This report must be preceded or accompanied by a prospectus. To obtain a prospectus for any of our funds, refer to the Account Management Resources information provided in the back of this booklet. We advise you to consider the fund's objectives, risks, charges and expenses carefully before investing. The prospectus contains this and other important information about the fund. Please read the prospectus carefully before you invest.

Investments in mutual funds involve risk. Some funds have more risk than others. This fund invests in individual bonds whose yields and market values fluctuate so that your investment may be worth more or less than its original cost. Bond investments are subject to interest rate risk such that when interest rates rise, the prices of the bonds, and thus the value of the bond fund, can decline and the investor can lose principal value. Derivatives may be more volatile and less liquid than traditional securities, and the fund could suffer losses on its derivative positions. A portion of the fund's returns may be subject to federal, state and local taxes and the alternative minimum tax. Finally, the fund may focus its investments in certain geographical regions, thereby increasing its vulnerability to developments in these regions. This may result in greater share price volatility. Please read this fund's prospectus for specific details regarding its investments and risk profile.

DWS Investments is part of Deutsche Bank's Asset Management division and, within the US, represents the retail asset management activities of Deutsche Bank AG, Deutsche Bank Trust Company Americas, Deutsche Investment Management Americas Inc. and DWS Trust Company.

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

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

Until May 31, 2009, the maximum sales charge for Class A shares was 4.50%. Effective June 1, 2009, the maximum sales charge for Class A shares was lowered to 2.75%. For Class B shares, the maximum contingent deferred sales charge (CDSC) is 4% within the first year after purchase, declining to 0% after six years. Class C shares have no front-end sales charge, but redemptions within one year of purchase may be subject to a CDSC of 1%. Unadjusted returns do not reflect sales charges and would have been lower if they had. Institutional Class shares are not subject to sales charges.

The total annual fund operating expense ratios, gross of any fee waivers or expense reimbursements, as stated in the fee table of the prospectus dated October 1, 2008 are 1.16%, 1.98%, 1.92% and 0.90% for Class A, Class B, Class C and Institutional Class shares, respectively. Please see the Information About Your Fund's Expenses, the Financial Highlights and Notes to the Financial Statements (Note C, Related Parties) sections of this report for gross and net expense related disclosure for the period ended May 31, 2009.

To discourage short-term trading, the Fund imposed a 2% redemption fee on shareholders redeeming shares held less than 15 days, which has the effect of lowering total return.

Returns and rankings during all periods shown for Class A, B, C and Institutional Class shares reflect a fee waiver and/or expense reimbursement. Without this waiver/reimbursement, returns and rankings would have been lower.

Performance figures do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Returns and rankings may differ by share class.

A portion of the Fund's distributions may be subject to federal, state and local taxes and the alternative minimum tax.

Returns shown for Class A, B and C shares for the period prior to their inception on June 11, 2001 are derived from the historical performance of Class S shares of DWS Managed Municipal Bond Fund during such period and have been adjusted to reflect the higher total annual operating expenses of each specific class. Any difference in expenses will affect performance.

Source: Lipper Inc. Rankings are historical and do not guarantee future results. Rankings are based on total return unadjusted for sales charges with distributions reinvested. If sales charges had been included, results might have been less favorable. Rankings are for Class A shares; other share classes may vary.

The Fund's growth of an assumed $10,000 investment is adjusted for the maximum sales charge of 4.50%. This results in a net initial investment of $9,550.

Class S shares are generally not available to new investors except under certain circumstances. (Please refer to the Fund's Statement of Additional Information.)

The total annual fund operating expense ratio, gross of any fee waivers or expense reimbursements, as stated in the fee table of the prospectus dated October 1, 2008 is 0.95% for Class S shares. Please see the Information About Your Fund's Expenses, the Financial Highlights and Notes to the Financial Statements (Note C, Related Parties) sections of this report for gross and net expense related disclosure for the period ended May 31, 2009.

To discourage short-term trading, the Fund imposed a 2% redemption fee on shareholders redeeming shares held less than 15 days, which has the effect of lowering total return.

Returns and rankings during all periods shown for Class S reflect a fee waiver and/or expense reimbursement. Without this waiver/reimbursement, returns and rankings would have been lower.

Performance figures do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Returns and rankings may differ by share class.

A portion of the Fund's distributions may be subject to federal, state and local taxes and the alternative minimum tax.

Source: Lipper Inc. Rankings are historical and do not guarantee future results. Rankings are based on total return with distributions reinvested. Rankings are for Class S shares; other share classes may vary.

As an investor of the Fund, you incur two types of costs: ongoing expenses and transaction costs. Ongoing expenses include management fees, distribution and service (12b-1) fees and other Fund expenses. Examples of transaction costs include sales charges (loads), redemption fees and account maintenance fees, which are not shown in this section. The following tables are intended to help you understand your ongoing expenses (in dollars) of investing in the Fund and to help you compare these expenses with the ongoing expenses of investing in other mutual funds. The example in the table is based on an investment of $1,000 invested at the beginning of the six-month period and held for the entire period (December 1, 2008 to May 31, 2009).

• Actual Fund Return. This helps you estimate the actual dollar amount of ongoing expenses (but not transaction costs) paid on a $1,000 investment in the Fund using the Fund's actual return during the period. To estimate the expenses you paid over the period, simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the "Expenses Paid per $1,000" line under the share class you hold.

• Hypothetical 5% Fund Return. This helps you to compare your Fund's ongoing expenses (but not transaction costs) with those of other mutual funds using the Fund's actual expense ratio and a hypothetical rate of return of 5% per year before expenses. Examples using a 5% hypothetical fund return may be found in the shareholder reports of other mutual funds. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period.

Please note that the expenses shown in these tables are meant to highlight your ongoing expenses only and do not reflect any transaction costs. The "Expenses Paid per $1,000" line of the tables is useful in comparing ongoing expenses only and will not help you determine the relative total expense of owning different funds. An account maintenance fee of $6.25 per quarter for Class S shares may apply for certain accounts whose balances do not meet the applicable minimum initial investment. This fee is not included in these tables. If it was, the estimate of expenses paid for Class S shares during the period would be higher, and account value during the period would be lower, by this amount.

Deutsche Investment Management Americas Inc. ("DIMA" or the "Advisor"), which is part of Deutsche Asset Management, is the investment advisor for DWS Managed Municipal Bond Fund. DIMA and its predecessors have more than 80 years of experience managing mutual funds and DIMA provides a full range of investment advisory services to institutional and retail clients. DIMA is also responsible for selecting brokers and dealers and for negotiating brokerage commissions and dealer charges.

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

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

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

DWS Managed Municipal Bond Fund's Class A shares posted a return of 3.38% over the 12 months ended May 31, 2009. The overall municipal bond market, as measured by the unmanaged Barclays Capital Municipal Bond Index, delivered a total return of 3.57% for the same period.¹ The broad taxable bond market, as measured by the Barclays Capital Aggregate Bond Index, provided a total return of 5.36% for the same period.² The fund outperformed its average peer in the Lipper General Municipal Debt Funds category, which returned -0.84%.³ (Returns are unadjusted for sales charges. If sales charges had been included, returns would have been lower. Past performance is no guarantee of future results. Please see pages 4 through 9 for the performance of other share classes and more complete performance information.)

Over the first part of the period, the primary factor in financial market returns was the ongoing credit market distress. The crisis reached new levels beginning in September of 2008 as several leading financial institutions failed, were bailed out or were forced into mergers. The net result was an evaporation of liquidity as the credit markets seized in September. In this environment, investors fled to Treasuries and most other asset classes, including municipals, suffered. Underwriters of some municipal tender option bonds discontinued or greatly reduced their programs, forcing market participants, including the fund, to unwind positions into an illiquid market.⁴ This put further pressure on municipals. To illustrate, the municipal market fell 4.69% in September as gauged by the Barclays Capital Municipal Bond Index.

Market conditions began to stabilize in December and investor risk tolerance returned as 2009 progressed, helping credit-oriented sectors. Municipals benefited especially strongly from these improved conditions, returning 9.00% over the six months ended May 31, 2009 according to the Barclays Capital Municipal Bond Index. Municipal demand was aided by several factors. First, municipals were viewed as relatively safe compared to other non-Treasury asset classes, and so were a natural to lead any rebound. In addition, with the federal budget deficit climbing as the government sought to stimulate the economy and bail out the financial sector, investors are anticipating income tax increases going forward to fund these efforts. Finally, municipals had become an extraordinary value relative to US Treasuries, as reflected in yields that were well above Treasury yields even before taking into account the tax advantage of municipals.

Late in the period, supply shrunk as municipal issuers took advantage of the American Recovery and Reinvestment Act of 2009 to issue taxable bonds with higher interest rates in effect subsidized by the federal government. The reduced supply of new tax-free bonds helped increase demand for existing issues. A significant source of support for municipals over the 12 months was from retail investors attracted by favorable yields. Mutual fund flows were largely positive as well, with the principal exception being during the aftermath of September's credit market dislocation.

At the start of the period, the US Federal Reserve Board's (the Fed's) benchmark federal funds rate, (or the interest rate set by the Fed at which banks lend money to each other, usually on an overnight basis), was at 2.00%. The Fed lowered short-term rates three times during the period, with the last move being to an unprecedented target range of 0% to 0.25%. Municipal yields declined significantly on the short-to-intermediate part of the curve, while remaining relatively stable on maturities over 20 years. Since a bond's yield moves in the opposite direction of its price, this meant that performance of intermediate-term municipal bonds was generally better than among longer issues.

The municipal bond yield curve steepened during the 12 months.⁵ The two-year bond yield decreased 134 basis points from 2.28% to 0.94%, while the 30-year yield rose two basis points from 4.53% to 4.55%, resulting in a total steepening of 136 basis points (one basis point is equal to one percentage point). (See the graph below for municipal bond yield changes from the beginning to the end of the period.)

This chart is for illustrative purposes only and is not intended to represent the yield of any DWS fund. Performance is historical and does not guarantee future results.

Credit market spreads (excess yield various bond sectors offer over Treasuries with similar maturities) began to revert to more normal levels toward the end of the period. However, municipal credit spreads still ended the 12 months meaningfully higher. In addition to the credit market distress that peaked in September of 2008, spread widening was driven by downgrades to the leading monoline insurers, insurance companies that provide guarantees to bond issuers, whose guarantees have traditionally applied to nearly half of municipal issues. Most insured issues are now trading on the basis of the underlying credits. In addition, with fewer insured issues coming to market, the outlook is for an increased supply of non-AAA-rated issues going forward, putting further pressure on spreads.⁶ Finally, the finances of states and localities have come under pressure with the national economic downturn, leading to wider credit spreads as market participants draw greater distinctions among municipal issues. California was the leading example as its well-publicized problems have led to downgrades by all three of the major rating agencies. Illinois and Nevada also were subjected to downgrades during the period.

Our quality profile was relatively high during the aftermath of the September crisis, helping to limit the impact of spread widening. In particular, our significant holdings of pre-refunded bonds, which have their principal cash amount already held in escrow until the maturity date, helped, as investors prized their top-notch quality during the liquidity crunch. As the period progressed and credit spreads reached very high levels we selectively increased exposure to lower-quality issues, such as A-rated hospital bonds. This began to help performance over the latter part of the period as spreads narrowed.

The fund had relatively light exposure for most of the period to bonds with maturities over 20 years, favoring instead intermediate-term issues. This positioning helped relative returns as rates fell and prices rose on bonds in the 10- to 20-year range As the yield curve steepened during the period, we harvested gains in pre-refunded bonds that experienced strong demand and used the proceeds to move into longer maturities in order to pick up income.

We hedged or established a position in one market in an attempt to offset exposure to the price risk of an equal but opposite obligation or position in another market, a portion of the fund's assets against interest rate changes using LIBOR interest rate swaps (London InterBank Offered Rate, a benchmark for taxable interest rates). The interest rate swaps increase in value as rates rise and decrease in value as rates fall. This strategy is intended to allow the fund to benefit to some degree from any rise in interest rates and resulting decline in the value of fixed-income instruments. This held back fund returns to a degree as the performance of the taxable and tax-free markets diverged early in the period and the value of the taxable LIBOR hedge declined.

Municipal yields have returned to more normal historical levels versus US Treasury bonds. To illustrate, at the end of May, the 10-year municipal bond was yielding approximately 86% of the comparable maturity Treasury bond, versus about 90% 12 months earlier. During the 12 months covered by this report, as municipal and Treasury market performance diverged, this ratio reached a high of 186%, and that was before taking into account the tax advantage of municipals.

Given a steep yield curve and attractive credit spreads, we have recently focused purchases on bonds rated AA or A with maturities in the 20-year and longer range.

A bright note for credit quality was passage of the federal stimulus package (the American Recovery and Reinvestment Act of 2009), which will pump nearly $800 billion into local economies. About $500 billion of this amount provides direct relief to state budgets over a two-year period and gives states some breathing room in crafting balanced budgets. Still, given the sharp downturn in the national economy, state and local governments continue to be challenged to cut spending fast enough to keep pace with falling tax receipts. In addition, the greatly decreased role of insurance in the municipal market puts a further premium on the expertise we bring to researching municipal sectors and individual issues. We will continue to take a prudent approach to investing in the municipal market, while seeking to maintain an attractive dividend and minimize capital gains distributions.

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

For more complete details about the Fund's investment portfolio, see page 20. A quarterly Fact Sheet is available upon request. A complete list of the Fund's portfolio holdings is posted as of the month end on www.dws-investments.com on or about the 15th day of the following month. More frequent posting of portfolio holdings information may be made from time to time on www.dws-investments.com. Please see the Account Management Resources section for contact information.

Following the Fund's fiscal first and third quarter-end, a complete portfolio holdings listing is filed with the SEC on Form N-Q. The form will be available on the SEC's Web site at www.sec.gov, and it also may be reviewed and copied at the SEC's Public Reference Room in Washington, D.C. Information on the operation of the SEC's Public Reference Room may be obtained by calling (800) SEC-0330.

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

ETM: Bonds bearing the description ETM (escrow to maturity) are collateralized usually by US Treasury securities which are held in escrow and used to pay principal and interest on bonds so designated.

Prerefunded: Bonds which are prerefunded are collateralized usually by US Treasury securities which are held in escrow and used to pay principal and interest on tax-exempt issues and to retire the bonds in full at the earliest refunding date.

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

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

The following is a summary of the inputs used as of May 31, 2009 in valuing the Fund's investments. For information on the Fund's policy regarding the valuation of investments, please refer to the Security Valuation section of Note A in the accompanying Notes to the Financial Statements.

The following is a reconciliation of the Fund's Level 3 investments for which significant unobservable inputs were used in determining value at May 31, 2009:

DWS Managed Municipal Bond Fund (the "Fund") is a diversified series of DWS Municipal Trust (the "Trust") which is registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end management investment company organized as a Massachusetts business trust.

The Fund offers multiple classes of shares which provide investors with different purchase options. Class A shares are offered to investors subject to an initial sales charge. Class B shares are offered to investors without an initial sales charge but are subject to higher ongoing expenses than Class A shares and a contingent deferred sales charge payable upon certain redemptions. Class B shares automatically convert to Class A shares six years after issuance. Class C shares are offered to investors without an initial sales charge but are subject to higher ongoing expenses than Class A shares and a contingent deferred sales charge payable upon certain redemptions within one year of purchase. Class C shares do not automatically convert into another class. Institutional Class shares are offered to a limited group of investors, are not subject to initial or contingent deferred sales charges and have lower ongoing expenses than other classes. Class S shares are not subject to initial or contingent deferred sales charges and are generally not available to new investors except under certain circumstances.

Investment income, realized and unrealized gains and losses and certain fund-level expenses and expense reductions, if any, are borne pro rata on the basis of relative net assets by the holders of all classes of shares, except that each class bears certain expenses unique to that class such as distribution and services fees, services to shareholders and certain other class-specific expenses. Differences in class-level expenses may result in payment of different per share dividends by class. All shares of the Fund have equal rights with respect to voting subject to class-specific arrangements.

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

Security Valuation. Investments are stated at value determined as of the close of regular trading on the New York Stock Exchange on each day the exchange is open for trading. Debt securities are valued by independent pricing services approved by the Trustees of the Fund, whose valuations are intended to reflect the mean between the bid and asked prices. If the pricing services are unable to provide valuations, the securities are valued at the mean of the most recent bid and asked quotations or evaluated prices, as applicable, obtained from one or more broker-dealers. Such services may use various pricing techniques which take into account appropriate factors such as yield, quality, coupon rate, maturity, type of issue, trading characteristics and other data, as well as broker quotes.

Securities and other assets for which market quotations are not readily available or for which the above valuation procedures are deemed not to reflect fair value are valued in a manner that is intended to reflect their fair value as determined in accordance with procedures approved by the Trustees. In accordance with the Fund's valuation procedures, factors used in determining value may include, but are not limited to, the type of the security, the size of the holding, the initial cost of the security, the existence of any contractual restrictions on the security's disposition, the price and extent of public trading in similar securities of the issuer or of comparable companies, quotations or evaluated prices from broker-dealers and/or pricing services, information obtained from the issuer, analysts, and/or the appropriate stock exchange (for exchange-traded securities), an analysis of the company's financial statements, an evaluation of the forces that influence the issuer and the market(s) in which the security is purchased and sold and with respect to debt securities, the maturity, coupon, creditworthiness, currency denomination, and the movement of the market in which the security is normally traded. The value determined under these procedures may differ from published values for the same securities.

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

New Accounting Pronouncement. In April 2009, the FASB issued FASB Staff Position No. 157-4, "Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly" ("FSP 157-4"). FSP 157-4 provides additional guidance for estimating fair value in accordance with Statement of Financial Accounting Standards No. 157, "Fair Value Measurements," when the volume and level of activity for the asset or liability have significantly decreased as well as guidance on identifying circumstances that indicate a transaction is not orderly. FSP 157-4 is effective for fiscal years and interim periods ending after June 15, 2009. Management is currently reviewing the enhanced disclosure requirements for the adoption of FSP 157-4.

Inverse Floaters. Inverse floating rate notes are debt instruments with a weekly floating rate of interest that bears an inverse relationship to changes in short-term market interest rates. Investments in this type of instrument involve special risks as compared to investments in a fixed rate municipal security. The debt instrument in which the Fund may invest is a tender option bond trust (the "trust") which can be established by the Fund, a financial institution, or broker, consisting of underlying municipal obligations with intermediate to long maturities and a fixed interest rate ("underlying bond"). Other investors in the trust usually consist of money market fund investors receiving weekly floating interest rate payments who have put options with the financial institutions. The Fund may enter into shortfall and forbearance agreements by which a Fund agrees to reimburse the trust, in certain circumstances, for the difference between the liquidation value of the fixed rate municipal security held by the trust and the liquidation value of the floating rate notes. Certain inverse floating rate securities held by the Fund have been created with bonds purchased by the Fund and subsequently transferred to the trust. These transactions are considered a form of financing for accounting purposes. As a result, the Fund includes the underlying bond in its investment portfolio and a corresponding liability in the statement of assets and liabilities equal to the floating rate note issued. When a trust is terminated and/or collapsed by either party, the related fixed rate securities held by the trust are delivered back to the Fund where they are either held or sold, and the related liability of the floating rate note issued is adjusted. The Fund does not consider the Fund's investment in inverse floaters borrowing within the meaning of the 1940 Act. Inverse floating rate notes exhibit added interest rate sensitivity compared to other bonds with a similar maturity. Moreover, since these securities are in a trust form, a sale may take longer to settle than the standard two days after the trade date.

The weighted average outstanding daily balance of the floating rate notes issued during the year ended May 31, 2009 was approximately $485,569,000, with a weighted average interest rate of 2.53%.

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

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

Derivatives. The Fund has adopted the provisions of Statement of Financial Accounting Standards No. 161 ("FAS 161"), "Disclosures about Derivative Instruments and Hedging Activities," effective at the beginning of the Fund's fiscal year. FAS 161 requires enhanced disclosure about the Fund's derivative and hedging activities. The disclosure below includes additional information as a result of adopting FAS 161.

Interest Rate Swap Agreements. The value of the Fund's underlying bond investments are subject to interest rate risk. As interest rates increase, the value of the Fund's fixed rate bonds may fall. The longer the duration of the fund's securities, the more sensitive the Fund will be to interest rate changes. To help mitigate this interest rate risk, the Fund invests in interest rate swap contracts to reduce the duration of the investment portfolio. The use of interest rate swaps is a highly specialized activity that involves investment techniques and risks different from those associated with ordinary portfolio security transactions. In an interest rate swap, the Fund agrees to pay to the other party to the interest rate swap (which is known as the "counterparty") a fixed rate payment in exchange for the counterparty agreeing to pay to the Fund a variable rate payment, or the Fund agrees to receive from the counterparty a fixed rate payment in exchange for the counterparty agreeing to receive from the Fund a variable rate payment, the accruals for which would begin at a specified date in the future (the "effective date"). The payment obligations are based on the notional amount of the swap. Certain risks may arise when entering into swap transactions including counterparty default, liquidity or unfavorable changes in interest rates. In connection with these agreements, securities and or cash may be identified as collateral in accordance with the terms of the swap agreements to provide assets of value and recourse in the event of default. The maximum counterparty credit risk is the net present value of the cash flows to be received from or paid to the counterparty over the term of the interest rate swap contract, to the extent that this amount is beneficial to the Fund, in addition to any related collateral posted to the counterparty by the Fund. This risk may be partially reduced by a master netting arrangement between the Fund and the counterparty. The Fund generally intends, but is not obligated, to terminate its interest rate swaps before the effective date. Payments received or made are recorded as realized gain or loss in the Statement of Operations. The value of the swap is adjusted daily based upon a price supplied by a Board approved pricing vendor and the change in value is recorded as unrealized appreciation or depreciation.

A summary of the open interest rate swaps as of May 31, 2009 is included at the end of the Fund's Investment Portfolio. The volume indicated is indicative of the volume throughout the year.

At May 31, 2009, the Fund had the following derivatives (not designated as hedges under Statement of Financial Accounting Standards No. 133), grouped into appropriate risk categories that illustrate how and why the Fund uses derivative instruments:

The above contracts are located in the following Statement of Assets and Liabilities account:

Transactions in derivative instruments during the year ended May 31, 2009, were as follows:

The above contracts are located in the following Statement of Operations account:

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

The Fund has reviewed the tax positions for the open tax years as of May 31, 2009 and has determined that no provision for income tax is required in the Fund's financial statements. The Fund's federal tax returns for the prior three fiscal years remain subject to examination by the Internal Revenue Service.

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

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

At May 31, 2009, the Fund's components of distributable earnings (accumulated losses) on a tax basis were as follows:

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

Redemption Fees. During the year, the Fund imposed a redemption fee of 2% of the total redemption amount on the Fund shares redeemed or exchanged within 15 days of buying them, either by purchase or exchange. This fee was assessed and retained by the Fund for the benefit of the remaining shareholders. The redemption fee was accounted for as an addition to paid-in capital. The Fund will no longer impose the 2% redemption fee on Fund shares acquired (either by purchase or exchange) on or after June 1, 2009.

Expenses. Expenses of the Trust arising in connection with a specific fund are allocated to that fund. Other Trust expenses which cannot be directly attributed to a fund are apportioned among the funds in the Trust.

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

Other. Investment transactions are accounted for on a trade date plus one basis for daily net asset value calculations. However, for financial reporting purposes, investment security transactions are reported on trade date. Interest income is recorded on the accrual basis. Realized gains and losses from investment transactions are recorded on an identified cost basis. All premiums and discounts are amortized/accreted for financial reporting purposes.

Statement of Cash Flows. Information on financial transactions which have been settled through the receipt and disbursement of cash is presented in the Statement of Cash Flows. The cash amount shown in the Statement of Cash Flows represents the cash overdraft position at the Fund's custodian bank at May 31, 2009. Previously, the Fund has utilized the direct method for presentation of its Statement of Cash Flows. The Fund has changed its presentation to the indirect method, which it believes provides a useful format and conforms to more common industry practice.

During the year ended May 31, 2009, purchases and sales of investment securities (excluding short-term investments) aggregated $2,931,790,841 and $3,131,993,876, respectively.

Management Agreement. Under the Investment Management Agreement with Deutsche Investment Management Americas Inc. ("DIMA" or the "Advisor"), an indirect, wholly owned subsidiary of Deutsche Bank AG, the Advisor directs the investments of the Fund in accordance with its investment objectives, policies and restrictions. The Advisor determines the securities, instruments and other contracts relating to investments to be purchased, sold or entered into by the Fund.

Under the Investment Management Agreement with the Advisor, the Fund pays a monthly management fee based on the Fund's average daily net assets, computed and accrued daily and payable monthly, at the following annual rates:

For the period from June 1, 2008 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 of the Fund (excluding certain expenses such as extraordinary expenses, taxes, brokerage and interest) to the extent necessary to maintain the operating expenses of each class as follows:

Accordingly, for the year ended May 31, 2009, the fee pursuant to the Investment Management Agreement was equivalent to an annual effective rate of 0.33% of the Fund's average daily net assets.

Administration Fee. Pursuant to an Administrative Services Agreement, DIMA provides most administrative services to the Fund. For all services provided under the Administrative Services Agreement, the Fund pays the Advisor a fee ("Administration Fee") of 0.10% of the Fund's average daily net assets, computed and accrued daily and payable monthly. For the year ended May 31, 2009, the Administration Fee was $3,432,379, of which $296,647 is unpaid.

Service Provider Fees. DWS Investments Service Company ("DISC"), an affiliate of the Advisor, is the transfer agent, dividend-paying agent and shareholder service agent of the Fund. Pursuant to a sub-transfer agency agreement between DISC and DST Systems, Inc. ("DST"), DISC has delegated certain transfer agent, dividend-paying agent and shareholder service agent functions to DST. DISC compensates DST out of the shareholder servicing fee it receives from the Fund. For the year ended May 31, 2009, the amounts charged to the Fund by DISC were as follows:

Distribution and Service Fees. Under the Fund's Class B and Class C 12b-1 Plans, DWS Investments Distributors, Inc. ("DIDI"), an affiliate of the Advisor, receives a fee ("Distribution Fee") of 0.75% of average daily net assets of Class B and C shares. In accordance with the Fund's Underwriting and Distribution Services Agreement, DIDI enters into related selling group agreements with various firms at various rates for sales of Class B and C shares. For the year ended May 31, 2009, the Distribution Fee was as follows:

In addition, DIDI provides information and administrative services for a fee ("Service Fee") to Class A, B and C shareholders at an annual rate of up to 0.25% of average daily net assets for each such class. DIDI in turn has various agreements with financial services firms that provide these services and pays these fees based upon the assets of shareholder accounts the firms service. For the year ended May 31, 2009, the Service Fee was as follows:

Underwriting Agreement and Contingent Deferred Sales Charge. DIDI is the principal underwriter for the Fund. Underwriting commissions paid to DIDI in connection with the distribution of Class A shares for the year ended May 31, 2009 aggregated $121,425.

In addition, DIDI receives any contingent deferred sales charge ("CDSC") from Class B share redemptions occurring within six years of purchase and Class C share redemptions occurring within one year of purchase. There is no such charge upon redemption of any share appreciation or reinvested dividends. The CDSC is based on declining rates ranging from 4% to 1% for Class B and 1% for Class C, of the value of the shares redeemed. For the year ended May 31, 2009, the CDSC for Class B and C shares aggregated $16,393 and $19,962, respectively. A deferred sales charge of up to 0.85% is assessed on certain redemptions of Class A shares. For the year ended May 31, 2009, DIDI received $16,592 for Class A shares.

Typesetting and Filing Service Fees. Under an agreement with DIMA, DIMA is compensated for providing typesetting and certain regulatory filing services to the Fund. For the year ended May 31, 2009, the amount charged to the Fund by DIMA included in the Statement of Operations under "reports to shareholders" aggregated $31,868, of which $12,908 is unpaid.

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

The Fund has entered into an arrangement with its custodian and transfer agent whereby credits realized as a result of uninvested cash balances were used to reduce a portion of the Fund's custodian expenses. During the year ended May 31, 2009, the custodian fee was reduced by $4,223 and $5,170, respectively, for custody and transfer agent credits earned.

The Fund and other affiliated funds (the "Participants") share in a $450 million revolving credit facility provided by a syndication of banks. The Fund may borrow for temporary or emergency purposes, including the meeting of redemption requests that otherwise might require the untimely disposition of securities. The Participants are charged an annual commitment fee which is allocated based on net assets, among each of the Participants. Interest is calculated at a rate per annum equal to the sum of the Federal Funds Rate plus 1.25 percent plus if LIBOR exceeds the Federal Funds Rate the amount of such excess. The Fund may borrow up to a maximum of 33 percent of its net assets under the agreement.

To the Trustees of DWS Municipal Trust and the Shareholders of DWS Managed Municipal Bond Fund:

In our opinion, the accompanying statement of assets and liabilities, including the investment portfolio, and the related statements of operations, of cash flows and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of DWS Managed Municipal Bond Fund (the "Fund") at May 31, 2009, and the results of its operations, its cash flows, the changes in its net assets and the financial highlights for each of the periods indicated therein, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at May 31, 2009 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.

The Fund paid distributions of $0.031 per share from net long-term capital gains during its year ended May 31, 2009, of which 100% represents 15% rate gains.

Pursuant to Section 852 of the Internal Revenue Code, the Fund designates $5,161,000 as capital gains dividends for its year ended May 31, 2009, of which 100% represents 15% rate gains.

Of the dividends paid from net investment income for the taxable year ended May 31, 2009, 100% are designated as exempt interest dividends for federal income tax purposes.

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

Pursuant to an Order entered into by Deutsche Investment Management Americas and affiliates (collectively, "DeAM") with the Attorney General of New York, I, Thomas H. Mack, have been appointed the Independent Fee Consultant for the DWS Funds (formerly the DWS Scudder Funds). My duties include preparing an annual written evaluation of the management fees DeAM charges the Funds, considering among other factors the management fees charged by other mutual fund companies for like services, management fees DeAM charges other clients for like services, DeAM's costs of supplying services under the management agreements and related profit margins, possible economies of scale if a Fund grows larger, and the nature and quality of DeAM's services, including fund performance. This report summarizes my evaluation for 2008, including my qualifications, the evaluation process for each of the DWS Funds, consideration of certain complex-level factors, and my conclusions. I served in substantially the same capacity in 2007.

For more than 35 years I have served in various professional capacities within the investment management business. I have held investment analysis and advisory positions, including securities analyst, portfolio strategist and director of investment policy with a large investment firm. I have also performed business management functions, including business development, financial management and marketing research and analysis.

Since 1991, I have been an independent consultant within the asset management industry. I have provided services to over 125 client organizations, including investment managers, mutual fund boards, product distributors and related organizations. Over the past ten years I have completed a number of assignments for mutual fund boards, specifically including assisting boards with management contract renewal.

I hold a Master of Business Administration degree, with highest honors, from Harvard University and Master of Science and Bachelor of Science (highest honors) degrees from the University of California at Berkeley. I am an independent director and audit committee financial expert for two closed-end mutual funds, serve on the board of directors of a private market research company, and have served in various leadership and financial oversight capacities with non-profit organizations.

My work focused primarily on evaluating, fund-by-fund, the fees charged to each of the 129 Fund portfolios in the DWS Fund family. For each Fund, I considered each of the key factors mentioned above, as well as any other relevant information. In doing so I worked closely with the Funds' Independent Directors in their annual contract renewal process, as well as in their approval of contracts for several new funds (documented separately).

In evaluating each Fund's fees, I reviewed comprehensive materials provided by or on behalf of DeAM, including expense information prepared by Lipper Analytical, comparative performance information, profitability data, manager histories, and other materials. I also accessed certain additional information from the Lipper, Strategic Insight, and Morningstar databases and drew on my industry knowledge and experience.

To facilitate evaluating this considerable body of information, I prepared for each Fund a document summarizing the key data elements in each area as well as additional analytics discussed below. This made it possible to consider each key data element in the context of the others.

In the course of contract renewal, DeAM agreed to implement a number of fee and expense adjustments requested by the Independent Directors which will favorably impact future fees and expenses, and my evaluation includes the effects of these changes.

The competitive fee and expense evaluation for each fund focused on two primary comparisons:

The Fund's contractual management fee (the advisory fee plus the administration fee where applicable) compared with those of a group of typically 12-15 funds in the same Lipper investment category (e.g. Large Capitalization Growth) having similar distribution arrangements and being of similar size.

The Fund's total expenses compared with a broader universe of funds from the same Lipper investment category and having similar distribution arrangements.

These two comparisons provide a view of not only the level of the fee compared with funds of similar scale but also the total expense the Fund bears for all the services it receives, in comparison with the investment choices available in the Fund's investment category and distribution channel. The principal figure-of-merit used in these comparisons was the subject Fund's percentile ranking against peers.

DeAM provided management fee schedules for all of its US domiciled fund and non-fund investment management accounts in any of the investment categories where there is a DWS Fund. These similar products included the other DWS Funds, non-fund pooled accounts, institutional accounts and sub-advisory accounts. Using this information, I calculated for each Fund the fee that would be charged to each similar product, at the subject Fund's asset level.

Evaluating information regarding non-fund products is difficult because there are varying levels of services required for different types of accounts, with mutual funds generally requiring considerably more regulatory and administrative types of service as well as having more frequent cash flows than other types of accounts. Also, while mutual fund fees for similar fund products can be expected to be similar, there will be some differences due to different pricing conditions in different distribution channels (e.g. retail funds versus those used in variable insurance products), differences in underlying investment processes and other factors.

DeAM provided a detailed profitability analysis for each Fund. After making some adjustments so that the presentation would be more comparable to the available industry figures, I reviewed profit margins from investment management alone, from investment management plus other fund services (excluding distribution) provided to the Funds by DeAM (principally shareholder services), and DeAM profits from all sources, including distribution. A later section comments on overall profitability.

Economies of scale — an expected decline in management cost per dollar of fund assets as fund assets grow — are very rarely quantified and documented because of inherent difficulties in collecting and analyzing relevant data. However, in virtually every investment category that I reviewed, larger funds tend to have lower fees and lower total expenses than smaller funds. To see how each DWS Fund compares with this industry observation, I reviewed:

The trend in Fund assets over the last five years and the accompanying trend in total expenses. This shows if the Fund has grown and, if so, whether total expense (management fees as well as other expenses) have declined as a percent of assets.

Whether the Fund has break-points in its management fee schedule, the extent of the fee reduction built into the schedule and the asset levels where the breaks take effect, and in the case of a sub-advised Fund how the Fund's break-points compare with those of the sub-advisory fee schedule.

How the Fund's contractual fee schedule compares with trends in the industry data. To accomplish this, I constructed a chart showing how actual latest-fiscal-year contractual fees of the Fund and of other similar funds relate to average fund assets, with the subject Fund's contractual fee schedule superimposed.

The quality-of-service evaluation focused on investment performance, which is the principal result of the investment management service. Each Fund's performance was reviewed over the past 1, 3, 5 and 10 years, as applicable, and compared with that of other funds in the same investment category and with a suitable market index.

In addition, I calculated and reviewed risk-adjusted returns relative to an index of similar mutual funds' returns and a suitable market index. The risk-adjusted returns analysis provides a way of determining the extent to which the Fund's return comparisons are mainly the product of investment value-added (or lack thereof) or alternatively taking considerably more or less risk than is typical in its investment category.

I also received and considered the history of portfolio manager changes for each Fund, as this provided an important context for evaluating the performance results.

While this evaluation was conducted mainly at the individual fund level, there are some issues relating to the reasonableness of fees that can alternatively be considered across the whole fund complex:

I reviewed DeAM's profitability analysis for all DWS Funds, with a view toward determining if the allocation procedures used were reasonable and how profit levels compared with public data for other investment managers.

I considered whether DeAM and affiliates receive any significant ancillary or "fall-out" benefits that should be considered in interpreting the direct profitability results. These would be situations where serving as the investment manager of the Funds is beneficial to another part of the Deutsche Bank organization.

I considered how aggregated DWS Fund expenses had varied over the years, by asset class and in the context of trends in asset levels.

I reviewed the structure of the DeAM organization, trends in staffing levels, and information on compensation of investment management and other professionals compared with industry data.

Based on the process and analysis discussed above, which included reviewing a wide range of information from management and external data sources and considering among other factors the fees DeAM charges other clients, the fees charged by other fund managers, DeAM's costs and profits associated with managing the Funds, economies of scale, possible fall-out benefits, and the nature and quality of services provided, in my opinion the management fees charged the DWS Funds are reasonable.

Pursuant to an Order entered into by Deutsche Asset Management (DeAM) with the Attorney General of New York, I, Thomas H. Mack, have been appointed the Independent Fee Consultant for the DWS Funds and have as part of my duties evaluated the reasonableness of the proposed management fees to be charged by DeAM to the DWS Funds, taking onto account a proposal to pass through to the funds certain fund accounting-related charges in connection with new regulatory requirements. My evaluation considered the following:

• While the proposal would alter the services to be provided under the Administration Agreement, which I consider to be part of fund management under the Order, it is my opinion that the change in services is slight and that the scope of prospective services under the combination of the Advisory and Administration Agreements continues to be comparable with those typically provided to competitive funds under their management agreements.

• While the proposal would increase fund expenses, according to a pro forma analysis performed by management, the prospective effect is less than .01% for all but seven of the DeAM Funds' 438 active share classes, and in all cases the effect is less than .03% and overall expenses would remain reasonable in my opinion.

Based on the foregoing considerations, in my opinion the fees and expenses for all of the DWS Funds will remain reasonable if the Directors adopt this proposal.

The following table presents certain information regarding the Board Members and Officers of the Trust as of May 31, 2009. Each Board Member's year of birth is set forth in parentheses after his or her name. Unless otherwise noted, (i) each Board Member has engaged in the principal occupation(s) noted in the table for at least the most recent five years, although not necessarily in the same capacity; and (ii) the address of each Independent Board Member is c/o Dawn-Marie Driscoll, PO Box 100176, Cape Coral, FL 33904. Except as otherwise noted below, the term of office for each Board Member is until the election and qualification of a successor, or until such Board Member sooner dies, resigns, is removed or as otherwise provided in the governing documents of the fund. Because the fund does not hold an annual meeting of shareholders, each Board Member will hold office for an indeterminate period. The Board Members may also serve in similar capacities with other funds in the fund complex. The Length of Time Served represents the year in which the Board Member joined the board of one or more DWS funds now overseen by the Board.

The fund's Statement of Additional Information ("SAI") includes additional information about the Board Members. The SAI is available, without charge, upon request. If you would like to request a copy of the SAI, you may do so by calling the following toll-free number: (800) 621-1048.

ITEM 2.	CODE OF ETHICS

	As of the end of the period, May 31, 2009, DWS Managed Municipal Bond Fund has a code of ethics, as defined in Item 2 of Form N-CSR, that applies to its Principal Executive Officer and Principal Financial Officer. There have been no amendments to, or waivers from, a provision of the code of ethics during the period covered by this report that would require disclosure under Item 2. A copy of the code of ethics is filed as an exhibit to this Form N-CSR.

ITEM 3.	AUDIT COMMITTEE FINANCIAL EXPERT

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

ITEM 4.	PRINCIPAL ACCOUNTANT FEES AND SERVICES

DWS MANAGED MUNICIPAL BOND FUND

FORM N-CSR DISCLOSURE RE: AUDIT FEES

The following table shows the amount of fees that PricewaterhouseCoopers, LLP (“PWC”), the Fund’s independent registered public accounting firm, billed to the Fund during the Fund’s last two fiscal years. The Audit Committee approved in advance all audit services and non-audit services that PWC provided to the Fund.

Services that the Fund’s Independent Registered Public Accounting Firm Billed to the Fund

Fiscal Year Ended May 31,	Audit Fees Billed to Fund	Audit-Related Fees Billed to Fund	Tax Fees Billed to Fund	All Other Fees Billed to Fund
2009	$94,925	$0	$0	$0
2008	$92,925	$0	$0	$0

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

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

Fiscal Year May 31,	Audit-Related Fees Billedto Adviser and Affiliated Fund Service Providers	Tax Fees Billed to Adviser and Affiliated Fund Service Providers	All Other Fees Billed to Adviser and Affiliated Fund Service Providers
2009	$0	$19,000	$0
2008	$21,500	$25,000	$0

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

Non-Audit Services

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

Fiscal Year
Ended
May 31,

Total
Non-Audit Fees Billed to Fund

(A)

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

(B)

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

(C)

Total of (A), (B)

and (C)

2009

$19,000

2008

$25,000

$600,000

$625,000

All other engagement fees were billed for services provided by PWC for services related to consulting on an IT project.

Audit Committee Pre-Approval Policies and Procedures. Generally, each Fund’s Audit Committee must pre approve (i) all services to be performed for a Fund by a Fund’s Independent Registered Public Accounting Firm and (ii) all non-audit services to be performed by a Fund’s Independent Registered Public Accounting Firm for the DIMA Entities with respect to operations and financial reporting of the Fund, except that the Chairperson or Vice Chairperson of each Fund’s Audit Committee may grant the pre-approval for non-audit services described in items (i) and (ii) above for non-prohibited services for engagements of less than $100,000. All such delegated pre approvals shall be presented to each Fund’s Audit Committee no later than the next Audit Committee meeting.

There were no amounts that were approved by the Audit Committee pursuant to the de minimis exception under Rule 2-01 of Regulation S-X.

According to the registrant’s principal Independent Registered Public Accounting Firm, all of the principal Independent Registered Public Accounting Firm's hours spent on auditing the registrant's financial statements were attributed to work performed by full-time permanent employees of the principal Independent Registered Public Accounting Firm.

***

PwC advised the Fund's Audit Committee that PwC has identified two matters that it determined to be inconsistent with the SEC's auditor independence rules. In the first instance, an employee of PwC had power of attorney over an account which included DWS funds. The employee did not perform any audit services for the DWS Funds, but did work on a non audit project for Deutsche Bank AG. In the second instance, an employee of PwC served as a nominee shareholder (effectively equivalent to a Trustee) of various companies/trusts since 2001. Some of these companies held shares of Aberdeen, a sub advisor to certain DWS Funds, and of certain funds sponsored by subsidiaries of Deutsche Bank AG. The trustee relationship has ceased. PwC informed the Audit Committee that these matters could have constituted an investment in an affiliate of an audit client in violation of the Rule 2-01(c)(1) of Regulation S-X. PwC advised the Audit Committee that PwC believes its independence had not been impacted as it related to the audits of the Fund. In reaching this conclusion, PwC noted that during the time of its audit, the engagement team was not aware of the investment and that PwC does not believe these situations affected PwC's ability to act objectively and impartially and to issue a report on financial statements as the funds' independent auditor.


ITEM 5.	AUDIT COMMITTEE OF LISTED REGISTRANTS

	Not Applicable

ITEM 6.	SCHEDULE OF INVESTMENTS

	Not Applicable

ITEM 7.	DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES

	Not applicable.


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

	Not applicable.

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

	Not Applicable.

ITEM 10.	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

	The primary function of the Nominating and Governance Committee is to identify and recommend individuals for membership on the Board and oversee the administration of the Board Governance Guidelines. Shareholders may recommend candidates for Board positions by forwarding their correspondence by U.S. mail or courier service to Chairman of the Board, P.O. Box 100176, Cape Coral, FL 33910.

ITEM 11.	CONTROLS AND PROCEDURES

	(a) The Chief Executive and Financial Officers concluded that the Registrant’s Disclosure Controls and Procedures are effective based on the evaluation of the Disclosure Controls and Procedures as of a date within 90 days of the filing date of this report.

	(b) There have been no changes in the registrant’s internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal controls over financial reporting.

ITEM 12.	EXHIBITS

	(a)(1) Code of Ethics pursuant to Item 2 of Form N-CSR is filed and attached hereto as EX-99.CODE ETH.

	(a)(2) Certification pursuant to Rule 30a-2(a) under the Investment Company Act of 1940 (17 CFR 270.30a-2(a)) is filed and attached hereto as Exhibit 99.CERT.

	(b) Certification pursuant to Rule 30a-2(b) under the Investment Company Act of 1940 (17 CFR 270.30a-2(b)) is furnished and attached hereto as Exhibit 99.906CERT.

Average Annual Total Returns (Unadjusted for Sales Charge) as of 5/31/09
DWS Managed Municipal Bond Fund	1-Year	3-Year	5-Year	10-Year
Class A	3.38%	3.60%	3.99%	4.56%
Class B	2.45%	2.82%	3.20%	3.76%
Class C	2.61%	2.84%	3.21%	3.75%
Barclays Capital Municipal Bond Index⁺	3.57%	4.09%	4.41%	4.95%

Average Annual Total Returns as of 5/31/09
DWS Managed Municipal Bond Fund	1-Year	3-Year	5-Year	Life of Class^*
Institutional Class	3.61%	3.86%	4.24%	3.98%
Barclays Capital Municipal Bond Index⁺	3.57%	4.09%	4.41%	4.22%

Net Asset Value and Distribution Information
	Class A	Class B	Class C	Institutional Class
Net Asset Value: 5/31/09	$ 8.68	$ 8.68	$ 8.68	$ 8.68
5/31/08	$ 8.85	$ 8.86	$ 8.85	$ 8.85
Distribution Information: Twelve Months as of 5/31/09: Income Dividends	$ .41	$ .34	$ .34	$ .43
Capital Gain Distributions	$ .03	$ .03	$ .03	$ .03
May Income Dividend	$ .0346	$ .0288	$ .0285	$ .0341
SEC 30-day Yield⁺⁺ as of 5/31/09	4.05%	3.46%	3.41%	4.17%
Tax Equivalent Yield⁺⁺ as of 5/31/09	6.23%	5.32%	5.25%	6.42%
Current Annualized Distribution Rate⁺⁺ as of 5/31/09	4.69%	3.91%	3.87%	4.63%

Class A Lipper Rankings — General Municipal Debt Funds Category as of 5/31/09
Period	Rank		Number of Funds Tracked	Percentile Ranking (%)
1-Year	35	of	241	15
3-Year	31	of	220	15
5-Year	19	of	205	9

Comparative Results (Adjusted for Maximum Sales Charge) as of 5/31/09
DWS Managed Municipal Bond Fund		1-Year	3-Year	5-Year	10-Year
Class A	Growth of $10,000	$9,873	$10,620	$11,614	$14,919
Class A	Average annual total return	-1.27%	2.03%	3.04%	4.08%
Class B	Growth of $10,000	$9,951	$10,677	$11,608	$14,461
Class B	Average annual total return	-.49%	2.21%	3.03%	3.76%
Class C	Growth of $10,000	$10,261	$10,875	$11,712	$14,454
Class C	Average annual total return	2.61%	2.84%	3.21%	3.75%
Barclays Capital Municipal Bond Index⁺	Growth of $10,000	$10,357	$11,279	$12,408	$16,209
Barclays Capital Municipal Bond Index⁺	Average annual total return	3.57%	4.09%	4.41%	4.95%

Comparative Results as of 5/31/09
DWS Managed Municipal Bond Fund		1-Year	3-Year	5-Year	Life of Class^*
Institutional Class	Growth of $1,000,000	$1,036,100	$1,120,200	$1,230,800	$1,303,100
Institutional Class	Average annual total return	3.61%	3.86%	4.24%	3.98%
Barclays Capital Municipal Bond Index⁺	Growth of $1,000,000	$1,035,700	$1,127,900	$1,240,800	$1,321,500
Barclays Capital Municipal Bond Index⁺	Average annual total return	3.57%	4.09%	4.41%	4.22%

Net Asset Value and Distribution Information
	Class S
Net Asset Value: 5/31/09	$ 8.69
5/31/08	$ 8.87
Distribution Information: Twelve Months as of 5/31/09: Income Dividends	$ .43
Capital Gain Distributions	$ .03
May Income Dividend	$ .0360
SEC 30-day Yield⁺⁺ as of 5/31/09	4.42%
Tax Equivalent Yield⁺⁺ as of 5/31/09	6.80%
Current Annualized Distribution Rate⁺⁺ as of 5/31/09	4.88%

Class S Lipper Rankings — General Municipal Debt Funds Category as of 5/31/09
Period	Rank		Number of Funds Tracked	Percentile Ranking (%)
1-Year	31	of	241	13
3-Year	23	of	220	11
5-Year	10	of	205	5
10-Year	6	of	160	4

Expenses and Value of a $1,000 Investment (Including Interest Expense)* for the six months ended May 31, 2009
Actual Fund Return	Class A	Class B	Class C	Class S	Institutional Class
Beginning Account Value 12/1/08	$ 1,000.00	$ 1,000.00	$ 1,000.00	$ 1,000.00	$ 1,000.00
Ending Account Value 5/31/09	$ 1,106.30	$ 1,101.80	$ 1,102.20	$ 1,107.30	$ 1,107.40
Expenses Paid per $1,000**	$ 5.83	$ 10.17	$ 9.91	$ 4.78	$ 4.89
Hypothetical 5% Fund Return	Class A	Class B	Class C	Class S	Institutional Class
Beginning Account Value 12/1/08	$ 1,000.00	$ 1,000.00	$ 1,000.00	$ 1,000.00	$ 1,000.00
Ending Account Value 5/31/09	$ 1,019.40	$ 1,015.26	$ 1,015.51	$ 1,020.39	$ 1,020.29
Expenses Paid per $1,000**	$ 5.59	$ 9.75	$ 9.50	$ 4.58	$ 4.68

Annualized Expense Ratios	Class A	Class B	Class C	Class S	Institutional Class
DWS Managed Municipal Bond Fund	1.11%	1.94%	1.89%	.91%	.93%

Asset Allocation (As a % of Investment Portfolio)	5/31/09	5/31/08

Revenue Bonds	62%	51%
General Obligation Bonds	20%	21%
Lease Obligations	10%	9%
ETM/Prerefunded	8%	19%
	100%	100%

Quality	5/31/09	5/31/08

AAA	6%	59%
AA	32%	16%
A	37%	12%
BBB	21%	6%
B	—	1%
Not Rated	4%	6%
	100%	100%

Effective Maturity	5/31/09	5/31/08

0-4.99 years	28%	33%
5-9.99 years	43%	47%
10-14.99 years	11%	13%
Greater than 15 years	18%	7%
	100%	100%

Top Five State Allocations (As a % of Investment Portfolio)	5/31/09	5/31/08

California	15%	15%
Illinois	12%	11%
Texas	8%	8%
Massachusetts	7%	7%
Florida	6%	4%

	% of Net Assets	Value ($)

Total Investment Portfolio (Cost $3,720,726,353)⁺	109.7	3,859,302,916
Other Assets and Liabilities, Net	(9.7)	(342,636,928)
Net Assets	100.0	3,516,665,988

	Principal Amount ($)	Value ($)

Municipal Bonds and Notes 94.5%
Alabama 1.1%
Alabama, State Public School & College Authority, Capital Improvement, 5.0%, 12/1/2023 (a)	35,000,000	36,658,650
Phoenix County, AL, Industrial Development Revenue, Industrial Development Board, AMT, 6.35%, 5/15/2035	4,000,000	3,147,600
		39,806,250
Alaska 0.3%
Anchorage, AK, Electric Revenue, 6.5%, 12/1/2015 (b)	5,000,000	5,925,050
North Slope Borough, AK, County General Obligation Lease, Series B, Zero Coupon, 6/30/2011 (b)	5,000,000	4,795,700
		10,720,750
Arizona 0.9%
Arizona, Health Facilities Authority Revenue, Banner Health System:
Series B, 0.2%**, 1/1/2035, Scotiabank (c)	11,500,000	11,500,000
Series D, 5.375%, 1/1/2032	12,000,000	11,898,600
Arizona, Salt Verde Financial Corp., Gas Revenue:
5.0%, 12/1/2032	1,600,000	1,307,888
5.0%, 12/1/2037	8,405,000	6,723,664
		31,430,152
Arkansas 0.5%
Jonesboro, AR, Hospital & Healthcare Revenue, Healthcare Facilities Authority, Bernard's Regional Medical Center, Series A, 5.8%, 7/1/2012 (b)	3,305,000	3,312,634
North Little Rock, AR, Electric Revenue, Series A, 6.5%, 7/1/2015 (b)	13,080,000	14,639,267
		17,951,901
California 13.6%
Banning, CA, Water & Sewer Revenue, 1989 Water System Improvement Project, ETM, 8.0%, 1/1/2019 (b)	755,000	932,787
Banning, CA, Water & Sewer Revenue, Water System Reference & Improvement Project, ETM, 8.0%, 1/1/2019 (b)	525,000	633,974
California, Health Facilities Financing Authority Revenue, Adventist Health System, Series A, 5.75%, 9/1/2039	5,000,000	5,030,300
California, Health Facilities Financing Authority Revenue, Catholic Healthcare West:
Series A, 6.0%, 7/1/2034	10,000,000	10,188,800
Series A, 6.0%, 7/1/2039	7,500,000	7,624,350
California, Higher Education Revenue, Marymount University, Zero Coupon, 10/1/2014 (b)	1,000,000	823,530
California, Special Assessment Revenue, Golden State Tobacco Securitization Corp.:
Series A-1, 5.0%, 6/1/2033	40,725,000	28,535,600
Series A-1, 5.75%, 6/1/2047	6,670,000	4,445,822
California, State Department of Water Resources Revenue, Prerefunded, 5.5%, 12/1/2015	25,000	27,789
California, State General Obligation:
5.0%, 2/1/2031 (b)	26,975,000	25,212,453
5.0%, 9/1/2032	10,000,000	9,248,700
California, State General Obligation, Various Purposes:
5.0%, 6/1/2023 (b)	25,000,000	25,846,000

Securities	Coupon	Maturity Date	Principal Amount ($)	Acquisition Cost ($)	Value ($)
Austin, TX, Austin-Bergstrom Landhost Enterprises, Inc., Airport Hotel Project, Series A	6.75%	4/1/2027	21,335,000	21,337,200	14,688,081
Green Springs, OH, Senior Care Revenue, Hospital & Healthcare Facilities Revenue, Series A	7.0%	5/15/2014	3,555,000	3,508,947	2,648,688
Green Springs, OH, Senior Care Revenue, St. Francis Health Care Center Project, Series A	7.125%	5/15/2025	4,405,000	4,343,833	2,728,281
				29,189,980	20,065,050

Insurance Coverage	As a % of Total Investment Portfolio
Ambac Financial Group, Inc.	8.6
Assured Guaranty Corp.	0.8
Financial Guaranty Insurance Co	6.8
Financial Security Assurance, Inc.	10.4
National Public Finance Guarantee Corp.	25.4
XL Capital Assurance	0.2

Effective/ Expiration Date	Notional Amount ($)	Cash Flows Paid by the Fund	Cash Flows Received by the Fund	Unrealized Appreciation/ (Depreciation) ($)
2/9/2009 2/8/2021	17,400,000¹	Fixed — 4.681%	Floating — LIBOR	(1,719,164)
3/2/2010 3/2/2021	37,000,000²	Fixed —3.59%	Floating — LIBOR	1,536,599
12/17/2008 12/17/2022	18,800,000²	Fixed — 5.084%	Floating — LIBOR	(2,780,849)
3/17/2009 3/17/2024	5,900,000³	Fixed — 4.43%	Floating — LIBOR	(366,930)
1/8/2010 1/8/2025	12,000,000¹	Fixed — 3.222%	Floating — LIBOR	1,232,191
3/17/2010 3/17/2025	10,300,000¹	Fixed — 3.462%	Floating — LIBOR	836,456
1/8/2010 1/8/2026	49,800,000¹	Fixed —3.133%	Floating — LIBOR	5,909,651
1/12/2010 1/12/2026	30,000,000¹	Fixed — 3.034%	Floating — LIBOR	3,917,883
6/2/2010 6/4/2029	42,000,000¹	Fixed — 4.446%	Floating — LIBOR	—
Total net unrealized appreciation on open interest rate swaps				8,565,837

Valuation Inputs	Investments in Securities	Other Financial Instruments⁺⁺
Level 1	$ —	$ —
Level 2	3,841,794,563	8,565,837
Level 3	17,508,353	—
Total	$ 3,859,302,916	$ 8,565,837

	Investments in Securities
Balance as of June 1, 2008	$ —
Total realized gain (loss)	—
Change in unrealized appreciation (depreciation)	(258,465)
Amortization premium/discount	20,068
Net purchases (sales)	—
Net transfers in (out) of Level 3	17,746,750
Balance as of May 31, 2009	$ 17,508,353
Net change in unrealized appreciation (depreciation) from investments still held as of May 31, 2009	$ (258,465)

Statement of Assets and Liabilities as of May 31, 2009
Assets
Investments: Investments in securities, at value (cost $3,720,726,353)	$ 3,859,302,916
Receivable for investments sold	4,650,684
Receivable for Fund shares sold	2,580,289
Interest receivable	56,591,423
Unrealized appreciation on open interest rate swaps	13,432,780
Other assets	103,518
Total assets	3,936,661,610
Liabilities
Cash overdraft	1,701,260
Payable for investments purchased	15,712,350
Payable for when-issued securities purchased	29,884,379
Payable for Fund shares redeemed	2,023,437
Payable for floating rate notes issued	360,393,315
Unrealized depreciation on open interest rate swaps	4,866,943
Distributions payable	2,704,136
Accrued management fee	946,777
Other accrued expenses and payables	1,763,025
Total liabilities	419,995,622
Net assets, at value	$ 3,516,665,988
Net Assets Consist of:
Undistributed net investment income	1,577,100
Net unrealized appreciation (depreciation) on: Investments	138,576,563
Interest rate swaps	8,565,837
Accumulated net realized gain (loss)	(3,247,558)
Paid-in capital	3,371,194,046
Net assets, at value	$ 3,516,665,988

Statement of Assets and Liabilities as of May 31, 2009 (continued)
Net Asset Value
Class A Net Asset Value and redemption price^(a) per share ($1,627,239,301 ÷ 187,535,768 outstanding shares of beneficial interest, $.01 par value, unlimited number of shares authorized)	$ 8.68
Maximum offering price per share (100 ÷ 95.50 of $8.68)	$ 9.09
Class B Net Asset Value, offering and redemption price^(a) (subject to contingent deferred sales charge) per share ($6,696,056 ÷ 771,554 outstanding shares of beneficial interest, $.01 par value, unlimited number of shares authorized)	$ 8.68
Class C Net Asset Value, offering and redemption price^(a) (subject to contingent deferred sales charge) per share ($58,546,227 ÷ 6,747,789 outstanding shares of beneficial interest, $.01 par value, unlimited number of shares authorized)	$ 8.68
Class S Net Asset Value, offering and redemption price^(a)per share ($1,818,258,282 ÷ 209,268,535 outstanding shares of beneficial interest, $.01 par value, unlimited number of shares authorized)	$ 8.69
Institutional Class Net Asset Value, offering and redemption price^(a)per share ($5,926,122 ÷ 682,959 outstanding shares of beneficial interest, $.01 par value, unlimited number of shares authorized)	$ 8.68

Statement of Operations for the year ended May 31, 2009
Investment Income
Income: Interest	$ 207,741,806
Expenses: Management fee	11,311,992
Distribution and service fees	4,348,956
Administration fee	3,432,379
Services to shareholders	2,332,215
Reports to shareholders	133,262
Professional fees	263,740
Trustees' fees and expenses	90,356
Registration fees	148,798
Custodian fee	95,098
Interest expense and fees on floating rate notes issued	12,291,266
Other	240,202
Total expenses before expense reductions	34,688,264
Expense reductions	(214,887)
Total expenses after expense reductions	34,473,377
Net investment income	173,268,429
Realized and Unrealized Gain (Loss)
Net realized gain (loss) from: Investments	37,100,760
Interest rate swaps	(32,395,456)
	4,705,304
Change in net unrealized appreciation (depreciation) on: Investments	(78,105,290)
Interest rate swaps	6,343,311
	(71,761,979)
Net gain (loss)	(67,056,675)
Net increase (decrease) in net assets resulting from operations	$ 106,211,754

Statement of Cash Flows for the year ended May 31, 2009
Increase (Decrease) in Cash: Cash Flows from Operating Activities
Net increase (decrease) in net assets resulting from operations	$ 106,211,754
Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by operating activities: Purchases of long-term investments	(2,931,790,841)
Net amortization of premium (discount)	(18,076,987)
Proceeds from sales and maturities of long-term investments	3,131,993,876
(Increase) decrease in interest receivable	3,926,138
(Increase) decrease in other assets	(12,773)
(Increase) decrease in receivable for investments sold	749,348
Increase (decrease) in payable for investments purchased	41,531,993
Increase (decrease) in accrued expenses and payables	(390,349)
Change in net unrealized (appreciation) depreciation on investments	78,105,290
Change in net unrealized (appreciation) depreciation on interest rate swaps	(6,343,311)
Net realized (gain) loss from investments	(37,100,760)
Cash provided (used) by operating activities	$ 368,803,378
Cash Flows from Financing Activities
Net increase (decrease) in cash overdraft	1,429,957
Proceeds from shares sold	506,661,195
Cost of shares redeemed	(697,609,249)
Distributions paid (net of reinvestment of distributions)	(67,011,611)
Increase (decrease) in payable for floating rate notes issued	(112,273,670)
Cash provided (used) by financing activities	(368,803,378)
Supplemental Disclosure of Non-Cash Financing Activities
Reinvestment of distributions	$ 115,884,499
Interest expense on floating rate notes issued	$ (12,291,266)

Statement of Changes in Net Assets
	Years Ended May 31,
Increase (Decrease) in Net Assets	2009	2008
Operations: Net investment income	$ 173,268,429	$ 173,768,217
Net realized gain (loss)	4,705,304	19,594,212
Change in net unrealized appreciation (depreciation)	(71,761,979)	(71,765,819)
Net increase (decrease) in net assets resulting from operations	106,211,754	121,596,610
Distributions to shareholders from: Net investment income: Class A	(77,611,473)	(79,911,289)
Class B	(352,094)	(559,746)
Class C	(1,678,734)	(902,775)
Class S	(89,581,894)	(90,980,331)
Institutional Class	(259,047)	(189,231)
Net realized gains: Class A	(6,335,777)	(1,887,516)
Class B	(32,556)	(15,784)
Class C	(152,497)	(23,835)
Class S	(7,260,022)	(2,057,143)
Institutional Class	(17,799)	(3,863)
Total distributions	(183,281,893)	(176,531,513)
Fund share transactions: Proceeds from shares sold	507,174,323	296,024,427
Reinvestment of distributions	115,884,499	108,609,184
Cost of shares redeemed	(695,902,284)	(531,349,137)
Redemption fees	10,238	1,732
Net increase (decrease) in net assets from Fund share transactions	(72,833,224)	(126,713,794)
Increase (decrease) in net assets	(149,903,363)	(181,648,697)
Net assets at beginning of period	3,666,569,351	3,848,218,048
Net assets at end of period (including undistributed net investment income of $1,577,100 and $950,670, respectively)	$ 3,516,665,988	$ 3,666,569,351

Class A Years Ended May 31,	2009	2008	2007	2006	2005
Selected Per Share Data
Net asset value, beginning of period	$ 8.85	$ 8.99	$ 9.04	$ 9.20	$ 9.04
Income from investment operations: Net investment income	.41	.40	.39	.40	.42
Net realized and unrealized gain (loss)	(.14)	(.13)	.00^*	(.16)	.16
Total from investment operations	.27	.27	.39	.24	.58
Less distributions from: Net investment income	(.41)	(.40)	(.39)	(.40)	(.42)
Net realized gains	(.03)	(.01)	(.05)	(.00)^*	(.00)^*
Total distributions	(.44)	(.41)	(.44)	(.40)	(.42)
Redemption fees	.00^*	.00^*	.00^*	.00^*	.00^*
Net asset value, end of period	$ 8.68	$ 8.85	$ 8.99	$ 9.04	$ 9.20
Total Return (%)^a	3.38^b	3.08^b	4.36^b	2.65^b	6.53
Ratios to Average Net Assets and Supplemental Data
Net assets, end of period ($ millions)	1,627	1,745	1,843	1,949	2,147
Ratio of expenses before expense reductions (including interest expense) (%)^c	1.11	1.16	1.04	1.11	.88
Ratio of expenses after expense reductions (including interest expense) (%)^c	1.10	1.14	1.02	1.09	.88
Ratio of expenses after expense reductions (excluding interest expense) (%)	.74	.73	.73	.74	.74
Ratio of net investment income (%)	4.95	4.52	4.29	4.38	4.56
Portfolio turnover rate (%)	77	55	19	28	31
^a Total return does not reflect the effect of any sales charges. ^b Total return would have been lower had certain expenses not been reduced. ^c Interest expense represents interest and fees on short term floating rate notes issued in conjunction with inverse floating rate securities. Interest income from such transactions is included in income from investment operations. ^* Amount is less than $.005.

Class B Years Ended May 31,	2009	2008	2007	2006	2005
Selected Per Share Data
Net asset value, beginning of period	$ 8.86	$ 8.99	$ 9.04	$ 9.20	$ 9.04
Income from investment operations: Net investment income	.34	.34	.32	.33	.35
Net realized and unrealized gain (loss)	(.15)	(.13)	.00^*	(.16)	.16
Total from investment operations	.19	.21	.32	.17	.51
Less distributions from: Net investment income	(.34)	(.33)	(.32)	(.33)	(.35)
Net realized gains	(.03)	(.01)	(.05)	(.00)^*	(.00)^*
Total distributions	(.37)	(.34)	(.37)	(.33)	(.35)
Redemption fees	.00^*	.00^*	.00^*	.00^*	.00^*
Net asset value, end of period	$ 8.68	$ 8.86	$ 8.99	$ 9.04	$ 9.20
Total Return (%)^a,b	2.45	2.42	3.59	1.88	5.70
Ratios to Average Net Assets and Supplemental Data
Net assets, end of period ($ millions)	7	12	19	26	34
Ratio of expenses before expense reductions (including interest expense) (%)^c	1.92	1.98	1.84	1.88	1.68
Ratio of expenses after expense reductions (including interest expense) (%)^c	1.89	1.89	1.77	1.84	1.67
Ratio of expenses after expense reductions (excluding interest expense) (%)	1.53	1.48	1.48	1.49	1.53
Ratio of net investment income (%)	4.16	3.77	3.54	3.63	3.77
Portfolio turnover rate (%)	77	55	19	28	31
^a Total return does not reflect the effect of any sales charges. ^b Total return would have been lower had certain expenses not been reduced. ^c Interest expense represents interest and fees on short term floating rate notes issued in conjunction with inverse floating rate securities. Interest income from such transactions is included in income from investment operations. ^* Amount is less than $.005.

Class C Years Ended May 31,	2009	2008	2007	2006	2005
Selected Per Share Data
Net asset value, beginning of period	$ 8.85	$ 8.99	$ 9.04	$ 9.20	$ 9.04
Income from investment operations: Net investment income	.34	.34	.32	.33	.35
Net realized and unrealized gain (loss)	(.14)	(.13)	.00^*	(.16)	.16
Total from investment operations	.20	.21	.32	.17	.51
Less distributions from: Net investment income	(.34)	(.34)	(.32)	(.33)	(.35)
Net realized gains	(.03)	(.01)	(.05)	(.00)^*	(.00)^*
Total distributions	(.37)	(.35)	(.37)	(.33)	(.35)
Redemption fees	.00^*	.00^*	.00^*	.00^*	.00^*
Net asset value, end of period	$ 8.68	$ 8.85	$ 8.99	$ 9.04	$ 9.20
Total Return (%)^a	2.61^b	2.32^b	3.59^b	1.86^b	5.72
Ratios to Average Net Assets and Supplemental Data
Net assets, end of period ($ millions)	59	32	22	22	24
Ratio of expenses before expense reductions (including interest expense) (%)^c	1.88	1.92	1.81	1.88	1.65
Ratio of expenses after expense reductions (including interest expense) (%)^c	1.87	1.90	1.78	1.85	1.65
Ratio of expenses after expense reductions (excluding interest expense) (%)	1.52	1.49	1.49	1.50	1.51
Ratio of net investment income (%)	4.18	3.76	3.53	3.62	3.80
Portfolio turnover rate (%)	77	55	19	28	31
^a Total return does not reflect the effect of any sales charges. ^b Total return would have been lower had certain expenses not been reduced. ^c Interest expense represents interest and fees on short term floating rate notes issued in conjunction with inverse floating rate securities. Interest income from such transactions is included in income from investment operations. ^* Amount is less than $.005.

Annual Report to Shareholders

Annual Report
to Shareholders

Class S Years Ended May 31,	2009	2008	2007	2006	2005
Selected Per Share Data
Net asset value, beginning of period	$ 8.87	$ 9.00	$ 9.05	$ 9.21	$ 9.05
Income from investment operations: Net investment income	.43	.42	.41	.42	.44
Net realized and unrealized gain (loss)	(.15)	(.12)	.00^*	(.16)	.16
Total from investment operations	.28	.30	.41	.26	.60
Less distributions from: Net investment income	(.43)	(.42)	(.41)	(.42)	(.44)
Net realized gains	(.03)	(.01)	(.05)	(.00)^*	(.00)^*
Total distributions	(.46)	(.43)	(.46)	(.42)	(.44)
Redemption fees	.00^*	.00^*	.00^*	.00^*	.00^*
Net asset value, end of period	$ 8.69	$ 8.87	$ 9.00	$ 9.05	$ 9.21
Total Return (%)	3.48^a	3.42^a	4.59^a	2.88	6.81
Ratios to Average Net Assets and Supplemental Data
Net assets, end of period ($ millions)	1,818	1,873	1,961	771	789
Ratio of expenses before expense reductions (including interest expense) (%)^b	.90	.95	.82	.86	.63
Ratio of expenses after expense reductions (including interest expense) (%)^b	.89	.93	.79	.86	.63
Ratio of expenses after expense reductions (excluding interest expense) (%)	.54	.52	.50	.51	.49
Ratio of net investment income (%)	5.16	4.74	4.52	4.61	4.82
Portfolio turnover rate (%)	77	55	19	28	31
^a Total return would have been lower had certain expenses not been reduced. ^b Interest expense represents interest and fees on short term floating rate notes issued in conjunction with inverse floating rate securities. Interest income from such transactions is included in income from investment operations. ^* Amount is less than $.005.

Institutional Class Years Ended May 31,	2009	2008	2007	2006	2005
Selected Per Share Data
Net asset value, beginning of period	$ 8.85	$ 8.99	$ 9.04	$ 9.21	$ 9.05
Income from investment operations: Net investment income	.43	.43	.41	.42	.45
Net realized and unrealized gain (loss)	(.14)	(.13)	.00^*	(.17)	.16
Total from investment operations	.29	.30	.41	.25	.61
Less distributions from: Net investment income	(.43)	(.43)	(.41)	(.42)	(.45)
Net realized gains	(.03)	(.01)	(.05)	(.00)^*	(.00)^*
Total distributions	(.46)	(.44)	(.46)	(.42)	(.45)
Redemption fees	.00^*	.00^*	.00^*	.00^*	.00^*
Net asset value, end of period	$ 8.68	$ 8.85	$ 8.99	$ 9.04	$ 9.21
Total Return (%)	3.61^a	3.35	4.62	2.82	6.86^a
Ratios to Average Net Assets and Supplemental Data
Net assets, end of period ($ millions)	6	5	4	4	.45
Ratio of expenses before expense reductions (including interest expense) (%)^b	.90	.90	.78	.88	.66
Ratio of expenses after expense reductions (including interest expense) (%)^b	.89	.90	.78	.88	.63
Ratio of expenses after expense reductions (excluding interest expense) (%)	.54	.49	.49	.53	.49
Ratio of net investment income (%)	5.16	4.77	4.53	4.59	4.81
Portfolio turnover rate (%)	77	55	19	28	31
^a Total returns would have been lower had certain expenses not been reduced. ^b Interest expense represents interest and fees on short term floating rate notes issued in conjunction with inverse floating rate securities. Interest income from such transactions is included in income from investment operations. ^* Amount is less than $.005.

Asset Derivatives	Swap Contracts
Interest Rate Contracts (a)	$ 13,432,780

Liability Derivatives	Swap Contracts
Interest Rate Contracts (a)	$ 4,866,943

Realized Gain (Loss)	Swap Contracts
Interest Rate Contracts (a)	$ (32,395,456)

Change in Net Unrealized Appreciation (Depreciation)	Swap Contracts
Interest Rate Contracts (a)	$ 6,343,311

Undistributed tax-exempt income	$ 3,091,314
Undistributed ordinary income	$ 649,722
Undistributed net long-term capital gains	$ 2,518,471
Net unrealized appreciation (depreciation) on investments	$ 144,739,044

First $250 million of the Fund's average daily net assets	.365%
Next $750 million of such net assets	.345%
Next $1.5 billion of such net assets	.325%
Next $2.5 billion of such net assets	.315%
Next $2.5 billion of such net assets	.295%
Next $2.5 billion of such net assets	.275%
Next $2.5 billion of such net assets	.255%
Over $12.5 billion of such net assets	.235%

Class A	.73%
Class B	1.48%
Class C	1.49%
Class S	.52%
Institutional Class	.50%

Services to Shareholders	Total Aggregated	Waived	Unpaid at May 31, 2009
Class A	$ 551,872	$ 94,353	$ 138,549
Class B	7,139	2,761	1,690
Class C	17,660	2,634	5,246
Class S	722,301	105,665	187,558
Institutional Class	2,451	81	563
	$ 1,301,423	$ 205,494	$ 333,606