for large dollar-denominated loans in the international
market. LIBOR is generally quoted for loans having rate adjustments at one,
three, six or twelve month intervals.

Mortgage-Backed Securities and Asset-Backed Securities -- Types of Credit
Support. Mortgage-backed securities and asset-backed securities are often backed
by a pool of assets representing the obligations of a number of different
parties. To lessen the effect of failure by obligors on underlying assets to
make payments, such securities may contain elements of credit support. Such
credit support falls into two categories: (1) liquidity protection and (2)
protection against losses resulting from ultimate default by an obligor on the
underlying assets.

Liquidity protection refers to the provision of advances, generally by the
entity administering the pool of assets, to ensure that the pass-through of
payments due on the underlying pool occurs in a timely fashion. Protection
against losses resulting from ultimate default enhances the likelihood of
ultimate payment of the obligations on at least a portion of the assets in the
pool. Such protection may be provided through guarantees, insurance policies or
letters of credit obtained by the issuer or sponsor from third parties; through
various means of structuring the transaction; or through a combination of such
approaches. The fund will not usually pay any additional fees for such credit
support, although the existence of credit support may increase the price of a
security.

The ratings of mortgage-backed securities and asset-backed securities for which
third-party credit enhancement provides liquidity protection or protection
against losses from default are generally dependent upon the continued
creditworthiness of the provider of the credit enhancement. The ratings of such
securities could be subject to reduction in the event of deterioration in the
creditworthiness of the credit enhancement provider even in cases where the
delinquency and loss experience on the underlying pool of assets is better than
expected. Examples of credit support arising out of the structure of the
transaction include "senior-subordinated securities" (multiple class securities
with one or more classes subordinate to other classes as to the payment of
principal thereof and interest thereon, with the result that defaults on the
underlying assets are borne first by the holders of the subordinated class),
creation of "reserve funds" (where cash or investments, sometimes funded from a
portion of the payments on the underlying assets, are held in reserve against
future losses) and "over-collateralization" (where the scheduled payments on, or
the principal amount of, the underlying assets exceed those required to make
payment of the securities and pay any servicing or other fees). The degree of
credit support provided for each issue is generally based on historical
information with respect to the level of credit risk associated with the
underlying assets.

Delinquency or losses in excess of that which is anticipated could adversely
affect the return on an investment in such a security.


Yankee Bonds. Yankee Bonds are US dollar denominated bonds sold in the US by
non-US issuers. As compared with bonds issued in the US, such bond issues
normally carry an interest rate but are less actively traded. Investing in the
securities of foreign companies involves more risks than investing in securities
of US companies. Their value is subject to economic and political developments
in the countries where the companies operate and to changes in foreign currency
values. Values may also be affected by foreign tax laws, changes in foreign
economic or monetary policies, exchange control regulations and regulations
involving prohibitions on the repatriation of foreign currencies. In many
foreign countries, there is less publicly available information about foreign
issuers, and there is less government regulation and supervision of foreign
stock exchanges, brokers and listed companies. Also in many foreign countries,
companies are not subject to uniform accounting, auditing, and financial
reporting standards comparable to those applicable to domestic issuers.


Security trading practices and custody arrangements abroad may offer less
protection to the fund's investments and there may be difficulty in enforcing
legal rights outside the United States. Settlement of transactions in some
foreign markets may be delayed or may be less frequent than in the United States
which could affect the liquidity of the fund's portfolio. Additionally, in some
foreign countries, there is the possibility of expropriation or confiscatory
taxation, limitations on the removal of securities, property, or other fund
assets, political or social instability or diplomatic developments which could
affect investments in foreign securities. In addition, the relative performance
of various countries' fixed income markets historically has reflected wide
variations relating to the unique characteristics of each country's economy.
Year-to-year fluctuations in certain markets have been significant, and negative
returns have been experienced in various markets from time to time.


Yield Curve Options. In contrast to other types of options, a yield curve option
is based on the difference between the yields of designated securities, rather
than the prices of the individual securities, and is settled through cash
payments. Accordingly, a yield curve option is profitable to the holder if this
differential widens (in the case of a call) or narrows (in the case of a put),
regardless of whether the yields of the underlying securities increase or
decrease.

Spreadlocks. A spreadlock is a form of swap contract that involves an exchange
of a one-time cash payment based on a specific financial index between the fund
and another party. A spreadlock allows an interest rate swap user to lock in the
forward differential between the interest rate swap rate and the yield of the
government bond underlying the swap. Essentially, a spreadlock allows the
investor to buy or sell the spread forward by entering into a forward contract
on the swap spread (i.e., the spread between the government yield and the swap
rate (or yield)) for a given maturity. The price of a spreadlock is determined
by the yield spread between a forward starting fixed/floating swap and a forward
transaction in a government bond. The value of the swap is adjusted daily and
the change in value is recorded as unrealized appreciation or depreciation until
the agreement matures, at which time the cash payment, based on the value of the
swap on the maturity date, is exchanged between the two parties.


Supranational Entities. Supranational entities are international organizations
designated or supported by governmental entities to promote economic
reconstruction or development and international banking institutions and related
government agencies. Examples include the International Bank for Reconstruction
and Development (the World Bank), the European Coal and Steel Community, The
Asian Development Bank and the InterAmerican Development Bank. Obligations of
supranational entities are backed by the guarantee of one or more foreign
governmental parties which sponsor the entity.

Synthetic Investments. In certain circumstances, a fund may wish to obtain the
price performance of a security without actually purchasing the security in
circumstances where, for example, the security is illiquid, or is unavailable
for direct investment or available only on less attractive terms. In such
circumstances, a fund may invest in synthetic or derivative alternative
investments ("Synthetic Investments") that are based upon or otherwise relate to
the economic performance of the underlying securities. Synthetic Investments may
include swap transactions, notes or units with variable redemption amounts, and
other similar instruments and contracts. Synthetic Investments typically do not
represent beneficial ownership of the underlying security, usually are not
collateralized or otherwise secured by the counterparty and may or may not have
any credit enhancements attached to them. Accordingly, Synthetic Investments
involve exposure not only to the creditworthiness of the issuer of the
underlying security, changes in exchange rates and future governmental actions
taken by the jurisdiction in which the underlying security is issued, but also
to the creditworthiness and legal standing of the counterparties involved. In
addition, Synthetic Investments typically are illiquid.

Tax-Exempt Commercial Paper. Issues of tax-exempt commercial paper typically
represent short-term, unsecured, negotiable promissory notes. These obligations
are issued by state and local governments and their agencies to finance working
capital needs of municipalities or to provide interim construction financing and
are paid from general revenues of municipalities or are refinanced with
long-term debt. In most cases, tax-exempt commercial paper is backed by letters
of credit, lending agreements, note repurchase agreements or other credit
facility agreements offered by banks or other institutions.

TBA Purchase Commitments. A fund may enter into TBA purchase commitments to
purchase securities for a fixed price at a future date, typically not exceeding
45 days. TBA purchase commitments may be considered securities in themselves,
and involve a risk of loss if the value of the security to be purchased declines
prior to settlement date, which risk is in addition to the risk of decline in
the value of a fund's other assets. Unsettled TBA purchase commitments are
valued at the current market value of the underlying securities.

Tender Option Bonds. A tender option bond is a municipal security (generally
held pursuant to a custodial arrangement) having a relatively long maturity and
bearing interest at a fixed rate substantially higher than prevailing short-term
tax-exempt rates. The bond is typically issued in conjunction with the agreement
of a third party, such as a bank, broker-dealer or other financial institution,
pursuant to which such institution grants the security holders the option, at
periodic intervals, to tender their securities to the institution and receive
the face value thereof.

As consideration for providing the option, the financial institution receives
periodic fees equal to the difference between the bond's fixed coupon rate and
the rate, as determined by a remarketing or similar agent at or near the
commencement of such period, that would cause the securities, coupled with the
tender option, to trade at par on the date of such determination. Thus, after
payment of this fee, the security holder effectively holds a demand obligation
that bears interest at the prevailing short-term tax-exempt rate.

However, an institution will not be obligated to accept tendered bonds in the
event of certain defaults or a significant downgrade in the credit rating
assigned to the issuer of the bond. The liquidity of a tender option bond is a
function of the credit quality of both the bond issuer and the financial
institution providing liquidity. Tender option bonds are deemed to be liquid
unless, in the opinion of the Advisor, the credit quality of the bond issuer and
the financial institution is deemed, in light of a fund's credit quality
requirements, to be inadequate. A fund intends to invest only in tender option
bonds the interest on which, in the opinion of bond counsel, counsel for the
issuer of interests therein or counsel selected by the Advisor, will be exempt
from regular federal income tax. However, because there can be no assurance that
the IRS will agree with such counsel's opinion in any particular case, there is
a risk that a fund will not be entitled to treat such interest as exempt from
such tax. Additionally, the federal income tax treatment of certain other
aspects of these investments, including the proper tax treatment of tender
option bonds and the associated fees, in relation to various regulated
investment company tax provisions is unclear. A fund intends to manage its
portfolio in a manner designed to eliminate or minimize any adverse impact from
the federal income tax rules applicable to these investments.

Third Party Puts. A fund may purchase long-term fixed rate bonds that have been
coupled with an option granted by a third party financial institution allowing a
fund at specified intervals to tender (or "put") the bonds to the institution
and receive the face value thereof (plus accrued interest). These third party
puts are available in several different forms, may be represented by custodial
receipts or trust certificates and may be combined with other features such as
interest rate swaps. A fund receives a short-term rate of interest (which is
periodically reset), and the interest rate differential between that rate and
the fixed rate on the bond is retained by the financial institution. The
financial institution granting the option does not provide credit enhancement,
and in the event that there is a default in the payment of principal or
interest, or downgrading of a bond or a loss of the bond's tax-exempt status,
the put option will terminate automatically, the risk to a fund will be that of
holding such a long-term bond and the weighted average maturity of a fund's
portfolio would be adversely affected.

These bonds coupled with puts may present the same tax issues as are associated
with Stand-By Commitments. As with any Stand-By Commitments acquired by a fund,
a fund intends to take the position that it is the owner of any municipal
obligation acquired subject to a third-party put, and that tax-exempt interest
earned with respect to such municipal obligations will be tax-exempt in its
hands. There is no assurance that the IRS will agree with such position in any
particular case. Additionally, the federal income tax treatment of certain other
aspects of these investments, including the treatment of tender fees and swap
payments, in relation to various regulated investment company tax provisions is
unclear. However, the advisor seeks to manage a fund's portfolio in a manner
designed to minimize any adverse impact from these investments.

Trust Preferred Securities. A fund may invest in Trust Preferred Securities,
which are hybrid instruments issued by a special purpose trust (the "Special
Trust"), the entire equity interest of which is owned by a single issuer. The
proceeds of the issuance to the Fund of Trust Preferred Securities are typically
used to purchase a junior subordinated debenture, and distributions from the
Special Trust are funded by the payments of principal and interest on the
subordinated debenture.

If payments on the underlying junior subordinated debentures held by the Special
Trust are deferred by the debenture issuer, the debentures would be treated as
original issue discount ("OID") obligations for the remainder of their term. As
a result, holders of Trust Preferred Securities, such as a fund, would be
required to accrue daily for federal income tax purposes their share of the OID
on the debentures (regardless of whether a fund receives any cash distributions
from the Special Trust), in addition to reporting the stated interest on the
debenture, and the value of Trust Preferred Securities would likely be
negatively affected. Interest payments on the underlying junior subordinated
debentures typically may only be deferred if dividends are suspended on both
common and preferred stock of the issuer. The underlying junior subordinated
debentures generally rank slightly higher in terms of payment priority than both
common and preferred securities of the issuer, but rank below other subordinated
debentures and debt securities. Trust Preferred Securities may be subject to
mandatory prepayment under certain circumstances. The market values of Trust
Preferred Securities may be more volatile than those of conventional debt
securities. Trust Preferred Securities may be issued in reliance on Rule 144A
under the 1933 Act, and, unless and until registered, are restricted securities;
there can be no assurance as to the liquidity of Trust Preferred Securities and
the ability of holders of Trust Preferred Securities, such as a fund, to sell
their holdings.

US Government Securities. There are two broad categories of US
government-related debt instruments: (a) direct obligations of the US Treasury,
and (b) securities issued or guaranteed by US government agencies.

Examples of direct obligations of the US Treasury are Treasury Bills, Notes,
Bonds and other debt securities issued by the US Treasury. These instruments are
backed by the "full faith and credit" of the US. They differ primarily in
interest rates, the length of maturities and the dates of issuance. Treasury
bills have original maturities of one year or less. Treasury notes have original
maturities of one to ten years and Treasury bonds generally have original
maturities of greater than ten years.

Some agency securities are backed by the full faith and credit of the US (such
as Maritime Administration Title XI Ship Financing Bonds and Agency for
International Development Housing Guarantee Program Bonds) and others are backed
only by the rights of the issuer to borrow from the US Treasury (such as Federal
Home Loan Bank Bonds and Federal National Mortgage Association Bonds), while
still others, such as the securities of the Federal Farm Credit Bank, are
supported only by the credit of the issuer. With respect to securities supported
only by the credit of the issuing agency or by an additional line of credit with
the US Treasury, there is no guarantee that the US government will provide
support to such agencies and such securities may involve risk of loss of
principal and interest.

US Government Securities may include "zero coupon" securities that have been
stripped by the US government of their unmatured interest coupons and
collateralized obligations issued or guaranteed by a US government agency or
instrumentality.

Interest rates on US government obligations may be fixed or variable. Interest
rates on variable rate obligations are adjusted at regular intervals, at least
annually, according to a formula reflecting then current specified standard
rates, such as 91-day US Treasury bill rates. These adjustments generally tend
to reduce fluctuations in the market value of the securities.

The government guarantee of the US Government Securities in a fund's portfolio
does not guarantee the net asset value of the shares of a fund. There are market
risks inherent in all investments in securities and the value of an investment
in a fund will fluctuate over time. Normally, the value of investments in US
Government Securities varies inversely with changes in interest rates. For
example, as interest rates rise the value of investments in US Government
Securities will tend to decline, and as interest rates fall the value of a
fund's investments will tend to increase. In addition, the potential for
appreciation in the event of a decline in interest rates may be limited or
negated by increased principal prepayments with respect to certain
Mortgage-Backed Securities, such as GNMA Certificates. Prepayments of high
interest rate Mortgage-Backed Securities during times of declining interest
rates will tend to lower the return of a fund and may even result in losses to a
fund if some securities were acquired at a premium. Moreover, during periods of
rising interest rates, prepayments of Mortgage-Backed Securities may decline,
resulting in the extension of a fund's average portfolio maturity. As a result,
a fund's portfolio may experience greater volatility during periods of rising
interest rates than under normal market conditions.

Variable and Floating Rate Instruments. A fund may invest in variable or
floating rate instruments and variable rate demand instruments, including
variable amount master demand notes. These instruments will normally involve
industrial development or revenue bonds that provide that the rate of interest
is set as a specific percentage of a designated base rate (such as the prime
rate) at a major commercial bank. In addition, the interest rate on these
securities may be reset daily, weekly or on some other reset period and may have
a floor or ceiling on interest rate changes. When holding such an instrument, a
Fund can demand payment of the obligation at all times or at stipulated dates on
short notice (not to exceed 30 days) at par plus accrued interest.

Debt instruments purchased by a fund may be structured to have variable or
floating interest rates. These instruments may include variable amount master
demand notes that permit the indebtedness to vary in addition to providing for
periodic adjustments in the interest rates. The Advisor will consider the
earning power, cash flows and other liquidity ratios of the issuers and
guarantors of such instruments and, if the instrument is subject to a demand
feature, will continuously monitor their financial ability to meet payment on
demand. Where necessary to ensure that a variable or floating rate instrument is
equivalent to the quality standards applicable to a fund's fixed income
investments, the issuer's obligation to pay the principal of the instrument will
be backed by an unconditional bank letter or line of credit, guarantee or
commitment to lend. Any bank providing such a bank letter, line of credit,
guarantee or loan commitment will meet a fund's investment quality standards
relating to investments in bank obligations. The Advisor will also continuously
monitor the creditworthiness of issuers of such instruments to determine whether
a fund should continue to hold the investments.

The absence of an active secondary market for certain variable and floating rate
notes could make it difficult to dispose of the instruments, and a fund could
suffer a loss if the issuer defaults or during periods in which a fund is not
entitled to exercise its demand rights.

Variable and floating rate instruments held by a fund will be subject to a
fund's limitation on investments in illiquid securities when a reliable trading
market for the instruments does not exist and the fund may not demand payment of
the principal amount of such instruments within seven days.

Warrants. The holder of a warrant has the right, until the warrant expires, to
purchase a given number of shares of a particular issuer at a specified price.
Such investments can provide a greater potential for profit or loss than an
equivalent investment in the underlying security. Prices of warrants do not
necessarily move, however, in tandem with the prices of the underlying
securities and are, therefore, considered speculative investments. Warrants pay
no dividends and confer no rights other than a purchase option. Thus, if a
warrant held by a fund were not exercised by the date of its expiration, a fund
would lose the entire purchase price of the warrant.

When-Issued Securities. A fund may from time to time purchase equity and debt
securities on a "when-issued," "delayed delivery" or "forward delivery" basis.
The price of such securities, which may be expressed in yield terms, is fixed at
the time the commitment to purchase is made, but delivery and payment for the
securities takes place at a later date. During the period between purchase and
settlement, no payment is made by a fund to the issuer and no interest accrues
to a fund. When a fund purchases such securities, it immediately assumes the
risks of ownership, including the risk of price fluctuation. Failure to deliver
a security purchased on this basis may result in a loss or missed opportunity to
make an alternative investment.

To the extent that assets of a fund are held in cash pending the settlement of a
purchase of securities, a fund would earn no income. While such securities may
be sold prior to the settlement date, a fund intends to purchase them with the
purpose of actually acquiring them unless a sale appears desirable for
investment reasons. At the time a fund makes the commitment to purchase a
security on this basis, it will record the transaction and reflect the value of
the security in determining its net asset value. The market value of the
securities may be more or less than the purchase price.

Zero Coupon Securities. A fund may invest in zero coupon securities, which pay
no cash income and are sold at substantial discounts from their value at
maturity. When held to maturity, their entire income, which consists of
accretion of discount, comes from the difference between the issue price and
their value at maturity. Zero coupon securities are subject to greater market
value fluctuations from changing interest rates than debt obligations of
comparable maturities which make current distributions of interest (cash). Zero
coupon securities which are convertible into common stock offer the opportunity
for capital appreciation as increases (or decreases) in market value of such
securities closely follow the movements in the market value of the underlying
common stock. Zero coupon convertible securities generally are expected to be
less volatile than the underlying common stocks as they usually are issued with
maturities of 15 years or less and are issued with options and/or redemption
features exercisable by the holder of the obligation entitling the holder to
redeem the obligation and receive a defined cash payment.

Zero coupon securities include municipal securities, securities issued directly
by the US Treasury, and US Treasury bonds or notes and their unmatured interest
coupons and receipts for their underlying principal ("coupons") which have been
separated by their holder, typically a custodian bank or investment brokerage
firm, from the underlying principal (the "corpus") of the US Treasury security.
A number of securities firms and banks have stripped the interest coupons and
receipts and then resold them in custodial receipt programs with a number of
different names, including Treasury Income Growth Receipts ("TIGRS(TM)") and
Certificate of Accrual on Treasuries ("CATS(TM)"). The underlying US Treasury
bonds and notes themselves are held in book-entry form at the Federal Reserve
Bank or, in the case of bearer securities (i.e., unregistered securities which
are owned ostensibly by the bearer or holder thereof), in trust on behalf of the
owners thereof. Counsel to the underwriters of these certificates or other
evidences of ownership of the US Treasury securities have stated that, for
federal tax and securities purposes, in their opinion purchasers of such
certificates, such as a fund, most likely will be deemed the beneficial holder
of the underlying US Government securities. A fund intends to adhere to the
current SEC staff position that privately stripped obligations should not be
considered US Government securities for the purpose of determining if a fund is
"diversified" under the 1940 Act.

The US Treasury has facilitated transfers of ownership of zero coupon securities
by accounting separately for the beneficial ownership of particular interest
coupon and corpus payments on Treasury securities through the Federal Reserve
book-entry record-keeping system. The Federal Reserve program, as established by
the Treasury Department, is known as "STRIPS" or "Separate Trading of Registered
Interest and Principal of Securities." Under the STRIPS program, a fund will be
able to have its beneficial ownership of zero coupon securities recorded
directly in the book-entry record-keeping system in lieu of having to hold
certificates or other evidences of ownership of the underlying US Treasury
securities.

When US Treasury obligations have been stripped of their unmatured interest
coupons by the holder, the principal or corpus is sold at a deep discount
because the buyer receives only the right to receive a future fixed payment on
the security and does not receive any rights to periodic interest (cash)
payments. Once stripped or separated, the corpus and coupons may be sold
separately. Typically, the coupons are sold separately or grouped with other
coupons with like maturity dates and sold bundled in such form. Purchasers of
stripped obligations acquire, in effect, discount obligations that are
economically identical to the zero coupon securities that the Treasury sells.

Strategic Transactions and Derivatives

A fund may, but is not required to, utilize various other investment strategies
as described below for a variety of purposes, such as hedging various market
risks, managing the effective maturity or duration of the fixed-income
securities in a fund's portfolio or enhancing potential gain. These strategies
may be executed through the use of derivative contracts.

In the course of pursuing these investment strategies, a fund may purchase and
sell exchange-listed and over-the-counter put and call options on securities,
equity and fixed-income indices and other instruments, purchase and sell futures
contracts and options thereon, enter into various transactions such as swaps,
caps, floors, collars, currency forward contracts, currency futures contracts,
currency swaps or options on currencies, or currency futures and various other
currency transactions (collectively, all the above are called "Strategic
Transactions"). In addition, certain Strategic Transactions may also include
additional techniques, instruments or strategies that are permitted as
regulatory changes occur. Strategic Transactions may be used without limit
(subject to certain limits imposed by the 1940 Act) to attempt to protect
against possible changes in the market value of securities held in or to be
purchased for a fund's portfolio resulting from securities markets or currency
exchange rate fluctuations, to protect a fund's unrealized gains in the value of
its portfolio securities, to facilitate the sale of such securities for
investment purposes, to manage the effective maturity or duration of a fund's
portfolio, to establish a position in the derivatives markets as a substitute
for purchasing or selling particular securities or for any other purpose
permitted by applicable law. Some Strategic Transactions may also be used to
enhance potential gain. Any or all of these investment techniques may be used at
any time and in any combination, and there is no particular strategy that
dictates the use of one technique rather than another, as use of any Strategic
Transaction is a function of numerous variables including market conditions. The
ability of a fund to utilize these Strategic Transactions successfully will
depend on the Advisor's ability to predict pertinent market movements, which
cannot be assured. Strategic Transactions will not be used to alter fundamental
investment purposes and characteristics of a fund.

Strategic Transactions, including derivative contracts, have risks associated
with them including possible default by the other party to the transaction,
illiquidity and, to the extent the Advisor's view as to certain market movements
is incorrect, the risk that the use of such Strategic Transactions could result
in losses greater than if they had not been used. Use of put and call options
may result in losses to a fund, force the sale or purchase of portfolio
securities at inopportune times or for prices higher than (in the case of put
options) or lower than (in the case of call options) current market values,
limit the amount of appreciation a fund can realize on its investments or cause
a fund to hold a security it might otherwise sell. The use of currency
transactions can result in a fund incurring losses as a result of a number of
factors including the imposition of exchange controls, suspension of
settlements, or the inability to deliver or receive a specified currency. The
use of options and futures transactions entails certain other risks. In
particular, the variable degree of correlation between price movements of
futures contracts and price movements in the related portfolio position of a
fund creates the possibility that losses on the hedging instrument may be
greater than gains in the value of a fund's position. In addition, futures and
options markets may not be liquid in all circumstances and certain
over-the-counter options may have no markets. As a result, in certain markets, a
fund might not be able to close out a transaction without incurring substantial
losses, if at all. Although the use of futures and options transactions for
hedging should tend to minimize the risk of loss due to a decline in the value
of the hedged position, at the same time they tend to limit any potential gain
which might result from an increase in value of such position. Other Strategic
Transactions, such as forward contracts and swaps, are also subject to similar
risks. Losses resulting from the use of Strategic Transactions would reduce net
asset value, and possibly income, and such losses can be greater than if the
Strategic Transactions had not been utilized.

Commodities-Linked Derivative Instruments. A fund intends to invest in
commodities-linked derivative instruments, in particular in structured notes.
The value of a commodities-linked derivative instrument typically is based on
the price movements of a physical commodity, a commodity futures contract or
commodity index, or some other readily measurable economic variable dependent
upon changes in the value of commodities or the commodities markets. A fund
invests in commodities-linked derivative investments that are hybrid instruments
excluded from regulation under the Commodity Exchange Act and the rules
thereunder, so that a fund will not be considered a "commodity pool." A fund may
invest up to 40% of its total assets in qualifying hybrid instruments.
Additionally, from time to time the fund may invest in other hybrid instruments
that do not qualify for exemption from regulation under the Commodity Exchange
Act.

A fund will invest in derivative debt instruments with principal and/or coupon
payments linked to the value of commodities, commodity futures contracts, or the
performance of commodity indices. These are "commodities-linked" or
"index-linked" notes. They are sometimes referred to as "structured notes"
because the terms of the debt instrument may be structured by the issuer of the
note and the purchaser of the note, such as a fund. These notes may be issued by
banks, brokerage firms, insurance companies and other corporations.

The values of these notes will rise and fall in response to changes in the
underlying commodity or related index or investment. These notes expose a fund
economically to movements in commodity prices, but a particular note is
primarily a debt obligation. These notes also are subject to credit and interest
rate risks that in general affect the value of debt securities. Therefore, at
the maturity of the note, a fund may receive more or less principal than it
originally invested. A fund might receive interest payments on the note that are
more or less than the stated coupon interest rate payments. To try to reduce
this risk, a fund does not expect to invest more than 40% of its total assets in
structured notes under whose terms the potential loss, either at redemption or
maturity, exceeds 50% of the face value of the notes. That amount is calculated
at the time of investment.

The structured notes a fund enters into are expected to involve leverage,
meaning that the value of the instrument will be calculated as a multiple of the
upward or downward price movement of the underlying index. The prices of
commodity-linked instruments may move in different directions than investments
in traditional equity and debt securities in periods of rising inflation. Of
course, there can be no guarantee that a fund's commodity-linked investments
would not be correlated with traditional financial assets under any particular
market conditions.

Commodity-linked structured notes may be issued by US and foreign banks,
brokerage firms, insurance companies and other corporations. These notes are
debt securities of the issuer and so, in addition to fluctuating in response to
changes in the underlying commodity index, will be subject to credit and
interest rate risks that typically affect debt securities.

The commodity-linked instruments a fund invests in may be wholly principal
protected, partially principal protected or offer no principal protection. With
a wholly principal protected instrument, a fund will receive at maturity the
greater of the par value of the note or the increase in value of the underlying
index. Partially protected instruments may suffer some loss of principal up to a
specified limit if the underlying index declines in value during the term of the
instrument. For instruments without principal protection, there is a risk that
the instrument could lose all of its value if the index declines sufficiently.
The Advisor's decision on whether and to what extent to use principal protection
depends in part on the cost of the protection. In addition, the ability of a
fund to take advantage of any protection feature depends on the creditworthiness
of the issuer of the instrument.

Although a fund itself will not be leveraged, some of the commodity-linked
instruments the fund may hold will involve leverage. The fund will not invest in
an instrument if, at the time of purchase, (1) that instrument's "leverage
ratio" exceeds 300% of the price increase (or decrease) in the underlying index
or (2) the fund's "portfolio leverage ratio" exceeds 150%. What this means is
that for an instrument with a "leverage factor" of 300%, a 1% gain (or loss) in
the underlying index would result in a 3% gain (or loss) in the value of the
instrument. "Portfolio leverage ratio" is defined as the average (mean) leverage
ratio of all instruments in a fund's portfolio, weighted by the market values of
such instruments or, in the case of futures contracts, their notional value.

Derivative strategies and the writing of uncovered (or so-called "naked")
options are speculative and may hurt a Fund's performance. A fund may attempt to
hedge its investments in order to mitigate risk, but it is not required to do
so. The benefits to be derived from the fund's derivatives and options strategy
are dependent upon the Advisor's ability to discern pricing inefficiencies and
predict trends in the commodities and other markets, which decisions could prove
to be inaccurate. This requires different skills and techniques than predicting
changes in the price of individual stocks or fixed-income securities, and there
can be no assurance that the use of this strategy will be successful.


General Characteristics of Options. Put options and call options typically have
similar structural characteristics and operational mechanics regardless of the
underlying instrument on which they are purchased or sold. Thus, the following
general discussion relates to each of the particular types of options discussed
in greater detail below. In addition, many Strategic Transactions involving
options require segregation of fund assets in special accounts, as described
above under "Asset Segregation."


A put option gives the purchaser of the option, upon payment of a premium, the
right to sell, and the writer the obligation to buy, the underlying security,
commodity, index, currency or other instrument at the exercise price. For
instance, a fund's purchase of a put option on a security might be designed to
protect its holdings in the underlying instrument (or, in some cases, a similar
instrument) against a substantial decline in the market value by giving a fund
the right to sell such instrument at the option exercise price. A call option,
upon payment of a premium, gives the purchaser of the option the right to buy,
and the seller the obligation to sell, the underlying instrument at the exercise
price. A fund's purchase of a call option on a security, financial future,
index, currency or other instrument might be intended to protect a fund against
an increase in the price of the underlying instrument that it intends to
purchase in the future by fixing the price at which it may purchase such
instrument. An American style put or call option may be exercised at any time
during the option period while a European style put or call option may be
exercised only upon expiration or during a fixed period prior thereto. A fund is
authorized to purchase and sell exchange listed options and over-the-counter
options ("OTC options"). Exchange listed options are issued by a regulated
intermediary such as the Options Clearing Corporation ("OCC"), which guarantees
the performance of the obligations of the parties to such options. The
discussion below uses the OCC as an example, but is also applicable to other
financial intermediaries.

With certain exceptions, OCC issued and exchange listed options generally settle
by physical delivery of the underlying security or currency, although in the
future cash settlement may become available. Index options and Eurodollar
instruments are cash settled for the net amount, if any, by which the option is
"in-the-money" (i.e., where the value of the underlying instrument exceeds, in
the case of a call option, or is less than, in the case of a put option, the
exercise price of the option) at the time the option is exercised. Frequently,
rather than taking or making delivery of the underlying instrument through the
process of exercising the option, listed options are closed by entering into
offsetting purchase or sale transactions that do not result in ownership of the
new option.

A fund's ability to close out its position as a purchaser or seller of an OCC or
exchange listed put or call option is dependent, in part, upon the liquidity of
the option market. Among the possible reasons for the absence of a liquid option
market on an exchange are: (i) insufficient trading interest in certain options;
(ii) restrictions on transactions imposed by an exchange; (iii) trading halts,
suspensions or other restrictions imposed with respect to particular classes or
series of options or underlying securities including reaching daily price
limits; (iv) interruption of the normal operations of the OCC or an exchange;
(v) inadequacy of the facilities of an exchange or OCC to handle current trading
volume; or (vi) a decision by one or more exchanges to discontinue the trading
of options (or a particular class or series of options), in which event the
relevant market for that option on that exchange would cease to exist, although
outstanding options on that exchange would generally continue to be exercisable
in accordance with their terms.

The hours of trading for listed options may not coincide with the hours during
which the underlying financial instruments are traded. To the extent that the
option markets close before the markets for the underlying financial
instruments, significant price and rate movements can take place in the
underlying markets that cannot be reflected in the option markets.

OTC options are purchased from or sold to securities dealers, financial
institutions or other parties ("Counterparties") through direct bilateral
agreement with the Counterparty. In contrast to exchange listed options, which
generally have standardized terms and performance mechanics, all the terms of an
OTC option, including such terms as method of settlement, term, exercise price,
premium, guarantees and security, are set by negotiation of the parties. A fund
will only sell OTC options (other than OTC currency options) that are subject to
a buy-back provision permitting a fund to require the Counterparty to sell the
option back to a fund at a formula price within seven days. A fund expects
generally to enter into OTC options that have cash settlement provisions,
although it is not required to do so.

Unless the parties provide for it, there is no central clearing or guaranty
function in an OTC option. As a result, if the Counterparty fails to make or
take delivery of the security, currency or other instrument underlying an OTC
option it has entered into with a fund or fails to make a cash settlement
payment due in accordance with the terms of that option, a fund will lose any
premium it paid for the option as well as any anticipated benefit of the
transaction. Accordingly, the Advisor must assess the creditworthiness of each
such Counterparty or any guarantor or credit enhancement of the Counterparty's
credit to determine the likelihood that the terms of the OTC option will be
satisfied. A fund will engage in OTC option transactions only with US government
securities dealers recognized by the Federal Reserve Bank of New York as
"primary dealers" or broker/dealers, domestic or foreign banks or other
financial institutions which have received (or the guarantors of the obligation
of which have received) a short-term credit rating of A-1 from S&P or P-1 from
Moody's or an equivalent rating from any nationally recognized statistical
rating organization ("NRSRO") or, in the case of OTC currency transactions, are
determined to be of equivalent credit quality by the Advisor. The staff of the
SEC currently takes the position that OTC options purchased by a fund, and
portfolio securities "covering" the amount of a fund's obligation pursuant to an
OTC option sold by it (the cost of the sell-back plus the in-the-money amount,
if any) are illiquid, and are subject to a fund's limitation on investing no
more than 15% of its net assets in illiquid securities.

If a fund sells a call option, the premium that it receives may serve as a
partial hedge, to the extent of the option premium, against a decrease in the
value of the underlying securities or instruments in its portfolio or will
increase a fund's income. The sale of put options can also provide income.

A fund may purchase and sell call options on securities including US Treasury
and agency securities, mortgage-backed securities, foreign sovereign debt,
corporate debt securities, equity securities (including convertible securities)
and Eurodollar instruments that are traded on US and foreign securities
exchanges and in the over-the-counter markets, and on securities indices,
currencies and futures contracts. All calls sold by a fund must be "covered"
(i.e., a fund must own the securities or futures contract subject to the call)
or must meet the asset segregation requirements described below as long as the
call is outstanding. Even though a fund will receive the option premium to help
protect it against loss, a call sold by a fund exposes a fund during the term of
the option to possible loss of opportunity to realize appreciation in the market
price of the underlying security or instrument and may require a fund to hold a
security or instrument which it might otherwise have sold.

A fund may purchase and sell put options on securities including US Treasury and
agency securities, mortgage-backed securities, foreign sovereign debt, corporate
debt securities, equity securities (including convertible securities) and
Eurodollar instruments (whether or not it holds the above securities in its
portfolio), and on securities indices, currencies and futures contracts other
than futures on individual corporate debt and individual equity securities. A
fund will not sell put options if, as a result, more than 50% of a fund's total
assets would be required to be segregated to cover its potential obligations
under such put options other than those with respect to futures and options
thereon. In selling put options, there is a risk that a fund may be required to
buy the underlying security at a disadvantageous price above the market price.

General Characteristics of Futures. A fund may enter into futures contracts or
purchase or sell put and call options on such futures as hedges against
anticipated interest rate, currency or equity market changes, and for duration
management, risk management and return enhancement purposes. Futures are
generally bought and sold on the commodities exchanges where they are listed
with payment of initial and variation margin as described below. The sale of a
futures contract creates a firm obligation by the seller, to deliver to the
buyer the specific type of financial instrument called for in the contract at a
specific future time for a specified price (or, with respect to certain
instruments, such as index futures and Eurodollar instruments, the net cash
amount) and a firm obligation by the buyer to deliver the specified price.
Options on futures contracts are similar to options on securities except that an
option on a futures contract gives the purchaser the right in return for the
premium paid to assume a position in a futures contract and obligates the seller
to deliver such position.

A fund's use of futures and options thereon will in all cases be consistent with
applicable regulatory requirements and in particular the rules and regulations
of the Commodity Futures Trading Commission and will be entered into for bona
fide hedging, risk management (including duration management) or other portfolio
and return enhancement management purposes. Typically, maintaining a futures
contract or selling an option thereon requires a fund to deposit with a
financial intermediary as security for its obligations an amount of cash or
other specified assets (initial margin) which initially is typically 1% to 10%
of the face amount of the contract (but may be higher in some circumstances).
Additional cash or assets (variation margin) may be required to be deposited
thereafter on a daily basis as the mark to market value of the contract
fluctuates. The purchase of an option on financial futures involves payment of a
premium for the option without any further obligation on the part of a fund. If
a fund exercises an option on a futures contract it will be obligated to post
initial margin (and potential subsequent variation margin) for the resulting
futures position just as it would for any position. Futures contracts and
options thereon are generally settled by entering into an offsetting transaction
but there can be no assurance that the position can be offset prior to
settlement at an advantageous price, nor that delivery will occur.

A fund will not enter into a futures contract or related option (except for
closing transactions) if, immediately thereafter, the sum of the amount of its
initial margin and premiums on open futures contracts and options thereon would
exceed 5% of a fund's total assets (taken at current value); however, in the
case of an option that is in-the-money at the time of the purchase, the
in-the-money amount may be excluded in calculating the 5% limitation. The
segregation requirements with respect to futures contracts and options thereon
are described below.

Hedging Strategies. A fund may use certain strategies designed to adjust the
overall risk of its investment portfolio. These "hedging" strategies involve
derivative contracts, including (but not limited to) US Treasury and Eurodollar
futures contracts and exchange-traded put and call options on such futures
contracts. New financial products and risk management techniques continue to be
developed and may be used if consistent with a fund's investment objective and
policies. Among other purposes, these hedging strategies may be used to
effectively maintain desired portfolio duration or to protect against market
risk should a fund change its investments among different types of fixed income
securities.

A fund might not use any hedging strategies, and there can be no assurance that
any strategy used will succeed. If the Advisor is incorrect in its judgment on
market values, interest rates or other economic factors in using a hedging
strategy, a fund may have lower net income and a net loss on the investment.
Each of these strategies involves certain risks, which include:

A fund might not use any hedging strategies, and there can be no assurance that
any strategy used will succeed. If the Advisor is incorrect in its judgment on
market values, interest rates or other economic factors in using a hedging
strategy, a fund may have lower net income and a net loss on the investment.
Each of these strategies involves certain risks, which include:

o        the fact that the skills needed to use hedging instruments are
         different from those needed to select securities for a fund;

o        the possibility of imperfect correlation, or even no correlation,
         between the price movements of hedging instruments and price movements
         of the securities or currencies being hedged;

o        possible constraints placed on a fund's ability to purchase or sell
         portfolio investments at advantageous times due to the need for a fund
         to maintain "cover" or to segregate securities; and

o        the possibility that a fund will be unable to close out or liquidate
         its hedged position.

A hedge is designed to offset a loss in a portfolio position with a gain in the
hedged position; at the same time, however, a properly correlated hedge will
result in a gain in the portfolio position being offset by a loss in the hedged
position. As a result, the use of options, futures and currency exchange
transactions for hedging purposes could limit any potential gain from an
increase in the value of the position hedged. With respect to futures contracts,
since the value of portfolio securities will far exceed the value of the futures
contracts sold by a Fund, an increase in the value of the futures contracts
could only mitigate, but not totally offset, the decline in the value of a
Fund's assets.

To the extent that a fund engages in the strategies described above, a fund may
experience losses greater than if these strategies had not been utilized. In
addition to the risks described above, these instruments may be illiquid and/or
subject to trading limits, and a fund may be unable to close out a position
without incurring substantial losses, if at all. A fund is also subject to the
risk of default by a counterparty to an off-exchange transaction.

Options on Securities Indices and Other Financial Indices. A fund also may
purchase and sell call and put options on securities indices and other financial
indices and in so doing can achieve many of the same objectives it would achieve
through the sale or purchase of options on individual securities or other
instruments. Options on securities indices and other financial indices are
similar to options on a security or other instrument except that, rather than
settling by physical delivery of the underlying instrument, they settle by cash
settlement, i.e., an option on an index gives the holder the right to receive,
upon exercise of the option, an amount of cash if the closing level of the index
upon which the option is based exceeds, in the case of a call, or is less than,
in the case of a put, the exercise price of the option (except if, in the case
of an OTC option, physical delivery is specified). This amount of cash is equal
to the excess of the closing price of the index over the exercise price of the
option, which also may be multiplied by a formula value. The seller of the
option is obligated, in return for the premium received, to make delivery of
this amount. The gain or loss on an option on an index depends on price
movements in the instruments making up the market, market segment, industry or
other composite on which the underlying index is based, rather than price
movements in individual securities, as is the case with respect to options on
securities.

Currency Transactions. A fund may engage in currency transactions with
Counterparties primarily in order to hedge, or manage the risk of the value of
portfolio holdings denominated in particular currencies against fluctuations in
relative value. Currency transactions include forward currency contracts,
exchange listed currency futures, exchange listed and OTC options on currencies,
and currency swaps. A forward currency contract involves a privately negotiated
obligation to purchase or sell (with delivery generally required) a specific
currency at a future date, which may be any fixed number of days from the date
of the contract agreed upon by the parties, at a price set at the time of the
contract. A currency swap is an agreement to exchange cash flows based on the
notional difference among two or more currencies and operates similarly to an
interest rate swap, which is described below. A fund may enter into currency
transactions with Counterparties which have received (or the guarantors of the
obligations which have received) a credit rating of A-1 or P-1 by S&P or
Moody's, respectively, or that have an equivalent rating from a NRSRO or (except
for OTC currency options) are determined to be of equivalent credit quality by
the underlying fund's advisor.

A fund's dealings in forward currency contracts and other currency transactions
such as futures, options, options on futures and swaps generally will be limited
to hedging involving either specific transactions or portfolio positions except
as described below. Transaction hedging is entering into a currency transaction
with respect to specific assets or liabilities of a fund, which will generally
arise in connection with the purchase or sale of its portfolio securities or the
receipt of income therefrom. Position hedging is entering into a currency
transaction with respect to portfolio security positions denominated or
generally quoted in that currency.

A fund generally will not enter into a transaction to hedge currency exposure to
an extent greater, after netting all transactions intended wholly or partially
to offset other transactions, than the aggregate market value (at the time of
entering into the transaction) of the securities held in its portfolio that are
denominated or generally quoted in or currently convertible into such currency,
other than with respect to proxy hedging or cross hedging as described below, as
applicable.

A fund may also cross-hedge currencies by entering into transactions to purchase
or sell one or more currencies that are expected to decline in value relative to
other currencies to which a fund has or in which a fund expects to have
portfolio exposure.

To reduce the effect of currency fluctuations on the value of existing or
anticipated holdings of portfolio securities, a fund may also engage in proxy
hedging. Proxy hedging is often used when the currency to which the fund's
portfolio is exposed is difficult to hedge or to hedge against the dollar. Proxy
hedging entails entering into a commitment or option to sell a currency whose
changes in value are generally considered to be correlated to a currency or
currencies in which some or all of a fund's portfolio securities are or are
expected to be denominated, in exchange for US dollars. Currency hedging
involves some of the same risks and considerations as other transactions with
similar instruments. Currency transactions can result in losses to a fund if the
currency being hedged fluctuates in value to a degree or in a direction that is
not anticipated. Further, there is the risk that the perceived correlation
between various currencies may not be present or may not be present during the
particular time that a fund is engaging in proxy hedging. If a fund enters into
a currency hedging transaction, a fund will comply with the asset segregation
requirements described below.

Risks of Currency Transactions. Currency transactions are subject to risks
different from those of other portfolio transactions. Because currency control
is of great importance to the issuing governments and influences economic
planning and policy, purchases and sales of currency and related instruments can
be negatively affected by government exchange controls, blockages, and
manipulations or exchange restrictions imposed by governments. These can result
in losses to a fund if it is unable to deliver or receive currency or funds in
settlement of obligations and could also cause hedges it has entered into to be
rendered useless, resulting in full currency exposure as well as incurring
transaction costs. Buyers and sellers of currency futures are subject to the
same risks that apply to the use of futures generally. Further, settlement of a
currency futures contract for the purchase of most currencies must occur at a
bank based in the issuing nation. Trading options on currency futures is
relatively new, and the ability to establish and close out positions on such
options is subject to the maintenance of a liquid market which may not always be
available. Currency exchange rates may fluctuate based on factors extrinsic to
that country's economy.

Eurodollar Instruments. A fund may make investments in Eurodollar instruments.
Eurodollar instruments are US dollar-denominated futures contracts or options
thereon which are linked to the London Interbank Offered Rate ("LIBOR"),
although foreign currency-denominated instruments are available from time to
time. Eurodollar futures contracts enable purchasers to obtain a fixed rate for
the lending of funds and sellers to obtain a fixed rate for borrowings. A fund
might use Eurodollar futures contracts and options thereon to hedge against
changes in LIBOR, to which many interest rate swaps and fixed income instruments
are linked.

Risks of Strategic Transactions Outside the US. When conducted outside the US,
Strategic Transactions may not be regulated as rigorously as in the US, may not
involve a clearing mechanism and related guarantees, and are subject to the risk
of governmental actions affecting trading in, or the prices of, foreign
securities, currencies and other instruments. The value of such positions also
could be adversely affected by: (i) other complex foreign political, legal and
economic factors, (ii) lesser availability than in the US of data on which to
make trading decisions, (iii) delays in a fund's ability to act upon economic
events occurring in foreign markets during non-business hours in the US, (iv)
the imposition of different exercise and settlement terms and procedures and
margin requirements than in the US, and (v) lower trading volume and liquidity.

Swaps, Caps, Floors and Collars. Among the Strategic Transactions into which a
fund may enter are interest rate, currency, index and other swaps and the
purchase or sale of related caps, floors and collars. A fund expects to enter
into these transactions primarily to preserve a return or spread on a particular
investment or portion of its portfolio, to protect against currency
fluctuations, as a duration management technique, to protect against any
increase in the price of securities a fund anticipates purchasing at a later
date or to enhance returns. A fund will not sell interest rate caps or floors
where it does not own securities or other instruments providing the income
stream a fund may be obligated to pay. Interest rate swaps involve the exchange
by a fund with another party of their respective commitments to pay or receive
interest, e.g., an exchange of floating rate payments for fixed rate payments
with respect to a notional amount of principal. A currency swap is an agreement
to exchange cash flows on a notional amount of two or more currencies based on
the relative value differential among them and an index swap is an agreement to
swap cash flows on a notional amount based on changes in the values of the
reference indices. The purchase of a cap entitles the purchaser to receive
payments on a notional principal amount from the party selling such cap to the
extent that a specified index exceeds a predetermined interest rate or amount.
The purchase of a floor entitles the purchaser to receive payments on a notional
principal amount from the party selling such floor to the extent that a
specified index falls below a predetermined interest rate or amount. A collar is
a combination of a cap and a floor that preserves a certain return within a
predetermined range of interest rates or values.

Swaps will be entered in on a net basis, i.e., the two payment streams are
netted out in a cash settlement on the payment date or dates specified in the
instrument, with each fund receiving or paying, as the case may be, only the net
amount of the two payments. Each fund will not enter into any swap, cap, floor
or collar transaction unless, at the time of entering into such transaction, the
unsecured long-term debt of the Counterparty, combined with any credit
enhancements, is rated at least A by S&P or Moody's or has an equivalent rating
from another NRSRO or is determined to be of equivalent credit quality by the
Advisor. If there is a default by the Counterparty, each fund may have
contractual remedies pursuant to the agreements related to the transaction. The
swap market has grown substantially in recent years with a large number of banks
and investment banking firms acting both as principals and as agents utilizing
standardized swap documentation. As a result, the swap market has become
relatively liquid. Caps, floors and collars are more recent innovations for
which standardized documentation has not yet been fully developed and,
accordingly, they are less liquid than swaps.

A credit default swap is a contract between a buyer and a seller of protection
against a pre-defined credit event. The buyer of protection pays the seller a
fixed regular fee provided that no event of default on an underlying reference
obligation has occurred. If an event of default occurs, the seller must pay the
buyer the full notional value, or "par value," of the reference obligation in
exchange for the reference obligation. Credit default swaps are used as a means
of "buying" credit protection, i.e., attempting to mitigate the risk of default
or credit quality deterioration in some portion of a fund's holdings, or
"selling" credit protection, i.e., attempting to gain exposure to an underlying
issuer's credit quality characteristics without directly investing in that
issuer. Where a fund is a seller of credit protection, it effectively adds
leverage to its portfolio because, in addition to its total net assets, a fund
would be subject to investment exposure on the notional amount of the swap. A
fund will only sell credit protection with respect to securities in which it
would be authorized to invest directly. A fund currently considers credit
default swaps to be illiquid and treats the market value of the contract as
illiquid for purposes of determining compliance with a fund's restrictions on
investing in illiquid securities.

If a fund is a buyer of a credit default swap and no event of default occurs, a
fund will lose its investment and recover nothing. However, if a fund is a buyer
and an event of default occurs, a fund will receive the full notional value of
the reference obligation that may have little or no value. As a seller, the fund
receives a fixed rate of income through the term of the contract (typically
between six months and three years), provided that there is no default event. If
an event of default occurs, the seller must pay the buyer the full notional
value of the reference obligation. Credit default swaps involve greater risks
than if the fund had invested in the reference obligation directly.

A fund may use credit default swaps to gain exposure to particular issuers or
particular markets through investments in portfolios of credit default swaps,
such as Dow Jones CDX.NA.HY certificates. By investing in certificates
representing interests in a basket of credit default swaps, the fund is taking
credit risk with respect to an entity or group of entities and providing credit
protection to the swap counterparties. For example, the CDX EM is a tradable
basket of 19 credit default swaps on country credits which seeks to replicate
the returns on the indices of a broad group of emerging markets countries. The
credits are a subset of the countries represented by the JPMorgan Emerging
Markets Bond Index Global Diversified. By purchasing interests in CDX EM, the
fund is gaining emerging markets exposure through a single investment. Unlike
other types of credit default swaps which are generally considered illiquid,
credit default swap certificates generally can be sold within seven days and are
not subject to the fund's restrictions on investing in illiquid securities.



Combined Transactions. A fund may enter into multiple transactions, including
multiple options transactions, multiple futures transactions, multiple currency
transactions (including forward currency contracts) and multiple interest rate
transactions and any combination of futures, options, currency and interest rate
transactions ("component" transactions), instead of a single Strategic
Transaction, as part of a single or combined strategy when, in the opinion of
the advisor, it is in the best interests of a fund to do so. A combined
transaction will usually contain elements of risk that are present in each of
its component transactions. Although combined transactions are normally entered
into based on the advisor's judgment that the combined strategies will reduce
risk or otherwise more effectively achieve the desired portfolio management
goal, it is possible that the combination will instead increase such risks or
hinder achievement of the portfolio management objective.

Global Asset Allocation Strategy ("GAA Strategy"). In connection with the GAA
Strategy and in addition to the securities described above, a fund may invest in
indexed securities, futures contracts on securities indices, securities
representing securities of foreign issuers (e.g., ADRs, GDRs and EDRs), options
on stocks, options on futures contracts, foreign currency exchange transactions
and options on foreign currencies. These are discussed below, to the extent not
already described above.

Indexed Securities. The indexed securities in which a fund may invest include
debt securities whose value at maturity is determined by reference to the
relative prices of various currencies or to the price of a stock index. The
value of such securities depends on the price of foreign currencies, securities
indices or other financial values or statistics. These securities may be
positively or negatively indexed; that is, their value may increase or decrease
if the underlying instrument appreciates.

Securities Representing Securities of Foreign Issuers. A fund's investments in
the securities of foreign issuers may be made directly or in the form of ADRs,
GDRs, also referred to as International Depositary Receipts or "IDRs", EDRs or
other similar securities representing securities of foreign issuers. These
securities may not necessarily be denominated in the same currency as the
securities they represent, and while designed for use as alternatives to the
purchase of the underlying securities in their national markets and currencies,
are subject to the same risks as the foreign securities to which they relate.

ADRs are receipts, typically issued by a US bank or trust company, which
evidence ownership of underlying securities issued by a foreign corporation.
EDRs, which are sometimes referred to as Continental Depository Receipts
("CDRs"), are receipts issued in Europe, and GDRs or IDRs are issued outside the
United States. EDRs (CDRs) and GDRs (IDRs) are typically issued by non-US banks
and trust companies and evidence ownership of either foreign or domestic
securities. Generally, ADRs in registered form are designed for use in US
securities markets, and EDRs (CDRs) and GDRs (IDRs) in bearer form are designed
for use in European and non-US securities markets, respectively. For purposes of
a fund's investment policies, depository receipts generally are deemed to have
the same classification as the underlying securities they represent. Thus, a
depository receipt representing ownership of common stock will be treated as
common stock.

ADRs are publicly traded on exchanges or over-the-counter in the United States
and are issued through "sponsored" or "unsponsored" arrangements. In a sponsored
ADR arrangement, the foreign issuer assumes the obligation to pay some or all of
the depository's transaction fees, whereas under an unsponsored arrangement, the
foreign issuer assumes no obligations and the depository's transaction fees are
paid directly by the ADR holders. In addition, less information is available in
the US about an unsponsored ADR than about a sponsored ADR.

Investments in foreign securities incur higher costs than investments in US
securities, including higher costs in making securities transactions as well as
foreign government taxes which may reduce the investment return of A fund. In
addition, foreign investments may include risks associated with currency
exchange rates, less complete information about additional companies, less
market liquidity and political instability.


Portfolio Holdings


In addition to the public disclosure of portfolio holdings through required
Securities and Exchange Commission ("SEC") quarterly filings, a Portfolio may
make its portfolio holdings information publicly available on the DWS Funds' Web
site as described in each Portfolio's prospectus. Each Portfolio does not
disseminate non-public information about portfolio holdings except in accordance
with policies and procedures adopted by each Portfolio.

Each Portfolio's procedures permit non-public portfolio holdings information to
be shared with Deutsche Asset Management and its affiliates (collectively
"DeAM"), subadvisors, if any, custodians, independent registered public
accounting firms, attorneys, officers and Trustees and each of their respective
affiliates and advisers who require access to this information to fulfill their
duties to each Portfolio and are subject to the duties of confidentiality,
including the duty not to trade on non-public information, imposed by law or
contract, or by each Portfolio's procedures. This non-public information may
also be disclosed, subject to the requirements described below, to certain third
parties, such as securities lending agents, financial printers, proxy voting
firms, mutual fund analysts and rating and tracking agencies, or to shareholders
in connection with in-kind redemptions (collectively, "Authorized Third
Parties").

Prior to any disclosure of each Portfolio's non-public portfolio holdings
information to Authorized Third Parties, a person authorized by each Portfolio's
Trustees must make a good faith determination in light of the facts then known
that a Portfolio has a legitimate business purpose for providing the
information, that the disclosure is in the best interest of each Fund, and that
the recipient assents or otherwise has a duty to keep the information
confidential and to not trade based on the information received while the
information remains non-public. No compensation is received by each Portfolio or
DeAM for disclosing non-public holdings information. Periodic reports regarding
these procedures will be provided to each Portfolio's Trustees.

Portfolio holdings information distributed by the trading desks of DeAM or a
subadvisor for the purpose of facilitating efficient trading of such securities
and receipt of relevant research is not subject to the foregoing requirements.
Non-public portfolio holding information does not include portfolio
characteristics (other than holdings or subsets of holdings) about each
Portfolio and information derived therefrom, including, but not limited to, how
each Portfolio's investments are divided among various sectors, industries,
countries, value and growth stocks, bonds, currencies and cash, types of bonds,
bond maturities, duration, bond coupons and bond credit quality ratings so long
as the identity of each Portfolio's holdings could not be derived from such
information.

Registered investment companies that are subadvised by DeAM may be subject to
different portfolio holdings disclosure policies, and neither DeAM nor a
Portfolio's Trustees exercise control over such policies. In addition, separate
account clients of DeAM have access to their portfolio holdings and are not
subject to a Portfolio's portfolio holdings disclosure policy. The portfolio
holdings of some of the funds subadvised by DeAM and some of the separate
accounts managed by DeAM may substantially overlap with the portfolio holdings
of a Portfolio.

DeAM also manages certain unregistered commingled trusts and creates model
portfolios, the portfolio holdings of which may substantially overlap with the
portfolio holdings of a Portfolio. To the extent that investors in these
commingled trusts or recipients of model portfolio holdings information may
receive portfolio holdings information of their trust or of a model portfolio on
a different basis from that on which fund portfolio holdings information is made
public, DeAM has implemented procedures reasonably designed to encourage such
investors and recipients to keep such information confidential, and to prevent
those investors from trading on the basis of non-public holdings information.

There is no assurance that a Portfolio's policies and procedures with respect to
the disclosure of portfolio holdings information will protect a Portfolio from
the potential misuse of portfolio holdings information by those in possession of
that information.

Fees and Expenses of Underlying DWS Funds

As noted above, the Portfolios will bear their pro rata share of the Underlying
DWS Funds' fees and expenses. In addition, certain Underlying DWS Funds impose a
fee upon the redemption or exchange of shares held for less than one year. The
fees, which amount to 2% of the net asset value of the shares being redeemed or
exchanged, are assessed and retained by the Underlying DWS Funds for the benefit
of the remaining shareholders. The fee is intended to encourage long-term
investment in the Underlying DWS Fund. The fee is not a deferred sales charge,
is not a commission paid to the Advisor or its subsidiary and does not benefit
the Advisor in any way. Each such Underlying DWS Fund reserves the right to
modify the terms of or terminate this fee at any time. As a shareholder of such
Underlying DWS Funds, the Funds will be subject to such fees. Under normal
market conditions, the Funds will seek to avoid taking action that would result
in the imposition of such a fee. However, in the event that a fee is incurred,
the net assets of the Fund would be reduced by the amount of such fees that are
assessed and retained by the Underlying DWS Funds for the benefit of their
shareholders.

The management fees and total operating expenses of the Underlying DWS Funds
during their most recent fiscal year as reflected in the funds' currently
effective prospectuses are described in the following table. Reimbursement and
or waiver arrangements applicable to certain Underlying DWS Funds caused the net
fees and/or expenses for those funds to be lower than the values below.


<TABLE>
<CAPTION>
                                                                         Management         Total            Net
Name of Fund                                       Fiscal Year End        Fees (%)         Expenses*       Expenses
------------                                       ---------------        --------         ---------       --------

<S>                          <C>                         <C>                <C>              <C>              <C>
DWS Commodity Securities Fund(1)                         6/30               0.95             1.22             1.22
DWS Disciplined Market Neutral Fund(2)                   8/31               1.25             3.03            2.75
DWS Disciplined Long/Short Growth Fund(3)                4/30               1.00             3.87            2.33
DWS Emerging Markets Equity Fund(4)                      10/31               1.01             1.38            1.38
DWS Emerging Markets Fixed Income Fund(5)                10/31               0.59             0.88            0.88
DWS Communications Fund (6)                              12/31               0.90             1.10            1.10
DWS Floating Rate Plus Fund(7)                            4/30               0.65             1.19            0.95
DWS Global Bond Fund(8)                                 10/31               0.41             0.96             0.96
DWS GNMA Fund                                            9/30               0.32             0.45            0.45
DWS Gold & Precious Metals Fund(9)                      10/31               0.82             1.03            1.03
DWS Europe Equity Fund                                  10/31               0.65             0.90            0.90
DWS High Income Plus Fund(1)0 (11)                      10/31               0.50             0.76            0.64
DWS Dreman Mid Cap Value Fund(12)                        10/31               0.75             1.05            1.00
DWS Inflation Protected Plus Fund13 (14)                  9/30               0.40             0.74            0.70
DWS International Value Opportunities Fund(15)           8/31               0.80             2.11            1.27
DWS Japan Equity Fund (16)                               8/31               0.85             1.76            1.49
DWS Large Company Growth Fund                            7/31               0.62             0.83            0.83
DWS Latin America Equity Fund                           10/31               1.10             1.44            1.44
DWS RREEF Global Real Estate Securities Fund17           12/31               1.00             1.27            1.27
(18)
DWS S&P 500 Plus Fund(19)                                2/28               0.50             0.50            0.50
DWS Short Duration Fund20 21 (22)                       10/31               0.40             0.68            0.68
DWS Short Duration Plus Fund(2)(3)                       9/30               0.36             0.54            0.54
DWS Small Cap Core Fund                                  9/30               0.67             1.21            1.21
DWS Dreman Small Cap Value Fund                          11/30               0.72             0.83            0.83
</TABLE>

*         Except as otherwise noted, the information in the table is based on
          amounts incurred during the fund's most recent fiscal year. It is
          important for you to understand that a decline in the fund's average
          net assets during the current fiscal year due to recent unprecedented
          market volatility or other factors could cause the fund's expense
          ratios for the fund's current fiscal year to be higher than the
          expense information presented.

(1)      Through September 30, 2009, the Advisor has contractually agreed to
         waive all or a portion of its management fee and reimburse or pay
         certain operating expenses of the fund to the extent necessary to
         maintain the fund's total operating expenses at 1.25% for Institutional
         Class shares, excluding certain expenses such as extraordinary
         expenses, taxes, brokerage, and interest.

(2)      Through November 30, 2009, the advisor has contractually agreed to
         waive all or a portion of its management fee and reimburse or pay
         operating expenses of the fund to the extent necessary to maintain the
         fund's total operating expenses at 1.45% for Institutional Class
         shares, excluding certain expenses such as extraordinary expenses,
         taxes, brokerage, interest, and dividend expenses on short sales
         (estimated at 1.30%).

(3)      Through September 30, 2009, the Advisor has agreed to waive all or a
         portion of its management fee and reimburse or pay operating expenses
         of the fund to the extent necessary to maintain the fund's total
         operating expenses at 1.20% for Institutional Class shares, excluding
         certain expenses such as extraordinary expenses, taxes, brokerage and
         interest, leverage expenses and dividend expenses on short sales.

(4)      Through September 30, 2009, the Advisor has contractually agreed to
         waive all or a portion of its management fee and reimburse or pay
         operating expenses of the fund to the extent necessary to maintain the
         fund's total operating expenses at 1.71% for Institutional Class
         shares, excluding certain expenses such as extraordinary expenses,
         taxes, brokerage and interest. Although there can be no assurances that
         the current waiver/expense reimbursement arrangement will be maintained
         beyond September 30, 2009, the Advisor has committed to review the
         continuance of waiver/expense reimbursement arrangements by September
         30, 2009.

(5)      Restated on annualized basis to reflect fee changes which took effect
         on December 1, 2008. Through September 30, 2009, the Advisor has
         contractually agreed to waive all or a portion of its management fee
         and reimburse or pay operating expenses of the fund to the extent
         necessary to maintain the fund's total operating expenses at 1.05% for
         Institutional Class shares, excluding certain expenses such as
         extraordinary expenses, taxes, brokerage and interest. Although there
         can be no assurances that the current waiver/expense reimbursement
         arrangement will be maintained beyond September 30, 2009, the Advisor
         has committed to review the continuance of waiver/expense reimbursement
         arrangements by September 30, 2009.

(6)      The Advisor has voluntarily agreed to waive all or a portion of its
         fees and reimburse expenses so that the fund's total operating expenses
         will not exceed 1.18% for Institutional Class shares, excluding certain
         expenses such as extraordinary expenses, taxes, brokerage, and
         interest. The Advisor, at its discretion, may revise or discontinue
         this arrangement at any time.

(7)      Through September 30, 2009, the Advisor has contractually agreed to
         waive all or a portion of its management fee and reimburse or pay
         operating expenses of the fund to the extent necessary to maintain the
         fund's total operating expenses at 0.95% for Institutional Class
         shares, excluding certain expenses such as extraordinary expenses,
         taxes, brokerage and interest.

(8)      Restated on an annualized basis to reflect fee changes which took
         effect on December 1, 2008. Through September 30, 2009, the Advisor has
         contractually agreed to waive all or a portion of its management fee
         and reimburse or pay operating expenses of the fund to the extent
         necessary to maintain the fund's total operating expenses at 1.01% for
         Class S shares, excluding certain expenses such as extraordinary
         expenses, taxes, brokerage and interest. Although there can be no
         assurance that the current waiver/reimbursement arrangement will be
         maintained beyond September 30, 2009, the Advisor has committed to
         review the continuance of waiver/expense reimbursement arrangements by
         September 30, 2009.

(9)      Restated on an annualized basis to reflect fee changes which took
         effect on October 1, 2008. Through September 30, 2009, the Advisor has
         contractually agreed to waive all or a portion of its management fee
         and reimburse or pay operating expenses of the fund to the extent
         necessary to maintain the fund's total annual operating expenses at
         1.19% for Institutional Class shares, excluding certain expenses such
         as extraordinary expenses, taxes, brokerage and interest. Although
         there can be no assurance that the current waiver/expense reimbursement
         arrangement will be maintained beyond September 30, 2009, the Advisor
         has committed to review the continuance of waiver/expense reimbursement
         arrangements by September 30, 2009.

(10)     Through May 11, 2010, the Advisor has contractually agreed to waive a
         portion of its management fee in the amount of 0.12% of the fund's
         average daily net assets.

(11)     Through September 30, 2009, the Advisor has contractually agreed to
         waive all or a portion of its management fee and reimburse or pay
         certain operating expenses of the fund to the extent necessary to
         maintain the fund's total annual operating expenses at 0.89% for
         Institutional Class shares, excluding certain expenses such as
         extraordinary expenses, taxes, brokerage and interest expenses.
         Although there can be no assurances that the current waiver/expense
         reimbursement arrangement will be maintained beyond September 30, 2009,
         the Advisor has committed to review the continuance of waiver/expense
         reimbursement arrangements by September 30, 2009.

(12)     Restated on an annualized basis to reflect approved fee changes that
         took place on July 28, 2008. Through February 28, 2010, the Advisor has
         contractually agreed to waive all or a portion of its management fee
         and reimburse or pay certain operating expenses of the fund to the
         extent necessary to maintain the fund's total operating expenses at
         1.00% excluding certain expenses, such as extraordinary expenses,
         taxes, brokerage and interest.

(13)     Through September 30, 2009, the Advisor has contractually agreed to
         waive all or a portion of its management fee and reimburse or pay
         certain operating expenses of the fund to the extent necessary to
         maintain the fund's total operating expenses at 0.65% for Institutional
         Class, excluding certain expenses such as extraordinary expenses,
         taxes, brokerage and interest expense.

(14)     From October 1, 2009 to January 31, 2010, the Advisor has contractually
         agreed to waive all or a portion of its management fee and reimburse or
         pay certain operating expenses of the fund to the extent necessary to
         maintain the fund's total operating expenses at ratios no higher than
         0.70% for Institutional Class, excluding certain expenses such as
         extraordinary expenses, taxes, brokerage, and interest expense.

(15)     Through November 30, 2009, the advisor has contractually agreed to
         waive all or a portion of its management fee and reimburse or pay
         operating expenses of the fund to the extent necessary to maintain the
         fund's total annual operating expenses at 1.27% for Institutional Class
         shares, excluding certain expenses such as extraordinary expenses,
         taxes, brokerage and interest.

(16)     Through November 30, 2009, the Advisor has contractually agreed to
         waive all or a portion of its management fee and reimburse or pay
         operating expenses of the fund to the extent necessary to maintain the
         fund's total annual operating expenses at 1.49% for Class S shares,
         excluding certain expenses such as extraordinary expenses, taxes,
         brokerage and interest.


(17)     Through September 30, 2009, the Advisor has contractually agreed to
         waive all or a portion of its management fee and reimburse or pay
         certain operating expenses of the fund to the extent necessary to
         maintain the fund's total operating expenses at 1.26% for Institutional
         Class shares, excluding certain expenses, such as extraordinary
         expenses, taxes, brokerage, and interest.

(18)     From October 1, 2009 through April 30, 2010, the Advisor has
         contractually agreed to waive all or a portion of its management fee
         and reimburse or pay operating expenses of the fund to the extent
         necessary to maintain the fund's total operating expenses at a ratio no
         higher than 1.35% for Institutional Class shares, excluding certain
         expenses, such as extraordinary expenses, taxes, brokerage, and
         interest.

(19)     The Unitary Fee is paid to the Advisor for investment management
         services and for assuming responsibility for the payment of all of the
         Fund's day-to-day expenses in the ordinary course of business, with the
         exception of distribution fees and expenses, interest, taxes, brokerage
         or other portfolio trading expenses or for extraordinary expenses (as
         determined by the Board). Beginning on January 1, 2010, the fund's
         Unitary Fee may be increased or decreased due to the effect of a
         performance adjustment. The Index against which the fund's performance
         will be measured for purposes of determining the performance adjustment
         is the S&P 500 Index.

(20)     Through November 30, 2009, the Advisor has contractually agreed to
         waive a portion of its management fee in the amount of 0.182% of the
         fund's average daily net assets.

(21)     The Advisor has voluntarily agreed to waive all or a portion of its
         management fee and reimburse or pay certain operating expenses so that
         the total annual operating expenses will not exceed 0.45% for
         Institutional Class shares, excluding certain expenses such as
         extraordinary expenses, taxes, brokerage and interest expenses. The
         Advisor, at its discretion, may revise or discontinue this arrangement
         at any time.

(22)     Through September 30, 2009, the Advisor has contractually agreed to
         waive all or a portion of its management fee and reimburse or pay
         operating expenses of the fund to the extent necessary to maintain the
         fund's total annual operating expenses at 0.63% for Institutional Class
         shares, excluding certain expenses such as extraordinary expenses,
         taxes, brokerage and interest expenses. Although there can be no
         assurance that the current waiver/expense reimbursement arrangement
         will be maintained beyond September 30, 2009, the Advisor has committed
         to review the continuance of waiver/reimbursement arrangement by
         September 30, 2009.

(23)     Through September 30, 2009, the Advisor has contractually agreed to
         waive all or a portion of its management fee and reimburse or pay
         operating expenses of the fund to the extent necessary to maintain the
         fund's total operating expenses at 0.64% for Institutional Class
         shares, excluding certain expenses such as extraordinary expenses,
         taxes, brokerage and interest. Although there can be no assurances that
         the current waiver/expense reimbursement arrangement will be maintained
         beyond September 30, 2009, the Advisor has committed to review the
         continuance of waiver/expense reimbursement arrangements by September
         30, 2009.


The Advisor may serve as advisor to other funds with investment objectives and
policies similar to those of a Portfolio that may have different distribution
arrangements or expenses, which may affect performance.

Codes of Ethics

The Portfolios, the Advisor and the Portfolios' principal underwriter have each
adopted codes of ethics under Rule 17j-1 under the 1940 Act. Board members,
officers of the Fund and employees of the Advisor and principal underwriter are
permitted to make personal securities transactions, including transactions in
securities that may be purchased or held by the Funds, subject to requirements
and restrictions set forth in the applicable Code of Ethics. The Advisor's Code
of Ethics contains provisions and requirements designed to identify and address
certain conflicts of interest between personal investment activities and the
interests of the Portfolios. Among other things, the Advisor's Code of Ethics
prohibits certain types of transactions absent prior approval, imposes time
periods during which personal transactions may not be made in certain
securities, and requires the submission of duplicate broker confirmations and
quarterly reporting of securities transactions. Additional restrictions apply to
portfolio managers, traders, research analysts and others involved in the
investment advisory process. Exceptions to these and other provisions of the
Advisor's Code of Ethics may be granted in particular circumstances after review
by appropriate personnel.

Portfolio Turnover

Portfolio turnover rate is defined by the SEC as the ratio of the lesser of
sales or purchases to the monthly average value of such securities owned during
the year, excluding all securities whose remaining maturities at the time of
acquisition were one year or less.

Higher levels of activity by a fund result in higher transaction costs and may
also result in taxes on realized capital gains to be borne by the fund's
shareholders. Purchases and sales are made whenever necessary, in the Advisor's
discretion, to meet a fund's objective.


Portfolio turnover rates for the two most recent fiscal periods are as follows:

<TABLE>
<CAPTION>
                                                                FY 2008          FY 2007
                                                               Portfolio        Portfolio
                                                                Turnover        Turnover
Name of Fund                               Fiscal Year End    Rate (%)(1)      Rate (%)(1)
------------                               ---------------    -----------      -----------

<S>                                              <C>              <C>              <C>
DWS Commodity Securities Fund                    6/30             145              117
DWS Disciplined Market Neutral Fund              8/31             967            1,009**
DWS Disciplined Long/Short Growth Fund           4/30           450((2))          229**

DWS Emerging Markets Equity Fund                10/31              81              98
DWS Emerging Markets Fixed Income Fund          10/31              99              173

DWS Communications Fund                         12/31             118              39
DWS Floating Rate Plus Fund                      4/30             25**            NA(a)
DWS Global Bond Fund                            10/31             146              237
DWS GNMA Fund                                    9/30             220            189(b)
DWS Gold & Precious Metals Fund                 10/31              79              52
DWS High Income Plus Fund                       10/31              35              75

DWS Dreman Mid Cap Value Fund                   11/30              60              82
DWS Inflation Protected Plus Fund                9/30              91              167
DWS International Value Opportunities                             197              127

Fund                                             8/31

DWS Japan Equity Fund                            8/31             105              52
DWS Large Company Growth Fund                    7/31              43              23
DWS Latin America Equity Fund                   10/31              37              62
DWS RREEF Global Real Estate Securities         12/31              77              28
Fund
DWS S&P 500 Plus Fund                            2/28            51(2)             81
DWS Short Duration Fund                         10/31             181              230
DWS Short Duration Plus Fund                     9/30              83              57
DWS Small Cap Core Fund                          9/30             304              202

DWS Dreman Small Cap Value Fund                 11/30              62              60

</TABLE>

(1)      As of each Underlying DWS Fund's most recent fiscal reporting period.

(2)      As of each Underlying DWS Fund's previous fiscal reporting period.

*        Annualized


**       Annualized

(a)      Commenced operations on June 29, 2007.

(b)      The portfolio turnover rate including mortgage dollar roll transactions
         was 381% for the year ended September 30, 2007 for DWS GNMA Fund.


For certain Underlying DWS Funds, the increase in portfolio turnover rates for
the most recent fiscal year was due to the general market conditions and
increased volatility.

                             MANAGEMENT OF THE FUND

Investment Advisor

DIMA, which is part of Deutsche Asset Management ("DeAM"), is the investment
advisor for the Portfolios. Under the supervision of the Fund's Board of
Trustees, DIMA, with headquarters at 345 Park Avenue, New York, New York, makes
each Portfolio's investment decisions, buys and sells securities for the
Portfolios and conducts research that leads to these purchase and sale
decisions. The Advisor manages each Portfolio's daily investment and business
affairs subject to the policies established by the Fund's Board of Trustees.
DIMA and its predecessors have more than 80 years of experience managing mutual
funds. DIMA provides a full range of investment advisory services to
institutional and retail clients. Each Portfolio's investment advisor is also
responsible for selecting brokers and dealers and for negotiating brokerage
commissions and dealer charges.


DeAM is the marketing name in the US for the asset management activities of
Deutsche Bank AG, DIMA, Deutsche Bank Trust Company Americas and DWS Trust
Company. DeAM is a global asset management organization that offers a wide range
of investing expertise and resources, including hundreds of portfolio managers
and analysts and an office network that reaches the world's major investment
centers. This well-resourced global investment platform brings together a wide
variety of experience and investment insight, across industries, regions, asset
classes and investing styles. DIMA is an indirect, wholly owned subsidiary of
Deutsche Bank AG. Deutsche Bank AG is a major global banking institution that is
engaged in a wide range of financial services, including investment management,
mutual fund, retail, private and commercial banking, investment banking and
insurance. DWS Investments is part of Deutsche Bank's Asset Management division
and, within the US, represents the retail asset management activities of
Deutsche Bank AG, Deutsche Bank Trust Company Americas, Deutsche Investment
Management Americas Inc. and DWS Trust Company.


The Advisor provides investment counsel for many individuals and institutions,
including insurance companies, industrial corporations, and financial and
banking organizations, as well as providing investment advice to open- and
closed-end SEC registered funds.

In certain cases, the investments for a Portfolio are managed by the same
individuals who manage one or more other mutual funds advised by the Advisor
that have similar names, objectives and investment styles. You should be aware
that a Portfolio is likely to differ from these other mutual funds in size, cash
flow pattern and tax matters. Accordingly, the holdings and performance of a
Portfolio can be expected to vary from those of these other mutual funds.


The Board and the shareholders approved an amended and restated investment
management agreement (the "Investment Management Agreement") for the Portfolios.
Pursuant to the Investment Management Agreement, the Advisor provides continuing
investment management of the assets of a Portfolio. In addition to the
investment management of the assets of the Portfolios, the Advisor determines
the investments to be made for the Portfolio, including what portion of its
assets remain uninvested in cash or cash equivalents, and with whom the orders
for investments are placed, consistent with the Portfolio's policies as stated
in its prospectus and SAI, or as adopted by the Portfolio's Board. The Advisor
will also monitor, to the extent not monitored by the Portfolio's administrator
or other agent, the Portfolio's compliance with its investment and tax
guidelines and other compliance policies.


The Advisor provides assistance to the Portfolio's Board in valuing the
securities and other instruments held by the Portfolio, to the extent reasonably
required by valuation policies and procedures that may be adopted by the Fund.

Pursuant to the Investment Management Agreement, (unless otherwise provided in
the agreement or as determined by the Portfolio's Board and to the extent
permitted by applicable law), the Advisor pays the compensation and expenses of
all the Board members, officers, and executive employees of the Portfolio,
including the Portfolio's share of payroll taxes, who are affiliated persons of
the Advisor.

The Investment Management Agreement provides that the Portfolio is generally
responsible for expenses that include: fees payable to the Advisor; outside
legal, accounting or auditing expenses, including with respect to expenses
related to negotiation, acquisition or distribution of portfolio investments;
maintenance of books and records that are maintained by the Portfolio, the
Portfolio's custodian, or other agents of the Portfolio; taxes and governmental
fees; fees and expenses of the Portfolio's accounting agent, custodian,
sub-custodians, depositories, transfer agents, dividend reimbursing agents and
registrars; payment for portfolio pricing or valuation services to pricing
agents, accountants, bankers and other specialists, if any; brokerage
commissions or other costs of acquiring or disposing of any portfolio securities
or other instruments of the Portfolio; and litigation expenses and other
extraordinary expenses not incurred in the ordinary course of the Portfolio's
business.

The Investment Management Agreement allows the Advisor to delegate any of its
duties under the Agreement to a subadvisor, subject to a majority vote of the
Board of the Portfolio, including a majority of the Board who are not interested
persons of the Portfolio, and, if required by applicable law, subject to a
majority vote of the Portfolio's shareholders.

The Investment Management Agreement provides that the Advisor shall not be
liable for any error of judgment or mistake of law or for any loss suffered by
the Portfolio in connection with matters to which the agreement relates, except
a loss resulting from willful malfeasance, bad faith or gross negligence on the
part of the Advisor in the performance of its duties or from reckless disregard
by the Advisor of its obligations and duties under the agreement. The Investment
Management Agreement may be terminated at any time, without payment of penalty,
by either party or by vote of a majority of the outstanding voting securities of
the Portfolio on 60 days' written notice.

Certain investments may be appropriate for a Portfolio and also for other
clients advised by the Advisor. Investment decisions for a Portfolio and other
clients are made with a view to achieving their respective investment objectives
and after consideration of such factors as their current holdings, availability
of cash for investment and the size of their investments generally. Frequently,
a particular security may be bought or sold for only one client or in different
amounts and at different times for more than one but less than all clients.
Likewise, a particular security may be bought for one or more clients when one
or more other clients are selling the security. In addition, purchases or sales
of the same security may be made for two or more clients on the same day. In
such event, such transactions will be allocated among the clients in a manner
believed by the Advisor to be equitable to each. In some cases, this procedure
could have an adverse effect on the price or amount of the securities purchased
or sold by a Portfolio. Purchase and sale orders for a Portfolio may be combined
with those of other clients of the Advisor in the interest of achieving the most
favorable net results to a Portfolio.

Each Portfolio is managed by a team of investment professionals who each play an
important role in a Portfolio's management process. Team members work together
to develop investment strategies and select securities for a Portfolio. This
team works for the Advisor or its affiliates and is supported by a large staff
of economists, research analysts, traders and other investment specialists. The
Advisor or its affiliates believe(s) its team approach benefits Portfolio
investors by bringing together many disciplines and leveraging its extensive
resources. Team members with primary responsibility for management of each
Portfolio, as well as team members who have other ongoing management
responsibilities for each Portfolio, are identified in each Portfolio's
prospectus as of the date of the prospectus. Composition of the team may change
over time, and Portfolio shareholders and investors will be notified of changes
affecting individuals with primary Portfolio management responsibility.

Each Agreement continues in effect from year to year only if its continuance is
approved annually by the vote of a majority of those Trustees who are not
parties to such Agreements or interested persons of the Advisor or the Fund,
cast in person at a meeting called for the purpose of voting on such approval,
and either by a vote of the Fund's Trustees or of a majority of the outstanding
voting securities of the respective Portfolio. The Agreements may be terminated
at any time without payment of penalty by either party on sixty days' written
notice and automatically terminate in the event of their assignment.


From time to time, Deutsche Bank or an affiliate (collectively, "DB") may at its
sole discretion invest its own assets in shares of each Portfolio ("proprietary
investment") for such purposes it deems appropriate, including investments
designed to assist in the management of each Portfolio's portfolio. Any
proprietary investment may be hedged and, in that event, the return on the
proprietary investment, net of the effect of the hedge, would be expected to
differ from the return of each Portfolio. DB has no obligation to make any
proprietary investments and the amount of any proprietary investment this is
made may or may not be significant in comparison to the level of assets of each
Portfolio. In the event that a proprietary investment is made, except as
otherwise required under the Investment Company Act of 1940, DB would be
permitted to redeem the investment at such time that it deems appropriate.


The Board and the Portfolios' shareholders approved a new subadvisor policy for
the Portfolios (the "Subadvisor Approval Policy"). The Subadvisor Approval
Policy permits the Advisor, subject to the approval of the Board, including a
majority of the Independent Board Members, to terminate an existing subadvisor
or sub-subadvisor and hire another subadvisor or sub-subadvisor, as applicable,
and materially amend an existing subadvisory agreement or sub-subadvisory
agreement without obtaining shareholder approval. The Portfolios could not
implement the Subadvisor Approval Policy without the SEC granting the Portfolios
exemptive relief. A number of other mutual fund complexes have obtained
exemptive relief with respect to an advisor's ability to appoint, replace or
amend the subadvisory agreement with unaffiliated subadvisors and subadvisors
that are wholly owned subsidiaries of the advisor. However, exemptive relief
with regard to an advisor's ability to appoint, replace or amend the subadvisory
agreement with a subadvisor, who is affiliated with, but not wholly owned
subsidiary of the advisor, without shareholder approval, would be more expansive
relief than previously granted by the SEC. In addition, exemptive relief with
regard to an advisor's ability to appoint, replace or amend a sub-subadvisory
agreement with a sub-advisor, without shareholder approval, would be more
expansive relief than previously obtained by other mutual fund complexes.
Accordingly, there can be no assurance that the Portfolios' exemptive
application will be granted by the SEC or that it will be sufficiently broad to
allow the Portfolios to implement the Subadvisor Approval Policy as described
above. The SEC also has proposed Rule 15a-5 under the 1940 Act in October 2003
to permit the appointment and termination of subadvisors and amendment to
subadvisory agreements without shareholder approval. No action has been taken on
proposed Rule 15a-5 under the 1940 Act since it proposal and there is no
assurances that the rule will be adopted as proposed. The Portfolios and the
Advisor will be subject to the conditions imposed by the SEC (either by an
exemptive order or as part of the final rule) whenever the Advisor acts under
the Subadvisor Approval Policy, including any shareholder notice requirements.



Effective May 1, 2008, the Portfolios listed below each pay the Advisor a
graduated investment management fee, based on the average daily net assets of a
Portfolio, payable monthly, at the annual rates shown below:

Average Daily Net Assets of the Portfolio                             Fee Rate
-----------------------------------------                             --------

$0-$500 million                                                         0.065%
next $500 million                                                       0.055%
next $500 million                                                       0.045%
next $1 billion                                                         0.035%
Over $2.5 billion                                                       0.025%

Prior to May 1, 2008, the Portfolios each paid the Advisor a graduated
investment management fee, based on the average daily net assets of the
Portfolio, payable monthly, at the annual rates shown below:

Average Daily Net Assets of the Portfolio                             Fee Rate
-----------------------------------------                             --------

$0-$500 million                                                         0.15%
next $500 million                                                       0.14%
next $500 million                                                       0.13%
next $1 billion                                                         0.12%
Over $2.5 billion                                                       0.11%

The investment management fees paid by each Portfolio for its last three fiscal
years are shown in the table below:


<TABLE>
<CAPTION>
                                                                Amount Waived
Portfolio (1)                              Fiscal 2008(2)(3)    Fiscal 2008(4)       Fiscal 2007       Fiscal 2006
-------------                              -----------------    --------------       -----------       -----------


<S>                                            <C>                  <C>                <C>               <C>
DWS Conservative Allocation VIP (5)            $15,317              $15,317            $83,535           $78,016
DWS Growth Allocation VIP(6)                   $26,040              $13,477           $296,674          $307,763
DWS Moderate Allocation VIP(6)                 $30,022              $15,508           $254,334          $268,882
</TABLE>

(1)      In addition to the expenses that the Portfolio bears directly, the
         Portfolio's shareholders indirectly bear the expenses of the underlying
         portfolios in which the Portfolio invests. The Portfolio's estimated
         indirect expense from investing in the underlying portfolios, based on
         its expected allocations to the underlying portfolios.

(2)      Restated on an annualized basis to reflect approved fee changes that
         took effect on May 1, 2008.




(3)      Through September 30, 2009, the Advisor has contractually agreed to
         waive a portion of its Investment Management Fee in the amount of 0.05%
         of the portfolio's average daily net assets.





(4)      Prior to May 1, 2008, these fees included an administrative services
         fee.




(5)      Through September 30, 2009, for Conservative Allocation VIP, the
         Advisor has contractually agreed to waive all or a portion of its
         management fee and reimburse or pay certain operating expenses of the
         portfolio to the extent necessary to maintain the portfolio's total
         operating expenses at 0.62% for Class B shares, excluding certain
         expenses such as extraordinary expenses, taxes, brokerage, interest and
         indirect expenses of underlying DWS portfolios. Effective October 1,
         2009 through April 30, 2010, the Advisor has contractually agreed to
         waive all or a portion of its management fee and reimburse or pay
         certain operating expenses of the portfolio to the extent necessary to
         maintain the portfolio's total operating expenses at ratios no higher
         than 0.75% for Class B shares, excluding certain expenses such as
         extraordinary expenses, taxes, brokerage, interest and indirect
         expenses of underlying DWS portfolios. Through September 30, 2008, the
         Advisor had agreed to waive all or a portion of its management fee and
         reimburse or pay certain operating expenses so that the total annual
         operating expenses of the Portfolio would not exceed 0.70% for Class B
         shares, excluding certain expenses such as extraordinary expenses,
         taxes, brokerage, interest and indirect expenses of underlying DWS
         portfolios. Through November 30, 2006, the advisor, underwriter and
         accounting agent had each contractually agreed to waive their
         respective fees to the extent necessary to maintain the Portfolio's
         direct operating expenses at 0.75% of average daily net assets,
         excluding certain expenses such as extraordinary expenses, taxes,
         brokerage and interest. Through April 30, 2006, the advisor,
         underwriter and accounting agent had each contractually agreed to waive
         their respective fees to the extent necessary to maintain the
         Portfolio's direct operating expenses at 0.75% of average daily net
         assets, excluding certain expenses such as extraordinary expenses,
         taxes, brokerage and interest. In addition, for the fiscal year ended
         December 31, 2008, the Advisor waived record keeping expenses of Class
         B shares of DWS Conservative Allocation VIP in the amount of $16,607
         and other expenses in the amount of $3,955.


(6)      Through September 30, 2009, for Growth Allocation VIP, the Advisor has
         contractually agreed to waive all or a portion of its management fee
         and reimburse or pay certain operating expenses of the portfolio to the
         extent necessary to maintain the portfolio's total operating expenses
         at 0.63% for Class B shares, excluding certain expenses such as
         extraordinary expenses, taxes, brokerage, interest and indirect
         expenses of underlying DWS portfolios. Through September 30, 2009, for
         Moderate Allocation VIP, the Advisor has contractually agreed to waive
         all or a portion of its management fee and reimburse or pay certain
         operating expenses of the portfolio to the extent necessary to maintain
         the portfolio's total operating expenses at 0.62% for Class B shares,
         excluding certain expenses such as extraordinary expenses, taxes,
         brokerage, interest and indirect expenses of underlying DWS portfolios.
         Effective October 1, 2009 through April 30, 2010, for Growth Allocation
         VIP and Moderate Allocation VIP, the Advisor has contractually agreed
         to waive all or a portion of its management fee and reimburse or pay
         certain operating expenses of the portfolios to the extent necessary to
         maintain each portfolio's total operating expenses at ratios no higher
         than 0.75% for Class B shares, excluding certain expenses such as
         extraordinary expenses, taxes, brokerage, interest and indirect
         expenses of underlying DWS portfolios. Through September 30, 2008, for
         Growth Allocation VIP and Moderate Allocation VIP, the Advisor had
         agreed to waive all or a portion of its management fee and reimburse or
         pay certain operating expenses so that the total annual operating
         expenses of the portfolio would not exceed 0.70% for Class B shares,
         excluding certain expenses such as extraordinary expenses, taxes,
         brokerage, interest and indirect expenses of underlying DWS portfolios.
         Through September 30, 2007, for Growth Allocation VIP and Moderate
         Allocation VIP, the Advisor had agreed to waive all or a portion of its
         management fee and reimburse or pay operating expenses to the extent
         necessary to maintain each portfolio's total operating expenses at
         0.75% for Class B shares, excluding certain expenses such as
         extraordinary expenses, taxes, brokerage, interest, organizational and
         offering expenses, and indirect expenses of underlying DWS portfolios.
         Through April 30, 2006, the advisor, underwriter and accounting agent
         had each contractually agreed to waive their respective fees to the
         extent necessary to maintain each Portfolio's direct operating expenses
         at 0.75% of average daily net assets, excluding certain expenses such
         as extraordinary expenses, taxes, brokerage and interest. In addition,
         for the fiscal year ended December 31, 2008, the Advisor waived record
         keeping expenses of Class B shares of DWS Growth Allocation VIP and DWS
         Moderate Allocation VIP in the amount of $28,321 and $32,491,
         respectively.

In reviewing the terms of each Agreement and in discussions with the Advisor
concerning such Agreement, the Independent Trustees of the Portfolio are
represented by independent counsel at the Portfolio's expense.

Officers and employees of the Advisor from time to time may have transactions
with various banks, including the Portfolios' custodian bank. It is the
Advisor's opinion that the terms and conditions of those transactions which have
occurred were not influenced by existing or potential custodial or other Fund
relationships.

The Advisor may serve as advisor to other funds with investment objectives and
policies similar to those of a Portfolio that may have different distribution
arrangements or expenses, which may affect performance.

None of the officers or Trustees of the Fund may have dealings with a Portfolio
as principals in the purchase or sale of securities, except as individual
subscribers to or holders of shares of a Portfolio.

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.

Fees and Expenses of Underlying Portfolios

As noted above, the Portfolios will bear their pro rata share of the underlying
portfolios' fees and expenses. The management fees and total operating expenses
of the underlying portfolios during their most recent fiscal year are described
in the following table. Reimbursement and/or waiver arrangements applicable to
certain underlying portfolios caused the net fees and/or expenses for those
portfolios to be lower than the values below.

The information in the table does not reflect charges and fees associated with
the separate account that invests in a portfolio or any variable life insurance
policy or variable annuity contract for which a portfolio is an investment
option. These charges and fees will increase expenses.


<TABLE>
<CAPTION>

                                                                                        Total
Name                                                    Management Fees (%)        Expenses (%)(1)       Net Expenses (%)
----                                                    -------------------        ---------------       ----------------

<S>                                                            <C>                      <C>                    <C>
DWS Bond VIP                                                   0.39                     0.59                   0.59
DWS Capital Growth VIP(2)                                      0.37                     0.85                   0.82
DWS Conservative Allocation VIP (3)(4)                         0.07                     1.90                   1.43
DWS Diversified International Equity VIP                       0.65                     0.99                   0.99
DWS Global Opportunities VIP(5)                                0.89                     1.42                   1.42
DWS Growth Allocation VIP (3)(6)                               0.07                     1.76                   1.54
DWS Growth & Income VIP(7)(8)                                  0.39                     0.82                   0.82
DWS International VIP(9)                                       0.77                     1.33                   1.29
DWS Health Care VIP(10)                                        0.67                     1.27                   1.27
DWS Balanced VIP                                               0.36                     0.61                   0.61
DWS Blue Chip VIP (11)                                         0.55                     1.09                   1.09
DWS Core Fixed Income VIP                                      0.50                     1.07                   1.07
DWS Dreman Small Mid Cap Value VIP                             0.64                     1.15                   1.15
DWS Global Thematic VIP(12)                                    0.90                     1.77                   1.65
DWS Government & Agency Securities VIP (13)                    0.45                     0.98                   0.98
DWS High Income VIP(14)                                        0.50                     1.05                   1.05
DWS Large Cap Value VIP((15)                                   0.65                     1.20                   1.20
DWS Mid Cap Growth VIP (16)                                    0.66                     1.08                   1.08
DWS Moderate Allocation VIP (3)(17)                            0.07                     1.67                   1.50
DWS Money Market VIP (18)                                      0.29                     0.46                   0.44
DWS Small Cap Growth VIP                                       0.55                     0.79                   0.79
DWS Strategic Value VIP(19)                                    0.64                     1.13                   1.11
DWS Technology VIP(20)                                         0.66                     1.29                   1.29
DWS Turner Mid Cap Growth VIP                                  0.61                     0.98                   0.98
DWS Equity 500 Index VIP(21)                                   0.20                     0.58                   0.58
DWS Equity 500 Index VIP Class B2(22)                          0.20                     0.72                   0.72
DWS Small Cap Index VIP                                        0.35                     0.79                   0.79
</TABLE>

(1)      Except as otherwise noted, the information in the table is based on
         amounts incurred during the portfolio's most recent fiscal year. It is
         important for you to understand that a decline in the portfolio's
         average net assets during the current fiscal year due to recent
         unprecedented market volatility or other factors could cause the
         portfolio's expense ratios for the portfolio's current fiscal year to
         be higher than the expense information presented.

(2)      Through April 30, 2010, the Advisor has contractually agreed to waive
         all or a portion of its management fee and reimburse or pay certain
         operating expenses of the portfolio to the extent necessary to maintain
         the portfolio's total operating expenses at 0.82% for Class B shares,
         excluding certain expenses such as extraordinary expenses, taxes,
         brokerage and interest.

(3)      Through September 30, 2009, the Advisor has contractually agreed to
         waive a portion of its Investment Management Fee in the amount of 0.05%
         of the portfolio's average daily net assets.

(4)      Through September 30, 2009, the Advisor has contractually agreed to
         waive all or a portion of its management fee and reimburse or pay
         certain operating expenses of the portfolio to the extent necessary to
         maintain the portfolio's total operating expenses at 0.62% for Class B
         shares, excluding certain expenses such as extraordinary expenses,
         taxes, brokerage, interest and indirect expenses of underlying DWS
         portfolios. Effective October 1, 2009 through April 30, 2010, the
         Advisor has contractually agreed to waive all or a portion of its
         management fee and reimburse or pay certain operating expenses of the
         portfolio to the extent necessary to maintain the portfolio's total
         operating expenses at ratios no higher than 0.75% for Class B shares,
         excluding certain expenses such as extraordinary expenses, taxes,
         brokerage, interest and indirect expenses of underlying DWS portfolios.

(5)      Through September 30, 2009, the Advisor has contractually agreed to
         waive all or a portion of its management fee and reimburse or pay
         certain operating expenses of the portfolio to the extent necessary to
         maintain the portfolio's total operating expenses at 1.35% for Class B
         shares, excluding certain expenses such as extraordinary expenses,
         taxes, brokerage and interest. Effective October 1, 2009 through April
         30, 2010, the Advisor has contractually agreed to waive all or a
         portion of its management fee and reimburse or pay certain operating
         expenses of the portfolio to the extent necessary to maintain the
         portfolio's total operating expenses at ratios no higher than 1.50% for
         Class B shares, excluding certain expenses such as extraordinary
         expenses, taxes, brokerage and interest.

(6)      Through September 30, 2009, the Advisor has contractually agreed to
         waive all or a portion of its management fee and reimburse or pay
         certain operating expenses of the portfolio to the extent necessary to
         maintain the portfolio's total operating expenses at 0.63% for Class B
         shares, excluding certain expenses such as extraordinary expenses,
         taxes, brokerage, interest and indirect expenses of underlying DWS
         portfolios. Effective October 1, 2009 through April 30, 2010, the
         Advisor has contractually agreed to waive all or a portion of its
         management fee and reimburse or pay certain operating expenses of the
         portfolio to the extent necessary to maintain the portfolio's total
         operating expenses at ratios no higher than 0.75% for Class B shares,
         excluding certain expenses such as extraordinary expenses, taxes,
         brokerage, interest and indirect expenses of underlying DWS portfolios.

(7)      Through April 30, 2010, the Advisor has contractually agreed to waive
         all or a portion of its management fee and reimburse or pay certain
         operating expenses of the portfolio to the extent necessary to maintain
         the portfolio's total operating expenses at 0.87% for Class B shares,
         excluding certain expenses such as extraordinary expenses, taxes,
         brokerage and interest.

(8)      Additionally, the Advisor has contractually agreed to waive a portion
         of its fees in the amount of 0.01% of
         average daily net assets until April 27, 2010.

(9)      Through April 30, 2010, the Advisor has contractually agreed to waive
         all or a portion of its management fee and reimburse or pay certain
         operating expenses of the portfolio to the extent necessary to maintain
         the portfolio's total operating expenses at 1.29% for Class B shares,
         excluding certain expenses such as extraordinary expenses, taxes,
         brokerage and interest.

(10)     Through September 30, 2009, the Advisor has contractually agreed to
         waive all or a portion of its management fee and reimburse or pay
         operating expenses of the portfolio to the extent necessary to maintain
         the portfolio's total annual operating expenses at 1.49% for Class B
         shares, excluding certain expenses such as extraordinary expenses,
         taxes, brokerage and interest. Although there can be no assurance that
         the current waiver/expense reimbursement arrangement will be maintained
         beyond September 30, 2009, the Advisor has committed to review the
         continuance of waiver/expense reimbursement arrangements by September
         30, 2009.

(11)     Through September 30, 2009, the Advisor has contractually agreed to
         waive all or a portion of its management fee and reimburse or pay
         certain operating expenses of the portfolio to the extent necessary to
         maintain the portfolio's total operating expenses at 1.25% for Class B
         shares, excluding certain expenses such as extraordinary expenses,
         taxes, brokerage and interest. Although there can be no assurance that
         the current waiver/expense reimbursement arrangement will be maintained
         beyond September 30, 2009, the Advisor has committed to review the
         continuance of waiver/expense reimbursement arrangements by September
         30, 2009.

(12)     Through September 30, 2009, the Advisor has contractually agreed to
         waive all or a portion of its management fee and reimburse or pay
         certain operating expenses to the extent necessary to maintain the
         portfolio's total operating expenses at 1.47% for Class B shares,
         excluding certain expenses such as extraordinary expenses, taxes,
         brokerage and interest. Effective October 1, 2009 through April 30,
         2010, the Advisor has contractually agreed to waive all or a portion of
         its management fee and reimburse or pay certain operating expenses of
         the portfolio to the extent necessary to maintain the portfolio's total
         operating expenses at ratios no higher than 1.65% for Class B shares,
         excluding certain expenses such as extraordinary expenses, taxes,
         brokerage and interest.

(13)     Through September 30, 2009, the Advisor has contractually agreed to
         waive all or a portion of its management fee and reimburse or pay
         certain operating expenses of the portfolio to the extent necessary to
         maintain the portfolio's total operating expenses at 1.05% for Class B
         shares, excluding certain expenses such as extraordinary expenses,
         taxes, brokerage and interest. Although there can be no assurance that
         the current waiver/expense reimbursement arrangement will be maintained
         beyond September 30, 2009, the Advisor has committed to review the
         continuance of waiver/expense reimbursement arrangements by September
         30, 2009.

(14)     Through September 30, 2009, the Advisor has contractually agreed to
         waive all or a portion of its management fee and reimburse or pay
         certain operating expenses of the portfolio to the extent necessary to
         maintain the portfolio's total operating expenses at 1.18% for Class B
         shares, excluding certain expenses such as extraordinary expenses,
         taxes, brokerage and interest. Although there can be no assurance that
         the current waiver/expense reimbursement arrangement will be maintained
         beyond September 30, 2009, the Advisor has committed to review the
         continuance of waiver/expense reimbursement arrangements by September
         30, 2009.

(15)     Through September 30, 2009, the Advisor has contractually agreed to
         waive all or a portion of its management fee and reimburse or pay
         certain operating expenses of the portfolio to the extent necessary to
         maintain the portfolio's total operating expenses at 1.25% for Class B
         shares, excluding certain expenses such as extraordinary expenses,
         taxes, brokerage and interest. Although there can be no assurance that
         the current waiver/expense reimbursement arrangement will be maintained
         beyond September 30, 2009, the Advisor has committed to review the
         continuance of waiver/expense reimbursement arrangements by September
         30, 2009.

(16)     Through September 30, 2009, the Advisor has contractually agreed to
         waive all or a portion of its management fee and reimburse or pay
         certain operating expenses of the portfolio to the extent necessary to
         maintain the portfolio's total operating expenses at 0.94% for Class A
         shares, excluding certain expenses such as extraordinary expenses,
         taxes, brokerage and interest. Effective October 1, 2009 through April
         30, 2010, the Advisor has contractually agreed to waive all or a
         portion of its management fee and reimburse or pay certain expense of
         portfolio to the extent necessary to maintain the portfolio's total
         operating expenses at ratios no higher 1.10% for Class A shares,
         excluding certain expenses such as extraordinary expenses, taxes,
         brokerage and interest.

(17)     Through September 30, 2009, the Advisor has contractually agreed to
         waive all or a portion of its management fee and reimburse or pay
         certain operating expenses of the portfolio to the extent necessary to
         maintain the portfolio's total operating expenses at 0.62% for Class B
         shares, excluding certain expenses such as extraordinary expenses,
         taxes, brokerage, interest and indirect expenses of underlying DWS
         portfolios. Effective October 1, 2009 through April 30, 2010, the
         Advisor has contractually agreed to waive all or a portion of its
         management fee and reimburse or pay certain operating expenses of the
         portfolio to the extent necessary to maintain the portfolio's total
         operating expenses at ratios no higher than 0.75% for Class B shares,
         excluding certain expenses such as extraordinary expenses, taxes,
         brokerage, interest and indirect expenses of underlying DWS portfolios.

(18)     Through April 30, 2010, the Advisor has contractually agreed to waive
         all or a portion of its management fee and reimburse or pay certain
         operating expenses of the portfolio to the extent necessary to maintain
         the portfolio's total operating expenses at 0.44% for Class A shares,
         excluding certain expenses such as extraordinary expenses, taxes,
         brokerage and interest.

(19)     Through April 30, 2010, the Advisor has contractually agreed to waive
         all or a portion of its management fee and reimburse or pay certain
         operating expenses of the portfolio so that the total annual operating
         expenses of the portfolio will not exceed 1.11% for Class B shares,
         excluding certain expenses such as extraordinary expenses, taxes,
         brokerage and interest.

(20)     Through September 30, 2009, the Advisor has contractually agreed to
         waive all or a portion of its management fee and reimburse or pay
         certain operating expenses of the portfolio to the extent necessary to
         maintain the portfolio's total operating expenses at 1.48% for Class B
         shares, excluding certain expenses such as extraordinary expenses,
         taxes, brokerage and interest. Although there can be no assurance that
         the current waiver/expense reimbursement arrangement will be maintained
         beyond September 30, 2009, the Advisor has committed to review the
         continuance of waiver/expense reimbursement arrangements by September
         30, 2009.

(21)     Through September 30, 2009, the Advisor has contractually agreed to
         waive all or a portion of its management fee and reimburse or pay
         operating expenses of the fund to the extent necessary to maintain the
         fund's operating expenses at 0.62% for Class B shares, excluding
         certain expenses such as extraordinary expenses, taxes, brokerage and
         interest. Although there can be no assurance that the current
         waiver/expense reimbursement arrangement will be maintained beyond
         September 30, 2009, the Advisor has committed to review the continuance
         of waiver/expense reimbursement arrangement by September 30, 2009.

(22)     Through September 30, 2009, the Advisor has contractually agreed to
         waive all or a portion of its management fee and reimburse or pay
         operating expenses of the fund to the extent necessary to maintain the
         fund's operating expenses at 0.77% for Class B2 shares, excluding
         certain expenses such as extraordinary expenses, taxes, brokerage and
         interest. Although there can be no assurance that the current
         waiver/expense reimbursement arrangement will be maintained beyond
         September 30, 2009, the Advisor has committed to review the continuance
         of waiver/expense reimbursement arrangement by September 30, 2009.



Codes of Ethics. The Fund, the Advisor, the underlying portfolios' subadvisors
and the Fund's principal underwriter have each adopted codes of ethics under
Rule 17j-1 under the 1940 Act. Trustees, officers of the Fund and employees of
the Advisor and principal underwriter are permitted to make personal securities
transactions, including transactions in securities that may be purchased or held
by the Fund, subject to requirements and restrictions set forth in the
applicable Code of Ethics. The Advisor's Code of Ethics contains provisions and
requirements designed to identify and address certain conflicts of interest
between personal investment activities and the interests of the Fund. Among
other things, the Advisor's Code of Ethics prohibits certain types of
transactions absent prior approval, imposes time periods during which personal
transactions may not be made in certain securities, and requires the submission
of duplicate broker confirmations and quarterly reporting of securities
transactions. Additional restrictions apply to portfolio managers, traders,
research analysts and others involved in the investment advisory process.
Exceptions to these and other provisions of the Advisor's Code of Ethics may be
granted in particular circumstances after review by appropriate personnel.

Compensation of Portfolio Managers

Portfolio managers are eligible for total compensation comprised of base salary
and variable compensation.

Base Salary - Base salary is linked to job functions, responsibilities and
financial services industry peer comparison through the use of extensive market
data surveys.

Variable Compensation - Generally, variable compensation comprises a greater
proportion of total compensation as a portfolio manager's seniority and
compensation levels increase. Variable Compensation may include a cash bonus
incentive, and potential participation in long-term incentive programs including
but not limited to, Deutsche Bank equity, equity linked vehicle, and restricted
cash. Variable compensation is determined based on an analysis of a number of
factors, including among other things, the performance of Deutsche Bank, the
performance of the Asset Management division, and the portfolio manager's
individual contribution. In evaluating individual contribution, management will
consider a combination of quantitative and qualitative factors. Top performing
investment professionals earn a total compensation package that is highly
competitive. As variable compensation increases, the percentage awarded in
long-term incentives also increases. Long-term incentives are subject to a
clawback provision for unvested portions only during the three-year life of the
plan should the individual engage in any conduct that is a significant breach of
DB policies and procedures.

o        The quantitative analysis of a portfolio manager's individual
         performance is based on, among other factors, performance of all of the
         accounts managed by the portfolio manager (which includes the portfolio
         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 portfolio's prospectus to which the portfolio'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
         portfolio's assets due to the purchase or sale of portfolio shares is
         not considered a material factor.

o        The qualitative analysis of a portfolio manager's individual
         performance is based on, among other things, the results of an annual
         management and internal peer review process, and management's
         assessment of overall portfolio manager contributions to investor
         relations, the investment process and overall performance (distinct
         from portfolio and other account performance). Other factors, including
         contributions made to the investment team, as well as adherence to
         Compliance Policies and Procedures, Risk Management procedures, the
         firm's Code of Ethics and "living the values" of the Advisor are also
         factors.

The quantitative analysis of a portfolio manager's performance is given more
weight in determining variable compensation than the qualitative portion.

Portfolio Ownership of Portfolio Managers.

For Portfolios managed by the Advisor or an affiliated Advisor the following
table shows the dollar range of shares owned beneficially and of record by each
member of the Portfolio's management team (except DWS Money Market VIP) in the
applicable Portfolio 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 Portfolio's most recent fiscal year end.

<TABLE>
<CAPTION>
                                                                        Dollar Range of         Dollar Range of All
                                        Name of                        Portfolio Shares           DWS Fund Shares
     Name of Portfolio                  Portfolio Manager                    Owned                     Owned
     -----------------                  -----------------                    -----                     -----

<S>                                                                        <C>                   <C>      <C>
Conservative Allocation                 Inna Okounkova                     $0                    $100,001-$500,000
                                        Robert Wang                         $0                   $100,001-$500,000
Growth Allocation                       Inna Okounkova                      $0                   $100,001-$500,000
                                        Robert Wang                         $0                   $100,001-$500,000
Moderate Allocation                     Inna Okounkova                      $0                   $100,001-$500,000
                                        Robert Wang                         $0                   $100,001-$500,000
</TABLE>

Conflicts of Interest

In addition to managing the assets of the Portfolios, the 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 Portfolio, (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 Portfolios' most recent fiscal year end.

Other SEC Registered Investment Companies Managed:

<TABLE>
<CAPTION>
                                                                                               Number of
                                                                                              Investment
                                                  Number of           Total Assets of           Company       Total Assets of
                                                 Registered             Registered           Accounts with     Performance-
     Name of           Name of Portfolio         Investment             Investment           Performance-        Based Fee
     Portfolio              Manager               Companies              Companies             Based Fee         Accounts
     ---------              -------               ---------              ---------             ---------         --------

<S>                <C>                               <C>                 <C>                       <C>              <C>
Conservative       Inna Okounkova
Allocation                                           15                   $2,739,715,392           0                $0
                   Robert Wang                       44                  $11,741,638,684           0                $0
Growth             Inna Okounkova
Allocation                                           15                   $2,732,640,009           0                $0
                   Robert Wang                       44                  $11,734,563,300           0                $0
Moderate           Inna Okounkova
Allocation                                           15                   $2,729,458,977           0                $0
                   Robert Wang                       44                  $11,731,382,268           0                $0

Other Pooled Investment Vehicles Managed:

                                                                                             Number of
                                                                                              Pooled
                                                                                            Investment        Total Assets
                                                    Number of                                 Vehicle              of
                                                      Pooled                               Accounts with      Performance-
                            Name of Portfolio       Investment    Total Assets of Pooled   Performance-        Based Fee
Name of Portfolio                Manager             Vehicles       Investment Vehicles      Based Fee          Accounts
-----------------                -------             --------       -------------------      ---------          --------

                          Inna Okounkova                3                $58,377,538             0                      $0
Conservative Allocation
                          Robert Wang                   38            $1,528,682,925             1              $4,184,315
Growth Allocation         Inna Okounkova                3                $58,377,538             0                      $0
                          Robert Wang                   38            $1,528,682,925             1              $4,184,315
Moderate Allocation       Inna Okounkova                3                $58,377,538             0                      $0
                          Robert Wang                   38            $1,528,682,925             1              $4,184,315
Conservative Allocation

Other Accounts Managed:

                                                                                               Number of       Total Assets
                                                                                                 Other              of
                                                        Number                               Accounts with     Performance-
                              Name of Portfolio        of Other        Total Assets of       Performance-        Based Fee
Name of Portfolio                  Manager             Accounts        Other Accounts          Based Fee         Accounts
-----------------                  -------             --------        --------------          ---------         --------

Conservative Allocation    Inna Okounkova                    0                  $0                   0                 $0
                           Robert Wang                      46     $6,324,034,835                    8       $211,118,336
Growth Allocation          Inna Okounkova                    0                  $0                   0                 $0
                           Robert Wang                      46     $6,324,034,835                    8       $211,118,336
Moderate Allocation        Inna Okounkova                    0                  $0                   0                 $0
                           Robert Wang                      46     $6,324,034,835                    8       $211,118,336
</TABLE>

In addition to the accounts above, an investment professional may manage
accounts in a personal capacity that may include holdings that are similar to,
or the same as, those of the Portfolio. 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 Portfolio and other client accounts.

Real, potential or apparent conflicts of interest may arise when a portfolio
manager has day-to-day portfolio management responsibilities with respect to
more than one fund or account, including the following:

o        Certain investments may be appropriate for the Portfolio and also for
         other clients advised by the Advisor, including other client accounts
         managed by the Portfolio's management team. Investment decisions for
         the Portfolio 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 Portfolio 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 Portfolio. Purchase and sale orders for the Portfolio may
         be combined with those of other clients of the Advisor in the interest
         of achieving the most favorable net results to the Portfolio and the
         other clients.

o        To the extent that a portfolio manager has responsibilities for
         managing multiple client accounts, a portfolio manager will need to
         divide time and attention among relevant accounts. The Advisor attempts
         to minimize these conflicts by aligning its portfolio management teams
         by investment strategy and by employing similar investment models
         across multiple client accounts.

o        In some cases, an apparent conflict may arise where the Advisor has an
         incentive, such as a performance-based fee, in managing one account and
         not with respect to other accounts it manages. The Advisor will not
         determine allocations based on whether it receives a performance-based
         fee from the client. Additionally, the Advisor has in place supervisory
         oversight processes to periodically monitor performance deviations for
         accounts with like strategies.

o        The Advisor and its affiliates and the investment team of the Portfolio
         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 Portfolio's 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 Portfolio's Board of
Trustees.

Regulatory Matters and Legal Proceedings

On December 21, 2006, Deutsche Asset Management ("DeAM") settled proceedings
with the Securities and Exchange Commission ("SEC") and the New York Attorney
General on behalf of Deutsche Asset Management, Inc. ("DAMI") and DIMA, the
investment advisors to many of the DWS Investments funds, regarding allegations
of improper trading of fund shares at DeAM and at the legacy Scudder and Kemper
organizations prior to their acquisition by DeAM in April 2002. These regulators
alleged that although the prospectuses for certain funds in the regulators' view
indicated that the funds did not permit market timing, DAMI and DIMA breached
their fiduciary duty to those funds in that their efforts to limit trading
activity in the funds were not effective at certain times. The regulators also
alleged that DAMI and DIMA breached their fiduciary duty to certain funds by
entering into certain market timing arrangements with investors. These trading
arrangements originated in businesses that existed prior to the currently
constituted DeAM organization, which came together as a result of various
mergers of the legacy Scudder, Kemper and Deutsche fund groups, and all of the
arrangements were terminated prior to the start of the regulatory investigations
that began in the summer of 2003. No current DeAM employee approved these
trading arrangements. Under the terms of the settlements, DAMI and DIMA neither
admitted nor denied any wrongdoing.

The terms of the SEC settlement, which identified improper trading in the legacy
Deutsche and Kemper mutual funds only, provide for payment of disgorgement in
the amount of $17.2 million. The terms of the settlement with the New York
Attorney General provide for payment of disgorgement in the amount of $102.3
million, which is inclusive of the amount payable under the SEC settlement, plus
a civil penalty in the amount of $20 million. The total amount payable by DeAM,
approximately $122.3 million, will be distributed to shareholders of the
affected funds in accordance with a distribution plan to be developed by a
distribution consultant. The funds' investment advisors do not believe these
amounts will have a material adverse financial impact on them or materially
affect their ability to perform under their investment management agreements
with the DWS funds. The above-described amounts are not material to Deutsche
Bank, and have already been reserved.

Among the terms of the settled orders, DeAM is subject to certain undertakings
regarding the conduct of its business in the future, including formation of a
Code of Ethics Oversight Committee to oversee all matters relating to issues
arising under the advisors' Code of Ethics; establishment of an Internal
Compliance Controls Committee having overall compliance oversight responsibility
of the advisors; engagement of an Independent Compliance Consultant to conduct a
comprehensive review of the advisors' supervisory compliance and other policies
and procedures designed to prevent and detect breaches of fiduciary duty,
breaches of the Code of Ethics and federal securities law violations by the
advisors and their employees; and commencing in 2008, the advisors shall undergo
a compliance review by an independent third party.

In addition, DeAM is subject to certain further undertakings relating to the
governance of the mutual funds, including that at least 75% of the members of
the Boards of Trustees/Directors overseeing the DWS Funds continue to be
independent of DeAM; the Chairmen of the DWS Funds' Boards of Trustees/Directors
continue to be independent of DeAM; DeAM maintain existing management fee
reductions for certain funds for a period of five years and not increase
management fees for these certain funds during this period; the funds retain a
senior officer (or independent consultants, as applicable) responsible for
assisting in the review of fee arrangements and monitoring compliance by the
funds and the investment advisors with securities laws, fiduciary duties, codes
of ethics and other compliance policies, the expense of which shall be borne by
DeAM; and periodic account statements, fund prospectuses and the mutual funds'
web site contain additional disclosure and/or tools that assist investors in
understanding the fees and costs associated with an investment in the funds and
the impact of fees and expenses on fund returns.

DeAM has also settled proceedings with the Illinois Secretary of State regarding
market timing matters. The terms of the Illinois settlement provide for investor
education contributions totaling approximately $4 million and a payment in the
amount of $2 million to the Securities Audit and Enforcement Fund.

On September 28, 2006, the SEC and the National Association of Securities
Dealers ("NASD") (now known as the Financial Industry Regulatory Authority, or
"FINRA") announced final agreements in which Deutsche Investment Management
Americas Inc. ("DIMA"), Deutsche Asset Management, Inc. ("DAMI") and DWS Scudder
Distributors, Inc. (now known as DWS Investments Distributors, Inc. ("DIDI"))
settled administrative proceedings regarding disclosure of brokerage allocation
practices in connection with sales of the DWS Funds' (now known as the DWS
Investments Funds) shares during 2001-2003. The agreements with the SEC and NASD
are reflected in orders which state, among other things, that DIMA and DAMI
failed to disclose potential conflicts of interest to the funds' Boards and to
shareholders relating to DIDI's use of certain funds' brokerage commissions to
reduce revenue sharing costs to broker-dealer firms with whom it had
arrangements to market and distribute DWS Fund shares. These directed brokerage
practices were discontinued in October 2003.

Under the terms of the settlements, in which DIMA, DAMI and DIDI neither
admitted nor denied any of the regulators' findings, DIMA, DAMI and DIDI agreed
to pay disgorgement, prejudgment interest and civil penalties in the total
amount of $19.3 million. The portion of the settlements distributed to the funds
was approximately $17.8 million and was paid to the funds as prescribed by the
settlement orders based upon the amount of brokerage commissions from each fund
used to satisfy revenue sharing agreements with broker-dealers who sold fund
shares.

As part of the settlements, DIMA, DAMI and DIDI also agreed to implement certain
measures and undertakings relating to revenue sharing payments including making
additional disclosures in the funds' Prospectuses or Statements of Additional
Information, adopting or modifying relevant policies and procedures and
providing regular reporting to the fund Boards.

Additional information announced by DeAM regarding the terms of the settlements
is available at www.dws-investments.com/regulatory_settlements.

The matters alleged in the regulatory settlements described above also serve as
the general basis of a number of private class action lawsuits involving the DWS
funds. These lawsuits name as defendants various persons, including certain DWS
funds, the funds' investment advisors and their affiliates, and certain
individuals, including in some cases fund Trustees/Directors, officers, and
other parties. Each DWS fund's investment advisor has agreed to indemnify the
applicable DWS funds in connection with these lawsuits, or other lawsuits or
regulatory actions that may be filed making similar allegations.

Based on currently available information, the funds' investment advisors believe
the likelihood that the pending lawsuits will have a material adverse financial
impact on a DWS fund is remote and such actions are not likely to materially
affect their ability to perform under their investment management agreements
with the DWS funds.

                             FUND SERVICE PROVIDERS

Administrator


Each Portfolio has entered into an administrative services agreement with the
Advisor (the "Administrative Services Agreement"), pursuant to which the Advisor
provides administrative services to the Portfolio including, among others,
providing the Portfolio with personnel, preparing and making required filings on
behalf of the Portfolio, maintaining books and records for the Portfolio, and
monitoring the valuation of Portfolio securities. For all services provided
under the Administrative Services Agreement, the Portfolio pays the Advisor a
fee, computed daily and paid monthly, of 0.100% of each Portfolio's average
daily net assets.

Under the Administrative Services Agreement, the Advisor is obligated on a
continuous basis to provide such administrative services as the Board of the
Fund reasonably deems necessary for the proper administration of the Portfolio.
The Advisor provides the Portfolio with personnel; arranges for the preparation
and filing of the Portfolio's tax returns; prepares and submits reports and
meeting materials to the Board and the shareholders; prepares and files updates
to the Portfolio's prospectus and statement of additional information as well as
other reports required to be filed by the SEC; maintains the Portfolio's
records; provides the Portfolio with office space, equipment and services;
supervises, negotiates the contracts of and monitors the performance of third
parties contractors; oversees the tabulation of proxies; monitors the valuation
of portfolio securities and monitors compliance with Board-approved valuation
procedures; assists in establishing the accounting and tax policies of the
Portfolio; assists in the resolution of accounting issues that may arise with
respect to the Portfolio; establishes and monitors the Portfolio's operating
expense budgets; reviews and processes the Portfolio's bills; assists in
determining the amount of dividends and distributions available to be paid by
the Portfolio, prepares and arranges dividend notifications and provides
information to agents to effect payments thereof; provides to the Board periodic
and special reports; provides assistance with investor and public relations
matters; and monitors the registration of shares under applicable federal and
state law. The Advisor also performs certain fund accounting services under the
Administrative Services Agreement. The Administrative Services Agreement
provides that the Advisor will not be liable under the Administrative Services
Agreement except for willful misfeasance, bad faith or negligence in the
performance of its duties or from the reckless disregard by it of its duties and
obligations thereunder.


The administrative services fees paid by each Portfolio for the period from May
1, 2008 through December 31, 2008 are shown in the table below:

Portfolio                                               2008
---------                                               ----

DWS Conservative Allocation VIP(1)                     $10,198
DWS Growth Allocation VIP                              $16,931
DWS Moderate Allocation VIP                            $19,414

(1)      All of which was waived.

Pursuant to an agreement between the Administrator and State Street Bank and
Trust Company, the Administrator has delegated certain administrative functions
to SSB. The costs and expenses of such delegation are borne by the
Administrator, not by the Fund.

Pursuant to DeAM procedures approved by the Boards on behalf of the DWS funds,
proof of claim forms are routinely filed on behalf of the DWS funds by a third
party service provider, with certain limited exceptions. The Boards of the DWS
funds receive periodic reports regarding the implementation of these procedures.

Distributor

DWS Investments Distributors, Inc. ("DIDI" or the "Distributor"), 222 South
Riverside Plaza, Chicago, Illinois 60606, a wholly owned subsidiary of the
Advisor, is the distributor and principal underwriter for shares of each
Portfolio pursuant to an Underwriting Agreement in the continuous offering of
its shares. Terms of continuation, termination and assignment under the
underwriting agreement are identical to those described above with regard to the
investment management agreements, except that termination other than upon
assignment requires sixty days' notice.

Each Portfolio has adopted a distribution plan under Rule 12b-1 (the "Plan")
that provides for fees payable as an expense of the Class B shares. Under the
plan, DWS Variable Series II may make quarterly payments as reimbursement to the
distributor for distribution and shareholder servicing related expenses incurred
or paid by the distributor or a participating insurance company. No such payment
shall be made with respect to any quarterly period in excess of an amount
determined for such period at the annual rate of 0.25% of the average daily net
assets of Class B shares during that quarterly period. The fee is payable by the
Fund, on behalf of each Portfolio, of up to 0.25% of the average daily net
assets attributable to the Class B shares of a Portfolio. Because 12b-1 fees are
paid out of Portfolio assets on an ongoing basis, they will, over time, increase
the cost of investment and may cost more than other types of sales charges. The
Plan and any Rule 12b-1-related agreement that is entered into by the Fund or
the Distributor in connection with the Plan will continue in effect for a period
of more than one year only so long as continuance is specifically approved at
least annually by a vote of a majority of the Fund's Board of Trustees, and of a
majority of the Trustees who are not interested persons (as defined in the 1940
Act) of the Fund or a Portfolio ("Independent Trustees"), cast in person at a
meeting called for the purpose of voting on the Plan, or the Rule 12b-1 related
agreement, as applicable. In addition, the Plan and any Rule 12b-1 related
agreement, may be terminated as to Class B shares of a Portfolio at any time,
without penalty, by vote of a majority of the outstanding Class B shares of that
Portfolio or by vote of a majority of the Independent Trustees. The Plan and
Underwriting Agreement also provide that it may not be amended to increase
materially the amount that may be spent for distribution of Class B shares of a
Portfolio without the approval of Class B shareholders of that Portfolio.


As of December 31, 2008, the Portfolios paid distribution fees as follows:


Name of Portfolio                       Total Aggregated Fee            Waived
-----------------                       --------------------            ------


DWS Moderate Allocation VIP                    $77,539                  $25,955
DWS Growth Allocation VIP                      $67,386                  $33,153
DWS Conservative Allocation VIP                $39,976                  $39,976


In addition, DIDI may, from time to time, from its own resources pay certain
firms additional amounts for ongoing administrative services and assistance
provided to their customers and clients who are shareholders of the Fund.

Recordkeeping

Technically, the shareholders of the Portfolios of the Fund are the
participating insurance companies that offer the Portfolios as investment
options for holders of certain variable annuity contracts and variable life
insurance policies. Effectively, ownership of Portfolio shares is passed through
to insurance company contract and policy holders. The holders of the shares of
the Portfolios on the records of the Fund are the participating insurance
companies and no information concerning the Portfolio holdings of specific
contract and policy holders is maintained by the Fund. The insurance companies
place orders for the purchase and redemption of Portfolio shares with the Fund
reflecting the investment of premiums paid, surrender and transfer requests and
other matters on a net basis; they maintain all records of the transactions and
holdings of Portfolio shares and distributions thereon for individual contract
and policy holders; and they prepare and mail to contract and policy holders
confirmations and periodic account statements reflecting such transactions and
holdings.

The Portfolios of the Fund may compensate certain insurance companies for record
keeping and other administrative services performed with regard to holdings of
Class B shares as an expense of the Class B shares up to 0.15%. These fees are
included within the "Other Expenses" category in the fee table for each
portfolio in the Portfolios' prospectus (see "How Much Investors Pay" in the
Portfolio's prospectus). In addition, the Advisor may, from time to time, pay
from its own resources certain insurance companies for record keeping and other
administrative services related to Class B shares of the Portfolios held by such
insurance companies on behalf of their contract and policy holders.

Custodian

State Street Bank and Trust Company ("SSB"), 225 Franklin Street, Boston,
Massachusetts 02110, as custodian, has custody of all securities and cash of
each Portfolio. The custodian attends to the collection of principal and income,
and payment for and collection of proceeds of securities bought and sold by the
Portfolios. SSB also serves as the foreign custody manager for the Portfolios.

Transfer Agent

DWS Investments Service Company ("DISC" or the "Transfer Agent"), 811 Main
Street, Kansas City, Missouri 64105-2005, an affiliate of the Advisor, is each
Portfolio's transfer agent, dividend-paying agent and shareholder service agent.


The Transfer Agent receives an annual service fee for each account of a
Portfolio, based on the type of account. For open retail accounts, the fee is a
flat fee ranging from $20.00 to $27.50 per account, for open wholesale money
funds the fee is $35.05 per account, while for certain retirement accounts
serviced on the recordkeeping system of ADP, Inc., the fee is a flat fee up to
$3.80 per account (as of 2008, indexed to inflation) plus an asset based fee of
up to 0.25% of average net assets. 1/12th of the annual service charge for each
account is charged and payable to the Transfer Agent each month. A fee is
charged for any account which at any time during the month had a share balance
in a Portfolio. Smaller fees are also charged for closed accounts for which
information must be retained on the Transfer Agent's system for up to 18 months
after closing for tax reporting purposes.


Fees paid to DISC for the period ended December 31, 2008 are set forth below:

Portfolio                                Fiscal Year 2008               Waived
---------                                ----------------               ------

DWS Conservative Allocation VIP                  $48                       $48
DWS Growth Allocation VIP                        $48                       $48
DWS Moderate Allocation VIP                      $48                       $48

Fees paid to DISC for the period ended December 31, 2007 are set forth below:

Portfolio                            Fiscal Year 2007                Waived
---------                            ----------------                ------

DWS Conservative Allocation VIP              $76                          $76
DWS Growth Allocation VIP                    $76                           $0
DWS Moderate Allocation VIP                  $76                           $0

Certain out-of-pocket expenses incurred by the Transfer Agent, including
expenses of printing and mailing routine fund disclosure documents, costs of
record retention and transaction processing costs are reimbursed by a Portfolio
or are paid directly by a Portfolio. Certain additional out-of-pocket expenses,
including costs of computer hardware and software, third party record-keeping
and processing of proxy statements, may only be reimbursed by a Portfolio with
the prior approval of the Fund's Board.

Pursuant to a sub-transfer agency agreement between DISC and DST Systems, Inc.
("DST"), DISC has delegated certain transfer agent, dividend paying agent and
shareholder servicing agent functions to DST. The costs and expenses of such
delegation are borne by DISC, not by the Funds.

Legal Counsel

Vedder Price P.C., 222 North LaSalle Street, Chicago, Illinois 60601, serves as
legal counsel to the Fund.

Ropes & Gray LLP, One International Place, Boston, MA 02110-2624, serves as
counsel to the Independent Trustees.

Independent Registered Public Accounting Firm


The financial highlights of the Portfolios included in the Portfolios'
prospectuses and the financial statements of the Portfolios incorporated by
reference in this Statement of Additional Information have been so included or
incorporated by reference in reliance on the report of Ernst & Young LLP ,
independent registered public accounting firm, 200 Clarendon Street, Boston, MA
02116, given on the authority of said firm as experts in auditing and
accounting. Ernst & Young LLP audits the financial statements of the Portfolios
and provides other audit, tax and related services. Shareholders will receive
annual audited financial statements and semi-annual unaudited financial
statements.


Fund Accounting Agent


Prior to May 1, 2008, DWS Investments Fund Accounting Corp. ("DIFA"), One Beacon
Street, Boston, Massachusetts, 02108, a subsidiary of DIMA, was responsible for
determining the daily net asset value per share and maintaining the portfolio
and general accounting records of each Portfolio. For the fiscal year ended
December 31, 2007, and for the period from January 1, 2008 through April 30,
2008, DIFA received fees from the Portfolios as follows:

Name of Portfolio                        Fiscal 2008                Fiscal 2007
-----------------                        -----------                -----------


     DWS Moderate Allocation VIP           $13,852                      $42,640
     DWS Growth Allocation VIP             $13,664                      $45,339
     DWS Conservative Allocation VIP       $13,737                      $40,652

Pursuant to a sub-administration and sub-accounting agreement among the Advisor,
DIFA and SSB, DIFA delegated certain fund accounting functions to SSB under the
Portfolios' fund accounting agreements. The costs and expenses of such
delegation were borne by DIFA, not by the Portfolios.

                             PORTFOLIO TRANSACTIONS

The Advisor is generally responsible for placing the orders for the purchase and
sale of portfolio securities, including the allocation of brokerage. With
respect to those Portfolios for which a sub-investment advisor manages the
Portfolio's investments, references in this section to the "Advisor" should be
read to mean the Sub-Advisor, except as noted below.

The policy of the Advisor in placing orders for the purchase and sale of
securities for the Portfolios is to seek best execution, taking into account
such factors, among others, as price; commission (where applicable); the
broker-dealer's ability to ensure that securities will be delivered on
settlement date; the willingness of the broker-dealer to commit its capital and
purchase a thinly traded security for its own inventory; whether the
broker-dealer specializes in block orders or large program trades; the
broker-dealer's knowledge of the market and the security; the broker-dealer's
ability to maintain confidentiality; the broker-dealer's ability to provide
access to new issues; the broker-dealer's ability to provide support when
placing a difficult trade; the financial condition of the broker-dealer; and
whether the broker-dealer has the infrastructure and operational capabilities to
execute and settle the trade. The Advisor seeks to evaluate the overall
reasonableness of brokerage commissions with commissions charged on comparable
transactions and compares the brokerage commissions (if any) paid by the
Portfolios to reported commissions paid by others. The Advisor routinely reviews
commission rates, execution and settlement services performed and makes internal
and external comparisons.

Commission rates on transactions in equity securities on US securities exchanges
are subject to negotiation. Commission rates on transactions in equity
securities on foreign securities exchanges are generally fixed. Purchases and
sales of fixed-income securities and certain over-the-counter securities are
effected on a net basis, without the payment of brokerage commissions.
Transactions in fixed income and certain over-the-counter securities are
generally placed by the Advisor with the principal market makers for these
securities unless the Advisor reasonably believes more favorable results are
available elsewhere. Transactions with dealers serving as market makers reflect
the spread between the bid and asked prices. Purchases of underwritten issues
will include an underwriting fee paid to the underwriter. Money market
instruments are normally purchased in principal transactions directly from the
issuer or from an underwriter or market maker.

It is likely that the broker-dealers selected based on the considerations
described in this section will include firms that also sell shares of the
Portfolios to their customers. However, the Advisor does not consider sales of
shares of the Portfolios as a factor in the selection of broker-dealers to
execute portfolio transactions for the Portfolios and, accordingly, has
implemented policies and procedures reasonably designed to prevent its traders
from considering sales of shares of the Funds as a factor in the selection of
broker-dealers to execute portfolio transactions for the Portfolios.

The Advisor is permitted by Section 28(e) of the Securities Exchange Act of
1934, as amended ("1934 Act"), when placing portfolio transactions for a
Portfolio, to cause the Portfolio to pay brokerage commissions in excess of that
which another broker-dealer might charge for executing the same transaction in
order to obtain research and brokerage services if the Advisor determines that
such commissions are reasonable in relation to the overall services provided.
The Advisor may from time to time, in reliance on Section 28(e) of the 1934 Act,
execute portfolio transactions with broker-dealers that provide research and
brokerage services to the Advisor. Consistent with the Advisor's policy
regarding best execution, where more than one broker is believed to be capable
of providing best execution for a particular trade, the Advisor may take into
consideration the receipt of research and brokerage services in selecting the
broker-dealer to execute the trade. Although certain research and brokerage
services from broker-dealers may be useful to a Fund and to the Advisor, it is
the opinion of the Advisor that such information only supplements its own
research effort since the information must still be analyzed, weighed and
reviewed by the Advisor's staff. To the extent that research and brokerage
services of value are received by the Advisor, the Advisor may avoid expenses
that it might otherwise incur. Research and brokerage services received from a
broker-dealer may be useful to the Advisor and its affiliates in providing
investment management services to all or some of its clients, which includes a
Portfolio. Services received from broker-dealers that executed securities
transactions for a Portfolio will not necessarily be used by the Advisor
specifically to service such Portfolio.

Research and brokerage services provided by broker-dealers may include, but are
not limited to, information on the economy, industries, groups of securities,
individual companies, statistical information, accounting and tax law
interpretations, political developments, legal developments affecting portfolio
securities, technical market action, pricing and appraisal services, credit
analysis, risk measurement analysis, performance analysis and measurement and
analysis of corporate responsibility issues. Research and brokerage services are
typically received in the form of written or electronic reports, access to
specialized financial publications, telephone contacts and personal meetings
with security analysts, but may also be provided in the form of access to
various computer software and meetings arranged with corporate and industry
representatives.

The Advisor may also select broker-dealers and obtain from them research and
brokerage services that are used in connection with executing trades provided
that such services are consistent with interpretations under Section 28(e) of
the 1934 Act. Typically, these services take the form of computer software
and/or electronic communication services used by the Advisor to facilitate
trading activity with those broker-dealers.

Research and brokerage services may include products obtained from third parties
if the Advisor determines that such product or service constitutes brokerage and
research as defined in Section 28(e) and interpretations thereunder. Currently,
it is the Advisor's policy that Sub-Advisors may not execute portfolio
transactions on behalf of the Portfolios to obtain third party research and
brokerage services. The Advisor may, in the future, change this policy.
Regardless, certain Sub-Advisors may, as matter of internal policy, limit or
preclude third party research and brokerage services.

The Advisor may use brokerage commissions to obtain certain brokerage products
or services that have a mixed use (i.e., it also serves a function that does not
relate to the investment decision-making process). In those circumstances, the
Advisor will make a good faith judgment to evaluate the various benefits and
uses to which it intends to put the mixed use product or service and will pay
for that portion of the mixed use product or service that it reasonably believes
does not constitute research and brokerage services with its own resources.

DIMA will monitor regulatory developments and market practice in the use of
client commissions to obtain research and brokerage services and may adjust its
portfolio transactions policies in response thereto.

Investment decisions for each Portfolio and for other investment accounts
managed by the Advisor are made independently of each other in light of
differing conditions. However, the same investment decision may be made for two
or more of such accounts. In such cases, simultaneous transactions are
inevitable. To the extent permitted by law, the Advisor may aggregate the
securities to be sold or purchased for a Portfolio with those to be sold or
purchased for other accounts in executing transactions. Purchases or sales are
then averaged as to price and commission and allocated as to amount in a manner
deemed equitable to each account. While in some cases this practice could have a
detrimental effect on the price paid or received by, or on the size of the
position obtained or disposed of for, the Portfolio, in other cases it is
believed that the ability to engage in volume transactions will be beneficial to
the Portfolio.

DIMA and its affiliates and the Portfolios' management team manage other mutual
funds and separate accounts, some of which use short sales of securities as a
part of its investment strategy. The simultaneous management of long and short
portfolios creates potential conflicts of interest including the risk that short
sale activity could adversely affect the market value of the long positions (and
vice versa), the risk arising from sequential orders in long and short
positions, and the risks associated with receiving opposing orders at the same
time.

DIMA has adopted procedures that it believes are reasonably designed to mitigate
these potential conflicts of interest. Incorporated in the procedures are
specific guidelines developed to ensure fair and equitable treatment for all
clients. DIMA and the investment team have established monitoring procedures and
a protocol for supervisory reviews, as well as compliance oversight to ensure
that potential conflicts of interest relating to this type of activity are
properly addressed.

Deutsche Bank AG or one of its affiliates (or in the case of a Sub-Advisor, the
Sub-Advisor or one of its affiliates) may act as a broker for the Portfolios and
receive brokerage commissions or other transaction-related compensation from the
Portfolios in the purchase and sale of securities, options or futures contracts
when, in the judgment of the Advisor, and in accordance with procedures approved
by the Portfolios ` Boards, the affiliated broker will be able to obtain a price
and execution at least as favorable as those obtained from other qualified
brokers and if, in the transaction, the affiliated broker charges the Portfolios
a rate consistent with that charged to comparable unaffiliated customers in
similar transactions.

DWS Moderate Allocation VIP, DWS Growth Allocation VIP and DWS Conservative
Allocation VIP are each required to identify any securities of its "regular
brokers or dealers" (as such term is defined in rule 10b-1 of the 1940 Act) that
the Portfolio has acquired during the most recent fiscal year. As of December
31, 2008, each Portfolio did not hold any securities of its regular brokers or
dealers.

The table below shows total brokerage commissions paid by each Portfolio for the
most recent fiscal year:


 Portfolio                                                Fiscal Year 2008
 ---------                                                ----------------

 DWS Moderate Allocation VIP                                   $651
 DWS Growth Allocation VIP                                     $688
 DWS Conservative Allocation VIP                               $330




In addition, for the fiscal year ended December 31, 2008:

<TABLE>
<CAPTION>
                                                                        Percentage of
                                                 Percentage of           Transactions          Dollar Amount of
                                                  Commissions             Involving            Commissions Paid
                                               Paid to Affiliated    Commissions Paid to        to Brokers for
Portfolio                                           Brokers           Affiliated Brokers      Research Services
---------                                           -------           ------------------      -----------------

<S>                                                    <C>                    <C>                     <C>
DWS Conservative Allocation VIP                        0%                     0%                      $0
DWS Growth Allocation VIP                              0%                     0%                      $0
DWS Moderate Allocation VIP                            0%                     0%                      $0

</TABLE>

Portfolio Turnover

Portfolio turnover rate is defined by the SEC as the ratio of the lesser of
annual sales or purchases to the monthly average value of the securities owned
by the portfolios during the year, excluding from both the numerator and the
denominator all securities whose remaining maturities at the time of acquisition
of one year or less.

Higher levels of activity by an underlying portfolio result in higher
transaction costs and may also result in taxes on realized capital gains to be
borne by that underlying portfolio's shareholders and, indirectly, by
shareholders of the Portfolios.

Portfolio turnover rates for the years ended December 31, 2008 and 2007,
respectively, for the Portfolios are as follows:

Name                                 December 31, 2008        December 31, 2007
----                                 -----------------        -----------------

DWS Moderate Allocation VIP                 59%                      30%
DWS Growth Allocation VIP                   45%                      31%
DWS Conservative Allocation VIP             59%                      32%

Portfolio turnover rates for the years ended December 31, 2008 and 2007,
respectively, for the underlying portfolios that are part of DWS Variable Series
I are as follows:

Name                             December 31, 2008          December 31, 2007
----                             -----------------          -----------------

DWS Bond VIP                            196%                      176%
DWS Growth & Income VIP                 130%                      310%
DWS Capital Growth VIP                  21%                        30%
DWS Global Opportunities VIP            21%                        19%
DWS International VIP                   123%                      108%
DWS Health Care VIP                     24%                        37%

Portfolio turnover rates for the years ended December 31, 2008 and 2007,
respectively, for the underlying portfolios that are part of DWS Variable Series
II are as follows:


<TABLE>
<CAPTION>
Name                                       December 31, 2008              December 31, 2007
----                                       -----------------              -----------------

<S>                                                <C>                                  <C>
DWS Balanced VIP                                   263%                                 190%
DWS Blue Chip VIP                                  127%                                 275%
DWS Core Fixed Income VIP                          215%                                 197%
DWS Diversified International Equity VIP           132%                                 117%
DWS Dreman Small Mid Cap Value VIP                  49%                                 110%
DWS Global Thematic VIP                            229%                                 191%
DWS Government & Agency Securities VIP             543%                                 465%
DWS High Income VIP                                 38%                                  61%
DWS Large Cap Value VIP                             97%                                 103%
DWS Mid Cap Growth VIP                              82%                                  68%
DWS Small Cap Growth VIP                            67%                                  67%
DWS Strategic Value VIP                             28%                                  27%
DWS Technology VIP                                  71%                                  91%
DWS Turner Mid Cap Growth VIP                      156%                                 133%
</TABLE>

Purchases and sales for each Portfolio are made whenever necessary, in
management's opinion, to meet a Portfolio's objective.

                            PURCHASE AND REDEMPTIONS


The separate accounts of the Participating Insurance Companies purchase and
redeem shares of each Portfolio based on, among other things, the amount of
premium payments to be invested and surrender and transfer requests to be
effected on that day pursuant to variable annuity contracts and variable life
insurance policies, but only on days on which the Exchange is open for trading.
Such purchases and redemptions of the shares of each Portfolio are effected at
their respective net asset values per share, determined as of the close of
regular trading on the Exchange (normally 4 p.m. Eastern time) on that same day
(See "NET ASSET VALUE."). Payment for redemptions will be made by State Street
Bank and Trust Company or Brown Brothers Harriman & Co., as applicable, on
behalf of the Fund and the applicable Portfolios within seven days thereafter.
No fee is charged the separate accounts of the Participating Insurance Companies
when they redeem Fund shares.




The Fund may, on behalf of a Portfolio, suspend or postpone redemptions as
permitted pursuant to Section 22(e) of the 1940 Act. Generally, those
circumstances are when: 1) the New York Stock Exchange is closed other than
customary weekend or holiday closings; 2) trading on the New York Stock Exchange
is restricted; 3) an emergency exists which makes the disposal of securities
owned by a fund or the fair determination of the value of a Portfolio's net
assets not reasonably practicable; or 4) the SEC, by order, permits the
suspension of the right of redemption. Redemption payments by wire may also be
delayed in the event of a non-routine closure of the Federal Reserve wire
payment system.



Revenue Sharing

In light of recent regulatory developments, the Advisor, the Distributor and
their affiliates have undertaken to furnish certain additional information below
regarding the level of payments made by them to selected affiliated and
unaffiliated brokers, dealers, participating insurance companies or other
financial intermediaries ("financial advisors") in connection with the sale
and/or distribution of Portfolio shares or the retention and/or servicing of
investors and Portfolio shares ("revenue sharing").

The Advisor, the Distributor and/or their affiliates may pay additional
compensation, out of their own assets and not as an additional charge to each
Portfolio, to financial advisors in connection with the sale and/or distribution
of Portfolio shares or the retention and/or servicing of Portfolio investors and
Portfolio shares. Such revenue sharing payments are in addition to any
distribution or service fees payable under any Rule 12b-1 or service plan of any
portfolio, any record keeping/sub-transfer agency/networking fees payable by
each Portfolio (generally through the Distributor or an affiliate) and/or the
Distributor to certain financial advisors for performing such services and any
sales charges, commissions, non-cash compensation arrangements expressly
permitted under applicable rules of FINRA or other concessions described in the
fee table or elsewhere in the Prospectuses or the SAI as payable to all
financial advisors. For example, the Advisor, the Distributor and/or their
affiliates may compensate financial advisors for providing each Portfolio with
"shelf space" or access to a third party platform or portfolio offering list, or
other marketing programs including, without limitation, inclusion of each
Portfolio on preferred or recommended sales lists, mutual fund "supermarket"
platforms and other formal sales programs; granting the Distributor access to
the financial advisor's sales force; granting the Distributor access to the
financial advisor's conferences and meetings; assistance in training and
educating the financial advisor's personnel; and, obtaining other forms of
marketing support. The level of revenue sharing payments made to financial
advisors may be a fixed fee or based upon one or more of the following factors:
gross sales, current assets and/or number of accounts of each Portfolio
attributable to the financial advisor, the particular portfolio or portfolio
type or other measures as agreed to by the Advisor, the Distributor and/or their
affiliates and the financial advisors or any combination thereof. The amount of
these payments is determined at the discretion of the Advisor, the Distributor
and/or their affiliates from time to time, may be substantial, and may be
different for different financial advisors based on, for example, the nature of
the services provided by the financial advisor.

The Advisor, the Distributor and/or their affiliates currently make revenue
sharing payments from their own assets in connection with the sale and/or
distribution of DWS fund shares, or the retention and/or servicing of investors,
to financial advisors in amounts that generally range from .01% up to .50% of
assets of the Portfolio serviced and maintained by the financial advisor, .05%
to .25% of sales of the Portfolio attributable to the financial advisor, a flat
fee of $13,350 up to $500,000, or any combination thereof. These amounts are
annual figures typically paid on a quarterly basis and are subject to change at
the discretion of the Advisor, the Distributor and/or their affiliates. Receipt
of, or the prospect of receiving, this additional compensation, may influence
your financial advisor's recommendation of this Portfolio or of any particular
share class of the Portfolio. You should review your financial advisor's
compensation disclosure and/or talk to your financial advisor to obtain more
information on how this compensation may have influenced your financial
advisor's recommendation of this Portfolio.

The Advisor, the Distributor and/or their affiliates may also make such revenue
sharing payments to financial advisors under the terms discussed above in
connection with the distribution of both DWS funds and non-DWS funds by
financial advisors to retirement plans that obtain record keeping services from
ADP, Inc. on the DWS Investments branded retirement plan platform (the
"Platform") with the level of revenue sharing payments being based upon sales of
both the DWS funds and the non-DWS funds by the financial advisor on the
Platform or current assets of both the DWS funds and the non-DWS funds serviced
and maintained by the financial advisor on the Platform.

As of the date hereof, each Portfolio has been advised that the Advisor, the
Distributor and their affiliates expect that the following firms will receive
revenue sharing payments at different points during the coming year as described
above:

Channel: Broker-Dealers and Financial Advisors
----------------------------------------------
AIG Advisors Group
Ameriprise
Cadaret, Grant & Co. Inc.
Capital Analyst, Incorporated
Citigroup Global Markets, Inc. (dba Smith Barney)
Commonwealth Equity Services, LLP (dba Commonwealth Financial Network)
Deutsche Bank Group Ensemble Financial Services
First Allied Securities First
Clearing/Wachovia Securities
HD Vest Investment Securities, Inc.
ING Advisors Network
John Hancock Distributors LLC
LPL Financial
M.L. Stern & Co.
Meridien Financial Group
Merrill Lynch, Pierce, Fenner & Smith Inc.
Morgan Stanley
Oppenheimer & Co., Inc.
PlanMember Services
Prime Capital Inc.
Raymond James & Associates
Raymond James Financial Services
RBC Dain Rauscher, Inc
Securities America, Inc.
UBS Financial Services
Wells Fargo Investments, LLC

Channel: Cash Product Platform
------------------------------
Allegheny Investments LTD
Bank of America
Bank of New York (Hare & Co.)
BMO Capital Markets
Brown Brothers Harriman
Brown Investment Advisory & Trust Company
Cadaret Grant & Co.
Chicago Mercantile Exchange
D.A. Davidson & Company
Deutsche Bank Group
Emmett A. Larkin Company
Fiduciary Trust Co. - International
First Southwest Company
J.P. Morgan Clearing Corp.
Legent Clearing LLC
Lincoln Investment Planning
LPL Financial
Mellon Financial Markets LLC
Mesirow Financial, Inc.
Penson Financial Services
Pershing Choice Platform
ProFunds Distributors, Inc.
Ridge Clearing & Outsourcing Solutions
Robert W. Baird & Co.
Romano Brothers and Company
SAMCO Capital Markets
Smith Moore & Company
Sungard Institutional Brokerage Inc.
Treasury Curve LLC
US Bancorp
UBS Financial Services
William Blair & Company

Channel: Third Party Insurance Platforms
----------------------------------------
Allstate Life Insurance Company of New York
Ameritas Life Insurance Group
Annuity Investors Life Insurance Company
Columbus Life Insurance Company
Commonwealth Annuity and Life Insurance Company
Companion Life Insurance Company
Connecticut General Life Insurance Company
EquiTrust Life Insurance Company
Farm Bureau Life Insurance Company
Farmers New World Life Insurance Company
Fidelity Security Life Insurance Company
First Allmerica Financial Life Insurance Company
First Great West Life and Annuity Company
Genworth Life Insurance Company of New York
Genworth Life and Annuity Insurance Company
Great West Life and Annuity Insurance Company
Hartford Life Insurance Company
Integrity Life Insurance Company
John Hancock Life Insurance companies
Kemper Investors Life Insurance Company
Lincoln Benefit Life Insurance Company
Lincoln Life & Annuity Company of New York
Lincoln National Life Insurance Company
Massachusetts Mutual Life Insurance Group
MetLife Group
Minnesota Life Insurance Company
National Life Insurance Company
National Integrity Life Insurance Company
Nationwide Group
New York Life Insurance and Annuity Corporation
Phoenix Life Insurance Company
Protective Life Insurance
Provident Mutual Life Insurance
Prudential Insurance Company of America
Sun Life Group
Symetra Life Insurance Company
Transamerica Life Insurance Company
Union Central Life Insurance Company
United of Omaha Life Insurance Company
United Investors Life Insurance Company
Western Southern Life Assurance Company

Any additions, modifications or deletions to the financial advisors identified
above that have occurred since the date hereof are not reflected.

The Advisor, the Distributor or their affiliates may enter into additional
revenue sharing arrangements or change or discontinue existing arrangements with
financial advisors at any time without notice.

The prospect of receiving, or the receipt of additional compensation or
promotional incentives described above by financial advisors may provide such
financial advisors and/or their salespersons with an incentive to favor sales of
shares of the DWS funds or a particular DWS fund over sales of shares of mutual
funds (or non-mutual fund investments) with respect to which the financial
advisor does not receive additional compensation or promotional incentives, or
receives lower levels of additional compensation or promotional incentives.
Similarly, financial advisors may receive different compensation or incentives
that may influence their recommendation of any particular share class of the
Portfolio or of other portfolios. These payment arrangements, however, will not
change the price that an investor pays for Portfolio shares or the amount that
the Portfolio receives to invest on behalf of an investor and will not increase
Portfolio expenses. You may wish to take such payment arrangements into account
when considering and evaluating any recommendations relating to Portfolio shares
and you should discuss this matter with your financial advisor and review your
financial advisor's disclosures.

It is likely that broker-dealers that execute portfolio transactions for the
Portfolio will include firms that also sell shares of the DWS funds to their
customers. However, the Advisor will not consider sales of DWS fund shares as a
factor in the selection of broker-dealers to execute portfolio transactions for
the DWS funds. Accordingly, the Advisor has implemented policies and procedures
reasonably designed to prevent its traders from considering sales of DWS fund
shares as a factor in the selection of broker-dealers to execute portfolio
transactions for the Portfolio. In addition, the Advisor, the Distributor and/or
their affiliates will not use fund brokerage to pay for their obligation to
provide additional compensation to financial advisors as described above.

                           DIVIDENDS AND CAPITAL GAINS

The Fund normally follows the practice of declaring and distributing
substantially all the net investment income and any net short-term and long-term
capital gains of these Portfolios at least annually.

The Fund may at any time vary the dividend practices with respect to a Portfolio
and, therefore, reserves the right from time to time to either distribute or
retain for reinvestment such of its net investment income and its net short-term
and long-term capital gains as the Board of Trustees of the Fund determines
appropriate under the then current circumstances.

                              FEDERAL INCOME TAXES

Each Portfolio, underlying portfolio and underlying DWS fund intends to qualify
as a regulated investment company under subchapter M of the Internal Revenue
Code of 1986, as amended (the "Code"), in order to avoid federal income
taxation.

Pursuant to the requirements of Section 817(h) of the Code, with certain limited
exceptions, the only shareholders of the Portfolios will be insurance companies
and their separate accounts that fund variable insurance and annuity contracts.
The prospectus that describes a particular variable insurance or annuity
contract should discuss the taxation of separate accounts and the owner of the
particular variable insurance or annuity contract. Potential insurance and
annuity contract holders should review such prospectus.

Section 817(h) of the Code and the regulations issued by the Treasury Department
impose certain diversification requirements affecting the securities in which
the Portfolios may invest. These diversification requirements are in addition to
the diversification requirements under subchapter M of the Code and the 1940
Act. A failure to meet the requirements of Section 817(h) could result in
federal income taxation of the insurance company offering the variable insurance
or annuity contract and treatment of the owner of the contract other than as
described in the prospectus for the contract. Each Portfolio therefore intends
to comply with the requirements of Section 817(h) and related regulations.

Pursuant to a ruling issued by the Internal Revenue Service, for purposes of the
diversification requirements of Section 817(h), each Portfolio generally will be
treated as owning a pro rata portion of the investments of an underlying
portfolio or underlying fund in which the Portfolio holds an interest if (1) the
underlying portfolio or underlying fund is a regulated investment company for
federal income tax purposes, (2) all of the beneficial interests in the
underlying portfolio or underlying fund are held directly or indirectly by one
or more insurance company segregated asset accounts and (3) subject to certain
exceptions, public access to the underlying portfolio is available exclusively
through the purchase of a variable contract. A Portfolio's investment in a
retail DWS fund or an Exchange Traded Fund is not expected to satisfy these
requirements. If these requirements are not satisfied with respect to an
underlying portfolio or underlying fund, a Portfolio's investment in the
underlying portfolio or underlying fund may be treated as a single security for
purposes of the Code Section 817(h) diversification requirements. The Portfolios
will take this rule into account in determining whether they have satisfied the
Section 817(h) diversification requirements.

If owners of a variable insurance or annuity contract possess sufficient
incidents of ownership, they will be considered for federal income tax purposes
the owners of the assets of the separate accounts used to support their
contracts. In those circumstances, income and gains from the separate account's
assets for a taxable year will be included in the owner's gross income for the
current taxable year. In Revenue Ruling 2003-91, the Internal Revenue Service
ruled that under a specified set of facts the owners of variable insurance and
annuity contracts would not be considered the owners of the assets of the
separate accounts used to support the contracts, but Revenue Ruling 2003-91 did
not address a situation where the separate accounts invested in regulated
investment companies that are not publicly available, such as the Portfolios,
which themselves invested in regulated investment companies that are publicly
available, such as some of the underlying funds. The Internal Revenue Service,
however, has addressed such a situation in private letter rulings. In these
private letter rulings, the Internal Revenue Service generally concluded that
the contract owners were not subject to current federal income taxation on the
income and gains of the separate account's assets and such assets would be
treated for federal income tax purposes as owned by the life insurance company
and not the variable life insurance or annuity contract owners. However, each
private letter ruling is directed only to the taxpayer who requested it and may
not be relied on or cited as precedent by other taxpayers, including the
Portfolios. In addition, while the facts of the private letter rulings are
similar to the Portfolios' situation in some respects, the private letter
rulings are distinguishable in other respects.

The Portfolios are seeking a private letter ruling from the Internal Revenue
Service. Until the Portfolios receive a private letter ruling from the Internal
Revenue Service or the Internal Revenue Service issues further guidance, the
investment by the Portfolios in publicly available regulated investment
companies creates some risk that contract owners could be treated as the owners
of the separate account assets, which could result in adverse federal income tax
consequences to the contract owners.

The preceding is a brief summary of certain of the relevant federal income tax
considerations applicable to an investment in the Portfolios. The summary is not
intended as a complete explanation or a substitute for careful tax planning and
consultation with individual tax advisors.

                                 NET ASSET VALUE

The net asset value of shares of each Portfolio is computed as of the close of
regular trading on the New York Stock Exchange on each day the Exchange is open
for trading (the "Value Time"). The Exchange is scheduled to be closed on the
following holidays: New Year's Day, Dr. Martin Luther King, Jr. Day, Presidents'
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving and
Christmas, and on the preceding Friday or subsequent Monday when one of these
holidays falls on a Saturday or Sunday, respectively. Net asset value per share
is determined by dividing the value of the total assets of each Portfolio, less
all liabilities attributable to that class, by the total number of shares
outstanding.

An equity security is valued at its most recent sale price on the primary
exchange or OTC market as of the Value Time. Lacking any sales, the security is
valued at the calculated mean between the most recent bid quotation and the most
recent asked quotation (the "Calculated Mean") on such exchange or OTC market as
of the Value Time. If it is not possible to determine the Calculated Mean, the
security is valued at the most recent bid quotation on such exchange or OTC
market as of the Value Time. In the case of certain foreign exchanges or OTC
markets, the closing price reported by the exchange or OTC market (which may
sometimes be referred to as the "official close" or the "official closing price"
or other similar term) will be considered the most recent sale price.

Debt securities are valued as follows. Money market instruments purchased with
an original or remaining maturity of 60 days or less, maturing at par, are
valued at amortized cost. Other money market instruments are valued based on
information obtained from an independent pricing service or, if such information
is not readily available, by using matrix pricing techniques (formula driven
calculations based primarily on current market yields). Bank loans are valued at
prices supplied by an independent pricing service (which are intended to reflect
the mean between the bid and asked prices), if available, and otherwise at the
mean of the most recent bid and asked quotations or evaluated prices, as
applicable, based on quotations or evaluated prices obtained from one or more
broker-dealers. Privately placed debt securities, other than Rule 144A debt
securities, initially are valued at cost and thereafter based on all relevant
factors including type of security, size of holding and restrictions on
disposition. Municipal debt securities are valued at prices supplied by an
independent pricing service (which are intended to reflect the mean between the
bid and asked prices), if available, and otherwise at the average of the means
based on the most recent bid and asked quotations or evaluated prices obtained
from two broker-dealers. Other debt securities not addressed above are valued at
prices supplied by an independent pricing service, if available, and otherwise
at the most recent bid quotation or evaluated price, as applicable, obtained
from one or more broker-dealers. If it is not possible to value a particular
debt security pursuant to the above methods, the security is valued on the basis
of factors including (but not limited to) maturity, coupon, creditworthiness,
currency denomination, and the movement of the market in which the security is
normally traded.

An exchange-traded option contract on securities, currencies and other financial
instruments is valued at its most recent sale price on such exchange. Lacking
any sales, the option contract is valued at the Calculated Mean. If it is not
possible to determine the Calculated Mean, the option contract is valued at the
most recent bid quotation in the case of a purchased option contract or the most
recent asked quotation in the case of a written option contract, in each case as
of the Value Time. An option contract on securities, currencies and other
financial instruments traded in the OTC market is valued on the Value Date at
the market to market price, or if not available, at the evaluated price provided
by the broker-dealer with which it was traded. Futures contracts (and options
thereon) are valued at the most recent settlement price, if available, on the
exchange on which they are traded most extensively. With the exception of stock
index futures contracts which trade on the Chicago Mercantile Exchange, closing
settlement times are prior to the close of trading on the New York Stock
Exchange. For stock index futures contracts which trade on the Chicago
Mercantile Exchange, closing settlement prices are normally available at
approximately 4:20 Eastern time. If no settlement price is available, the last
traded price on such exchange will be used.

If market quotations for a portfolio asset are not readily available or the
value of a portfolio asset as determined in accordance with Board-approved
procedures does not represent the fair market value of a portfolio asset, the
value of the portfolio asset is taken to be an amount which, in the opinion of a
portfolio's Pricing Committee (or, in some cases, the Board's Valuation
Committee), represents fair market value. The value of other portfolio holdings
owned by a Portfolio is determined in a manner which is intended to reflect the
fair market value of the asset on the valuation date, based on valuation
procedures adopted by the Board and overseen by the Pricing Committee.

                           BOARD MEMBERS AND OFFICERS

The following table presents certain information regarding the Board Members of
the Trust. Each Board Member's year of birth is set forth in parentheses after
his or her name. Unless otherwise noted, (i) each Board Member has engaged in
the principal occupation(s) noted in the table for at least the most recent five
years, although not necessarily in the same capacity, and (ii) the address of
each Board Member that is not an "interested person" (as defined in the 1940
Act) of the Trust or the Advisor (each, an "Independent Board Member") is c/o
Dawn-Marie Driscoll, PO Box 100176, Cape Coral, FL 33904. The term of office for
each Board Member is until the election and qualification of a successor, or
until such Board Member sooner dies, resigns, is removed or as otherwise
provided in the governing documents of the Trust. Because the Portfolios do not
hold an annual meeting of shareholders, each Board Member will hold office for
an indeterminate period. The Board Members may also serve in similar capacities
with other funds in the DWS fund complex.

Independent Board Members

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
 Name, Year of Birth, Position                                                                   Number of Funds
 with the Trust and Length of     Business Experience and                                        in DWS Fund
 Time Served(1)                   Directorships During the Past 5 Years                          Complex Overseen
--------------------------------------------------------------------------------------------------------------------
<S>                               <C>                                                                   <C>
Paul K. Freeman                   Consultant, World Bank/Inter-American Development Bank;               129
(1950)                            Governing Council of the Independent Directors Council
Chairperson since 2009, and       (governance, executive committees); formerly: Project Leader,
Board Member since 1993           International Institute for Applied Systems Analysis
                                  (1998-2001); Chief Executive Officer, The Eric Group, Inc.
                                  (environmental insurance) (1986-1998)
--------------------------------------------------------------------------------------------------------------------
John W. Ballantine (1946)         Retired; formerly: Executive Vice President and Chief Risk            129
Board Member since 1999           Management Officer, First Chicago NBD Corporation/The First
                                  National Bank of Chicago (1996-1998); Executive Vice
                                  President and Head of International Banking (1995-1996);
                                  Directorships: Healthways Inc. (provider of disease and care
                                  management services); Portland General Electric (utility
                                  company); Stockwell Capital Investments PLC (private equity);
                                  former Directorships: First Oak Brook Bancshares, Inc. and
                                  Oak Brook Bank
--------------------------------------------------------------------------------------------------------------------
 Henry P. Becton, Jr. (1943)      Vice Chair, WGBH Educational Foundation; Directorships:               129
 Board Member since               Association of Public Television Stations; Becton Dickinson
 1990                             and Company(2) (medical technology company); Belo
                                  Corporation(2) (media company); Boston Museum of Science;
                                  Public Radio International; PRX, The Public Radio Exchange;
                                  The PBS Foundation; former Directorships: American Public
                                  Television; Concord Academy; New England Aquarium; Mass.
                                  Corporation for Educational Telecommunications; Committee for
                                  Economic Development; Public Broadcasting Service
--------------------------------------------------------------------------------------------------------------------
Dawn-Marie Driscoll (1946)        President, Driscoll Associates (consulting firm); Executive           129
Board Member since 1987           Fellow, Center for Business Ethics, Bentley University;
                                  formerly: Partner, Palmer & Dodge (1988-1990); Vice President
                                  of Corporate Affairs and General Counsel, Filene's
                                  (1978-1988); Directorships: Trustee of 20 open-end mutual
                                  funds managed by Sun Capital Advisers, Inc. (since 2007);
                                  Director of ICI Mutual Insurance Company (since 2007);
                                  Advisory Board, Center for Business Ethics, Bentley
                                  University; Trustee, Southwest Florida Community Foundation
                                  (charitable organization); former Directorships: Investment
                                  Company Institute (audit, executive, nominating committees)
                                  and Independent Directors Council (governance, executive
                                  committees)
--------------------------------------------------------------------------------------------------------------------
Keith R. Fox (1954)               Managing General Partner, Exeter Capital Partners (a series           129
Board Member since                of private equity funds); Directorships: Progressive Holding
1996                              Corporation (kitchen goods importer and distributor); Natural
                                  History, Inc. (magazine publisher); Box Top Media Inc.
                                  (advertising); The Kennel Shop (retailer)
--------------------------------------------------------------------------------------------------------------------
Kenneth C. Froewiss               Clinical Professor of Finance, NYU Stern School of Business           129
(1945)                            (1997-present); Member, Finance Committee, Association for
Board Member since                Asian Studies (2002-present); Director, Mitsui Sumitomo
2001                              Insurance Group (US) (2004-present); prior thereto, Managing
                                  Director, J.P. Morgan (investment banking firm) (until 1996)
--------------------------------------------------------------------------------------------------------------------
Richard J. Herring                Jacob Safra Professor of International Banking and Professor,         129
(1946)                            Finance Department, The Wharton School, University of
Board Member since                Pennsylvania (since July 1972); Co-Director, Wharton
1990                              Financial Institutions Center (since July 2000); Director,
                                  Japan Equity Fund, Inc. (since September 2007), Thai Capital
                                  Fund, Inc. (since September 2007), Singapore Fund, Inc.
                                  (since September 2007); formerly: Vice Dean and Director,
                                  Wharton Undergraduate Division (July 1995-June 2000);
                                  Director, Lauder Institute of International Management
                                  Studies (July 2000-June 2006)
--------------------------------------------------------------------------------------------------------------------
William McClayton (1944)          Managing Director, Diamond Management & Technology                    129
Board Member since 2004           Consultants, Inc. (global management consulting firm)
                                  (2001-present); Directorship: Board of Managers, YMCA of
                                  Metropolitan Chicago; formerly: Senior Partner, Arthur
                                  Andersen LLP (accounting) (1966-2001); Trustee, Ravinia
                                  Festival
--------------------------------------------------------------------------------------------------------------------
Rebecca W. Rimel                  President and Chief Executive Officer, The Pew Charitable             129
(1951)                            Trusts (charitable organization) (1994 to present); Trustee,
Board Member since                Thomas Jefferson Foundation (charitable organization) (1994
1995                              to present); Trustee, Executive Committee, Philadelphia
                                  Chamber of Commerce (2001 to 2007); Trustee, Pro Publica
                                  (2007-present) (charitable organization); formerly: Executive
                                  Vice President, The Glenmede Trust Company (investment trust
                                  and wealth management) (1983 to 2004); Board Member, Investor
                                  Education (charitable organization) (2004-2005); Director,
                                  Viasys Health Care(2) (January 2007-June 2007)
--------------------------------------------------------------------------------------------------------------------
William N. Searcy, Jr.            Private investor since October 2003; Trustee of 20 open-end           129
(1946)                            mutual funds managed by Sun Capital Advisers, Inc. (since
Board Member since                October 1998); formerly: Pension & Savings Trust Officer,
1993                              Sprint Corporation(2) (telecommunications) (November
                                  1989-September 2003)
--------------------------------------------------------------------------------------------------------------------
Jean Gleason Stromberg            Retired; formerly: Consultant (1997-2001); Director, US               129
(1943)                            Government Accountability Office (1996-1997); Partner,
Board Member since                Fulbright & Jaworski, L.L.P. (law firm) (1978-1996);
1997                              Directorships: The William and Flora Hewlett Foundation;
                                  Business Leadership Council, Wellesley College; former
                                  Directorships: Service Source, Inc., Mutual Fund Directors
                                  Forum (2002-2004), American Bar Retirement Association
                                  (funding vehicle for retirement plans) (1987-1990 and
                                  1994-1996)
--------------------------------------------------------------------------------------------------------------------
Robert H. Wadsworth (1940)        President, Robert H. Wadsworth & Associates, Inc. (consulting         132
Board Member since 1999           firm) (1983 to present); Director, The Phoenix Boys Choir
                                  Association
--------------------------------------------------------------------------------------------------------------------

Interested Board Member

--------------------------------------------------------------------------------------------------------------------
 Name, Year of Birth, Position                                                                   Number of Funds
 with the Trust and Length of     Business Experience and                                        in DWS Fund
 Time Served(1)                   Directorships During the Past 5 Years                          Complex Overseen
--------------------------------------------------------------------------------------------------------------------
 Axel Schwarzer(3)                Managing Director(4), Deutsche Asset Management; Head of              129
 (1958)                           Deutsche Asset Management Americas; CEO of DWS Investments;
 Board Member since               formerly: board member of DWS Investments, Germany
 2006                             (1999-2005); Head of Sales and Product Management for the
                                  Retail and Private Banking Division of Deutsche Bank in
                                  Germany (1997-1999); various strategic and operational
                                  positions for Deutsche Bank Germany Retail and Private
                                  Banking Division in the field of investment funds, tax driven
                                  instruments and asset management for corporates (1989-1996)
--------------------------------------------------------------------------------------------------------------------

Officers((5))

--------------------------------------------------------------------------------------------------------------------
 Name, Year of Birth, Position
 with the Trust and Length of     Business Experience and
 Time Served(6)                   Directorships During the Past 5 Years
--------------------------------------------------------------------------------------------------------------------
 Michael G. Clark(7) (1965)       Managing Director(4), Deutsche Asset Management (2006-present); President of
 President, 2006-present          DWS family of funds; Director, ICI Mutual Insurance Company (since
                                  October 2007); formerly: Director of Fund Board Relations (2004-2006) and
                                  Director of Product Development (2000-2004), Merrill Lynch Investment Managers;
                                  Senior Vice President Operations, Merrill Lynch Asset Management (1999-2000)
--------------------------------------------------------------------------------------------------------------------
 John Millette(8) (1962)          Director(4), Deutsche Asset Management
 Vice President and Secretary,
 1999-present
--------------------------------------------------------------------------------------------------------------------
 Paul H. Schubert(7) (1963)       Managing Director(4), Deutsche Asset Management (since July 2004); formerly:
 Chief Financial Officer,         Executive Director, Head of Mutual Fund Services and Treasurer for UBS Family
 2004-present                     of Funds (1998-2004); Vice President and Director of Mutual Fund Finance at UBS
 Treasurer, 2005-present          Global Asset Management (1994-1998)
--------------------------------------------------------------------------------------------------------------------
 Caroline Pearson(8) (1962)       Managing Director(4), Deutsche Asset Management
 Assistant Secretary,
 1997-present
--------------------------------------------------------------------------------------------------------------------
 Rita Rubin(9) (1970)             Vice President and Counsel, Deutsche Asset Management (since October 2007);
 Assistant Secretary,             formerly, Vice President, Morgan Stanley Investment Management (2004-2007);
 2009-present                     Attorney, Shearman & Sterling LLP (2004); Vice President and Associate General
                                  Counsel, UBS Global Asset Management (2001-2004)
--------------------------------------------------------------------------------------------------------------------
 Paul Antosca(8)                  Director(4), Deutsche Asset Management (since 2006); formerly: Vice President,
 (1957)                           The Manufacturers Life Insurance Company (U.S.A.) (1990-2006)
 Assistant Treasurer,
 2007-present
--------------------------------------------------------------------------------------------------------------------
 Jack Clark (8)                   Director(4), Deutsche Asset Management (since 2007); formerly: Vice President,
 (1967)                           State Street Corporation (2002-2007)
 Assistant Treasurer,
 2007-present
--------------------------------------------------------------------------------------------------------------------
 Diane Kenneally(8)               Director(4), Deutsche Asset Management
 (1966)
 Assistant Treasurer,
 2007-present
--------------------------------------------------------------------------------------------------------------------
 Jason Vazquez(9) (1972)          Vice President, Deutsche Asset Management (since 2006); formerly: AML
 Anti-Money Laundering            Operations Manager for Bear Stearns (2004-2006); Supervising Compliance
 Compliance Officer,              Principal and Operations Manager for AXA Financial (1999-2004)
 2007-present
--------------------------------------------------------------------------------------------------------------------
 Robert Kloby(9) (1962)           Managing Director(4), Deutsche Asset Management (2004-present); formerly: Chief
 Chief Compliance Officer,        Compliance Officer/Chief Risk Officer, Robeco USA (2000-2004); Vice President,
 2006-present                     The Prudential Insurance Company of America (1988-2000); E.F. Hutton and
                                  Company (1984-1988)
--------------------------------------------------------------------------------------------------------------------
 J. Christopher Jackson(9)        Director(4), Deutsche Asset Management (2006-present); formerly: Director,
 (1951)                           Senior Vice President, General Counsel, and Assistant Secretary, Hansberger
 Chief Legal Officer,             Global Investors, Inc. (1996-2006); Director, National Society of Compliance
 2006-present                     Professionals (2002-2005) (2006-2009)
--------------------------------------------------------------------------------------------------------------------
</TABLE>

(1)      The length of time served represents the year in which the Board Member
         joined the board of one or more DWS funds currently overseen by the
         Board.

(2)      A publicly held company with securities registered pursuant to Section
         12 of the Securities Exchange Act of 1934.

(3)      The mailing address of Axel Schwarzer is c/o Deutsche Investment
         Management Americas Inc., 345 Park Avenue, New York, New York 10154.
         Mr. Schwarzer is an interested Board Member by virtue of his positions
         with Deutsche Asset Management. As an interested person, Mr. Schwarzer
         receives no compensation from the Portfolios.

(4)      Executive title, not a board directorship.

(5)      As a result of their respective positions held with the Advisor, these
         individuals are considered "interested persons" of the Advisor within
         the meaning of the 1940 Act. Interested persons receive no compensation
         from the Portfolios.

(6)      The length of time served represents the year in which the officer was
         first elected in such capacity for one or more DWS funds.

(7)      Address:  345 Park Avenue, New York, New York 10154.

(8)      Address: One Beacon Street, Boston, Massachusetts 02108.

(9)      Address:  280 Park Avenue, New York, New York 10017.

Certain officers hold similar positions for other investment companies for which
DIMA or an affiliate serves as the Advisor.

Officer's Role with Principal Underwriter:  DWS Investments Distributors, Inc.

 Paul H. Schubert:           Vice President
 Jason Vazquez:              Vice President and AML Compliance Officer
 Caroline Pearson:           Secretary

Board Members' Responsibilities. The officers of the Trust manage its day-to-day
operations under the direction of the Board. The primary responsibility of the
Board is to represent the interests of the Portfolios and to provide oversight
of the management of the Portfolios.

Board Committees. The Board has established the following standing committees:
Audit Committee, Nominating and Governance Committee, Contract Committee, Equity
Oversight Committee, Fixed-Income and Quant Oversight Committee, Marketing and
Shareholder Services Committee, and Operations Committee. For each committee,
the Board has adopted a written charter setting forth each committee's
responsibilities. Each committee was reconstituted effective April 1, 2008.

Audit Committee: The Audit Committee, which consists entirely of Independent
Board Members, assists the Board in fulfilling its responsibility for oversight
of (1) the integrity of the financial statements, (2) the Portfolios' accounting
and financial reporting policies and procedures, (3) the Portfolios' compliance
with legal and regulatory requirements related to accounting and financial
reporting and (4) the qualifications, independence and performance of the
independent registered public accounting firm for the Portfolios. It also
approves and recommends to the Board the appointment, retention or termination
of the independent registered public accounting firm for the Portfolios, reviews
the scope of audit and internal controls, considers and reports to the Board on
matters relating to the Portfolios' accounting and financial reporting
practices, and performs such other tasks as the full Board deems necessary or
appropriate. The Audit Committee receives annual representations from the
independent registered public accounting firm as to its independence. The
members of the Audit Committee are William McClayton (Chair), Kenneth C.
Froewiss (Vice Chair), John W. Ballantine, Henry P. Becton, Jr., Keith R. Fox
and William N. Searcy, Jr. During the calendar year 2008, the Audit Committee of
the Portfolios' Board held six (6) meetings.

Nominating and Governance Committee: The Nominating and Governance Committee,
which consists entirely of Independent Board Members, recommends individuals for
membership on the Board, nominates officers, Board and committee chairs, vice
chairs and committee members, and oversees the operations of the Board. The
Nominating and Governance Committee also reviews recommendations by shareholders
for candidates for Board positions. Shareholders may recommend candidates for
Board positions by forwarding their correspondence by US mail or courier service
to Dawn-Marie Driscoll, P.O. Box 100176, Cape Coral, FL 33904. The members of
the Nominating and Governance Committee are Henry P. Becton, Jr. (Chair),
Rebecca W. Rimel (Vice Chair), Paul K. Freeman and William McClayton. During the
calendar year 2008, the Nominating and Governance Committee of the Portfolios'
Board held five (5) meetings.

Contract Committee: The Contract Committee, which consists entirely of
Independent Board Members, reviews at least annually, (a) the Portfolios'
financial arrangements with DIMA and its affiliates, and (b) the Portfolios'
expense ratios. The members of the Contract Committee are Robert H. Wadsworth
(Chair), Keith R. Fox (Vice Chair), Henry P. Becton, Jr., Richard J. Herring,
William McClayton and Jean Gleason Stromberg. During the calendar year 2008, the
Contract Review Committee of the Portfolios' Board held seven (7) meeting.

Equity Oversight Committee: The Equity Oversight Committee reviews the
investment operations of those portfolios that primarily invest in equity
securities (except for those funds managed by a quantitative investment team).
The members of the Equity Oversight Committee are John W. Ballantine (Chair),
William McClayton (Vice Chair), Henry P. Becton, Jr., Keith R. Fox, Richard J.
Herring and Rebecca W. Rimel. During the calendar year 2008, the Equity
Oversight Committee of the Portfolios' Board held five (5) meetings.

Fixed-Income and Quant Oversight Committee: The Fixed-Income and Quant Oversight
Committee reviews the investment operations of those portfolios that primarily
invest in fixed-income securities or are managed by a quantitative investment
team. The members of the Fixed-Income and Quant Oversight Committee are William
N. Searcy, Jr. (Chair), Jean Gleason Stromberg (Vice Chair), Dawn-Marie
Driscoll, Kenneth C. Froewiss and Robert H. Wadsworth. During the calendar year
2008, the Fixed-Income Oversight Committee of the Portfolios' Board held five
(5) meetings.

Marketing and Shareholder Services Committee: The Marketing and Shareholder
Services Committee reviews the Portfolios' marketing program, sales practices
and literature and shareholder services. The Marketing and Shareholder Services
Committee also considers matters relating to fund mergers and liquidations and
the organization of new funds. The members of the Marketing and Shareholder
Services Committee are Richard J. Herring (Chair), Dawn-Marie Driscoll (Vice
Chair), Rebecca W. Rimel, Jean Gleason Stromberg and Robert H. Wadsworth. During
the calendar year 2008, the Marketing/Distribution/Shareholder Service Committee
of the Portfolios' Board held four (4) meetings.

The Operations Committee: The Operations Committee reviews the administrative
operations, legal affairs and general compliance matters of the Portfolios. The
Operations Committee reviews administrative matters related to the operations of
the Portfolios, policies and procedures relating to portfolio transactions,
custody arrangements, fidelity bond and insurance arrangements, valuation of
Portfolio assets and securities and such other tasks as the full Board deems
necessary or appropriate. The Operations Committee also oversees the valuation
of the Portfolios' securities and other assets and determines, as needed, the
fair value of Portfolio securities or other assets under certain circumstances
as described in the Portfolios' Valuation Procedures. The Operations Committee
has appointed a Valuation Sub-Committee, which may make determinations of fair
value required when the Operations Committee is not in session. The members of
the Operations Committee are Dawn-Marie Driscoll (Chair), John W. Ballantine
(Vice Chair), Kenneth C. Froewiss, Rebecca W. Rimel and William N. Searcy, Jr.
The members of the Valuation Sub-Committee are Kenneth C. Froewiss (Chair), John
W. Ballantine, Dawn-Marie Driscoll (Alternate), Rebecca W. Rimel (Alternate) and
William N. Searcy, Jr. (Alternate). During the calendar year 2008, the
Operations Committee held five (5) meetings and the Valuation Sub-Committee held
no meetings.

Ad Hoc Committees. In addition to the standing committees described above, from
time to time the Board may also form ad hoc committees to consider specific
issues.

Remuneration. Each Independent Board Member receives compensation from the
Portfolios for his or her services, which includes retainer fees and specified
amounts for various committee services and for the Board Chairperson. No
additional compensation is paid to any Independent Board Member for travel time
to meetings, attendance at directors' educational seminars or conferences,
service on industry or association committees, participation as speakers at
directors' conferences or service on special fund industry director task forces
or subcommittees. Independent Board Members do not receive any employee benefits
such as pension or retirement benefits or health insurance from the Portfolios
or any fund in the DWS fund complex.

Board Members who are officers, directors, employees or stockholders of Deutsche
Asset Management or its affiliates receive no direct compensation from the
Portfolios, although they are compensated as employees of Deutsche Asset
Management, or its affiliates, and as a result may be deemed to participate in
fees paid by the Portfolios. The following tables show compensation from the
Portfolios and aggregate compensation from all of the funds in the DWS fund
complex received by each Independent Board Member during the calendar year 2008.
Mr. Schwarzer is an interested person of the Portfolios and received no
compensation from the Portfolios or any fund in the DWS fund complex during the
relevant periods.


<TABLE>
<CAPTION>
                                     Aggregate                                  Aggregate
                                   Compensation           Aggregate           Compensation
                                     from DWS            Compensation           from DWS          Total Compensation
                                   Conservative        from DWS Growth          Moderate            from Fund and
  Name of Board Member            Allocation VIP       Allocation VIP        Allocation VIP       DWS Fund Complex(1)
  --------------------            --------------       --------------        --------------       -------------------

<S>                                    <C>                 <C>                  <C>                       <C>
  John W. Ballantine                   $587                $873                 $838                      $237,500
  Henry P. Becton, Jr.(2)              $533                $397                 $603                      $246,000
  Dawn-Marie Driscoll(2)((3))          $613                $453                 $700                      $292,500
  Keith R. Fox((2))                    $502                $376                 $567                      $229,500
  Paul K. Freeman                      $648                $956                 $921                      $255,000
  Kenneth C. Froewiss                  $495                $372                 $560                      $226,750
  Richard J. Herring(2)                $518                $388                 $588                      $240,000
  William McClayton((4))               $696              $1,037               $1,003                      $257,500
  Rebecca W. Rimel(2)                  $512                $383                 $577                      $233,500
  William N. Searcy, Jr.               $513                $385                 $583                      $238,000
  Jean Gleason Stromberg               $492                $370                 $557                      $225,500
  Robert H. Wadsworth                  $568                $835                 $810                      $273,500
</TABLE>

(1)      The DWS fund complex is composed of 136 funds as of December 31, 2008.

(2)      Aggregate compensation includes amounts paid to the Board Members for
         special meetings of ad hoc committees of the Board in connection with
         the consolidation of the DWS fund boards and various funds, meetings
         for considering fund expense simplification initiatives, and
         consideration of issues specific to the Portfolios' direct shareholders
         (i.e., those shareholders who did not purchase shares through financial
         intermediaries). Such amounts totaled $8,000 for Mr. Becton, $2,000 for
         Ms. Driscoll, $2,000 for Mr. Fox, $2,000 for Dr. Herring and $8,000 for
         Ms. Rimel. These meeting fees were borne by the funds.

(3)      Includes $70,000 in annual retainer fees received by Ms. Driscoll as
         Chairperson of DWS funds.

(4)      Includes $15,000 paid to Mr. McClayton for numerous special meetings of
         an ad hoc committee of the former Chicago Board in connection with
         board consolidation initiatives.

Board Member Ownership in the Portfolios

The following table shows the dollar range of equity securities beneficially
owned by each Board Member in the Portfolios and DWS fund complex as of December
31, 2008.

<TABLE>
<CAPTION>
                                                                                  Aggregate Dollar Range of
                                            Dollar Range of Beneficial       Ownership in all Funds Overseen by
                                                     Ownership                          Board Member
Board Member                                 in DWS Variable Series II          in the DWS Fund Complex((1))
------------                                 -------------------------          ----------------------------

Independent Board Member:
-------------------------

<S>                                                    <C>                                 <C>
John W. Ballantine                                     None                                Over $100,000
Henry P. Becton, Jr.                                   None                                Over $100,000
Dawn-Marie Driscoll                                    None                                Over $100,000
Keith R. Fox                                           None                                Over $100,000
Paul K. Freeman                                        None                                Over $100,000
Kenneth C. Froewiss                                    None                                Over $100,000
Richard J. Herring                                     None                                Over $100,000
William McClayton                                      None                                Over $100,000
Rebecca W. Rimel                                       None                                Over $100,000
William N. Searcy, Jr.                                 None                                Over $100,000
Jean Gleason Stromberg                                 None                                Over $100,000
Robert H. Wadsworth                                    None                                Over $100,000

Interested Board Member:
------------------------

Axel Schwarzer                                         None                                Over $100,000
</TABLE>

(1)      Securities beneficially owned as defined under the 1934 Act include
         direct and/or indirect ownership of securities where the Board Member's
         economic interest is tied to the securities, employment ownership and
         securities when the Board Member can exert voting power, and when the
         Board Member has authority to sell the securities. The dollar ranges
         are: None, $1-$10,000, $10,001-$50,000, $50,001-$100,000 and over
         $100,000.

Ownership in Securities of the Advisor and Related Companies

As reported to the Portfolios, the information in the following table reflects
ownership by the Independent Board Members and their immediate family members of
certain securities as of December 31, 2008. Immediate family members can be a
spouse, children residing in the same household including step and adoptive
children, and any dependents. The securities represent ownership in the Advisor
or principal underwriter of the Portfolios and any persons (other than a
registered investment company) directly or indirectly controlling, controlled
by, or under common control with the Advisor or principal underwriter of the
Portfolios (including Deutsche Bank AG).

<TABLE>
<CAPTION>
                                                                                Value of         Percent of
                              Owner and                                         Securities on    Class on an
Independent                   Relationship to                      Title of     an Aggregate     Aggregate
Board Member                  Board Member          Company        Class        Basis            Basis
------------                  ------------          -------        -----        -----            -----

<S>     <C>    <C>    <C>    <C>    <C>    <C>
John W. Ballantine                                      None
Henry P. Becton, Jr.                                    None
Dawn-Marie Driscoll                                     None
Keith R. Fox                                            None
Paul K. Freeman                                         None
Kenneth C. Froewiss                                     None
Richard J. Herring                                      None
William McClayton                                       None
Rebecca W. Rimel                                        None
William N. Searcy, Jr.                                  None
Jean Gleason Stromberg                                  None
Robert H. Wadsworth                                     None
</TABLE>

Securities Beneficially Owned

As of April 3, 2009, the Board Members and officers of the Trust owned, as a
group, less than 1% of the outstanding shares of each Portfolio.

To the best of each Portfolio's knowledge, as of April 3, 2009, no person owned
of record or beneficially 5% or more of any class of the Portfolio's outstanding
shares, except as noted below.

DWS Conservative Allocation VIP

<TABLE>
<CAPTION>
Name and Address of Investor Ownership                          Shares                      % of Total Shares
--------------------------------------                          ------                      -----------------

<S>                                                          <C>                             <C>
METLIFE INSURANCE CO OF CT                                   1,971,612.72                    100% of Class B
ATTN SHAREHOLDER ACCOUNTING DEPT
HARTFORD CT  06199-0027


DWS Moderate Allocation VIP

Name and Address of Investor Ownership                          Shares                      % of Total Shares
--------------------------------------                          ------                      -----------------

METLIFE INSURANCE CO OF CT                                   3,167,663.73                    100% of Class B
ATTN SHAREHOLDER ACCOUNTING DEPT
HARTFORD CT  06199-0027

DWS Growth Allocation VIP

Name and Address of Investor Ownership                          Shares                      % of Total Shares
--------------------------------------                          ------                      -----------------

METLIFE INSURANCE CO OF CT                                   3,155,407.85                    100% of Class B
ATTN SHAREHOLDER ACCOUNTING DEPT
HARTFORD CT  06199-0027
</TABLE>

Agreement to Indemnify Independent Trustees for Certain Expenses

In connection with litigation or regulatory action related to possible improper
market timing or other improper trading activity or possible improper marketing
and sales activity in certain DWS Funds (the "Affected Funds"), DIMA has agreed
to indemnify and hold harmless the Affected Funds ("Fund Indemnification
Agreement") against any and all loss, damage, liability and expense, arising
from market timing or marketing and sales matters alleged in any enforcement
actions brought by governmental authorities involving or potentially affecting
the Affected Funds or DIMA ("Enforcement Actions") or that are the basis for
private actions brought by shareholders of the Affected Funds against the
Affected Funds, their directors and officers, DIMA and/or certain other parties
("Private Litigation"), or any proceedings or actions that may be threatened or
commenced in the future by any person (including governmental authorities),
arising from or similar to the matters alleged in the Enforcement Actions or
Private Litigation. In recognition of its undertaking to indemnify the Affected
Funds and in light of the rebuttable presumption generally afforded to
independent directors/trustees of investment companies that they have not
engaged in disabling conduct, DIMA has also agreed, subject to applicable law
and regulation, to indemnify certain (or, with respect to certain Affected
Funds, all) of the Independent Trustees of the Affected Funds, against certain
liabilities the Independent Trustees may incur from the matters alleged in any
Enforcement Actions or Private Litigation or arising from or similar to the
matters alleged in the Enforcement Actions or Private Litigation, and advance
expenses that may be incurred by the Independent Trustees in connection with any
Enforcement Actions or Private Litigation. DIMA is not, however, required to
provide indemnification and advancement of expenses: (1) with respect to any
proceeding or action which the Affected Funds' Board determines that the
Independent Trustees ultimately would not be entitled to indemnification or (2)
for any liability of the Independent Trustees to the Funds or their shareholders
to which the Independent Trustee would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the
Independent Trustee's duties as a director or trustee of the Affected Funds as
determined in a final adjudication in such action or proceeding. The estimated
amount of any expenses that may be advanced to the Independent Trustees or
indemnity that may be payable under the indemnity agreements is currently
unknown. These agreements by DIMA will survive the termination of the investment
management agreements between DIMA and the Affected Funds.

                                FUND ORGANIZATION


The Fund was organized as a business trust under the laws of Massachusetts on
January 22, 1987 and is governed by an Amended and Restated Declaration of
Trust, approved by shareholders in the second quarter of 2008, as may be further
amended from time to time (the "Declaration of Trust"). . On February 6, 2006
the Fund changed its name from "Scudder Variable Series II" to "DWS Variable
Series II." The Fund may issue an unlimited number of shares of beneficial
interest all having no par value. Since the Fund offers multiple portfolios, it
is known as a "series company." Currently, each Portfolio offered herein offers
one class of shares: Class B. The Portfolios' Class B shares have separate and
exclusive voting rights with respect to the Portfolios' Rule 12b-1 Plan. The
Portfolios' Class B shares also have equal rights with respect to dividends,
assets and liquidation subject to any preferences (such as resulting from
different Rule 12b-1 distribution fees), rights or privileges of any classes of
shares of a Portfolio. Shares are fully paid and nonassessable when issued, and
have no preemptive or conversion rights.

Information about the Portfolios' investment performance is contained in the
Fund's 2008 Annual Report to Shareholders, which may be obtained without charge
from the Fund or from Participating Insurance Companies which offer the
Portfolios.


A Portfolio generally is not required to hold meetings of its shareholders.
Under the Declaration of Trust, however, shareholder meetings will be held in
connection with the following matters to the extent and as provided in the
Declaration of Trust and as required by applicable law: (a) the election or
removal of trustees if a meeting is called for such purpose; (b) the termination
of the Fund or a Portfolio; (c) an amendment of the Declaration of Trust; and
(d) such additional matters as may be required by law or as the Trustees may
determine to be necessary or desirable. Shareholders also vote upon changes in
fundamental policies or restrictions.




Under current interpretations of the 1940 Act, the Fund expects that
Participating Insurance Company shareholders will offer VLI and VA contract
holders the opportunity to instruct them as to how Fund shares attributable to
such contracts will be voted with respect to the matters described above. The
separate prospectuses describing the VLI and VA contracts include additional
disclosure of how contract holder voting rights are computed.



The Declaration of Trust provides that shareholder meeting quorum requirements
shall be established in the Fund's By-laws. The By-laws currently in effect
provide that the presence in person or by proxy of the holders of thirty percent
of the shares entitled to vote at a meeting (or of an individual series or class
if required to vote separately) shall constitute a quorum for the transaction of
business at meetings of shareholders of the Fund.

On any matter submitted to a vote of shareholders, all shares of the Fund
entitled to vote shall, except as otherwise provided in the Fund's By-Laws, be
voted in the aggregate as a single class without regard to series or classes of
shares, except (a) when required by applicable law or when the Trustees shall
have determined that the matter affects one or more series or classes of shares
materially differently, shares shall be voted by individual series or class; and
(b) when the Trustees have determined that the matter affects only the interests
of one or more series or classes, only shareholders of such series or classes
shall be entitled to vote thereon.

The Declaration of Trust provides that the Board of Trustees may, in its
discretion, establish minimum investment amounts for shareholder accounts,
impose fees on accounts that do not exceed a minimum investment amount and
involuntarily redeem shares in any such account in payment of such fees. The
Board of Trustees, in its sole discretion, also may cause the Fund to redeem all
of the shares of the Fund or one or more series or classes held by any
shareholder for any reason, to the extent permissible by the 1940 Act, including
(a) if the shareholder owns shares having an aggregate net asset value of less
than a specified minimum amount, (b) if a particular shareholder's ownership of
shares would disqualify a series from being a regulated investment company, (c)
upon a shareholder's failure to provide sufficient identification to permit the
Fund to verify the shareholder's identity, (d) upon a shareholder's failure to
pay for shares or meet or maintain the qualifications for ownership of a
particular class or series of shares, (e) if the Board of Trustees determines
(or pursuant to policies established by the Board it is determined) that share
ownership by a particular shareholder is not in the best interests of remaining
shareholders, (f) when a Portfolio is requested or compelled to do so by
governmental authority or applicable law and (g) upon a shareholder's failure to
comply with a request for information with respect to the direct or indirect
ownership of shares of the Fund. The Declaration of Trust also authorizes the
Board of Trustees to terminate a Portfolio or any class without shareholder
approval, and the Fund may suspend the right of shareholders to require the Fund
to redeem shares to the extent permissible under the 1940 Act.

Upon the termination of the Fund or any series, after paying or adequately
providing for the payment of all liabilities which may include the establishment
of a liquidating trust or similar vehicle, and upon receipt of such releases,
indemnities and refunding agreements as they deem necessary for their
protection, the Trustees may distribute the remaining Fund property or property
of the series, in cash or in kind or partly each, to the shareholders of the
Fund or the series involved, ratably according to the number of shares of the
Fund or such series held by the several shareholders of the Fund or such series
on the date of termination, except to the extent otherwise required or permitted
by the preferences and special or relative rights and privileges of any classes
of shares of a series involved, provided that any distribution to the
shareholders of a particular class of shares shall be made to such shareholders
pro rata in proportion to the number of shares of such class held by each of
them. The composition of any such distribution (e.g., cash, securities or other
assets) shall be determined by the Fund in its sole discretion, and may be
different among shareholders (including differences among shareholders in the
same series or class).

Under Massachusetts law, shareholders of a Massachusetts business trust could,
under certain circumstances, be held personally liable for obligations of a
Portfolio. The Declaration of Trust, however, disclaims shareholder liability
for acts or obligations of the Portfolio and requires that notice of such
disclaimer be given in each agreement, obligation, or instrument entered into or
executed by the Portfolio or the Portfolio's trustees. Moreover, the Declaration
of Trust provides for indemnification out of Portfolio property for all losses
and expenses of any shareholder held personally liable for the obligations of
the Portfolio and the Portfolio may be covered by insurance which the Trustees
consider adequate to cover foreseeable tort claims. Thus, the risk of a
shareholder incurring financial loss on account of shareholder liability is
considered by the Advisor remote and not material, since it is limited to
circumstances in which a disclaimer is inoperative and the Portfolio itself is
unable to meet its obligations.




                             PROXY VOTING GUIDELINES

The Fund has delegated proxy voting responsibilities to the Advisor, subject to
the Board's general oversight. The Advisor votes proxies pursuant to the proxy
voting policy and guidelines set forth in Appendix A to this SAI).

You may obtain information about how a fund voted proxies related to its
portfolio securities during the 12-month period ended June 30 by visiting the
Securities and Exchange Commission's Web site at www.sec.gov or by visiting our
Web site at: www.dws-investments.com (click on "proxy voting" at the bottom of
the page).

                             ADDITIONAL INFORMATION

The CUSIP number for each Portfolio is as follows:

                                                        Class B

DWS Conservative Allocation VIP                        23338H461
DWS Growth Allocation VIP                              23338H453
DWS Moderate Allocation VIP                            23338H446

Each series of DWS Variable Series II has a fiscal year ending December 31.

Many of the investment changes in the Portfolios will be made at prices
different from those prevailing at the time they may be reflected in a regular
report to shareholders of the Fund. These transactions will reflect investment
decisions made by the Advisor in light of each Portfolio's investment objectives
and policies, its other portfolio holdings and tax considerations, and should
not be construed as recommendations for similar action by other investors.


Each Portfolio, through its combined Prospectuses and combined Statement of
Additional Information, offers only its own share classes, yet it is possible
that one Portfolio might become liable for a misstatement regarding the other
Portfolio. The Trustees have considered this, and have approved the use of the
Prospectus and Statement of Additional Information.


The Portfolios' prospectus and this Statement of Additional Information omit
certain information contained in the Registration Statement and its amendments
which the Fund has filed with the SEC under the Securities Act of 1933 and
reference is hereby made to the Registration Statement for further information
with respect to the Fund and the securities offered hereby. The Registration
Statement and its amendments are available for inspection by the public at the
SEC in Washington, D.C.

                              FINANCIAL STATEMENTS

The audited financial statements, including the investment portfolios of each
Portfolio, as applicable, together with the Report of Independent Registered
Public Accounting Firm, Financial Highlights and notes to financial statements
in the Annual Report to the Shareholders of each Portfolio dated December 31,
2008 are incorporated herein by reference and are hereby deemed to be a part of
this Statement of Additional Information. A copy of the Fund's Annual Report may
be obtained without charge by contacting the Customer Service Center at the
telephone number shown in the contract Prospectus.


                      APPENDIX A -- PROXY VOTING GUIDELINES

       Deutsche Asset Management ("AM") Proxy Voting Policy and Guidelines


I.       INTRODUCTION

AM has adopted and implemented the following policies and procedures, which it
believes are reasonably designed to ensure that proxies are voted in the best
economic interest of clients, in accordance with its fiduciary duties and local
regulation. These Proxy Voting Policies, Procedures and Guidelines shall apply
to all accounts managed by US domiciled advisers and to all US client accounts
managed by non US regional offices. Non US regional offices are required to
maintain procedures and to vote proxies as may be required by law on behalf of
their non US clients. In addition, AM's proxy policies reflect the fiduciary
standards and responsibilities for ERISA accounts.

The attached guidelines represent a set of global recommendations that were
determined by the Global Proxy Voting Sub-Committee ("the GPVSC"). These
guidelines were developed to provide AM with a comprehensive list of
recommendations that represent how AM will generally vote proxies for its
clients. The recommendations derived from the application of these guidelines
are not intended to influence the various AM legal entities either directly or
indirectly by parent or affiliated companies. In addition, the organizational
structures and documents of the various AM legal entities allows, where
necessary or appropriate, the execution by individual AM subsidiaries of the
proxy voting rights independently of any DB parent or affiliated company. This
applies in particular to non U.S. fund management companies. The individuals
that make proxy voting decisions are also free to act independently, subject to
the normal and customary supervision by the management/boards of these AM legal
entities.


II.      AM'S PROXY VOTING RESPONSIBILITIES

Proxy votes are the property of AM's advisory clients.(1) As such, AM's
authority and responsibility to vote such proxies depend upon its contractual
relationships with its clients. AM has delegated responsibility for effecting
its advisory clients' proxy votes to Institutional Shareholder Services ("ISS"),
an independent third-party proxy voting specialist. ISS votes AM's advisory
clients' proxies in accordance with AM's proxy guidelines or AM's specific
instructions. Where a client has given specific instructions as to how a proxy
should be voted, AM will notify ISS to carry out those instructions. Where no
specific instruction exists, AM will follow the procedures in voting the proxies
set forth in this document. Certain Taft-Hartley clients may direct AM to have
ISS vote their proxies in accordance with Taft Hartley voting Guidelines

_____________________

(1)      For purposes of these Policies and Procedures, "clients" refers to
         persons or entities: for which AM serves as investment adviser or
         sub-adviser; for which AM votes proxies; and that have an economic or
         beneficial ownership interest in the portfolio securities of issuers
         soliciting such proxies.

Clients may in certain instances contract with their custodial agent and notify
AM that they wish to engage in securities lending transactions. In such cases,
it is the responsibility of the custodian to deduct the number of shares that
are on loan so that they do not get voted twice.


III.     POLICIES

1.       Proxy voting activities are conducted in the best economic interest of
         clients

AM has adopted the following policies and procedures to ensure that proxies are
voted in accordance with the best economic interest of its clients, as
determined by AM in good faith after appropriate review.

2.       The Global Proxy Voting Sub-Committee

The Global Proxy Voting Sub-Committee (the "GPVSC") is an internal working group
established by the applicable AM's Investment Risk Oversight Committee pursuant
to a written charter. The GPVSC is responsible for overseeing AM's proxy voting
activities, including:

(i)    adopting, monitoring and updating guidelines, attached as Exhibit A (the
       "Guidelines"), that provide how AM will generally vote proxies pertaining
       to a comprehensive list of common proxy voting matters;

(ii)   voting proxies where (A) the issues are not covered by specific client
       instruction or the Guidelines; (B) the Guidelines specify that the issues
       are to be determined on a case-by-case basis; or (C) where an exception
       to the Guidelines may be in the best economic interest of AM's clients;
       and

(iii)  monitoring the Proxy Vendor Oversight's proxy voting activities (see
       below).

AM's Proxy Vendor Oversight, a function of AM's Operations Group, is responsible
for coordinating with ISS to administer AM's proxy voting process and for voting
proxies in accordance with any specific client instructions or, if there are
none, the Guidelines, and overseeing ISS' proxy responsibilities in this regard.

3.       Availability of Proxy Voting Policies and Procedures and proxy voting
         record

Copies of these Policies and Procedures, as they may be updated from time to
time, are made available to clients as required by law and otherwise at AM's
discretion. Clients may also obtain information on how their proxies were voted
by AM as required by law and otherwise at AM's discretion; however, AM must not
selectively disclose its investment company clients' proxy voting records. The
Proxy Vendor Oversight will make proxy voting reports available to advisory
clients upon request. The investment companies' proxy voting records will be
disclosed to shareholders by means of publicly-available annual filings of each
company's proxy voting record for 12-month periods ended June 30 (see
"Recordkeeping" below), if so required by relevant law.


IV.      PROCEDURES

The key aspects of AM's proxy voting process are as follows:

1.       The GPVSC's Proxy Voting Guidelines

The Guidelines set forth the GPVSC's standard voting positions on a
comprehensive list of common proxy voting matters. The GPVSC has developed, and
continues to update the Guidelines based on consideration of current corporate
governance principles, industry standards, client feedback, and the impact of
the matter on issuers and the value of the investments.

The GPVSC will review the Guidelines as necessary to support the best economic
interests of AM's clients and, in any event, at least annually. The GPVSC will
make changes to the Guidelines, whether as a result of the annual review or
otherwise, taking solely into account the best economic interests of clients.
Before changing the Guidelines, the GPVSC will thoroughly review and evaluate
the proposed change and the reasons therefore, and the GPVSC Chair will ask
GPVSC members whether anyone outside of the AM organization (but within Deutsche
Bank and its affiliates) or any entity that identifies itself as a AM advisory
client has requested or attempted to influence the proposed change and whether
any member has a conflict of interest with respect to the proposed change. If
any such matter is reported to the GPVSC Chair, the Chair will promptly notify
the Conflicts of Interest Management Sub-Committee (see below) and will defer
the approval, if possible. Lastly, the GPVSC will fully document its rationale
for approving any change to the Guidelines.

The Guidelines may reflect a voting position that differs from the actual
practices of the public company(ies) within the Deutsche Bank organization or of
the investment companies for which AM or an affiliate serves as investment
adviser or sponsor. Investment companies, particularly closed-end investment
companies, are different from traditional operating companies. These differences
may call for differences in voting positions on the same matter. Further, the
manner in which AM votes investment company proxies may differ from proposals
for which a AM-advised or sponsored investment company solicits proxies from its
shareholders. As reflected in the Guidelines, proxies solicited by closed-end
(and open-end) investment companies are generally voted in accordance with the
pre-determined guidelines of ISS. See Section IV.3.B.

Funds ("Underlying Funds") in which Topiary Fund Management Fund of Funds (each,
a "Fund") invest, may from time to time seek to revise their investment terms
(i.e. liquidity, fees, etc.) or investment structure. In such event, the
Underlying Funds may require approval/consent from its investors to effect the
relevant changes. Topiary Fund Management has adopted Proxy Voting Procedures
which outline the process for these approvals.

2.       Specific proxy voting decisions made by the GPVSC

The Proxy Vendor Oversight will refer to the GPVSC all proxy proposals (i) that
are not covered by specific client instructions or the Guidelines; or (ii) that,
according to the Guidelines, should be evaluated and voted on a case-by-case
basis.

Additionally, if, the Proxy Vendor Oversight, the GPVSC Chair or any member of
the GPVSC, a portfolio manager, a research analyst or a sub-adviser believes
that voting a particular proxy in accordance with the Guidelines may not be in
the best economic interests of clients, that individual may bring the matter to
the attention of the GPVSC Chair and/or the Proxy Vendor Oversight.(2)

_____________________

(2)      The Proxy Vendor Oversight generally monitors upcoming proxy
         solicitations for heightened attention from the press or the industry
         and for novel or unusual proposals or circumstances, which may prompt
         the Proxy Vendor Oversight to bring the solicitation to the attention
         of the GPVSC Chair. AM portfolio managers, AM research analysts and
         sub-advisers also may bring a particular proxy vote to the attention of
         the GPVSC Chair, as a result of their ongoing monitoring of portfolio
         securities held by advisory clients and/or their review of the periodic
         proxy voting record reports that the GPVSC Chair distributes to AM
         portfolio managers and AM research analysts.

If the Proxy Vendor Oversight refers a proxy proposal to the GPVSC or the GPVSC
determines that voting a particular proxy in accordance with the Guidelines is
not in the best economic interests of clients, the GPVSC will evaluate and vote
the proxy, subject to the procedures below regarding conflicts.

The GPVSC endeavors to hold meetings to decide how to vote particular proxies
sufficiently before the voting deadline so that the procedures below regarding
conflicts can be completed before the GPVSC's voting determination.

3.       Certain proxy votes may not be cast

In some cases, the GPVSC may determine that it is in the best economic interests
of its clients not to vote certain proxies. If the conditions below are met with
regard to a proxy proposal, AM will abstain from voting:

o        Neither the Guidelines nor specific client instructions cover an issue;

o        ISS does not make a recommendation on the issue;

o        The GPVSC cannot convene on the proxy proposal at issue to make a
         determination as to what would be in the client's best interest. (This
         could happen, for example, if the Conflicts of Interest Management
         Sub-committee found that there was a material conflict or if despite
         all best efforts being made, the GPVSC quorum requirement could not be
         met).

In addition, it is AM's policy not to vote proxies of issuers subject to laws of
those jurisdictions that impose restrictions upon selling shares after proxies
are voted, in order to preserve liquidity. In other cases, it may not be
possible to vote certain proxies, despite good faith efforts to do so. For
example, some jurisdictions do not provide adequate notice to shareholders so
that proxies may be voted on a timely basis. Voting rights on securities that
have been loaned to third-parties transfer to those third-parties, with loan
termination often being the only way to attempt to vote proxies on the loaned
securities. Lastly, the GPVSC may determine that the costs to the client(s)
associated with voting a particular proxy or group of proxies outweighs the
economic benefits expected from voting the proxy or group of proxies.

The Proxy Vendor Oversight will coordinate with the GPVSC Chair regarding any
specific proxies and any categories of proxies that will not or cannot be voted.
The reasons for not voting any proxy shall be documented.

4.       Conflict of Interest Procedures

A. Procedures to Address Conflicts of Interest and Improper Influence

Overriding Principle. In the limited circumstances where the GPVSC votes
proxies,(3) the GPVSC will vote those proxies in accordance with what it, in
good faith, determines to be the best economic interests of AM's clients.(4)

_____________________

(3)      As mentioned above, the GPVSC votes proxies (i) where neither a
         specific client instruction nor a Guideline directs how the proxy
         should be voted, (ii) where the Guidelines specify that an issue is to
         be determined on a case by case basis or (iii) where voting in
         accordance with the Guidelines may not be in the best economic
         interests of clients.

(4)      The Proxy Vendor Oversight, who serves as the non-voting secretary of
         the GPVSC, may receive routine calls from proxy solicitors and other
         parties interested in a particular proxy vote. Any contact that
         attempts to exert improper pressure or influence shall be reported to
         the Conflicts of Interest Management Sub-Committee.

Independence of the GPVSC. As a matter of Compliance policy, the GPVSC and the
Proxy Vendor Oversight are structured to be independent from other parts of
Deutsche Bank. Members of the GPVSC and the employee responsible for Proxy
Vendor Oversight are employees of AM. As such, they may not be subject to the
supervision or control of any employees of Deutsche Bank Corporate and
Investment Banking division ("CIB"). Their compensation cannot be based upon
their contribution to any business activity outside of AM without prior approval
of Legal and Compliance. They can have no contact with employees of Deutsche
Bank outside of the Private Client and Asset Management division ("PCAM")
regarding specific clients, business matters or initiatives without the prior
approval of Legal and Compliance. They furthermore may not discuss proxy votes
with any person outside of AM (and within AM only on a need to know basis).

Conflict Review Procedures. There will be a committee (the "Conflicts of
Interest Management Sub-Committee") established within AM that will monitor for
potential material conflicts of interest in connection with proxy proposals that
are to be evaluated by the GPVSC. Promptly upon a determination that a vote
shall be presented to the GPVSC, the GPVSC Chair shall notify the Conflicts of
Interest Management Sub-Committee. The Conflicts of Interest Management
Sub-Committee shall promptly collect and review any information deemed
reasonably appropriate to evaluate, in its reasonable judgment, if AM or any
person participating in the proxy voting process has, or has the appearance of,
a material conflict of interest. For the purposes of this policy, a conflict of
interest shall be considered "material" to the extent that a reasonable person
could expect the conflict to influence, or appear to influence, the GPVSC's
decision on the particular vote at issue. GPVSC should provide the Conflicts of
Interest Management Sub-Committee a reasonable amount of time (no less than 24
hours) to perform all necessary and appropriate reviews. To the extent that a
conflicts review can not be sufficiently completed by the Conflicts of Interest
Management Sub-Committee the proxies will be voted in accordance with the
standard guidelines.

The information considered by the Conflicts of Interest Management Sub-Committee
may include without limitation information regarding (i) AM client
relationships; (ii) any relevant personal conflict known by the Conflicts of
Interest Management Sub-Committee or brought to the attention of that
sub-committee; (iii) and any communications with members of the GPVSC (or anyone
participating or providing information to the GPVSC) and any person outside of
the AM organization (but within Deutsche Bank and its affiliates) or any entity
that identifies itself as a AM advisory client regarding the vote at issue. In
the context of any determination, the Conflicts of Interest Management
Sub-Committee may consult with, and shall be entitled to rely upon, all
applicable outside experts, including legal counsel.

Upon completion of the investigation, the Conflicts of Interest Management
Sub-Committee will document its findings and conclusions. If the Conflicts of
Interest Management Sub-Committee determines that (i) AM has a material conflict
of interest that would prevent it from deciding how to vote the proxies
concerned without further client consent or (ii) certain individuals should be
recused from participating in the proxy vote at issue, the Conflicts of Interest
Management Sub-Committee will so inform the GPVSC chair.

If notified that AM has a material conflict of interest as described above, the
GPVSC chair will obtain instructions as to how the proxies should be voted
either from (i) if time permits, the effected clients, or (ii) in accordance
with the standard guidelines. If notified that certain individuals should be
recused from the proxy vote at issue, the GPVSC Chair shall do so in accordance
with the procedures set forth below.

Note: Any AM employee who becomes aware of a potential, material conflict of
interest in respect of any proxy vote to be made on behalf of clients shall
notify Compliance. Compliance shall call a meeting of the conflict review
committee to evaluate such conflict and determine a recommended course of
action.

Procedures to be followed by the GPVSC. At the beginning of any discussion
regarding how to vote any proxy, the GPVSC Chair (or his or her delegate) will
inquire as to whether any GPVSC member (whether voting or ex officio) or any
person participating in the proxy voting process has a personal conflict of
interest or has actual knowledge of an actual or apparent conflict that has not
been reported to the Conflicts of Interest Management Sub-Committee.

The GPVSC Chair also will inquire of these same parties whether they have actual
knowledge regarding whether any director, officer or employee outside of the AM
organization (but within Deutsche Bank and its affiliates) or any entity that
identifies itself as a AM advisory client, has: (i) requested that AM, the Proxy
Vendor Oversight (or any member thereof) or a GPVSC member vote a particular
proxy in a certain manner; (ii) attempted to influence AM, the Proxy Vendor
Oversight (or any member thereof), a GPVSC member or any other person in
connection with proxy voting activities; or (iii) otherwise communicated with a
GPVSC member or any other person participating or providing information to the
GPVSC regarding the particular proxy vote at issue, and which incident has not
yet been reported to the Conflicts of Interest Management Sub- Committee.

If any such incidents are reported to the GPVSC Chair, the Chair will promptly
notify the Conflicts of Interest Management Sub-Committee and, if possible, will
delay the vote until the Conflicts of Interest Management Sub-Committee can
complete the conflicts report. If a delay is not possible, the Conflicts of
Interest Management Sub-Committee will instruct the GPVSC whether anyone should
be recused from the proxy voting process, or whether AM should vote the proxy in
accordance with the standard guidelines, seek instructions as to how to vote the
proxy at issue from ISS or, if time permits, the effected clients. These
inquiries and discussions will be properly reflected in the GPVSC's minutes.

Duty to Report. Any AM employee, including any GPVSC member (whether voting or
ex officio), that is aware of any actual or apparent conflict of interest
relevant to, or any attempt by any person outside of the AM organization (but
within Deutsche Bank and its affiliates) or any entity that identifies itself as
a AM advisory client to influence, how AM votes its proxies has a duty to
disclose the existence of the situation to the GPVSC Chair (or his or her
designee) and the details of the matter to the Conflicts of Interest Management
Sub-Committee. In the case of any person participating in the deliberations on a
specific vote, such disclosure should be made before engaging in any activities
or participating in any discussion pertaining to that vote.

Recusal of Members. The GPVSC will recuse from participating in a specific proxy
vote any GPVSC members (whether voting or ex officio) and/or any other person
who (i) are personally involved in a material conflict of interest; or (ii) who,
as determined by the Conflicts of Interest Management Sub-Committee, have actual
knowledge of a circumstance or fact that could effect their independent
judgment, in respect of such vote. The GPVSC will also exclude from
consideration the views of any person (whether requested or volunteered) if the
GPVSC or any member thereof knows, or if the Conflicts of Interest Management
Sub-Committee has determined, that such other person has a material conflict of
interest with respect to the particular proxy, or has attempted to influence the
vote in any manner prohibited by these policies.

If, after excluding all relevant GPVSC voting members pursuant to the paragraph
above, there are three or more GPVSC voting members remaining, those remaining
GPVSC members will determine how to vote the proxy in accordance with these
Policies and Procedures. If there are fewer than three GPVSC voting members
remaining, the GPVSC Chair will vote the proxy in accordance with the standard
guidelines, will obtain instructions as to how to have the proxy voted from, if
time permits, the effected clients and otherwise from ISS.

B.       Investment Companies and Affiliated Public Companies

Investment Companies. As reflected in the Guidelines, all proxies solicited by
open-end and closed-end investment companies are voted in accordance with the
pre-determined guidelines of ISS, unless the investment company client directs
AM to vote differently on a specific proxy or specific categories of proxies.
However, regarding investment companies for which AM or an affiliate serves as
investment adviser or principal underwriter, such proxies are voted in the same
proportion as the vote of all other shareholders (i.e., "mirror" or "echo"
voting). Master fund proxies solicited from feeder funds are voted in accordance
with applicable provisions of Section 12 of the Investment Company Act of 1940.

Subject to participation agreements with certain Exchange Traded Funds ("ETF")
issuers that have received exemptive orders from the U.S. Securities and
Exchange Commission allowing investing DWS funds to exceed the limits set forth
in Section 12(d)(1)(A) and (B) of the Investment Company Act of 1940, DeAM will
echo vote proxies for ETFs in which Deutsche Bank holds more than 25% of
outstanding voting shares globally when required to do so by participation
agreements and SEC orders.

Affiliated Public Companies. For proxies solicited by non-investment company
issuers of or within the Deutsche Bank organization, e.g., Deutsche bank itself,
these proxies will be voted in the same proportion as the vote of other
shareholders (i.e., "mirror" or "echo" voting).

Note: With respect to the QP Trust (not registered under the Investment Company
Act of 1940), the Fund is not required to engage in echo voting and the
investment adviser will use these Guidelines, and may determine, with respect to
the QP Trust, to vote contrary to the positions in the Guidelines, consistent
with the Fund's best interest.

C.       Other Procedures That Limit Conflicts of Interest

AM and other entities in the Deutsche Bank organization have adopted a number of
policies, procedures and internal controls that are designed to avoid various
conflicts of interest, including those that may arise in connection with proxy
voting, including:

o        Deutsche Bank Americas Restricted Activities Policy. This policy
         provides for, among other things, independence of AM employees from
         CIB, and information barriers between AM and other affiliates.
         Specifically, no AM employee may be subject to the supervision or
         control of any employee of CIB. No AM employee shall have his or her
         compensation based upon his or her contribution to any business
         activity within the Bank outside of the business of AM, without the
         prior approval of Legal or Compliance. Further, no employee of CIB
         shall have any input into the compensation of a AM employee without the
         prior approval of Legal or Compliance. Under the information barriers
         section of this policy, as a general rule, AM employees who are
         associated with the investment process should have no contact with
         employees of Deutsche Bank or its affiliates, outside of PCAM,
         regarding specific clients, business matters, or initiatives. Further,
         under no circumstances should proxy votes be discussed with any
         Deutsche Bank employee outside of AM (and should only be discussed on a
         need-to-know basis within AM).

Other relevant internal policies include the Deutsche Bank Americas Code of
Professional Conduct, the Deutsche Asset Management Information Sharing
Procedures, the Deutsche Asset Management Code of Ethics, the Sarbanes-Oxley
Senior Officer Code of Ethics, and the Deutsche Bank Group Code of Conduct. The
GPVSC expects that these policies, procedures and internal controls will greatly
reduce the chance that the GPVSC (or, its members) would be involved in, aware
of or influenced by, an actual or apparent conflict of interest.


V.       RECORDKEEPING

At a minimum, the following types of records must be properly maintained and
readily accessible in order to evidence compliance with this policy.

o        AM will maintain a record of each vote cast by AM that includes among
         other things, company name, meeting date, proposals presented, vote
         cast and shares voted.

o        The Proxy Vendor Oversight maintains records for each of the proxy
         ballots it votes. Specifically, the records include, but are not
         limited to:

         -        The proxy statement (and any additional solicitation
                  materials) and relevant portions of annual statements.

         -        Any additional information considered in the voting process
                  that may be obtained from an issuing company, its agents or
                  proxy research firms.

         -        Analyst worksheets created for stock option plan and share
                  increase analyses.

         -        Proxy Edge print-screen of actual vote election.

o        AM will retain these Policies and Procedures and the Guidelines; will
         maintain records of client requests for proxy voting information; and
         will retain any documents the Proxy Vendor Oversight or the GPVSC
         prepared that were material to making a voting decision or that
         memorialized the basis for a proxy voting decision.

o        The GPVSC also will create and maintain appropriate records documenting
         its compliance with these Policies and Procedures, including records of
         its deliberations and decisions regarding conflicts of interest and
         their resolution.

o        With respect to AM's investment company clients, ISS will create and
         maintain records of each company's proxy voting record for 12-month
         periods ended June 30. AM will compile the following information for
         each matter relating to a portfolio security considered at any
         shareholder meeting held during the period covered by the report and
         with respect to which the company was entitled to vote:

         -        The name of the issuer of the portfolio security;

         -        The exchange ticker symbol of the portfolio security (if
                  symbol is available through reasonably practicable means);

         -        The Council on Uniform Securities Identification Procedures
                  number for the portfolio security (if the number is available
                  through reasonably practicable means);

         -        The shareholder meeting date;

         -        A brief identification of the matter voted on;

         -        Whether the matter was proposed by the issuer or by a security
                  holder;

         -        Whether the company cast its vote on the matter;

         -        How the company cast its vote (e.g., for or against proposal,
                  or abstain; for or withhold regarding election of directors);
                  and

         -        Whether the company cast its vote for or against management.

Note: This list is intended to provide guidance only in terms of the records
that must be maintained in accordance with this policy. In addition, please note
that records must be maintained in accordance with the applicable AM Records
Management Policy.

With respect to electronically stored records, "properly maintained" is defined
as complete, authentic (unalterable) usable and backed-up. At a minimum, records
should be retained for a period of not less than six years (or longer, if
necessary to comply with applicable regulatory requirements), the first three
years in an appropriate AM office.


VI.      THE GPVSC'S OVERSIGHT ROLE

In addition to adopting the Guidelines and making proxy voting decisions on
matters referred to it as set forth above, the GPVSC will monitor the proxy
voting process by reviewing summary proxy information presented by ISS. The
GPVSC will use this review process to determine, among other things, whether any
changes should be made to the Guidelines. This review will take place at least
quarterly and will be documented in the GPVSC's minutes.


Attachment A - Global Proxy Voting Guidelines







                            Deutsche Asset Management

                         Global Proxy Voting Guidelines



                             As Amended October 2008


                                [GRAPHIC OMITTED]
Table of contents

I        Board Of Directors And Executives

         A        Election Of Directors

         B        Classified Boards Of Directors

         C        Board And Committee Independence

         D        Liability And Indemnification Of Directors

         E        Qualifications Of Directors

         F        Removal Of Directors And Filling Of Vacancies

         G        Proposals To Fix The Size Of The Board

         H        Proposals to Restrict Chief Executive Officer's Service on

                  Multiple Boards

         I        Proposals to Restrict Supervisory Board Members Service on

                  Multiple Boards

         J        Proposals to Establish Audit Committees

II       Capital Structure

         A        Authorization Of Additional Shares

         B        Authorization Of "Blank Check" Preferred Stock

         C        Stock Splits/Reverse Stock Splits

         D        Dual Class/Supervoting Stock

         E        Large Block Issuance

         F        Recapitalization Into A Single Class Of Stock

         G        Share Repurchases

         H        Reductions In Par Value

III      Corporate Governance Issues

         A        Confidential Voting

         B        Cumulative Voting

         C        Supermajority Voting Requirements

         D        Shareholder Right To Vote

IV       Compensation

         A        Establishment of a Remuneration Committee

         B        Executive And Director Stock Option Plans

         C        Employee Stock Option/Purchase Plans

         D        Golden Parachutes

         E        Proposals To Limit Benefits Or Executive Compensation

         F        Option Expensing

         G        Management board election and motion

         H        Remuneration (variable pay)

         I        Long-term incentive plans

         J        Shareholder Proposals Concerning "Pay For Superior
                  Performance"

         K        Executive Compensation Advisory

V        Anti-Takeover Related Issues

         A        Shareholder Rights Plans ("Poison Pills")

         B        Reincorporation

         C        Fair-Price Proposals

         D        Exemption From State Takeover Laws

         E        Non-Financial Effects Of Takeover Bids

VI       Mergers & Acquisitions

VII      Social & Political Issues

         A        Labor & Human Rights

         B        Diversity & Equality

         C        Health & Safety

         D        Government/Military

         E        Tobacco

VIII     Environmental Issues

IX       Miscellaneous Items

         A        Ratification Of Auditors

         B        Limitation Of Non-Audit Services Provided By Independent
                  Auditor

         C        Audit Firm Rotation

         D        Transaction Of Other Business

         E        Motions To Adjourn The Meeting

         F        Bundled Proposals

         G        Change Of Company Name

         H        Proposals Related To The Annual Meeting

         I        Reimbursement Of Expenses Incurred From Candidate Nomination

         J        Investment Company Proxies

         K        International Proxy Voting


These Guidelines may reflect a voting position that differs from the actual
practices of the public company (ies) within the Deutsche Bank organization or
of the investment companies for which AM or an affiliate serves as investment
adviser or sponsor.

NOTE: Because of the unique structure and regulatory scheme applicable to
closed-end investment companies, the voting guidelines (particularly those
related to governance issues) generally will be inapplicable to holdings of
closed-end investment companies. As a result, determinations on the appropriate
voting recommendation for closed-end investment company shares will be made on a
case-by-case basis.


I.       Board of Directors and Executives

A.       Election of Directors

Routine: AM Policy is to vote "for" the uncontested election of directors. Votes
for a director in an uncontested election will be withheld in cases where a
director has shown an inability to perform his/her duties in the best interests
of the shareholders.

Proxy contest: In a proxy contest involving election of directors, a
case-by-case voting decision will be made based upon analysis of the issues
involved and the merits of the incumbent and dissident slates of directors. AM
will incorporate the decisions of a third party proxy research vendor,
currently, Institutional Shareholder Services ("ISS") subject to review by the
Proxy Voting Sub-Committee (GPVSC) as set forth in the AM's Proxy Voting
Policies and Procedures.

Rationale: The large majority of corporate directors fulfill their fiduciary
obligation and in most cases support for management's nominees is warranted. As
the issues relevant to a contested election differ in each instance, those cases
must be addressed as they arise.

B.       Classified Boards of Directors

AM policy is to vote against proposals to classify the board and for proposals
to repeal classified boards and elect directors annually.

Rationale: Directors should be held accountable on an annual basis. By
entrenching the incumbent board, a classified board may be used as an
anti-takeover device to the detriment of the shareholders in a hostile take-over
situation.

C.       Board and Committee Independence

AM policy is to vote:

1.       "For" proposals that require that a certain percentage (majority up to
         66 2/3%) of members of a board of directors be comprised of independent
         or unaffiliated directors.

2.       "For" proposals that require all members of a company's compensation,
         audit, nominating, or other similar committees be comprised of
         independent or unaffiliated directors.

3.       "Against" shareholder proposals to require the addition of special
         interest, or constituency, representatives to boards of directors.

4.       "For" separation of the Chairman and CEO positions.

5.       "Against" proposals that require a company to appoint a Chairman who is
         an independent director.

Rationale: Board independence is a cornerstone of effective governance and
accountability. A board that is sufficiently independent from management assures
that shareholders' interests are adequately represented. However, the Chairman
of the board must have sufficient involvement in and experience with the
operations of the company to perform the functions required of that position and
lead the company.

No director qualifies as 'independent' unless the board of directors
affirmatively determines that the director has no material relationship with the
listed company (either directly or as a partner, shareholder or officer of an
organization that has a relationship with the company).

Whether a director is in fact not "independent" will depend on the laws and
regulations of the primary market for the security and the exchanges, if any, on
which the security trades.

D.       Liability and Indemnification of Directors

AM policy is to vote "for" management proposals to limit directors' liability
and to broaden the indemnification of directors, unless broader indemnification
or limitations on directors' liability would effect shareholders' interests in
pending litigation.

Rationale: While shareholders want directors and officers to be responsible for
their actions, it is not in the best interests of the shareholders for them to
be to risk averse. If the risk of personal liability is too great, companies may
not be able to find capable directors willing to serve. We support expanding
coverage only for actions taken in good faith and not for serious violations of
fiduciary obligation or negligence.

E.       Qualifications of Directors

AM policy is to follow management's recommended vote on either management or
shareholder proposals that set retirement ages for directors or require specific
levels of stock ownership by directors.

Rationale: As a general rule, the board of directors, and not the shareholders,
is most qualified to establish qualification policies.

F.       Removal of Directors and Filling of Vacancies

AM policy is to vote "against" proposals that include provisions that directors
may be removed only for cause or proposals that include provisions that only
continuing directors may fill board vacancies.

Rationale: Differing state statutes permit removal of directors with or without
cause. Removal of directors for cause usually requires proof of self-dealing,
fraud or misappropriation of corporate assets, limiting shareholders' ability to
remove directors except under extreme circumstances. Removal without cause
requires no such showing.

Allowing only incumbent directors to fill vacancies can serve as an
anti-takeover device, precluding shareholders from filling the board until the
next regular election.

G.       Proposals to Fix the Size of the Board

AM policy is to vote:

1.       "For" proposals to fix the size of the board unless: (a) no specific
         reason for the proposed change is given; or (b) the proposal is part of
         a package of takeover defenses.

2.       "Against" proposals allowing management to fix the size of the board
         without shareholder approval.

Rationale: Absent danger of anti-takeover use, companies should be granted a
reasonable amount of flexibility in fixing the size of its board.

H.       Proposals to Restrict Chief Executive Officer's Service on Multiple
         Boards

AM policy is to vote "For" proposals to restrict a Chief Executive Officer from
serving on more than three outside boards of directors.

Rationale: Chief Executive Officer must have sufficient time to ensure that
shareholders' interests are represented adequately.

Note: A director's service on multiple closed-end fund boards within a fund
complex are treated as service on a single Board for the purpose of the proxy
voting guidelines.

I.       Proposals to Restrict Supervisory Board Members Service on Multiple
         Boards (For FFT Securities)

AM policy is to vote "for" proposals to restrict a Supervisory Board Member from
serving on more than five supervisory boards.

Rationale: We consider a strong, independent and knowledgeable supervisory board
as important counter-balance to executive management to ensure that the
interests of shareholders are fully reflected by the company.

Full information should be disclosed in the annual reports and accounts to allow
all shareholders to judge the success of the supervisory board controlling their
company.

Supervisory Board Member must have sufficient time to ensure that shareholders'
interests are represented adequately.

Note: A director's service on multiple closed-end fund boards within a fund
complex are treated as service on a single Board for the purpose of the proxy
voting guidelines.

J.       Proposals to Establish Audit Committees (For FFT and U.S. Securities)
         AM policy is to vote "for" proposals that require the establishment of
         audit committees.

Rationale: The audit committee should deal with accounting and risk management
related questions, verifies the independence of the auditor with due regard to
possible conflicts of interest. It also should determine the procedure of the
audit process.


II.      Capital Structure

A.       Authorization of Additional Shares (For U.S. Securities)

AM policy is to vote "for" proposals to increase the authorization of existing
classes of stock that do not exceed a 3:1 ratio of shares authorized to shares
outstanding for a large cap company, and do not exceed a 4:1 ratio of shares
authorized to shares outstanding for a small-midcap company (companies having a
market capitalization under one billion U.S. dollars.).

Rationale: While companies need an adequate number of shares in order to carry
on business, increases requested for general financial flexibility must be
limited to protect shareholders from their potential use as an anti-takeover
device. Requested increases for specifically designated, reasonable business
purposes (stock split, merger, etc.) will be considered in light of those
purposes and the number of shares required.

B.       Authorization of "Blank Check" Preferred Stock (For U.S. Securities)

AM policy is to vote:

1.   "Against" proposals to create blank check preferred stock or to increase
     the number of authorized shares of blank check preferred stock unless the
     company expressly states that the stock will not be used for anti-takeover
     purposes and will not be issued without shareholder approval.

2.   "For" proposals mandating shareholder approval of blank check stock
     placement.

Rationale: Shareholders should be permitted to monitor the issuance of classes
of preferred stock in which the board of directors is given unfettered
discretion to set voting, dividend, conversion and other rights for the shares
issued.

C.       Stock Splits/Reverse Stock Splits

AM policy is to vote "for" stock splits if a legitimate business purpose is set
forth and the split is in the shareholders' best interests. A vote is cast "for"
a reverse stock split only if the number of shares authorized is reduced in the
same proportion as the reverse split or if the effective increase in authorized
shares (relative to outstanding shares) complies with the proxy guidelines for
common stock increases (see, Section II.A, above.)

Rationale: Generally, stock splits do not detrimentally effect shareholders.
Reverse stock splits, however, may have the same result as an increase in
authorized shares and should be analyzed accordingly.

D.       Dual Class/Supervoting Stock

AM policy is to vote "against" proposals to create or authorize additional
shares of super-voting stock or stock with unequal voting rights.

Rationale: The "one share, one vote" principal ensures that no shareholder
maintains a voting interest exceeding their equity interest in the company.

E.       Large Block Issuance (For U.S. Securities)

AM policy is to address large block issuances of stock on a case-by-case basis,
incorporating the recommendation of an independent third party proxy research
firm (currently ISS) subject to review by the GPVSC as set forth in AM's Proxy
Policies and Procedures.

Additionally, AM supports proposals requiring shareholder approval of large
block issuances.

Rationale: Stock issuances must be reviewed in light of the business
circumstances leading to the request and the potential impact on shareholder
value.

F.       Recapitalization into a Single Class of Stock

AM policy is to vote "for" recapitalization plans to provide for a single class
of common stock, provided the terms are fair, with no class of stock being
unduly disadvantaged.

Rationale: Consolidation of multiple classes of stock is a business decision
that may be left to the board and/management if there is no adverse effect on
shareholders.

G.       Share Repurchases

AM policy is to vote "for" share repurchase plans provided all shareholders are
able to participate on equal terms.

Rationale: Buybacks are generally considered beneficial to shareholders because
they tend to increase returns to the remaining shareholders.

H.       Reductions in Par Value

AM policy is to vote "for" proposals to reduce par value, provided a legitimate
business purpose is stated (e.g., the reduction of corporate tax
responsibility.)

Rationale: Usually, adjustments to par value are a routine financial decision
with no substantial impact on shareholders.


III.     Corporate Governance Issues

A.       Confidential Voting

AM policy is to vote "for" proposals to provide for confidential voting and
independent tabulation of voting results and to vote "against" proposals to
repeal such provisions.

Rationale: Confidential voting protects the privacy rights of all shareholders.
This is particularly important for employee-shareholders or shareholders with
business or other affiliations with the company, who may be vulnerable to
coercion or retaliation when opposing management. Confidential voting does not
interfere with the ability of corporations to communicate with all shareholders,
nor does it prohibit shareholders from making their views known directly to
management.

B.       Cumulative Voting (For U.S. Securities)

AM policy is to vote "against" shareholder proposals requesting cumulative
voting and "for"management proposals to eliminate it. The protections afforded
shareholders by cumulative voting are not necessary when a company has a history
of good performance and does not have a concentrated ownership interest.
Accordingly, a vote is cast "against" cumulative voting and "for" proposals to
eliminate it if:

a)       The company has a five year return on investment greater than the
         relevant industry index,

b)       All directors and executive officers as a group beneficially own less
         than 10% of the outstanding stock, and

c)       No shareholder (or voting block) beneficially owns 15% or more of the
         company.

Thus, failure of any one of the three criteria results in a vote for cumulative
voting in accordance with the general policy.

Rationale: Cumulative voting is a tool that should be used to ensure that
holders of a significant number of shares may have board representation;
however, the presence of other safeguards may make their use unnecessary.

C.       Supermajority Voting Requirements

AM policy is to vote "against" management proposals to require a supermajority
vote to amend the charter or bylaws and to vote "for" shareholder proposals to
modify or rescind existing supermajority requirements.

*Exception made when company holds a controlling position and seeks to lower
threshold to maintain control and/or make changes to corporate by-laws.

Rationale: Supermajority voting provisions violate the democratic principle that
a simple majority should carry the vote. Setting supermajority requirements may
make it difficult or impossible for shareholders to remove egregious by-law or
charter provisions. Occasionally, a company with a significant insider held
position might attempt to lower a supermajority threshold to make it easier for
management to approve provisions that may be detrimental to shareholders. In
that case, it may not be in the shareholders interests to lower the
supermajority provision.

D.       Shareholder Right to Vote

AM policy is to vote "against" proposals that restrict the right of shareholders
to call special meetings, amend the bylaws, or act by written consent. Policy is
to vote "for" proposals that remove such restrictions.

Rationale: Any reasonable means whereby shareholders can make their views known
to management or effect the governance process should be supported.


IV.      Compensation

Annual Incentive Plans or Bonus Plans are often submitted to shareholders for
approval. These plans typically award cash to executives based on company
performance. Deutsche Bank believes that the responsibility for executive
compensation decisions rest with the board of directors and/or the compensation
committee, and its policy is not to second-guess the board's award of cash
compensation amounts to executives unless a particular award or series of awards
is deemed excessive. If stock options are awarded as part of these bonus or
incentive plans, the provisions must meet Deutsche Bank's criteria regarding
stock option plans, or similar stock-based incentive compensation schemes, as
set forth below.

A.       Establishment of a Remuneration Committee (For FFT Securities)

AM policy is to vote "for" proposals that require the establishment of a
remuneration committee.

Rationale: Corporations should disclose in each annual report or proxy statement
their policies on remuneration. Essential details regarding executive
remuneration including share options, long-term incentive plans and bonuses,
should be disclosed in the annual report, so that investors can judge whether
corporate pay policies and practices meet the standard.

The remuneration committee shall not comprise any board members and should be
sensitive to the wider scene on executive pay. It should ensure that
performance-based elements of executive pay are designed to align the interests
of shareholders.

B.       Executive and Director Stock Option Plans

AM policy is to vote "for" stock option plans that meet the following criteria:

(1)      The resulting dilution of existing shares is less than (a) 15 percent
         of outstanding shares for large capital corporations or (b) 20 percent
         of outstanding shares for small-mid capital companies (companies having
         a market capitalization under one billion U.S. dollars.)

(2)      The transfer of equity resulting from granting options at less than FMV
         is no greater than 3% of the over-all market capitalization of large
         capital corporations, or 5% of market cap for small-mid capital
         companies.

(3)      The plan does not contain express repricing provisions and, in the
         absence of an express statement that options will not be repriced; the
         company does not have a history of repricing options.

(4)      The plan does not grant options on super-voting stock.

AM will support performance-based option proposals as long as a) they do not
mandate that all options granted by the company must be performance based, and
b) only certain high-level executives are subject to receive the performance
based options.

AM will support proposals to eliminate the payment of outside director pensions.

Rationale: Determining the cost to the company and to shareholders of
stock-based incentive plans raises significant issues not encountered with
cash-based compensation plans. These include the potential dilution of existing
shareholders' voting power, the transfer of equity out of the company resulting
from the grant and execution of options at less than FMV and the authority to
reprice or replace underwater options. Our stock option plan analysis model
seeks to allow reasonable levels of flexibility for a company yet still protect
shareholders from the negative impact of excessive stock compensation.
Acknowledging that small mid-capital corporations often rely more heavily on
stock option plans as their main source of executive compensation and may not be
able to compete with their large capital competitors with cash compensation, we
provide slightly more flexibility for those companies.

C.       Employee Stock Option/Purchase Plans

AM policy is to vote for employee stock purchase plans (ESPP's) when the plan
complies with Internal Revenue Code 423, allowing non-management employees to
purchase stock at 85% of FMV.

AM policy is to vote "for" employee stock option plans (ESOPs) provided they
meet the standards for stock option plans in general. However, when computing
dilution and transfer of equity, ESOPs are considered independently from
executive and director option plans.

Rationale: ESOPs and ESPP's encourage rank-and-file employees to acquire an
ownership stake in the companies they work for and have been shown to promote
employee loyalty and improve productivity.

D.       Golden Parachutes

AM policy is to vote "for" proposals to require shareholder approval of golden
parachutes and for proposals that would limit golden parachutes to no more than
three times base compensation. Policy is to vote "against" more restrictive
shareholder proposals to limit golden parachutes.

Rationale: In setting a reasonable limitation, AM considers that an effective
parachute should be less attractive than continued employment and that the IRS
has opined that amounts greater than three times annual salary, are excessive.

E.       Proposals to Limit Benefits or Executive Compensation

AM policy is to vote "against"

1.   Proposals to limit benefits, pensions or compensation and

2.   Proposals that request or require disclosure of executive compensation
     greater than the disclosure required by Securities and Exchange Commission
     (SEC) regulations.

Rationale: Levels of compensation and benefits are generally considered to be
day-to-day operations of the company, and are best left unrestricted by
arbitrary limitations proposed by shareholders.

F.       Option Expensing

AM policy is to support proposals requesting companies to expense stock options.

Rationale: Although companies can choose to expense options voluntarily, the
Financial Accounting Standards Board (FASB) does not yet require it, instead
allowing companies to disclose the theoretical value of options as a footnote.
Because the expensing of stock options lowers earnings, most companies elect not
to do so. Given the fact that options have become an integral component of
compensation and their exercise results in a transfer of shareholder value, AM
agrees that their value should not be ignored and treated as "no cost"
compensation. The expensing of stock options would promote more modest and
appropriate use of stock options in executive compensation plans and present a
more accurate picture of company operational earnings.

G.        Management board election and motion (For FFT Securities)

AM policy is to vote "against":

o        the election of board members with positions on either remuneration or
         audit committees;

o        the election of supervisory board members with too many supervisory
         board mandates;

o        "automatic" election of former board members into the supervisory
         board.

Rationale: Management as an entity, and each of its members, are responsible for
all actions of the company, and are - subject to applicable laws and regulations
- accountable to the shareholders as a whole for their actions.

Sufficient information should be disclosed in the annual company report and
account to allow shareholders to judge the success of the company.

H.       Remuneration (variable pay): (For FFT Securities)

Executive remuneration for Management Board

AM policy is to vote "for" remuneration for Management Board that is transparent
and linked to results.

Rationale: Executive compensation should motivate management and align the
interests of management with the shareholders. The focus should be on criteria
that prevent excessive remuneration; but enable the company to hire and retain
first-class professionals.

Shareholder interests are normally best served when management is remunerated to
optimise long-term returns. Criteria should include suitable measurements like
return on capital employed or economic value added.

Interests should generally also be correctly aligned when management own shares
in the company - even more so if these shares represent a substantial portion of
their own wealth.

Its disclosure shall differentiate between fixed pay, variable (performance
related) pay and long-term incentives, including stock option plans with
valuation ranges as well as pension and any other significant arrangements.

Executive remuneration for Supervisory Board

AM policy is to vote "for" remuneration for Supervisory Board that is at least
50% in fixed form.

Rationale: It would normally be preferable if performance linked compensation
were not based on dividend payments, but linked to suitable result based
parameters. Consulting and procurement services should also be published in the
company report.

I.       Long-term incentive plans (For FFT Securities)

AM policy is to vote "for" long-term incentive plans for members of a management
board that reward for above average company performance.

Rationale: Incentive plans will normally be supported if they:

o        directly align the interests of members of management boards with those
         of shareholders;

o        establish challenging performance criteria to reward only above average
         performance;

o        measure performance by total shareholder return in relation to the
         market or a range of comparable companies;

o        are long-term in nature and encourage long-term ownership of the shares
         once exercised through minimum holding periods;

o        do not allow a repricing of the exercise price in stock option plans.

J.       Shareholder Proposals Concerning "Pay for Superior Performance"

AM policy is to address pay for superior performance proposals on a case-by-case
basis, incorporating the recommendation of an independent third party proxy
research firm (currently ISS) subject to review by the GPVSC as set forth in
AM's Proxy Policies and Procedures.

Rationale: While AM agrees that compensation issues are better left to the
discretion of management, they appreciate the need to monitor for excessive
compensation practices on a case by case basis. If, after a review of the ISS
metrics, AM is comfortable with ISS's applying this calculation and will vote
according to their recommendation.

K.       Executive Compensation Advisory

AM policy is to follow management's recommended vote on shareholder proposals to
propose an advisory resolution seeking to ratify the compensation of the
company's named executive officers (NEOs) on an annual basis.

Rationale: AM believes that controls exist within senior management and
corporate compensation committees, ensuring fair compensation to executives.
This might allow shareholders to require approval for all levels of management's
compensation.

V.       Anti-Takeover Related Issues

A.       Shareholder Rights Plans ("Poison Pills")

AM policy is to vote "for" proposals to require shareholder ratification of
poison pills or that request boards to redeem poison pills, and to vote
"against" the adoption of poison pills if they are submitted for shareholder
ratification.

Rationale: Poison pills are the most prevalent form of corporate takeover
defenses and can be (and usually are) adopted without shareholder review or
consent. The potential cost of poison pills to shareholders during an attempted
takeover outweighs the benefits.

B.       Reincorporation

AM policy is to examine reincorporation proposals on a case-by-case basis. The
voting decision is based on: (1) differences in state law between the existing
state of incorporation and the proposed state of incorporation; and (2)
differences between the existing and the proposed charter/bylaws/articles of
incorporation and their effect on shareholder rights. If changes resulting from
the proposed reincorporation violate the corporate governance principles set
forth in these guidelines, the reincorporation will be deemed contrary to
shareholder's interests and a vote cast "against."

Rationale: Reincorporations can be properly analyzed only by looking at the
advantages and disadvantages to their shareholders. Care must be taken that
anti-takeover protection is not the sole or primary result of a proposed change.

C.       Fair-Price Proposals

AM policy is to vote "for" management fair-price proposals, provided that: (1)
the proposal applies only to two-tier offers; (2) the proposal sets an objective
fair-price test based on the highest price that the acquirer has paid for a
company's shares; (3) the supermajority requirement for bids that fail the
fair-price test is no higher than two-thirds of the outstanding shares; (4) the
proposal contains no other anti-takeover provisions or provisions that restrict
shareholders rights.

A vote is cast for shareholder proposals that would modify or repeal existing
fair-price requirements that do not meet these standards.

Rationale: While fair price provisions may be used as anti-takeover devices, if
adequate provisions are included, they provide some protection to shareholders
who have some say in their application and the ability to reject those
protections if desired.

D.       Exemption from state takeover laws

AM policy is to vote "for" shareholder proposals to opt out of state takeover
laws and to vote "against" management proposals requesting to opt out of state
takeover laws.

Rationale: Control share statutes, enacted at the state level, may harm
long-term share value by entrenching management. They also unfairly deny certain
shares their inherent voting rights.

E.       Non-financial Effects of Takeover Bids

Policy is to vote "against" shareholder proposals to require consideration of
non-financial effects of merger or acquisition proposals.

Rationale: Non-financial effects may often be subjective and are secondary to
AM's stated purpose of acting in its client's best economic interest.


VI.      Mergers & Acquisitions

Evaluation of mergers, acquisitions and other special corporate transactions
(i.e., takeovers, spin-offs, sales of assets, reorganizations, restructurings
and recapitalizations) are performed on a case-by-case basis incorporating
information from an independent proxy research source (currently ISS.)
Additional resources including portfolio management and research analysts may be
considered as set forth in AM's Policies and Procedures.


VII.     Social, Environmental & Political Issues

Social and environmental issues are becoming increasingly important to corporate
success. We incorporate social and environmental considerations into both our
investment decisions and our proxy voting decisions - particularly if the
financial performance of the company could be impacted.

With increasing frequency, shareholder proposals are submitted relating to
social and political responsibility issues. Almost universally, the company
management will recommend a vote "against" these proposals. These types of
proposals cover an extremely wide range of issues. Many of the issues tend to be
controversial and are subject to more than one reasonable, yet opposing, theory
of support. More so than with other types of proxy proposals, social and
political responsibility issues may not have a connection to the economic and
corporate governance principles effecting shareholders' interests. AM's policy
regarding social and political responsibility issues, as with any other issue,
is designed to protect our client shareholders' economic interests.

Occasionally, a distinction is made between a shareholder proposal requesting
direct action on behalf of the board and a request for a report on (or
disclosure of) some information. In order to avoid unduly burdening any company
with reporting requirements, AM's policy is to vote against shareholder
proposals that demand additional disclosure or reporting than is required by the
Securities and Exchange Commission unless it appears there is a legitimate issue
and the company has not adequately addressed shareholders' concerns.

A.       Labor & Human Rights

AM policy is to vote "against" adopting global codes of conduct or workplace
standards exceeding those mandated by law.

Rationale: Additional requirements beyond those mandated by law are deemed
unnecessary and potentially burdensome to companies

B.       Diversity & Equality

1.       AM policy is to vote "against" shareholder proposals to force equal
         employment opportunity, affirmative action or board diversity.

Rationale: Compliance with State and Federal legislation along with information
made available through filings with the EEOC provides sufficient assurance that
companies act responsibly and make information public.

2.       AM policy is also to vote "against" proposals to adopt the Mac Bride
         Principles. The Mac Bride Principles promote fair employment,
         specifically regarding religious discrimination.

Rationale: Compliance with the Fair Employment Act of 1989 makes adoption of the
Mac Bride Principles redundant. Their adoption could potentially lead to charges
of reverse discrimination.

C.       Health & Safety

1.       AM policy is to vote "against" adopting a pharmaceutical price
         restraint policy or reporting pricing policy changes.

Rationale: Pricing is an integral part of business for pharmaceutical companies
and should not be dictated by shareholders (particularly pursuant to an
arbitrary formula.) Disclosing pricing policies may also jeopardize a company's
competitive position in the marketplace.

2.       AM policy is to vote "against" shareholder proposals to control the use
         or labeling of and reporting on genetically engineered products.

Rationale: Additional requirements beyond those mandated by law are deemed
unnecessary and potentially burdensome to companies.

D.       Government/Military

1.       AM policy is to vote against shareholder proposals regarding the
         production or sale of military arms or nuclear or space-based weapons,
         including proposals seeking to dictate a company's interaction with a
         particular foreign country or agency.

Rationale: Generally, management is in a better position to determine what
products or industries a company can and should participate in. Regulation of
the production or distribution of military supplies is, or should be, a matter
of government policy.

2.       AM policy is to vote "against" shareholder proposals regarding
         political contributions and donations.

Rationale: The Board of Directors and Management, not shareholders, should
evaluate and determine the recipients of any contributions made by the company.

3.       AM policy is to vote "against" shareholder proposals regarding
         charitable contributions and donations.

Rationale: The Board of Directors and Management, not shareholders, should
evaluate and determine the recipients of any contributions made by the company.

E.       Tobacco

1.       AM policy is to vote "against" shareholder proposals requesting
         additional standards or reporting requirements for tobacco companies as
         well as "against" requesting companies to report on the intentional
         manipulation of nicotine content.

Rationale: Where a tobacco company's actions meet the requirements of legal and
industry standards, imposing additional burdens may detrimentally effect a
company's ability to compete. The disclosure of nicotine content information
could affect the company's rights in any pending or future litigation.

2.       Shareholder requests to spin-off or restructure tobacco businesses will
         be opposed.

Rationale: These decisions are more appropriately left to the Board and
management, and not to shareholder mandate.


VIII.    Environmental Issues

AM policy is to follow management's recommended vote on CERES Principles or
other similar environmental mandates (e.g., those relating to Greenhouse gas
emissions or the use of nuclear power).

Rationale: Environmental issues are extensively regulated by outside agencies
and compliance with additional requirements often involves significant cost to
companies.


IX.      Miscellaneous Items

A.       Ratification of Auditors

AM policy is to vote "for" a) the management recommended selection of auditors
and b) proposals to require shareholder approval of auditors.

Rationale: Absent evidence that auditors have not performed their duties
adequately, support for management's nomination is warranted.

B.       Limitation of non-audit services provided by independent auditor

AM policy is to support proposals limiting non-audit fees to 50% of the
aggregate annual fees earned by the firm retained as a company's independent
auditor.

Rationale: In the wake of financial reporting problems and alleged audit
failures at a number of companies, AM supports the general principle that
companies should retain separate firms for audit and consulting services to
avoid potential conflicts of interest. However, given the protections afforded
by the recently enacted Sarbanes-Oxley Act of 2002 (which requires Audit
Committee pre-approval for non-audit services and prohibits auditors from
providing specific types of services), and the fact that some non-audit services
are legitimate audit-related services, complete separation of audit and
consulting fees may not be warranted. A reasonable limitation is appropriate to
help ensure auditor independence and it is reasonable to expect that audit fees
exceed non-audit fees.

C.       Audit firm rotation

AM policy is to support proposals seeking audit firm rotation unless the
rotation period sought is less than five years.

Rationale: While the Sarbanes-Oxley Act mandates that the lead audit partner be
switched every five years, AM believes that rotation of the actual audit firm
would provide an even stronger system of checks and balances on the audit
function.

D.       Transaction of Other Business

AM policy is to vote against "transaction of other business" proposals.

Rationale: This is a routine item to allow shareholders to raise other issues
and discuss them at the meeting. As the nature of these issues may not be
disclosed prior to the meeting, we recommend a vote against these proposals.
This protects shareholders voting by proxy (and not physically present at a
meeting) from having action taken at the meeting that they did not receive
proper notification of or sufficient opportunity to consider.

E.       Motions to Adjourn the Meeting

AM Policy is to vote against proposals to adjourn the meeting.

Rationale: Management may seek authority to adjourn the meeting if a favorable
outcome is not secured. Shareholders should already have had enough information
to make a decision. Once votes have been cast, there is no justification for
management to continue spending time and money to press shareholders for
support.

F.       Bundled Proposals

AM policy is to vote against bundled proposals if any bundled issue would
require a vote against it if proposed individually.

Rationale: Shareholders should not be forced to "take the good with the bad" in
cases where the proposals could reasonably have been submitted separately.

G.       Change of Company Name

AM policy is to support management on proposals to change the company name.

Rationale: This is generally considered a business decision for a company.

H.       Proposals Related to the Annual Meeting

AM Policy is to vote in favor of management for proposals related to the conduct
of the annual meeting (meeting time, place, etc.)

Rationale: These are considered routine administrative proposals.

I.       Reimbursement of Expenses Incurred from Candidate Nomination

AM policy is to follow management's recommended vote on shareholder proposals
related to the amending of company bylaws to provide for the reimbursement of
reasonable expenses incurred in connection with nominating one or more
candidates in a contested election of directors to the corporation's board of
directors.

Rationale: Corporations should not be liable for costs associated with
shareholder proposals for directors.

J.       Investment Company Proxies

Proxies solicited by investment companies are voted in accordance with the
recommendations of an independent third party, currently ISS. However, regarding
investment companies for which AM or an affiliate serves as investment adviser
or principal underwriter, such proxies are voted in the same proportion as the
vote of all other shareholders. Proxies solicited by master funds from feeder
funds will be voted in accordance with applicable provisions of Section 12 of
the Investment Company Act of 1940.

Investment companies, particularly closed-end investment companies, are
different from traditional operating companies. These differences may call for
differences in voting positions on the same matter. For example, AM could vote
"for" staggered boards of closed-end investment companies, although AM generally
votes "against" staggered boards for operating companies. Further, the manner in
which AM votes investment company proxies may differ from proposals for which a
AM-advised investment company solicits proxies from its shareholders. As
reflected in the Guidelines, proxies solicited by closed-end (and open-end)
investment companies are voted in accordance with the pre-determined guidelines
of an independent third-party.

Subject to participation agreements with certain Exchange Traded Funds ("ETF")
issuers that have received exemptive orders from the U.S. Securities and
Exchange Commission allowing investing DWS funds to exceed the limits set forth
in Section 12(d)(1)(A) and (B) of the Investment Company Act of 1940, DeAM will
echo vote proxies for ETFs in which Deutsche Bank holds more than 25% of
outstanding voting shares globally when required to do so by participation
agreements and SEC orders.

Note: With respect to the QP Trust (not registered under the Investment Company
Act of 1940), the Fund is not required to engage in echo voting and the
investment adviser will use these Guidelines, and may determine, with respect to
the QP Trust, to vote contrary to the positions in the Guidelines, consistent
with the Fund's best interest.


K.       International Proxy Voting

The above guidelines pertain to issuers organized in the United States, Canada
and Germany. Proxies solicited by other issuers are voted in accordance with
international guidelines or the recommendation of ISS and in accordance with
applicable law and regulation.







--------------------------------------------------------------------------------
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.
--------------------------------------------------------------------------------


                      APPENDIX B -- RATINGS OF INVESTMENTS

BOND AND COMMERCIAL PAPER RATINGS

Set forth below are descriptions of ratings which represent opinions as to the
quality of the securities. It should be emphasized, however, that ratings are
relative and subjective and are not absolute standards of quality.

MOODY'S INVESTORS SERVICE, INC. -- CORPORATE BOND RATINGS

Aaa: Bonds which are rated Aaa are judged to be of the highest quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt-edged." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.

Aa: Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuations of protective elements
may be of greater amplitude or there may be other elements present which make
the long-term risk appear somewhat larger than in Aaa securities.

A: Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper -medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.

Baa: Bonds which are rated Baa are considered as medium grade obligations,
(i.e., they are neither highly protected nor poorly secured). Interest payments
and principal security appear adequate for the present, but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.

Ba: Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safe-guarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.

B: Bonds which are rated B are considered speculative and generally lack
characteristics of the desirable investment. Assurance of interest and principal
payments or of maintenance of other terms of the contract over any long period
of time may be small.

Caa: Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.

Ca: Bonds which are rated Ca represent obligations which are highly speculative.
Such issues are often in default or have other marked shortcomings.

C: Bonds which are rated C are the lowest rated class of bonds, typically are in
default and can be regarded as having extremely poor prospects of ever attaining
any real investment standing.

Note: Moody's appends numerical modifiers 1, 2 and 3 to each generic rating
classification from Aa through Caa in its corporate bond rating system. The
modifier 1 indicates that the issue ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking; and the modifier
3 indicates that the issue ranks in the lower end of its generic rating
category.

MOODY'S INVESTORS SERVICE, INC. -- SHORT-TERM RATINGS

Moody's short-term debt ratings are opinions of the ability of issuers to honor
short-term financial obligations. Ratings may be assigned to issuers, short-term
programs or to individual short-term debt instruments. Such obligations
generally have an original maturity not exceeding thirteen months, unless
explicitly noted. Issuers rated Prime-1 or P-1 (or supporting institutions) have
a superior ability for repayment of short-term debt obligations. Prime-1 or P-1
repayment ability will often be evidenced by many of the following
characteristics: o Leading market positions in well established industries.
o        High rates of return on funds employed.
o Conservative capitalization structure with moderate reliance on debt and ample
asset protection. o Broad margins in earnings coverage of fixed financial
charges and high internal cash generation. o Well established access to a range
of financial markets and assured sources of alternate liquidity.

Issuers rated Prime-2 or P-2 (or supporting institutions) have a strong ability
for repayment of short-term debt obligations. This will normally be evidenced by
many of the characteristics cited above but to a lesser degree. Earnings trends
and coverage ratios, while sound, may be more subject to variation.
Capitalization characteristics, while still appropriate, may be more affected by
external conditions. Ample alternate liquidity is maintained.

STANDARD & POOR'S RATINGS SERVICES -- CORPORATE BOND RATINGS

INVESTMENT GRADE

AAA: Debt rated AAA has the highest rating assigned by S&P's to a debt
obligation. Capacity to pay interest and repay principal is extremely strong.

AA: Debt rated AA has a very strong capacity to pay interest and repay principal
and differs from the higher rated issues only in small degree.

A: Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than bonds in higher rated categories.

BBB: Debt rated BBB has an adequate capacity to pay interest and repay
principal. Whereas it normally exhibits adequate protection parameters, adverse
economic conditions or changing circumstances are more likely to lead to a
weakened capacity to pay interest and repay principal for debt in this category
than in higher rated categories.

SPECULATIVE GRADE

Debt rated BB, B, CCC, CC, and C has significant speculative characteristics
with respect to capacity to pay interest and repay principal. BB indicates the
least degree of speculation and C the highest. While such debt will likely have
some quality and protective characteristics, these may be outweighed by large
uncertainties or major exposures to adverse conditions.

BB: Debt rated BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments.

The BB rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BBB- rating.

B: Debt rated B has a greater vulnerability to default but currently has the
capacity to meet interest payments and principal repayments. Adverse business,
financial, or economic conditions will likely impair capacity or willingness to
pay interest and repay principal.

The B rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BB or BB- rating.

CCC: Debt rated CCC has a current vulnerability to default, and is dependent
upon favorable business, financial, and economic conditions to meet timely
payment of interest and repayment of principal. In the event of adverse
business, financial, or economic conditions, it is not likely to have the
capacity to pay interest and repay principal.

The CCC rating category is also used for debt subordinated to senior debt that
is assigned an actual or implied B or B- rating.

CC: Debt rated CC has a current high vulnerability to default, and is dependent
upon favorable business, financial, and economic conditions to meet timely
payment of interest and repayment of principal.

The rating CC is also applied to debt subordinated to senior debt which is
assigned an actual or implied CCC debt rating.

C: The rating C is typically applied to debt subordinated to senior debt which
is assigned an actual or implied CCC- debt rating. The C rating may be used to
cover a situation where a bankruptcy petition has been filed, but debt service
payments are continued.

C1: The Rating C1 is reserved for income bonds on which no interest is being
paid.

D: Debt rated D is in payment default. The D rating category is used when
interest payments or principal payments are not made on the date due even if the
applicable grace period has not expired, unless Standard & Poor's believes that
such payments will be made during such grace period. The D rating also will be
used upon the filing of a bankruptcy petition if debt service payments are
jeopardized.

Plus (+) or Minus (-): The ratings from AA to CCC may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.

R: Debt rated `R' is under regulatory supervision owing to its financial
condition. During the pendency of the regulatory supervision, the regulators may
have the power to favor one class of obligations over others or pay some
obligations and not others.

N.R.: Bonds may lack a S&P's rating because no public rating has been requested,
because there is insufficient information on which to base a rating, or because
S&P's does not rate a particular type of obligation as a matter of policy.

STANDARD & POOR'S RATINGS SERVICES -- SHORT-TERM RATINGS

S&P's commercial paper rating is a current assessment of the likelihood of
timely payment of debt considered short-term in the relevant market.

A-1: This highest category indicates that the degree of safety regarding timely
payment is strong. Those issues determined to possess extremely strong safety
characteristics are denoted with a plus (+) sign designation.

A-2: Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as for
issues designated A-1.

A-3: Issues carrying this designation have adequate capacity for timely payment.
However, adverse economic conditions or changing circumstances are more likely
to lead to a weakened capacity of the issuer to meet its financial commitments.

FITCH INVESTORS SERVICE, INC. -- BOND RATINGS

INVESTMENT GRADE

AAA: Bonds considered to be investment grade and of the highest credit quality.
The obligor has an exceptionally strong ability to pay interest and repay
principal, which is unlikely to be affected by reasonably foreseeable events.

AA: Bonds considered to be investment grade and of very high credit quality. The
obligor's ability to pay interest and repay principal is very strong, although
not quite as strong as bonds rated AAA. Bonds rated in the AAA and AA categories
are not significantly vulnerable to foreseeable events.

A: Bonds considered to be investment grade and of high credit quality. The
obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions and
circumstances than bonds with higher ratings.

BBB: Bonds considered to be investment grade and of good credit quality. The
obligor's ability to pay interest and repay principal is considered to be
adequate. Adverse changes in economic conditions and circumstances, however, are
more likely to have adverse impact on these bonds, and therefore, impair timely
payment. The likelihood that the ratings of these bonds will fall below
investment grade is higher than for bonds with higher ratings.

SPECULATIVE GRADE

BB: Bonds are considered speculative. The obligor's ability to pay interest and
repay principal may be affected over time by adverse economic changes. However,
business or financial alternatives may be available which could assist the
obligor in satisfying its debt service requirements.

B: Bonds are considered highly speculative. While bonds in this class are
currently meeting debt service requirements, the probability of continued timely
payment of principal and interest reflects the obligor's limited margin of
safety and the need for reasonable business and economic activity throughout the
life of the issue.

CCC: Bonds have certain identifiable characteristics which, if not remedied, may
lead to default. The ability to meet obligations requires an advantageous
business and economic environment.

CC: Bonds are minimally protected. Default in payment of interest and/or
principal seems probable over time.

C: Bonds are in imminent default in payment of interest or principal.

DDD, DD and D: Bonds are in default of interest and/or principal payments. Such
bonds are extremely speculative and should be valued on the basis of their
ultimate recovery value in liquidation or reorganization of the obligor. DDD
represents the highest potential for recovery on these bonds, and D represents
the lowest potential for recovery.

Plus (+) or Minus (-): The ratings from AA to CC may be appended by the addition
of a plus or minus sign to denote the relative status within the rating
category.

NR: Indicates that Fitch Rating does not publicly rate the specific issue.

FITCH INVESTORS SERVICE, INC. -- SHORT-TERM RATINGS

Fitch's short-term ratings apply to debt obligations that are payable on demand
or have original maturities of generally up to three years, including commercial
paper, certificates of deposit, medium-term notes, and municipal and investment
notes.

F-1+: Exceptionally Strong Credit Quality. Issues assigned this rating are
regarded as having the strongest capacity for timely payment.

F-1: Very Strong Credit Quality. Issues assigned this rating reflect a capacity
for timely payment only slightly less than issues rated F-1+.

F-2: Good Credit Quality. Issues assigned this rating have a satisfactory
capacity for timely payment, but the margin of safety is not as great as the
F-1+ and F-1 categories.

F-3: Fair Credit Quality. Issues assigned this rating have characteristics
suggesting that the capacity for timely payment is adequate; however, near-term
adverse changes could cause these securities to be rated below investment grade.

B: Speculative. Minimal capacity for timely payment of financial commitments,
plus vulnerability to near-term adverse changes in financial and economic
conditions.

C: High default risk. Default is a real possibility. Capacity for meeting
financial commitments is solely reliant upon a sustained, favorable business and
economic environment.

D: Default. Denotes actual or imminent payment default.



<PAGE>

                             DWS VARIABLE SERIES II

                                     PART C

                                OTHER INFORMATION

<TABLE>
<CAPTION>
   Item 23.       Exhibits
   --------       --------

<S>                <C>                      <C>
                   (a)(1)                   Amended and Restated Declaration of Trust, dated June 2, 2008. (Incorporated
                                            by reference to Post-Effective Amendment No. 72 to the Registration
                                            Statement, filed on April 9, 2009.)

                   (a)(2)                   Amended and Restated Establishment and Designation of Series and Classes of
                                            Shares of Beneficial Interest, dated June 10, 2008, to authorize the
                                            establishment of DWS Alternative Asset Allocation Plus VIP and the
                                            establishment of Class A shares of this series. (Filed herein.)

                   (a)(3)                   Amended and Restated Establishment and Designation of Series and Classes of
                                            Shares of Beneficial Interest, dated November 21, 2008. (Incorporated by
                                            reference to Post-Effective Amendment No. 67 to the Registration Statement,
                                            filed December 5, 2008.)

                   (a)(4)                   Amended and Restated Establishment and Designation of Series and Classes of
                                            Shares of Beneficial Interest, dated January 22, 2009, to reclassify Class B
                                            shares of DWS Money Market VIP as Class A shares. (Incorporated by reference
                                            to Post-Effective Amendment No. 72 to the Registration Statement, filed on
                                            April 9, 2009.)

                   (a)(5)                   Amended and Restated Establishment and Designation of Series and Classes of
                                            Shares of Beneficial Interest, dated January 22, 2009, to reclassify Class B
                                            shares of DWS Balanced VIP, DWS International Select Equity VIP, DWS Mid Cap
                                            Growth VIP, DWS Small Cap Growth VIP, DWS Strategic Income VIP and DWS
                                            Turner Mid Cap Growth VIP as Class A shares. (Filed herein.)

                   (a)(6)                   Redesignation of Series of Shares of Beneficial Interest as DWS Diversified
                                            International Equity VIP. (To be filed by amendment.)

                   (a)(7)                   Redesignation of Series of Shares of Beneficial Interest as DWS Strategic
                                            Value VIP. (To be filed by amendment.)

                    (b)                     By-laws, dated April 1, 2008.  (Incorporated by reference to Post-Effective
                                            Amendment No. 72 to the Registration Statement, filed on April 9, 2009.)

                    (c)                     Text of Share Certificate.  (Incorporated by reference to Post-Effective
                                            Amendment No. 14 to the Registration Statement, filed on April 27, 1995.)



                                       3
<PAGE>

                   (d)(1)                   Amended and Restated Investment Management Agreement between the Registrant,
                                            on behalf of  DWS Balanced VIP, DWS Blue Chip VIP, DWS Conservative
                                            Allocation VIP, DWS Core Fixed Income VIP,  DWS Dreman High Return Equity
                                            VIP, DWS Dreman Small Mid Cap Value VIP, DWS Global Thematic VIP, DWS
                                            Government & Agency VIP, DWS Growth Allocation VIP, DWS High Income VIP, DWS
                                            International Select Equity VIP,  DWS Mid Cap Growth VIP, DWS Moderate
                                            Allocation VIP, DWS Money Market VIP, DWS Small Cap Growth VIP, DWS
                                            Strategic Income VIP, DWS Technology VIP, DWS Turner Mid Cap Growth VIP, and
                                            Deutsche Investment Management Americas Inc., dated May 1, 2008.
                                            (Incorporated by reference to Post-Effective Amendment No. 64 to the
                                            Registration Statement, filed on August 8, 2008.)

                   (d)(2)                   Subadvisory Agreement between Deutsche Investment Management Americas Inc.
                                            and Dreman Value Management, L.L.C., dated April 5, 2002, for DWS Dreman
                                            Small Cap Value VIP.  (Incorporated by reference to Post-Effective Amendment
                                            No. 38 to the Registration Statement, filed on February 28, 2003.)

                   (d)(3)                   Subadvisory Agreement between Deutsche Investment Management Americas Inc.
                                            and Turner Investment Partners, Inc., dated April 5, 2002, for DWS Turner
                                            Mid Cap Growth VIP.  (Incorporated by reference to Post-Effective Amendment
                                            No. 38 to the Registration Statement, filed on February 28, 2003.)

                   (d)(4)                   Sub-Advisory Agreement between Deutsche Investment Management Americas Inc.
                                            and Deutsche Asset Management International GmbH dated April 11, 2007 (DWS
                                            Large Cap Value VIP).  (Incorporated by reference to Post-Effective
                                            Amendment No. 63 to the Registration Statement, filed on May 1, 2008.)

                   (d)(5)                   Sub-Advisory Agreement between Deutsche Investment Management Americas Inc.
                                            and Deutsche Asset Management International GmbH dated April 1, 2008 (DWS
                                            Balanced VIP). (Incorporated by reference to Post-Effective Amendment No. 64
                                            to the Registration Statement, filed on August 8, 2008.)

                   (d)(6)                   Investment Management Agreement between the Registrant, on behalf of DWS
                                            Large Cap Value VIP, dated April 11, 2007.  (Incorporated by reference to
                                            Post-Effective Amendment No. 63 to the Registration Statement, filed on
                                            May 1, 2008.)

                   (d)(7)                   Subadvisory Agreement between Deutsche Investment Management Americas, Inc.
                                            and RREEF America L.L.C., dated January 15, 2009, on behalf of DWS
                                            Alternative Asset Allocation Plus VIP. (Incorporated by reference to
                                            Post-Effective Amendment No. 71 to the Registration Statement, filed on
                                            February 19, 2009.)

                   (d)(8)                   Sub-Subadvisory Agreement (Global Infrastructure) between Deutsche
                                            Investments Australia Limited and RREEF America L.L.C., dated January 15,
                                            2009, on behalf of DWS Alternative Asset Allocation Plus VIP. (Incorporated
                                            by reference to Post-Effective Amendment No. 71 to the Registration
                                            Statement, filed on February 19, 2009.)



                                       4
<PAGE>

                   (d)(9)                   Sub-Subadvisory Agreement (Global Infrastructure) between Deutsche Asset
                                            Management (Hong Kong) Limited and RREEF America L.L.C., dated January 15,
                                            2009, on behalf of DWS Alternative Asset Allocation Plus VIP. (Incorporated
                                            by reference to Post-Effective Amendment No. 71 to the Registration
                                            Statement, filed on February 19, 2009.)

                  (d)(10)                   Sub-Subadvisory Agreement (Global Infrastructure) between RREEF Global
                                            Advisors Limited and RREEF America L.L.C., dated January 15, 2009, on behalf
                                            of DWS Alternative Asset Allocation Plus VIP. (Incorporated by reference to
                                            Post-Effective Amendment No. 71 to the Registration Statement, filed on
                                            February 19, 2009.)

                  (d)(11)                   Amended Schedule I and Schedule II, dated February 2, 2009, to the Amended
                                            and Restated Investment Management Agreement, dated May 1, 2008,
                                            establishing DWS Alternative Asset Allocation Plus VIP as a new series under
                                            the Amended and Restated Investment Management Agreement. (Incorporated by
                                            reference to Post-Effective Amendment No. 72 to the Registration Statement,
                                            filed on April 9, 2009.)

                  (d)(12)                   Form of Sub-Subadvisory Agreement (Global Real Estate) between RREEF America
                                            L.L.C. and Deutsche Investments Australia Limited, dated
                                            January 15, 2009, on behalf of DWS Alternative Asset Allocation Plus VIP.
                                            (Filed herein.)

                  (d)(13)                   Form of Sub-Subadvisory Agreement (Global Real Estate) between RREEF America
                                            L.L.C. and Deutsche Asset Management (Hong Kong) Limited, dated January 15,
                                            2009, on behalf of DWS Alternative Asset Allocation Plus VIP. (Filed herein.)

                  (d)(14)                   Form of Sub-Subadvisory Agreement (Global Real Estate) between RREEF America
                                            L.L.C. and RREEF Global Advisors Limited, dated January 15, 2009, on behalf
                                            of DWS Alternative Asset Allocation Plus VIP. (Filed herein.)

                    (e)                     Underwriting and Distribution Services Agreement between Scudder Variable
                                            Series II and Scudder Distributors, Inc., dated April 5, 2002.
                                            (Incorporated by reference to Post-Effective Amendment No. 38 to the
                                            Registration Statement, filed on February 28, 2003.)

                   (g)(1)                   Amended and Restated Master Custodian Agreement, dated October 17, 2008,
                                            between the Registrant and Brown Brothers Harriman & Co. (Incorporated by
                                            reference to Post-Effective Amendment No. 71 to the Registration Statement,
                                            filed on February 19, 2009.)

                   (g)(2)                   Master Custodian Agreement, dated November 17, 2008, between the Registrant
                                            and State Street Bank and Trust Company.  (Incorporated by reference to
                                            Post-Effective Amendment No. 71 to the Registration Statement, filed on
                                            February 19, 2009.)

                   (g)(3)                   Amendment, dated February 17, 2009, to Amended and Restated Master Custodian
                                            Agreement, dated October 17, 2008, between the Registrant and Brown Brothers
                                            Harriman & Co. (Filed herein.)



                                       5
<PAGE>

                   (h)(1)                   Agency Agreement between Scudder Variable Series II and Scudder Investments
                                            Service Company, dated July 1, 2001.  (Incorporated by reference to
                                            Post-Effective Amendment No. 35 to the Registration statement, filed on
                                            February 13, 2002.)

                   (h)(2)                   Supplement to Agency Agreement.  (Incorporated by reference to
                                            Post-Effective Amendment No. 24 to the Registration Statement, filed on
                                            April 29, 1999.)

                   (h)(3)                   Second Amendment to the Agency Agreement, dated March 13, 2006.
                                            (Incorporated by reference to Post-Effective Amendment No. 61 to the
                                            Registration Statement, filed April 27, 2007.)

                   (h)(4)                   Amended and Restated Administrative Services Agreement, dated October 1,
                                            2008, between the Registrant and Deutsche Investment Management Americas
                                            Inc. (Incorporated by reference to Post-Effective Amendment No. 70 to the
                                            Registration Statement, filed on January 20, 2009.)

                   (h)(5)                   Letters of Indemnity to the Scudder Funds dated September 10, 2004; and
                                            Letter of Indemnity to the Independent Directors/Trustees dated September
                                            10, 2004. (Incorporated by reference to Post-Effective Amendment No. 56 to
                                            the Registration Statement, filed on February 25, 2005.)

                   (h)(6)                   Form of Participation Agreement. (Filed herein.)

                   (h)(7)                   Form of Expense Limitation Agreement between the Registrant and Deutsche
                                            Investment Management Americas Inc. (Filed herein.)

                   (i)(1)                   Opinion and Consent of Legal Counsel from Vedder, Price, Kaufman & Kammholz,
                                            dated April 22, 2002. (Incorporated by reference to Post-Effective Amendment
                                            No. 36 to the Registration Statement, filed on May 1, 2002.)

                   (i)(2)                   Opinion and Consent of Legal Counsel from Dechert, dated April 25, 2002.
                                            (Incorporated by reference to Post-Effective Amendment No. 36 to the
                                            Registration Statement, filed on May 1, 2002.)

                   (i)(3)                   Opinion and Consent of Legal Counsel, in regards to DWS Alternative Asset
                                            Allocation Plus VIP. (Incorporated by reference to Post-Effective Amendment
                                            No. 70 to the Registration Statement, filed on January 20, 2009.)

                    (j)                     Consent of Independent Registered Public Accounting Firm. (Filed herein.)

                    (k)                     Inapplicable.

                    (l)                     Inapplicable.

                   (m)(1)                   Master Distribution Plan for Class B Shares, as approved on November 28,
                                            2001. (Incorporated by reference to Post-Effective Amendment No. 39 to the
                                            Registration Statement, filed on April 30, 2003.)

                   (m)(2)                   Supplement to Master Distribution Plan for Class B Shares, as approved on
                                            January 15, 2003 for Scudder Strategic Income Portfolio.  (Incorporated by
                                            reference to Post-Effective Amendment No. 39 to the Registration Statement,
                                            filed on April 30, 2003.)



                                       6
<PAGE>

                    (n)                     Plan Pursuant to Rule 18f-3 as approved on November 28, 2001. (Incorporated
                                            by reference to Post-Effective Amendment No. 39 to the Registration
                                            Statement, filed on April 30, 2003.)

                   (p)(1)                   Code of Ethics for Deutsche Asset Management - U.S., dated January 1, 2009.
                                            (Incorporated by reference to Post-Effective Amendment No. 72 to the
                                            Registration Statement, filed on April 9, 2009.)

                   (p)(2)                   Code of Ethics for Turner Investment Partners, Inc. dated July 10, 2003.
                                            (Incorporated by reference to Post-Effective Amendment No. 45 to the
                                            Registration Statement, filed on April 1, 2004.)

                   (p)(3)                   Code of Ethics for Dreman Value Management, L.L.C. (Incorporated by
                                            reference to Post-Effective Amendment No. 45 to the Registration Statement,
                                            filed on April 1, 2004.)

                   (p)(4)                   Consolidated Code of Ethics (All Funds). (Incorporated by reference to
                                            Post-Effective Amendment No. 59 to the Registration Statement.)
</TABLE>

Item 24.          Persons Controlled by or under Common Control with Fund.
--------          --------------------------------------------------------

                  None

Item 25.          Indemnification
--------          ---------------

                  Article IV of the Registrant's Amended and Restated
                  Declaration of Trust (Exhibit (a)(1) hereto, which is
                  incorporated herein by reference) provides in effect that the
                  Registrant will indemnify its officers and trustees under
                  certain circumstances. However, in accordance with Section
                  17(h) and 17(i) of the Investment Company Act of 1940 and its
                  own terms, said Article of the Amended and Restated
                  Declaration of Trust does not protect any person against any
                  liability to the Registrant or its shareholders to which such
                  Trustee would otherwise be subject by reason of willful
                  misfeasance, bad faith, gross negligence, or reckless
                  disregard of the duties involved in the conduct of his or her
                  office.

                  Each of the trustees who is not an "interested person" (as
                  defined under the Investment Company Act of 1940) of
                  Registrant (a "Non-interested Trustee") has entered into an
                  indemnification agreement with Registrant, which agreement
                  provides that the Registrant shall indemnify the
                  Non-interested Trustee against certain liabilities which such
                  Trustee may incur while acting in the capacity as a trustee,
                  officer or employee of the Registrant to the fullest extent
                  permitted by law, now or in the future, and requires
                  indemnification and advancement of expenses unless prohibited
                  by law. The indemnification agreement cannot be altered
                  without the consent of the Non-interested Trustee and is not
                  affected by amendment of the Amended and Restated Declaration
                  of Trust. In addition, the indemnification agreement adopts
                  certain presumptions and procedures which may make the process
                  of indemnification and advancement of expenses, more timely,
                  efficient and certain. In accordance with Section 17(h) of the
                  Investment Company Act of 1940, the indemnification agreement
                  does not protect a Non-interested Trustee against any
                  liability to the Registrant or its shareholders to which such
                  Trustee would otherwise be subject by reason of willful
                  misfeasance, bad faith, gross negligence, or reckless
                  disregard of the duties involved in the conduct of his or her
                  office.

                  The Registrant has purchased insurance policies insuring its
                  officers and trustees against certain liabilities which such
                  officers and trustees may incur while acting in such
                  capacities and providing reimbursement to the Registrant for
                  sums which it may be permitted or required to pay to its
                  officers and trustees by way of indemnification against such
                  liabilities, subject to certain deductibles.



                                       7
<PAGE>

                  On April 5, 2002, Zurich Scudder Investments, Inc.
                  ("Scudder"), the investment adviser, now known as Deutsche
                  Investment Management Americas Inc., was acquired by Deutsche
                  Bank AG, not including certain U.K. Operations (the
                  "Transaction"). In connection with the Trustees' evaluation of
                  the Transaction, Deutsche Bank agreed to indemnify, defend and
                  hold harmless Registrant and the trustees who were not
                  "interested persons" of Scudder, Deutsche Bank or Registrant
                  (the "Independent Trustees") for and against any liability and
                  claims and expenses based upon or arising from, whether in
                  whole or in part, or directly or indirectly, any untrue
                  statement or alleged untrue statement of a material fact made
                  to the Independent Trustees by Deutsche Bank in connection
                  with the Independent Trustees' consideration of the
                  Transaction, or any omission or alleged omission of a material
                  fact necessary in order to make statements made, in light of
                  the circumstances under which they were made, not misleading.

                  Deutsche Investment Management Americas Inc. ("DIMA"), the
                  investment advisor, has agreed, subject to applicable law and
                  regulation, to indemnify and hold harmless the Registrant
                  against any loss, damage, liability and expense, including,
                  without limitation, the advancement and payment, as incurred,
                  of reasonable fees and expenses of counsel (including counsel
                  to the Registrant and counsel to the Non-interested Trustees)
                  and consultants, whether retained by the Registrant or the
                  Non-interested Trustees, and other customary costs and
                  expenses incurred by the Registrant in connection with any
                  litigation or regulatory action related to possible improper
                  market timing or other improper trading activity or possible
                  improper marketing and sales activity in the Registrant
                  ("Private Litigation and Enforcement Actions"). In the event
                  that this indemnification is unavailable to the Registrant for
                  any reason, then DIMA has agreed to contribute to the amount
                  paid or payable by the Registrant as a result of any loss,
                  damage, liability or expense in such proportion as is
                  appropriate to reflect the relative fault of DIMA and the
                  Registrant with respect to the matters which resulted in such
                  loss, damage, liability or expense, as well as any other
                  relevant equitable considerations; provided, however, if no
                  final determination is made in such action or proceeding as to
                  the relative fault of DIMA and the Registrant, then DIMA shall
                  pay the entire amount of such loss, damage, liability or
                  expense.

                  In recognition of its undertaking to indemnify the Registrant,
                  DIMA has also agreed, subject to applicable law and
                  regulation, to indemnify and hold harmless each of the
                  Non-interested Trustees against any and all loss, damage,
                  liability and expense, including without limitation the
                  advancement and payment as incurred of reasonable fees and
                  expenses of counsel and consultants, and other customary costs
                  and expenses incurred by the Non-interested Trustees, arising
                  from the Private Litigation and Enforcement, including without
                  limitation:

                           1. all reasonable legal and other expenses incurred
                           by the Non-interested Trustees in connection with the
                           Private Litigation and Enforcement Actions, and any
                           actions that may be threatened or commenced in the
                           future by any person (including any governmental
                           authority), arising from or similar to the matters
                           alleged in the Private Litigation and Enforcement
                           Actions, including without limitation expenses
                           related to the defense of, service as a witness in,
                           or monitoring of such proceedings or actions;

                           2. all liabilities and expenses incurred by any
                           Non-interested Trustee in connection with any
                           judgment resulting from, or settlement of, any such
                           proceeding, action or matter;

                           3. any loss or expense incurred by any Non-interested
                           Trustee as a result of the denial of, or dispute
                           about, any insurance claim under, or actual or
                           purported rescission or termination of, any policy of
                           insurance arranged by DIMA (or by a representative of
                           DIMA acting as such, acting as a representative of
                           the Registrant or of the Non-interested Trustees or
                           acting otherwise) for the benefit of the
                           Non-interested Trustee, to the extent that such
                           denial, dispute or rescission is based in whole or in
                           part upon any alleged misrepresentation made in the
                           application for such policy or any other alleged
                           improper conduct on the part of DIMA, any of its
                           corporate affiliates, or any of their directors,
                           officers or employees;



                                       8
<PAGE>

                           4. any loss or expense incurred by any Non-interested
                           Trustee, whether or not such loss or expense is
                           otherwise covered under the terms of a policy of
                           insurance, but for which the Non-interested Trustee
                           is unable to obtain advancement of expenses or
                           indemnification under that policy of insurance, due
                           to the exhaustion of policy limits which is due in
                           whole or in part to DIMA or any affiliate thereof
                           having received advancement of expenses or
                           indemnification under that policy for or with respect
                           to a matter which is the subject of the
                           indemnification agreement; provided, however, the
                           total amount which DIMA will be obligated to pay
                           under this provision for all loss or expense, will
                           not exceed the amount that DIMA and any of its
                           affiliate actually receive under that policy or
                           insurance for or with respect to a matter which is
                           the subject of the indemnification agreement; and

                           5. all liabilities and expenses incurred by any
                           Non-interested Trustee in connection with any
                           proceeding or action to enforce his or her rights
                           under the agreement, unless DIMA prevails on the
                           merits of any such dispute in a final, nonappealable
                           court order.

                  DIMA is not required to pay costs or expenses or provide
                  indemnification to or for any individual Non-interested
                  Trustee (i) with respect to any particular proceeding or
                  action as to which the Board of the Registrant has determined
                  that such Non-interested Trustee ultimately will not be
                  entitled to indemnification with respect thereto, or (ii) for
                  any liability of the Non-interested Trustee to the Registrant
                  or its shareholders to which such Non-interested Trustee would
                  otherwise be subject by reason of willful misfeasance, bad
                  faith, gross negligence, or reckless disregard of the
                  Non-interested Trustee's duties as a Trustee of the Registrant
                  as determined in a final adjudication in such proceeding or
                  action. In addition, to the extent that DeAM has paid costs or
                  expenses under the agreement to any individual Non-interested
                  Trustee with respect to a particular proceeding or action, and
                  there is a final adjudication in such proceeding or action of
                  the Non-interested Trustee's liability to the Registrant or
                  its shareholders by reason of willful misfeasance, bad faith,
                  gross negligence, or reckless disregard of the Non-interested
                  Trustee's duties as a Trustee of the Registrant, such
                  Non-interested Trustee has undertaken to repay such costs or
                  expenses to DIMA.

Item 26.          Business and Other Connections of Investment Advisor
--------          ----------------------------------------------------

                  During the last two fiscal years, no director or officer of
                  Deutsche Investment Management Americas Inc., the investment
                  advisor, has engaged in any other business, profession,
                  vocation or employment of a substantial nature other than that
                  of the business of investment management and, through
                  affiliates, investment banking.

Item 27.          Principal Underwriters
--------          ----------------------

                  (a)

                  DWS Investments Distributors, Inc. acts as principal
                  underwriter of the Registrant's shares and acts as principal
                  underwriter for registered open-end management investment
                  companies other funds managed by Deutsche Investment
                  Management Americas Inc.



                                       9
<PAGE>

                  (b)

                  Information on the officers and directors of DWS Investments
                  Distributors, Inc., principal underwriter for the Registrant,
                  is set forth below. The principal business address is 222
                  South Riverside Plaza, Chicago, Illinois 60606.

<TABLE>
<CAPTION>
                      (1)                             (2)                                  (3)
          DWS Investments
          Distributors, Inc.
          Name and Principal             Positions and Offices with               Positions and
          Business Address               DWS Investments Distributors, Inc.       Offices with Registrant
          ----------------               ----------------------------------       -----------------------

<S>      <C>                            <C>                                       <C>
         Philipp Hensler                Director, Chairman of the Board and CEO   None
         345 Park Avenue
         New York, NY 10154

         Michael Colon                  Director and Chief Operating Officer      None
         345 Park Avenue
         New York, NY 10154

         Thomas Winnick                 Director and President                    None
         345 Park Avenue
         New York, NY 10154

         Cliff Goldstein                Chief Financial Officer and Treasurer     None
         100 Plaza One
         Jersey City, NJ 07311

         Paul Schubert                  Vice President                            Chief Financial Officer
         345 Park Avenue                                                          and Treasurer
         New York, NY 10154

         Mark Perrelli                  Vice President                            None
         345 Park Avenue
         New York, NY 10154

         Donna White                    Chief Compliance Officer                  None
         280 Park Avenue
         New York, NY 10017

         Jason Vazquez                  Vice President and AML Compliance Officer AML Compliance Officers
         280 Park Avenue
         New York, NY 10017

         Caroline Pearson               Secretary                                 Assistant Secretary
         One Beacon Street
         Boston, MA 02108

         Philip J. Collora              Assistant Secretary                       None
         222 South Riverside Plaza
         Chicago, IL 60606



                                       10
<PAGE>

                      (1)                             (2)                                  (3)
          DWS Investments
          Distributors, Inc.
          Name and Principal             Positions and Offices with               Positions and
          Business Address               DWS Investments Distributors, Inc.       Offices with Registrant
          ----------------               ----------------------------------       -----------------------

         Patricia DeFilippis            Assistant Secretary                       None
         280 Park Avenue
         New York, NY 10017

         Anjie LaRocca                  Assistant Secretary                       None
         280 Park Avenue
         New York, NY 10017
</TABLE>


         (c)      Not applicable


Item 28.          Location of Accounts and Records.
--------          ---------------------------------

                  Accounts, books and other documents are maintained at the
                  offices of the Registrant, the offices of the Registrant's
                  investment advisor, Deutsche Investment Management Americas
                  Inc., 345 Park Avenue, New York, NY 10154; at the offices of
                  the Registrant's principal underwriter, DWS Investments
                  Distributors, Inc., 222 South Riverside Plaza, Chicago,
                  Illinois 60606; or, in the case of records concerning
                  custodial functions, at the offices of either of the
                  custodians: State Street Bank and Trust Company, 225 Franklin
                  Street, Boston, Massachusetts or Brown Brothers Harriman &
                  Co., 40 Water Street, Boston, Massachusetts; or, in the case
                  of records concerning transfer agency functions, at the
                  offices of State Street Bank and Trust Company and of the
                  shareholder service agent DWS Investments Services Company,
                  210 West 10th Street, Kansas City, Missouri 64105.

Item 29.          Management Services.
--------          --------------------

                  Inapplicable.

Item 30.          Undertakings.
--------          -------------

                  Inapplicable.



                                       11
<PAGE>

                                   SIGNATURES
                                   ----------

         Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this amendment to
its Registration Statement to be signed on its behalf by the undersigned,
thereto duly authorized, in the City of New York and the State of New York on
the 17th day of April 2009.

                                          DWS VARIABLE SERIES II

                                           By:  /s/Michael G. Clark
                                               -----------------------------
                                               Michael G. Clark*

         Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment to its Registration Statement has been signed below by
the following persons in the capacities and on the dates indicated:

<TABLE>
<CAPTION>
 SIGNATURE                                  TITLE                                        DATE
 ---------                                  -----                                        ----

<S>     <C>    <C>    <C>    <C>    <C>    <C>
 /s/Michael G. Clark
 -------------------------------------
 Michael G. Clark*                          President                                    April 17, 2009

 /s/Paul H. Schuber
 -------------------------------------
 Paul H. Schubert                           Chief Financial Officer and Treasurer        April 17, 2009

 /s/John W. Ballantine
 -------------------------------------
 John W. Ballantine*                        Trustee                                      April 17, 2009

 /s/Henry P. Becton, Jr.
 -------------------------------------
 Henry P. Becton, Jr.*                      Trustee                                      April 17, 2009

  /s/Dawn-Marie Driscoll
 -------------------------------------
 Dawn-Marie Driscoll*                       Trustee                                      April 17, 2009

 /s/Keith R. Fox
 -------------------------------------
 Keith R. Fox*                              Trustee                                      April 17, 2009

 /s/Paul K. Freeman
 -------------------------------------
 Paul K. Freeman*                           Chairperson and Trustee                      April 17, 2009

 /s/Kenneth C. Froewiss
 -------------------------------------
 Kenneth C. Froewiss*                       Trustee                                      April 17, 2009

 /s/Richard J. Herring
 -------------------------------------
 Richard J. Herring*                        Trustee                                      April 17, 2009

 /s/William McClayton
 -------------------------------------
 William McClayton*                         Trustee                                      April 17, 2009

 /s/Rebecca W. Rimel
 -------------------------------------
 Rebecca W. Rimel*                          Trustee                                      April 17, 2009

 /s/William N. Searcy, Jr.
 -------------------------------------
 William N. Searcy, Jr.*                    Trustee                                      April 17, 2009



<PAGE>

 /s/Jean Gleason Stromberg
 -------------------------------------
 Jean Gleason Stromberg*                    Trustee                                      April 17, 2009

 /s/Robert H. Wadsworth
 -------------------------------------
 Robert H. Wadsworth*                       Trustee                                      April 17, 2009

 /s/Axel Schwarzer
 -------------------------------------
 Axel Schwarzer*                            Trustee                                      April 17, 2009
</TABLE>

*By:    /s/Caroline Pearson
        ------------------------------
         Caroline Pearson**
         Assistant Secretary

**       Attorney-in-fact pursuant to the powers of attorney as filed on October
         22, 2008 in Post-Effective Amendment No. 65 to the Registrant's
         Registration Statement and as filed on May 1, 2008 in Post-Effective
         Amendment No. 63 to the Registrant's Registration Statement.


<PAGE>


                                                               File No. 33-11802
                                                               File No. 811-5002



                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549



                                    EXHIBITS

                                       TO

                                    FORM N-1A

                         POST-EFFECTIVE AMENDMENT NO. 73
                            TO REGISTRATION STATEMENT

                                      UNDER

                           THE SECURITIES ACT OF 1933

                                       AND

                                AMENDMENT NO. 74

                            TO REGISTRATION STATEMENT

                                      UNDER

                       THE INVESTMENT COMPANY ACT OF 1940



                             DWS VARIABLE SERIES II



                                       12
<PAGE>

                             DWS VARIABLE SERIES II

                                  EXHIBIT INDEX


                                     (a)(2)
                                     (a)(5)
                                     (d)(12)
                                     (d)(13)
                                     (d)(14)
                                     (g)(3)
                                     (h)(6)
                                     (h)(7)
                                       (j)




                                       13