UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549

 

FORM            N-CSR

 

| Investment Company Act file number | 811-05655 |
|------------------------------------|-----------|

 

DWS Municipal Income Trust

(Exact Name of Registrant as Specified in Charter)

 

222            South Riverside Plaza

Chicago, IL 60606

(Address of principal executive offices)                        (Zip code)

 

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

 

Paul            Schubert

345            Park Avenue

New York, NY 10154

(Name            and Address of Agent for Service)

 

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

 

| Date of reporting period: | 11/30/07 |
|---------------------------|----------|

 

 

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

 

 

NOVEMBER 30,        2007

# Annual Report        to Shareholders

**DWS Municipal Income        Trust**

Ticker Symbol: KTF

|  |
|--|

**Contents**

| **click here**Performance Summary

**click here**Portfolio Management Review

**click here**Portfolio Summary

**click                    here**Investment Portfolio

**click here**Financial Statements

**click here**Financial Highlights

**click here**Notes to Financial Statements

**click here**Report of Independent Registered Public Accounting                    Firm

**click here**Tax Information

**click here**Other Information

**click here**Dividend Repurchase Plan

**click here**Investment Management Agreement Approval

**click here**Trustees and Officers

**click here**Additional Information |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

Investments in funds        involve risk. Certain investors' income may be subject to the federal Alternative Minimum        Tax (AMT), and federal, state and local taxes may apply. The fund invests in individual        bonds whose yields and market values fluctuate, so that your investment may be worth more        or less than its original cost. Bond investments are subject to interest-rate risk such        that when interest rates rise, the prices of the bonds, and thus the value of the bond        investment, can decline and the investor can lose principal value. Leverage results in        additional risks and can magnify the effect of any losses. All of these factors may result        in greater share price volatility. Closed-end funds, unlike open-end funds, are not        continuously offered. There is an initial public offering and once issued, shares of        closed-end funds are sold in the open market through a stock exchange. Shares of closed-end        funds frequently trade at a discount to net asset value. The price of the fund's shares is        determined by a number of factors, several of which are beyond the control of the fund.        Therefore, the fund cannot predict whether its shares will trade at, below or above net        asset value.

*DWS Scudder is part of        Deutsche Asset Management, which is the marketing name in the US for the asset        management activities of Deutsche Bank AG, Deutsche Bank Trust Company Americas, Deutsche        Investment Management Americas Inc. and DWS Trust Company.*

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

**Performance        SummaryNovember 30, 2007**

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

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

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

| **Average                    Annual Total Returns**as of                    11/30/07  |
|---------------------------------------------------------------------------------------|
| **DWS                    Municipal Income Trust**                                     | **1-Year** | **3-Year** | **5-Year** | **10-Year** |
| **Based on                    Net Asset Value(a)**                                    | **2.04%** | **4.11%** | **5.64%** | **6.18%** |
| **Based on                    Market Price(a)**                                       | **.06%** | **1.01%** | **5.09%** | **3.47%** |
| Lehman Brothers Municipal Bond                Index(b)                                | 2.71% | 4.23% | 4.68% | 5.30% |
| Lipper General Closed-End Municipal Debt Funds                (Leveraged) Category(c) | -.78% | 4.97% | 6.28% | 5.67% |

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

| **Net Asset                    Value and Market Price** |
|---------------------------------------------------------|
|                                                    | **As of                    11/30/07** | **As of                    11/30/06** |
| Net Asset Value                                         | $                    11.79 | $                    12.17 |
| Market Price                                            | $                    10.43 | $                    10.98 |

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

| **Distribution Information**                                                                              |
|-----------------------------------------------------------------------------------------------------------|
| Twelve Months as of 11/30/07:
Income                    Dividends (common shareholders)                   | $                    .58 |
| November Income Dividends (common                shareholders)                                            | $                    .0480 |
| Current Annualized Distribution Rate (based on Net                Asset Value) as of 11/30/07++ | 4.89% |
| Current Annualized Distribution Rate (based on                Market Price) as of 11/30/07++    | 5.52% |
| Tax Equivalent Distribution Rate (based on Net                Asset Value) as of 11/30/07++     | 7.52% |
| Tax Equivalent Distribution Rate (based on Market                Price) as of 11/30/07++        | 8.49% |

| **Lipper                    Rankings — General Closed-End Municipal Debt Funds (Leveraged)                    Category**as of 11/30/07 |
|--------------------------------------------------------------------------------------------------------------------------------------------------------|
| **Period**                                                                                                                                             | **Rank** |   | **Number of                    Funds Tracked** | **Percentile Ranking (%)** |
| 1-Year                                                                                                                                                 | 5 | of | 54 | 10 |
| 3-Year                                                                                                                                                 | 46 | of | 54 | 84 |
| 5-Year                                                                                                                                                 | 42 | of | 52 | 80 |
| 10-Year                                                                                                                                                | 9 | of | 38 | 24 |

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

**Portfolio Management        Review**

**DWS Municipal Income Trust:        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 Municipal Income Trust. DIMA and its predecessors have more than        80 years of experience managing mutual funds and DIMA provides a full range of investment        advisory services to institutional and retail clients.

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

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

**Portfolio Management        Team**

*Philip G.        Condon*

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

Joined Deutsche Asset        Management in 1983 and the fund team in 1998.

Over 30 years of        investment industry experience.

BA and MBA, University of        Massachusetts at Amherst.

*Eleanor R. Lynch,        CFA*

Director of Deutsche Asset        Management and Co-Lead Portfolio Manager of the fund.

Joined Deutsche Asset        Management in 1995 and the fund team in 1998.

Over 20 years of        investment industry experience.

BS, Ursinus College; MS,        Drexel University.

Philip G. Condon and        Eleanor R. Lynch serve as co-lead portfolio managers of DWS Municipal Income Trust. In the        following interview, the DWS municipal bond team discusses the fund's performance for the        period and the market environment for municipal bonds.

*The views expressed in        the following discussion reflect those of the portfolio managers 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.*

**Q: Will you describe        the general market environment during the annual period ended November 30,        2007?**

**A:**Municipal bonds delivered modest positive results over the        12 months. The municipal bond market, as measured by the Lehman Brothers Municipal        Bond Index, delivered a total return of 2.71% for the 12 months ended November 30,        2007.1 The broad taxable bond market, as measured by the Lehman Brothers        US Aggregate Index, delivered a total return of 6.05% for the same        period.2

The US Federal Reserve Board (the        Fed) held rates steady for most of the period, before lowering the federal funds rate        — the overnight interbank lending rate and a benchmark for interest rates generally        — two times totaling 75 basis points (one basis point equals 0.01%) in September and        October. This left the federal funds rate at 4.50% at the end of November 2007. Municipal        yields declined on the shorter parts of the curve, while rising on issues over 10        years.3 Since a bond's yield moves in the opposite direction of its price, this        meant that performance of shorter-term municipal bonds was generally better than among        longer issues.

The relationship between supply of,        and demand for, municipal issues can be an important factor in the performance of this        market. High demand or low supply can drive municipal bond prices higher, while low demand        or high supply can have the reverse effect. Supply nationally was generally heavy during        the fiscal year, driven by relatively low interest rates, although issuance began to ease        toward the end of the period. To illustrate, issuance over the first 11 months of 2007 was        16 percent above last year's pace. On the demand side, much activity early in the period        was driven by institutional investors using nontraditional strategies to benefit in a        leveraged fashion from disparities between the tax-free and taxable markets. In the wake of        the subprime mortgage crisis and resulting credit crunch, much of this interest has waned.        Another outgrowth of the tighter credit environment has been a trimming of municipal        inventory on the part of dealers looking to improve balance sheets, further constraining        demand. Flows into tax-free mutual funds were positive overall for the period.

The municipal bond        yield curve steepened significantly during the annual period. The two-year bond yield        decreased 27 basis points from 3.45% to 3.18%, while the 30-year yield increased 41 basis        points to 4.32% from 3.91%, resulting in a total steepening of 68 basis points. (See        the graph on the following page for municipal bond yield changes from the beginning to the        end of the period.)

| **Municipal                    Bond Yield Curve**(as of 11/30/06 and                    11/30/07) |
|---------------------------------------------------------------------------------------------------|
|                                                                                                   |

*Source: Municipal        Market Data, AAA-rated universe*

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

**Q: How        did DWS Municipal Income Trust perform for the 12-month period ended November 30,        2007?**

**A:**DWS Municipal Income Trust delivered a total return based        on net asset value of 2.04% for the fund's fiscal year ended November 30,        2007. The fund posted a return based on market value of 0.06% for this period. Its average        peer in the Lipper General Closed End Municipal Debt Leveraged Funds category for        closed-end funds delivered -0.78% in the period.4 The fund 's benchmark, the        unmanaged Lehman Brothers Municipal Bond Index, returned 2.71% for the same period. (Past        performance is no guarantee of future results. Please see pages 4        through 5 for more complete performance information.)

Over the period, the discount at        which the fund traded to its net asset value widened slightly from about 10% to a little        under 11.6%. We believe the discount is largely a function of a broader market focus on        both liquidity and the cost of credit in the wake of the summer's subprime crisis. We rely        on access to funding in order to leverage the fund's investments, and the cost of        pursuing such strategies has risen in the ensuing credit crunch. In addition, closed-end        funds are generally not heavily traded and therefore tend to be viewed as somewhat illiquid        by market participants.

**Q: How was the fund        positioned, and how did this positioning contribute to its performance for the annual        period ended November 30, 2007?**

**A:**Over the period, we continued to manage the fund with an eye on        preserving its earnings capacity. Early in the period, given an environment of low interest        rates, we maintained a focus on avoiding excessive sales of bonds carrying high        distribution yields.

The flattening of the yield curve        that occurred significantly reduced the income advantage provided by longer-term issues. In        fact, at the start of the period, 30-year AAA-rated municipal bond yields were at        historically low levels.5 As a result, our curve positioning favored        intermediate-term issues over longer-dated issues. This helped performance, as longer-dated        issues were most impacted by rising yields and falling prices over the year. As long-term        rates backed up over the period, we have increasingly taken advantage of opportunities        to extend the fund's duration and increase income.

With respect to credit risk, early        in the year, the yield advantage provided by BBB-rated versus AAA-rated issues remained        narrow by historical standards, and we did not feel that we could justify any significant        tilt toward lower quality given the minimal incremental reward. This helped performance as        credit spreads widened over the period.

In our view, credit spreads have        reached levels where investors are paid more fairly for the incremental risk, and we began        late in the period to selectively increase exposure to lower-quality issues. As an example,        we recently increased the fund's holdings of prepaid utility contract bonds after spreads        widened to attractive levels. These issues are backed by brokerage firms, virtually all of        whom have some exposure to the subprime issue, and their prices suffered during the        period.

While tobacco-related issues        underperformed, a number of the fund's holdings within the sector benefited from refunding        activity (which generally results in a price increase as affected issues experience a        credit upgrade). Ongoing refunding activity is the principal explanation for the increased        representation of AAA-rated prerefunded bonds in the fund over the period.

The increase in short-term rates        over the period was reflected in increased borrowing costs related to the fund's preferred        shares. This constrained performance to a degree over the 12 months.

At the end of November, the 10-year        municipal bond was yielding 92% of the comparable maturity Treasury bond, reflecting an        unusually attractive relative valuation. As wider credit spreads, a steeper yield curve and        more favorable municipal valuations have emerged, we have begun to adopt a less defensive        position in the fund to take advantage of potential opportunities.

After the end of        the fund's fiscal period, the major rating agencies -— Moody's, Standard & Poor's        and Fitch — placed on negative watch or outlook a number of leading bond insurers.        Additionally, Ambac was downgraded to AA by Fitch. The underlying securities of municipal        bonds insured by these firms are generally of high credit quality, with an average rating        in the A category. The majority of the bonds insured by these three companies are backed by        municipal general obligations, leases, other taxes, or essential purpose revenue bonds.        While such downgrades have the potential to affect the trading value of a bond, we believe        the default risk on an underlying municipal credit remains relatively low.

**Portfolio        Summary**

| **Asset                    Allocation**(As a                    % of Investment Portfolio) | **11/30/07** | **11/30/06** |
|------------------------------------------------------------------------------------------------------|--------------|--------------|
|                                                                                                 |         |         |
| Revenue                    Bonds                                                                     | 48%          | 47%          |
| ETM/Prerefunded Bonds                                                                                | 35%          | 32%          |
| US Government                    Secured                                                             | 14%          | 17%          |
| Lease                    Obligations                                                                 | 3%           | 4%           |
|                                                                                                 | 100%         | 100%         |

| **Quality**                  | **11/30/07** | **11/30/06** |
|------------------------------|--------------|--------------|
|                         |         |         |
| AAA                          | 70%          | 72%          |
| AA                           | 8%           | 4%           |
| A                            | 12%          | 14%          |
| BBB                          | 7%           | 8%           |
| BB                           | 1%           | —      |
| Not                    Rated | 2%           | 2%           |
|                         | 100%         | 100%         |

| **Interest                    Rate Sensitivity** | **11/30/07**                 | **11/30/06**                 |
|--------------------------------------------------|------------------------------|------------------------------|
|                                             |                         |                         |
| Average                    Maturity              | 5.3                    years | 4.5                    years |
| Duration                                         | 5.0                    years | 4.1                    years |

| **Top Five                    State Allocations**(As a % of Investment Portfolio) | **11/30/07** | **11/30/06** |
|------------------------------------------------------------------------------------------------------------|--------------|--------------|
|                                                                                                       |         |         |
| California                                                                                                 | 16%          | 12%          |
| Texas                                                                                                      | 11%          | 12%          |
| New                    York                                                                                | 9%           | 9%           |
| Illinois                                                                                                   | 7%           | 6%           |
| New                    Jersey                                                                              | 6%           | 7%           |

*Asset allocation,        quality, interest rate sensitivity and state allocations are subject to change. Duration        shown does not account for the leverage position of the Fund.*

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

*For more complete        details about the Fund's investment portfolio, see page 13. A        quarterly Fact Sheet is available upon request. Please see the Additional Information        section for contact information.*

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

**Investment        Portfolioas of November 30, 2007**

|                                                                                                                                                                                                                | **Principal                    Amount ($)** | **Value                    ($)** |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------|----------------------------------|
|                                                                                                                                                                                                                |                                        |
| **Municipal Bonds and                    Notes 149.5%**                                                                                                                                                             |
| **Alabama                    3.5%**                                                                                                                                                                                 |
| Camden, AL,                    Industrial Development Board Revenue, AMT, Series B, 6.375%,                    12/1/2024                                                                                            | 1,000,000                                   | 1,059,660                        |
| Huntsville,                    AL, Hospital & Healthcare Revenue, Health Care Authority, Series A, 5.75%,                    6/1/2031                                                                           | 5,500,000                                   | 5,973,275                        |
| Huntsville,                    AL, Water & Sewer Revenue, AMT, 5.75%, 10/1/2011 (a)                                                                                                                        | 8,560,000                                   | 9,046,807                        |
|                                                                                                                                                                                                                | **16,079,742**                              |
| **Arizona                    2.2%**                                                                                                                                                                                 |
| Arizona,                    Hospital & Healthcare Revenue, Health Facilities Authority, Catholic                    Healthcare West, Series A, 6.625%, 7/1/2020                                            | 7,000,000                                   | 7,630,070                        |
| Arizona, Salt                    Verde Financial Corp., Gas Revenue, 5.5%, 12/1/2029                                                                                                                           | 2,400,000                                   | 2,495,304                        |
|                                                                                                                                                                                                                | **10,125,374**                              |
| **California                    20.7%**                                                                                                                                                                             |
| California,                    Health Facilities Financing Authority Revenue, Sutter Health, Series A, 5.0%,                    11/15/2042                                                                          | 2,000,000                                   | 2,004,960                        |
| California,                    Special Assessment Revenue, Golden State Tobacco Securitization                    Corp.:                                                                                            |                                        |                             |
| Series A-1,                    5.0%, 6/1/2033                                                                                                                                                                       | 7,000,000                                   | 6,145,370                        |
| Series A,                    5.0%, 6/1/2038 (a)                                                                                                                                                                     | 2,500,000                                   | 2,516,325                        |
| Series B,                    5.625%, 6/1/2038                                                                                                                                                                       | 7,080,000                                   | 7,840,958                        |
| Series                    2003-A-1, 6.75%, 6/1/2039                                                                                                                                                                 | 11,730,000                                  | 13,646,682                       |
| California,                    State General Obligation:                                                                                                                                                            |                                        |                             |
| 4.5%,                    10/1/2029                                                                                                                                                                                  | 15,000,000                                  | 14,306,550                       |
| Series 2,                    5.0%, 9/1/2019                                                                                                                                                                         | 4,385,000                                   | 4,632,884                        |
| 5.0%,                    12/1/2020                                                                                                                                                                                  | 4,600,000                                   | 4,873,240                        |
| 5.0%,                    11/1/2027                                                                                                                                                                                  | 3,000,000                                   | 3,071,790                        |
| 5.0%,                    6/1/2028                                                                                                                                                                                   | 3,000,000                                   | 3,051,600                        |
| 5.125%,                    4/1/2024                                                                                                                                                                                 | 4,400,000                                   | 4,627,876                        |
| 5.25%,                    12/1/2021                                                                                                                                                                                 | 10,215,000                                  | 10,979,082                       |
| 5.25%,                    4/1/2030                                                                                                                                                                                  | 110,000                                     | 116,199                          |
| California,                    State Public Works Board, Lease Revenue, Department of Corrections, Series C,                    5.5%, 6/1/2021                                                                      | 2,500,000                                   | 2,711,550                        |
| California,                    State Public Works Board, Lease Revenue, Department of Mental Health, Series A,                    5.5%, 6/1/2021                                                                    | 5,000,000                                   | 5,454,100                        |
| Long Beach,                    CA, Bond Finance Authority, Natural Gas Purchased Revenue, Series A, 5.5%,                    11/15/2030                                                                             | 5,000,000                                   | 5,095,000                        |
| Northern                    California, Tobacco Securitization Authority, Tobacco Settlement Revenue,                    Series A-1, 5.375%, 6/1/2038                                                          | 3,000,000                                   | 2,706,180                        |
| Southern                    California, Public Power Authority, Natural Gas Project Revenue, Project No.1,                    Series A, 5.25%, 11/1/2026                                                       | 1,155,000                                   | 1,173,711                        |
|                                                                                                                                                                                                                | **94,954,057**                              |
| **Colorado                    4.6%**                                                                                                                                                                                |
| Colorado,                    Hospital & Healthcare Revenue, Portercare Adventist Health Project, 6.5%,                    11/15/2031                                                                            | 1,000,000                                   | 1,126,400                        |
| Colorado,                    Hospital & Healthcare Revenue, Poudre Valley Health Facilities:                                                                                                                    |                                        |                             |
| Series A,                    5.5%, 12/1/2017 (a)                                                                                                                                                                    | 6,145,000                                   | 6,464,294                        |
| Series A,                    6.0%, 12/1/2015 (a)                                                                                                                                                                    | 5,705,000                                   | 6,056,314                        |
| Series A,                    6.0%, 12/1/2016 (a)                                                                                                                                                                    | 2,000,000                                   | 2,123,160                        |
| Colorado,                    Single Family Housing Revenue, AMT, Series B2, 7.25%, 10/1/2031                                                                                                                        | 205,000                                     | 220,094                          |
| Denver, CO,                    Airport Revenue, AMT, Series A, 6.0%, 11/15/2014 (a)                                                                                                                            | 5,000,000                                   | 5,316,450                        |
|                                                                                                                                                                                                                | **21,306,712**                              |
| **District of                    Columbia 8.3%**                                                                                                                                                                    |
| District of                    Columbia, ETM, Series A, Prerefunded, 5.5%, 6/1/2014 (a)                                                                                                                        | 640,000                                     | 665,805                          |
| District of                    Columbia, Core City General Obligation, Series B, 5.5%, 6/1/2011 (a)                                                                                                                 | 20,000,000                                  | 21,461,400                       |
| District of                    Columbia, General Obligation:                                                                                                                                                        |                                        |                             |
| Prerefunded,                    Series A-2005, 5.25%, 6/1/2027 (a)                                                                                                                                                  | 2,585,000                                   | 2,634,891                        |
| Series A-2005,                    5.25%, 6/1/2027 (a)                                                                                                                                                               | 8,245,000                                   | 8,378,239                        |
| District of                    Columbia, Howard University Revenue, Series A, 5.0%, 10/1/2023 (a)                                                                                                                   | 2,810,000                                   | 2,969,046                        |
| District of                    Columbia, State General Obligation, Series A, 5.5%, 6/1/2014 (a)                                                                                                                     | 1,860,000                                   | 1,931,089                        |
|                                                                                                                                                                                                                | **38,040,470**                              |
| **Florida                    7.1%**                                                                                                                                                                                 |
| Dade County,                    FL, Airport Revenue, AMT, Series A, 5.75%, 10/1/2026 (a)                                                                                                                       | 13,000,000                                  | 13,145,990                       |
| Dade County,                    FL, Special Assessment Revenue:                                                                                                                                                     |                                        |                             |
| Series B,                    Prerefunded, Zero Coupon, 10/1/2022 (a)                                                                                                                                                | 7,735,000                                   | 3,216,754                        |
| Series B,                    Prerefunded, Zero Coupon, 10/1/2024 (a)                                                                                                                                                | 16,955,000                                  | 6,210,277                        |
| Hillsborough                    County, FL, Industrial Development Revenue, University Community Hospital                    Project, Series A, 5.625%, 8/15/2023                                              | 1,000,000                                   | 1,012,410                        |
| Miami-Dade                    County, FL, Transportation/Tolls Revenue, Expressway Authority:                                                                                                                       |                                        |                             |
| 6.0%, 7/1/2013                    (a)                                                                                                                                                                               | 1,665,000                                   | 1,788,227                        |
| 6.0%, 7/1/2014                    (a)                                                                                                                                                                               | 1,000,000                                   | 1,074,010                        |
| Orange County,                    FL, Health Facilities Authority Revenue, Orlando Regional Healthcare System,                    5.75%, 12/1/2032                                                                  | 1,000,000                                   | 1,106,550                        |
| Palm Beach                    County, FL, School District Revenue Lease, Series A, Prerefunded, 5.75%,                    8/1/2017 (a)                                                                              | 2,850,000                                   | 3,055,656                        |
| South Miami,                    FL, Health Facilities Authority Hospital Revenue, Baptist Health South Florida                    Group, 5.0%, 8/15/2032                                                       | 2,000,000                                   | 2,011,320                        |
|                                                                                                                                                                                                                | **32,621,194**                              |
| **Georgia                    3.6%**                                                                                                                                                                                 |
| Atlanta, GA,                    Water & Wastewater Revenue, Water Utilities Improvements, 5.0%, 11/1/2024                    (a)                                                                                | 4,000,000                                   | 4,176,880                        |
| Georgia, Main                    Street Natural Gas, Inc., Gas Project Revenue:                                                                                                                                |                                        |                             |
| Series A,                    5.0%, 3/15/2022                                                                                                                                                                        | 7,340,000                                   | 7,395,490                        |
| Series A,                    5.5%, 9/15/2027                                                                                                                                                                        | 5,000,000                                   | 4,996,550                        |
|                                                                                                                                                                                                                | **16,568,920**                              |
| **Hawaii                    4.5%**                                                                                                                                                                                  |
| Hawaii,                    Airport System Revenue, AMT, Series B, 6.5%, 7/1/2013 (a)                                                                                                                           | 8,800,000                                   | 9,491,152                        |
| Hawaii,                    Electric Revenue, Department of Budget & Finance, AMT, Series D, 6.15%,                    1/1/2020 (a)                                                                              | 2,195,000                                   | 2,264,296                        |
| Hawaii, Port                    Authority Revenue, AMT:                                                                                                                                                             |                                        |                             |
| Series A,                    6.0%, 7/1/2011 (a)                                                                                                                                                                     | 2,950,000                                   | 3,147,857                        |
| Series A,                    6.0%, 7/1/2012 (a)                                                                                                                                                                     | 3,135,000                                   | 3,338,085                        |
| Hawaii, State                    General Obligation, Series CT, Prerefunded, 5.75%, 9/1/2014 (a)                                                                                                                    | 2,310,000                                   | 2,429,127                        |
|                                                                                                                                                                                                                | **20,670,517**                              |
| **Idaho                    0.0%**                                                                                                                                                                                   |
| Idaho, Single                    Family Housing Revenue, AMT, Series C2, 6.9%, 7/1/2025                                                                                                                             | 80,000                                      | **80,102**                       |
| **Illinois                    8.7%**                                                                                                                                                                                |
| Chicago, IL,                    Airport Revenue, O'Hare International Airport, AMT, 5.5%, 1/1/2014                    (a)                                                                                           | 10,000,000                                  | 10,460,800                       |
| Chicago, IL,                    Core City General Obligation:                                                                                                                                                       |                                        |                             |
| Series A,                    Prerefunded, 6.0%, 1/1/2014 (a)                                                                                                                                                        | 2,085,000                                   | 2,246,045                        |
| Series A,                    Prerefunded, 6.125%, 1/1/2015 (a)                                                                                                                                                      | 2,000,000                                   | 2,160,640                        |
| Series A,                    6.125%, 1/1/2016 (a)                                                                                                                                                                   | 2,000,000                                   | 2,160,640                        |
| Chicago, IL,                    Other General Obligation, Neighborhoods Alive 21 Project:                                                                                                                      |                                        |                             |
| Series A,                    Prerefunded, 6.0%, 1/1/2015 (a)                                                                                                                                                        | 1,000,000                                   | 1,077,240                        |
| Series A,                    6.0%, 1/1/2017 (a)                                                                                                                                                                     | 1,000,000                                   | 1,077,240                        |
| Chicago, IL,                    Water Revenue:                                                                                                                                                                      |                                        |                             |
| Second Lien,                    3.58%*, 11/1/2031 (a)                                                                                                                                                               | 1,515,000                                   | 1,515,000                        |
| Series A,                    5.0%, 11/1/2020 (a)                                                                                                                                                                    | 3,615,000                                   | 3,882,438                        |
| Illinois,                    Development Finance Authority, Hospital Revenue, Adventist Health System,                    Sunbelt Obligation, 5.5%, 11/15/2020                                                 | 2,500,000                                   | 2,624,700                        |
| Illinois,                    Health Facilities Authority Revenue, Children's Memorial Hospital, Series A,                    Prerefunded, 5.625%, 8/15/2019 (a)                                                | 4,000,000                                   | 4,191,880                        |
| Illinois,                    Higher Education Revenue, DePaul University, Educational Facilities                    Authority:                                                                                      |                                        |                             |
| Prerefunded,                    5.625%, 10/1/2013 (a)                                                                                                                                                               | 2,695,000                                   | 2,891,924                        |
| Prerefunded,                    5.625%, 10/1/2015 (a)                                                                                                                                                               | 1,710,000                                   | 1,834,950                        |
| Illinois,                    Sales & Special Tax Revenue, Metropolitan Pier & Exposition                    Authority:                                                                                      |                                        |                             |
| Series A, ETM,                    5.5%, 6/15/2017 (a)                                                                                                                                                               | 1,955,000                                   | 2,246,725                        |
| Series A,                    5.5%, 6/15/2017 (a)                                                                                                                                                                    | 1,555,000                                   | 1,758,238                        |
|                                                                                                                                                                                                                | **40,128,460**                              |
| **Indiana                    1.2%**                                                                                                                                                                                 |
| Indiana,                    Hospital & Healthcare Revenue, Health Facilities Authority, 5.5%,                    11/1/2031                                                                                      | 5,000,000                                   | **5,449,400**                    |
| **Kansas                    0.7%**                                                                                                                                                                                  |
| Overland Park,                    KS, Industrial Development Revenue, Series A, 7.375%, 1/1/2032                                                                                                               | 3,000,000                                   | **3,378,660**                    |
| **Kentucky                    1.4%**                                                                                                                                                                                |
| Kentucky,                    Economic Development Finance Authority, Health System Revenue, Norton                    Healthcare:                                                                                   |                                        |                             |
| Series A,                    Prerefunded, 6.5%, 10/1/2020                                                                                                                                                           | 790,000                                     | 864,955                          |
| Series A,                    6.5%, 10/1/2020                                                                                                                                                                        | 1,210,000                                   | 1,272,606                        |
| Series A,                    Prerefunded, 6.625%, 10/1/2028                                                                                                                                                         | 3,130,000                                   | 3,437,460                        |
| Series A,                    6.625%, 10/1/2028                                                                                                                                                                      | 870,000                                     | 929,786                          |
|                                                                                                                                                                                                                | **6,504,807**                               |
| **Louisiana                    0.5%**                                                                                                                                                                               |
| Louisiana,                    Electric Revenue, 5.75%, 1/1/2013 (a)                                                                                                                                                 | 2,000,000                                   | **2,203,520**                    |
| **Maine                    1.5%**                                                                                                                                                                                   |
| Maine,                    Hospital & Healthcare Revenue, Series D, 5.7%, 7/1/2013 (a)                                                                                                                      | 375,000                                     | 375,626                          |
| Maine,                    Transportation/Tolls Revenue, 5.0%, 7/1/2017 (a)                                                                                                                                          | 6,165,000                                   | 6,280,964                        |
|                                                                                                                                                                                                                | **6,656,590**                               |
| **Maryland                    0.6%**                                                                                                                                                                                |
| Maryland,                    Hospital & Healthcare Revenue, University of Maryland Medical System,                    6.75%, 7/1/2030                                                                           | 2,500,000                                   | **2,737,950**                    |
| **Massachusetts 3.6%**                                                                                                                                                                                              |
| Massachusetts,                    Airport Revenue, AMT, Series B, 5.5%, 7/1/2009 (a)                                                                                                                           | 8,000,000                                   | 8,237,040                        |
| Massachusetts,                    Airport Revenue, U.S. Airways, Inc. Project, AMT, Series A, 5.875%, 9/1/2023                    (a)                                                                               | 5,000,000                                   | 5,058,200                        |
| Massachusetts,                    Port Authority Revenue, AMT, Series B, 5.5%, 7/1/2015 (a)                                                                                                                         | 3,000,000                                   | 3,092,580                        |
|                                                                                                                                                                                                                | **16,387,820**                              |
| **Michigan                    2.2%**                                                                                                                                                                                |
| Chippewa                    County, MI, Hospital & Healthcare Revenue, Chippewa County War Memorial,                    Series B, 5.625%, 11/1/2014                                                        | 1,500,000                                   | 1,477,590                        |
| Michigan,                    Industrial Development Revenue:                                                                                                                                                        |                                        |                             |
| 5.5%, 6/1/2018                    (a)                                                                                                                                                                               | 3,425,000                                   | 3,606,696                        |
| 5.75%,                    6/1/2016 (a)                                                                                                                                                                              | 4,640,000                                   | 4,913,807                        |
|                                                                                                                                                                                                                | **9,998,093**                               |
| **Minnesota                    1.6%**                                                                                                                                                                               |
| Minneapolis                    & St. Paul, MN, Airport Revenue, AMT, Series B, 6.0%, 1/1/2012                    (a)                                                                                       | 4,395,000                                   | 4,642,175                        |
| Minneapolis                    & St. Paul, MN, Port Authority Revenue, AMT, Series B, 5.625%, 1/1/2015                    (a)                                                                                   | 2,500,000                                   | 2,563,525                        |
|                                                                                                                                                                                                                | **7,205,700**                               |
| **Missouri                    0.1%**                                                                                                                                                                                |
| Missouri,                    Hospital & Healthcare Revenue, Lake of the Ozarks General Hospital, 6.5%,                    2/15/2021                                                                             | 365,000                                     | **366,146**                      |
| **Nevada                    1.8%**                                                                                                                                                                                  |
| Nevada, State                    General Obligation, Capital Improvement and Cultural Affairs Project, Series A,                    5.5%, 2/1/2014                                                                  | 2,575,000                                   | 2,665,485                        |
| Washoe County,                    NV, School District General Obligation, Prerefunded, 5.75%, 6/1/2014                    (a)                                                                                       | 5,450,000                                   | 5,711,600                        |
|                                                                                                                                                                                                                | **8,377,085**                               |
| **New Jersey                    10.4%**                                                                                                                                                                             |
| New Jersey,                    Economic Development Authority Revenue, Cigarette Tax, 5.75%,                    6/15/2034                                                                                           | 1,090,000                                   | 1,093,205                        |
| New Jersey,                    Hospital & Healthcare Revenue, General Hospital Center at Passaic, ETM,                    6.75%, 7/1/2019 (a)                                                                   | 5,000,000                                   | 6,142,400                        |
| New Jersey,                    Industrial Development Revenue, American Water Co., Inc. Project, AMT,                    Series A, 6.875%, 11/1/2034 (a)                                                  | 10,775,000                                  | 10,918,415                       |
| New Jersey,                    Industrial Development Revenue, Economic Development Authority, Harrogate,                    Inc., Series A, 5.875%, 12/1/2026                                                      | 1,400,000                                   | 1,403,262                        |
| New Jersey,                    Resource Recovery Revenue, Tobacco Settlement Financing Corp., 5.75%,                    6/1/2032                                                                                    | 2,025,000                                   | 2,193,541                        |
| New Jersey,                    State Agency General Obligation Lease, Transportation Trust Fund Authority,                    Series A, Prerefunded, 5.75%, 6/15/2017                                               | 10,000,000                                  | 10,608,800                       |
| New Jersey,                    Tobacco Settlement Financing Corp., Series 1-A, 5.0%, 6/1/2041                                                                                                                  | 1,000,000                                   | 839,430                          |
| New Jersey,                    Transportation/Tolls Revenue, Economic Development Authority, Series A,                    Prerefunded, 5.75%, 5/1/2013 (a)                                                     | 6,000,000                                   | 6,206,700                        |
| New Jersey,                    Transportation/Tolls Revenue, Garden State Parkway Project, Prerefunded, 5.6%,                    1/1/2017 (a)                                                                       | 8,000,000                                   | 8,453,280                        |
|                                                                                                                                                                                                                | **47,859,033**                              |
| **New York                    10.1%**                                                                                                                                                                               |
| Nassau County,                    NY, Hospital & Healthcare, 6.0%, 8/1/2015 (a)                                                                                                                       | 3,390,000                                   | 3,605,231                        |
| New York,                    State Agency General Obligation Lease, Higher Education Revenue, Dormitory                    Authority, Bronx-Lebanon Hospital Center, Series E, 5.2%, 2/15/2016                      | 1,770,000                                   | 1,803,117                        |
| New York,                    State Agency General Obligation Lease, Higher Education Revenue, Dormitory                    Authority, City University, Series A, 5.625%, 7/1/2016                                   | 1,500,000                                   | 1,671,225                        |
| New York,                    State Agency General Obligation Lease, Higher Education Revenue, Dormitory                    Authority, Jamaica Hospital, Series F, 5.2%, 2/15/2016                                   | 1,000,000                                   | 1,018,710                        |
| New York,                    State General Obligation, Tobacco Settlement Financing Corp., Series A-1,                    5.25%, 6/1/2022 (a)                                                                       | 10,000,000                                  | 10,634,800                       |
| New York,                    Tobacco Settlement Financing Corp., Series B-1C, 5.5%, 6/1/2019                                                                                                                   | 5,500,000                                   | 5,894,075                        |
| New York,                    Transportation/Tolls Revenue:                                                                                                                                                          |                                        |                             |
| Prerefunded,                    5.625%, 4/1/2013 (a)                                                                                                                                                                | 5,000,000                                   | 5,205,350                        |
| Prerefunded,                    5.75%, 4/1/2014 (a)                                                                                                                                                                 | 2,000,000                                   | 2,085,400                        |
| New York, NY,                    General Obligation:                                                                                                                                                                |                                        |                             |
| Series D,                    5.0%, 11/1/2024                                                                                                                                                                        | 7,500,000                                   | 7,745,325                        |
| Series F,                    Prerefunded, 5.25%, 8/1/2015 (a)                                                                                                                                                       | 50,000                                      | 50,657                           |
| New York, NY,                    Sales & Special Tax Revenue, Transitional Finance Authority:                                                                                                                   |                                        |                             |
| Series B,                    Prerefunded, 6.125%, 11/15/2014                                                                                                                                                        | 1,645,000                                   | 1,774,906                        |
| Series B,                    6.125%, 11/15/2014                                                                                                                                                                     | 355,000                                     | 383,034                          |
| Series B,                    Prerefunded, 6.125%, 11/15/2015                                                                                                                                                        | 3,000,000                                   | 3,236,160                        |
| Niagara Falls,                    NY, School District General Obligation, 5.6%, 6/15/2014 (a)                                                                                                                  | 1,180,000                                   | 1,331,465                        |
|                                                                                                                                                                                                                | **46,439,455**                              |
| **North                    Carolina 1.7%**                                                                                                                                                                          |
| Charlotte, NC,                    Airport Revenue, AMT:                                                                                                                                                             |                                        |                             |
| Series B,                    5.75%, 7/1/2013 (a)                                                                                                                                                                    | 2,480,000                                   | 2,578,580                        |
| Series B,                    5.875%, 7/1/2014 (a)                                                                                                                                                                   | 1,140,000                                   | 1,187,492                        |
| North                    Carolina, Electric Revenue, Municipal Power Agency:                                                                                                                                        |                                        |                             |
| Series C,                    5.375%, 1/1/2017                                                                                                                                                                       | 1,000,000                                   | 1,048,140                        |
| Series B,                    6.375%, 1/1/2013                                                                                                                                                                       | 3,000,000                                   | 3,158,550                        |
|                                                                                                                                                                                                                | **7,972,762**                               |
| **North                    Dakota 0.8%**                                                                                                                                                                            |
| Grand Forks,                    ND, Hospital & Healthcare Revenue, Altru Health Care System, 7.125%,                    8/15/2024                                                                               | 3,400,000                                   | **3,755,368**                    |
| **Ohio                    3.1%**                                                                                                                                                                                    |
| Buckeye, OH,                    Tobacco Settlement Financing Authority, Series A-2, 5.875%, 6/1/2030                                                                                                                | 8,820,000                                   | 8,594,561                        |
| Green Springs,                    OH, Senior Care Revenue, St. Francis Health Care Center Project, Series A,                    7.125%, 5/15/2025                                                                   | 6,000,000                                   | 5,763,000                        |
|                                                                                                                                                                                                                | **14,357,561**                              |
| **Oregon                    2.4%**                                                                                                                                                                                  |
| Oregon, State                    General Obligation Lease, Department of Administrative Services, Series A,                    Prerefunded, 6.25%, 5/1/2017 (a)                                                | 1,000,000                                   | 1,078,840                        |
| Oregon, State                    Revenue Lease, Department of Administrative Services, Series A, Prerefunded,                    6.25%, 5/1/2018 (a)                                                           | 1,000,000                                   | 1,078,840                        |
| Portland, OR,                    Special Assessment Revenue, Downtown Waterfront:                                                                                                                              |                                        |                             |
| Series A,                    5.625%, 6/15/2015 (a)                                                                                                                                                                  | 3,100,000                                   | 3,298,896                        |
| Series A,                    5.75%, 6/15/2018 (a)                                                                                                                                                                   | 2,225,000                                   | 2,362,995                        |
| Series A,                    5.75%, 6/15/2019 (a)                                                                                                                                                                   | 2,820,000                                   | 2,994,896                        |
|                                                                                                                                                                                                                | **10,814,467**                              |
| **Pennsylvania 1.7%**                                                                                                                                                                                               |
| Pennsylvania,                    Hospital & Healthcare Revenue, Economic Development Financing Authority,                    UPMC Health System, Series A, 6.0%, 1/15/2031                                      | 2,570,000                                   | 2,743,732                        |
| Philadelphia,                    PA, Gas Works Revenue, Series A-1, 5.0%, 9/1/2029 (a)                                                                                                                         | 5,000,000                                   | 5,162,950                        |
|                                                                                                                                                                                                                | **7,906,682**                               |
| **Puerto Rico                    0.2%**                                                                                                                                                                             |
| Commonwealth                    of Puerto Rico, Public Improvement:                                                                                                                                                 |                                        |                             |
| Prerefunded,                    Series A, 5.25%, 7/1/2030                                                                                                                                                           | 620,000                                     | 697,643                          |
| Series A,                    5.25%, 7/1/2030                                                                                                                                                                        | 380,000                                     | 385,620                          |
|                                                                                                                                                                                                                | **1,083,263**                               |
| **Rhode                    Island 0.9%**                                                                                                                                                                            |
| Rhode Island,                    Special Assessment Revenue, Series A, 6.125%, 6/1/2032                                                                                                                             | 4,000,000                                   | **4,070,000**                    |
| **South                    Carolina 3.4%**                                                                                                                                                                          |
| Greenwood                    County, SC, Hospital & Healthcare Revenue, South Carolina Memorial                    Hospital, 5.5%, 10/1/2031                                                                    | 1,500,000                                   | 1,523,160                        |
| South                    Carolina, Jobs Economic Development Authority, Hospital Facilities Revenue,                    Palmetto Health Alliance:                                                                   |                                        |                             |
| Series C,                    Prerefunded, 7.0%, 8/1/2030                                                                                                                                                            | 4,825,000                                   | 5,698,518                        |
| Series C,                    7.0%, 8/1/2030                                                                                                                                                                         | 595,000                                     | 701,047                          |
| Series A,                    Prerefunded, 7.375%, 12/15/2021                                                                                                                                                        | 2,000,000                                   | 2,268,000                        |
| South                    Carolina, Tobacco Settlement Revenue Management Authority:                                                                                                                            |                                        |                             |
| Series B,                    6.0%, 5/15/2022                                                                                                                                                                        | 2,000,000                                   | 2,041,460                        |
| Series B,                    6.375%, 5/15/2030                                                                                                                                                                      | 3,085,000                                   | 3,088,548                        |
|                                                                                                                                                                                                                | **15,320,733**                              |
| **South                    Dakota 0.3%**                                                                                                                                                                            |
| South Dakota,                    State Health & Educational Facilities Authority Revenue, Sanford Health,                    5.0%, 11/1/2027                                                                    | 1,500,000                                   | **1,525,305**                    |
| **Tennessee                    4.8%**                                                                                                                                                                               |
| Clarksville,                    TN, Natural Gas Acquisition Corp., Gas Revenue, 5.0%, 12/15/2021                                                                                                                    | 2,000,000                                   | 1,959,460                        |
| Memphis-Shelby                    County, TN, Airport Revenue, AMT, Series D, 6.25%, 3/1/2017 (a)                                                                                                              | 4,690,000                                   | 4,942,650                        |
| Shelby County,                    TN, Health Educational & Housing Facility Board, Hospital Revenue,                    Methodist Health Care:                                                                  |                                        |                             |
| ETM, 6.5%,                    9/1/2026                                                                                                                                                                              | 2,615,000                                   | 2,983,218                        |
| Prerefunded,                    6.5%, 9/1/2026                                                                                                                                                                      | 4,385,000                                   | 5,002,452                        |
| Tennessee,                    Energy Acquisition Corp., Gas Revenue, Series A, 5.25%,                    9/1/2019                                                                                              | 7,000,000                                   | 7,270,340                        |
|                                                                                                                                                                                                                | **22,158,120**                              |
| **Texas                    18.6%**                                                                                                                                                                                  |
| Austin, TX,                    Sales & Special Tax Revenue, Hotel Occupancy Tax:                                                                                                                      |                                        |                             |
| 6.0%,                    11/15/2013 (a)                                                                                                                                                                             | 3,190,000                                   | 3,354,157                        |
| 6.0%,                    11/15/2015 (a)                                                                                                                                                                             | 3,480,000                                   | 3,659,081                        |
| 6.0%,                    11/15/2016 (a)                                                                                                                                                                             | 3,625,000                                   | 3,811,543                        |
| Brazos River,                    TX, Pollution Control Revenue, Brazos River Authority, Texas Utilities Electric                    Co. Project, AMT, Series C, 5.75%, 5/1/2036                                | 3,965,000                                   | 3,850,689                        |
| Dallas-Fort                    Worth, TX, Airport Revenue, International Airport, AMT, Series A, 5.875%,                    11/1/2016 (a)                                                                           | 6,500,000                                   | 6,900,270                        |
| Harris County,                    TX, Hospital & Healthcare Revenue, Health Facilities Development Corp.,                    Memorial Hermann Healthcare Systems, Series A, 6.375%, 6/1/2029                    | 5,500,000                                   | 6,097,410                        |
| Houston, TX,                    Airport Revenue, People Mover Project, AMT, Series A, 5.5%, 7/15/2017                    (a)                                                                                        | 3,300,000                                   | 3,303,465                        |
| Houston, TX,                    Port Authority Revenue, Airport Revenue, AMT, Series A, 5.875%, 7/1/2014                    (a)                                                                                     | 3,960,000                                   | 4,174,434                        |
| Red River, TX,                    School District Revenue Lease, St. Mark's School Project, 6.0%,                    8/15/2019                                                                                      | 5,390,000                                   | 5,606,624                        |
| Tarrant                    County, TX, Cultural Educational Facilities Finance Corp. Revenue, Texas Health                    Resources, Series A, 5.0%, 2/15/2026                                             | 4,000,000                                   | 4,063,160                        |
| Tarrant                    County, TX, Hospital & Healthcare Revenue, Health Facilities Development                    Corp., 6.7%, 11/15/2030                                                                  | 4,500,000                                   | 4,967,955                        |
| Texas,                    Industrial Development Revenue, Waste Disposal Authority, AMT, Series A, 6.1%,                    8/1/2024                                                                                | 2,000,000                                   | 2,046,580                        |
| Texas,                    Municipal Gas Acquisition & Supply Corp I, Gas Supply Revenue, Series B,                    4.365%**, 12/15/2017                                                                      | 10,000,000                                  | 9,387,800                        |
| Texas, State                    General Obligation, College Student Loans, AMT, 5.0%, 8/1/2021                                                                                                                      | 4,015,000                                   | 4,016,205                        |
| Texas, State                    Turnpike Authority, Dallas Northway Revenue, 5.5%, 1/1/2015 (a)                                                                                                                     | 14,605,000                                  | 14,921,198                       |
| Texas, White                    Settlement, Independent School District, 5.125%, 8/15/2026                                                                                                                          | 5,035,000                                   | 5,304,070                        |
|                                                                                                                                                                                                                | **85,464,641**                              |
| **Virginia                    0.2%**                                                                                                                                                                                |
| Virginia,                    Tobacco Settlement Financing Corp., Series B-1, 5.0%, 6/1/2047                                                                                                                         | 1,200,000                                   | **996,876**                      |
| **Washington                    5.8%**                                                                                                                                                                              |
| Seattle, WA,                    Airport Revenue, AMT, Series B, 6.0%, 2/1/2013 (a)                                                                                                                             | 7,355,000                                   | 8,110,432                        |
| Seattle, WA,                    Special Assessment Revenue, AMT:                                                                                                                                                    |                                        |                             |
| Series B,                    5.5%, 9/1/2011 (a)                                                                                                                                                                     | 1,085,000                                   | 1,138,447                        |
| Series B,                    5.75%, 9/1/2013 (a)                                                                                                                                                                    | 1,045,000                                   | 1,099,058                        |
| Skagit County,                    WA, School District General Obligation, School District No. 1, Burlington                    Edison, 5.625%, 12/1/2014 (a)                                                   | 1,570,000                                   | 1,685,521                        |
| Snohomish                    County, WA, Electric Revenue, Public Utility District No. 1, 5.375%, 12/1/2024                    (a)                                                                                  | 3,000,000                                   | 3,150,480                        |
| Washington,                    Electric Revenue, Energy Northwest Columbia Generating, Series B, 6.0%,                    7/1/2018 (a)                                                                              | 3,000,000                                   | 3,289,140                        |
| Washington,                    Hospital & Healthcare Revenue, Group Health Coop of Puget Sound, 5.375%,                    12/1/2017 (a)                                                                        | 1,500,000                                   | 1,585,305                        |
| Washington,                    State General Obligation, Series A, 5.5%, 7/1/2016                                                                                                                              | 4,835,000                                   | 5,001,324                        |
| Washington,                    State Health Care Facilities Authority Revenue, Series C, 5.375%, 8/15/2028 (a)                    (b)                                                                               | 1,435,000                                   | 1,458,204                        |
|                                                                                                                                                                                                                | **26,517,911**                              |
| **West                    Virginia 4.5%**                                                                                                                                                                           |
| West Virginia,                    Hospital & Healthcare Revenue, Hospital Finance Authority, Charleston                    Medical Center:                                                                      |                                        |                             |
| Series A,                    6.75%, 9/1/2022                                                                                                                                                                        | 2,355,000                                   | 2,588,168                        |
| 6.75%,                    9/1/2030                                                                                                                                                                                  | 395,000                                     | 434,109                          |
| West Virginia,                    Hospital Finance Authority, Charleston Medical Center:                                                                                                                            |                                        |                             |
| Prerefunded,                    6.75%, 9/1/2022                                                                                                                                                                     | 9,645,000                                   | 10,607,957                       |
| Prerefunded,                    6.75%, 9/1/2030                                                                                                                                                                     | 3,605,000                                   | 3,964,923                        |
| West Virginia,                    Water & Sewer Revenue, Water Development Authority, Series B, 5.25%,                    11/1/2023 (a)                                                                         | 2,740,000                                   | 2,948,788                        |
|                                                                                                                                                                                                                | **20,543,945**                              |
| **Wisconsin                    2.2%**                                                                                                                                                                               |
| Badge, WI,                    Tobacco Asset Securitization Corp., 6.125%, 6/1/2027                                                                                                                             | 3,930,000                                   | 4,068,690                        |
| Wisconsin,                    Hospital & Healthcare Revenue, Health & Education Facilities Authority,                    Aurora Health Care, Inc., Series A, 5.6%, 2/15/2029                                | 6,000,000                                   | 6,035,640                        |
|                                                                                                                                                                                                                | **10,104,330**                              |
| **Total                    Municipal Bonds and Notes** (Cost $649,089,341)                                                                                                                                          | **686,731,771**                             |
|                                                                                                                                                                                                                |
| **Municipal Inverse                    Floating Rate Notes 21.1%**                                                                                                                                                  |
| **Arizona                    2.6%**                                                                                                                                                                                 |
| Phoenix, AZ,                    Industrial Development Authority, Single Family Mortgage Revenue, Series                    2007-3, 5.625%, 5/1/2039 (c)                                                       | 11,250,000                                  | **12,008,023**                   |
| *Trust:                    Phoenix, AZ, Puttable Floating Option, Tax Exempt Receipts, RITES-PA-1509, AMT,                    144A, 10.614%, 5/1/2039, Leverage Factor at purchase date: 4 to                    1* |                                        |                             |
| **California                    6.9%**                                                                                                                                                                              |
| California,                    San Francisco Bay Area Toll Authority, Toll Bridge Revenue, Series F, 5.0%,                    4/1/2031 (c)                                                                          | 10,000,000                                  | 10,481,900                       |
| *Trust:                    California, Bay Area Toll Authority, Toll Bridge Revenue, Series 1962-5, 144A,                    8.66%, 4/1/2031, Leverage Factor at purchase date: 4 to 1*                             |                                        |                             |
| San Jose, CA,                    Redevelopment Agency Tax Allocation, Merged Area Redevelopment Project, Series                    C, 5.0%, 8/1/2025 (a) (c)                                                   | 10,000,000                                  | 10,447,800                       |
| *Trust:                    California, Puttable Floating Option, Tax Exempt Receipts, RITES-PA-1505, 144A,                    8.12%, 8/1/2025, Leverage Factor at purchase date: 4 to 1*                            |                                        |                             |
| California,                    State General Obligation, 5.0%, 6/1/2023 (a) (c)                                                                                                                                     | 10,000,000                                  | 10,633,600                       |
| *Trust:                    California, State General Obligation, Series 1932, 144A, 8.66%, 6/1/2023,                    Leverage Factor at purchase date: 4 to 1*                                                   |                                        |                             |
|                                                                                                                                                                                                                | **31,563,300**                              |
| **Illinois                    4.0%**                                                                                                                                                                                |
| Chicago, IL,                    General Obligation, Series A, 5.0%, 1/1/2024 (a) (c)                                                                                                                 | 10,360,000                                  | 10,929,852                       |
| *Trust:                    Chicago, IL, UBS Municipal (CRVS), Various States, 144A, 8.48%, 1/1/2024,                    Leverage Factor at purchase date: 4 to 1*                                                   |                                        |                             |
| Aurora, IL,                    Single Family Mortgage Revenue, Series C, 5.5%, 6/1/2045 (c)                                                                                                                         | 7,000,000                                   | 7,309,085                        |
| *Trust:                    Illinois, Puttable Floating Option, Tax Exempt Receipts, RITES-PA-1499, 144A,                    AMT, 10.03%, 6/1/2045, Leverage Factor at purchase date: 4 to 1*                        |                                        |                             |
|                                                                                                                                                                                                                | **18,238,937**                              |
| **Nevada                    2.2%**                                                                                                                                                                                  |
| Henderson, NV,                    Health Care Facility Revenue, Catholic Healthcare West, Series B, 5.25%,                    7/1/2031 (c)                                                                          | 10,000,000                                  | **10,157,650**                   |
| *Trust:                    Nevada, Puttable Floating Option, Tax Exempt Receipts, RITES-PA-1494, 144A,                    8.16%, 7/1/2031, Leverage Factor at purchase date: 4 to 1*                                |                                        |                             |
| **New York                    5.4%**                                                                                                                                                                                |
| New York,                    State Dormitory Authority Revenues, State Supported Debt, University Dormitory                    Facilities, 5.0%, 7/1/2025 (c)                                                  | 5,425,000                                   | 5,687,998                        |
| *Trust: New                    York, State Dormitory Authority Revenues, Secondary Issues, Series 1971-1,                    144A, 8.479%, 7/1/2025, Leverage Factor at purchase date: 4 to 1*                      |                                        |                             |
| New York,                    State Dormitory Authority Revenues, State Supported Debt, University Dormitory                    Facilities, 5.0%, 7/1/2027 (c)                                                  | 8,080,000                                   | 8,420,249                        |
| *Trust: New                    York, State Dormitory Authority Revenues, Secondary Issues, Series 1971-2,                    144A, 8.48%, 7/1/2027, Leverage Factor at purchase date: 4 to 1*                       |                                        |                             |
| New York,                    State Dormitory Authority, State Personal Income Tax Revenue, Series A, 5.0%,                    3/15/2024 (c)                                                                         | 10,000,000                                  | 10,661,150                       |
| *Trust: New                    York, State Dormitory Authority Revenues, Secondary Issues, Series 1955-3,                    144A, 8.57%, 3/15/2024, Leverage Factor at purchase date: 4 to 1*                      |                                        |                             |
|                                                                                                                                                                                                                | **24,769,397**                              |
| **Total                    Municipal Inverse Floating Rate Notes** (Cost $96,106,848)                                                                                                                               | **96,737,307**                              |

|                                                                        | **% of Net                    Assets** | **Value                    ($)** |
|-----------------------------------------------------------------------------|----------------------------------------|----------------------------------|
|                                                                        |                                   |
| **Total                    Investment Portfolio** (Cost $745,196,189)+ | 170.6                                  | **783,469,078**                  |
| **Other                    Assets and Liabilities, Net**                    | (12.9)                                 | **(59,135,237)**                 |
| **Preferred                    Shares, at Redemption Value**                | (57.7)                                 | **(265,000,000)**                |
| **Net Assets                    Applicable to Common Shareholders**         | 100.0                                  | **459,333,841**                  |

| **Insurance                    Coverage** | **As a % of                    Total Investment Portfolio** |
|-------------------------------------------|-------------------------------------------------------------|
| Ambac Financial Group                     | 13.8                                                        |
| Financial Guaranty Insurance Company      | 10.1                                                        |
| Financial Security Assurance, Inc.        | 14.9                                                        |
| MBIA Corp.                                | 9.9                                                         |
| Radian                                    | 0.2                                                         |

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

*AMT: Subject to        alternative minimum tax*

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

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

*RITES: Residual        Interest Tax Exempt Security.*

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

**Financial        Statements**

| **Statement                    of Assets and Liabilities**as of                    November 30, 2007                                                                                                             |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **Assets**                                                                                                                                                                                                       |
| Investments in securities, at value                (cost $745,196,189)                                                                                                                                      | $                    783,469,078 |
| Cash                                                                                                                                                                                                             | 55,214 |
| Receivable for investments sold                                                                                                                                                                                  | 100,000 |
| Interest receivable                                                                                                                                                                                              | 12,549,804 |
| Total assets                                                                                                                                                                                                     | 796,174,096 |
| **Liabilities**                                                                                                                                                                                                  |
| Payable for investments purchased —                when-issued security                                                                                                                                    | 1,412,858 |
| Payable for floating rate notes issued                                                                                                                                                                           | 69,083,500 |
| Distributions payable                                                                                                                                                                                            | 497,783 |
| Accrued management fee                                                                                                                                                                                           | 327,705 |
| Other accrued expenses and payables                                                                                                                                                                              | 518,409 |
| Total liabilities                                                                                                                                                                                                | 71,840,255 |
| **Remarketed                    preferred shares, at redemption value**                                                                                                                                          | **265,000,000** |
| **Net assets                    applicable to common shareholders**                                                                                                                                              | **$                    459,333,841** |
| **Net Assets                    Applicable to Common Shareholders Consist of**                                                                                                                                   |
| Undistributed net investment income                                                                                                                                                                              | 61,847 |
| Net unrealized appreciation (depreciation) on                investments                                                                                                                                         | 38,272,889 |
| Accumulated net realized gain (loss)                                                                                                                                                                             | (6,452,090) |
| Paid-in capital                                                                                                                                                                                                  | 427,451,195 |
| **Net assets                    applicable to common shareholders**                                                                                                                                              | **$                    459,333,841** |
| **Net Asset                    Value**                                                                                                                                                                           |
| **Net Asset Value** per common share                ($459,333,841 ÷ 38,973,231 outstanding shares of beneficial                interest, $.01 par value, unlimited shares authorized) | **$                    11.79** |

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

| **Statement                    of Operations**for the year ended                    November 30, 2007 |
|-------------------------------------------------------------------------------------------------------|
| **Investment                    Income**                                                              |
| Income:Interest                                                                                       | $                    39,702,646 |
| Expenses:Management fee                                                                               | 4,004,227 |
| Services to shareholders                                                                              | 87,660 |
| Custodian fees                                                                                        | 30,527 |
| Professional fees                                                                                     | 96,204 |
| Trustees' fees and expenses                                                                           | 43,604 |
| Reports to shareholders                                                                               | 89,077 |
| Remarketing agent fee                                                                                 | 662,501 |
| Stock exchange listing fees                                                                           | 33,229 |
| Interest expense and fees on floating rate                notes                                       | 1,282,883 |
| Other                                                                                                 | 108,665 |
| Total expenses before expense reductions                                                              | 6,438,577 |
| Expense reductions                                                                                    | (42,833) |
| Total expenses after expense reductions                                                               | 6,395,744 |
| **Net                    investment income**                                                          | **33,306,902** |
| **Realized                    and Unrealized Gain (Loss)**                                            |
| Net realized gain (loss) from                investments                                              | (768,584) |
| Change in net unrealized appreciation                (depreciation) on investments                    | (14,725,086) |
| **Net gain                    (loss)**                                                                | **(15,493,670)** |
| **Dividends                    on remarketed preferred shares**                                       | **(10,526,572)** |
| **Net                    increase (decrease) in net assets resulting from operations**                | **$                    7,286,660** |

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

| **Statement                    of Cash Flows**for the year ended                    November 30, 2007                                                                        |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **Cash Flows                    from Operating Activities:**                                                                                                                 |
| Investment income received*                                                                                                                                                  | $                    39,938,931 |
| Payment of operating expenses                                                                                                                                                | (5,072,577) |
| Payment of interest expense                                                                                                                                                  | (1,282,883) |
| Proceeds from sales and maturities of                investments                                                                                                             | 414,145,093 |
| Purchases of investments                                                                                                                                                     | (484,121,796) |
| **Cash                    provided (used) by operating activities**                                                                                                          | **$                    (36,393,232)** |
| **Cash Flows                    from Financing Activities:**                                                                                                                 |
| Net increase (decrease) in payable for floating                rate notes issued                                                                                             | $                    69,083,500 |
| Reimbursement by Advisor                                                                                                                                                     | 175,116 |
| Distributions paid                                                                                                                                                           | (32,853,168) |
| **Cash                    provided (used) by financing activities**                                                                                                          | **36,405,448** |
| Increase (decrease) in cash                                                                                                                                                  | 12,216 |
| Cash at beginning of period                                                                                                                                                  | 42,998 |
| **Cash at end                    of period**                                                                                                                                 | **$                    55,214** |
| **Reconciliation of Net Increase (Decrease) in                    Net Assets Resulting from Operations to Cash Provided (Used) by Operating                    Activities:** |
| Increase (decrease) in net assets resulting from                operations (excluding dividends on remarketed preferred shares)                                         | $                    17,813,232 |
| (Increase) decrease in cost of                investments                                                                                                                    | (70,391,260) |
| (Increase) decrease in unrealized appreciation                (depreciation) on investments                                                                                  | 14,725,086 |
| (Increase) decrease in receivable for investments                sold                                                                                                        | (60,000) |
| (Increase) decrease in interest                receivable                                                                                                                    | 66,568 |
| (Increase) decrease in other assets                                                                                                                                          | 917 |
| Increase (decrease) in payable for investments                purchased                                                                                                      | 1,412,858 |
| Increase (decrease) in other accrued expenses and                payables                                                                                                    | 39,367 |
| **Cash                    provided (used) by operating activities**                                                                                                          | **$                    (36,393,232)** |

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

| **Statement                    of Changes in Net Assets**                                                                                                                                            |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **Increase                    (Decrease) in Net Assets**                                                                                                                                             | **Years                    Ended November 30,** |
| **2007**                                                                                                                                                                                             | **2006** |
| Operations:Net investment income                                                                                                                                                                     | $                    33,306,902 | $                    33,421,782 |
| Net realized gain (loss)                                                                                                                                                                             | (768,584) | (898,315) |
| Change in net unrealized appreciation                (depreciation)                                                                                                                                  | (14,725,086) | 2,288,488 |
| Dividends on remarketed preferred shares                                                                                                                                                             | (10,526,572) | (9,282,908) |
| Net increase (decrease) in net assets resulting                from operations                                                                                                                       | 7,286,660 | 25,529,047 |
| Distributions to common shareholders                from:Net investment income                                                                                                                       | (22,448,581) | (24,214,594) |
| Fund share and paid-in capital                transactions:Net proceeds from shares issued to common                shareholders in reinvestment of distributions                                    | — | 655,914 |
| Reimbursement by Advisor                                                                                                                                                                             | 175,116 | — |
| Net increase (decrease) in net assets from Fund                share and paid-in capital transactions                                                                                                | 175,116 | 655,914 |
| **Increase                    (decrease) in net assets**                                                                                                                                             | (14,986,805) | 1,970,367 |
| Net assets at beginning of period                                                                                                                                                                    | 474,320,646 | 472,350,279 |
| Net assets at end of period (including                undistributed net investment income and distributions in excess of net investment                income of $61,847 and $251,858, respectively) | **$                    459,333,841** | **$                    474,320,646** |
| **Other                    Information**                                                                                                                                                             |
| Common shares outstanding at beginning of                period                                                                                                                                      | 38,973,231 | 38,919,429 |
| Shares issued to common shareholders in                reinvestment of distributions                                                                                                                 | — | 53,802 |
| Common shares outstanding at end of                period                                                                                                                                            | 38,973,231 | 38,973,231 |

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

**Financial        Highlights**

| **Years Ended                    November 30,**                                                                                                                        | **2007**                       | **2006**                       | **2005**                       | **2004**                       | **2003**                       |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------|--------------------------------|--------------------------------|--------------------------------|--------------------------------|
| **Selected                    Per Share Data**                                                                                                                         |
| **Net asset                    value, beginning of period**                                                                                                            | **$                    12.17** | **$                    12.14** | **$                    12.42** | **$                    12.59** | **$                    12.18** |
| *Income                    (loss) from investment operations:*

Net investment                    incomea                                                              | .85                            | .86                            | .87                            | .89                            | .92                            |
| Net realized                    and unrealized gain (loss)                                                                                                             | (.38)                          | .03                            | (.17)                          | (.16)                          | .36                            |
| *Dividends                    on remarketed preferred shares (common share equivalent):*

From net                    investment income                                | (.27)                          | (.24)                          | (.17)                          | (.09)                          | (.07)                          |
| **Total from                    investment operations**                                                                                                                | .20                            | .65                            | .53                            | .64                            | 1.21                           |
| *Less                    distributions from:*

Net investment                    income                                                                                | (.58)                          | (.62)                          | (.81)                          | (.81)                          | (.79)                          |
| Net realized                    gains to common shareholders                                                                                                           | —                        | —                        | —                        | —                        | (.01)                          |
| **Total                    distributions to common shareholders**                                                                                                      | (.58)                          | (.62)                          | (.81)                          | (.81)                          | (.80)                          |
| Reimbursement by Advisor                                                                                                                                               | .00*                           | —                        | —                        | —                        | —                        |
| **Net asset                    value, end of period**                                                                                                                  | **$                    11.79** | **$                    12.17** | **$                    12.14** | **$                    12.42** | **$                    12.59** |
| **Market                    value, end of period**                                                                                                                     | **$                    10.43** | **$                    10.98** | **$                    12.40** | **$                    12.03** | **$                    11.96** |
| **Total                    Return**                                                                                                                                    |
| Based on net asset                value (%)b                                                                                                                      | 2.04c,f                        | 5.88f                          | 4.45                           | 5.50                           | 10.53                          |
| Based on market                value (%)b                                                                                                                         | .06                            | (6.47)                         | 10.15                          | 7.57                           | 15.63                          |
| **Ratios to                    Average Net Assets and Supplemental Data**                                                                                              |
| Net assets, end of period                ($ millions)                                                                                                             | 459                            | 474                            | 472                            | 482                            | 489                            |
| Ratio of expenses before fee reductions (%)                (based on net assets of common shares, including interest                expense)d                     | 1.39                           | 1.10                           | 1.10                           | 1.06                           | 1.05                           |
| Ratio of expenses after fee reductions (%)                (based on net assets of common shares, including interest                expense)d                      | 1.38                           | 1.09                           | 1.10                           | 1.06                           | 1.05                           |
| Ratio of expenses after fee reductions (%)                (based on net assets of common shares, excluding interest expense)                                      | 1.10                           | 1.09                           | 1.10                           | 1.06                           | 1.05                           |
| Ratio of expenses before fee reductions (%) (based                on net assets of common and remarketed preferred shares, including interest                expense)d | .88                            | .71                            | .71                            | .68                            | .68                            |

| **Years Ended                    November 30,**(continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | **2007** | **2006** | **2005** | **2004** | **2003** |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------|----------|----------|----------|----------|
| Ratio of expenses after fee reductions (%) (based                on net assets of common and remarketed preferred shares, including interest                expense)d                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | .88      | .70      | .71      | .68      | .68      |
| Ratio of expenses after fee reductions (%) (based                on net assets of common and remarketed preferred shares, excluding interest                expense)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | .70      | .70      | .71      | .68      | .68      |
| Ratio of net investment income (%) (based on                net assets of common shares)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | 7.19     | 7.13     | 7.00     | 7.15     | 7.35     |
| Ratio of net investment income (%) (based on                net assets of common and remarketed preferred shares)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | 4.57     | 4.55     | 4.52     | 4.62     | 4.75     |
| Portfolio turnover rate (%)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | 57       | 33       | 16       | 25       | 7        |
| Remarketed preferred shares information at end                of period:Aggregate amount outstanding                ($ millions)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | 265      | 265      | 265      | 265      | 265      |
| Asset coverage per                share ($)e                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | 13,667   | 13,949   | 13,912   | 14,097   | 14,225   |
| Liquidation and market value per                share ($)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | 5,000    | 5,000    | 5,000    | 5,000    | 5,000    |
| a*Based on average common shares outstanding                during the period.*b*Total return based on net asset value reflects                changes in the Fund's net asset value during each period. Total return based on                market value reflects changes in market value. Each figure assumes that dividend                and capital gains distributions, if any, were reinvested. These figures will differ                depending upon the level of any discount from or premium to net asset value at                which the Fund's shares traded during the period.*c*Includes a non-recurring reimbursement from the                Advisor for a fee previously charged to the Fund (see Note F). Excluding this                non-recurring reimbursement, total return would have been 0.04%                lower.*d*Interest expense represents interest and fees on                short term floating rate notes issued in conjunction with inverse floating rate                securities. Interest income from such transactions is included in income from                investment operations.*e*Asset coverage per share equals net assets of                common shares plus the redemption value of the remarketed preferred shares divided                by the total number of remarketed preferred shares outstanding at the end of the                period.*f*Total return would have been lower had certain                fees not been reduced.***Amount is less than $.005.* |

**Notes to Financial        Statements**

**A. Significant Accounting        Policies**

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

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

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

Money market instruments purchased        with an original or remaining maturity of sixty days or less, maturing at par, are valued        at amortized cost.

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

In September 2006, the Financial        Accounting Standards Board ("FASB") released Statement of Financial Accounting Standards        No. 157, "Fair Value Measurements" ("FAS 157"). FAS 157 defines fair value, establishes a        framework for measuring fair value and expands disclosures about fair value measurements.        FAS 157 is effective for fiscal years beginning after November 15, 2007. As of November 30,        2007, management does not believe the adoption of FAS 157 will impact the amounts reported        in the financial statements, however, additional disclosures will be required about the        inputs used to develop the measurements of fair value and the effect of certain of the        measurements reported in the statement of operations for a fiscal period.

**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 and tax-exempt income to its shareholders. Accordingly, the        Fund paid no federal income taxes and no federal income tax provision was        required.

At November 30, 2007, the Fund had a        net tax basis capital loss carryforward of approximately $5,837,000 which may be applied        against any realized net taxable capital gains of each succeeding year until fully utilized        or until November 30, 2008 ($3,602,000), November 30, 2011 ($1,323,000) and November 30,        2014 ($912,000), the respective expiration dates, whichever occurs first. During the year        ended November 30, 2007, the Fund utilized approximately $204,000 and lost through        expiration approximately $617,000 of a prior year capital loss carryforward. In addition,        from November 1, 2007 through November 30, 2007, the Fund incurred approximately $970,000        of net realized capital losses. As permitted by tax regulations, the Fund intends to elect        to defer these losses and treat them as arising in the fiscal year ending November 30,        2008.

In July 2006, FASB issued        Interpretation No. 48 ("FIN 48"), "Accounting for Uncertainty in Income Taxes — an        interpretation of FASB Statement No. 109" (the "Interpretation"). The Interpretation        establishes for the Fund a minimum threshold for financial statement recognition of the        benefit of positions taken in filing tax returns (including whether the Fund is taxable in        certain jurisdictions), and requires certain expanded tax disclosures. The Interpretation        is effective for fiscal years beginning after December 15, 2006. On December 22, 2006, the        SEC indicated that they would not object if a Fund implements FIN 48 in the first required        financial statement reporting period for its fiscal year beginning after December 15, 2006.        Management is evaluating the application of the Interpretation to the Fund and is not in a        position at this time to estimate the significance of its impact, if any, on the Fund's        financial statements.

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

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

At November 30, 2007, the Fund's        components of distributable earnings (accumulated losses) on a tax-basis were as        follows:

| Undistributed tax-exempt income                                          | $                    595,828     |
|--------------------------------------------------------------------------|----------------------------------|
| Capital loss carryforwards                                               | $                    (5,837,000) |
| Net unrealized appreciation (depreciation) on                investments | $                    38,873,306  |

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

|                                 | **Years                    Ended November 30,** |
|--------------------------------------|-------------------------------------------------|
|                                 | **2007**                                        | **2006** |
| Distributions from ordinary income   | $                    —                    | 48,947 |
| Distributions from tax-exempt income | $                    32,975,153                 | $                    33,448,555 |

**Remarketed        Preferred Shares.** The Fund has issued and outstanding 10,800 Series A,        10,700 Series B, 10,800 Series C, 10,700 Series D and 10,000 Series E remarketed preferred        shares, each at a liquidation value of $5,000 per share. The preferred shares are senior to        and have certain class specific preferences over the common shares. The dividend rate on        each series is set by the remarketing agent, and the dividends are generally paid every 28        days. The remarketing agent will pay each broker-dealer a service charge from funds        provided by the Fund (remarketing agent fee). The 1940 Act requires that the preferred        shareholders of the Fund, voting as a separate class, have the right to: a) elect at        least two trustees at all times, and b) elect a majority of the trustees at any time when        dividends on the preferred shares are unpaid for two full years. Unless otherwise required        by law or under the terms of the preferred shares designation statement, each preferred        share is entitled to one vote and preferred shareholders will vote together with common        shareholders as a single class and have the same voting rights.

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

The weighted        average outstanding daily balance of the floating rate notes during the period ended        November 30, 2007 was approximately $32,940,000, with a weighted average interest rate        of 3.92%.

**Statement of Cash        Flows.** Information on financial transactions which have been settled through the        receipt and disbursement of cash is presented in the Statement of Cash Flows. The end of        period cash amount shown in the Statement of Cash Flows represents the cash position in the        Fund's custodian bank at November 30, 2007. Non-cash activity from discount accretion and        premium amortization has been excluded from the Statement of Cash Flows.

**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.        Realized gains and losses from investment transactions are recorded on an identified cost        basis. All premiums and discounts are amortized/accreted for financial reporting purposes,        with the exception of securities in default of principal.

**B. Purchases and        Sales of Securities**

During the year ended November 30,        2007, purchases and sales of investment securities (excluding short-term investments)        aggregated $485,534,654 and $414,205,093, respectively.

**C. Related Parties**

**Management        Agreement.** Under the Investment Management Agreement with Deutsche Investment        Management Americas Inc. ("DIMA" or the "Advisor"), an indirect, wholly owned subsidiary of        Deutsche Bank AG, the Advisor directs the investments of the Fund in accordance with its        investment objectives, policies and restrictions. The Advisor determines the securities,        instruments and other contracts relating to investments to be purchased, sold or entered        into by the Fund. In addition to portfolio management services, the Advisor provides        certain administrative services in accordance with the Investment Management Agreement. The        management fee payable under the Investment Management Agreement is equal to an annual rate        of 0.55% of the Fund's average weekly net assets, computed and accrued daily and payable        monthly.

**Service Provider        Fees.** DWS Scudder Investments Service Company ("DWS-SISC"), 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 DWS-SISC and DST Systems, Inc.        ("DST"), DWS-SISC has delegated certain transfer agent, dividend-paying agent and        shareholder service agent functions to DST. DWS-SISC compensates DST out of the shareholder        servicing fee it receives from the Fund. For the year ended November 30, 2007, the amount        charged to the Fund by DWS-SISC aggregated $87,447, of which $16,459 is        unpaid.

**Typesetting and        Filing Service Fees.** Under an agreement with DIMA, DIMA is compensated for        providing typesetting and certain regulatory filing services to the Fund. For the year        ended November 30, 2007, the amount charged to the Fund by DIMA included in the Statement        of Operations under "reports to shareholders" aggregated $20,369, of which $12,491 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.

**Other Related        Parties.** Deutsche Bank Trust Company Americas, an affiliate of the Advisor,        charges an Administration fee for the remarketed preferred shares. For the year ended        November 30, 2007, the amount charged to the Fund by Deutsche Bank Trust Company Americas        aggregated $19,009, all of which is unpaid.

**D. Fee Reductions**

For the year ended November 30,        2007, the Advisor agreed to reimburse the Fund $16,838, which represents a portion of the        fee savings expected to be realized by the Advisor related to the outsourcing by the        Advisor of certain administrative services to an unaffiliated service provider.

In addition, the        Fund has entered into an arrangement with its custodian and transfer agent whereby credits        realized as a result of uninvested cash balances are used to reduce a portion of the Fund's        custodian expenses. During the year ended November 30, 2007, the Fund's custodian fees were        reduced by $688 and $25,307, respectively, for custodian and transfer agent credits        earned.

**E. Line of Credit**

The Fund and other affiliated funds        (the ``Participants'') share in a $750 million revolving credit facility administered        by JPMorgan Chase Bank, N.A. for temporary or emergency purposes. The Participants are        charged an annual commitment fee which is allocated, based upon net assets, among each of        the Participants. Interest is calculated at the Federal Funds Rate plus 0.35 percent.        The Fund may borrow up to a maximum of 33 percent of its net assets under the        agreement.

**F. Payment Made by        Affiliates**

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

**Report of Independent        Registered Public Accounting Firm**

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

We have audited the accompanying        statement of assets and liabilities of DWS Municipal Income Trust (the "Fund"), including        the investment portfolio, as of November 30, 2007, and the related statement of operations        and cash flows for the year then ended, the statement of changes in net assets for each of        the two years in the period then ended, and the financial highlights for each of the five        years in the period then ended. These financial statements and financial highlights are the        responsibility of the Fund's management. Our responsibility is to express an opinion on        these financial statements and financial highlights based on our audits.

We conducted our audits in        accordance with the standards of the Public Company Accounting Oversight Board (United        States). Those standards require that we plan and perform the audit to obtain reasonable        assurance about whether the financial statements and financial highlights are free of        material misstatement. We were not engaged to perform an audit of the Fund's internal        control over financial reporting. Our audits included consideration of internal control        over financial reporting as a basis for designing audit procedures that are appropriate in        the circumstances, but not for the purpose of expressing an opinion on the effectiveness of        the Fund's internal control over financial reporting. Accordingly, we express no such        opinion. An audit also includes examining, on a test basis, evidence supporting the amounts        and disclosures in the financial statements and financial highlights, assessing the        accounting principles used and significant estimates made by management, and evaluating the        overall financial statement presentation. Our procedures included confirmation of        securities owned as of November 30, 2007, by correspondence with the custodian and brokers        or by other appropriate auditing procedures where replies from bankers were not received.        We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial        statements and financial highlights referred to above present fairly, in all material        respects, the financial position of DWS Municipal Income Trust at November 30, 2007, the        results of its operations and its cash flows for the year then ended, the changes in its        net assets for each of the two years in the period then ended, and the financial highlights        for each of the five years in the period then ended, in conformity with U.S. generally        accepted accounting principles.

| Boston,                    Massachusetts                    January 28, 2007 |   |  |
|------------------------------------------------------------------------------|--------|--|

**Tax Information(Unaudited)**

Of the dividends paid from net        investment income for the taxable year ended November 30, 2007, 100% are designated as        exempt-interest dividends for federal income tax purposes.

Please contact 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)        294-4366.

**Other        Information**

**Certifications**

The fund's chief executive officer        has certified to the New York Stock Exchange that, as of May 31, 2007, he was not aware of        any violation by the fund of applicable NYSE corporate governance listing standards. The        fund's reports to the Securities and Exchange Commission on Forms N-CSR and N-Q contain        certifications by the fund's chief executive officer and chief financial officer that        relate to the fund's disclosure in such reports and that are required by rule 30a-2 under        the 1940 Act.

**Dividend Repurchase        Plan**

**A. Participation**

We invite you to review the        description of the Dividend Reinvestment Plan (the ``Plan'') that is available to you as a        shareholder of DWS Municipal Income Trust (the ``Fund''). If you wish to participate and        your shares are held in your own name, simply contact DWS Scudder Investments Service        Company, whose address and phone number are provided in Paragraph E, for the appropriate        form. If your shares are held in the name of a brokerage firm, bank, or other nominee, you        must instruct that nominee to re-register your shares in your name so that you may        participate in the Plan, unless your nominee has made the Plan available on shares held by        them. Shareholders who so elect will be deemed to have appointed Computershare Inc.*        ("Computershare") as their agent and as agent for the Fund under the Plan.

**B. Dividend Investment        Account**

The Fund's transfer agent and        dividend disbursing agent or its delegate (the ``Transfer Agent'') will establish a        Dividend Investment Account (the ``Account'') for each shareholder participating in the        Plan. The Transfer Agent will credit to the Account of each participant funds it receives        from the following sources: (a) cash dividends and capital gains distributions paid on        shares of beneficial interest (the ``Shares'') of the Fund registered in the participant's        name on the books of the Fund; and (b) cash dividends and capital gains distributions paid        on Shares registered in the name of the Transfer Agent but credited to the participant's        Account. Sources described in clauses (a) and (b) of the preceding sentence are hereinafter        called ``Distributions.''

**C. Investment of Distribution        Funds Held in Each Account**

If on the record date for a        Distribution (the ``Record Date''), Shares are trading at a discount from net asset value        per Share (according to the evaluation most recently made on Shares of the Fund), funds        credited to a participant's Account will be used to purchase Shares (the ``Purchase'').        Computershare will attempt, commencing five days prior to the Payment Date and ending at        the close of business on the Payment Date (``Payment Date'' as used herein shall mean the        last business day of the month in which such Record Date occurs), to acquire Shares in the        open market. If and to the extent that Computershare is unable to acquire sufficient Shares        to satisfy the Distribution by the close of business on the Payment Date, the Fund will        issue to Computershare, Shares valued at net asset value per Share (according to the        evaluation most recently made on Shares of the Fund) in the aggregate amount of the        remaining value of the Distribution. If, on the Record Date, Shares are trading at a        premium over net asset value per Share, the Fund will issue on the Payment Date, Shares        valued at net asset value per Share on the Record Date to the Transfer Agent in the        aggregate amount of the funds credited to the participants' accounts.

**D. Voluntary        Cash Contributions**

A participant may from time to time        make voluntary cash contributions to his Account by sending to the Transfer Agent a check        or money order, payable to the Transfer Agent, in a minimum amount of $100 with appropriate        accompanying instructions. (No more than $500 may be contributed per month.) The Transfer        Agent will inform Computershare of the total funds available for the purchase of Shares and        Computershare will use the funds to purchase additional Shares for the participant's        Account the earlier of: (a) when it next purchases Shares as a result of a Distribution or        (b) on or shortly after the first day of each month and in no event more than 30 days after        such date except when temporary curtailment or suspension of purchases is necessary to        comply with applicable provisions of federal securities laws. Cash contributions received        more than fifteen calendar days or less than five calendar days prior to a Payment Date        will be returned uninvested. Interest will not be paid on any uninvested cash        contributions. Participants making voluntary cash investments will be charged a $.75        service fee for each such investment and will be responsible for their pro rata share of        brokerage commissions.

**E. Additional        Information**

Address all notices, correspondence,        questions, or other communication regarding the Plan, or if you would like a copy of the        Plan, to:

**DWS Scudder        Investments Service Company**        P.O. Box 219066        Kansas City, Missouri 64121-9066        (800) 294-4366

**F. Adjustment of Purchase        Price**

The Fund will increase the price at        which Shares may be issued under the Plan to 95% of the fair market value of the shares on        the Record Date if the net asset value per Share of the Shares on the Record Date is less        than 95% of the fair market value of the Shares on the Record Date.

**G. Determination of Purchase        Price**

The cost of Shares and fractional        Shares acquired for each participant's Account in connection with a Purchase shall be        determined by the average cost per Share, including brokerage commissions as described in        Paragraph H hereof, of the Shares acquired by Computershare in connection with that        Purchase. Shareholders will receive a confirmation showing the average cost and number of        Shares acquired as soon as practicable after the Transfer Agent has received or        Computershare has purchased Shares. The Transfer Agent may mingle the cash in a        participant's account with similar funds of other participants of the Fund for whom        Computershare acts as agent under the Plan.

**H. Brokerage        Charges**

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

**I. Service Charges**

There is no service charge by the        Transfer Agent or Computershare to shareholders who participate in the Plan other than        service charges specified in Paragraphs D and M hereof. However, the Fund reserves the        right to amend the Plan in the future to include a service charge.

**J. Transfer of Shares Held by        Agent**

The Transfer Agent will maintain the        participant's Account, hold the additional Shares acquired through the Plan in safekeeping        and furnish the participant with written confirmation of all transactions in the Account.        Shares in the Account are transferable upon proper written instructions to the Transfer        Agent. Upon request to the Transfer Agent, a certificate for any or all full Shares in a        participant's Account will be sent to the participant.

**K. Shares Not Held in        Shareholder's Name**

Beneficial owners of Shares which        are held in the name of a broker or nominee will not be automatically included in the Plan        and will receive all distributions in cash. Such shareholders should contact the broker or        nominee in whose name their Shares are held to determine whether and how they may        participate in the Plan.

**L. Amendments**

Experience under the Plan may        indicate that changes are desirable. Accordingly, the Fund reserves the right to amend or        terminate the Plan, including provisions with respect to any Distribution paid, subsequent        to notice thereof sent to participants in the Plan at least ninety days before the record        date for such Distribution, except when such amendment is necessary or appropriate to        comply with applicable law or the rules or policies of the Securities and Exchange        Commission or any other regulatory authority, in which case such amendment shall be        effective as soon as practicable. The amendment shall be deemed to be accepted by each        participant unless, prior to the effective date thereof, the Transfer Agent receives notice        of the termination of such participant's account under the Plan in accordance with the        terms hereof. The Plan may be terminated by the Fund.

**M. Withdrawal        from Plan**

Shareholders may withdraw from the        Plan at any time by giving the Transfer Agent a written notice. If the proceeds are        $100,000 or less and the proceeds are to be payable to the shareholder of record and mailed        to the address of record, a signature guarantee normally will not be required for notices        by individual account owners (including joint account owners), otherwise a signature        guarantee will be required. In addition, if the certificate is to be sent to anyone other        than the registered owner(s) at the address of record, a signature guarantee will be        required on the notice. A notice of withdrawal will be effective for the next Distribution        following receipt of the notice by the Transfer Agent provided the notice is received by        the Transfer Agent at least ten days prior to the Record Date for the Distribution. When a        participant withdraws from the Plan, or when the Plan is terminated in accordance with        Paragraph L hereof, the participant will receive a certificate for full Shares in the        Account, plus a check for any fractional Shares based on market price; or if a Participant        so desires, the Transfer Agent will notify Computershare to sell his Shares in the Plan and        send the proceeds to the participant, less brokerage commissions and a $2.50 service        fee.

**N. Tax        Implications**

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

**Investment Management        Agreement Approval**

The Board of Trustees, including the        Independent Trustees, approved the renewal of your Fund's investment management        agreement (the "Agreement") with Deutsche Investment Management Americas Inc. ("DIMA" or        the "Advisor") in September 2007. As part of its review process, the Board requested        and evaluated all information it deemed reasonably necessary to evaluate the Agreement.        Over the course of several months, the Contract Review Committee, in coordination with the        Fixed-Income Oversight Committee and the Operations Committee of the Board, reviewed        comprehensive materials received from the Advisor, independent third parties and        independent counsel. These materials included an analysis of the Fund's performance, fees        and expenses, and profitability compiled by an independent fee consultant. The Board also        received extensive information throughout the year regarding performance and operating        results of the Fund. Based on their evaluation of the information provided, the Committees        presented their findings and recommendations to the Independent Trustees as a group. The        Independent Trustees then reviewed the Committees' findings and recommendations and        presented their recommendations to the full Board. Throughout their consideration of the        Agreement, the Independent Trustees were advised by their independent legal counsel and by        an independent fee consultant.

In connection with the contract        review process, the various Committees and the Board considered the factors discussed        below, among others. The Board also considered that the Advisor 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 invested in the Fund or approved the        investment management agreement for the Fund, knowing that the Advisor managed the Fund and        knowing the investment management fee schedule. The Board considered Deutsche Bank's        commitment that it will devote to the Advisor and its affiliates all attention and        resources that are necessary to provide the Fund with top-quality investment management and        shareholder, administrative and product distribution services.

**Nature, Quality        and Extent of Services.** The Board considered the nature, extent and quality of        services provided under the Agreement, including portfolio management services and        administrative services. The Board considered the experience and skills of senior        management and investment personnel, the resources made available to such personnel, the        ability of the Advisor to attract and retain high-quality personnel, and the organizational        depth and stability of the Advisor. 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 Lipper Inc.        ("Lipper"). The Board considered whether investment results were consistent with the Fund's        investment objective and policies. The Board also noted that it has put a process into        place of identifying "Focus Funds" (e.g., funds performing poorly relative to their        benchmark or a peer group compiled by Lipper), and receives more frequent reporting        and information from the Advisor regarding such funds, along with the Advisor's        remedial plans to address underperformance. The Board believes this process is an effective        manner of addressing poorly performing funds at this time.

On the basis of        this evaluation and the ongoing review of investment results by the Fixed-Income Oversight        Committee, the Board concluded that the nature, quality and extent of services provided by        the Advisor historically have been and continue to be satisfactory. The Board noted the        relative underperformance of the Fund, and took into account the factors contributing to        such performance, the recent municipal bond and short-term interest rate environments, the        Fund's favorable ten year period performance, and steps being taken by the Advisor to        improve performance.

**Fees and        Expenses.** The Board considered the Fund's management fee rate, operating        expenses and total expense ratio, and compared management fees to a peer group and total        expenses to a broader peer universe based on information and data supplied by Lipper        and supplemented by the independent fee consultant. The information provided to the Board        showed that the Fund's management fee rate was at the 15th percentile of the peer        group, and that the total expense ratio was at the 36th percentile of the peer        universe. The Board also considered the Fund's management fee rate as compared to fees        charged by the Advisor and certain of its affiliates for comparable funds and considered        differences in fund and fee structures among the DWS Funds.

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 the Advisor.

**Profitability.** The Board reviewed        detailed information regarding revenues received by the Advisor under the Agreement. The        Board considered the estimated costs and pre-tax profits realized by the Advisor 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 enterprisewide profitability of the DWS Scudder organization with respect to all        fund services in totality and by fund. The Board reviewed DIMA's methodology in allocating        its costs to the management of the Fund. Although the Board noted the inherently subjective        nature of any allocation methodology, the Board received an attestation report from an        accounting firm affirming that the allocation methods were consistently applied and were        based upon practices commonly used in the investment management industry. Based on the        information provided, the Board concluded that the pre-tax profits realized by DIMA in        connection with the management of the Fund were not unreasonable.

**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 considered whether the        management fee rate under the Agreement is reasonable in relation to the asset size of the        Fund. The Board concluded that the management fee rate reflects an appropriate level of        sharing of any economies of scale.

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

Based on all of the information        considered and the conclusions reached, the Board (including a majority of the Independent        Trustees) determined that the terms of the Agreement continue to be fair and reasonable and        that the continuation of the Agreement is in the best interests of the Fund. No single        factor was determinative in the Board's analysis.

**Trustees and        Officers**

The following table presents certain        information regarding the Board Members and Officers of the fund as of November 30, 2007.        Each individual's year of birth is set forth in parentheses after his or her name. Unless        otherwise noted; (i) each individual 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 individual is c/o Deutsche Asset Management, 222        South Riverside Plaza, Chicago, Illinois 60606. Each Board Member's term of office extends        until the next shareholders' meeting called for the purpose of electing such Board        Members and until the election and qualification of a successor, or until such Board Member        sooner dies, retires, resigns or is removed as provided in the governing documents        of the fund.

| **Independent                    Board Members**                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|--------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **Name, Year                    of Birth, Position(s) Held with the Fund and Length of Time                    Served1** | **Principal                    Occupation(s) During Past 5 Years and Other Directorships                    Held**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | **Number of                    Funds in Fund Complex Overseen** |
| Paul                K. Freeman (1950)Chairperson since 2007, and Board Member,                2002-present               | Consultant, World Bank/Inter-American Development                Bank; formerly, Project Leader, International Institute for Applied Systems                Analysis (1998-2001); Chief Executive Officer, The Eric Group, Inc. (environmental                insurance) (1986-1998)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | 58 |
| John                W. Ballantine (1946)Board Member, 1999-present                                                       | 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                                                                                                                                                                       | 58 |
| Donald L. Dunaway (1937)Board Member, 1980-present                                                                       | Retired; formerly, Executive Vice President, A.O.                Smith Corporation (diversified manufacturer) (1963-1994)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | 58 |
| James R. Edgar (1946)Board Member, 1999-present                                                                          | Distinguished Fellow, University of Illinois,                Institute of Government and Public Affairs (1999-present); formerly, Governor,                State of Illinois (1991-1999). Directorships: John B. Sanfilippo & Son, Inc.                (processor/packager/marketer of nuts, snacks and candy products); Horizon Group                Properties, Inc.; Youbet.com (online wagering platform); Alberto-Culver Company                (manufactures, distributes and markets health and beauty care products)                                                                                                                                                                                                                                    | 58 |
| Robert B. Hoffman (1936)Board Member, 1981-present                                                                       | Retired; formerly, Chairman, Harnischfeger                Industries, Inc. (machinery for the mining and paper industries) (1999-2001); prior                thereto, Vice Chairman and Chief Financial Officer, Monsanto Company (agricultural,                pharmaceutical and nutritional/food products) (1994-1999). Directorships: RCP                Advisors, LLC (a private equity investment advisory firm)                                                                                                                                                                                                                                                                                                                                              | 58 |
| William McClayton (1944)Board Member, 2004-present                                                                       | Chief Administrative Officer, Diamond Management                & Technology Consultants, Inc. (global management consulting firm)                (2001-present); formerly, Senior Partner, Arthur Andersen LLP (accounting)                (1966-2001). Directorship: Board of Managers, YMCA of Metropolitan Chicago.                Formerly, Trustee, Ravinia Festival.                                                                                                                                                                                                                                                                                                                                                                                     | 58 |
| Shirley D. Peterson (1941)Board Member, 1995-present                                                                     | Retired; formerly, President, Hood College                (1995-2000); prior thereto, Partner, Steptoe & Johnson (law firm);                Commissioner, Internal Revenue Service; Assistant Attorney General (Tax),                US Department of Justice. Directorships: Federal Mogul Corp. (supplier of                automotive components and subsystems); AK Steel (steel production); Goodyear                Tire & Rubber Co. (April 2004-present); Champion Enterprises, Inc.                (manufactured home building); Wolverine World Wide, Inc. (designer, manufacturer                and marketer of footwear) (April 2005-present); Trustee, Bryn Mawr College. Former                Directorship: Bethlehem Steel Corp. | 58 |
| Robert H. Wadsworth(1940)Board Member, 2004-present                                                                      | President, Robert H. Wadsworth & Associates,                Inc. (consulting firm) (1983 to present). Formerly, Trustee of New York Board DWS                Funds.* *                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | 61 |

| **Interested                    Board Member**                                               |
|----------------------------------------------------------------------------------------------|
| **Name, Year                    of Birth, Position with the Fund and Length of Time Served** | **Business                    Experience and Directorships During the                    Past Five Years** | **Number of                    Funds in Fund Complex Overseen** |
| Axel                Schwarzer6 (1958)Board Member since 2007                                 | Managing Director3, Deutsche Asset                Management; Head of Deutsche Asset Management Americas; CEO of DWS Scudder;                formerly, board member of DWS Investments, Germany (1999-2005); formerly, Head of                Sales and Product Management for the Retail and Private Banking Division of                Deutsche Bank in Germany (1997-1999); formerly, various strategic and operational                positions for Deutsche Bank Germany Retail and Private Banking Division in the                field of investment funds, tax driven instruments and asset management for                corporates (1989-1996) | 82 |

| **Officers2**                                                                                                            |
|--------------------------------------------------------------------------------------------------------------------------|
| **Name, Year                    of Birth, Position(s) Held with the Fund and Length of Time                    Served1** | **Principal                    Occupation(s) During Past 5 Years and Other Directorships                    Held** |
| Michael G. Clark4 (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) |
| Philip J. Collora (1945)Vice President and Assistant Secretary,                1986-present                              | Director3, Deutsche Asset                Management |
| Paul                H. Schubert4 (1963)Chief Financial Officer, 2004-presentTreasurer, 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) |
| John                Millette5 (1962)Secretary, 2001-present                                                              | Director3, Deutsche Asset                Management |
| Patricia DeFilippis4 (1963)Assistant Secretary, 2005-present                                                             | Vice                President, Deutsche Asset Management (since June 2005); formerly, Counsel, New York                Life Investment Management LLC (2003-2005); legal associate, Lord, Abbett & Co.                LLC (1998-2003) |
| Elisa D. Metzger4,(1962)Assistant Secretary 2005-present                                                                 | Director3, Deutsche Asset Management                (since September 2005); formerly, Counsel, Morrison and Foerster LLP                (1999-2005) |
| Caroline Pearson5 (1962)Assistant Secretary, 1998-present                                                                | Managing Director3, Deutsche Asset                Management |
| Paul                Antosca5 (1957)Assistant Treasurer, 2007-present                                                     | Director3, Deutsche Asset Management                (since 2006); Vice President, The Manufacturers Life Insurance Company (U.S.A.)                (1990-2006) |
| Kathleen Sullivan D'Eramo5                (1957)Assistant Treasurer, 2003-present                                        | Director3, Deutsche Asset                Management |
| Jason Vazquez4 (1972)Anti-Money Laundering Compliance Officer,                2007-present                               | Vice                President, Deutsche Asset Management (since 2006); formerly, AML Operations Manager                for Bear Stearns (2004-2006), Supervising Compliance Principal and Operations                Manager for AXA Financial (1999-2004) |
| Robert Kloby4 (1962)Chief Compliance Officer, 2006-present                                                               | Managing Director3, Deutsche Asset                Management (2004-present); formerly, Chief Compliance Officer/Chief Risk Officer,                Robeco USA (2000-2004); Vice President, The Prudential Insurance Company of America                (1988-2000); E.F. Hutton and Company (1984-1988) |

**Additional        Information**

|                                                                 |
|----------------------------------------------------------------------|
| **Automated                    Information Line**                    | **DWS Scudder                    Closed-End Fund Info Line**

**(800)                    349-4281** |
| **Web                    Sites**                                     | **www.dws-scudder.com**
or visit our Direct Link:
**www.cef.dws-scudder.com**
Obtain quarterly fact sheets, financial                    reports, press releases and webcasts when available.
**www.cef.dws-scudder/alerts.**
Register online to receive email alerts on your                    DWS funds. |
| **Written                    Correspondence**                        | **Deutsche                    Investment Management Americas Inc.**
222 South Riverside PlazaChicago, IL 60606 |
| **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 endedJune 30is available on our Web site —                www.dws-scudder.com (click on "proxy voting"at the bottom of the page) —                or on the SEC's Web site — www.sec.gov. To obtain a written copy of the                fund's policies and procedures without charge, upon request, call us toll free at                (800) 621-1048. |
| **Legal                    Counsel**                                 | **Vedder,                    Price P.C.**
222 North LaSalle StreetChicago, IL 60601 |
| **Dividend                    Reinvestment Plan Agent**         | **Computershare Inc.***
P.O. Box 43078Providence, RI 02940-3078 |
| **Shareholder Service Agent and Transfer                    Agent**  | **DWS Scudder                    Investments Service Company**
P.O. Box 219066Kansas City, MO 64121-9066
**(800)                    294-4366** |
| **Custodian**                                                        | **State                    Street Bank and Trust Company**
225 Franklin StreetBoston, MA 02110 |
| **Independent Registered Public Accounting                    Firm** | **Ernst &                    Young LLP**
200 Clarendon StreetBoston, MA 02116 |
| **NYSE                    Symbol**                                   | KTF |

| **CUSIP                    Numbers** | Common Shares               | 23338M 106 |
|--------------------------------------|-----------------------------|------------|
|                                 | Series A (Preferred Shares) | 23338M 205 |
|                                 | Series B (Preferred Shares) | 23338M 304 |
|                                 | Series C (Preferred Shares) | 23338M 403 |
|                                 | Series D (Preferred Shares) | 23338M 502 |
|                                 | Series E (Preferred Shares) | 23338M 601 |

**Notes**

**Notes**

**Notes**

**Notes**

**Notes**

 

| **ITEM 2.** | **CODE OF ETHICS**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|-------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|        | As of the end of the period, November 30, 2007, DWS                            Municipal Income Trust has a code of ethics, as defined in Item 2 of                            Form N-CSR, that applies to its Principal Executive Officer and                            Principal Financial Officer.

                             

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

                             

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

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| **ITEM 3.** | **AUDIT COMMITTEE FINANCIAL EXPERT**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|        | The Fund’s Board of Directors/Trustees has                            determined that the Fund has at least one “audit committee                            financial expert” serving on its audit committee: Mr. William                            McClayton, Mr. Donald Dunaway and Mr. Robert Hoffman. Each of these                            audit committee members is “independent,” meaning that he                            is not an “interested person” of the Fund (as that term is                            defined in Section 2(a)(19) of the Investment Company Act of 1940) and                            he does not accept any consulting, advisory, or other compensatory fee                            from the Fund (except in the capacity as a Board or committee                            member).

                             

An “audit committee financial expert” is not                            an “expert” for any purpose, including for purposes of                            Section 11 of the Securities Act of 1933, as a result of being                            designated as an “audit committee financial expert.”                            Further, the designation of a person as an “audit committee                            financial expert” does not mean that the person has any greater                            duties, obligations, or liability than those imposed on the person                            without the “audit committee financial expert” designation.                            Similarly, the designation of a person as an “audit committee                            financial expert” does not affect the duties, obligations, or                            liability of any other member of the audit committee or board of                            directors. |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| **ITEM 4.** | **PRINCIPAL ACCOUNTANT FEES AND SERVICES**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |

 

**DWS MUNICIPAL INCOME TRUST**

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

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

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

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

 

| Fiscal YearEndedNovember 30 | Audit Fees Billed to Fund | Audit-RelatedFees Billed to Fund | Tax Fees Billed to Fund | AllOther Fees Billed to Fund |
|-----------------------------|---------------------------|----------------------------------|-------------------------|------------------------------|
| 2007                        | $51,719                   | $0                               | $7,053                  | $0                           |
| 2006                        | $49,067                   | $0                               | $6,691                  | $0                           |

 

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

 

----

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

The            following table shows the amount of fees billed by E&Y to Deutsche Investment            Management Americas, Inc. (“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 YearEndedNovember 30 | Audit-RelatedFees Billed to Adviser and Affiliated Fund Service                            Providers | Tax Fees Billed to Adviser and Affiliated Fund                            Service Providers | AllOther Fees Billed to Adviser and Affiliated Fund Service                            Providers |
|-----------------------------|------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------|
| 2007                        | $250,000                                                                                             | $486,614                                                                                    | $0                                                                                               |
| 2006                        | $80,000                                                                                              | $316,254                                                                                    | $0                                                                                               |

 

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

Non-Audit Services

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

 

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

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

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

(C) | Total of (A), (B)and (C) |
|-----------------------------|-----------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------|--------------------------|
| 2007                        | $7,053                                  | $486,614                                                                                                                                                                                                                     | $1,215,526                                                                                                                           | $1,709,193               |
| 2006                        | $6,691                                  | $316,254                                                                                                                                                                                                                     | $948,620                                                                                                                             | $1,271,565               |

 

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

             

***

 

----

In            connection with the audit of the 2006 and 2007 financial statements, the Fund entered            into an engagement letter with E&Y. The terms of the engagement letter required by            E&Y, and agreed to by the Audit Committee, include provisions in which the parties            consent to the sole jurisdiction of federal courts in New York, Boston or the Northern            District of Illinois, as well as a waiver of right to a trial by jury and an exclusion            of punitive damages.

 

***

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

 

|        |                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|-------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **ITEM 5.** | **AUDIT COMMITTEE OF LISTED REGISTRANTS**                                                                                                                                                                                                                                                                                                                                                                                              |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|        | The                            registrant has a separately-designated standing audit committee                            established in accordance with Section 3(a)(58)(A) of the Securities                            Exchange Act of 1934, as amended. The registrant's audit committee                            consists of William McClayton (Chairman), Robert B. Hoffman, and Donald                            L. Dunaway. |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| **ITEM 6.** | **SCHEDULE OF INVESTMENTS**                                                                                                                                                                                                                                                                                                                                                                                                            |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|        | Not Applicable                                                                                                                                                                                                                                                                                                                                                                                                                         |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| **ITEM 7.** | **DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES                            FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES**                                                                                                                                                                                                                                                                                                       |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                   |

 

 

----

 

|        | **Proxy Voting Guidelines.**The Fund has delegated proxy voting responsibilities to                            its investment advisor, subject to the Board’s general oversight.                            The Fund has delegated proxy voting to the advisor with the direction                            that proxies should be voted consistent with the Fund’s best                            economic interests. The advisor has adopted its own Proxy Voting                            Policies and Procedures (“Policies”), a Proxy Voting                            Desktop Manual (“Manual”), and Proxy Voting Guidelines                            (“Guidelines”) for this purpose. The Policies address,                            among other things, conflicts of interest that may arise between the                            interests of the Fund, and the interests of the advisor and its                            affiliates. The Manual sets forth the procedures that the advisor has                            implemented to vote proxies, including monitoring for corporate events,                            communicating with the fund’s custodian regarding proxies,                            considering the merits f each proposal, and executing and recording the                            proxy vote. The Guidelines set forth the advisor’s general                            position on various proposals, such as:

                             

**•**             Shareholder                            Rights — The advisor generally votes against proposals that                            restrict shareholder rights.

                             

**•**             Corporate                            Governance — The advisor generally votes for confidential and                            cumulative voting and against supermajority voting requirements for                            charter and bylaw amendments. The advisor generally votes for proposals                            to restrict a chief executive officer from serving on more than three                            outside board of directors. The advisor generally votes against                            proposals that require a company to appoint a chairman who is an                            independent director.

                             

**•**             Anti-Takeover                            Matters — The advisor generally votes for proposals that require                            shareholder ratification of poison pills or that request boards to                            redeem poison pills, and votes “against” the adoption of                            poison pills if they are submitted for shareholder ratification. The                            advisor generally votes for fair price proposals.

                             

**•**             Routine                            Matters — The advisor generally votes for the ratification of                            auditors, procedural matters related to the annual meeting, and changes                            in company name, and against bundled proposals and                            adjournment.

                             

The general provisions described above do not apply to                            investment companies. The advisor generally votes proxies solicited by                            investment companies in accordance with the recommendations of an                            independent third-party, except for proxies solicited by or with                            respect to investment companies for which the advisor or an affiliate                            serves as investment advisor or principal underwriter                            (“affiliated investment companies”). The advisor votes                            affiliated investment company proxies in the same proportion as the                            vote of the investment company’s other shareholders (sometimes                            called “mirror” or “echo” voting). Master fund                            proxies solicited from feeder funds are voted in accordance with                            applicable requirements of the Investment Company Act of                            1940.

                             

Although the Guidelines set forth the advisor’s                            general voting positions on various proposals, the advisor may,                            consistent with the Fund’s best interests, determine under some                            circumstances to vote contrary to those positions.

                             

The Guidelines on a particular issue may or may not                            reflect the view of individual members of the board, or of a majority                            of the board. In addition, the Guidelines may reflect a voting position                            that differs from the actual practices of the public companies within                            the Deutsche Bank organization or of the investment companies for which                            the advisor or an affiliate serves as investment advisor or                            sponsor.

                             

The advisor may consider the views of a portfolio                            company’s management in deciding how to vote a proxy or in                            establishing general voting positions for the Guidelines, but                            management’s views are not determinative.

                             

As mentioned above, the Policies describe the way in                            which the advisor resolves conflicts of interest. To resolve conflicts,                            the advisor, under normal circumstances, votes proxies in accordance                            with its Guidelines. If the advisor departs from the Guidelines with                            respect to a particular proxy or if the Guidelines do not specifically                            address a certain proxy proposal, a committee established by the                            advisor will vote the proxy. Before voting any such proxy, however, the                            committee will exclude from the voting discussions and determinations                            any member who is involved in or aware of a material conflict of                            interest. If, after excluding any and all such members, there are fewer                            than three voting members remaining, the advisor will engage an                            independent third party to vote the proxy or follow the proxy voting                            recommendations of an independent third party.

                             

Under certain circumstances, the advisor may not be able                            to vote proxies or the advisor may find that the expected economic                            costs from voting outweigh the benefits associated with voting. For                            example, the advisor may not vote proxies on certain foreign securities                            due to local restrictions or customs. The advisor generally does not                            vote proxies on securities subject to share blocking                            restrictions. |
|-------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------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                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| **ITEM 8.** | **PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT                            INVESTMENT COMPANIES**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
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                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |

 

**Portfolio Manager Team Disclosure**

 

----

 

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

 

The            following individuals handle the day-to-day management of the fund.

 

Philip            G. Condon, Managing Director of Deutsche Asset Management and Co-Lead Portfolio Manager            of the Fund.

|   | **•** | Joined Deutsche Asset Management in 1983 and the fund                            team in 1998. |
|--------|------------|------------------------------------------------------------------------------------------------|

|   | **•** | Over 30 years of investment industry                            experience. |
|--------|------------|-----------------------------------------------------------------------------|

|   | **•** | BA and MBA, University of Massachusetts at                            Amherst. |
|--------|------------|--------------------------------------------------------------------------------|

 

Eleanor            R. Lynch, CFA, Director of Deutsche Asset Management and Co-Lead Portfolio Manager of            the Fund.

| **•** | Joined Deutsche Asset Management in 1995 and the Fund in                            1998. |
|------------|-------------------------------------------------------------------------------------------|

| **•** | Over 20 years of investment industry                            experience. |
|------------|-----------------------------------------------------------------------------|

| **•** | BS, Ursinus College; MS, Drexel University. |
|------------|---------------------------------------------|

**Compensation of Portfolio Managers**

 

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

 

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

 

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

 

|   | **•** | The quantitative analysis of a portfolio manager’s                            individual performance is based on, among other factors, performance of                            all of the accounts managed by the portfolio manager (which includes                            the fund and any other accounts managed by the portfolio manager) over                            a one-, three-, and five-year period relative to the appropriate                            Morningstar and Lipper peer group universes and/or benchmark index(es)                            with respect to each account. Additionally, the portfolio                            manager’s retail/institutional asset mix is weighted, as                            appropriate for evaluation purposes. Generally the benchmark index used                            is a benchmark index set forth in the fund's prospectus to which the                            fund's performance is compared. Additional or different appropriate                            peer group or benchmark indices may also be used. Primary weight is                            given to pre-tax portfolio performance over three-year and five-year                            time periods (adjusted as appropriate if the portfolio manager has                            served for less than five years) with lesser consideration given to                            portfolio performance over a one-year period. The increase or decrease                            in a fund’s assets due to the purchase or sale of fund shares is                            not considered a material factor. |
|--------|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

|   | **•** | The qualitative analysis of a portfolio manager’s                            individual performance is based on, among other things, the results of                            an annual management and internal peer review process, and management's                            assessment of overall portfolio manager contributions to investor                            relations, the investment process and overall performance (distinct                            from fund and other account performance). Other factors, including                            contributions made to the investment team, as well as adherence to                            Compliance Policies and Procedures, Risk Management procedures, the                            firm’s Code of Ethics and “living the values” of the                            Advisor are also factors. |
|--------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

             

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The            quantitative analysis of a portfolio manager’s performance is given more weight            in determining discretionary incentive compensation that the qualitative            portion.

 

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

**Fund Ownership of Portfolio Managers**

The            following table shows the dollar range of shares owned beneficially and of record by            each member of the Fund’s portfolio management team in the Fund as well as in all            DWS Funds as a group (i.e. those funds advised by Deutsche Asset Management or its            affiliates), including investments by their immediate family members sharing the same            household and amounts invested through retirement and deferred compensation plans. This            information is provided as of the Fund’s most recent fiscal year end.

 

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

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

Philip G. Condon                            | $100,001 -                            $500,000 | Over $1,000,000                                                          |
|  

Eleanor R.                            Lynch | $10,001 - $50,000                              | $100,001 - $500,000                                                      |

 

**Conflicts of Interest**

In            addition to managing the assets of the Fund, the Fund’s portfolio managers may            have responsibility for managing other client accounts of the Advisor or its            affiliates. The tables below show, for each portfolio manager, the number and asset            size of (1) SEC registered investment companies (or series thereof) other than the            Fund, (2) pooled investment vehicles that are not registered investment companies and            (3) other accounts (e.g., accounts managed for individuals or organizations) managed by            each portfolio manager. Total assets attributed to each portfolio manager in the tables            below include total assets of each account managed by them, although the manager may            only manage a portion of such account’s assets. The tables also show the number            of performance based fee accounts, as well as the total assets of the accounts for            which the advisory fee is based on the performance of the account. This information is            provided as of the Fund’s most recent fiscal year end.

 

**Other SEC Registered Investment Companies Managed:**

 

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

Philip G. Condon      | 8                                                                        | $7,741,604,398                                                                 | None                                                                                            | -                                                                              |
|  

Eleanor R. Lynch      | 2                                                                        | $4,639,389,838                                                                 | None                                                                                            | -                                                                              |

 

 

----

**Other Pooled Investment Vehicles Managed:**

 

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

Philip G. Condon      | 1                                        | $10,872,991                                                               | None                                                                                                   | -                                                                              |
|  

Eleanor R. Lynch      | None                                     | -                                                                         | None                                                                                                   | -                                                                              |

 

**Other Accounts Managed:**

 

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

Philip G. Condon      |  

None                 |  

-                          |  

None                                                                        | -                                                                              |
|  

Eleanor R. Lynch      |  

None                 | -                                  |  

None                                                                        | -                                                                              |

 

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

 

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

| **•** | Certain investments may be appropriate for the Fund and                            also for other clients advised by the Advisor, including other client                            accounts managed by the Fund’s portfolio management team.                            Investment decisions for the Fund and other clients are made with a                            view to achieving their respective investment objectives and after                            consideration of such factors as their current holdings, availability                            of cash for investment and the size of their investments generally. A                            particular security may be bought or sold for only one client or in                            different amounts and at different times for more than one but less                            than all clients. Likewise, because clients of the Advisor may have                            differing investment strategies, a particular security may be bought                            for one or more clients when one or more other clients are selling the                            security. The investment results achieved for the Fund may differ from                            the results achieved for other clients of the Advisor. In addition,                            purchases or sales of the same security may be made for two or more                            clients on the same day. In such event, such transactions will be                            allocated among the clients in a manner believed by the Advisor to be                            most equitable to each client, generally utilizing a pro rata                            allocation methodology. In some cases, the allocation procedure could                            potentially have an adverse effect or positive effect on the price or                            amount of the securities purchased or sold by the Fund. Purchase and                            sale orders for the Fund may be combined with those of other clients of                            the Advisor in the interest of achieving the most favorable net results                            to the Fund and the other clients. |
|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

             

| **•** | To the extent that a portfolio manager has                            responsibilities for managing multiple client accounts, a portfolio                            manager will need to divide time and attention among relevant accounts.                            The Advisor attempts to minimize these |
|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

             

----

conflicts by aligning its portfolio management teams by investment            strategy and by employing similar investment models across multiple client            accounts.

             

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

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

 

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

 

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

 

|  

                             

Period | (a)Total Number of Shares Purchased | (b)Average Price Paid per Share | (c)Total Number of Shares Purchased as Part of Publicly                            Announced Plans or Programs | (d)Maximum Number of Shares that May Yet Be Purchased Under                            the Plans or Programs |
|----------------------------------------------------|-------------------------------------|---------------------------------|----------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------|
|                                               |                                |                            |                                                                                                           |                                                                                                         |
| December 1 through December 31                     | n/a                                 | n/a                             | n/a                                                                                                            | n/a                                                                                                          |
| January 1 through January 31                       | n/a                                 | n/a                             | n/a                                                                                                            | n/a                                                                                                          |
| February 1 through February 28                     | n/a                                 | n/a                             | n/a                                                                                                            | n/a                                                                                                          |
| March 1 through March 31                           | n/a                                 | n/a                             | n/a                                                                                                            | n/a                                                                                                          |

 

 

----

 

| April 1 through April 30         | n/a    | n/a    | n/a    | n/a    |
|----------------------------------|--------|--------|--------|--------|
| May 1 through May 31             | n/a    | n/a    | n/a    | n/a    |
| June 1 through June 30           | n/a    | n/a    | n/a    | n/a    |
| July 1 through July 31           | n/a    | n/a    | n/a    | n/a    |
| August 1 through August 31       | n/a    | n/a    | n/a    | n/a    |
| September 1 through September 30 | n/a    | n/a    | n/a    | n/a    |
| October 1 through October 31     | n/a    | n/a    | n/a    | n/a    |
| November 1 through November 30   | n/a    | n/a    | n/a    | n/a    |
|                             |   |   |   |   |
| Total                            | n/a    | n/a    | n/a    | n/a    |

 

| **ITEM 10.** | **SUBMISSION OF MATTERS TO A VOTE OF SECURITY                            HOLDERS**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|--------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|         | The primary function of the Nominating and Governance                            Committee is to identify and recommend individuals for membership on                            the Board and oversee the administration of the Board Governance                            Procedures and Guidelines. Shareholders may recommend candidates for                            Board positions by forwarding their correspondence by U.S. mail or                            courier service to the Fund's Secretary for the attention of the                            Chairman of the Nominating and Governance Committee, Two International                            Place, Boston, MA 02110. Suggestions for candidates must include a                            resume of the candidate. |
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| **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 registrant’s last half-year                            (the registrant’s second fiscal half-year in the case of the                            annual 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 Municipal Income Trust |
|-------------|----------------------------|

 

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

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

President

 

| Date: | February 1, 2008 |
|-------|------------------|

 

 

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

 

| Registrant: | DWS Municipal Income Trust |
|-------------|----------------------------|

 

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

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

President

 

| Date: | February 1, 2008 |
|-------|------------------|

 

 

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

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

Chief Financial Officer and Treasurer

 

| Date: | February 1, 2008 |
|-------|------------------|