N-CSR 1 ar103110af_cfi.htm DWS CORE FIXED INCOME FUND ar103110af_cfi.htm
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549

FORM N-CSR

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: (201) 593-6408

Paul Schubert
100 Plaza One
Jersey City, NJ 07311
(Name and Address of Agent for Service)

Date of fiscal year end:                                           10/31

Date of reporting period:                                        10/31/2010

ITEM 1.
REPORT TO STOCKHOLDERS
 
OCTOBER 31, 2010
Annual Report
to Shareholders
 
DWS Core Fixed Income Fund
 
Contents
4 Performance Summary
7 Information About Your Fund's Expenses
9 Portfolio Management Review
13 Portfolio Summary
15 Investment Portfolio
22 Statement of Assets and Liabilities
24 Statement of Operations
25 Statement of Changes in Net Assets
26 Financial Highlights
32 Notes to Financial Statements
43 Report of Independent Registered Public Accounting Firm
44 Tax Information
45 Investment Management Agreement Approval
51 Summary of Management Fee Evaluation by Independent Fee Consultant
55 Board Members and Officers
59 Account Management Resources
 
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. In the current market environment, mortgage- backed securities are experiencing increased volatility. 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 October 31, 2010
Average Annual Total Returns as of 10/31/10
Unadjusted for Sales Charge
1-Year
3-Year
5-Year
10-Year
Class A
7.64%
0.19%
1.87%
4.09%
Class B
6.73%
-0.57%
1.10%
3.31%
Class C
6.85%
-0.57%
1.10%
3.32%
Adjusted for the Maximum Sales Charge
        
Class A (max 4.50% load)
2.80%
-1.34%
0.93%
3.62%
Class B (max 4.00% CDSC)
3.73%
-1.17%
0.93%
3.31%
Class C (max 1.00% CDSC)
6.85%
-0.57%
1.10%
3.32%
No Sales Charges
        
Class R
7.39%
-0.03%
1.65%
3.86%
Class S
7.71%
0.40%
2.05%
4.22%
Institutional Class
7.93%
0.44%
2.12%
4.36%
Barclays Capital US Aggregate Bond Index+
8.01%
7.23%
6.45%
6.38%
 
Sources: Lipper Inc. and Deutsche Investment Management Americas Inc.
 
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 1.05%, 1.84%, 1.74%, 1.35%, 0.76% and 0.68% for Class A, Class B, Class C, Class R, 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.
 
Returns shown for Class A, B and C shares for the periods prior to their inception on June 28, 2002, Class R shares on October 1, 2003 and Class S shares on February 1, 2005 are derived from the historical performance of Institutional Class shares of DWS Core Fixed Income 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 Core Fixed Income Fund — Class A
[] Barclays Capital US Aggregate Bond Index+
Yearly periods ended October 31
 
The Fund's growth of an assumed $10,000 investment is adjusted for the maximum sales charge of 4.50%. This results in a net initial investment of $9,550.
 
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.
 
+ Barclays Capital US Aggregate Bond Index is an unmanaged index representing domestic taxable investment-grade bonds, with index components for government and corporate securities, mortgage pass-through securities, and asset-backed securities with average maturities of one year or more.
Net Asset Value and Distribution Information
  
   
Class A
    
Class B
    
Class C
    
Class R
    
Class S
    
Institutional Class
  
Net Asset Value:
10/31/10
   $ 9.45     $ 9.44     $ 9.45     $ 9.50     $ 9.44     $ 9.45  
10/31/09
   $ 9.04     $ 9.04     $ 9.04     $ 9.09     $ 9.04     $ 9.04  
Distribution Information:
Twelve Months as of 10/31/10:
Income Dividends
   $ .27     $ .20     $ .20     $ .25     $ . .29     $ .30  
October Income Dividend
   $ .0213     $ .0157     $ .0164     $ .0228     $ .0242     $ .0252  
SEC 30-day Yield as of 10/31/10++
     2.01 %     1.42 %     1.53 %     2.26 %     2.46 %     2.57 %
Current Annualized Distribution Rate as of 10/31/10++
     2.65 %     1.96 %     2.04 %     2.83 %     3.02 %     3.14 %
 
++ The SEC yield is net investment income per share earned over the month ended October 31, 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. Current annualized distribution rate is the latest monthly dividend shown as an annualized percentage of net asset value on October 31, 2010. Distribution rate simply measures the level of dividends and is not a complete measure of performance. Yields and distribution rates are historical, not guaranteed and will fluctuate.
Lipper Rankings — Intermediate Investment Grade Debt Funds Category as of 10/31/10
Period
Rank
  
Number of Fund Classes Tracked
Percentile Ranking (%)
Class A
1-Year
487
of
557
88
3-Year
463
of
477
97
5-Year
373
of
388
96
Class B
1-Year
533
of
557
96
3-Year
468
of
477
98
5-Year
381
of
388
98
Class C
1-Year
528
of
557
95
3-Year
467
of
477
98
5-Year
380
of
388
98
Class R
1-Year
502
of
557
90
3-Year
464
of
477
98
5-Year
377
of
388
97
Class S
1-Year
479
of
557
86
3-Year
462
of
477
97
5-Year
372
of
388
96
Institutional Class
1-Year
453
of
557
82
3-Year
461
of
477
97
5-Year
371
of
388
96
10-Year
235
of
250
94
 
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 of the Fund, you incur two types of costs: ongoing expenses and transaction costs. Ongoing expenses include management fees, distribution and service (12b-1) fees and other Fund expenses. Examples of transaction costs include sales charges (loads), redemption fees and account maintenance fees, which are not shown in this section. The following tables are intended to help you understand your ongoing expenses (in dollars) of investing in the Fund and to help you compare these expenses with the ongoing expenses of investing in other mutual funds. In the most recent six-month period, the Fund limited these expenses; had it 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 (May 1, 2010 to October 31, 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 October 31, 2010
  
Actual Fund Return
  
Class A
    
Class B
    
Class C
    
Class R
    
Class S
    
Institutional Class
  
Beginning Account Value 5/1/10
   $ 1,000.00     $ 1,000.00     $ 1,000.00     $ 1,000.00     $ 1,000.00     $ 1,000.00  
Ending Account Value 10/31/10
   $ 1,045.30     $ 1,041.50     $ 1,041.50     $ 1,045.40     $ 1,046.40     $ 1,048.00  
Expenses Paid per $1,000*
   $ 4.49     $ 8.28     $ 8.18     $ 5.41     $ 3.61     $ 2.99  
Hypothetical 5% Fund Return
  
Class A
    
Class B
    
Class C
    
Class R
    
Class S
    
Institutional Class
  
Beginning Account Value 5/1/10
   $ 1,000.00     $ 1,000.00     $ 1,000.00     $ 1,000.00     $ 1,000.00     $ 1,000.00  
Ending Account Value 10/31/10
   $ 1,020.82     $ 1,017.09     $ 1,017.19     $ 1,019.91     $ 1,021.68     $ 1,022.28  
Expenses Paid per $1,000*
   $ 4.43     $ 8.19     $ 8.08     $ 5.35     $ 3.57     $ 2.96  
 
* 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 R
Class S
Institutional Class
DWS Core Fixed Income Fund
.87%
1.61%
1.59%
1.05%
.70%
.58%
 
For more information, please refer to the Fund's prospectus.
 
Portfolio Management Review
 
DWS Core Fixed Income Fund: A Team Approach to Investing
 
Deutsche Investment Management Americas Inc. ("DIMA" or the "Advisor"), which is part of Deutsche Asset Management, is the investment advisor for DWS Core Fixed Income Fund. DIMA and its predecessors have more than 90 years of experience managing mutual funds and DIMA provides a full range of investment advisory services to both institutional and retail clients.
 
DIMA is an indirect, wholly owned subsidiary of Deutsche Bank AG. Deutsche Bank AG is a major global banking institution that is engaged in a wide range of financial services, including investment management, mutual funds, retail, private and commercial banking, investment banking and insurance.
 
DWS Investments is the retail brand name of the US asset management activities of Deutsche Bank AG and DIMA, representing a wide range of investing expertise and resources. This well-resourced global investment platform brings together a wide variety of experience and investment insight across industries, regions, asset classes and investing styles.
 
Portfolio Management Team
 
Kenneth R. Bowling, CFA
 
Jamie Guenther, CFA
 
John Brennan
 
Bruce Harley, CFA, CEBS
 
David Vignolo
 
J. Richard Robben, CFA
 
J. Kevin Horsley, CFA, CPA
 
Stephen Willer, CFA
 
Portfolio Managers
 
Effective on or about January 3, 2011, Fischer Francis Trees & Watts, Inc. (FFTW), New York, New York, will serve as the sub-advisor to the fund. FFTW will conduct investment research and be responsible for the purchase, sale or exchange of the fund's assets.
 
The portfolio management team for the fund will be as follows:
 
David Marmon
 
Lead Portfolio Manager, Fischer Francis Trees & Watts, Inc.
 
Overview of Market and Fund Performance
 
The views expressed in the following discussion reflect those of the portfolio management team only through the end of the period of the report as stated on the cover. The management team's views are subject to change at any time based on market and other conditions and should not be construed as a recommendation. Past performance is no guarantee of future results. Current and future portfolio holdings are subject to risk.
 
For the annual period ended October 31, 2010, the total return of the fund's Class A shares was 7.64%. By comparison, the Barclays Capital US Aggregate Bond Index delivered an 8.01% return.1 The average return of the Lipper Intermediate Investment Grade Debt Funds category was 9.63% for the 12-month period.2 (Returns are unadjusted for sales charges. If sales charges had been included, returns would have been lower. Past performance is no guarantee of future results. Please see pages 4 through 6 for the performance of other share classes and for more complete performance information.)
 
Incoming data over the fiscal period generally reflected moderate improvement in the economy, in keeping with a recovery that is likely to be less robust than past cycles. After initially ticking upward as the economy emerged from the depths of financial crisis, interest rates declined over the period, supported by the extremely accommodative US Federal Reserve Board (the Fed) policy. For the full 12 months, interest rates fell along the entire Treasury yield curve, with the steepest declines occurring on intermediate-term issues.3 To illustrate, the two-year yield went from 0.90% to 0.34%, the five-year from 2.31% to 1.17%, the 10-year from 3.41% to 2.63% and the 30-year from 4.23% to 3.99%. In keeping with a declining rate environment, domestic bonds generally provided positive returns during the fiscal year.
 
Along the way, a variety of concerns, including continued weak employment and European government finances, led to significant volatility in credit spreads — the incremental yield offered by lower-quality versus higher-quality fixed-income instruments. Despite the uncertainties surrounding economic growth in the US and abroad, the overall trend for credit-sensitive sectors was upward for the 12 months as investors sought incremental yield in a low-rate environment. For the year, credit spreads narrowed in this environment. Among investment-grade credit sectors, commercial mortgage-backed securities (CMBS) and corporate bonds led performance, while retail mortgage-backed securities (MBS) lagged the other principal segments of the domestic bond market.4 Corporations took advantage of improved liquidity and low interest rates to issue a large volume of bonds. Within corporates, financial issues did especially well, as the largest banks were able to return TARP funds to the government.5
 
Positive Contributors to Performance
 
The fund's overweight exposure to investment-grade corporate bonds was the biggest contributor to returns relative to the benchmark, as fixed-income sectors that trade at a yield spread versus Treasuries outperformed.6,7 Within corporates, our weighting towards the financial and telecommunications/media sectors was especially helpful.
 
Given a relatively steep yield curve, we entered the quarter with an overweighting of longer-term issues while underweighting the short end of the curve. Our yield curve positioning helped relative performance as the curve flattened over the quarter, principally via yield declines and price increases on intermediate- and longer-term bonds.
 
Negative Contributors to Performance
 
The fund's posture with respect to portfolio duration and corresponding interest rate sensitivity was a constraint on performance versus the benchmark for the period. Specifically, the fund at times had a shorter, relatively conservative overall duration, reducing the positive impact on returns from falling interest rates.
 
Outlook and Positioning
 
At the end of the period, the largest allocation was a position of approximately 33% in residential MBS, the great majority of which are asset-backed securities.8 The next-highest weighting was 28% in investment-grade corporate bonds, followed by 27% in US Treasury and other government-backed securities, and 8% in municipal bonds and notes.
 
Effective on or about January 3, 2011, Fischer Francis Trees & Watts, Inc. (FFTW), New York, New York, will serve as the sub-advisor to the fund. FFTW will conduct investment research and be responsible for the purchase, sale or exchange of the fund's assets. With respect to the corporate sector, balance sheets are generally strong, earnings are rising and bond defaults are low. As a consequence, the fund is expected to maintain a relatively high weighting in corporate bonds versus the benchmark.
 
The Fed has effectively been anchoring the short end of the yield curve by committing to maintain the federal funds rate in a range of 0% to 0.25% for an undefined, but prolonged, period.9 With employment continuing to lag and consumer demand for homes and autos well below the levels of past economic recoveries, we expect the Fed to maintain its zero interest rate policy for the foreseeable future. In addition, the Fed has announced plans for a second round of Treasury bond purchases aimed at keeping mortgage rates low, which should support bond prices farther out the maturity spectrum over the near-to-intermediate term.
 
Given this backdrop of very low short-term interest rates and Fed support of bonds out the curve, the fund shall maintain a relatively neutral stance in terms of overall interest rate sensitivity, while underweighting the short end of the yield curve and overweighting issues in the 10-year range by a corresponding amount. With the Fed in effect seeking to engineer inflation, we can expect that at some point market sentiment with respect to longer-term bonds will become less positive. Economic indicators and relative valuations will be closely monitored within the US bond market in an effort to provide shareholders with core fixed-income exposure.
 
1 The Barclays Capital US Aggregate Bond Index is an unmanaged index representing domestic taxable investment-grade bonds, with index components for government and corporate securities, mortgage pass-through securities and asset-backed securities with average maturities of one year or more. Index returns, unlike fund returns, do not reflect any fees or expenses. It is not possible to invest directly into an index.
 
2 The Lipper Intermediate Investment Grade Debt Funds category is comprised of funds that invest primarily in investment-grade corporate debt issues or government issues. Category returns assume reinvestment of all distributions. It is not possible to invest directly in a Lipper category.
 
3 The yield curve is a graph with a left-to-right line that shows how high or low yields are, from the shortest to the longest maturities. Typically, the line rises from left to right as investors who are willing to tie up their money for a longer period are rewarded with higher yields. When the yield curve is characterized as "steep," this is especially true.
 
4 Mortgage-backed securities (MBS) are bonds that are secured by mortgage debt. Commercial mortgage-backed securities (CMBS) are secured by loans on a commercial property.
 
5 The Troubled Asset Relief Program (TARP) is a government program created for the establishment and management of a Treasury fund, in an attempt to curb the ongoing financial crisis of 2007-2008.
 
6 "Overweight" means the fund holds a higher weighting in a given sector or security than the benchmark. "Underweight" means the fund holds a lower weighting.
 
7 "Spread" refers to the excess yield various bond sectors offer over Treasuries with similar maturities. When spreads widen, yield differences are increasing between bonds in the two sectors being compared. When spreads narrow, the opposite is true.
 
8 Asset-backed securities (ABS) are secured by assets.
 
9 The federal funds rate is the interest rate, set by the US Federal Reserve Board, at which banks lend money to each other, usually on an overnight basis.
 
Portfolio Summary
Asset Allocation (As a % of Net Assets)
10/31/10
10/31/09
     
Mortgage-Backed Securities Pass-Throughs
33%
37%
Corporate Bonds
28%
26%
Government & Agency Obligations
27%
16%
Cash Equivalents and Other Assets and Liabilities, net
(6)%
6%
Municipal Bonds and Notes
8%
5%
Commercial Mortgage-Backed Securities
7%
7%
Collateralized Mortgage Obligations
2%
2%
Asset-Backed
1%
1%
 
100%
100%
 

Sector Diversification (As a % of Corporate Bonds)
10/31/10
10/31/09
     
Financials
42%
46%
Consumer Discretionary
15%
10%
Energy
13%
11%
Consumer Staples
10%
9%
Health Care
6%
7%
Telecommunication Services
4%
4%
Industrials
4%
4%
Materials
3%
4%
Utilities
3%
5%
 
100%
100%
 

Quality (Excludes Cash Equivalents and Securities Lending Collateral)
10/31/10
10/31/09
     
US Government and Agencies
57%
57%
AAA
3%
4%
AA
4%
2%
A
9%
14%
BBB
21%
20%
BB
1%
1%
B
2%
—
Not Rated
3%
2%
 
100%
100%
 
Asset allocation, sector diversification and quality are subject to change.
 
The quality ratings represent the lower of Moody's Investors Service, Inc. ("Moody's") or Standard & Poor's Corporation ("S&P") credit ratings. The ratings of Moody's and S&P represent their opinions as to the quality of the securities they rate. Ratings are relative and subjective and are not absolute standards of quality. The Fund's credit quality does not remove market risk and is subject to change.
Interest Rate Sensitivity
10/31/10
10/31/09
     
Effective Maturity
6.8 years
6.5 years
Effective Duration
4.8 years
4.9 years
 
Effective maturity is the weighted average of the bonds held by the Fund taking into consideration any maturity shortening features.
 
Effective duration is the measurable change in the value of a security in response to a change in interest rates.
 
Interest rate sensitivity is subject to change.
 
For more complete details about the Fund's investment portfolio, see page 14. 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. The Fund's portfolio holdings are 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 October 31, 2010
   
Principal Amount ($)
    
Value ($)
  
       
Corporate Bonds 27.7%
  
Consumer Discretionary 4.2%
  
CBS Corp., 5.9%, 10/15/2040
     1,950,000       1,888,690  
Comcast Corp., 5.15%, 3/1/2020
     1,300,000       1,429,821  
DirecTV Holdings LLC:
  
3.125%, 2/15/2016
     800,000       819,315  
6.35%, 3/15/2040
     1,892,000       2,019,082  
Discovery Communications LLC, 5.05%, 6/1/2020
     3,100,000       3,413,813  
Home Depot, Inc.:
  
5.4%, 9/15/2040
     875,000       852,153  
5.875%, 12/16/2036
     400,000       415,532  
MGM Resorts International, 144A, 9.0%, 3/15/2020
     2,500,000       2,734,375  
NBC Universal, Inc., 144A, 5.95%, 4/1/2041
     2,000,000       2,042,534  
Time Warner, Inc.:
  
6.2%, 3/15/2040
     1,200,000       1,292,700  
7.625%, 4/15/2031
     1,200,000       1,460,740  
Yum! Brands, Inc.:
  
3.875%, 11/1/2020
     1,490,000       1,490,429  
5.3%, 9/15/2019
     510,000       567,918  
        20,427,102  
Consumer Staples 2.9%
  
Anheuser-Busch InBev Worldwide, Inc., 144A, 7.75%, 1/15/2019
     3,100,000       4,008,784  
CVS Caremark Corp.:
  
6.125%, 9/15/2039
     1,750,000       1,885,879  
6.25%, 6/1/2027
     2,663,000       2,964,683  
Kraft Foods, Inc., 5.375%, 2/10/2020
     4,000,000       4,481,460  
Kroger Co., 5.4%, 7/15/2040
     790,000       784,148  
        14,124,954  
Energy 3.7%
  
DCP Midstream LLC, 144A, 9.75%, 3/15/2019
     2,330,000       3,085,696  
Enterprise Products Operating LLC:
  
4.6%, 8/1/2012
     700,000       736,638  
Series M, 5.65%, 4/1/2013
     830,000       906,115  
Series B, 7.5%, 2/1/2011
     1,525,000       1,549,115  
Kinder Morgan Energy Partners LP, 6.5%, 9/1/2039
     2,050,000       2,174,902  
ONEOK Partners LP, 6.15%, 10/1/2016
     1,527,000       1,785,542  
Plains All American Pipeline LP, 8.75%, 5/1/2019
     3,750,000       4,788,465  
Weatherford International Ltd., 5.125%, 9/15/2020
     2,650,000       2,774,243  
        17,800,716  
Financials 11.5%
  
American Express Co., 7.0%, 3/19/2018
     3,500,000       4,204,025  
Bank of America Corp.:
  
5.625%, 7/1/2020
     1,590,000       1,648,733  
5.75%, 12/1/2017
     1,310,000       1,388,415  
6.5%, 8/1/2016
     525,000       585,419  
Citigroup, Inc., 5.375%, 8/9/2020
     4,000,000       4,209,876  
Covidien International Finance SA, 4.2%, 6/15/2020
     3,500,000       3,706,115  
Fifth Third Bancorp., 5.45%, 1/15/2017
     2,082,000       2,210,653  
Ford Motor Credit Co., LLC, 8.0%, 6/1/2014
     5,000,000       5,597,950  
General Electric Capital Corp., Series A, 5.625%, 5/1/2018
     4,000,000       4,470,032  
Hartford Financial Services Group, Inc., 5.95%, 10/15/2036
     2,400,000       2,118,430  
JPMorgan Chase & Co., 5.125%, 9/15/2014
     5,000,000       5,483,220  
KeyBank NA, 5.7%, 11/1/2017
     1,075,000       1,139,413  
Lincoln National Corp., 8.75%, 7/1/2019
     1,475,000       1,901,953  
Merrill Lynch & Co., Inc., Series C, 5.45%, 7/15/2014
     445,000       475,553  
Metropolitan Life Global Funding I, 144A, 5.125%, 4/10/2013
     1,670,000       1,818,991  
Morgan Stanley, Series F, 6.0%, 4/28/2015
     2,110,000       2,345,339  
PNC Funding Corp., 5.25%, 11/15/2015
     2,750,000       3,059,562  
Prudential Financial, Inc.:
  
Series B, 5.1%, 9/20/2014
     1,120,000       1,228,132  
6.2%, 1/15/2015
     820,000       931,352  
7.375%, 6/15/2019
     460,000       557,550  
Telecom Italia Capital SA, 5.25%, 11/15/2013
     2,871,000       3,121,891  
The Goldman Sachs Group, Inc., 6.0%, 6/15/2020
     2,700,000       3,000,540  
Travelers Companies, Inc., 5.35%, 11/1/2040
     865,000       872,758  
        56,075,902  
Health Care 1.8%
  
Express Scripts, Inc.:
  
6.25%, 6/15/2014
     1,480,000       1,705,913  
7.25%, 6/15/2019
     2,155,000       2,689,651  
Medco Health Solutions, Inc., 7.125%, 3/15/2018
     3,400,000       4,177,801  
        8,573,365  
Industrials 1.0%
  
CSX Corp.:
  
6.15%, 5/1/2037
     1,000,000       1,085,687  
6.25%, 3/15/2018
     2,200,000       2,606,153  
Raytheon Co., 3.125%, 10/15/2020
     1,295,000       1,270,510  
        4,962,350  
Materials 0.9%
  
ArcelorMittal, 6.125%, 6/1/2018
     1,500,000       1,640,483  
Corporacion Nacional del Cobre de Chile, 144A, 3.75%, 11/4/2020 (a)
     2,850,000       2,824,549  
        4,465,032  
Telecommunication Services 1.0%
  
American Tower Corp.:
  
5.05%, 9/1/2020
     2,600,000       2,714,431  
7.25%, 5/15/2019
     1,250,000       1,496,875  
Crown Castle Towers LLC, 144A, 4.883%, 8/15/2020
     800,000       815,009  
        5,026,315  
Utilities 0.7%
  
FirstEnergy Solutions Corp., 6.8%, 8/15/2039
     2,316,000       2,331,179  
Sempra Energy, 6.5%, 6/1/2016
     1,000,000       1,206,330  
        3,537,509  
Total Corporate Bonds (Cost $123,907,215)
       134,993,245  
   
Mortgage-Backed Securities Pass-Throughs 33.4%
  
Federal Home Loan Mortgage Corp.:
  
5.5%, with various maturities from 10/1/2023 until 1/1/2034
     3,562,149       3,854,622  
6.0%, 3/1/2038
     1,983,744       2,149,960  
6.5%, 2/1/2038
     718,608       796,055  
Federal National Mortgage Association:
  
3.5%, 4/1/2025 (a)
     19,000,000       19,662,032  
3.579%*, 8/1/2037
     2,369,928       2,478,046  
4.0%, with various maturities from 5/1/2039 until 9/1/2040 (a)
     29,826,035       30,776,261  
5.0%, with various maturities from 10/1/2033 until 8/1/2040
     26,561,259       28,215,887  
5.5%, with various maturities from 2/1/2025 until 4/1/2035 (a) (b)
     21,134,250       22,819,146  
6.0%, with various maturities from 10/1/2022 until 10/1/2035 (a)
     24,560,433       26,780,897  
6.5%, with various maturities from 5/1/2023 until 4/1/2037
     7,773,327       8,660,718  
Government National Mortgage Association:
  
4.5%, 6/1/2039 (a)
     5,250,000       5,567,051  
5.0%, 5/1/2038 (a)
     5,250,000       5,637,187  
5.5%, 5/1/2036 (a)
     5,250,000       5,696,250  
Total Mortgage-Backed Securities Pass-Throughs (Cost $159,478,535)
       163,094,112  
   
Asset-Backed 0.7%
  
Credit Card Receivables 0.6%
  
Citibank Omni Master Trust, "A8", Series 2009-A8, 144A, 2.356%*, 5/16/2016
     3,000,000       3,039,474  
Manufactured Housing Receivables 0.1%
  
Green Tree Financial Corp., "A4", Series 1996-2, 7.2%, 4/15/2026
     164,710       165,853  
Total Asset-Backed (Cost $3,204,199)
       3,205,327  
   
Commercial Mortgage-Backed Securities 6.9%
  
Banc of America Commercial Mortgage, Inc., "A4", Series 2007-4, 5.741%*, 2/10/2051
     6,989,022       7,495,265  
Bear Stearns Commercial Mortgage Securities, Inc., "A4", Series 2007-PW18, 5.7%, 6/13/2050
     6,923,000       7,424,242  
Citigroup/Deutsche Bank Commercial Mortgage Trust, "A4", Series 2006-CD2, 5.348%*, 1/15/2046
     4,700,000       5,082,644  
JPMorgan Chase Commercial Mortgage Securities Corp., "A4", Series 2006-LDP7, 5.872%*, 4/15/2045
     4,800,000       5,325,645  
LB-UBS Commercial Mortgage Trust:
  
"A3", Series 2006-C7, 5.347%, 11/15/2038
     2,500,000       2,679,618  
"A4", Series 2007-C6, 5.858%*, 7/15/2040
     5,200,000       5,529,253  
Total Commercial Mortgage-Backed Securities (Cost $29,430,044)
       33,536,667  
   
Collateralized Mortgage Obligations 2.1%
  
Chase Mortgage Finance Corp., "A1", Series 2003-S2, 5.0%, 3/25/2018
     3,770       3,874  
FDIC Structured Sale Guaranteed Notes, "1A", Series 2010-S1, 144A, 0.805%*, 2/25/2048
     5,258,554       5,268,713  
Federal Home Loan Mortgage Corp.:
  
"NE", Series 2802, 5.0%, 2/15/2033
     90,000       98,024  
"TE", Series 2827, 5.0%, 4/15/2033
     65,000       71,061  
"PE", Series 2864, 5.0%, 6/15/2033
     40,000       43,670  
"KE", Series 2934, 5.0%, 11/15/2033
     53,000       57,460  
Federal National Mortgage Association:
  
"EC", Series 2005-15, 5.0%, 10/25/2033
     80,000       87,793  
"PE", Series 2005-14, 5.0%, 12/25/2033
     90,000       98,859  
"J", Series 1998-36, 6.0%, 7/18/2028
     1,938,194       2,031,201  
NCUA Guaranteed Notes, "1A", Series 2010-R1, 0.706%*, 10/7/2020
     2,700,000       2,700,000  
Total Collateralized Mortgage Obligations (Cost $10,158,954)
       10,460,655  
   
Government & Agency Obligations 27.4%
  
Sovereign Bonds 0.5%
  
Republic of Poland, 6.375%, 7/15/2019
     2,000,000       2,416,920  
US Treasury Obligations 26.9%
  
US Treasury Bill, 0.185%**, 3/17/2011 (c)
     705,000       704,640  
US Treasury Bonds:
  
4.75%, 2/15/2037 (b)
     12,000,000       13,644,372  
5.375%, 2/15/2031 (b)
     12,000,000       14,910,000  
US Treasury Notes:
  
1.75%, 1/31/2014 (b)
     90,000,000       93,346,920  
3.125%, 5/15/2019 (b)
     5,000,000       5,302,345  
3.625%, 2/15/2020
     3,000,000       3,275,391  
        131,183,668  
Total Government & Agency Obligations (Cost $128,051,345)
       133,600,588  
   
Municipal Bonds and Notes 8.1%
  
California, University Revenues, Build America Bonds, 5.946%, 5/15/2045
     870,000       851,495  
Chicago, IL, Transit Authority, Sales Tax Receipts Revenue, Build America Bonds, Series B, 6.2%, 12/1/2040 (d)
     1,300,000       1,255,982  
Kentucky, Asset/Liability Commission, General Fund Revenue, 3.165%, 4/1/2018
     5,000,000       5,060,800  
Los Angeles, CA, Community Redevelopment Agency, Community Redevelopment Financing Authority Revenue, Series L, 6.02%, 9/1/2021 (e)
     6,480,000       6,507,799  
Nashville & Davidson County, TN, Metropolitan Government, Convention Center Authority Revenue, Build America Bonds, Series A2, 7.431%, 7/1/2043
     750,000       829,860  
Pomona, CA, Pension Obligation, Series AR, 5.732%, 7/1/2025 (e)
     2,245,000       2,161,217  
Pueblo of Santa Ana, NM, Certificates of Participation, "A", 5.875%, 4/1/2024
     7,020,000       5,907,330  
Rancho Cordova, CA, Certificates of Partnership, City Hall Acquisition, Series B, 5.65%, 2/1/2024 (e)
     4,340,000       4,268,129  
Riverside, CA, Public Financing Authority, Tax Allocation Revenue, University Corridor, Series D, 5.89%, 8/1/2032 (e)
     925,000       742,211  
West Virginia, State General Obligation, Jobs Inventory Trust Board:
                
Series A, Zero Coupon, 1/22/2012
     1,300,000       1,236,807  
Series A, 144A, Zero Coupon, 6/12/2013
     1,500,000       1,341,915  
Series C, 144A, Zero Coupon, 7/31/2013
     3,500,000       3,111,780  
Wilkes Barre, PA, General Obligation, Series C, 5.48%, 11/15/2024 (e)
     6,315,000       6,235,747  
Total Municipal Bonds and Notes (Cost $40,029,569)
       39,511,072  
 

   
Shares
    
Value ($)
  
       
Securities Lending Collateral 26.9%
  
Daily Assets Fund Institutional, 0.26% (f) (g) (Cost $131,043,703)
     131,043,703       131,043,703  
   
Cash Equivalents 14.0%
  
Central Cash Management Fund, 0.20% (f) (Cost $68,034,382)
     68,034,382       68,034,382  
 

   
% of Net Assets
    
Value ($)
  
       
Total Investment Portfolio (Cost $693,337,946)+
     147.2       717,479,751  
Other Assets and Liabilities, Net
     (47.2 )     (229,948,757 )
Net Assets
     100.0       487,530,994  
 
* These securities are shown at their current rate as of October 31, 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.
 
** Annualized yield at time of purchase; not a coupon rate.
 
+ The cost for federal income tax purposes was $693,458,260. At October 31, 2010, net unrealized appreciation for all securities based on tax cost was $24,021,491. This consisted of aggregate gross unrealized appreciation for all securities in which there was an excess of value over tax cost of $25,756,639 and aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over value of $1,735,148.
 
(a) When-issued or delayed delivery security included.
 
(b) All or a portion of these securities were on loan (see Notes to Financial Statements). The value of all securities loaned at October 31, 2010 amounted to $128,037,021, which is 26.3% of net assets.
 
(c) At October 31, 2010, this security has been pledged, in whole or in part, to cover initial margin requirements for open futures contracts.
 
(d) Taxable issue.
 
(e) Bond is insured by one of these companies:
Insurance Coverage
As a % of Total Investment Portfolio
Ambac Financial Group, Inc.
1.5
National Public Finance Guarantee Corp.
1.3
 
Many insurers who have traditionally guaranteed payment of municipal issues have been downgraded by the major rating agencies.
 
(f) Affiliated fund managed by Deutsche Investment Management Americas Inc. The rate shown is the annualized seven-day yield at period end.
 
(g) Represents collateral held in connection with securities lending. Income earned by the Fund is net of borrower rebates.
 
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.
 
FDIC: Federal Deposit Insurance Corp.
 
Included in the portfolio are investments in mortgage- or asset-backed securities which are interests in separate pools of mortgages or assets. Effective maturities of these investments may be shorter than stated maturities due to prepayments. Some separate investments in the Federal Home Loan Mortgage Corp. and Federal National Mortgage Association issues have similar coupon rates and have been aggregated for presentation purposes in the investment portfolio.
 
At October 31, 2010, open futures contracts sold were as follows:
Futures
Currency
Expiration Date
  
Contracts
    
Notional Value ($)
    
Unrealized Depreciation ($)
  
10-Year US Treasury Note
USD
12/21/2010
     190       23,993,438       (112,656 )
2-Year US Treasury Note
USD
12/31/2010
     150       32,997,656       (145,313 )
30-Year US Treasury Bond
USD
12/21/2010
     122       15,974,375       (139,781 )
Total unrealized depreciation
       (397,750 )
 

Currency Abbreviation
USD United States Dollar
 
For information on the Fund's policy and additional disclosures regarding futures contracts, please refer to Note B in the accompanying Notes to Financial Statements.
 
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 October 31, 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
  
   
Fixed Income (h)
                        
Corporate Bonds
   $ —     $ 134,993,245     $ —     $ 134,993,245  
Mortgage-Backed Securities Pass-Throughs
     —       163,094,112       —       163,094,112  
Asset-Backed
     —       3,205,327       —       3,205,327  
Commercial Mortgage-Backed Securities
     —       33,536,667       —       33,536,667  
Collateralized Mortgage Obligations
     —       7,760,655       2,700,000       10,460,655  
Government & Agency Obligations
     —       132,895,948       —       132,895,948  
Municipal Bonds and Notes
     —       39,511,072       —       39,511,072  
Short-Term Investments (h)
     199,078,085       704,640       —       199,782,725  
Total
   $ 199,078,085     $ 515,701,666     $ 2,700,000     $ 717,479,751  
 

Liabilities
  
Level 1
    
Level 2
    
Level 3
    
Total
  
   
Derivatives (i)
   $ (397,750 )   $ —     $ —     $ (397,750 )
Total
   $ (397,750 )   $ —     $ —     $ (397,750 )
 
There have been no significant transfers in and out of Level 1 and Level 2 fair value measurements during the year ended October 31, 2010.
 
(h) See Investment Portfolio for additional detailed categorizations.
 
(i) Derivatives include unrealized appreciation (depreciation) on open futures contracts.
 
Level 3 Reconciliation
 
The following is a reconciliation of the Fund's Level 3 investments for which significant unobservable inputs were used in determining value:
   
Collateralized Mortgage Obligations
  
Balance as of October 31, 2009
   $ —  
Realized gain (loss)
     —  
Change in unrealized appreciation (depreciation)
     —  
Amortization premium/discount
     —  
Net purchases (sales)
     2,700,000  
Transfers into Level 3
     —  
Transfers (out) of Level 3
     —  
Balance as of October 31, 2010
   $ 2,700,000  
Net change in unrealized appreciation (depreciation) from investments still held as of October 31, 2010
   $ —  
 
Transfers between price levels are recognized at the beginning of the reporting period.
 
The accompanying notes are an integral part of the financial statements.
 
Statement of Assets and Liabilities
as of October 31, 2010
  
Assets
  
Investments:
Investments in securities, at value (cost $494,259,861) — including $128,037,021 of securities loaned
   $ 518,401,666  
Investment in Daily Assets Fund Institutional (cost $131,043,703)*
     131,043,703  
Investment in Central Cash Management Fund (cost $68,034,382)
     68,034,382  
Total investments, at value (cost $693,337,946)
     717,479,751  
Receivable for investments sold — delayed delivery securities
     21,716,625  
Receivable for Fund shares sold
     78,300  
Interest receivable
     3,768,406  
Other assets
     38,494  
Total assets
     743,081,576  
Liabilities
  
Payable for investments purchased
     10,865,179  
Payable for investments purchased — when-issued and delayed delivery securities
     108,618,481  
Payable for Fund shares redeemed
     3,850,495  
Payable upon return of securities loaned
     131,043,703  
Payable for daily variation margin on open futures contracts
     186,597  
Distributions payable
     210,611  
Accrued management fee
     175,292  
Other accrued expenses and payables
     600,224  
Total liabilities
     255,550,582  
Net assets, at value
   $ 487,530,994  
 
* Represents collateral on securities loaned.
 
The accompanying notes are an integral part of the financial statements.
 
Statement of Assets and Liabilities as of October 31, 2010 (continued)
  
Net Assets Consist of:
  
Accumulated distributions in excess of net investment income
     (210,611 )
Net unrealized appreciation (depreciation) on:
Investments
     24,141,805  
Futures
     (397,750 )
Accumulated net realized gain (loss)
     (292,702,545 )
Paid-in capital
     756,700,095  
Net assets, at value
   $ 487,530,994  
Net Asset Value
  
Class A
Net Asset Value and redemption price per share ($241,773,511 ÷ 25,582,449 outstanding shares of beneficial interest, $.001 par value, unlimited number of shares authorized)
   $ 9.45  
Maximum offering price per share (100 ÷ 95.50 of $9.45)
   $ 9.90  
Class B
Net Asset Value, offering and redemption price (subject to contingent deferred sales charge) per share ($7,625,418 ÷ 807,445 outstanding shares of beneficial interest, $.001 par value, unlimited number of shares authorized)
   $ 9.44  
Class C
Net Asset Value, offering and redemption price (subject to contingent deferred sales charge) per share ($24,028,568 ÷ 2,542,808 outstanding shares of beneficial interest, $.001 par value, unlimited number of shares authorized)
   $ 9.45  
Class R
Net Asset Value, offering and redemption price per share ($1,706,691 ÷ 179,688 outstanding shares of beneficial interest, $.001 par value, unlimited number of shares authorized)
   $ 9.50  
Class S
Net Asset Value, offering and redemption price per share ($49,994,275 ÷ 5,293,477 outstanding shares of beneficial interest, $.001 par value, unlimited number of shares authorized)
   $ 9.44  
Institutional Class
Net Asset Value, offering and redemption price per share ($162,402,531 ÷ 17,188,424 outstanding shares of beneficial interest, $.001 par value, unlimited number of shares authorized)
   $ 9.45  
 
The accompanying notes are an integral part of the financial statements.
 
Statement of Operations
for the year ended October 31, 2010
  
Investment Income
  
Income:
Interest
   $ 20,885,384  
Income distributions — Central Cash Management Fund
     192,955  
Securities lending income, including income from Daily Assets Fund Institutional, net of borrower rebates
     34,149  
Total income
     21,112,488  
Expenses:
Management fee
     2,204,902  
Administration fee
     551,226  
Services to shareholders
     1,191,410  
Distribution and service fees
     1,040,560  
Custodian fee
     21,938  
Professional fees
     86,698  
Trustees' fees and expenses
     17,261  
Reports to shareholders
     53,613  
Registration fees
     81,133  
Other
     53,780  
Total expenses before expense reductions
     5,302,521  
Expense reductions
     (839,809 )
Total expenses after expense reductions
     4,462,712  
Net investment income
     16,649,776  
Realized and Unrealized Gain (Loss)
  
Net realized gain (loss) from:
Investments
     33,423,956  
Futures
     (4,770,557 )
      28,653,399  
Change in net unrealized appreciation (depreciation) on:
Investments
     (5,278,969 )
Futures
     (229,022 )
      (5,507,991 )
Net gain (loss)
     23,145,408  
Net increase (decrease) in net assets resulting from operations
   $ 39,795,184  
 
The accompanying notes are an integral part of the financial statements.
 
Statement of Changes in Net Assets
   
Years Ended October 31,
  
Increase (Decrease) in Net Assets
  
2010
    
2009
  
Operations:
Net investment income
   $ 16,649,776     $ 58,621,652  
Net realized gain (loss)
     28,653,399       (304,109,002 )
Change in net unrealized appreciation (depreciation)
     (5,507,991 )     290,990,902  
Net increase (decrease) in net assets resulting from operations
     39,795,184       45,503,552  
Distributions to shareholders from:
Net investment income:
Class A
     (8,026,850 )     (20,504,435 )
Class B
     (207,739 )     (642,236 )
Class C
     (610,609 )     (1,577,820 )
Class R
     (80,031 )     (146,709 )
Class S
     (1,600,668 )     (3,449,579 )
Institutional Class
     (6,123,556 )     (32,325,189 )
Total distributions
     (16,649,453 )     (58,645,968 )
Fund share transactions:
Proceeds from shares sold
     81,169,542       306,250,462  
Reinvestment of distributions
     14,948,932       55,035,286  
Cost of shares redeemed
     (285,411,462 )     (1,157,988,518 )
Redemption fees
     —       19,275  
Net increase (decrease) in net assets from Fund share transactions
     (189,292,988 )     (796,683,495 )
Increase from regulatory settlements (see Note H)
     1,560       —  
Increase (decrease) in net assets
     (166,145,697 )     (809,825,911 )
Net assets at beginning of period
     653,676,691       1,463,502,602  
Net assets at end of period (including accumulated distributions in excess of net investment income of $210,611 and $321,578, respectively)
   $ 487,530,994     $ 653,676,691  
 
The accompanying notes are an integral part of the financial statements.
 
Financial Highlights
Class A
Years Ended October 31,
  
2010
    
2009
    
2008
    
2007
    
2006
  
Selected Per Share Data
  
Net asset value, beginning of period
   $ 9.04     $ 9.01     $ 10.66     $ 10.72     $ 10.73  
Income (loss) from investment operations:
Net investment incomea
     .27       .42       .51       .49       .47  
Net realized and unrealized gain (loss)
     .41       .02 b     (1.65 )     (.06 )     .02  
Total from investment operations
     .68       .44       (1.14 )     .43       .49  
Less distributions from:
Net investment income
     (.27 )     (.41 )     (.51 )     (.49 )     (.48 )
Net realized gains
     —       —       —       —       (.02 )
Total distributions
     (.27 )     (.41 )     (.51 )     (.49 )     (.50 )
Redemption fees
     —       .00 *     .00 *     .00 *     .00 *
Net asset value, end of period
   $ 9.45     $ 9.04     $ 9.01     $ 10.66     $ 10.72  
Total Return (%)c,d
     7.64       5.18       (11.17 )     4.14       4.72  
Ratios to Average Net Assets and Supplemental Data
  
Net assets, end of period ($ millions)
     242       313       562       788       611  
Ratio of expenses before expense reductions (%)
     1.07       1.05       .97       .99       .95  
Ratio of expenses after expense reductions (%)
     .87       .78       .80       .80       .82  
Ratio of net investment income (%)
     2.96       4.84       4.93       4.64       4.50  
Portfolio turnover rate (%)
     293       258       223       194       173  
a Based on average shares outstanding during the period.
b The amount of net realized and unrealized gain shown for a share outstanding for the period ended October 31, 2009 does not correspond with the aggregate net loss on investments for the period due to the timing of sales and repurchases of Fund shares in relation to fluctuating market values of the investments of the Fund.
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.
* Amount is less than $.005.
  
 

Class B
Years Ended October 31,
  
2010
    
2009
    
2008
    
2007
    
2006
  
Selected Per Share Data
  
Net asset value, beginning of period
   $ 9.04     $ 9.00     $ 10.65     $ 10.71     $ 10.72  
Income (loss) from investment operations:
Net investment incomea
     .20       .36       .43       .41       .39  
Net realized and unrealized gain (loss)
     .40       .02 b     (1.65 )     (.06 )     .02  
Total from investment operations
     .60       .38       (1.22 )     .35       .41  
Less distributions from:
Net investment income
     (.20 )     (.34 )     (.43 )     (.41 )     (.40 )
Net realized gains
     —       —       —       —       (.02 )
Total distributions
     (.20 )     (.34 )     (.43 )     (.41 )     (.42 )
Redemption fees
     —       .00 *     .00 *     .00 *     .00 *
Net asset value, end of period
   $ 9.44     $ 9.04     $ 9.00     $ 10.65     $ 10.71  
Total Return (%)c,d
     6.73       4.37       (11.75 )     3.36       3.94  
Ratios to Average Net Assets and Supplemental Data
  
Net assets, end of period ($ millions)
     8       12       23       31       35  
Ratio of expenses before expense reductions (%)
     1.77       1.84       1.72       1.75       1.67  
Ratio of expenses after expense reductions (%)
     1.61       1.55       1.55       1.55       1.57  
Ratio of net investment income (%)
     2.22       4.07       4.18       3.89       3.75  
Portfolio turnover rate (%)
     293       258       223       194       173  
a Based on average shares outstanding during the period.
b The amount of net realized and unrealized gain shown for a share outstanding for the period ended October 31, 2009 does not correspond with the aggregate net loss on investments for the period due to the timing of sales and repurchases of Fund shares in relation to fluctuating market values of the investments of the Fund.
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.
* Amount is less than $.005.
  
 

Class C
Years Ended October 31,
  
2010
    
2009
    
2008
    
2007
    
2006
  
Selected Per Share Data
  
Net asset value, beginning of period
   $ 9.04     $ 9.01     $ 10.66     $ 10.72     $ 10.73  
Income (loss) from investment operations:
Net investment incomea
     .20       .36       .43       .41       .39  
Net realized and unrealized gain (loss)
     .41       .01 b     (1.65 )     (.06 )     .02  
Total from investment operations
     .61       .37       (1.22 )     .35       .41  
Less distributions from:
Net investment income
     (.20 )     (.34 )     (.43 )     (.41 )     (.40 )
Net realized gains
     —       —       —       —       (.02 )
Total distributions
     (.20 )     (.34 )     (.43 )     (.41 )     (.42 )
Redemption fees
     —       .00 *     .00 *     .00 *     .00 *
Net asset value, end of period
   $ 9.45     $ 9.04     $ 9.01     $ 10.66     $ 10.72  
Total Return (%)c,d
     6.85       4.36       (11.84 )     3.37       3.94  
Ratios to Average Net Assets and Supplemental Data
  
Net assets, end of period ($ millions)
     24       33       48       69       55  
Ratio of expenses before expense reductions (%)
     1.72       1.74       1.66       1.68       1.63  
Ratio of expenses after expense reductions (%)
     1.60       1.55       1.55       1.55       1.57  
Ratio of net investment income (%)
     2.23       4.07       4.18       3.89       3.75  
Portfolio turnover rate (%)
     293       258       223       194       173  
a Based on average shares outstanding during the period.
b The amount of net realized and unrealized gain shown for a share outstanding for the period ended October 31, 2009 does not correspond with the aggregate net loss on investments for the period due to the timing of sales and repurchases of Fund shares in relation to fluctuating market values of the investments of the Fund.
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.
* Amount is less than $.005.
  
 

Class R
Years Ended October 31,
  
2010
    
2009
    
2008
    
2007
    
2006
  
Selected Per Share Data
  
Net asset value, beginning of period
   $ 9.09     $ 9.05     $ 10.71     $ 10.77     $ 10.77  
Income (loss) from investment operations:
Net investment incomea
     .25       .40       .48       .47       .45  
Net realized and unrealized gain (loss)
     .41       .03 b     (1.65 )     (.06 )     .02  
Total from investment operations
     .66       .43       (1.17 )     .41       .47  
Less distributions from:
Net investment income
     (.25 )     (.39 )     (.49 )     (.47 )     (.45 )
Net realized gains
     —       —       —       —       (.02 )
Total distributions
     (.25 )     (.39 )     (.49 )     (.47 )     (.47 )
Redemption fees
     —       .00 *     .00 *     .00 *     .00 *
Net asset value, end of period
   $ 9.50     $ 9.09     $ 9.05     $ 10.71     $ 10.77  
Total Return (%)c
     7.39       5.02       (11.41 )     3.88       4.56  
Ratios to Average Net Assets and Supplemental Data
  
Net assets, end of period ($ millions)
     2       3       3       5       10  
Ratio of expenses before expense reductions (%)
     1.13       1.35       1.18       1.16       1.12  
Ratio of expenses after expense reductions (%)
     1.08       1.06       1.05       1.05       1.08  
Ratio of net investment income (%)
     2.75       4.57       4.68       4.39       4.24  
Portfolio turnover rate (%)
     293       258       223       194       173  
a Based on average shares outstanding during the period.
b The amount of net realized and unrealized gain shown for a share outstanding for the period ended October 31, 2009 does not correspond with the aggregate net loss on investments for the period due to the timing of sales and repurchases of Fund shares in relation to fluctuating market values of the investments of the Fund.
c Total return would have been lower had certain expenses not been reduced.
* Amount is less than $.005.
  
 

Class S
Years Ended October 31,
  
2010
    
2009
    
2008
    
2007
    
2006
  
Selected Per Share Data
  
Net asset value, beginning of period
   $ 9.04     $ 9.00     $ 10.65     $ 10.71     $ 10.73  
Income (loss) from investment operations:
Net investment incomea
     .29       .44       .53       .52       .49  
Net realized and unrealized gain (loss)
     .40       .03 b     (1.65 )     (.06 )     .00 *
Total from investment operations
     .69       .47       (1.12 )     .46       .49  
Less distributions from:
Net investment income
     (.29 )     (.43 )     (.53 )     (.52 )     (.49 )
Net realized gains
     —       —       —       —       (.02 )
Total distributions
     (.29 )     (.43 )     (.53 )     (.52 )     (.51 )
Redemption fees
     —       .00 *     .00 *     .00 *     .00 *
Net asset value, end of period
   $ 9.44     $ 9.04     $ 9.00     $ 10.65     $ 10.71  
Total Return (%)c
     7.71       5.42       (10.86 )     4.40       4.73  
Ratios to Average Net Assets and Supplemental Data
  
Net assets, end of period ($ millions)
     50       54       86       133       113  
Ratio of expenses before expense reductions (%)
     .80       .76       .80       .77       .93  
Ratio of expenses after expense reductions (%)
     .70       .56       .55       .55       .67  
Ratio of net investment income (%)
     3.13       5.06       5.18       4.89       4.65  
Portfolio turnover rate (%)
     293       258       223       194       173  
a Based on average shares outstanding during the period.
b The amount of net realized and unrealized gain shown for a share outstanding for the period ended October 31, 2009 does not correspond with the aggregate net loss on investments for the period due to the timing of sales and repurchases of Fund shares in relation to fluctuating market values of the investments of the Fund.
c Total return would have been lower had certain expenses not been reduced.
* Amount is less than $.005.
  
 

Institutional Class
Years Ended October 31,
  
2010
    
2009
    
2008
    
2007
    
2006
  
Selected Per Share Data
  
Net asset value, beginning of period
   $ 9.04     $ 9.01     $ 10.66     $ 10.72     $ 10.73  
Income (loss) from investment operations:
Net investment incomea
     .30       .44       .54       .52       .50  
Net realized and unrealized gain (loss)
     .41       .02 b     (1.66 )     (.06 )     .01  
Total from investment operations
     .71       .46       (1.12 )     .46       .51  
Less distributions from:
Net investment income
     (.30 )     (.43 )     (.53 )     (.52 )     (.50 )
Net realized gains
     —       —       —       —       (.02 )
Total distributions
     (.30 )     (.43 )     (.53 )     (.52 )     (.52 )
Redemption fees
     —       .00 *     .00 *     .00 *     .00 *
Net asset value, end of period
   $ 9.45     $ 9.04     $ 9.01     $ 10.66     $ 10.72  
Total Return (%)c
     7.93       5.42       (10.94 )     4.40       4.98  
Ratios to Average Net Assets and Supplemental Data
  
Net assets, end of period ($ millions)
     162       239       740       624       599  
Ratio of expenses before expense reductions (%)
     .70       .68       .58       .59       .61  
Ratio of expenses after expense reductions (%)
     .60       .55       .55       .55       .58  
Ratio of net investment income (%)
     3.23       5.07       5.18       4.89       4.74  
Portfolio turnover rate (%)
     293       258       223       194       173  
a Based on average shares outstanding during the period.
b The amount of net realized and unrealized gain shown for a share outstanding for the period ended October 31, 2009 does not correspond with the aggregate net loss on investments for the period due to the timing of sales and repurchases of Fund shares in relation to fluctuating market values of the investments of the Fund.
c Total return would have been lower had certain expenses not been reduced.
* Amount is less than $.005.
  
 
Notes to Financial Statements
 
A. Organization and Significant Accounting Policies
 
DWS Core Fixed Income 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. Class R shares are only available to participants in certain retirement plans and are offered to investors without an initial sales charge or contingent deferred sales charge. 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.
 
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.
 
Debt securities are valued by independent pricing services approved by the Fund's Board. If the pricing services are unable to provide valuations, securities are valued at the most recent bid quotation or evaluated price, as applicable, obtained from one or more broker-dealers. Such services may use various pricing techniques which take into account appropriate factors such as yield, quality, coupon rate, maturity, type of issue, trading characteristics and other data, as well as broker quotes. These securities are generally categorized as Level 2.
 
Futures contracts are generally valued at the settlement prices established each day on the exchange on which they are traded and are categorized as Level 1.
 
Money market instruments purchased with an original or remaining maturity of sixty days or less, maturing at par, are valued at amortized cost, which approximates value, and are categorized as Level 2. Investments in open-end investment companies are valued at their net asset value each business day and are categorized as Level 1.
 
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 Board and are generally categorized as Level 3. 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.
 
Securities Lending. The Fund lends securities to certain financial institutions. The Fund retains beneficial ownership of the securities it has loaned and continues to receive interest and dividends paid by the issuer of securities and to participate in any changes in their market value. The Fund requires the borrowers of the securities to maintain collateral with the Fund consisting of either cash or liquid, unencumbered assets having a value at least equal to the value of the securities loaned. When the collateral falls below specified amounts, the lending agent will use its best effort to obtain additional collateral on the next business day to meet required amounts under the security lending agreement. The Fund may invest the cash collateral into a joint trading account in an affiliated money market fund pursuant to Exemptive Orders issued by the SEC. The Fund receives compensation for lending its securities either in the form of fees or by earning interest on invested cash collateral net of borrower rebates and fees paid to a lending agent. Either the Fund or the borrower may terminate the loan. There may be risks of delay and costs in recovery of securities or even loss of rights in the collateral should the borrower of the securities fail financially. The Fund is also subject to all investment risks associated with the reinvestment of any cash collateral received, including, but not limited to, interest rate, credit and liquidity risk associated with such investments.
 
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.
 
Federal Income Taxes. The Fund's policy is to comply with the requirements of the Internal Revenue Code, as amended, which are applicable to regulated investment companies, and to distribute all of its taxable income to its shareholders.
 
At October 31, 2010, the Fund had a net tax basis capital loss carryforward of approximately $292,903,000, which may be applied against any realized net taxable capital gains of each succeeding year until fully utilized or until October 31, 2017 (the expiration date), whichever occurs first.
 
During the year ended October 31, 2010, the Fund utilized $27,731,000 of prior year capital loss carryforward.
 
The Fund has reviewed the tax positions for the open tax years as of October 31, 2010 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 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 primarily to 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.
 
At October 31, 2010, the Fund's components of distributable earnings (accumulated losses) on a tax-basis were as follows:
Capital loss carryforwards
   $ (292,903,000 )
Net unrealized appreciation (depreciation) on investments
   $ 24,021,491  
 
In addition, the tax character of distributions paid to shareholders by the Fund is summarized as follows:
   
Years Ended October 31,
  
   
2010
    
2009
  
Distributions from ordinary income*
   $ 16,649,453     $ 58,645,968  
 
*For tax purposes, short-term capital gains distributions are considered ordinary income distributions.
 
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 transactions are reported on trade date. Interest income is recorded on the accrual basis. Dividend income is recorded on the ex-dividend date. Realized gains and losses from investment transactions are recorded on an identified cost basis. All discounts and premiums are accreted/amortized for both tax and financial reporting purposes with the exception of securities in default of principal.
 
B. Derivative Instruments
 
Futures Contracts. A futures contract is an agreement between a buyer or seller and an established futures exchange or its clearinghouse in which the buyer or seller agrees to take or make a delivery of a specific amount of a financial instrument at a specified price on a specific date (settlement date). For the year ended October 31, 2010, the Fund entered into interest rate futures to gain exposure to different parts of the yield curve while managing overall duration.
 
Futures contracts are valued at the most recent settlement price. Upon entering into a futures contract, the Fund is required to deposit with a financial intermediary cash or securities ("initial margin") in an amount equal to a certain percentage of the face value indicated in the futures contract. Subsequent payments ("variation margin") are made or received by the Fund dependent upon the daily fluctuations in the value and are recorded for financial reporting purposes as unrealized gains or losses by the Fund. Gains or losses are realized when the contract expires or is closed. Since all futures contracts are exchange traded, counterparty risk is minimized as the exchange's clearinghouse acts as the counterparty, and guarantees the futures against default.
 
Certain risks may arise upon entering into futures contracts, including the risk that an illiquid market will limit the Fund's ability to close out a futures contract prior to the settlement date and that a change in the value of a futures contract may not correlate exactly with the changes in the value of the underlying hedged security, index or currency. Risk of loss may exceed amounts recognized in the Statement of Assets and Liabilities.
 
A summary of the open futures contracts as of October 31, 2010 is included in a table following the Fund's Investment Portfolio. For the year ended October 31, 2010, the Fund invested in futures contracts with a total notional value generally indicative of a range from approximately $35,372,000 to $97,877,000.
 
The following table summarizes the value of the Fund's derivative instruments held as of October 31, 2010 and the related location in the accompanying Statement of Assets and Liabilities, presented by primary underlying risk exposure:
Liability Derivative
  
Futures Contracts
  
Interest Rate Contracts (a)
   $ (397,750 )
 
The above derivative is located in the following Statement of Assets and Liabilities account:
 
(a) Net unrealized appreciation (depreciation) on futures. Liability of Payable for daily variation margin on open futures contracts reflects unsettled variation margin.
 
Additionally, the amount of unrealized and realized gains and losses on derivative instruments recognized in Fund earnings during the year ended October 31, 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)
  
Futures Contracts
  
Interest Rate Contracts (a)
   $ (4,770,557 )
 
The above derivative is located in the following Statement of Operations account:
 
(a) Net realized gain (loss) from futures
Change in Net Unrealized Appreciation (Depreciation)
  
Futures Contracts
  
Interest Rate Contracts (a)
   $ (229,022 )
 
The above derivative is located in the following Statement of Operations account:
 
(a) Change in net unrealized appreciation (depreciation) on futures
 
C. Purchases and Sales of Securities
 
During the year ended October 31, 2010, purchases and sales of investment securities (excluding short-term investments and US Treasury obligations) aggregated $1,116,895,264 and $1,260,877,340, respectively. Purchases and sales of US Treasury obligations aggregated $420,781,089 and $399,581,810, respectively.
 
D. 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.
 
Effective on or about January 3, 2011, Fischer Francis Trees & Watts, Inc. (FFTW), New York, New York, will serve as the sub-advisor to the Fund. FFTW will conduct investment research and be responsible for the purchase, sale or exchange of the fund's assets. FFTW will be paid by the Advisor, not the Fund, for the services FFTW will provide to 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 $1.5 billion of the Fund's average daily net assets
     .400 %
Next $1.75 billion of such net assets
     .385 %
Next $1.75 billion of such net assets
     .370 %
Over $5 billion of such net assets
     .355 %
 
Accordingly, for the year ended October 31, 2010, the fee pursuant to the Investment Management Agreement was equivalent to an annual effective rate of 0.40% of the Fund's average daily net assets.
 
For the period from November 1, 2009 through September 30, 2010, the Advisor voluntarily 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
.86%
Class B
1.61%
Class C
1.61%
Class R
1.11%
Class S
.71%
Institutional Class
.61%
 
In addition, for the period from November 1, 2009 through September 30, 2010, the Advisor has contractually agreed to waive its fees and/or reimburse certain operating expenses of Class S shares to the extent necessary to maintain the operating expenses (excluding certain expenses such as extraordinary expenses, taxes, brokerage and interest) at 0.81%.
 
Effective October 1, 2010 through September 30, 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
.95%
Class B
1.70%
Class C
1.70%
Class R
1.20%
Class S
.80%
Institutional Class
.70%
 
For the year ended October 31, 2010, the Advisor reimbursed the Fund $75,742 of sub-recordkeeping expenses for Class S and Institutional Class 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 year ended October 31, 2010, the Administration Fee was $551,226, of which $42,300 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 for the Fund. Pursuant to a sub-transfer agency agreement between DISC and DST Systems, Inc. ("DST"), DISC has delegated certain transfer agent, dividend-paying agent and shareholder service agent functions to DST. DISC compensates DST out of the shareholder servicing fee it receives from the Fund. For the year ended October 31, 2010, the amounts charged to the Fund by DISC were as follows:
Services to Shareholders
  
Total Aggregated
    
Waived
  
Class A
   $ 412,716     $ 412,716  
Class B
     11,404       11,404  
Class C
     29,814       29,814  
Class R
     1,160       1,160  
Class S
     49,416       49,416  
Institutional Class
     126,080       126,080  
    $ 630,590     $ 630,590  
 
Distribution and Service Fees. Under the Fund's Class B, Class C and Class R 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 and 0.25% of average daily net assets of Class R 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, C and R shares. For the year ended October 31, 2010, the Distribution Fee was as follows:
Distribution Fee
  
Total Aggregated
    
Unpaid at October 31, 2010
  
Class B
   $ 69,946     $ 5,566  
Class C
     206,145       15,878  
Class R
     7,329       1,162  
    $ 283,420     $ 22,606  
 
In addition, DIDI provides information and administrative services for a fee ("Service Fee") to the shareholders of Class A, Class B, Class C and Class R at an annual rate of up to 0.25% of average daily net assets for each such class. DIDI in turn has various agreements with financial services firms that provide these services and pays these fees based upon the assets of shareholder accounts the firms service. For the year ended October 31, 2010, the Service Fee was as follows:
Service Fee
  
Total Aggregated
    
Waived
    
Unpaid at October 31, 2010
    
Annual Effective Rate
  
Class A
   $ 660,255     $ 126,774     $ 214,817       .20 %
Class B
     22,487       3,595       5,653       .20 %
Class C
     67,080       2,880       19,998       .23 %
Class R
     7,318       228       2,165       .24 %
    $ 757,140     $ 133,477     $ 242,633          
 
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 year ended October 31, 2010, aggregated $7,208.
 
In addition, DIDI receives any contingent deferred sales charge ("CDSC") from Class B share redemptions occurring within six years of purchase and Class C share redemptions occurring within one year of purchase. There is no such charge upon redemption of any share appreciation or reinvested dividends. The CDSC is based on declining rates ranging from 4% to 1% for Class B and 1% for Class C, of the value of the shares redeemed. For the year ended October 31, 2010, the CDSC for Class B and C shares aggregated $16,956 and $1,335, respectively. A deferred sales charge of up to 0.85% is assessed on certain redemptions of Class A shares. For the year ended October 31, 2010, DIDI received $56 for Class A shares.
 
Typesetting and Filing Service Fees. Under an agreement with DIMA, DIMA is compensated for providing typesetting and certain regulatory filing services to the Fund. For the year ended October 31, 2010, the amount charged to the Fund by DIMA included in the Statement of Operations under "reports to shareholders" aggregated $19,795, of which $8,844 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.
 
Affiliated Cash Management Vehicles. The Fund may invest uninvested cash balances in Central Cash Management Fund and other affiliated money market funds managed by the Advisor. The Fund indirectly bears its proportionate share of the expenses of the underlying money market funds. Central Cash Management Fund does not pay the Advisor an investment management fee. Central Cash Management Fund seeks a high level of current income consistent with liquidity and the preservation of capital.
 
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. Concentration of Ownership
 
From time to time, the Fund may have a concentration of several shareholder accounts holding a significant percentage of shares outstanding. Investment activities of these shareholders could have a material impact on the Fund. At October 31, 2010, there was one shareholder account that held approximately 11% of the outstanding shares of the Fund.
 
G. Share Transactions
 
The following table summarizes share and dollar activity in the Fund:
   
Year Ended October 31, 2010
    
Year Ended October 31, 2009
  
   
Shares
    
Dollars
    
Shares
    
Dollars
  
Shares sold
  
Class A
     4,753,042     $ 43,721,975       7,655,443     $ 66,827,696  
Class B
     116,954       1,074,008       128,404       1,112,409  
Class C
     183,745       1,690,162       608,613       5,289,101  
Class R
     49,868       459,997       108,193       949,756  
Class S
     1,609,117       14,748,467       1,852,239       16,100,633  
Institutional Class
     2,117,352       19,474,933       24,615,346       215,970,867  
            $ 81,169,542             $ 306,250,462  
Shares issued to shareholders in reinvestment of distributions
  
Class A
     812,640     $ 7,454,241       2,172,520     $ 18,878,870  
Class B
     18,138       165,879       55,935       485,374  
Class C
     46,514       426,429       122,118       1,061,171  
Class R
     8,619       79,374       16,681       145,884  
Class S
     142,979       1,313,002       335,136       2,910,699  
Institutional Class
     600,874       5,510,007       3,628,975       31,553,288  
            $ 14,948,932             $ 55,035,286  
Shares redeemed
  
Class A
     (14,542,406 )   $ (133,291,910 )     (37,658,512 )   $ (328,812,396 )
Class B
     (624,741 )     (5,723,157 )     (1,416,451 )     (12,321,741 )
Class C
     (1,348,140 )     (12,347,088 )     (2,430,517 )     (21,149,993 )
Class R
     (263,235 )     (2,461,367 )     (112,824 )     (983,304 )
Class S
     (2,449,886 )     (22,531,189 )     (5,785,453 )     (50,538,573 )
Institutional Class
     (11,925,363 )     (109,056,751 )     (84,044,798 )     (744,182,511 )
            $ (285,411,462 )           $ (1,157,988,518 )
Redemption fees
           $ —             $ 19,275  
Net increase (decrease)
  
Class A
     (8,976,724 )   $ (82,115,694 )     (27,830,549 )   $ (243,090,933 )
Class B
     (489,649 )     (4,483,270 )     (1,232,112 )     (10,723,958 )
Class C
     (1,117,881 )     (10,230,497 )     (1,699,786 )     (14,798,220 )
Class R
     (204,748 )     (1,921,996 )     12,050       112,368  
Class S
     (697,790 )     (6,469,720 )     (3,598,078 )     (31,525,199 )
Institutional Class
     (9,207,137 )     (84,071,811 )     (55,800,477 )     (496,657,553 )
            $ (189,292,988 )           $ (796,683,495 )
 
H. Regulatory Settlements
 
On March 30, 2010, the Fund received $1,560 as part of a settlement with the SEC by a non-affiliated third party broker. This payment is included in "Increase from regulatory settlements" in the Statement of Changes in Net Assets. The amount of the payment was less than 0.01% of the Fund's average net assets, thus having no impact on the Fund's total return.
 
I. Subsequent Event
 
The Fund's Board of Trustees approved Fischer Francis Trees & Watts, Inc. (FFTW) as the Fund's sub-advisor. FFTW is expected to conduct investment research and be responsible for the purchase, sale or exchange of the Fund's assets, effective on or about January 3, 2011.
 
Report of Independent Registered Public Accounting Firm
 
To the Trustees of DWS Advisor Funds and Shareholders of DWS Core Fixed Income Fund:
 
In our opinion, the accompanying statement of assets and liabilities, including the investment portfolio, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of DWS Core Fixed Income Fund (the "Fund") at October 31, 2010, and the results of its operations, the changes in its net assets and the financial highlights for each of the years indicated therein, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at October 31, 2010 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
Boston, Massachusetts
December 21, 2010
PricewaterhouseCoopers LLP
 
Tax Information (Unaudited)
 
A total of 14% of the dividends distributed during the fiscal year was derived from interest on US government securities, which is generally exempt from state income tax.
 
Please consult a tax advisor if you have questions about federal or state income tax laws, or on how to prepare your tax returns. If you have specific questions about your account, please call (800) 621-1048.
 
Investment Management Agreement Approval
 
Board Considerations in Connection with the Annual Review of the Investment Management Agreement and Approval of the Sub-Advisory Agreement
 
The Board of Trustees, including the Independent Trustees, approved the renewal of your Fund's investment management agreement (the "Agreement") with Deutsche Investment Management Americas Inc. ("DWS") in September 2010. The Board also approved a sub-advisory agreement (the "Sub-Advisory Agreement" and together with the Agreement, the "Agreements") between DWS and Fischer Francis Trees & Watts, Inc. ("FFTW"), pursuant to which FFTW would assume the day-to-day portfolio management responsibilities for the Fund.
 
In terms of the process that the Board followed prior to approving the Agreements, shareholders should know that:
 
• In September 2010, all of the Fund's Trustees were independent of DWS and its affiliates.
 
• The Trustees meet frequently to discuss fund matters. Each year, the Trustees dedicate substantial time to contract review matters. Over the course of several months, the Board's Contract Committee, in coordination with the Board's Fixed Income and Quant Oversight Committee, reviewed comprehensive materials received from DWS, independent third parties and independent counsel. These materials included an analysis of the Fund's performance, fees and expenses, and profitability compiled by the Fund's independent fee consultant. The Board also received extensive information throughout the year regarding performance of the Fund.
 
• The Independent Trustees regularly meet privately with their independent counsel to discuss contract review and other matters. In addition, the Independent Trustees were also advised by the Fund's independent fee consultant in the course of their review of the Fund's contractual arrangements and considered a comprehensive report prepared by the independent fee consultant in connection with their deliberations (the "IFC Report").
 
• With respect to the Sub-Advisory Agreement, the Board considered that DWS and the Fund have received an exemptive order (the "Order") from the Securities and Exchange Commission that permits DWS, subject to the approval of the Board, to select sub-advisors that are not affiliates of DWS to manage all or a portion of the Fund's assets without obtaining shareholder approval. The Board considered information provided by DWS confirming that DWS's proposal to appoint FFTW as a sub-advisor for the Fund met all the conditions of the Order.
 
• The Fixed Income and Quant Oversight Committee engaged in a comprehensive review of the operational, financial and investment capabilities of FFTW, including meeting with key investment personnel and other members of senior management of FFTW. As part of its review, the Fixed Income and Quant Oversight Committee also reviewed and considered the terms of the Sub-Advisory Agreement.
 
• In connection with reviewing the Agreements, the Board also reviewed the terms of the Fund's Rule 12b-1 plan, distribution agreement, administrative services agreement, transfer agency agreement and other material service agreements.
 
• Based on its evaluation of the information provided, the Contract Committee and the Fixed Income and Quant Oversight Committee presented their findings and recommendations to the Independent Trustees as a group. The Independent Trustees reviewed the Contract Committee's and the Fixed Income and Quant Oversight Committee's findings and recommendations and presented their recommendations to the full Board.
 
In connection with the contract review process, the Contract Committee, the Fixed Income and Quant Oversight Committee and the Board considered the factors discussed below, among others. The Board also considered that DWS and its predecessors have managed the Fund since its inception, and the Board believes that a long-term relationship with a capable, conscientious advisor is in the best interests of the Fund. The Board considered, generally, that shareholders chose to invest or remain invested in the Fund knowing that DWS managed the Fund, and that the Agreement was approved by the Fund's shareholders. DWS is part of Deutsche Bank, a major global banking institution that is engaged in a wide range of financial services. The Board believes that there are significant advantages to being part of a global asset management business that offers a wide range of investing expertise and resources, including hundreds of portfolio managers and analysts with research capabilities in many countries throughout the world.
 
While shareholders may focus primarily on fund performance and fees, the Fund's Board considered these and many other factors, including the quality and integrity of DWS's and FFTW's personnel and such other issues as back-office operations, fund valuations, and compliance policies and procedures.
 
Nature, Quality and Extent of Services. The Board considered the terms of the Agreements, including the scope of advisory services provided under the Agreements. The Board noted that, under the Agreements, DWS and FFTW would provide portfolio management services to the Fund and that, pursuant to a separate administrative services agreement, DWS provides administrative services to the Fund. The Board considered the experience and skills of senior management and investment personnel, the resources made available to such personnel, the ability of DWS to attract and retain high-quality personnel, and the organizational depth and stability of DWS. The Board reviewed the Fund's performance over short-term and long-term periods and compared those returns to various agreed-upon performance measures, including market indices and a peer universe compiled by the independent fee consultant using information supplied by Lipper Inc. ("Lipper"). The Board also noted that it has put into place a process of identifying "Focus Funds" (e.g., funds performing poorly relative to their benchmark or a peer universe compiled by Lipper), and receives more frequent reporting and information from DWS regarding such funds, along with DWS's remedial plans to address underperformance. The Board believes this process is an effective manner of identifying and addressing underperforming funds. Based on the information provided, the Board noted that for the one-, three- and five-year periods ended December 31, 2009, the Fund's performance (Class A shares) was in the 4th quartile of the applicable Lipper universe (the 1st quartile being the best performers and the 4th quartile being the worst performers). The Board also observed that the Fund has outperformed its benchmark in the one-year period and has underperformed its benchmark in the three- and five-year periods ended December 31, 2009. In connection with its ongoing review of Fund performance, the Board noted the disappointing investment performance of the Fund in recent periods and requested that DWS examine possible changes to its internal investment process and structure for the Fund and also review potential external sub-advisors for the Fund. Based on the review completed at the request of the Board, DWS recommended that FFTW be engaged as sub-advisor to provide day-to-day portfolio management services to the Fund. At its September 2010 meeting, the Board reviewed information regarding the experience and skills of FFTW's senior management and investment personnel, the resources made available to such personnel and the organizational depth and stability of FFTW. The Board also reviewed information on the performance of a composite of products managed by FFTW with similar investment objectives and strategies as the Fund.
 
On the basis of its review of the Agreements, the Board concluded that the nature, quality and extent of services to be provided by DWS and FFTW are expected to be satisfactory.
 
Fees and Expenses. The Board considered the Fund's investment management fee schedule, operating expenses, and total expense ratios, and comparative information provided by Lipper and the independent fee consultant regarding investment management fee rates paid to other investment advisors by similar funds (1st quartile being the most favorable and 4th quartile being the least favorable). With respect to management fees paid to other investment advisors by similar funds, the Board noted that the contractual fee rates paid by the Fund, which include the 0.10% fee paid to DWS under the Fund's administrative services agreement, were lower than the median (2nd quartile) of the applicable Lipper peer group (based on Lipper data provided as of December 31, 2009). With respect to the sub-advisory fee to be paid to FFTW, the Board considered the proposed fee schedule. The Board noted that the sub-advisory fee will be paid by DWS out of its fee and not directly by the Fund. The Board noted that the Fund's Class A shares total (net) operating expenses (excluding 12b-1 fees) were expected to be higher than the median (4th quartile) of the applicable Lipper expense universe (based on Lipper data provided as of December 31, 2009, and analyzing Lipper expense universe Class A expenses less any applicable 12b-1 fees) ("Lipper Universe Expenses"). The Board also reviewed data comparing each share class's total (net) operating expenses to the applicable Lipper Universe Expenses. The Board considered the Fund's management fee rate as compared to fees charged by DWS and certain of its affiliates for comparable mutual funds and considered differences in fund and fee structures between the DWS Funds. The Board also considered how the Fund's total (net) operating expenses compared to the total (net) operating expenses of a more customized peer group selected by Lipper (based on such factors as asset size). The Board also noted that the expense limitations agreed to by DWS helped to ensure that the Fund's total (net) operating expenses would remain competitive.
 
The information considered by the Board as part of its review of management fees included information regarding fees charged by DWS and its affiliates to similar institutional accounts and to similar funds offered primarily to European investors ("DWS Europe funds"), in each case as applicable. The Board observed that advisory fee rates for institutional accounts generally were lower than the management fees charged by similarly managed DWS US mutual funds ("DWS Funds"), but also took note of the differences in services provided to DWS Funds as compared to institutional accounts. In the case of DWS Europe funds, the Board observed that fee rates for DWS Europe funds generally were higher than for similarly managed DWS Funds, but noted that differences in the types of services provided to DWS Funds relative to DWS Europe funds made it difficult to compare such fees.
 
On the basis of the information provided, the Board concluded that management fees were reasonable and appropriate in light of the nature, quality and extent of services provided by DWS and to be provided by FFTW.
 
Profitability. The Board reviewed detailed information regarding revenues received by DWS under the Agreement. The Board considered the estimated costs and pre-tax profits realized by DWS from advising the DWS Funds, as well as estimates of the pre-tax profits attributable to managing the Fund in particular. The Board also received information regarding the estimated enterprise-wide profitability of DWS and its affiliates with respect to all fund services in totality and by fund. The Board reviewed DWS's methodology in allocating its costs to the management of the Fund. Based on the information provided, the Board concluded that the pre-tax profits realized by DWS in connection with the management of the Fund were not unreasonable. The Board also reviewed information regarding the profitability of certain similar investment management firms. The Board noted that while information regarding the profitability of such firms is limited (and in some cases is not necessarily prepared on a comparable basis), DWS and its affiliates' overall profitability with respect to the DWS fund complex (after taking into account distribution and other services provided to the funds by DWS and its affiliates) was lower than the overall profitability levels of many comparable firms for which such data was available. The Board did not consider the estimated profitability of FFTW with respect to the Fund. The Board noted that DWS will pay FFTW's fee out of its management fee, and its understanding that the Fund's sub-advisory fee schedule was the product of an arm's length negotiation with DWS.
 
Economies of Scale. The Board considered whether there are economies of scale with respect to the management of the Fund and whether the Fund benefits from any economies of scale. The Board noted that the Fund's management fee schedule includes fee breakpoints. The Board concluded that the Fund's fee schedule represents an appropriate sharing between the Fund and DWS of such economies of scale as may exist in the management of the Fund at current asset levels.
 
Other Benefits to DWS and FFTW and Their Affiliates. The Board also considered the character and amount of other incidental benefits received or expected to be received by DWS and FFTW and their affiliates, including any fees received by DWS for administrative services provided to the Fund and any fees received by an affiliate of DWS for distribution services. The Board also considered benefits to DWS and FFTW related to brokerage and soft-dollar allocations, including allocating brokerage to pay for research generated by parties other than the executing broker dealers, which pertain primarily to funds investing in equity securities, along with the incidental public relations benefits to DWS and FFTW related to DWS Funds advertising and cross-selling opportunities among DWS products and services. The Board concluded that management fees were reasonable in light of these fallout benefits.
 
Compliance. The Board considered the significant attention and resources dedicated by DWS to documenting and enhancing its compliance processes in recent years. The Board noted in particular (i) the experience and seniority of both DWS's chief compliance officer and the Fund's chief compliance officer; (ii) the large number of DWS compliance personnel; and (iii) the substantial commitment of resources by DWS and its affiliates to compliance matters. The Board also considered FFTW's compliance program and resources. The Board considered that DWS would oversee FFTW's compliance program and its compliance with applicable Fund policies and procedures, and considered the attention and resources DWS would dedicate to that oversight.
 
Based on all of the information considered and the conclusions reached, the Board unanimously determined that the continuation of the Agreement and the approval of the Sub-Advisory Agreement are in the best interests of the Fund. In making this determination the Board did not give particular weight to any single factor identified above. The Board considered these factors over the course of numerous meetings, certain of which were in executive session with only the Independent Trustees and their counsel present. It is possible that individual Trustees may have weighed these factors differently in reaching their individual decisions to approve the continuation of the Agreement and the approval of the Sub-Advisory Agreement.
 
Summary of Management Fee Evaluation by Independent Fee Consultant
 
October 3, 2010
 
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 2010, 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, 2008, and 2009.
 
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 have served 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 118 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 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.
 
 
Thomas H. Mack
 
Board Members and Officers
 
The following table presents certain information regarding the Board Members and Officers of the Trust as of October 31, 2010. Each Board Member's year of birth is set forth in parentheses after his or her name. Unless otherwise noted, (i) each Board Member has engaged in the principal occupation(s) noted in the table for at least the most recent five years, although not necessarily in the same capacity; and (ii) the address of each Independent Board Member is c/o Paul K. Freeman, Independent Chairman, DWS Funds, PO Box 101833, Denver, CO 80250-1833. Except as otherwise noted below, the term of office for each Board Member is until the election and qualification of a successor, or until such Board Member sooner dies, resigns, is removed or as otherwise provided in the governing documents of the fund. Because the fund does not hold an annual meeting of shareholders, each Board Member will hold office for an indeterminate period. The Board Members may also serve in similar capacities with other funds in the fund complex. The Length of Time Served represents the year in which the Board Member joined the board of one or more DWS funds now overseen by the Board.
Independent Board Members
Name, Year of Birth, Position with the Fund and Length of Time Served1
Business Experience and Directorships During the Past Five Years
Number of Funds in DWS Fund Complex Overseen
Paul K. Freeman (1950)
Chairperson since 2009
Board Member since 1993
Consultant, World Bank/Inter-American Development Bank; Governing Council of the Independent Directors Council (governance, education committees); formerly, Project Leader, International Institute for Applied Systems Analysis (1998-2001); Chief Executive Officer, The Eric Group, Inc. (environmental insurance) (1986-1998)
123
John W. Ballantine (1946)
Board Member since 1999
Retired; formerly, Executive Vice President and Chief Risk Management Officer, First Chicago NBD Corporation/The First National Bank of Chicago (1996-1998); Executive Vice President and Head of International Banking (1995-1996). Directorships: Healthways, Inc. (provider of disease and care management services); Portland General Electric (utility company); Stockwell Capital Investments PLC (private equity). Former Directorships: First Oak Brook Bancshares, Inc. and Oak Brook Bank; Prisma Energy International
123
Henry P. Becton, Jr. (1943)
Board Member since 1990
Vice Chair and former President, WGBH Educational Foundation. Directorships: Association of Public Television Stations; Lead Director, Becton Dickinson and Company3 (medical technology company); Lead Director, Belo Corporation3 (media company); Public Radio International; Public Radio Exchange (PRX); The PBS Foundation. Former Directorships: Boston Museum of Science; American Public Television; Concord Academy; New England Aquarium; Mass. Corporation for Educational Telecommunications; Committee for Economic Development; Public Broadcasting Service
123
Dawn-Marie Driscoll (1946)
Board Member since 1987
President, Driscoll Associates (consulting firm); Executive Fellow, Center for Business Ethics, Bentley University; formerly, Partner, Palmer & Dodge (1988-1990); Vice President of Corporate Affairs and General Counsel, Filene's (1978-1988). Directorships: Trustee of 22 open-end mutual funds managed by Sun Capital Advisers, Inc. (since 2007); Director of ICI Mutual Insurance Company (since 2007); Advisory Board, Center for Business Ethics, Bentley University; Trustee, Southwest Florida Community Foundation (charitable organization). Former Directorships: Investment Company Institute (audit, executive, nominating committees) and Independent Directors Council (governance, executive committees)
123
Keith R. Fox (1954)
Board Member since 1996
Managing General Partner, Exeter Capital Partners (a series of private investment funds). Directorships: Progressive Holding Corporation (kitchen goods importer and distributor); Box Top Media Inc. (advertising); The Kennel Shop (retailer); former Chairman, National Association of Small Business Investment Companies
123
Kenneth C. Froewiss (1945)
Board Member since 2001
Adjunct Professor of Finance, NYU Stern School of Business (September 2009-present; Clinical Professor from 1997-September 2009); Member, Finance Committee, Association for Asian Studies (2002-present); Director, Mitsui Sumitomo Insurance Group (US) (2004-present); prior thereto, Managing Director, J.P. Morgan (investment banking firm) (until 1996)
123
Richard J. Herring (1946)
Board Member since 1990
Jacob Safra Professor of International Banking and Professor, Finance Department, The Wharton School, University of Pennsylvania (since July 1972); Co-Director, Wharton Financial Institutions Center (since July 2000); Director, Japan Equity Fund, Inc. (since September 2007), Thai Capital Fund, Inc. (since September 2007), Singapore Fund, Inc. (since September 2007); Independent Director of Barclays Bank Delaware (since September 2010). Formerly, Vice Dean and Director, Wharton Undergraduate Division (July 1995-June 2000); Director, Lauder Institute of International Management Studies (July 2000-June 2006)
123
William McClayton (1944)
Board Member since 2004+
Private equity investor (since October 2009); previously, Managing Director, Diamond Management & Technology Consultants, Inc. (global consulting firm) (2001-2009); Directorship: Board of Managers, YMCA of Metropolitan Chicago; formerly: Senior Partner, Arthur Andersen LLP (accounting) (1966-2001); Trustee, Ravinia Festival
123
Rebecca W. Rimel (1951)
Board Member since 1995
President and Chief Executive Officer, The Pew Charitable Trusts (charitable organization) (1994 to present); Trustee, Thomas Jefferson Foundation (charitable organization) (1994 to present); Trustee, Executive Committee, Philadelphia Chamber of Commerce (2001-2007); Trustee, Pro Publica (2007-present) (charitable organization); Director, CardioNet, Inc.2 (2009-present) (health care). Formerly, Executive Vice President, The Glenmede Trust Company (investment trust and wealth management) (1983-2004); Board Member, Investor Education (charitable organization) (2004-2005); Director, Viasys Health Care2 (January 2007-June 2007)
123
William N. Searcy, Jr. (1946)
Board Member since 1993
Private investor since October 2003; Trustee of 22 open-end mutual funds managed by Sun Capital Advisers, Inc. (since October 1998). Formerly, Pension & Savings Trust Officer, Sprint Corporation2 (telecommunications) (November 1989-September 2003)
123
Jean Gleason Stromberg (1943)
Board Member since 1997
Retired. Formerly, Consultant (1997-2001); Director, Financial Markets US Government Accountability Office (1996-1997); Partner, Fulbright & Jaworski, L.L.P. (law firm) (1978-1996). Directorships: The William and Flora Hewlett Foundation. Former Directorships: Service Source, Inc., Mutual Fund Directors Forum (2002-2004), American Bar Retirement Association (funding vehicle for retirement plans) (1987-1990 and 1994-1996)
123
Robert H. Wadsworth
(1940)
Board Member since 1999
President, Robert H. Wadsworth & Associates, Inc. (consulting firm) (1983 to present); Director, The Phoenix Boys Choir Association
126
 

Officers4
Name, Year of Birth, Position with the Fund and Length of Time Served5
Principal Occupation(s) During Past 5 Years and Other Directorships Held
Michael G. Clark6 (1965)
President, 2006-present
Managing Director3, Deutsche Asset Management (2006-present); President of DWS family of funds; Director, ICI Mutual Insurance Company (since October 2007); formerly, Director of Fund Board Relations (2004-2006) and Director of Product Development (2000-2004), Merrill Lynch Investment Managers; Senior Vice President Operations, Merrill Lynch Asset Management (1999-2000)
Ingo Gefeke7 (1967)
Executive Vice President since 2010
Managing Director3, Deutsche Asset Management; Global Head of Distribution and Product Management, DWS Global Head of Trading and Securities Lending. Member of the Board of Directors of DWS Investment GmbH Frankfurt (since July 2009) and DWS Holding & Service GmbH Frankfurt (since January 2010); formerly, Global Chief Administrative Officer, Deutsche Asset Management (2004-2009); Global Chief Operating Officer, Global Transaction Banking, Deutsche Bank AG, New York (2001-2004); Chief Operating Officer, Global Banking Division Americas, Deutsche Bank AG, New York (1999-2001); Central Management, Global Banking Services, Deutsche Bank AG, Frankfurt (1998-1999); Relationship Management, Deutsche Bank AG, Tokyo, Japan (1997-1998)
John Millette8 (1962)
Vice President and Secretary, 1999-present
Director3, Deutsche Asset Management
Paul H. Schubert6 (1963)
Chief Financial Officer, 2004-present
Treasurer, 2005-present
Managing Director3, Deutsche Asset Management (since July 2004); formerly, Executive Director, Head of Mutual Fund Services and Treasurer for UBS Family of Funds (1998-2004); Vice President and Director of Mutual Fund Finance at UBS Global Asset Management (1994-1998)
Caroline Pearson8 (1962)
Chief Legal Officer, April 2010-present
Managing Director3, Deutsche Asset Management; formerly, Assistant Secretary for DWS family of funds (1997-2010)
Rita Rubin9 (1970)
Assistant Secretary, 2009-present
Vice President and Counsel, Deutsche Asset Management (since October 2007); formerly, Vice President, Morgan Stanley Investment Management (2004-2007)
Paul Antosca8 (1957)
Assistant Treasurer, 2007-present
Director3, Deutsche Asset Management (since 2006); Vice President, The Manufacturers Life Insurance Company (U.S.A.) (1990-2006)
Jack Clark8 (1967)
Assistant Treasurer, 2007-present
Director3, Deutsche Asset Management (since 2007); formerly, Vice President, State Street Corporation (2002-2007)
Diane Kenneally8 (1966)
Assistant Treasurer, 2007-present
Director3, Deutsche Asset Management
John Caruso10 (1965)
Anti-Money Laundering Compliance Officer, 2010-present
Managing Director3, Deutsche Asset Management
Robert Kloby9 (1962)
Chief Compliance Officer, 2006-present
Managing Director3, Deutsche Asset Management
 
1 The length of time served represents the year in which the Board Member joined the board of one or more DWS funds currently overseen by the Board.
 
2 A publicly held company with securities registered pursuant to Section 12 of the Securities Exchange Act of 1934.
 
3 Executive title, not a board directorship.
 
4 As a result of their respective positions held with the Advisor, these individuals are considered "interested persons" of the Advisor within the meaning of the 1940 Act. Interested persons receive no compensation from the fund.
 
5 The length of time served represents the year in which the officer was first elected in such capacity for one or more DWS funds.
 
6 Address: 100 Plaza One, Jersey City, NJ 07311.
 
7 The mailing address of Mr. Gefeke is 345 Park Avenue, New York, New York 10154. In addition, Mr. Gefeke is an interested Board Member of certain DWS funds by virtue of his positions with Deutsche Asset Management. As an interested person, Mr. Gefeke receives no compensation from the fund.
 
8 Address: One Beacon Street, Boston, MA 02108.
 
9 Address: 280 Park Avenue, New York, New York 10017.
 
10 Address: 60 Wall Street, New York, New York 10005.
 
The fund's Statement of Additional Information ("SAI") includes additional information about the Board Members. The SAI is available, without charge, upon request. If you would like to request a copy of the SAI, you may do so by calling the following toll-free number: (800) 621-1048.
 
Account Management Resources
For shareholders of Class A, B, C, S and Institutional Class
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
  
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 are 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
  
SFXAX
SFXBX
SFXCX
SFXSX
MFINX
CUSIP Number
  
23339E 889
23339E 871
23339E 863
23339E 541
23339E 848
Fund Number
  
493
693
793
2394
593
 

For shareholders of Class R
Automated Information Line
  
DWS Investments Flex Plan Access (800) 532-8411
24-hour access to your retirement plan account.
Web Site
  
www.dws-investments.com
Click "Retirement Plans" to reallocate assets, process transactions and review your funds through our secure online account access.
Obtain prospectuses and applications, blank forms, interactive worksheets, news about DWS funds, subscription to fund updates by e-mail, retirement planning information, and more.
For More Information
  
(800) 543-5776
To speak with a service representative.
Written Correspondence
  
DWS Investments Service Company
222 South Riverside Plaza
Chicago, IL 60606-5806
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 R
Nasdaq Symbol
  
SFXRX
CUSIP Number
  
23339E 855
Fund Number
  
1504
 
 
   
ITEM 2.
CODE OF ETHICS
   
 
As of the end of the period covered by this report, the registrant has adopted a code of ethics, as defined in Item 2 of Form N-CSR, that applies to its Principal Executive Officer and Principal Financial Officer.
 
There have been no amendments to, or waivers from, a provision of the code of ethics during the period covered by this report that would require disclosure under Item 2.
 
A copy of the code of ethics is filed as an exhibit to this Form N-CSR.
   
ITEM 3.
AUDIT COMMITTEE FINANCIAL EXPERT
   
 
The fund’s audit committee is comprised solely of trustees who are "independent" (as such term has been defined by the Securities and Exchange Commission ("SEC") in regulations implementing Section 407 of the Sarbanes-Oxley Act (the "Regulations")). The fund’s Board of Trustees has determined that there are several "audit committee financial experts" (as such term has been defined by the Regulations) serving on the fund’s audit committee including Mr. William McClayton, the chair of the fund’s audit committee. An “audit committee financial expert” is not an “expert” for any purpose, including for purposes of Section 11 of the Securities Act of 1933 and the designation or identification of a person as an “audit committee financial expert” does not impose on such person any duties, obligations or liability that are greater than the duties, obligations and liability imposed on such person as a member of the audit committee and board of directors in the absence of such designation or identification.
   
ITEM 4.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
   
 
DWS CORE FIXED INCOME FUND
FORM N-CSR DISCLOSURE RE: AUDIT FEES
The following table shows the amount of fees that PricewaterhouseCoopers, LLP (“PWC”), the Fund’s independent registered public accounting firm, billed to the Fund during the Fund’s last two fiscal years.  The Audit Committee approved in advance all audit services and non-audit services that PWC provided to the Fund.
 
Services that the Fund’s Independent Registered Public Accounting Firm Billed to the Fund
Fiscal Year Ended October 31,
  
Audit Fees Billed to Fund
    
Audit-Related
Fees Billed to Fund
    
Tax Fees Billed to Fund
    
All
Other Fees Billed to Fund
  
2010
   $ 69,527     $ 0     $ 0     $ 0  
2009
   $ 68,164     $ 0     $ 0     $ 0  

Services that the Fund’s Independent Registered Public Accounting Firm Billed to the Adviser and Affiliated Fund Service Providers
The following table shows the amount of fees billed by PWC to Deutsche Investment Management Americas Inc. (“DeIM” or the “Adviser”), and any entity controlling, controlled by or under common control with DeIM (“Control Affiliate”) that provides ongoing services to the Fund (“Affiliated Fund Service Provider”), for engagements directly related to the Fund’s operations and financial reporting, during the Fund’s last two fiscal years.
Fiscal Year October 31,
  
Audit-Related
Fees Billed to Adviser and Affiliated Fund Service Providers
    
Tax Fees Billed to Adviser and Affiliated Fund Service Providers
    
All
Other Fees Billed to Adviser and Affiliated Fund Service Providers
  
2010
   $ 7,500     $ 0     $ 0  
2009
   $ 2,000     $ 0     $ 0  

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

Fiscal Year Ended October 31,
  
Total
Non-Audit Fees Billed to Fund
(A)
    
Total Non-Audit Fees billed to Adviser and Affiliated Fund Service Providers (engagements related directly to the operations and financial reporting of the Fund)
(B)
    
Total Non-Audit Fees billed to Adviser and Affiliated Fund Service Providers (all other engagements)
(C)
    
Total of (A), (B)
and (C)
  
2010
   $ 0     $ 0     $ 100,000     $ 100,000  
2009
   $ 0     $ 0     $ 0     $ 0  

All other engagement fees were billed for services in connection with an internal control review of a subadvisor.

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

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

According to the registrant’s principal Independent Registered Public Accounting Firm, all of the principal Independent Registered Public Accounting Firm's hours spent on auditing the registrant's financial statements were attributed to work performed by full-time permanent employees of the principal Independent Registered Public Accounting Firm.
***
 
   
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)
Code of Ethics pursuant to Item 2 of Form N-CSR is filed and attached hereto as EX-99.CODE ETH.
   
 
(a)(2)
Certification pursuant to Rule 30a-2(a) under the Investment Company Act of 1940 (17 CFR 270.30a-2(a)) is filed and attached hereto as Exhibit 99.CERT.
   
 
(b)
Certification pursuant to Rule 30a-2(b) under the Investment Company Act of 1940 (17 CFR 270.30a-2(b)) is furnished and attached hereto as Exhibit 99.906CERT.

Form N-CSR Item F

SIGNATURES

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

Registrant:
DWS Core Fixed Income Fund, a series of DWS Advisor Funds
   
   
By:
/s/Michael G. Clark
Michael G. Clark
President
   
Date:
 December 28, 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.


By:
/s/Michael G. Clark
Michael G. Clark
President
   
Date:
 December 28, 2010
   
   
   
By:
/s/Paul Schubert
Paul Schubert
Chief Financial Officer and Treasurer
   
Date:
 December 28, 2010