N-CSRS 1 sr043010af_stmb.htm DWS SHORT-TERM MUNICIPAL BOND FUND

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549

 

FORM N-CSRS

 

Investment Company Act file number

811-04760

 

DWS Advisor Funds

(Exact Name of Registrant as Specified in Charter)

 

345 Park Avenue

New York, NY 10154-0004

(Address of Principal Executive Offices) (Zip Code)

 

Registrant’s Telephone Number, including Area Code: (212) 454-7190

 

Paul Schubert

345 Park Avenue

New York, NY 10154-0004

(Name and Address of Agent for Service)

 

Date of fiscal year end:

10/31

 

Date of reporting period:

4/30/2010

 

ITEM 1.

REPORT TO STOCKHOLDERS

 

 

 

APRIL 30, 2010

Semiannual Report
to Shareholders

 

 

DWS Short-Term Municipal Bond Fund

stm_cover240

Contents

4 Performance Summary

7 Information About Your Fund's Expenses

9 Portfolio Summary

10 Investment Portfolio

23 Financial Statements

27 Financial Highlights

32 Notes to Financial Statements

41 Summary of Management Fee Evaluation by Independent Fee Consultant

46 Account Management Resources

47 Privacy Statement

This report must be preceded or accompanied by a prospectus. To obtain a summary prospectus, if available, or 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 summary prospectus and prospectus contain this and other important information about the fund. Please read the prospectus carefully before you invest.

Bond investments are subject to interest-rate and credit risks. When interest rates rise, bond prices generally fall. Credit risk refers to the ability of an issuer to make timely payments of principal and interest. Although the fund seeks income that is federally tax-free, a portion of the fund's distributions may be subject to federal, state and local taxes, including the alternative minimum tax. See the prospectus for details.

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

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

Performance Summary April 30, 2010

Average Annual Total Returns as of 4/30/10

Unadjusted for Sales Charge

6-Month‡

1-Year

3-Year

5-Year

10-Year

Class A

1.62%

4.35%

2.66%

2.77%

3.29%

Class B

1.23%

3.53%

1.89%

2.01%

2.52%

Class C

1.33%

3.65%

1.89%

2.00%

2.51%

Adjusted for the Maximum Sales Charge

 

 

 

 

 

Class A (max 2.00% load)

-0.41%

2.26%

1.97%

2.35%

3.08%

Class B (max 4.00% CDSC)

-2.77%

0.53%

1.25%

1.82%

2.52%

Class C (max 1.00% CDSC)

0.33%

3.65%

1.89%

2.00%

2.51%

No Sales Charges

 

 

 

 

 

Class S

1.68%

4.54%

2.90%

2.97%

3.44%

Institutional Class

1.74%

4.58%

2.89%

3.04%

3.56%

Barclays Capital 1-Year G.O. Bond Index+

0.92%

2.28%

3.95%

3.52%

3.42%

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

‡ Total returns shown for periods less than one year are not annualized.

Performance in the Average Annual Total Returns table above and the Growth of an Assumed $10,000 Investment line graph that follows is historical and does not guarantee future results. Investment return and principal fluctuate, so your shares may be worth more or less when redeemed. Current performance may differ from performance data shown. Please visit www.dws-investments.com for the Fund's most recent month-end performance. Performance includes reinvestment of all distributions. Unadjusted returns do not reflect sales charges and would have been lower if they had.

The gross expense ratios of the Fund, as stated in the fee table of the prospectus dated March 1, 2010 are 0.88%, 1.77%, 1.67%, 0.75% and 0.61% for Class A, Class B, Class C, Class S and Institutional Class shares, respectively, and may differ from the expense ratios disclosed in the Financial Highlights tables in this report.

Index returns, unlike Fund returns, do not reflect any fees or expenses. It is not possible to invest directly into an index.

Performance figures do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. A portion of the fund's distributions may be subject to federal, state and local tax and the alternative minimum tax.

Returns shown for Class A, B and C for the periods prior to their inception on February 28, 2003 and for Class S shares for the periods prior to their inception on February 28, 2005 are derived from the historical performance of Institutional Class shares of DWS Short-Term Municipal Bond Fund during such periods and have been adjusted to reflect the higher total annual operating expenses of each specific class. Any difference in expenses will affect performance.

Growth of an Assumed $10,000 Investment (Adjusted for Maximum Sales Charge)

[] DWS Short-Term Municipal Bond Fund — Class A

[] Barclays Capital 1-Year G.O. Bond Index+

stm_g10k200

Yearly periods ended April 30

The Fund's growth of an assumed $10,000 investment is adjusted for the maximum sales charge of 2.00%. This results in a net initial investment of $9,800.

The growth of $10,000 is cumulative.

Performance of other share classes will vary based on the sales charges and the fee structure of those classes.

+ The Barclays Capital 1-Year General Obligation Bond Index is an unmanaged index including bonds with a minimum credit rating of BAA3, issued as part of a deal of at least $75 million, having an amount outstanding of at least $7 million, a maturity of one to two years, backed by the full faith and credit of an issuer with taxing power, and issued after December 31, 1990.

Net Asset Value and Distribution Information

 

Class A

Class B

Class C

Class S

Institutional Class

Net Asset Value:

4/30/10

$ 10.21

$ 10.21

$ 10.21

$ 10.20

$ 10.21

10/31/09

$ 10.14

$ 10.14

$ 10.13

$ 10.13

$ 10.14

Distribution Information:

Six Months as of 4/30/10:

Income Dividends

$ .09

$ .05

$ .05

$ .10

$ .11

April Income Dividend

$ .0151

$ .0090

$ .0091

$ .0162

$ .0172

SEC 30-day Yield as of 4/30/10++

.93%

.19%

.20%

1.09%

1.17%

Tax Equivalent Yield as of 4/30/10++

1.43%

.29%

.31%

1.68%

1.80%

Current Annualized Distribution Rate as of 4/30/10++

1.80%

1.07%

1.08%

1.93%

2.05%

++ The SEC yield is net investment income per share earned over the month ended April 30, 2010, shown as an annualized percentage of the maximum offering price per share on the last day of the period. The SEC yield is computed in accordance with a standardized method prescribed by the Securities and Exchange Commission. The SEC yields would have been 0.10%, 0.10% and 0.98% for Class B, C and S shares, respectively, had certain expenses not been reduced. Tax equivalent yield is based on the Fund's distribution rate and a marginal income tax rate of 35%. Current annualized distribution rate is the latest monthly dividend shown as an annualized percentage of net asset value on April 30, 2010. Distribution rate simply measures the level of dividends and is not a complete measure of performance. The current annualized distribution rates would have been 0.98%, 0.98% and 1.82% for Class B, C and S shares, respectively, had certain expenses not been reduced. Yields and distribution rates are historical, not guaranteed, and will fluctuate.

Lipper Rankings — Short Municipal Debt Funds Category as of 4/30/10

Period

Rank

 

Number of Fund Classes Tracked

Percentile Ranking (%)

Class A

1-Year

20

of

71

28

3-Year

49

of

60

81

5-Year

39

of

55

70

Class B

1-Year

35

of

71

49

3-Year

53

of

60

87

5-Year

48

of

55

86

Class C

1-Year

32

of

71

45

3-Year

54

of

60

89

5-Year

49

of

55

88

Class S

1-Year

15

of

71

21

3-Year

46

of

60

76

5-Year

33

of

55

59

Institutional Class

1-Year

13

of

71

19

3-Year

47

of

60

78

5-Year

29

of

55

52

10-Year

6

of

27

22

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, rankings might have been less favorable.

Information About Your Fund's Expenses

As an investor, 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. In the most recent six-month period, Class B, C and S shares of the Fund limited these expenses; had they not done so, expenses would have been higher. 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 (November 1, 2009 to April 30, 2010).

The tables illustrate your Fund's expenses in two ways:

• 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.

Expenses and Value of a $1,000 Investment for the six months ended April 30, 2010

Actual Fund Return

Class A

Class B

Class C

Class S

Institutional Class

Beginning Account Value 11/1/09

$ 1,000.00

$ 1,000.00

$ 1,000.00

$ 1,000.00

$ 1,000.00

Ending Account Value 4/30/10

$ 1,016.20

$ 1,012.30

$ 1,013.30

$ 1,016.80

$ 1,017.40

Expenses Paid per $1,000*

$ 4.05

$ 7.88

$ 7.89

$ 3.40

$ 2.90

Hypothetical 5% Fund Return

Class A

Class B

Class C

Class S

Institutional Class

Beginning Account Value 11/1/09

$ 1,000.00

$ 1,000.00

$ 1,000.00

$ 1,000.00

$ 1,000.00

Ending Account Value 4/30/10

$ 1,020.78

$ 1,016.96

$ 1,016.96

$ 1,021.42

$ 1,021.92

Expenses Paid per $1,000*

$ 4.06

$ 7.90

$ 7.90

$ 3.41

$ 2.91

* Expenses are equal to the Fund's annualized expense ratio for each share class, multiplied by the average account value over the period, multiplied by the number of days in the most recent six-month period, then divided by 365.

Annualized Expense Ratios

Class A

Class B

Class C

Class S

Institutional Class

DWS Short-Term Municipal Bond Fund

.81%

1.58%

1.58%

.68%

.58%

For more information, please refer to the Fund's prospectus.

Portfolio Summary

Asset Allocation (As a % of Investment Portfolio)

4/30/10

10/31/09

 

 

 

Revenue Bonds

53%

55%

General Obligation Bonds

25%

20%

ETM/Prerefunded Bonds

11%

12%

Lease Obligations

9%

8%

Open End Investment Companies

2%

5%

 

100%

100%

Quality

4/30/10

10/31/09

 

 

 

AAA

30%

30%

AA

41%

35%

A

18%

23%

BBB

6%

6%

Not Rated

5%

6%

 

100%

100%

Effective Maturity

4/30/10

10/31/09

 

 

 

Under 1 year

30%

33%

1.00-2.99 years

40%

32%

3.00-4.99 years

16%

18%

Greater than 5 years

14%

17%

 

100%

100%

Top Five State Allocations

4/30/10

10/31/09

 

 

 

Texas

9%

12%

Florida

8%

6%

California

7%

5%

Ohio

6%

8%

Washington

6%

6%

Effective maturity is the weighted average of the bonds held by the Fund taking into consideration any maturity shortening features.

Weighted average effective maturity: 2.4 years and 2.5 years, respectively.

Asset allocation, quality, effective maturity and state allocations are subject to change.

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

For more complete details about the Fund's investment portfolio, see page 10. A quarterly Fact Sheet is available upon request. 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. A complete list of the Fund's portfolio holdings is also posted on www.dws-investments.com from time to time. Please see the Fund's current prospectus for more information.

Investment Portfolio as of April 30, 2010 (Unaudited)

 

Principal Amount ($)

Value ($)

 

 

Municipal Bonds and Notes 96.9%

Alabama 1.3%

Auburn, AL, General Obligation, 144A, 4.85%, 11/1/2011

189,050

189,329

Jefferson County, AL, Sewer Revenue, Capital Improvement Warrants, Prerefunded, 5.0%, 2/1/2041 (a)

8,000,000

8,706,800

 

8,896,129

Alaska 0.5%

Alaska, State Housing Finance Corp., Home Mortgage, Series A, AMT, 5.0%, 6/1/2036 (a)

3,580,000

3,695,419

Arizona 2.2%

Arizona, Health Facilities Authority Revenue, Banner Health, Series A, 5.0%, 1/1/2019

2,000,000

2,118,360

Arizona, Health Facilities Authority, Hospital System Revenue, Phoenix Baptist Hospital & Medical Center, ETM, 6.25%, 9/1/2011 (a)

150,000

154,755

Arizona, State Department of Administration, Certificates of Participation, Series A, 5.0%, 10/1/2012 (a)

1,000,000

1,084,640

Arizona, Water Infrastructure Finance Authority Revenue, Water Quality, Series A, Prerefunded, 5.375%, 10/1/2013

2,625,000

2,804,419

Maricopa County, AZ, Industrial Development Authority, Single Family Mortgage Revenue, Series 2B, AMT, 5.55%, 3/1/2028

40,000

39,867

Phoenix, AZ, Civic Improvement Corp., 0.279%, 6/3/2010

4,000,000

4,000,000

Pima County, AZ, Higher Education Revenue, Industrial Development Authority, Series A, 5.0%, 5/1/2013 (a)

1,030,000

789,474

Scottsdale, AZ, Municipal Property Corp., Excise Tax Revenue, 5.0%, 7/1/2014

3,320,000

3,769,860

Snowflake, AZ, Sales & Special Tax Revenue, 4.0%, 7/1/2013

340,000

353,920

 

15,115,295

Arkansas 0.0%

Chicot County, AR, Sales & Special Tax Revenue, Sales & Use Tax, 4.15%, 7/1/2026 (a)

30,000

27,206

Little Rock, AR, Residential Housing & Public Facility Board, Series B, Zero Coupon, 7/15/2011

15,000

13,778

Springdale, AR, Residential Housing & Healthcare Facility Board, Series A, 7.65%, 9/1/2011

1,170

1,198

 

42,182

California 6.5%

California, Health Facilities Financing Authority Revenue, Catholic Healthcare, Series C, 0.27%**, 7/1/2020, JPMorgan Chase Bank (a) (b)

1,890,000

1,890,000

California, State Department of Water Resources Power Supply Revenue, Series G-4, 5.0%, 5/1/2016

2,500,000

2,836,975

California, State General Obligation:

 

5.0%, 10/1/2017

5,435,000

6,052,525

 

5.25%, 4/1/2022

1,615,000

1,734,413

California, State Revenue Anticipation Notes:

 

Series A-1, 3.0%, 5/25/2010

6,600,000

6,609,042

 

Series A-2, 3.0%, 6/23/2010

2,975,000

2,984,252

California, Statewide Communities Development Authority Revenue, Proposition 1A Receivables Program, 5.0%, 6/15/2013

3,500,000

3,815,350

California, Statewide Communities Development Authority, Multi-Family Housing Revenue, AMT, 4.7%, 10/15/2012

435,000

449,594

California, Statewide Communities Development Authority, Multi-Family Housing Revenue, Citrus Gardens Apartments Project, 4.25%, 7/1/2012

250,000

259,283

Carlsbad, CA, Multi-Family Housing Revenue, Series A, AMT, 3.7%, 2/1/2013

300,000

306,435

Delta Counties, CA, Home Mortgage Finance Authority, Single Family Mortgage Revenue, Pacific Mortgage-Backed Securities, Series A, AMT, 6.7%, 6/1/2024 (a)

10,000

10,113

Placer County, CA, Water Agency, Middle Fork Project, 3.75%, 7/1/2012

95,000

94,217

San Diego, CA, Housing Authority Multi-Family Housing Revenue, Hollywood Palms Apartments, Series C, AMT, 5.1%, 11/1/2013

515,000

539,627

San Francisco, CA, City & County Airports Commission, International Airport Revenue, Governmental Purpose:

 

 

Series C, 5.0%, 5/1/2019

2,300,000

2,554,518

 

Series C, 5.0%, 5/1/2020

2,000,000

2,214,500

San Joaquin County, CA, Certificates of Participation, General Hospital Project, 5.25%, 9/1/2014 (a)

2,475,000

2,503,834

Southern California, Metropolitan Water District, Waterworks Revenue, Series A-1, 0.28%**, 7/1/2037

10,000,000

10,000,000

 

44,854,678

Colorado 1.2%

Aurora, CO, Industrial Development Revenue, Series A, 5.375%, 12/1/2011

365,000

365,949

Colorado, Health Facilities Authority Revenue, Catholic Health Initiatives, Series C-6, 3.95%, Mandatory Put 11/10/2010 @100, 9/1/2036

1,610,000

1,637,611

Colorado, Housing Finance Authority, Single Family Program, Series B-2, AMT, 6.4%, 11/1/2024

20,000

20,721

Colorado, Single Family Housing Revenue, Housing & Finance Authority:

 

 

Class III, Series B-4, AMT, 5.0%, 5/1/2032 (a)

360,000

361,710

 

Series A-2, AMT, 7.25%, 5/1/2027

10,000

10,187

Douglas County, CO, School District No. 1, Douglas & Elbert Counties, Prerefunded, 5.0%, 12/15/2012 (a)

5,320,000

5,701,550

El Paso County, CO, Public Housing Revenue, Series A, AMT, 4.1%, 12/20/2012

240,000

246,550

Pueblo County, CO, Certificates of Participation, ETM, 6.25%, 12/1/2010

250,000

255,635

 

8,599,913

Connecticut 1.8%

Connecticut, State Economic Recovery, Series A, 5.0%, 1/1/2012

6,000,000

6,426,900

Connecticut, State Special Tax Obligation Revenue, Transportation Infrastructure, Series B, 3.0%, 12/1/2011

6,000,000

6,207,120

 

12,634,020

Delaware 0.2%

Delaware, State Housing Authority Revenue, Single Family Mortgage, Series D, AMT, 5.875%, 1/1/2038

1,230,000

1,325,239

District of Columbia 0.5%

District of Columbia, Bond Anticipation Notes, Pilot-Arthur Revenue, 4.0%, 12/1/2012

2,895,000

3,027,330

District of Columbia, Housing Finance Agency, Multi-Family Housing Revenue, Stanton Glenn Apartments, AMT, 5.6%, 11/1/2010

100,000

101,399

 

3,128,729

Florida 7.6%

Brevard County, FL, Housing Finance Authority, Homeowner Mortgage Revenue, Series B, 6.5%, 9/1/2022

104,000

113,901

Broward County, FL, Airport Systems Revenue, Series E, AMT, 5.25%, 10/1/2012 (a)

6,000,000

6,044,760

Florida, Citizens Property Insurance Corp., High Risk Senior Secured Notes, Series A2, 2.0%, 4/21/2011

3,705,000

3,736,307

Florida, Hurricane Catastrophe Fund, Finance Corp. Revenue, Series A, 5.0%, 7/1/2011 (a)

9,720,000

10,150,499

Florida, State Board of Public Education, Series C, 5.0%, 6/1/2015

2,675,000

2,899,299

Florida, State Board of Public Education, Capital Outlay:

 

Series 2008-C, 4.0%, 6/1/2012

3,985,000

4,242,790

 

Series B, 5.5%, 6/1/2013

3,000,000

3,183,750

Florida, State Department Environmental Protection Preservation Revenue, Series C, 4.0%, 7/1/2012

4,490,000

4,779,829

Florida, State Department Environmental Protection Preservation Revenue, Florida Forever, Series A, 5.0%, 7/1/2011 (a)

1,250,000

1,314,987

Hillsborough County, FL, Special Assessment Revenue, 5.0%, 3/1/2014 (a)

2,135,000

2,290,471

Orange County, FL, Sales Tax Revenue, Series A, 5.125%, 1/1/2018 (a)

4,000,000

4,301,600

Orlando & Orange County, FL, Expressway Authority Revenue, Series C-3, 0.3%**, 7/1/2025 (a)

5,660,000

5,660,000

Orlando, FL, Utilities Commission Systems Revenue, Series C, 3.0%, 10/1/2011

880,000

908,723

South Miami, FL, Health Facilities Authority, Hospital Revenue, Baptist Health South Florida Group, 5.0%, 8/15/2021

2,500,000

2,606,800

 

52,233,716

Georgia 2.4%

Cobb County, GA, Housing Authority, Multi-Family Housing Revenue, Oakley Run Apartments Project, 4.75%, 3/1/2032

2,635,000

2,711,336

Gainesville & Hall County, GA, Hospital Authority Revenue, Anticipation Certificates, Northeast Healthcare, Series A, 5.0%, 2/15/2018

2,000,000

2,135,400

Georgia, State General Obligation, Series G, 4.0%, 11/1/2011

5,000,000

5,263,050

Gwinnett County, GA, Water & Sewer Authority Revenue, Series A, 3.0%, 8/1/2011

1,605,000

1,656,488

Monroe County, GA, Development Authority Pollution Control Revenue, Georgia Power Co. Plant Scherer, First Series, 4.5%, Mandatory Put 4/1/2011 @100, 7/1/2025

2,640,000

2,725,695

Muscogee County, GA, School District, 3.0%, 12/1/2011

1,950,000

2,022,189

 

16,514,158

Hawaii 1.0%

Hawaii, State Airports Systems Revenue, Series B, AMT, 5.0%, 7/1/2012

1,850,000

1,960,112

Hawaii, State General Obligation, Series DK, 5.0%, 5/1/2012

4,000,000

4,336,040

Hawaii, State Housing Finance & Development Corp., Single Family Mortgage Revenue, Series A, AMT, 5.2%, 7/1/2012

905,000

921,462

 

7,217,614

Idaho 0.2%

Idaho, Housing Agency, Single Family Mortgage:

 

Series H-2, AMT, 5.1%, 7/1/2020

80,000

81,132

 

Class III, AMT, 5.1%, 7/1/2023

175,000

176,988

 

Class III, AMT, 5.15%, 7/1/2023

400,000

408,152

 

Class III, AMT, 5.4%, 7/1/2021

90,000

92,076

 

Series G-2, AMT, 5.75%, 1/1/2014

15,000

15,442

 

Series H-2, AMT, 5.85%, 1/1/2014

45,000

46,419

 

Class III, AMT, 5.95%, 7/1/2019

420,000

436,355

 

Series E, AMT, 5.95%, 7/1/2020

50,000

51,947

 

1,308,511

Illinois 4.5%

Chicago, IL, Board of Education, Series A, 5.25%, 12/1/2018 (a)

1,830,000

1,972,795

Chicago, IL, O'Hare International Airport Revenue:

 

Series A, 5.0%, 1/1/2015 (a)

4,500,000

4,982,310

 

Series D, AMT, 5.25%, 1/1/2019

1,000,000

1,055,490

Du Page County, IL, Forest Preserve District, 3.0%, 11/1/2010

1,250,000

1,265,687

Huntley, IL, Project Revenue, Installment Contract, 5.85%, 12/1/2015

890,000

904,765

Illinois, Finance Authority Revenue, University of Chicago, Series B, 5.0%, 7/1/2017

5,000,000

5,751,900

Illinois, Health Facilities Authority Revenue, 5.25%, 11/15/2013 (a)

665,000

666,357

Illinois, State Building, Series B, 5.0%, 6/15/2011

955,000

997,087

Illinois, State General Obligation, 5.0%, 1/1/2019

3,000,000

3,229,170

Lake County, IL, Forest Preserve District, Series A, 0.652%*, 12/15/2020

5,000,000

4,448,750

McLean & Woodford Counties, IL, Community Unit School District No. 5, Prerefunded, 6.375%, 12/1/2016 (a)

4,820,000

5,256,933

Normal, IL, Multi-Family Housing Revenue, AMT, 3.75%, 12/1/2013

730,000

749,746

 

31,280,990

Indiana 2.3%

Indiana, Bond Bank Revenue, State Revolving Fund, Series B, Prerefunded, 5.25%, 8/1/2019

4,000,000

4,090,200

Indiana, Finance Authority Health Systems Revenue, Sisters of St. Francis Health, Series C, 5.0%, 11/1/2014

2,000,000

2,204,500

Indiana, Health Facilities Funding Authority, Series A, ETM, 5.75%, 9/1/2015

2,930,000

2,996,042

Indiana, Health Facility Financing Authority Revenue, Ascension Health, Series A-1, 5.0%, Mandatory Put 5/1/2013 @100, 11/1/2027

1,000,000

1,089,060

Indiana, Transportation Finance Authority, Highway Revenue, Series A, Prerefunded, 5.25%, 6/1/2016 (a)

5,000,000

5,627,550

Tipton, IN, School District General Obligation, School Building Corp., 5.55%, 7/15/2012 (a)

220,000

231,033

 

16,238,385

Kansas 0.1%

Sedgwick & Shawnee Counties, KS, Single Family Mortgage Revenue, Series B-4, AMT, 4.25%, 6/1/2023

65,000

65,006

Shawnee, KS, Multi-Family Housing Revenue, Prairie Lakes Apartments, AMT, 4.35%, 2/1/2013

400,000

412,160

Wichita, KS, Hospital Revenue, Facilities Improvement, Series III A, 3.0%, 11/15/2011

500,000

513,470

 

990,636

Kentucky 0.4%

Kentucky, Economic Development Finance Authority Revenue, Catholic Health, Series 04-D, 3.5%, Mandatory Put 11/10/2010 @100, 5/1/2034

1,000,000

1,015,530

Kentucky, Housing Corp. Revenue, Series G, AMT, 5.0%, 7/1/2030

1,475,000

1,519,707

 

2,535,237

Louisiana 0.2%

Louisiana, Local Government Environmental Facilities & Community Development Authority, LCTCS Facilities Corp. Project, Series A, 4.0%, 10/1/2012

1,500,000

1,585,530

Maine 0.3%

Maine, Finance Revenue Authority, Electronic Rate Stabilization, AMT, 5.2%, 7/1/2018 (a)

645,000

645,858

Maine, State Housing Authority Mortgage Purchase, Series D-2, AMT, 5.0%, 11/15/2027

1,530,000

1,584,606

 

2,230,464

Maryland 2.5%

Maryland, State & Local Facilities Loan, Capital Improvement:

 

Series A, 5.0%, 3/1/2012

1,000,000

1,080,200

 

Series A, 5.5%, 8/1/2011

2,670,000

2,839,305

Maryland, State Community Development Administration, Department of Housing & Community Development, Series E, AMT, 5.5%, 3/1/2032

1,510,000

1,601,294

Maryland, State Department of Transportation & Conservation, 5.0%, 2/15/2018

5,000,000

5,818,250

Maryland, University of Maryland, Systems Auxiliary Facility & Tuition Revenue, Series A, 5.0%, 4/1/2012

5,000,000

5,411,200

Prince Georges County, MD, Housing Authority, Single Family Mortgage Revenue:

 

 

Series A, AMT, 3.9%, 8/20/2012

165,000

168,556

 

Series A, AMT, 5.6%, 12/1/2034

60,000

61,826

 

Series A, AMT, 7.0%, 8/1/2033

70,000

72,584

 

Series A, AMT, 7.4%, 8/1/2032

25,000

25,339

 

17,078,554

Massachusetts 2.6%

Massachusetts, Bay Transportation Authority Revenue, Series A, Prerefunded, 5.25%, 7/1/2030

2,170,000

2,188,380

Massachusetts, Bay Transportation Authority, General Transportation Systems, 0.3%**, 3/1/2030

4,000,000

4,000,000

Massachusetts, Municipal Wholesale Electric Co., Power Supply Systems Revenue, Nuclear Project No. 4, Series A, 5.0%, 7/1/2011 (a)

1,000,000

1,042,200

Massachusetts, State General Obligation, Series A, 0.31%**, 9/1/2016

6,000,000

6,000,000

Massachusetts, State Port Authority Revenue, Series B, AMT, 5.5%, 7/1/2011 (a)

4,500,000

4,509,180

 

17,739,760

Michigan 3.6%

Detroit, MI, Sewer Disposal Revenue, Series D, 0.795%*, 7/1/2032 (a)

4,100,000

3,070,900

Detroit, MI, Water Supply System, ETM, 6.25%, 7/1/2012 (a)

110,000

116,050

Grand Haven, MI, Electric Revenue, 5.0%, 7/1/2010 (a)

1,515,000

1,524,211

Michigan, Municipal Bond Authority Revenue, Clean Water Revolving, 4.0%, 10/1/2011

3,285,000

3,444,782

Michigan, Municipal Bond Authority Revenue, School Loan, Series A, 5.25%, 6/1/2011

4,175,000

4,343,086

Michigan, Municipal Bond Authority Revenue, State Aid Revenue Notes, Series B, 5.0%, 3/21/2011

6,000,000

6,006,360

Michigan, State Building Authority Revenue, Facilities Program, Series H, 3.0%, 10/15/2010

275,000

277,701

Michigan, State General Obligation, Series A, 2.0%, 9/30/2010

2,500,000

2,515,825

Michigan, State Hospital Finance Authority Revenue, Ascension Health Senior Credit Group, Series B, 5.0%, 11/15/2020

3,000,000

3,248,340

Michigan, Strategic Fund, Limited Obligation Revenue, United Jewish Project, 5.75%, 1/1/2012, Bank One NA (b)

400,000

400,192

 

24,947,447

Minnesota 0.9%

Coon Rapids, MN, Multi-Family Housing Revenue, Brown Meadow Manor, Series A, AMT, 3.875%, 7/1/2014

500,000

502,945

Minneapolis & St. Paul, MN, Metropolitan Airports Commission, Airport Revenue, Series B, AMT, 5.0%, 1/1/2012

1,500,000

1,580,850

Minnesota, Single Family Housing Revenue, Housing Finance Agency, 5.2%, 1/1/2017

1,035,000

1,076,607

Rochester, MN, Electric Utility Revenue:

 

Prerefunded, 5.25%, 12/1/2024 (a)

2,000,000

2,057,500

 

Prerefunded, 5.25%, 12/1/2030 (a)

1,000,000

1,028,750

 

6,246,652

Mississippi 1.3%

Mississippi, Business Finance Corp., Solid Waste Disposal Revenue, Waste Management, Inc. Project, 1.0%*, Mandatory Put 9/1/2010 @100, 3/1/2029

7,000,000

7,002,030

Mississippi, Development Bank Special Obligation, DeSoto County Highway, Series A, 3.0%, 1/1/2012

1,250,000

1,294,025

Mississippi, Home Corp., Single Family Mortgage Revenue, Class 7, Series A, AMT, 6.3%, 6/1/2031

520,000

534,700

 

8,830,755

Missouri 2.0%

Florissant, MO, Industrial Development Authority, Mortgage Revenue, Desmet RHF Acquisition, Series A, Prerefunded, 8.5%, 8/15/2030

2,460,000

2,558,154

Jackson County, MO, Hospital & Healthcare Revenue, St. Joseph Hospital, ETM, 7.5%, 6/1/2010

210,000

211,121

Missouri, Development Finance Board, Greater St. Louis Project, 4.9%, 9/1/2010, Bank of America NA (b)

685,000

687,302

Missouri, Housing Development Community, Single Family Mortgage:

 

 

Series C, 6.55%, 9/1/2028

50,000

51,563

 

AMT, 7.45%, 9/1/2031

85,000

88,287

Missouri, State Highways & Transit Commission, State Road Revenue, Series A, Prerefunded, 5.0%, 2/1/2014

5,000,000

5,378,850

Missouri, State Housing Development Commission, Single Family Mortgage Revenue, Homeownership Loan Program:

 

 

Series D, 4.8%, 3/1/2040

1,440,000

1,528,488

 

Series C, AMT, 5.6%, 9/1/2035

1,570,000

1,671,375

St. Charles County, MO, Industrial Development Authority, Health Care Facilities Revenue, Garden View Care Center Project, AMT, 5.4%, 11/15/2016, US Bank NA (b)

1,335,000

1,336,415

 

13,511,555

Nebraska 0.3%

Clay County, NE, Industrial Development Revenue, Hybrids Cooperative Project, AMT, 5.25%, 3/15/2014, US Bank NA (b)

1,320,000

1,316,264

Fillmore County, NE, Industrial Development Revenue, Omalley Grain, Inc. Project:

 

 

AMT, 5.0%, 12/1/2010, US Bank NA (b)

45,000

45,017

 

AMT, 5.0%, 12/1/2011, US Bank NA (b)

180,000

178,616

 

AMT, 5.1%, 12/1/2012, US Bank NA (b)

135,000

135,014

 

AMT, 5.2%, 12/1/2013, US Bank NA (b)

195,000

194,984

 

1,869,895

Nevada 1.8%

Clark County, NV, School District General Obligation, 5.5%, 6/15/2013 (a)

4,700,000

5,261,791

Las Vegas Valley, NV, Water District Improvement, Series A, 5.25%, 6/1/2017 (a)

4,585,000

4,889,031

Nevada, Housing Division, Single Family Housing Revenue, Series B-1, 5.25%, 10/1/2017

250,000

252,163

Nevada, Housing Division, Single Family Mortgage, Series A, AMT, 5.15%, 10/1/2014

30,000

30,618

Nevada, Single Family Housing Revenue, Housing Division, Series A-2, AMT, 5.2%, 10/1/2018

160,000

162,584

Nevada, State Capital Cultural Improvement, Series B, 5.0%, 5/1/2011

1,000,000

1,045,930

Washoe, NV, Public Safety Training, 4.875%, 9/1/2010 (a)

1,055,000

1,058,133

 

12,700,250

New Jersey 3.0%

Gloucester County, NJ, Public Improvement Authority, Electric Mobility Project, AMT, 5.0%, 11/1/2010

135,000

135,408

Livingston, NJ, School District Revenue, Board of Education, 144A, 3.8%, 8/1/2014

677,051

679,197

New Jersey, Economic Development Authority Revenue, School Facilities Construction:

 

 

Series W, 5.0%, 3/1/2012

2,375,000

2,535,004

 

Series J-4, 5.0%, Mandatory Put 9/1/2014 @100, 9/1/2029 (a)

5,000,000

5,568,400

New Jersey, State Transportation Trust Fund Authority:

 

Series C, ETM, 5.0%, 6/15/2011

5,000,000

5,256,300

 

Series A, Prerefunded, 6.125%, 6/15/2015

6,650,000

6,698,545

 

20,872,854

New Mexico 0.2%

New Mexico, Mortgage Finance Authority, Second Mortgage Program, 144A, AMT, 6.5%, 1/1/2018

86,900

87,602

New Mexico, Mortgage Finance Authority, Single Family Mortgage, "I", Series D, 5.35%, 9/1/2040

1,155,000

1,253,302

 

1,340,904

New York 4.0%

New York, Metropolitan Transportation Authority Revenue:

 

Series E-1, 0.29%**, 11/1/2035, Fortis Bank SA (b)

5,000,000

5,000,000

 

Series E-2, 0.31%**, 11/1/2035, Fortis Bank SA (b)

5,000,000

5,000,000

New York, State Tollway Authority, State Personal Income Tax Revenue, Series A, 5.0%, 3/15/2012

1,000,000

1,078,310

New York, Tobacco Settlement Financing Corp.:

 

Series B, 5.0%, 6/1/2011

4,500,000

4,716,945

 

Series C-1, 5.25%, 6/1/2013

3,615,000

3,627,147

New York City, NY, Municipal Finance Authority, Water & Sewer Systems Revenue, Second Generation, Series-2008-BB-4, 0.27%**, 6/15/2033

5,000,000

5,000,000

New York City, NY, Transitional Finance Authority, Future Tax Secured, Series A, 5.0%, 8/1/2018

2,125,000

2,341,176

New York, NY, Higher Education Revenue, Dormitory Authority, Series A, 5.25%, 5/15/2013

585,000

647,829

 

27,411,407

North Carolina 2.2%

Mecklenburg County, NC, Public Facilities Corp., Limited Obligation Bond, Annual Appropriation, 5.0%, 3/1/2015

5,000,000

5,725,800

North Carolina, Eastern Municipal Power Agency, Power Systems Revenue, Series B, 5.0%, 1/1/2017

1,500,000

1,640,205

North Carolina, Housing Finance Agency, Home Ownership, Series 22-A, AMT, 5.5%, 7/1/2036

2,275,000

2,412,979

North Carolina, Municipal Power Agency, Number 1 Catawba Electric Revenue, Series A, 5.25%, 1/1/2013

2,500,000

2,740,925

North Carolina, State Grant Anticipation Revenue, Department of State Treasurer, 5.0%, 3/1/2012

1,545,000

1,663,146

North Carolina, State Public Improvement, Series A, 5.5%, 3/1/2011

1,000,000

1,043,260

 

15,226,315

Ohio 6.3%

Bowling Green, OH, Multi-Family Revenue, Village Apartments, Series A, 4.75%, 9/20/2011

60,000

61,498

Buckeye, OH, Tobacco Settlement Financing Authority, Series A-1, 5.0%, 6/1/2015

4,500,000

4,625,820

Columbus, OH, General Obligation, Series A, 5.0%, 6/15/2011

1,710,000

1,798,082

Franklin County, OH, Multi-Family Revenue, Lincoln Park Project, Series A, AMT, 5.65%, 4/20/2013

130,000

133,936

Maple Heights, OH, Bond Anticipation Notes, 2.0%, 6/24/2010

6,800,000

6,807,888

Mason, OH, Health Care Facilities, MCV Health Care Facilities Project, 5.25%, 2/20/2020

45,000

45,688

Montgomery County, OH, Catholic Health Revenue, Series C-2, 4.1%, Mandatory Put 11/10/2011 @100, 10/1/2041

1,135,000

1,180,752

Ohio, American Municipal Power, Inc., Electricity Purchase Revenue, Series A, 5.0%, 2/1/2011

5,000,000

5,125,000

Ohio, State Building Facilities Authority, Administration Building Fund Project, Series B, 5.0%, 10/1/2013

4,880,000

5,446,324

Ohio, State Common Schools, Series C, 4.0%, 9/15/2017

3,835,000

4,172,442

Ohio, State Higher Education, Series A, 5.0%, 8/1/2021

5,000,000

5,779,600

Ohio, State Higher Educational Facility Commission Revenue, Cleveland Clinic Health, Series A, 5.25%, 1/1/2019

2,500,000

2,760,075

Ohio, State Higher Educational Facility Revenue, Case Western Reserve University, Series B-2, 0.27%**, 12/1/2044, Bank of America NA (b)

2,150,000

2,150,000

Ohio, State Housing Finance Agency, Residential Mortgage Revenue, Mortgage-Backed Securities Program, Series E, 5.0%, 9/1/2039

1,045,000

1,117,565

Ohio, State Water Development Authority Revenue, Fresh Water Development:

 

 

5.375%, 12/1/2016

125,000

134,851

 

Prerefunded, 5.375%, 12/1/2016

1,925,000

2,108,837

 

43,448,358

Oklahoma 0.0%

Bryan County, OK, Economic Development Revenue Authority, Single Family Mortgage, Series A, 8.6%, 7/1/2010

30,000

14,850

Comanche County, OK, Home Finance Authority Mortgage Revenue, Multi-Family FHA Diplomat, Series A, 5.2%, 12/1/2013

305,000

308,813

 

323,663

Pennsylvania 3.7%

Allegheny County, PA, Hospital Development Authority Revenue, University of Pittsburgh Medical Center, Series A, 3.0%, 5/15/2011

1,115,000

1,140,701

Chester, PA, Core City General Obligation, Series B, 5.8%, 12/1/2013 (a)

810,000

810,308

Langhorne, PA, Hospital Revenue, Franciscan Health, St. Mary's Hospital Authority, Series A, 7.0%, 6/15/2015 (a)

1,770,000

1,774,885

Pennsylvania, Financing Authority Revenue, AMT, 5.0%, 6/1/2010 (a)

570,000

571,385

Pennsylvania, Housing Finance Agency, Single Family Mortgage, Series 90A, AMT, 5.0%, 10/1/2035

1,265,000

1,269,870

Pennsylvania, State General Obligation:

 

Series A, 5.0%, 2/15/2012

5,000,000

5,381,450

 

5.0%, 7/1/2013

7,500,000

8,397,300

Pennsylvania, State Industrial Development Authority Revenue, Economic Development, 5.5%, 7/1/2018 (a)

4,650,000

4,920,630

Pennsylvania, TJUH System Project, 6.0%, 1/1/2011 (c)

192,345

192,976

Philadelphia, PA, Industrial Development Revenue, Authority for Individual Development Senior Living Revenue:

 

 

Series A, 4.7%, 7/1/2013

160,000

160,178

 

Series C, 4.7%, 7/1/2013

150,000

150,166

 

Series E, 4.7%, 7/1/2013

180,000

180,200

Philadelphia, PA, Multi-Family Housing Revenue, Series B, AMT, 4.5%, 10/1/2013

610,000

593,042

Pittsburgh, PA, Industrial Development Revenue, Urban Redevelopment Authority, Series A, 144A, 6.0%, 12/1/2011, PNC Bank NA (b)

180,000

180,477

 

25,723,568

Puerto Rico 3.6%

Commonwealth of Puerto Rico, Government Development Bank, Series B, 5.0%, 12/1/2010

3,250,000

3,319,030

Commonwealth of Puerto Rico, Highway & Transportation Authority Revenue, Series BB, 5.25%, 7/1/2018 (a)

5,000,000

5,366,750

Commonwealth of Puerto Rico, Public Improvement:

 

Series A, 5.0%, 7/1/2011

930,000

962,132

 

Series A, 5.25%, 7/1/2012 (a)

3,790,000

4,021,834

 

Series A, 5.5%, 7/1/2012 (a)

2,000,000

2,132,860

Puerto Rico, Electric Power Authority Revenue, Series WW, 5.5%, 7/1/2021

1,495,000

1,621,671

Puerto Rico, Sales Tax Financing Corp., Sales Tax Revenue, Series A, 5.0%, Mandatory Put 8/1/2011 @100, 8/1/2039

7,000,000

7,309,960

 

24,734,237

South Carolina 0.9%

Beaufort-Jasper, SC, Water & Sewer Authority, Waterworks & Sewer Systems Revenue, Series B, 4.0%, 3/1/2012

745,000

788,419

South Carolina, Jobs-Economic Development Authority, Hospital Improvement Revenue, Palmetto Health Alliance:

 

 

3.0%, 8/1/2010

1,000,000

1,002,450

 

5.0%, 8/1/2015

500,000

531,185

South Carolina, State Public Service Authority Revenue, Series D, 5.25%, 1/1/2014 (a)

3,500,000

3,850,805

 

6,172,859

South Dakota 0.1%

South Dakota, Hospital & Healthcare Revenue, 5.4%, 8/1/2013 (a)

645,000

650,089

Tennessee 0.7%

Jackson, TN, Hospital Revenue, Jackson-Madison County Project, 5.25%, 4/1/2014

1,290,000

1,395,548

Rutherford County, TN, Capital Outlay Notes, 4.0%, 4/1/2012

1,000,000

1,057,870

Tennessee, Housing Development Agency, Homeownership Program, Series 2006-3, AMT, 5.75%, 7/1/2037

2,210,000

2,344,522

 

4,797,940

Texas 9.0%

Dallas, TX, General Obligation, Series A, 5.0%, 2/15/2012

1,700,000

1,830,322

Fort Worth, TX, General Obligation, 5.0%, 3/1/2016

4,260,000

4,870,160

Harris County, TX, Health Facilities Development Corp., Hospital Revenue, Memorial Hermann Healthcare System, Series A, 0.4%**, 6/1/2027 (a)

5,000,000

5,000,000

Houston, TX, Airport Systems Revenue, Series A, 5.0%, 7/1/2016

625,000

706,925

Houston, TX, Utility System Revenue, First Lien, Series C-2A, 5.0%, Mandatory Put 5/15/2011 @100, 5/15/2034 (a)

1,630,000

1,689,136

North Texas, Tollway Authority Revenue:

 

Series E-2, 5.25%, Mandatory Put 1/1/2012 @100, 1/1/2038

5,000,000

5,293,350

 

Series L-2, 6.0%, Mandatory Put 1/1/2013 @100, 1/1/2038

2,000,000

2,205,780

San Antonio, TX, Electric & Gas Revenue, Series A, 5.5%, 2/1/2013

4,000,000

4,472,160

Spring Branch, TX, Independent School District, 5.0%, 2/1/2012

5,440,000

5,850,720

Tarrant County, TX, Multi-Family Housing Revenue, Housing Financial Corp., Series A, AMT, 3.7%, 12/20/2013

510,000

516,961

Tarrant County, TX, Public Housing Revenue, Housing Financial Corp., Series A, AMT, 3.85%, 1/20/2013

445,000

455,271

Texas, Dallas-Fort Worth International Airport Revenue, Series A, 5.0%, 11/1/2016

4,000,000

4,454,440

Texas, Lower Colorado River Authority Revenue, Series A, 5.0%, 5/15/2016

3,500,000

3,938,270

Texas, Multi-Family Housing Revenue, Wintergreen Project, AMT, 4.85%, 9/20/2012

65,000

67,610

Texas, Municipal Gas Acquisition & Supply Corp. II, Gas Supply Revenue, 0.873%*, 9/15/2017

7,000,000

6,676,250

Texas, State Transportation Commission Revenue, First Tier, 5.0%, 4/1/2011

2,000,000

2,084,820

Texas, State Water Financial Assistance, Series E, 4.0%, 8/1/2011

500,000

521,920

Texas, Trinity River Authority, Regional Wastewater Systems Revenue, 5.0%, 8/1/2014

4,805,000

5,452,954

West Harris County, TX, Regional Water Authority, Water Systems Revenue:

 

 

5.0%, 12/15/2015

1,605,000

1,790,105

 

5.0%, 12/15/2017

1,270,000

1,404,087

Wichita Falls, TX, Water & Sewer Revenue, Prerefunded, 5.375%, 8/1/2024 (a)

3,000,000

3,181,020

 

62,462,261

Utah 1.2%

Intermountain Power Agency, UT, Power Supply Revenue, Series A, ETM, 6.15%, 7/1/2014 (a)

235,000

245,460

Salt Lake County, UT, General Obligation, 4.25%, 6/15/2013

5,000,000

5,487,800

Utah, Housing Finance Agency, Single Family Mortgage:

 

Series A-2, Class III, AMT, 5.2%, 7/1/2011

10,000

10,116

 

Series A-2, Class II, AMT, 5.4%, 7/1/2016

40,000

40,785

 

Series C, Class III, AMT, 6.25%, 7/1/2014

25,000

25,515

Utah, Single Family Housing Revenue, Series D-2, AMT, 5.0%, 7/1/2018

610,000

616,826

Utah, Single Family Housing Revenue, Mortgage Revenue, Series G, AMT, 4.875%, 1/1/2019

1,195,000

1,209,137

Utah, Single Family Housing Revenue, Single Family Mortgage, AMT, 3.875%, 7/1/2014

605,000

600,492

 

8,236,131

Vermont 0.1%

Vermont, Housing Finance Agency, Single Family, Series 23, AMT, 5.0%, 5/1/2034 (a)

710,000

715,914

Virgin Islands 0.4%

Virgin Islands, Public Finance Authority Revenue, Series B, 5.0%, 10/1/2011

1,645,000

1,720,078

Virgin Islands, Water & Power Authority, Electric Systems Revenue, Series A, 4.0%, 7/1/2011

1,000,000

1,027,220

 

2,747,298

Virginia 3.9%

Hampton, VA, Public Improvement, Series A, 4.0%, 1/15/2012

500,000

528,840

King George County, VA, Industrial Development Authority, Solid Waste Disposal Facility Revenue, Waste Management, Inc., Series A, AMT, 3.5%, Mandatory Put 5/1/2013 @100, 6/1/2023

2,500,000

2,501,500

Norfolk, VA, Capital Improvement, Series A, 5.0%, 3/1/2012

7,000,000

7,547,470

Virginia, College Building Authority, Educational Facilities Revenue, Public Higher Education Financing Program:

 

 

Series B, 3.0%, 9/1/2011

6,885,000

7,114,270

 

Series A, 5.0%, 9/1/2011

2,555,000

2,708,045

Virginia, State Resource Authority Infrastructure Revenue, Pooled Financing Program, Series B, 5.0%, 11/1/2016

1,300,000

1,520,714

Virginia, Upper Occoquan Sewer Authority, Regional Sewer Revenue, 5.0%, 7/1/2017 (a)

4,320,000

4,781,074

Virginia, Water & Sewer Systems Revenue, Series B, 8.7%, 11/1/2011

275,000

276,529

 

26,978,442

Washington 5.8%

King County, WA, Limited Tax, Series D, 4.0%, 12/1/2011

1,535,000

1,618,565

King County, WA, School District No. 410, Snoqualmie Valley, Series A, 5.0%, 12/1/2015 (a)

6,180,000

6,875,559

Pierce County, WA, Peninsula School District No. 401, 5.0%, 12/1/2015 (a)

5,000,000

5,478,850

Pierce County, WA, School District No. 400, Clover Park, 5.0%, 12/1/2010 (a)

1,000,000

1,027,360

Seattle, WA, Drain & Wastewater Revenue, Series B, 2.0%, 11/1/2010

3,695,000

3,727,627

Seattle, WA, Port Revenue, Series B, AMT, 5.625%, 4/1/2016 (a)

1,805,000

1,902,145

Washington, Energy Northwest Electric Revenue, Columbia Generating Station:

 

 

Series A, 5.0%, 7/1/2013 (a)

1,000,000

1,058,200

 

Series A, 5.5%, 7/1/2017 (a)

10,000,000

10,604,800

 

Series A, 5.75%, 7/1/2018 (a)

3,500,000

3,801,350

Washington, Energy Northwest Electric Revenue, Project No. 3, Series A, 5.5%, 7/1/2013

3,500,000

3,962,525

Washington, Housing Finance Authority, Nonprofit Housing Revenue, Series B, 5.1%, 7/1/2010, US Bank NA (b)

60,000

60,423

 

40,117,404

West Virginia 1.3%

West Virginia, Public Energy Authority Revenue, Morgantown Association Project, AMT, 0.45%**, 7/1/2017, Dexia Credit Local (b)

9,000,000

9,000,000

Wisconsin 2.3%

Sun Prairie, WI, School District, 3.0%, 3/1/2011

500,000

510,675

Wisconsin, Housing & Economic Development Authority, Home Ownership Revenue, Series D, AMT, 4.875%, 3/1/2036

1,885,000

1,950,993

Wisconsin, State Clean Water Revenue, Series 2, 5.0%, 6/1/2019

1,000,000

1,158,870

Wisconsin, State General Obligation, Series A, Prerefunded, 5.75%, 5/1/2020

10,000,000

10,001,500

Wisconsin, State Health & Educational Facilities Authority Revenue, Aurora Health Care, Inc., Series B, 4.75%, Mandatory Put 8/15/2014 @100, 8/15/2025

2,000,000

2,120,420

 

15,742,458

Total Municipal Bonds and Notes (Cost $659,956,643)

670,053,815

 


Shares

Value ($)

 

 

Open-End Investment Company 1.8%

BlackRock MuniCash, 0.20%*** (Cost $12,673,803)

12,673,803

12,673,803

 

% of Net Assets

Value ($)

 

 

Total Investment Portfolio (Cost $672,630,446)+

98.7

682,727,618 

Other Assets and Liabilities, Net

1.3

9,244,398 

Net Assets

100.0

691,972,016

* These securities are shown at their current rate as of April 30, 2010. Floating rate securities' yields vary with a designated market index or market rate, such as the coupon-equivalent of the US Treasury bill rate.
** Variable rate demand notes are securities whose interest rates are reset periodically at market levels. These securities are often payable on demand and are shown at their current rates as of April 30, 2010.
*** Current yield; not a coupon rate.
+ The cost for federal income tax purposes was $672,634,605. At April 30, 2010, net unrealized appreciation for all securities based on tax cost was $10,093,013. This consisted of aggregate gross unrealized appreciation for all securities in which there was an excess of value over tax cost of $12,408,557 and aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over value of $2,315,544.
(a) Bond is insured by one of these companies:

Insurance Companies

As a % of Total Investment Portfolio

AMBAC Financial Group, Inc.

3.2

American Capital Assurance

0.3

Assured Guaranty Municipal Corp.

11.9

Financial Security Assurance, Inc.

2.5

National Public Finance Guarantee Corp.

7.7

Many insurers who have traditionally guaranteed payment of municipal issues have been downgraded by the major rating agencies.

(b) Security incorporates a letter of credit from the bank listed.
(c) Taxable issue.

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.

AMT: Subject to alternative minimum tax.

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.

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 April 30, 2010 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 Financial Statements.

Assets

Level 1

Level 2

Level 3

Total

 

Municipal Bonds and Notes (d)

$ —

$ 670,053,815

$ —

$ 670,053,815

Open-End Investment Company

12,673,803

—

—

12,673,803

Total

$ 12,678,803

$ 670,053,815

$ —

$ 682,727,618

(d) See Investment Portfolio for additional detailed categorizations.

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

Financial Statements

Statement of Assets and Liabilities as of April 30, 2010 (Unaudited)

Assets

Investments in securities, at value (cost $672,630,446)

$ 682,727,618

Cash

21,486

Receivable for investments sold

790,276

Receivable for Fund shares sold

4,506,362

Interest receivable

8,157,794

Due from Advisor

9,076

Other assets

119,952

Total assets

696,332,564

Liabilities

Payable for investments purchased

2,500,000

Payable for Fund shares redeemed

1,010,652

Distributions payable

132,897

Accrued management fee

236,236

Accrued expenses

480,763

Total liabilities

4,360,548

Net assets, at value

$ 691,972,016

Net Assets Consist of

Accumulated distributions in excess of net investment income

(58,767)

Net unrealized appreciation (depreciation) on investments

10,097,172

Accumulated net realized gain (loss)

(17,809,185)

Paid-in capital

699,742,796

Net assets, at value

$ 691,972,016

Statement of Assets and Liabilities as of April 30, 2010 (Unaudited) (continued)

Net Asset Value

Class A

Net Asset Value and redemption price per share ($374,821,094 ÷ 36,704,093 outstanding shares of beneficial interest, $.001 par value, unlimited number of shares authorized)

$ 10.21

Maximum offering price per share (100 ÷ 98.00 of $10.21)

$ 10.42

Class B

Net Asset Value, offering and redemption price (subject to contingent deferred sales charge) per share ($1,199,919 ÷ 117,525 outstanding shares of beneficial interest, $.001 par value, unlimited number of shares authorized)

$ 10.21

Class C

Net Asset Value, offering and redemption price (subject to contingent deferred sales charge) per share ($62,381,317 ÷ 6,110,327 outstanding shares of beneficial interest, $.001 par value, unlimited number of shares authorized)

$ 10.21

Class S

Net Asset Value, offering and redemption price per share ($172,677,416 ÷ 16,928,906 outstanding shares of beneficial interest, $.001 par value, unlimited number of shares authorized)

$ 10.20

Institutional Class

Net Asset Value, offering and redemption price per share ($80,892,270 ÷ 7,921,317 outstanding shares of beneficial interest, $.001 par value, unlimited number of shares authorized)

$ 10.21

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

Statement of Operations for the six months ended April 30, 2010 (Unaudited)

Investment Income

Income:
Interest

$ 8,585,140

Expenses:
Management fee

1,277,941

Administration fee

322,272

Services to shareholders

258,857

Custodian fee

14,146

Distribution and service fees

648,709

Professional fees

44,209

Trustees' fees and expenses

9,370

Reports to shareholders

38,555

Registration fees

56,363

Other

30,055

Total expenses before expense reductions

2,700,477

Expense reductions

(64,499)

Total expenses after expense reductions

2,635,978

Net investment income

5,949,162

Realized and Unrealized Gain (Loss)

Net realized gain (loss) from:
Investments

(178,105)

Interest rate swap contracts

(628,000)

 

(806,105)

Change in net unrealized appreciation (depreciation) on:
Investments

4,777,872

Interest rate swap contracts

343,959

 

5,121,831

Net gain (loss)

4,315,726

Net increase (decrease) in net assets resulting from operations

$ 10,264,888

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

Statement of Changes in Net Assets

Increase (Decrease) in Net Assets

Six Months Ended April 30, 2010 (Unaudited)

Year Ended October 31, 2009

Operations:
Net investment income

$ 5,949,162

$ 11,196,265

Net realized gain (loss)

(806,105)

(5,601,541)

Change in net unrealized appreciation (depreciation)

5,121,831

19,149,967

Net increase (decrease) in net assets resulting from operations

10,264,888

24,744,691

Distributions to shareholders from:
Net investment income:

Class A

(3,106,064)

(4,250,540)

Class B

(7,864)

(52,010)

Class C

(297,203)

(627,830)

Class S

(1,711,407)

(4,244,127)

Institutional Class

(788,926)

(1,986,057)

Total distributions

(5,911,464)

(11,160,564)

Fund share transactions:
Proceeds from shares sold

258,218,361

367,446,267

Reinvestment of distributions

3,784,724

7,321,351

Cost of shares redeemed

(130,472,545)

(183,729,721)

Redemption fees

—

17,676

Net increase (decrease) in net assets from Fund share transactions

131,530,540

191,055,573

Increase (decrease) in net assets

135,883,964

204,639,700

Net assets at beginning of period

556,088,052

351,448,352

Net assets at end of period (including accumulated distributions in excess of net investment income of $58,767 and $96,465, respectively)

$ 691,972,016

$ 556,088,052

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

Financial Highlights

Class A

Years Ended October 31,

2010a

2009

2008

2007

2006

2005

Selected Per Share Data

Net asset value, beginning of period

$ 10.14

$ 9.77

$ 10.25

$ 10.30

$ 10.28

$ 10.33

Income (loss) from investment operations:

Net investment incomeb

.09

.28

.33

.33

.31

.25

Net realized and unrealized gain (loss)

.07

.37

(.48)

(.04)

.01

(.05)

Total from investment operations

.16

.65

(.15)

.29

.32

.20

Less distributions from:

Net investment income

(.09)

(.28)

(.33)

(.34)

(.30)

(.25)

Redemption fees

—

.00***

.00***

.00***

.00***

.00***

Net asset value, end of period

$ 10.21

$ 10.14

$ 9.77

$ 10.25

$ 10.30

$ 10.28

Total Return (%)c

1.62**

6.72d

(1.53)d

2.81

3.20d

1.97d

Ratios to Average Net Assets and Supplemental Data

Net assets, end of period ($ millions)

375

273

108

63

82

131

Ratio of expenses before expense reductions (%)

.81*

.87

.88

.88

.86

.83

Ratio of expenses after expense reductions (%)

.81*

.84

.85

.88

.81

.80

Ratio of net investment income (%)

1.85*

2.71

3.23

3.25

2.97

2.42

Portfolio turnover rate (%)

10**

30

33

39

46

35

a For the six months ended April 30, 2010 (Unaudited).
b Based on average shares outstanding during the period.
c Total return does not reflect the effect of any sales charges.
d Total return would have been lower had certain expenses not been reduced.
* Annualized
** Not annualized
*** Amount is less than $.005.

Class B

Years Ended October 31,

2010a

2009

2008

2007

2006

2005

Selected Per Share Data

Net asset value, beginning of period

$ 10.14

$ 9.77

$ 10.25

$ 10.30

$ 10.28

$ 10.33

Income (loss) from investment operations:

Net investment incomeb

.05

.20

.25

.26

.23

.17

Net realized and unrealized gain (loss)

.07

.37

(.48)

(.05)

.01

(.04)

Total from investment operations

.12

.57

(.23)

.21

.24

.13

Less distributions from:

Net investment income

(.05)

(.20)

(.25)

(.26)

(.22)

(.18)

Redemption fees

—

.00***

.00***

.00***

.00***

.00***

Net asset value, end of period

$ 10.21

$ 10.14

$ 9.77

$ 10.25

$ 10.30

$ 10.28

Total Return (%)c,d

1.23**

5.88

(2.29)

2.07

2.41

1.23

Ratios to Average Net Assets and Supplemental Data

Net assets, end of period ($ millions)

1

1

3

3

4

5

Ratio of expenses before expense reductions (%)

1.71*

1.76

1.69

1.69

1.59

1.55

Ratio of expenses after expense reductions (%)

1.58*

1.59

1.60

1.60

1.56

1.55

Ratio of net investment income (%)

1.08*

1.96

2.48

2.53

2.22

1.67

Portfolio turnover rate (%)

10**

30

33

39

46

35

a For the six months ended April 30, 2010 (Unaudited).
b Based on average shares outstanding during the period.
c Total return does not reflect the effect of any sales charges.
d Total return would have been lower had certain expenses not been reduced.
* Annualized
** Not annualized
*** Amount is less than $.005.

Class C

Years Ended October 31,

2010a

2009

2008

2007

2006

2005

Selected Per Share Data

Net asset value, beginning of period

$ 10.13

$ 9.76

$ 10.25

$ 10.29

$ 10.27

$ 10.33

Income (loss) from investment operations:

Net investment incomeb

.05

.20

.25

.25

.23

.17

Net realized and unrealized gain (loss)

.08

.37

(.49)

(.04)

.01

(.05)

Total from investment operations

.13

.57

(.24)

.21

.24

.12

Less distributions from:

Net investment income

(.05)

(.20)

(.25)

(.25)

(.22)

(.18)

Redemption fees

—

.00***

.00***

.00***

.00***

.00***

Net asset value, end of period

$ 10.21

$ 10.13

$ 9.76

$ 10.25

$ 10.29

$ 10.27

Total Return (%)c

1.33d**

5.90d

(2.40)d

2.11

2.40d

1.13

Ratios to Average Net Assets and Supplemental Data

Net assets, end of period ($ millions)

62

49

25

29

37

51

Ratio of expenses before expense reductions (%)

1.61*

1.66

1.66

1.65

1.61

1.55

Ratio of expenses after expense reductions (%)

1.58*

1.59

1.60

1.65

1.56

1.55

Ratio of net investment income (%)

1.08*

1.96

2.48

2.47

2.22

1.67

Portfolio turnover rate (%)

10**

30

33

39

46

35

a For the six months ended April 30, 2010 (Unaudited).
b Based on average shares outstanding during the period.
c Total return does not reflect the effect of any sales charges.
d Total return would have been lower had certain expenses not been reduced.
* Annualized
** Not annualized
*** Amount is less than $.005.

Class S

Years Ended October 31,

2010a

2009

2008

2007

2006

2005b

Selected Per Share Data

Net asset value, beginning of period

$ 10.13

$ 9.76

$ 10.24

$ 10.29

$ 10.27

$ 10.30

Income (loss) from investment operations:

Net investment incomec

.10

.30

.35

.36

.33

.19

Net realized and unrealized gain (loss)

.07

.37

(.48)

(.05)

.01

(.04)

Total from investment operations

.17

.67

(.13)

.31

.34

.15

Less distributions from:

Net investment income

(.10)

(.30)

(.35)

(.36)

(.32)

(.18)

Redemption fees

—

.00***

.00***

.00***

.00***

.00***

Net asset value, end of period

$ 10.20

$ 10.13

$ 9.76

$ 10.24

$ 10.29

$ 10.27

Total Return (%)d

1.68**

6.96

(1.32)

3.09

3.35

1.50**

Ratios to Average Net Assets and Supplemental Data

Net assets, end of period ($ millions)

173

165

141

260

303

2

Ratio of expenses before expense reductions (%)

.74*

.74

.89

.80

.73

.84*

Ratio of expenses after expense reductions (%)

.68*

.57

.60

.60

.67

.71*

Ratio of net investment income (%)

1.98*

2.98

3.48

3.53

3.11

2.72*

Portfolio turnover rate (%)

10**

30

33

39

46

35

a For the six months ended April 30, 2010 (Unaudited).
b For the period from February 28, 2005 (commencement of operations of Class S shares) to October 31, 2005.
c Based on average shares outstanding during the period.
d Total returns would have been lower had certain expenses not been reduced.
* Annualized
** Not annualized
*** Amount is less than $.005.

Institutional Class

Years Ended October 31,

2010a

2009

2008

2007

2006

2005

Selected Per Share Data

Net asset value, beginning of period

$ 10.14

$ 9.77

$ 10.25

$ 10.30

$ 10.28

$ 10.33

Income (loss) from investment operations:

Net investment incomeb

.11

.30

.35

.36

.33

.27

Net realized and unrealized gain (loss)

.07

.37

(.48)

(.04)

.02

(.04)

Total from investment operations

.18

.67

(.13)

.32

.35

.23

Less distributions from:

Net investment income

(.11)

(.30)

(.35)

(.37)

(.33)

(.28)

Redemption fees

—

.00***

.00***

.00***

.00***

.00***

Net asset value, end of period

$ 10.21

$ 10.14

$ 9.77

$ 10.25

$ 10.30

$ 10.28

Total Return (%)

1.74**

6.94c

(1.31)c

3.11

3.47c

2.22c

Ratios to Average Net Assets and Supplemental Data

Net assets, end of period ($ millions)

81

66

75

94

107

204

Ratio of expenses before expense reductions (%)

.58*

.60

.60

.58

.60

.58

Ratio of expenses after expense reductions (%)

.58*

.58

.60

.58

.55

.55

Ratio of net investment income (%)

2.09*

2.97

3.48

3.54

3.23

2.67

Portfolio turnover rate (%)

10**

30

33

39

46

35

a For the six months ended April 30, 2010 (Unaudited).
b Based on average shares outstanding during the period.
c Total return would have been lower had certain expenses not been reduced.
* Annualized
** Not annualized
*** Amount is less than $.005.

Notes to Financial Statements (Unaudited)

A. Organization and Significant Accounting Policies

DWS Short-Term Municipal Bond Fund (the "Fund") is a diversified series of DWS Advisor Funds (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 of the Fund are closed to new purchases, except exchanges or the reinvestment of dividends or other distributions. Class B shares were offered to investors without an initial sales charge and 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 service 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, securities are valued at the mean of the most recent bid and asked quotations or evaluated price, 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.

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

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

Disclosure about the classification of fair value measurements is included in a table following the Fund's Investment Portfolio.

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. Authoritative accounting guidance requires that disclosures about the Fund's derivative and hedging activities and derivatives accounted for as hedging instruments must be disclosed separately from derivatives that do not qualify for hedge accounting. Because investment companies account for their derivatives at fair value and record any changes in fair value in current period earnings, the Fund's derivatives are not accounted for as hedging instruments. As such, even though the Fund may use derivatives in an attempt to achieve an economic hedge, the Fund's derivatives are not considered to be hedging instruments. The disclosure below is presented in accordance with authoritative accounting guidance.

Interest Rate Swap Contracts. 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 the counterparty over the term of the interest rate swap contract, to 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.

There are no open interest rate swap contracts as of April 30, 2010. For the six months ended April 30, 2010, the Fund invested in interest rate swap contracts with a total notional amount generally indicative of a range from $0 to $22,250,000.

The following tables summarize the amount of unrealized and realized gains and losses on derivative instruments recognized in Fund earnings during the six months ended April 30, 2010 and the related location in the accompanying Statement of Operations is summarized in the following tables by primary underlying risk exposure:

Realized Gain (Loss)

Swap Contracts

Interest Rate Contracts (a)

$ (628,000)

The above derivative is located in the following Statement of Operations account:

(a) Net realized gain (loss) from interest rate swap contracts

Change in Net Unrealized Appreciation (Depreciation)

Swap Contracts

Interest Rate Contracts (a)

$ 343,959

The above derivative is located in the following Statement of Operations account:

(a) Change in net unrealized appreciation (depreciation) on interest rate swap contracts

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.

At October 31, 2009, the Fund had a net tax basis capital loss carryforward of approximately $16,999,000, which may be applied against any realized net taxable capital gains of each succeeding year until fully utilized or until October 31, 2010 ($479,000), October 31, 2011 ($2,026,000), October 31, 2012 ($1,898,000), October 31, 2013 ($711,000), October 31, 2015 ($631,000), October 31, 2016 ($5,651,000) and October 31, 2017 ($5,603,000), the respective expiration dates, whichever occurs first.

The Fund has reviewed the tax positions for the open tax years as of October 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 open 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. 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.

The tax character of current year distributions will be determined at the end of the current fiscal year.

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 both tax and financial reporting purposes.

B. Purchases and Sales of Securities

During the six months ended April 30, 2010, purchases and sales of investment securities (excluding short-term investments) aggregated $193,309,045 and $58,891,385, respectively.

C. Related Parties

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

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:

First $500 million of the Fund's average daily net assets

.400%

Next $500 million of such net assets

.385%

Next $1.0 billion of such net assets

.370%

Over $2.0 billion of such net assets

.355%

For the period from November 1, 2009 through February 28, 2011, the Advisor has contractually agreed to waive its fees and/or reimburse certain operating expenses of the Fund to the extent necessary to maintain the operating expenses (excluding certain expenses such as extraordinary expenses, taxes, brokerage and interest) of each class as follows:

Class A

.83%

Class B

1.58%

Class C

1.58%

Class S

.68%

Institutional Class

.58%

Accordingly, for the six months ended April 30, 2010, the fee pursuant to the Investment Management Agreement was equivalent to an annualized effective rate of 0.40% of the Fund's average daily net assets.

In addition, for the six months ended April 30, 2010, the Advisor reimbursed the Fund $8,847 of sub-recordkeeping expenses for Class S shares.

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 an annual fee ("Administration Fee") of 0.10% of the Fund's average daily net assets, computed and accrued daily and payable monthly. For the six months ended April 30, 2010, the Administration Fee was $322,272, of which $56,432 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 six months ended April 30, 2010, the amounts charged to the Fund by DISC were as follows:

Services to Shareholders

Total Aggregated

Waived

Unpaid at April 30, 2010

Class A

$ 13,627

$ —

$ 8,050

Class B

846

846

—

Class C

6,694

6,694

—

Class S

45,555

45,555

—

Institutional Class

1,268

—

977

 

$ 67,990

$ 53,095

$ 9,027

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 each 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 six months ended April 30, 2010, the Distribution Fee was as follows:

Distribution Fee

Total Aggregated

Unpaid at April 30, 2010

Class B

$ 5,466

$ 826

Class C

210,030

38,375

 

$ 215,496

$ 39,201

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. 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 six months ended April 30, 2010, the Service Fee was as follows:

Service Fee

Total Aggregated

Waived

Unpaid at April 30, 2010

Annualized Effective Rate

Class A

$ 362,367

$ —

$ 201,617

.21%

Class B

1,639

135

392

.21%

Class C

69,207

2,422

33,206

.24%

 

$ 433,213

$ 2,557

$ 235,215

 

Underwriting Agreement and Contingent Deferred Sales Charge. DIDI is the principal underwriter for the Fund. Underwriting commissions paid in connection with the distribution of Class A shares for the six months ended April 30, 2010, aggregated $1,412.

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 six months ended April 30, 2010, the CDSC for Class B and C shares was $1,041 and $6,752, respectively. A deferred sales charge of up to 0.50% is assessed on certain redemptions of Class A shares. For the six months ended April 30, 2010, DIDI received $53,694 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 six months ended April 30, 2010, the amount charged to the Fund by DIMA included in the Statement of Operations under "reports to shareholders" aggregated $17,800, of which $11,358 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.

D. Share Transactions

The following table summarizes share and dollar activity in the Fund:

 

Six Months Ended April 30, 2010

Year Ended October 31, 2009

 

Shares

Dollars

Shares

Dollars

Shares sold

Class A

15,638,726

$ 159,463,576

23,787,716

$ 239,555,443

Class B

30,868

314,493

74,915

746,115

Class C

1,740,584

17,752,204

2,924,187

29,446,411

Class S

4,870,011

49,637,053

7,933,973

79,685,772

Institutional Class

3,043,511

31,051,035

1,783,554

18,012,526

 

 

$ 258,218,361

 

$ 367,446,267

Shares issued to shareholders in reinvestment of distributions

Class A

212,326

$ 2,166,485

324,117

$ 3,254,298

Class B

658

6,709

3,890

38,878

Class C

18,423

187,940

41,287

414,054

Class S

85,062

867,069

209,651

2,098,151

Institutional Class

54,538

556,521

151,474

1,515,970

 

 

$ 3,784,724

 

$ 7,321,351

Shares redeemed

Class A

(6,121,473)

$ (62,446,131)

(8,171,067)

$ (81,906,716)

Class B

(61,602)

(628,383)

(214,236)

(2,152,948)

Class C

(531,954)

(5,429,252)

(640,981)

(6,427,556)

Class S

(4,360,762)

(44,455,559)

(6,224,841)

(62,179,465)

Institutional Class

(1,715,115)

(17,513,220)

(3,108,088)

(31,063,036)

 

 

$ (130,472,545)

 

$ (183,729,721)

Redemption fees

 

$ —

 

$ 17,676

Net increase (decrease)

Class A

9,729,579

$ 99,183,930

15,940,766

$ 160,916,876

Class B

(30,076)

(307,181)

(135,431)

(1,367,955)

Class C

1,227,053

12,510,892

2,324,493

23,434,711

Class S

594,311

6,048,563

1,918,783

19,605,394

Institutional Class

1,382,934

14,094,336

(1,173,060)

(11,533,453)

 

 

$ 131,530,540

 

$ 191,055,573

E. Line of Credit

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.

F. Review for Subsequent Events

Management has evaluated the events and transactions subsequent to period end through the date the financial statements were available to be issued, and has determined that there were no material events that would require disclosure in the Fund's financial statements.

Summary of Management Fee Evaluation by Independent Fee Consultant

October 9, 2009, As Revised November 20, 2009

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 2009, 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 and 2008.

Qualifications

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 and serve in various leadership and financial oversight capacities with non-profit organizations.

Evaluation of Fees for each DWS Fund

My work focused primarily on evaluating, fund-by-fund, the fees charged to each of the 124 publicly offered 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.

Fees and Expenses Compared with Other Funds

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's Fees for Similar Services to Others

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.

Costs and Profit Margins

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

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.

Quality of Service — Performance

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.

Complex-Level Considerations

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.

Findings

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.

stm_sigmack0
Thomas H. Mack

Account Management Resources

 

For More Information

The automated telephone system allows you to access personalized account information and obtain information on other DWS funds using either your voice or your telephone keypad. Certain account types within Classes A, B, C and S also have the ability to purchase, exchange or redeem shares using this system.
For more information, contact your financial advisor. You may also access our automated telephone system or speak with a DWS Investments representative by calling the appropriate number below:

For shareholders of Classes A, B, C and Institutional Class:

(800) 621-1048

For shareholders of Class S:

(800) 728-3337

Web Site

www.dws-investments.com

View your account transactions and balances, trade shares, monitor your asset allocation, and change your address, 24 hours a day.
Obtain prospectuses and applications, blank forms, interactive worksheets, news about DWS funds, subscription to fund updates by e-mail, retirement planning information, and more.

Written Correspondence

DWS Investments

PO Box 219151
Kansas City, MO 64121-9151

Proxy Voting

A description of the fund's policies and procedures for voting proxies for portfolio securities and information about how the fund voted proxies related to its portfolio securities during the 12-month period ended June 30 is available on our Web site — www.dws-investments.com (click on "proxy voting"at the bottom of the page) — or on the SEC's Web site — www.sec.gov. To obtain a written copy of the fund's policies and procedures without charge, upon request, call us toll free at (800) 621-1048.

Principal Underwriter

If you have questions, comments or complaints, contact:

DWS Investments Distributors, Inc.

222 South Riverside Plaza
Chicago, IL 60606-5808
(800) 621-1148

 

Class A

Class B

Class C

Class S

Institutional Class

Nasdaq Symbol

SRMAX
 SRMBX
 SRMCX
 SRMSX
 MGSMX

CUSIP Number

23339E 764
 23339E 756
 23339E 749
 23339E 731
 23339E 723

Fund Number

436
 636
 736
 2336
 536

Privacy Statement

Dear Valued Client:

Your confidence is important to us. So we want to make sure you know our policies regarding the handling of our clients' private information. The following information is issued by DWS Investments Distributors, Inc., Deutsche Investment Management Americas Inc., DeAM Investor Services, Inc., DWS Trust Company and the DWS Funds.

We consider privacy fundamental to our client relationships and adhere to the policies and practices described below to protect current and former clients' information. We never sell customer lists or individual client information. Internal policies are in place to protect confidentiality, while allowing client needs to be served. Only individuals who need to do so in carrying out their job responsibilities may access client information. We maintain physical, electronic and procedural safeguards that comply with federal and state standards to protect confidentiality. These safeguards extend to all forms of interaction with us, including the Internet.

In the normal course of business, clients give us nonpublic personal information on applications and other forms, on our Web sites, and through transactions with us or our affiliates. Examples of the nonpublic personal information collected are name, address, Social Security number, and transaction and balance information. To be able to serve our clients, certain of this client information is shared with affiliated and nonaffiliated third-party service providers such as transfer agents, custodians and broker-dealers to assist us in processing transactions and servicing your account.

In addition, we may disclose the information we collect to companies that perform marketing services on our behalf or to other financial institutions with which we have joint marketing agreements. These organizations may only use client information for the purpose designated by the companies listed above. Additional requirements beyond federal law may be imposed by certain states. To the extent that these state laws apply, we will comply with them before we share information about you.

We may also disclose nonpublic personal information about you to other parties as required or permitted by law. For example, we are required to or may provide information to government entities or regulatory bodies in response to requests for information or subpoenas, to private litigants in certain circumstances, to law enforcement authorities, or any time we believe it necessary to protect the firm.

At any time, if you have questions about our policy, please write to us at:

DWS Investments
Attention: Correspondence — Chicago
P.O. Box 219415
Kansas City, MO 64121-9415 September 2009

Notes

Notes

Notes

Notes

Notes

Notes

stm_backcover0

 

 

ITEM 2.

CODE OF ETHICS

 

 

 

Not applicable.

 

 

ITEM 3.

AUDIT COMMITTEE FINANCIAL EXPERT

 

 

 

Not applicable.

 

 

ITEM 4.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

 

 

 

Not applicable.

 

 

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

 

 

 

There were no material changes to the procedures by which shareholders may recommend nominees to the Fund’s Board. 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 Paul K. Freeman, Independent Chairman, DWS Funds, P.O. Box 101833, Denver, CO 80250-1833.

 

 

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

 

 

 

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

 

 

Form N-CSRS Item F

 

SIGNATURES

 

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

 

Registrant:

DWS Short-Term Municipal Bond Fund, a series of DWS Advisor Funds

 

 

 

 

By:

/s/Michael G. Clark

Michael G. Clark

President

 

 

Date:

June 29, 2010

 

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

 

Registrant:

DWS Short-Term Municipal Bond Fund, a series of DWS Advisor Funds

 

 

 

 

By:

/s/Michael G. Clark

Michael G. Clark

President

 

 

Date:

June 29, 2010

 

 

 

 

By:

/s/Paul Schubert

Paul Schubert

Chief Financial Officer and Treasurer

 

 

Date:

June 29, 2010