UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549  FORM N-CSRS  Investment Company Act file number  811-2671  DWS Municipal Trust (Exact Name of Registrant as Specified in Charter)  345 Park Avenue New York, NY 10154-0004 (Address of principal executive offices)             (Zip code)  Registrants Telephone Number, including Area Code:(212) 454-7190  Paul Schubert 345 Park Avenue New York, NY 10154-0004 (Name and Address of Agent for Service)  Date of fiscal year end:
        05/31
  Date of reporting period:
        11/30/08
   ITEM 1.REPORT TO STOCKHOLDERS


|NOVEMBER 30, 2008
Semiannual Report
to Shareholders
|---------------------------------------------------
|                                                   
|DWS Strategic High Yield Tax Free Fund             
|shyt_cover310                                      

Contents

|4Performance Summary
11Information About Your Fund's Expenses
13Portfolio Management Review
19Portfolio Summary
21Investment Portfolio
38Financial Statements
43Financial Highlights
48Notes to Financial Statements
58Investment Management Agreement Approval
63Summary of Management Fee Evaluation by Independent
Fee Consultant
68Summary of Administrative Fee Evaluation by Independent
Fee Consultant
69Account Management Resources
70Privacy Statement
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

Investments in mutual funds involve risk. Some funds have more risk than others. This
fund invests in individual bonds whose yields and market values fluctuate so that your
investment may be worth more or less than its original cost. Bond investments are
subject to interest rate risk such that when interest rates rise, the prices of the bonds,
and thus the value of the bond fund, can decline and the investor can lose principal value.
Derivatives may be more volatile and less liquid than traditional securities, and the fund
could suffer losses on its derivative positions. This fund may invest in lower-quality and
nonrated securities, which present greater risk of loss of principal and interest than
higher-quality securities. Insurance pertains to the timely payment of principal and interest
by the issuer of the underlying securities, and not to the value of the fund's shares. A
portion of the fund's returns may be subject to federal, state and local taxes and the
alternative minimum tax. Finally, the fund may focus its investments in certain
geographical regions, thereby increasing its vulnerability to developments in that region.
This may result in greater share price volatility. Please read this fund's prospectus for
specific details regarding its investments and risk profile.

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

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

Performance SummaryNovember 30, 2008

Classes A, B, C and Institutional Class

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

The maximum sales charge for Class A shares is 4.5%. For Class B shares, the
maximum contingent deferred sales charge (CDSC) is 4% within the first year after
purchase, declining to 0% after six years. Class C shares have no front-end sales
charge but redemptions within one year of purchase may be subject to a CDSC of
1%. Unadjusted returns do not reflect sales charges and would have been lower if
they had.Institutional Class shares are not subject to sales charges.

The total annual fund operating expense ratios, gross of any fee waivers or expense
reimbursements, as stated in the fee table of the prospectus dated October 1, 2008
are 1.59%, 2.36%, 2.30% and 1.31% for Class A, Class B, Class C and Institutional
Class shares, respectively. Please see the Information About Your Fund's Expenses,
the Financial Highlights and Notes to the Financial Statements (Note C, Related
Parties) sections of this report for gross and net expense related disclosure for the
period ended November 30, 2008.

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

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

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

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

Returns shown for Class A, B and C shares for the period prior to their inception on
May 1, 2000 are derived from the historical performance of Class S shares of
DWS Strategic High Yield Tax Free Fund during such period and have been adjusted to
reflect the higher total annual operating expenses of each specific class. Any difference in
expenses will affect performance.

|Average Annual Total Returns(Unadjusted for Sales Charge) as of 11/30/08
|------------------------------------------------------------------------
|DWS Strategic High Yield Tax Free
Fund                                  
|Class A                                                                 
|Class B                                                                 
|Class C                                                                 
|Barclays Capital Municipal Bond Index+                                  

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

|Average Annual Total Returnsas of 11/30/08
|------------------------------------------
|DWS Strategic High Yield Tax Free
Fund    
|Institutional Class                       
|Barclays Capital Municipal Bond Index+    

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

|Net Asset Value and Distribution Information                        
|--------------------------------------------------------------------
|                                                                    
|Net Asset Value:
11/30/08                                           
|5/31/08                                                             
|Distribution Information:
Six Months as of 11/30/08:Income Dividends
|November Income Dividend                                            
|Capital Gain Distributions                                          
|SEC 30-day Yield++ as of 11/30/08                                   
|Tax Equivalent Yield++ as of 11/30/08                               
|Current Annualized Distribution Rate++ as
of 11/30/08               

|Class A Lipper Rankings  High-Yield Municipal Debt Funds Categoryas of
11/30/08
|--------------------------------------------------------------------------------
|Period                                                                          
|1-Year                                                                          
|3-Year                                                                          
|5-Year                                                                          

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

|Growth of an Assumed $10,000 Investment(Adjusted for Maximum Sales Charge)                 
|-------------------------------------------------------------------------------------------
|[]DWS Strategic High Yield Tax Free Fund  Class A
[]Barclays Capital Municipal Bond Index+
|shyt_g10k280                                                                               
|Yearly periods ended November 30                                                           

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

|Comparative Results(Adjusted for Maximum Sales Charge) as of 11/30/08
|---------------------------------------------------------------------
|DWS Strategic High Yield Tax Free Fund                               
|Class A                                                              
|Average annual total return                                          
|Class B                                                              
|Average annual total return                                          
|Class C                                                              
|Average annual total return                                          
|Barclays Capital
Municipal Bond Index+                               
|Average annual total return                                          

The growth of $10,000 is cumulative.

|Growth of an Assumed $1,000,000 Investment                                                             
|-------------------------------------------------------------------------------------------------------
|[]DWS Strategic High Yield Tax Free Fund  Institutional Class
[]Barclays Capital Municipal Bond Index+
|shyt_g10k270                                                                                           
|Yearly periods ended November 30                                                                       

|Comparative Resultsas of 11/30/08     
|--------------------------------------
|DWS Strategic High Yield Tax Free Fund
|Institutional
Class                   
|Average annual total return           
|Barclays Capital
Municipal Bond
Index+
|Average annual total return           

The growth of $1,000,000 is cumulative.

The minimum initial investment for Institutional Class shares is $1,000,000.

Class S

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

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

The total annual fund operating expense ratio, gross of any fee waivers or expense
reimbursements, as stated in the fee table of the prospectus dated October 1, 2008
is 1.52% for Class S shares. Please see the Information About Your Fund's Expenses,
the Financial Highlights and Notes to the Financial Statements (Note C, Related
Parties) sections of this report for gross and net expense related disclosure for the
period ended November 30, 2008.

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

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

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

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

|Average Annual Total Returnsas of 11/30/08
|------------------------------------------
|DWS Strategic High Yield Tax Free
Fund    
|Class S                                   
|Barclays Capital Municipal Bond Index+    

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

|Net Asset Value and Distribution Information                        
|--------------------------------------------------------------------
|                                                                    
|Net Asset Value:
11/30/08                                           
|5/31/08                                                             
|Distribution Information:
Six Months as of 11/30/08:Income Dividends
|November Income Dividend                                            
|Capital Gain Distributions                                          
|SEC 30-day Yield++ as of 11/30/08                                   
|Tax Equivalent Yield++ as of 11/30/08                               
|Current Annualized Distribution Rate++ as of 11/30/08               

|Class S Lipper Rankings  High-Yield Municipal Debt Funds Categoryas of
11/30/08
|--------------------------------------------------------------------------------
|Period                                                                          
|1-Year                                                                          
|3-Year                                                                          
|5-Year                                                                          
|10-Year                                                                         

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

|Growth of an Assumed $10,000 Investment                                                    
|-------------------------------------------------------------------------------------------
|[]DWS Strategic High Yield Tax Free Fund  Class S
[]Barclays Capital Municipal Bond Index+
|shyt_g10k260                                                                               
|Yearly periods ended November 30                                                           

|Comparative Resultsas of 11/30/08     
|--------------------------------------
|DWS Strategic High Yield Tax Free Fund
|Class S                               
|Average annual total return           
|Barclays Capital
Municipal Bond Index+
|Average annual total return           

The growth of $10,000 is cumulative.

Information About Your Fund's Expenses

As an investor of the Fund, you incur two types of costs: ongoing expenses
and transaction costs. Ongoing expenses include management fees,
distribution and service (12b-1) fees and other Fund expenses. The following
tables are intended to help you understand your ongoing expenses (in
dollars) of investing in the Fund and to help you compare these expenses
with the ongoing expenses of investing in other mutual funds. In the most
recent six-month period, the Fund limited these expenses; had it not done
so, expenses would have been higher. The example in the table is based on
an investment of $1,000 invested at the beginning of the six-month period
and held for the entire period(June 1, 2008 to November 30, 2008).

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

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

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

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

|Expenses and Value of a $1,000 Investment (Including Interest Expense)*for the six months ended November 30, 2008
|-----------------------------------------------------------------------------------------------------------------
|Actual Fund Return                                                                                               
|Beginning Account Value 6/1/08                                                                                   
|Ending Account Value 11/30/08                                                                                    
|Expenses Paid per $1,000**                                                                                       
|Hypothetical 5% Fund Return                                                                                      
|Beginning Account Value 6/1/08                                                                                   
|Ending Account Value 11/30/08                                                                                    
|Expenses Paid per $1,000**                                                                                       

|Annualized Expense Ratios              | Class A | Class B | Class C | Class S | Institutional
Class
|-------------------------------------- | ------- | ------- | ------- | ------- | -------------------
|DWS Strategic High Yield Tax Free
Fund | 1.44%   | 2.19%   | 2.19%   | 1.19%   | 1.20%              

|Expenses and Value of a $1,000 Investment (Excluding Interest Expense)*for the six months ended November 30, 2008
|-----------------------------------------------------------------------------------------------------------------
|Actual Fund Return                                                                                               
|Beginning Account Value 6/1/08                                                                                   
|Ending Account Value 11/30/08                                                                                    
|Expenses Paid per $1,000**                                                                                       
|Hypothetical 5% Fund Return                                                                                      
|Beginning Account Value 6/1/08                                                                                   
|Ending Account Value 11/30/08                                                                                    
|Expenses Paid per $1,000**                                                                                       

|Annualized Expense Ratios              | Class A | Class B | Class C | Class S | Institutional
Class
|-------------------------------------- | ------- | ------- | ------- | ------- | -------------------
|DWS Strategic High Yield Tax Free
Fund | .92%    | 1.67%   | 1.67%   | .67%    | .68%               

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

Portfolio Management Review

In the following interview, the portfolio management team discusses
DWS Strategic High Yield Tax Free Fund's performance for the
semiannual period ending November 30, 2008 and the market
environment for municipal bonds.

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

Q: Will you describe the general market environment during the
semiannual period ending November 30, 2008?

A:Municipal bonds delivered negative results over the six months,
and lagged the taxable market. The municipal bond market, as
measured by the Barclays Capital Municipal Bond Index, delivered a
total return of -4.98% for the six months ended November 30,
2008.1 The broad taxable bond market, as measured by the Barclays
Capital US Aggregate Index, was essentially flat for the same
period, with a total return of a positive 0.24%.2

The primary factor in financial market returns over the period was
ongoing credit market distress that reached new levels of visibility
beginning in September. First, leading investment bank Lehman
Brothers failed while global insurance conglomerate AIG was bailed
out by the US Treasury. This was followed shortly by the conversion
of Morgan Stanley and Goldman Sachs to bank holding companies
as they sought shelter from the credit market storm, and the FDIC
seizure and sale of certain operations to JPMorgan Chase of giant
thrift Washington Mutual. The net result was an evaporation of
liquidity as the credit markets seized in September. As these events
unfolded, the Bush administration gained approval of a mammoth
package designed to unfreeze credit markets by funding the removal
of illiquid mortgage-related debt from the balance sheets of major
financial institutions. However, the ultimate execution and impact of
any rescue plan was less than clear.

In this environment, investors fled to Treasuries; most other asset
classes, including municipals, suffered. Underwriters of some
municipal tender option bonds discontinued or greatly reduced their
programs, forcing market participants, including the Fund, to unwind
positions into an illiquid market. This put further pressure on
municipals. To illustrate, the municipal market fell 4.69% in
September as gauged by the Barclays Capital Municipal Bond Index.

The largest source of support for municipals over the six months
was retail investors attracted by favorable yields. Mutual fund flows
turned negative as the period progressed and insurance companies
have been largely on the sidelines as buyers. Supply has been
erratic given the economic and credit market backdrop, but overall
has lagged last year's record volume only modestly.

The US Federal Reserve Board (the Fed) lowered short-term rates
twice during the period for a total reduction of 100 basis points (one
percentage point). This left the federal funds rate  the overnight
interbank lending rate and a benchmark for interest rates generally
 at 1.00% at the end of November 2008. Municipal yields declined
on the short end of the curve, but rose on intermediate and
longer-term issues. 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.

|Municipal Bond Yield Curve(as of 5/31/08 and 11/30/08)
|------------------------------------------------------
|shyt_yield1e0                                         

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.

The municipal bond yield curve steepened during the six months.3
The two-year bond yield decreased 15 basis points from 2.28% to
2.13%, while the 30-year yield rose 85 basis points from 4.53% to
5.38%, resulting in a total steepening of 100 basis points. (See the
graph above for municipal bond yield changes from the beginning to
the end of the period.)

Municipal credit spreads widened significantly during the period, as
all fixed-income markets were influenced by the flight to quality that
reached a crescendo in September.4 Credit spread widening was
also driven by downgrades to some of the leading monoline insurers
whose guarantees have traditionally applied to nearly half of
municipal issues.5 Many insured issues are now trading on the basis
of the underlying credits. In addition, with fewer insured issues
coming to market, the outlook is for an increased supply of
non-AAA-rated issues going forward, putting further pressure on
spreads.6 Finally, the finances of states and localities have come
under pressure with the national economic downturn, leading to
wider credit spreads as market participants draw greater distinctions
among municipal issues. Below-investment-grade issues were
particularly hard hit, with high-yield airline- and tobacco-related
issues down well over 20% for the six months.

Q: How did DWS Strategic High Yield Tax Free Fund perform for
the semiannual period ended November 30, 2008?

A:DWS Strategic High Yield Tax Free Fund posted a return of
-17.94% for the period. (Return is for Class A shares, unadjusted for
sales charges. If sales charges had been included, the return would
have been lower. Past performance is no guarantee of future
results. Please see pages 4 through 10 for the performance of
other share classes and more complete performance information.)
Its benchmark, the unmanaged Barclays Capital Municipal Bond
Index, returned -4.98%, while the fund's average peer in the Lipper
High-Yield Municipal Debt Funds category returned -18.36%.7

Q: How was the fund positioned, and how did this positioning
contribute to its performance for the semiannual period ended
November 30, 2008?

A:We manage the fund's exposure to below-investment-grade,
high-yield issues strategically, varying that weighting according to
our view of relative value. As the period began, we believed credit
spreads were at levels where high-yield investors were being paid
reasonably for the incremental risk. In addition, the yield curve had a
significant positive slope, also contributing in our view to the relative
value of high-yield bonds, which are typically issued with 30-year
maturities. The steeper curve, along with wider credit spreads, had
led us to add significantly to the fund's high-yield exposure, bringing
issues rated BBB or lower up to approximately 44% of fund assets.
While this shift did not help performance over the period, the fund
was still underweight high-yield issues compared to many of its
peers.8 In particular, the fund had only modest exposure to
airline-related issues and no exposure to non-investment-grade
tobacco bonds, both sectors that suffered large losses over the
period. On the downside, the fund had significant exposure to
high-yield hospital bonds, constraining returns as the sector fell
somewhat more than the overall high-yield market.

Among investment-grade issues, we have been selectively
increasing exposure to lower-quality issues. As credit spreads
continued to widen over the period, we further increased the fund's
exposure to non-AAA issues, such as A-rated hospital bonds. The
fund had relatively light exposure for most of the period to
investment-grade bonds with maturities over 20 years, helping to
limit the impact of rising yields and falling prices on longer-dated
issues. Given the steepening of the curve that has occurred, we
have continued to add exposure to issues in the 20-to-25-year
range.

We hedged a portion of the fund's assets against interest rate
changes using LIBOR swaps.9 This strategy is intended to allow the
fund to benefit to some degree from any rise in interest rates and
resulting decline in the value of fixed-income instruments. This held
back fund returns as the performance of the taxable and tax-free
markets diverged and the value of the taxable LIBOR hedge
declined at the same time as municipal bond prices.

Municipal yields are currently very attractive relative to US Treasury
bonds, providing an income advantage even before taking into
account their tax advantage. To illustrate, at the end of November,
the 10-year municipal bond was yielding approximately 138% of the
comparable-maturity Treasury bond, up from about 90% six months
earlier. With a national economic downturn under way and the
decreased role of insurance in the municipal market, we believe the
expertise we bring to researching municipal sectors and individual
issues has never been more important. We will continue to take a
prudent approach to investing in the municipal market, while
seeking to maintain an attractive dividend.

Portfolio Summary

|Asset Allocation(As a % of Investment Portfolio) | 11/30/08 | 5/31/08
|------------------------------------------------ | -------- | -------
|                                                 |          |        
|Revenue Bonds                                    | 82%      | 69%    
|General Obligation Bonds                         | 9%       | 8%     
|ETM/Prerefunded                                  | 8%       | 20%    
|Lease Obligations                                | 1%       | 3%     
|                                                 | 100%     | 100%   

|Quality   | 11/30/08 | 5/31/08
|--------- | -------- | -------
|          |          |        
|AAA       | 7%       | 18%    
|AA        | 17%      | 10%    
|A         | 18%      | 17%    
|BBB       | 31%      | 23%    
|BB        | 11%      | 9%     
|B         | 1%       | 1%     
|CCC       | 1%       |       
|Not Rated | 14%      | 22%    
|          | 100%     | 100%   

|Effective Maturity    | 11/30/08 | 5/31/08
|--------------------- | -------- | -------
|                      |          |        
|Less than 1 year      | 15%      | 9%     
|1-4.99 years          | 14%      | 25%    
|5-7.99 years          | 7%       | 15%    
|8-14.99 years         | 30%      | 28%    
|Greater than 15 years | 34%      | 23%    
|                      | 100%     | 100%   

Weighted average effective maturity: 11.9 and 10.0 years, respectively.

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

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

|Top Five State Allocations(As a % of Investment Portfolio) | 11/30/08 | 5/31/08
|---------------------------------------------------------- | -------- | -------
|                                                           |          |        
|Texas                                                      | 13%      | 12%    
|Pennsylvania                                               | 9%       | 5%     
|New York                                                   | 7%       | 8%     
|Florida                                                    | 7%       | 5%     
|Washington                                                 | 6%       | 9%     

Top five state allocations are subject to change.

For more complete details about the Fund's investment portfolio, see page 21. A quarterly Fact
Sheet is available upon request. A complete list of the fund's portfolio holdings is posted as of
the month end on www.dws-investments.com on or about the 15th day of the following
month. More frequent posting of portfolio holdings information may be made from time to time
on www.dws-investments.com. Please see the Account Management Resources section for
contact information.

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

Investment Portfolioas of November 30, 2008 (Unaudited)

|                                                                                                                                                                                         | Principal
Amount ($) | Value ($) 
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------- | ----------
|                                                                                                                                                                                         |                     
|Municipal Bonds and Notes 94.4%                                                                                                                                                         
|Alabama 0.4%                                                                                                                                                                            
|Camden, AL, Industrial Development Board
Revenue, Weyerhaeuser, Series A, Prerefunded,
6.125%, 12/1/2024                                                                                 | 1,000,000            | 1,140,070 
|Montgomery, AL, Medical Clinic Board, Health Care Facility
Revenue, Jackson Hospital & Clinic, 5.25%, 3/1/2036                                                                           | 2,000,000            | 1,394,100 
|Sylacauga, AL, Health Care Authority Revenue, Coosa Valley
Medical Center, Series A, 6.0%, 8/1/2035                                                                                      | 2,000,000            | 1,381,080 
|                                                                                                                                                                                         | 3,915,250           
|Arizona 1.4%                                                                                                                                                                            
|Arizona, Salt Verde Financial Corp., Gas Revenue,
5.25%, 12/1/2025                                                                                                                       | 4,000,000            | 2,802,880 
|Phoenix, AZ, Civic Improvement Corp., Airport Revenue:                                                                                                                                   |                      |           
|Series A, 5.0%, 7/1/2022 (a)                                                                                                                                                             | 3,570,000            | 3,477,108 
|Series A, 5.0%, 7/1/2023 (a)                                                                                                                                                             | 2,540,000            | 2,453,107 
|Pima County, AZ, Industrial Development Revenue, Tucson
Electric Power, Series A, 6.375%, 9/1/2029                                                                                       | 5,000,000            | 3,930,800 
|                                                                                                                                                                                         | 12,663,895          
|California 2.0%                                                                                                                                                                         
|California, Morongo Band of Mission Indians, Enterprise Casino
Revenue, Series B, 144A, 6.5%, 3/1/2028                                                                                   | 5,000,000            | 4,008,750 
|California, Special Assessment Revenue, Golden State Tobacco
Securitization Corp., Series A-1, 5.75%, 6/1/2047                                                                           | 1,665,000            | 1,049,749 
|Long Beach, CA, Bond Finance Authority, Natural Gas Purchase
Revenue, Series A, 5.25%, 11/15/2023                                                                                        | 620,000              | 460,474   
|Los Angeles County, CA, Public Works Financing
Authority Lease Revenue, Master Project, Series A,
5.0%, 12/1/2017 (b)                                                                    | 5,310,000            | 5,188,135 
|Los Angeles, CA, Airport Revenue, Regional Airports
Improvement Corporation Lease Revenue, Series C, AMT,
7.5%, 12/1/2024                                                                | 6,035,000            | 4,401,507 
|Millbrae, CA, Senior Care Revenue, Magnolia of Millbrae
Project, Series A, AMT, 7.375%, 9/1/2027                                                                                         | 895,000              | 766,004   
|Southern California, Public Power Authority, National
Gas Project Revenue, Project No. 1, Series A,
5.25%, 11/1/2022                                                                     | 2,500,000            | 1,801,675 
|                                                                                                                                                                                         | 17,676,294          
|Colorado 5.2%                                                                                                                                                                           
|Colorado, E-470 Public Highway Authority Revenue, Series A-1,
5.5%, 9/1/2024 (b)                                                                                                         | 3,500,000            | 3,016,685 
|Colorado, Health Facilities Authority Revenue, Adventist Health
Sunbelt, Series D, 5.125%, 11/15/2029                                                                                    | 8,000,000            | 6,583,760 
|Colorado, Health Facilities Authority Revenue, Covenant
Retirement Communities, Inc., 5.0%, 12/1/2035                                                                                    | 11,750,000           | 7,674,160 
|Colorado, Health Facilities Authority Revenue, Valley View
Hospital Association, 5.75%, 5/15/2036                                                                                        | 2,000,000            | 1,416,240 
|Colorado, Public Energy Authority, Natural Gas Purchased
Revenue, 6.25%, 11/15/2028                                                                                                      | 6,365,000            | 4,974,375 
|Colorado, Transportation/Tolls Revenue, Northwest Parkway
Public Highway Authority, Series D, Prerefunded, 7.125%,
6/15/2041 (a)                                                         | 7,960,000            | 8,420,247 
|Denver, CO, Airport Revenue, Series D, AMT,
7.75%, 11/15/2013                                                                                                                            | 7,480,000            | 8,002,852 
|Denver, CO, City & County Single Family Mortgage Revenue,
Metro Mayors Caucus, AMT, 5.25%, 11/1/2040                                                                                     | 3,902,794            | 3,281,782 
|Montrose, CO, Memorial Hospital Revenue, 6.375%, 12/1/2023                                                                                                                               | 2,355,000            | 2,151,316 
|                                                                                                                                                                                         | 45,521,417          
|Connecticut 1.9%                                                                                                                                                                        
|Connecticut, Mohegan Tribe Indians Gaming Authority, Priority
Distribution, 144A, 5.25%, 1/1/2033                                                                                        | 3,000,000            | 1,936,830 
|Mashantucket, CT, Project Revenue, Mashantucket Western
Pequot Tribe:                                                                                                                    |                      |           
|Series B, 144A, Zero Coupon, 9/1/2010                                                                                                                                                    | 2,000,000            | 1,777,380 
|Series B, 144A, Zero Coupon, 9/1/2011                                                                                                                                                    | 2,000,000            | 1,725,240 
|Series B, 144A, Zero Coupon, 9/1/2012                                                                                                                                                    | 2,000,000            | 1,607,740 
|Series B, 144A, Zero Coupon, 9/1/2013                                                                                                                                                    | 2,000,000            | 1,499,180 
|Series B, 144A, Zero Coupon, 9/1/2014                                                                                                                                                    | 2,000,000            | 1,392,280 
|Mashantucket, CT, Special Revenue, Mashantucket Western
Pequot Tribe, Series A, 144A, 6.5%, 9/1/2031                                                                                     | 7,295,000            | 5,470,521 
|Mashantucket, CT, Sports, Expo & Entertainment Revenue,
Mashantucket Western Pequot Tribe, Series B, 144A, 5.7%,
9/1/2012                                                                | 1,000,000            | 933,350   
|                                                                                                                                                                                         | 16,342,521          
|Delaware 0.1%                                                                                                                                                                           
|Sussex County, DE, First Mortgage Revenue, Cadbury Lewes,
Series A, 6.0%, 1/1/2035                                                                                                       | 1,000,000            | 688,620   
|District of Columbia 0.9%                                                                                                                                                               
|District of Columbia, Metropolitan Airport Authority System,
Series B, AMT, 5.0%, 10/1/2023 (a) (b)                                                                                      | 10,000,000           | 8,127,100 
|Florida 8.3%                                                                                                                                                                            
|Bayside, FL, Sales & Special Tax Revenue, Community
Development District, Series A, 6.3%, 5/1/2018                                                                                       | 445,000              | 410,045   
|Florida, Capital Region Community Development District,
Capital Improvement Revenue, Series A, 7.0%, 5/1/2039                                                                            | 4,270,000            | 3,376,801 
|Florida, Main Street Community Development District, Capital
Improvement Revenue, Series A, 6.8%, 5/1/2038                                                                               | 3,000,000            | 2,278,590 
|Florida, Special Assessment Revenue, East Park Community
Development District, Series A, 7.5%, 5/1/2039                                                                                  | 1,750,000            | 1,378,598 
|Florida, Special Assessment Revenue, Tolomato Community
Development District, 5.4%, 5/1/2037                                                                                             | 9,910,000            | 6,252,516 
|Highlands County, FL, Health Facilities Authority Revenue,
Adventist Health System:                                                                                                      |                      |           
|Series G, 5.125%, 11/15/2020                                                                                                                                                             | 970,000              | 899,035   
|Series G, Prerefunded, 5.125%, 11/15/2020                                                                                                                                                | 30,000               | 33,187    
|Series G, 5.125%, 11/15/2021                                                                                                                                                             | 1,930,000            | 1,761,414 
|Series G, Prerefunded, 5.125%, 11/15/2021                                                                                                                                                | 70,000               | 77,435    
|Series G, 5.125%, 11/15/2022                                                                                                                                                             | 2,205,000            | 1,979,892 
|Series G, Prerefunded, 5.125%, 11/15/2022                                                                                                                                                | 75,000               | 82,967    
|Series G, 5.125%, 11/15/2023                                                                                                                                                             | 2,245,000            | 1,987,745 
|Series G, Prerefunded, 5.125%, 11/15/2023                                                                                                                                                | 180,000              | 199,120   
|Hillsborough County, FL, Industrial Development Authority
Revenue, Health Facilities University Community Hospital,
Series A, 5.625%, 8/15/2029                                          | 13,125,000           | 10,130,400
|Miami Beach, FL, Health Facilities Authority Hospital Revenue,
Mount Sinai Medical Center, 144A, 6.75%, 11/15/2029                                                                       | 8,100,000            | 6,348,537 
|Orange County, FL, Health Facilities Authority Revenue,
Orlando Regional Healthcare, Series C, 5.25%, 10/1/2035                                                                          | 5,000,000            | 3,783,800 
|Orlando, FL, Greater Aviation Authority, Airport
Facilities Revenue, Jet Blue Airways Corp., AMT,
6.5%, 11/15/2036                                                                       | 1,000,000            | 614,450   
|Palm Beach County, FL, Health Facilities Authority Revenue,
Waterford Project, 5.375%, 11/15/2022                                                                                        | 2,600,000            | 2,131,610 
|Port St. Lucie, FL, Special Assessment Revenue, Southwest
Annexation District 1, Series B, 5.0%, 7/1/2027 (b)                                                                            | 2,500,000            | 2,191,500 
|Seminole Tribe, FL, Special Obligation Revenue:                                                                                                                                          |                      |           
|Series A, 144A, 5.5%, 10/1/2024                                                                                                                                                          | 8,000,000            | 6,257,280 
|Series A, 144A, 5.75%, 10/1/2022                                                                                                                                                         | 9,500,000            | 7,798,075 
|South Florida, Water Management District, Certificates of
Participation, 5.0%, 10/1/2025 (b)                                                                                             | 3,745,000            | 3,576,400 
|South Miami, FL, Health Facilities Authority Hospital Revenue,
Baptist Health South Florida Group:                                                                                       |                      |           
|5.0%, 8/15/2023                                                                                                                                                                          | 5,000,000            | 4,463,650 
|5.0%, 8/15/2024                                                                                                                                                                          | 1,000,000            | 897,660   
|5.0%, 8/15/2025                                                                                                                                                                          | 5,000,000            | 4,542,750 
|                                                                                                                                                                                         | 73,453,457          
|Georgia 2.2%                                                                                                                                                                            
|Americus-Sumter County, GA, Hospital & Healthcare Revenue,
Hospital Authority, South Georgia Methodist, Series A,
6.375%, 5/15/2029                                                      | 3,000,000            | 2,304,630 
|Atlanta, GA, Tax Allocation, Princeton Lakes Project, 144A,
5.5%, 1/1/2031                                                                                                               | 1,225,000            | 843,425   
|Georgia, Glynn-Brunswick Memorial Hospital Authority
Revenue, Anticipation Certificates-Southeast Health, Series
A, 5.625%, 8/1/2034                                                     | 5,500,000            | 4,371,125 
|Georgia, Main Street Natural Gas, Inc., Gas Project Revenue:                                                                                                                             |                      |           
|Series A, 5.0%, 3/15/2019 (a)                                                                                                                                                            | 10,000,000           | 8,461,000 
|Series A, 5.5%, 9/15/2024                                                                                                                                                                | 2,440,000            | 1,842,566 
|Georgia, Municipal Electric Authority, Power Revenue:                                                                                                                                    |                      |           
|Series Z, ETM, 5.5%, 1/1/2012                                                                                                                                                            | 80,000               | 84,794    
|Series 2005-Z, 5.5%, 1/1/2012                                                                                                                                                            | 1,295,000            | 1,363,889 
|                                                                                                                                                                                         | 19,271,429          
|Guam 0.1%                                                                                                                                                                               
|Government of Guam, Waterworks Authority, Water &
Wastewater System Revenue, 5.5%, 7/1/2016                                                                                              | 1,300,000            | 1,169,207 
|Illinois 2.9%                                                                                                                                                                           
|Chicago, IL, General Obligation, Series A, 5.25%, 1/1/2029 (b)                                                                                                                           | 175,000              | 169,918   
|Illinois, Finance Authority Revenue, Elmhurst Memorial
Healthcare, Series A, 5.625%, 1/1/2037                                                                                            | 9,500,000            | 7,493,315 
|Illinois, Finance Authority Revenue, Friendship Village of
Schaumburg, Series A, 5.625%, 2/15/2037                                                                                       | 3,000,000            | 1,897,110 
|Illinois, Finance Authority Revenue, Monarch Landing, Inc.
Facilities:                                                                                                                   |                      |           
|Series A, 7.0%, 12/1/2027                                                                                                                                                                | 5,000,000            | 4,026,250 
|Series A, 7.0%, 12/1/2037                                                                                                                                                                | 5,000,000            | 3,849,900 
|Illinois, Finance Authority Revenue, Rush University Medical
Center, Series B, 5.75%, 11/1/2028 (b)                                                                                      | 1,250,000            | 1,099,800 
|Illinois, Finance Authority Revenue, Three Crowns Park Plaza:                                                                                                                            |                      |           
|Series A, 5.875%, 2/15/2026                                                                                                                                                              | 1,225,000            | 893,086   
|Series A, 5.875%, 2/15/2038                                                                                                                                                              | 500,000              | 326,965   
|Illinois, Municipal Electric Agency Power Supply Revenue:                                                                                                                                |                      |           
|Series A, 5.25%, 2/1/2023 (b)                                                                                                                                                            | 3,500,000            | 3,331,615 
|Series A, 5.25%, 2/1/2024 (b)                                                                                                                                                            | 2,500,000            | 2,355,050 
|                                                                                                                                                                                         | 25,443,009          
|Indiana 0.8%                                                                                                                                                                            
|Indiana, Health & Educational Facility Financing Authority,
Hospital Revenue, Community Foundation Northwest, 5.5%,
3/1/2037                                                             | 1,750,000            | 1,230,845 
|Indiana, Hospital & Healthcare Revenue, Health Facilities
Finance Authority, Greenwood Village South Project,
5.625%, 5/15/2028                                                          | 1,000,000            | 684,620   
|Indiana, Senior Care Revenue, Health Facilities Finance
Authority, Franciscan Eldercare Community Services,
5.875%, 5/15/2029                                                            | 2,300,000            | 1,628,147 
|North Manchester, IN, Senior Care Revenue, 7.25%, 7/1/2033                                                                                                                               | 3,000,000            | 2,513,970 
|St. Joseph County, IN, Economic Development Revenue, Holy
Cross Village, Notre Dame Project, Series A,
6.0%, 5/15/2026                                                                   | 235,000              | 168,098   
|Vigo County, IN, Hospital Authority Revenue, Union Hospital,
Inc., 144A, 5.5%, 9/1/2027                                                                                                  | 1,000,000            | 700,460   
|                                                                                                                                                                                         | 6,926,140           
|Iowa 1.1%                                                                                                                                                                               
|Altoona, IA, Urban Renewal Tax Increment Revenue,
Annual Appropriation:                                                                                                                  |                      |           
|6.0%, 6/1/2034                                                                                                                                                                           | 1,000,000            | 857,150   
|6.0%, 6/1/2039                                                                                                                                                                           | 2,000,000            | 1,676,600 
|Cedar Rapids, IA, First Mortgage Revenue, Cottage Grove
Place, Series A, 5.875%, 7/1/2028                                                                                                | 5,335,000            | 3,641,138 
|Iowa, Finance Authority Retirement Community Revenue,
Edgewater LLC Project, 6.5%, 11/15/2027                                                                                            | 5,000,000            | 3,761,100 
|                                                                                                                                                                                         | 9,935,988           
|Kansas 1.8%                                                                                                                                                                             
|Overland Park, KS, Industrial Development Revenue, Series A,
Prerefunded, 7.375%, 1/1/2032                                                                                               | 8,000,000            | 8,883,040 
|Wichita, KS, Hospital & Healthcare Revenue:                                                                                                                                              |                      |           
|Series 3, 5.5%, 11/15/2025                                                                                                                                                               | 1,300,000            | 1,139,073 
|Series 3, 5.625%, 11/15/2031                                                                                                                                                             | 3,750,000            | 3,166,875 
|Wyandotte County, KS, Unified Government Special Obligation
Revenue, Sales Tax, Series B, 5.0%, 12/1/2020                                                                                | 3,600,000            | 3,017,736 
|                                                                                                                                                                                         | 16,206,724          
|Kentucky 0.5%                                                                                                                                                                           
|Kentucky, Economic Development Finance Authority,
Health System Revenue, Norton Healthcare, Series A,
6.625%, 10/1/2028                                                                  | 1,195,000            | 1,071,939 
|Kentucky, Economic Development Finance Authority, Louisville
Arena Project Revenue, Series A-1, 6.0%, 12/1/2033 (b)                                                                      | 3,635,000            | 3,507,411 
|                                                                                                                                                                                         | 4,579,350           
|Louisiana 1.9%                                                                                                                                                                          
|DeSoto Parish, LA, Environmental Improvement Revenue,
International Paper Co. Project, Series A, AMT,
5.75%, 9/1/2031                                                                    | 5,000,000            | 3,075,850 
|Louisiana, Local Government Environmental Facilities,
Community Development Authority Revenue,
6.75%, 11/1/2032                                                                          | 6,000,000            | 4,442,700 
|Louisiana, St. John Baptist Parish Revenue, Marathon Oil
Corp., Series A, 5.125%, 6/1/2037                                                                                               | 14,000,000           | 8,952,860 
|                                                                                                                                                                                         | 16,471,410          
|Maryland 1.9%                                                                                                                                                                           
|Anne Arundel County, MD, General Obligation,
National Business Park Project, Prerefunded, 144A, 7.375%,
7/1/2028 (a)                                                                     | 1,933,000            | 2,112,885 
|Maryland, State Health & Higher Educational Facilities Authority
Revenue, King Farm Presbyterian Community, Series B,
4.75%, 1/1/2013                                                    | 5,000,000            | 4,509,750 
|Maryland, State Health & Higher Educational Facilities Authority
Revenue, Mercy Medical Center, Series A, 5.0%, 7/1/2037                                                                 | 5,005,000            | 3,304,901 
|Maryland, State Health & Higher Educational Facilities Authority
Revenue, Washington County Hospital:                                                                                    |                      |           
|5.75%, 1/1/2033                                                                                                                                                                          | 2,660,000            | 1,947,998 
|6.0%, 1/1/2028                                                                                                                                                                           | 6,100,000            | 4,779,045 
|                                                                                                                                                                                         | 16,654,579          
|Massachusetts 4.6%                                                                                                                                                                      
|Boston, MA, Industrial Development Financing Authority
Revenue, Crosstown Center Project, AMT:                                                                                           |                      |           
|6.5%, 9/1/2035                                                                                                                                                                           | 8,935,000            | 6,137,988 
|8.0%, 9/1/2035                                                                                                                                                                           | 970,000              | 689,622   
|Massachusetts, Health & Educational Facilities Authority
Revenue, Caritas Christi Obligation, Series B,
6.25%, 7/1/2022                                                                  | 1,750,000            | 1,552,460 
|Massachusetts, Hospital & Healthcare Revenue, Health &
Educational Facilities Authority, Civic Investments, Series A,
Prerefunded, 9.0%, 12/15/2015                                      | 3,400,000            | 4,058,138 
|Massachusetts, Hospital & Healthcare Revenue, Health &
Educational Facilities Authority, Partners Healthcare System,
Series B, 5.125%, 7/1/2019                                          | 1,185,000            | 1,167,355 
|Massachusetts, Industrial Development Revenue,
Development Finance Agency, Series A, 7.1%, 7/1/2032                                                                                      | 3,750,000            | 3,052,462 
|Massachusetts, Project Revenue, Health & Educational
Facilities Authority, Series B, Prerefunded,
9.15%, 12/15/2023                                                                      | 2,000,000            | 2,477,540 
|Massachusetts, Project Revenue, Health & Educational
Facilities Authority, Jordan Hospital, Series E,
6.75%, 10/1/2033                                                                   | 7,450,000            | 5,877,454 
|Massachusetts, State Health & Educational Facilities Authority
Revenue, Caregroup Healthcare System:                                                                                     |                      |           
|Series E-1, 5.0%, 7/1/2028                                                                                                                                                               | 1,500,000            | 1,077,555 
|Series E-1, 5.125%, 7/1/2038                                                                                                                                                             | 1,500,000            | 1,015,590 
|Massachusetts, State Health & Educational Facilities Authority
Revenue, Jordan Hospital, Series B, 6.875%, 10/1/2015                                                                     | 5,090,000            | 5,101,096 
|Massachusetts, State Health & Educational Facilities Authority
Revenue, Milford Regional Medical Center:                                                                                 |                      |           
|Series E, 5.0%, 7/15/2022                                                                                                                                                                | 2,250,000            | 1,670,603 
|Series E, 5.0%, 7/15/2032                                                                                                                                                                | 3,250,000            | 2,053,382 
|Series E, 5.0%, 7/15/2037                                                                                                                                                                | 2,750,000            | 1,675,548 
|Massachusetts, State Health & Educational Facilities Authority
Revenue, Quincy Medical Center, Series A, 6.5%, 1/15/2038                                                                 | 1,500,000            | 1,115,790 
|Massachusetts, State Health & Educational Facilities Authority
Revenue, South Shore Hospital:                                                                                            |                      |           
|Series F, 5.625%, 7/1/2019                                                                                                                                                               | 370,000              | 337,658   
|Series F, 5.75%, 7/1/2029                                                                                                                                                                | 1,480,000            | 1,184,814 
|                                                                                                                                                                                         | 40,245,055          
|Michigan 2.7%                                                                                                                                                                           
|Dearborn, MI, Economic Development Corp. Revenue, Limited
Obligation, Henry Ford Village:                                                                                                |                      |           
|7.0%, 11/15/2038                                                                                                                                                                         | 4,500,000            | 3,565,575 
|7.125%, 11/15/2043                                                                                                                                                                       | 1,500,000            | 1,202,460 
|Detroit, MI, Sales & Special Tax Revenue, Downtown
Development Authority:                                                                                                                |                      |           
|Zero Coupon, 7/1/2011                                                                                                                                                                    | 3,150,000            | 2,822,589 
|Zero Coupon, 7/1/2012                                                                                                                                                                    | 3,150,000            | 2,664,049 
|Detroit, MI, Sewer Disposal Revenue, Series D,
3.201%*, 7/1/2032 (b)                                                                                                                     | 1,610,000            | 1,078,700 
|Kalamazoo, MI, Economic Development Corp. Revenue,
Limited Obligation, Heritage Community, 5.5%, 5/15/2036                                                                               | 1,000,000            | 624,010   
|Kentwood, MI, Economic Development, Limited Obligation,
Holland Home, Series A, 5.375%, 11/15/2036                                                                                       | 2,000,000            | 1,374,840 
|Michigan, State Grant Anticipation Bonds, 5.25%, 9/15/2023 (b)                                                                                                                           | 7,500,000            | 7,343,100 
|Michigan, State Hospital Finance Authority Revenue, Henry
Ford Health System, Series A, 5.0%, 11/15/2016                                                                                 | 1,125,000            | 1,042,988 
|Saginaw, MI, Hospital & Healthcare Revenue, Hospital Finance
Authority, Covenant Medical Center, Series F, 6.5%,
7/1/2030                                                                | 2,000,000            | 1,996,400 
|                                                                                                                                                                                         | 23,714,711          
|Mississippi 1.1%                                                                                                                                                                        
|Lowndes County, MS, Solid Waste Disposal & Pollution Control
Revenue, Weyerhaeuser Co. Project, Series A, 6.8%,
4/1/2022                                                                 | 5,500,000            | 4,465,670 
|Mississippi, Sales & Special Tax Revenue, Development Bank,
Diamond Lakes Utilities, Series A, 6.25%, 12/1/2017                                                                          | 1,000,000            | 850,810   
|Warren County, MS, Gulf Opportunity Zone, International Paper
Co.:                                                                                                                       |                      |           
|Series A, 6.5%, 9/1/2032                                                                                                                                                                 | 2,620,000            | 2,015,880 
|Series A, 5.5%, 9/1/2031                                                                                                                                                                 | 4,250,000            | 2,762,245 
|                                                                                                                                                                                         | 10,094,605          
|Missouri 1.5%                                                                                                                                                                           
|Branson, MO, Regional Airport Transportation Development,
District Airport Revenue, Series B, AMT, 6.0%, 7/1/2037                                                                        | 1,250,000            | 816,200   
|Cass County, MO, Hospital Revenue, 5.5%, 5/1/2027                                                                                                                                        | 2,000,000            | 1,449,920 
|Florissant, MO, Industrial Development Revenue, Desmet
Acquisition, Series A, Prerefunded, 8.5%, 8/15/2030                                                                               | 6,400,000            | 7,102,656 
|Florissant, MO, Industrial Development Revenue, St. Catherine
Acquisition, Series B, Prerefunded, 9.0%, 8/15/2030                                                                        | 3,025,000            | 3,381,194 
|Kansas City, MO, Industrial Development Authority, Health
Facilities Revenue, First Mortgage, Bishop Spencer, Series
A, 6.5%, 1/1/2035                                                   | 1,000,000            | 740,260   
|                                                                                                                                                                                         | 13,490,230          
|Nebraska 0.3%                                                                                                                                                                           
|Nebraska, Central Plains Energy Project Revenue, Project No.
1, Series A, 5.25%, 12/1/2021                                                                                               | 3,000,000            | 2,208,150 
|Nevada 1.3%                                                                                                                                                                             
|Clark County, NV, School District, Series A, 5.0%, 6/15/2022 (b)                                                                                                                         | 4,830,000            | 4,802,179 
|Las Vegas, NV, Transportation/Tolls Revenue, Las Vegas
Monorail Project, 7.375%, 1/1/2030                                                                                                | 6,000,000            | 1,388,280 
|Reno, NV, Hospital Revenue, Renown Regional Medical Center
Project, Series A, 5.0%, 6/1/2027                                                                                             | 5,000,000            | 3,921,150 
|Sparks, NV, Local Improvement Districts, Limited Obligation
District No.3, 6.75%, 9/1/2027                                                                                               | 2,000,000            | 1,651,660 
|                                                                                                                                                                                         | 11,763,269          
|New Hampshire 0.7%                                                                                                                                                                      
|New Hampshire, Health & Education Facilities Authority
Revenue, Havenwood-Heritage Heights:                                                                                              |                      |           
|Series A, 5.35%, 1/1/2026                                                                                                                                                                | 1,035,000            | 700,302   
|Series A, 5.4%, 1/1/2030                                                                                                                                                                 | 550,000              | 358,286   
|New Hampshire, Senior Care Revenue, Health & Educational
Facilities Authority, New Hampshire Catholic Charities,
5.8%, 8/1/2022                                                          | 2,760,000            | 2,367,914 
|New Hampshire, Senior Care Revenue, Health & Educational
Facilities Authority, Rivermead at Peterborough:                                                                                |                      |           
|5.5%, 7/1/2013                                                                                                                                                                           | 1,285,000            | 1,190,591 
|5.625%, 7/1/2018                                                                                                                                                                         | 1,615,000            | 1,345,360 
|                                                                                                                                                                                         | 5,962,453           
|New Jersey 2.8%                                                                                                                                                                         
|Middlesex County, NJ, Pollution Control Authority Revenue,
Pollution Control Amerada, 6.05%, 9/15/2034                                                                                   | 1,000,000            | 785,630   
|New Jersey, Economic Development Authority Revenue,
Cigarette Tax, 5.75%, 6/15/2034                                                                                                      | 1,165,000            | 814,766   
|New Jersey, Economic Development Authority Revenue,
Motor Vehicle Surplus Revenue, Series A, 5.0%, 7/1/2023 (b)                                                                          | 1,770,000            | 1,718,175 
|New Jersey, Economic Development Authority Revenue,
United Methodist Homes, Series A-2, 6.625%, 7/1/2033                                                                                 | 2,500,000            | 1,933,750 
|New Jersey, Health Care Facilities Financing Authority
Revenue, St. Joseph's Health Care Systems,
6.625%, 7/1/2038                                                                       | 11,570,000           | 8,788,456 
|New Jersey, Industrial Development Revenue, Economic
Development Authority, Harrogate, Inc., Series A, 5.875%,
12/1/2026                                                                 | 1,425,000            | 1,041,803 
|New Jersey, Tobacco Settlement Financing Corp., Series 1-A,
5.0%, 6/1/2029                                                                                                               | 15,965,000           | 9,727,475 
|                                                                                                                                                                                         | 24,810,055          
|New York 5.3%                                                                                                                                                                           
|Albany, NY, Industrial Development Agency, Civic Facility
Revenue, St. Peter's Hospital Project:                                                                                         |                      |           
|Series A, 5.25%, 11/15/2027                                                                                                                                                              | 3,000,000            | 2,289,090 
|Series A, 5.75%, 11/15/2022                                                                                                                                                              | 1,500,000            | 1,324,215 
|Brookhaven, NY, Hospital & Healthcare Revenue, Industrial
Development Authority, Memorial Hospital Medical Center,
Series A, Prerefunded, 8.25%, 11/15/2030                              | 2,000,000            | 2,248,220 
|Long Island, NY, Power Authority, Electric Systems Revenue,
Series E, 5.0%, 12/1/2022 (b)                                                                                                | 14,075,000           | 13,120,152
|Nassau County, NY, Industrial Development Agency,
Continuing Care Retirement, Amsterdam at Harborside,
Series A, 6.7%, 1/1/2043                                                          | 5,000,000            | 3,920,550 
|New York, Liberty Development Corp. Revenue, National
Sports Museum Project, Series A, 6.125%, 2/15/2019                                                                                 | 2,500,000            | 298,500   
|New York, State Dormitory Authority Revenues, NYU Hospital
Center, Series B, 5.25%, 7/1/2024                                                                                             | 1,000,000            | 746,780   
|New York, State Dormitory Authority Revenues, Orange
Regional Medical Center, 6.125%, 12/1/2029                                                                                          | 2,000,000            | 1,543,980 
|New York & New Jersey, Port Authority, One Hundred
Forty-Seventh, AMT, 5.0%, 10/15/2023 (a) (b)                                                                                          | 8,260,000            | 7,017,531 
|New York City, NY, Hospital & Healthcare Revenue, Industrial
Development Agency, British Airways PLC Project, AMT,
7.625%, 12/1/2032                                                     | 1,500,000            | 1,080,210 
|New York City, NY, Industrial Development Agency Revenue,
Liberty-7, World Trade Center, Series A, 6.25%, 3/1/2015                                                                       | 8,000,000            | 6,635,520 
|New York City, NY, Industrial Development Agency, Special
Facility Revenue, American Airlines, JFK International
Airport, AMT:                                                           |                      |           
|7.75%, 8/1/2031                                                                                                                                                                          | 5,000,000            | 3,454,800 
|8.0%, 8/1/2028                                                                                                                                                                           | 3,000,000            | 2,161,470 
|Orange County, NY, Senior Care Revenue, Industrial
Development Agency, The Glen Arden Project,
5.7%, 1/1/2028                                                                            | 1,250,000            | 860,912   
|                                                                                                                                                                                         | 46,701,930          
|North Carolina 0.7%                                                                                                                                                                     
|North Carolina, Electric Revenue, Municipal Power Agency:                                                                                                                                |                      |           
|Series F, 5.5%, 1/1/2016                                                                                                                                                                 | 1,000,000            | 1,020,650 
|Series F, 5.5%, 1/1/2017                                                                                                                                                                 | 1,495,000            | 1,515,377 
|Series B, 6.375%, 1/1/2013                                                                                                                                                               | 2,075,000            | 2,144,699 
|North Carolina, Medical Care Commission, Retirement Facilities
Revenue, First Mortgage, Southminster Project, Series A,
5.625%, 10/1/2027                                                | 2,500,000            | 1,826,200 
|                                                                                                                                                                                         | 6,506,926           
|North Dakota 0.0%                                                                                                                                                                       
|Grand Forks, ND, Hospital & Healthcare Revenue, Altru Health
Care System, Prerefunded, 7.125%, 8/15/2024                                                                                 | 250,000              | 274,000   
|Ohio 3.0%                                                                                                                                                                               
|Buckeye, OH, Tobacco Settlement Financing Authority, Series
A-2, 5.875%, 6/1/2030                                                                                                        | 37,505,000           | 25,012,460
|Franklin County, OH, Hospital & Healthcare Revenue, Health
Care Facilities, Ohio Presbyterian Retirement Service, Series
A, Prerefunded, 7.125%, 7/1/2029                                | 1,000,000            | 1,129,030 
|                                                                                                                                                                                         | 26,141,490          
|Oregon 1.0%                                                                                                                                                                             
|Clackamas County, OR, North Clackamas School District
No. 12, Series B, 0% to 6/15/2011, 5.0% to 6/15/2023 (b)                                                                           | 10,420,000           | 8,790,520 
|Pennsylvania 6.5%                                                                                                                                                                       
|Allegheny County, PA, Hospital Development Authority
Revenue, West Penn Allegheny Health Systems:                                                                                        |                      |           
|Series A, 5.0%, 11/15/2028                                                                                                                                                               | 12,160,000           | 6,963,424 
|Series B, Prerefunded, 9.25%, 11/15/2022                                                                                                                                                 | 2,000,000            | 2,295,260 
|Series B, Prerefunded, 9.25%, 11/15/2030                                                                                                                                                 | 4,630,000            | 5,313,527 
|Bucks County, PA, Industrial Development Authority,
Retirement Community Revenue, Ann's Choice, Inc. Facility,
Series A, 6.25%, 1/1/2035                                                 | 2,250,000            | 1,603,193 
|Chester County, PA, Senior Care Revenue, Health & Education
Facilities Authority, Jenners Pond, Inc. Project, Prerefunded,
7.625%, 7/1/2034                                              | 1,750,000            | 2,071,545 
|Delaware County, PA, Project Revenue, Authority First
Management, White Horse Village Project, Series A,
Prerefunded, 7.625%, 7/1/2030                                                   | 1,000,000            | 1,097,930 
|Delaware Valley, PA, Regional Finance Authority, Local
Government Revenue, 5.75%, 7/1/2017                                                                                               | 6,250,000            | 6,697,812 
|Lancaster County, PA, Hospital Authority Revenue, Brethren
Village Project, Series A, 6.375%, 7/1/2030                                                                                   | 1,000,000            | 770,790   
|Montgomery County, PA, Industrial Development Authority
Revenue, Whitemarsh Continuing Care, 6.25%, 2/1/2035                                                                             | 2,400,000            | 1,579,752 
|Montgomery County, PA, Senior Care Revenue, Higher
Education & Health Authority, Philadelphia Geriatric Center,
Series A, Prerefunded, 7.25%, 12/1/2027                                  | 3,125,000            | 3,345,781 
|Northampton County, PA, Hospital Authority Revenue, St.
Luke's Hospital Project:                                                                                                         |                      |           
|Series A, 5.375%, 8/15/2028                                                                                                                                                              | 3,500,000            | 2,586,045 
|Series A, 5.5%, 8/15/2035                                                                                                                                                                | 6,500,000            | 4,606,290 
|Pennsylvania, Economic Development Financing Authority,
Exempt Facilities Revenue, Reliant Energy, Series A, AMT,
6.75%, 12/1/2036                                                       | 4,000,000            | 2,496,840 
|Pennsylvania, Hospital & Healthcare Revenue, Economic
Development Financing Authority, UPMC Health System,
Series A, 6.0%, 1/15/2031                                                     | 5,095,000            | 4,939,959 
|Pennsylvania, Sales & Special Tax Revenue, Economic
Development Financing Authority, Amtrak Project, Series A,
AMT, 6.125%, 11/1/2021                                                    | 700,000              | 609,399   
|Philadelphia, PA, Hospitals & Higher Education Facilities
Authority Revenue, Temple University Health Systems,
Series A, 5.0%, 7/1/2034                                                  | 10,000,000           | 5,900,400 
|Westmoreland County, PA, Industrial Development Authority
Revenue, Redstone Retirement Community, Series A,
5.875%, 1/1/2032                                                             | 1,000,000            | 709,250   
|Westmoreland County, PA, Senior Care Revenue, Industrial
Development Authority, Health Care Facilities-Redstone,
Series B, Prerefunded, 8.125%, 11/15/2030                               | 3,000,000            | 3,376,650 
|                                                                                                                                                                                         | 56,963,847          
|Puerto Rico 4.6%                                                                                                                                                                        
|Commonwealth of Puerto Rico, Aqueduct & Sewer Authority
Revenue, Series A, 6.0%, 7/1/2038                                                                                                | 25,000,000           | 22,289,750
|Commonwealth of Puerto Rico, General Obligation:                                                                                                                                         |                      |           
|Series A, 5.0%, 7/1/2021                                                                                                                                                                 | 5,000,000            | 4,336,250 
|Series A, 6.0%, 7/1/2038                                                                                                                                                                 | 7,200,000            | 6,233,328 
|Commonwealth of Puerto Rico, Government Development
Bank, Series B, 5.0%, 12/1/2015                                                                                                      | 1,470,000            | 1,404,350 
|Puerto Rico, Public Buildings Authority Revenue, Government
Facilities:                                                                                                                  |                      |           
|Series N, 5.5%, 7/1/2024                                                                                                                                                                 | 2,000,000            | 1,766,320 
|Series M, 6.25%, 7/1/2022                                                                                                                                                                | 5,000,000            | 4,792,300 
|                                                                                                                                                                                         | 40,822,298          
|South Carolina 1.6%                                                                                                                                                                     
|Greenwood County, SC, Hospital & Healthcare Revenue, South
Carolina Memorial Hospital, 5.5%, 10/1/2031                                                                                   | 1,500,000            | 1,212,495 
|Hardeeville, SC, Assessment Revenue, Anderson Tract
Municipal Improvement District:                                                                                                      |                      |           
|Series B, 7.5%, 11/1/2015                                                                                                                                                                | 1,000,000            | 919,250   
|Series A, 7.75%, 11/1/2039                                                                                                                                                               | 4,917,000            | 3,980,803 
|South Carolina, Jobs Economic Development Authority
Revenue, Bon Secours Health System, Series B,
5.625%, 11/15/2030                                                                     | 3,960,000            | 3,297,690 
|South Carolina, Jobs Economic Development Authority,
Hospital Facilities Revenue, Palmetto Health Alliance:                                                                              |                      |           
|Series C, Prerefunded, 7.0%, 8/1/2030 (a)                                                                                                                                                | 600,000              | 702,354   
|Series A, Prerefunded, 7.375%, 12/15/2021                                                                                                                                                | 3,500,000            | 3,920,945 
|                                                                                                                                                                                         | 14,033,537          
|South Dakota 0.8%                                                                                                                                                                       
|South Dakota, State Health & Educational Facilities Authority
Revenue, Avera Health:                                                                                                     |                      |           
|Series B, 5.25%, 7/1/2038                                                                                                                                                                | 3,000,000            | 2,083,620 
|Series B, 5.5%, 7/1/2035                                                                                                                                                                 | 5,000,000            | 3,672,000 
|South Dakota, State Health & Educational Facilities Authority
Revenue, Sanford Health, 5.0%, 11/1/2027                                                                                   | 1,000,000            | 867,850   
|                                                                                                                                                                                         | 6,623,470           
|Tennessee 3.9%                                                                                                                                                                          
|Clarksville, TN, Natural Gas Acquisition Corp., Gas Revenue:                                                                                                                             |                      |           
|5.0%, 12/15/2017                                                                                                                                                                         | 2,500,000            | 2,041,950 
|5.0%, 12/15/2018                                                                                                                                                                         | 2,160,000            | 1,728,454 
|Elizabethton, TN, Hospital & Healthcare Revenue, Health &
Educational Facilities Board, Series B, Prerefunded,
8.0%, 7/1/2033                                                            | 3,000,000            | 3,369,420 
|Jackson, TN, Hospital Revenue, Jackson-Madison Project,
5.625%, 4/1/2038                                                                                                                 | 3,000,000            | 2,421,180 
|Johnson City, TN, Health & Educational Facilities, Board
Hospital Revenue, First Mortgage, Mountain States Health
Alliance, Series A, 5.5%, 7/1/2036                                     | 18,795,000           | 12,660,500
|Johnson City, TN, Hospital & Healthcare Revenue, Health &
Educational Facilities Board Hospital, Series A, Prerefunded,
7.5%, 7/1/2033                                                   | 5,000,000            | 5,556,700 
|Tennessee, Energy Acquisition Corp., Gas Revenue, Series A,
5.25%, 9/1/2018                                                                                                              | 8,000,000            | 6,414,800 
|                                                                                                                                                                                         | 34,193,004          
|Texas 11.0%                                                                                                                                                                             
|Abilene, TX, Hospital & Healthcare Revenue, Health Facilities,
Sears Methodist Retirement Facilities, Series A, 7.0%,
11/15/2033                                                         | 3,500,000            | 2,859,850 
|Abilene, TX, Senior Care Revenue, Health Facilities
Development, Sears Methodist Retirement Facilities, Series
A, 5.9%, 11/15/2025                                                       | 2,500,000            | 1,880,550 
|Austin, TX, Bergstrom Landhost Enterprises, Inc., Airport Hotel
Project, Series A, 6.75%, 4/1/2027                                                                                       | 4,930,000            | 3,327,996 
|Brazos River, TX, Pollution Control Authority Revenue, Series
D-1, AMT, 8.25%, 5/1/2033                                                                                                  | 7,000,000            | 5,031,530 
|Fort Bend, TX, General Obligation, Independent School District,
Series A, 5.25%, 8/15/2025                                                                                               | 4,445,000            | 4,479,538 
|Harris County, TX, Health Facilities Development Corp.,
Hospital Revenue, Memorial Hermann Healthcare Systems,
Series A, 5.125%, 12/1/2023                                               | 1,175,000            | 946,557   
|Houston, TX, Transportation/Tolls Revenue, Special Facilities,
Continental Airlines, Inc., Series E, AMT, 6.75%, 7/1/2029                                                                | 10,100,000           | 6,292,603 
|Jefferson County, TX, County General Obligation,
5.75%, 8/1/2017 (b)                                                                                                                     | 1,185,000            | 1,270,166 
|Lewisville, TX, Combination Contract Revenue, 144A, 6.75%,
10/1/2032                                                                                                                     | 17,075,000           | 13,762,108
|North Texas, Tollway Authority Revenue:                                                                                                                                                  |                      |           
|First Tier, Series A, 5.625%, 1/1/2033                                                                                                                                                   | 1,000,000            | 862,700   
|Second Tier, Series F, 5.75%, 1/1/2038                                                                                                                                                   | 17,500,000           | 14,608,300
|Plano, TX, Independent School District, 5.375%, 2/15/2016 (a)                                                                                                                            | 1,700,000            | 1,777,367 
|Tarrant County, TX, Cultural Educational Facilities Finance Corp.
Revenue, Texas Health Resources, Series A,
5.0%, 2/15/2022                                                             | 2,000,000            | 1,825,080 
|Texas, Dallas-Fort Worth International Airport Revenue, Series
A, AMT, 5.5%, 11/1/2020 (b)                                                                                               | 7,125,000            | 6,420,836 
|Texas, Industrial Development Revenue, Waste Disposal
Authority, Series A, AMT, 6.1%, 8/1/2024                                                                                           | 5,000,000            | 3,488,250 
|Texas, Municipal Gas Acquisition & Supply Corp. I, Gas Supply
Revenue:                                                                                                                   |                      |           
|Series D, 5.625%, 12/15/2017                                                                                                                                                             | 14,790,000           | 12,670,593
|Series D, 6.25%, 12/15/2026                                                                                                                                                              | 6,875,000            | 5,486,594 
|Texas, SA Energy Acquisition Public Facility Corp., Gas Supply
Revenue, 5.5%, 8/1/2020                                                                                                   | 10,000,000           | 7,808,500 
|Texas, Water & Sewer Revenue, Waste Disposal Authority,
AMT, 6.65%, 4/1/2032                                                                                                             | 2,000,000            | 1,445,380 
|Tom Green County, TX, Hospital & Healthcare Revenue, Health
Facilities Development Corp., Shannon Health System
Project, 6.75%, 5/15/2021                                                | 1,000,000            | 914,610   
|                                                                                                                                                                                         | 97,159,108          
|Utah 0.3%                                                                                                                                                                               
|Salt Lake City, UT, Hospital & Healthcare Revenue, IHC
Hospitals, Inc., ETM, 6.15%, 2/15/2012                                                                                            | 2,000,000            | 2,220,400 
|Vermont 0.1%                                                                                                                                                                            
|Vermont, Multi-Family Housing Revenue, Housing
Finance Agency, Northgate Project, AMT, 144A,
8.25%, 6/15/2020 (c)                                                                        | 760,000              | 738,287   
|Virginia 1.1%                                                                                                                                                                           
|Virginia, Marquis Community Development Authority Revenue,
5.625%, 9/1/2018                                                                                                              | 7,500,000            | 6,146,475 
|Virginia, Peninsula Ports Authority, Residential Care
Facility Revenue, Virginia Baptist Homes, Series C,
5.4%, 12/1/2033                                                                | 2,600,000            | 1,701,700 
|Virginia, Peninsula Town Center Community Development
Authority Revenue, Special Obligation, 6.45%, 9/1/2037                                                                             | 3,000,000            | 2,169,990 
|                                                                                                                                                                                         | 10,018,165          
|Washington 3.8%                                                                                                                                                                         
|Klickitat County, WA, Public Hospital District No. 2 Revenue,
Skyline Hospital, 6.5%, 12/1/2038                                                                                          | 3,205,000            | 2,392,308 
|Port Seattle, WA, Airport Revenue, Series B, AMT,
6.0%, 2/1/2014 (b)                                                                                                                     | 4,885,000            | 4,972,588 
|Washington, Electric Revenue, Energy Northeast Electric,
Series A, 5.75%, 7/1/2018 (b)                                                                                                   | 3,500,000            | 3,717,315 
|Washington, Electric Revenue, Public Power Supply System,
Nuclear Project No. 3, Series B, 7.125%, 7/1/2016 (a)                                                                          | 2,500,000            | 3,016,150 
|Washington, State Health Care Facilities Authority Revenue,
Series C, 5.375%, 8/15/2028 (b)                                                                                              | 2,970,000            | 2,159,695 
|Washington, State Health Care Facilities Authority Revenue,
Virginia Mason Medical Center:                                                                                               |                      |           
|Series B, 5.75%, 8/15/2037 (b)                                                                                                                                                           | 6,675,000            | 4,714,953 
|Series A, 6.125%, 8/15/2037                                                                                                                                                              | 16,000,000           | 12,017,600
|                                                                                                                                                                                         | 32,990,609          
|West Virginia 1.0%                                                                                                                                                                      
|West Virginia, Hospital & Healthcare Revenue, Hospital Finance
Authority, Charleston Medical Center, Prerefunded, 6.75%,
9/1/2030                                                        | 980,000              | 1,072,296 
|West Virginia, State Hospital Finance Authority Revenue,
Thomas Health Systems:                                                                                                          |                      |           
|6.5%, 10/1/2028                                                                                                                                                                          | 7,000,000            | 5,487,160 
|6.5%, 10/1/2038                                                                                                                                                                          | 3,000,000            | 2,215,650 
|                                                                                                                                                                                         | 8,775,106           
|Wisconsin 0.8%                                                                                                                                                                          
|Wisconsin, Hospital & Healthcare Revenue, Health & Education
Facilities Authority, Aurora Health Care, Inc., 6.875%,
4/15/2030                                                           | 5,000,000            | 4,619,250 
|Wisconsin, State Health & Educational Facilities Authority
Revenue, Beaver Dam Community Hospitals, Inc., Series A,
6.75%, 8/15/2034                                                     | 2,500,000            | 2,007,276 
|                                                                                                                                                                                         | 6,626,526           
|Multi-State 0.5%                                                                                                                                                                        
|Non-Profit Preferred Funding Trust I, Series A1,
4.22%, 9/15/2037                                                                                                                        | 4,860,538            | 4,216,030 
|Total Municipal Bonds and Notes (Cost $998,740,919)                                                                                                                                      | 831,130,171         
|                                                                                                                                                                                        
|Municipal Inverse Floating Rate Notes (d) 27.5%                                                                                                                                         
|California 3.7%                                                                                                                                                                         
|California, State Department of Water Resources, Power Supply
Revenue, Series A, Prerefunded, 5.375%, 5/1/2018 (b) (e)                                                                   | 3,750,000            | 4,192,519 
|Trust: California, State Department of Water Resources,
Power Supply Revenue, Series 309, 144A, 9.475%, 5/1/2018,
Leverage Factor at purchase date: 2 to 1                               |                      |           
|California, State Economic Recovery, Series A, 5.0%, 7/1/2015
(b) (e)                                                                                                                    | 5,800,000            | 6,230,853 
|Trust: California, State Economic Recovery, Series 926, 144A,
7.972%, 7/1/2014, Leverage Factor at purchase date: 2 to 1                                                                 |                      |           
|Sacramento, CA, Municipal Utility District, Electric Revenue,
Series U, 5.0%, 8/15/2024 (b) (e)                                                                                          | 8,500,000            | 8,102,618 
|Sacramento, CA, Municipal Utility District, Electric Revenue,
Series U, 5.0%, 8/15/2025 (b) (e)                                                                                          | 11,000,000           | 10,485,741
|Trust: Sacramento, CA, Municipal Utility District, Electric
Revenue, Series R 11513-1, 144A, 16.664%, 8/15/2024,
Leverage Factor at purchase date: 5 to 1                                |                      |           
|San Diego County, CA, Water Authority Revenue, Certificate of
Participation, Series 2008-A, 5.0%, 5/1/2027 (b) (e)                                                                       | 2,126,587            | 1,989,744 
|San Diego County, CA, Water Authority Revenue, Certificate of
Participation, Series 2008-A, 5.0%, 5/1/2028 (b) (e)                                                                       | 1,935,078            | 1,810,558 
|Trust: San Diego County, CA, Certificate of Participation,
Water Utility Improvements, Series 2008-1104,
144A, 8.213%, 5/1/2027, Leverage Factor at purchase date:
2 to 1                |                      |           
|                                                                                                                                                                                         | 32,812,033          
|Hawaii 1.1%                                                                                                                                                                             
|Hawaii, State General Obligation, Series DK, 5.0%, 5/1/2027 (e)                                                                                                                          | 10,000,000           | 9,869,450 
|Trust: Hawaii, State General Obligation, Series 2867,
144A, 15.83%, 5/1/2027, Leverage Factor at purchase date: 4
to 1                                                                   |                      |           
|Illinois 0.7%                                                                                                                                                                           
|Aurora, IL, Single Family Mortgage Revenue, Series C, AMT,
5.5%, 6/1/2045 (e)                                                                                                            | 6,770,725            | 5,818,210 
|Trust: Aurora, IL, Single Family Mortgage Revenue, Puttable
Floating Option Tax Exempt Receipts, RITES-PA-1499, AMT,
144A, 13.452%, 6/1/2045, Leverage Factor at purchase date:
3.2 to 1 |                      |           
|Nevada 2.4%                                                                                                                                                                             
|Clark County, NV, School District, Series C, 5.0%, 6/15/2021 (e)                                                                                                                         | 7,851,481            | 7,825,143 
|Clark County, NV, School District, Series C, 5.0%, 6/15/2022 (e)                                                                                                                         | 8,203,602            | 8,176,083 
|Clark County, NV, School District, Series C, 5.0%, 6/15/2023 (e)                                                                                                                         | 5,298,193            | 5,280,421 
|Trust: Clark County, NV, School Improvements, Series
2008-1153, 144A, 8.711%, 6/15/2021, Leverage Factor at
purchase date: 2 to 1                                                        |                      |           
|                                                                                                                                                                                         | 21,281,647          
|New York 3.5%                                                                                                                                                                           
|New York, State Dormitory Authority Revenues, Personal
Income Tax Revenue, Series A, 5.0%, 3/15/2023 (e)                                                                                 | 5,095,207            | 5,057,642 
|Trust: New York, State Dormitory Authority Revenues,
Secondary Issues, Series 1955-2, 144A, 16.446%, 3/15/2023,
Leverage Factor at purchase date: 4 to 1                                 |                      |           
|New York, State Environmental Facilities Corp., Clean Drinking
Water, Series A, 5.0%, 6/15/2025 (e)                                                                                      | 4,000,000            | 3,950,016 
|New York, State Environmental Facilities Corp., Clean Drinking
Water, Series A, 5.0%, 6/15/2026 (e)                                                                                      | 3,000,000            | 2,962,512 
|New York, State Environmental Facilities Corp., Clean Drinking
Water, Series A, 5.0%, 6/15/2027 (e)                                                                                      | 3,000,000            | 2,962,512 
|Trust: New York, State Environmental Facilities Corp., Clean
Drinking Water, Series 2870, 144A, 14.596%, 6/15/2025,
Leverage Factor at purchase date: 3.6 to 1                           |                      |           
|New York City, NY, Transitional Finance Authority Revenue,
Series C-1, 5.0%, 11/1/2027 (e)                                                                                               | 16,000,000           | 15,748,960
|Trust: New York City, NY, Transitional Finance Authority
Revenue, Series 2072, 144A, 6.08%, 11/1/2027, Leverage
Factor at purchase date: 4 to 1                                          |                      |           
|                                                                                                                                                                                         | 30,681,642          
|Ohio 1.2%                                                                                                                                                                               
|Ohio, State Higher Educational Facilities Commission Revenue,
Cleveland Clinic Health, Series A, 5.125%, 1/1/2028 (e)                                                                    | 4,522,767            | 4,006,419 
|Ohio, State Higher Educational Facilities Commission Revenue,
Cleveland Clinic Health, Series A, 5.25%, 1/1/2033 (e)                                                                     | 7,712,913            | 6,832,358 
|Trust: Ohio, State Higher Education Revenue, Series 3139,
144A, 12.98%, 1/1/2028, Leverage Factor at purchase date: 3
to 1                                                               |                      |           
|                                                                                                                                                                                         | 10,838,777          
|Pennsylvania 4.3%                                                                                                                                                                       
|Pennsylvania, State General Obligation, Series A,
5.0%, 8/1/2023 (e)                                                                                                                     | 21,790,000           | 21,978,025
|Trust: Pennsylvania, State General Obligation, Series
R-11505-1, 144A, 36.754%, 8/1/2023, Leverage Factor at
purchase date: 10 to 1                                                      |                      |           
|Pennsylvania, State General Obligation, Series A,
5.0%, 8/1/2024 (e)                                                                                                                     | 15,475,000           | 15,528,008
|Trust: Pennsylvania, State Revenue Bond, Series 2720, 144A,
10.176%, 8/1/2024, Leverage Factor at purchase date: 3 to 1                                                                  |                      |           
|                                                                                                                                                                                         | 37,506,033          
|Tennessee 1.7%                                                                                                                                                                          
|Nashville & Davidson County, TN, Metropolitan Government,
5.0%, 1/1/2024 (e)                                                                                                             | 14,996,415           | 15,050,190
|Trust: Nashville & Davidson County, TN, Metropolitan
Government, Series 2631-1, 144A, 16.066%, 1/1/2024,
Leverage Factor at purchase date: 4 to 1                                        |                      |           
|Texas 5.1%                                                                                                                                                                              
|Conroe, TX, Independent School District, School Building, 5.0%,
2/15/2024 (e)                                                                                                            | 3,710,000            | 3,684,585 
|Conroe, TX, Independent School District, School Building, 5.0%,
2/15/2025 (e)                                                                                                            | 4,315,000            | 4,285,441 
|Trust: Conroe, TX, Independent School District, Series 2487,
144A, 16.013%, 2/15/2024, Leverage Factor at purchase
date: 4 to 1                                                          |                      |           
|San Antonio, TX, Electric & Gas Revenue, 5.0%, 2/1/2024 (e)                                                                                                                              | 15,000,000           | 14,764,100
|Trust: San Antonio, TX, Electric & Gas Revenue, Series 2957,
144A, 12.22%, 2/1/2024, Leverage Factor at purchase date: 3
to 1                                                            |                      |           
|Texas, North East Independent School District, School Building,
Series A, 5.0%, 8/1/2024 (e)                                                                                             | 10,000,000           | 9,965,260 
|Trust: Texas, North East Independent School District, Series
2355, 144A, 20.04%, 8/1/2024, Leverage Factor at purchase
date: 5 to 1                                                      |                      |           
|Texas, State Transportation Commission Revenue,
5.0%, 4/1/2026 (e)                                                                                                                       | 12,500,000           | 12,229,875
|Trust: Texas, State Transportation Commission Revenue,
Series 2563, 144A, 19.84%, 4/1/2026, Leverage Factor at
purchase date: 5 to 1                                                     |                      |           
|                                                                                                                                                                                         | 44,929,261          
|Washington 3.8%                                                                                                                                                                         
|Washington, Energy Northwest Electric Revenue, Columbia
Generating Station, Series A, 5.0%, 7/1/2024 (e)                                                                                 | 10,000,000           | 9,798,260 
|Trust: Washington, Energy Northwest Electric Revenue,
Series 2301, 144A, 20.16%, 7/1/2024, Leverage Factor at
purchase date: 5 to 1                                                      |                      |           
|Washington, State General Obligation, Series 2007A,
5.0%, 7/1/2023 (b) (e)                                                                                                               | 10,000,000           | 9,979,200 
|Trust: Washington, State General Obligation, Series 2302,
144A, 17.16%, 7/1/2023, Leverage Factor at purchase date: 5
to 1                                                               |                      |           
|Washington, State General Obligation, Series A, 5.0%, 7/1/2025
(e)                                                                                                                       | 10,000,000           | 9,833,700 
|Trust: Washington, State General Obligation, Series 2154,
144A, 20.16%, 7/1/2025, Leverage Factor at purchase date: 5
to 1                                                               |                      |           
|Washington, State Public Power Supply System, Nuclear Project
No. 2, 5.4%, 7/1/2012                                                                                                      | 3,000,000            | 3,499,020 
|                                                                                                                                                                                         | 33,110,180          
|Total Municipal Inverse Floating Rate Notes (Cost $257,510,829)                                                                                                                          | 241,897,423         

|                                                 | % of Net
Assets | Value ($)    
|------------------------------------------------ | --------------- | -------------
|                                                 |                
|Total Investment Portfolio(Cost $1,256,251,748)+ | 121.9           | 1,073,027,594
|Other Assets and Liabilities, Net                | (21.9)          | (193,179,563)
|Net Assets                                       | 100.0           | 879,848,031  

|Insurance Coverage                 | As a % of Total
Investment Portfolio
|---------------------------------- | ------------------------------------
|Ambac Financial Group, Inc.        | 1.5                                 
|American Capital Assurance         | 0.4                                 
|Assured Guaranty Corp.             | 0.3                                 
|Financial Guaranty Insurance Co.   | 3.6                                 
|Financial Security Assurance, Inc. | 4.6                                 
|MBIA Corp.                         | 2.6                                 
|Radian                             | 0.2                                 

|Schedule of Restricted Security                                                                              
|-------------------------------------------------------------------------------------------------------------
|Security                                                                                                     
|Vermont, Multi-Family Housing
Revenue, Housing Finance Agency,
Northgate Project, AMT, 144A,
8.25%, 6/15/2020

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

AMT: Subject to alternative minimum tax.

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

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

RITES: Residual Interest Tax Exempt Security

At November 30, 2008, open interest rate swaps were as follows:

|Effective/
Expiration
Date                                                                                                                                                      | Notional
Amount ($) | Cash Flows Paid
by the Fund | Cash Flows
Received by the
Fund | Unrealized
Depreciation ($)
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------- | --------------------------- | ------------------------------- | ---------------------------
|9/26/2008
9/26/2018                                                                                                                                                             | 19,300,0001         | Fixed  4.145%              | Floating  LIBOR                | (1,676,341)                
|12/10/2008
12/10/2023                                                                                                                                                           | 5,300,0002          | Fixed  5.06%               | Floating  LIBOR                | (1,217,149)                
|12/10/2008
12/10/2023                                                                                                                                                           | 5,250,0003          | Fixed  5.048%              | Floating  LIBOR                | (1,198,111)                
|10/1/2008
4/1/2025                                                                                                                                                              | 9,400,0002          | Fixed  4.662%              | Floating  LIBOR                | (1,839,194)                
|2/12/2009
2/12/2026                                                                                                                                                             | 5,400,0004          | Fixed  5.006%              | Floating  LIBOR                | (1,352,928)                
|11/21/2008
11/21/2028                                                                                                                                                           | 15,000,0003         | Fixed  4.854%              | Floating  LIBOR                | (3,921,348)                
|12/12/2008
12/12/2028                                                                                                                                                           | 16,600,0004         | Fixed  5.214%              | Floating  LIBOR                | (5,230,766)                
|1/31/2009
1/31/2029                                                                                                                                                             | 31,300,0004         | Fixed  5.116%              | Floating  LIBOR                | (9,417,309)                
|12/19/2008
12/12/2031                                                                                                                                                           | 13,000,0001         | Fixed  5.185%              | Floating  LIBOR                | (4,504,660)                
|12/19/2008
12/19/2031                                                                                                                                                           | 30,000,0001         | Fixed  5.195%              | Floating  LIBOR                | (10,420,011)               
|Total unrealized depreciation on open interest rate swaps                                                                                                                       | (40,777,817)       
|Counterparties:1Goldman Sachs & Co.2Citigroup Global Markets, Inc.3Morgan Stanley Co., Inc.4JPMorgan Chase Securities, Inc.LIBOR: Represents the London InterBank Offered Rate.

Fair Value Measurements

The following is a summary of the inputs used as of November 30, 2008 in valuing the Fund's
investments. For information on the Fund's policy regarding the valuation of investments and of
the valuation inputs, and the aggregate levels used in the table below, please refer to the
Security Valuation section of Note A in the accompanying Notes to the Financial Statements.

|Valuation Inputs | Investments in
Securities | Other Financial
Instruments++
|---------------- | ------------------------- | -----------------------------
|Level 1          | $                        | $                           
|Level 2          | 1,073,027,594             | (40,777,817)                 
|Level 3          |                          |                             
|Total            | $    1,073,027,594        | $    (40,777,817)            

Financial Statements

|Statement of Assets and Liabilitiesas of November 30, 2008 (Unaudited)
|----------------------------------------------------------------------
|Assets                                                                
|Investments:Investments in securities, at value (cost $1,256,251,748) 
|Interest receivable                                                   
|Receivable for investments sold                                       
|Receivable for Fund shares sold                                       
|Due from Advisor                                                      
|Other assets                                                          
|Total assets                                                          
|Liabilities                                                           
|Cash overdraft                                                        
|Notes payable                                                         
|Payable for floating rate notes issued                                
|Payable for Fund shares redeemed                                      
|Distributions payable                                                 
|Net unrealized depreciation on open interest rate swaps               
|Accrued management fee                                                
|Other accrued expenses and payables                                   
|Total liabilities                                                     
|Net assets, at value                                                  
|Net Assets Consist of                                                 
|Undistributed net investment income                                   
|Net unrealized appreciation (depreciation) on:Investments             
|Interest rate swaps                                                   
|Accumulated net realized gain (loss)                                  
|Paid-in capital                                                       
|Net assets, at value                                                  

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

|Statement of Assets and Liabilitiesas of November 30, 2008 (Unaudited) (continued)                                                                                                                                                          
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Net Asset Value                                                                                                                                                                                                                             
|Class A
Net Asset Value and redemption price(a) per share
($260,184,311 ÷ 26,189,712 outstanding shares of beneficial interest,
$.01 par value, unlimited number of shares authorized)                                                      
|Maximum offering price per share (100 ÷ 95.50 of $9.93)                                                                                                                                                                                     
|Class B
Net Asset Value, offering and redemption price(a) (subject to contingent
deferred sales charge) per share ($15,970,001 ÷ 1,607,187 outstanding
shares of beneficial interest, $.01 par value, unlimited number of shares
authorized)
|Class C
Net Asset Value, offering and redemption price(a) (subject to contingent
deferred sales charge) per share ($73,348,584 ÷ 7,378,179 outstanding
shares of beneficial interest, $.01 par value, unlimited number of shares
authorized)
|Class S
Net Asset Value, offering and redemption price(a)per share
($520,385,930 ÷ 52,331,402 outstanding shares of beneficial interest,
$.01 par value, unlimited number of shares authorized)                                             
|Institutional Class
Net Asset Value, offering and redemption price(a)per share
($9,959,205 ÷ 1,001,058 outstanding shares of beneficial interest,
$.01 par value, unlimited number of shares authorized)                                    

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

|Statement of Operationsfor the six months ended November 30, 2008 (Unaudited)
|-----------------------------------------------------------------------------
|Investment Income                                                            
|Income:Interest                                                              
|Expenses:Management fee                                                      
|Administration fee                                                           
|Services to shareholders                                                     
|Custodian fee                                                                
|Distribution and service fees                                                
|Professional fees                                                            
|Trustees' fees and expenses                                                  
|Reports to shareholders                                                      
|Interest expense and fees on floating rate notes                             
|Registration fees                                                            
|Other                                                                        
|Total expenses before expense reductions                                     
|Expense reductions                                                           
|Total expenses after expense reductions                                      
|Net investment income                                                        
|Realized and Unrealized Gain (Loss)                                          
|Net realized gain (loss) from:Investments                                    
|Interest rate swaps                                                          
|                                                                             
|Change in net unrealized appreciation (depreciation) on:Investments          
|Interest rate swaps                                                          
|                                                                             
|Net gain (loss)                                                              
|Net increase (decrease) in net assets resulting from operations              

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

|Statement of Cash Flowsfor the six months ended November 30, 2008 (Unaudited)                                                                
|---------------------------------------------------------------------------------------------------------------------------------------------
|Increase (decrease) in cash:
Cash Flows from Operating Activities                                                                            
|Net increase (decrease) in net assets resulting from operations                                                                              
|Adjustments to reconcile net increase (decrease) in net assets
resulting from operations to net cash provided (used) in
operating activities:
|Purchases of long-term investments                                                                                                           
|Net amortization of premium (discount)                                                                                                       
|Proceeds from sales and maturities of long-term investments                                                                                  
|(Increase) decrease in interest receivable                                                                                                   
|(Increase) decrease in other assets                                                                                                          
|(Increase) decrease in receivable for investments sold                                                                                       
|Increase (decrease) in payable for investments purchased                                                                                     
|Increase (decrease) in accrued expenses and payables                                                                                         
|Change in net unrealized (appreciation) depreciation on investments                                                                          
|Change in net unrealized (appreciation) depreciation on interest rate swaps                                                                  
|Net realized (gain) loss from investments                                                                                                    
|Cash provided (used) by operating activities                                                                                                 
|Cash Flows from Financing Activities                                                                                                         
|Net increase (decrease) in cash overdraft                                                                                                    
|Net increase (decrease) in notes payable                                                                                                     
|Proceeds from shares sold                                                                                                                    
|Cost of shares redeemed                                                                                                                      
|Increase (decrease) in payable for floating rate notes issued                                                                                
|Distributions paid (net of reinvestment of distributions)                                                                                    
|Cash provided (used) by financing activities                                                                                                 
|Increase (decrease) in cash                                                                                                                  
|Cash at beginning of period                                                                                                                  
|Cash at end of period                                                                                                                        
|Supplemental Disclosure                                                                                                                      
|Reinvestment of distributions                                                                                                                
|Interest paid on notes                                                                                                                       

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

|Statement of Changes in Net Assets                                                                                
|------------------------------------------------------------------------------------------------------------------
|Increase (Decrease) in Net Assets                                                                                 
|Operations:Net investment income                                                                                  
|Net realized gain (loss)                                                                                          
|Change in net unrealized appreciation (depreciation)                                                              
|Net increase (decrease) in net assets resulting from
operations                                                   
|Distributions to shareholders from:Net investment income:Class A                                                  
|Class B                                                                                                           
|Class C                                                                                                           
|Class S                                                                                                           
|Institutional Class                                                                                               
|Net realized gains:Class A                                                                                        
|Class B                                                                                                           
|Class C                                                                                                           
|Class S                                                                                                           
|Institutional Class                                                                                               
|Total distributions                                                                                               
|Fund share transactions:Proceeds from shares sold                                                                 
|Reinvestment of distributions                                                                                     
|Cost of shares redeemed                                                                                           
|Redemption fees                                                                                                   
|Net increase (decrease) in net assets from Fund share
transactions                                                
|Increase (decrease) in net assets                                                                                 
|Net assets at beginning of period                                                                                 
|Net assets at end of period (including undistributed net
investment income of $482,709 and $155,152,
respectively)

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

Financial Highlights

|Class A
Years Ended May 31,                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | 2008a      | 2008       | 2007       | 2006       | 2005       | 2004      
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------- | ---------- | ---------- | ---------- | ---------- | ----------
|Selected Per Share Data                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|Net asset value, beginning of
period                                                                                                                                                                                                                                                                                                                                                                                                                                                            | $    12.46 | $    12.83 | $    12.78 | $    12.88 | $    12.50 | $    12.86
|Income from investment
operations:
Net investment income                                                                                                                                                                                                                                                                                                                                                                                                                                        | .32        | .59        | .59        | .60        | .65        | .67       
|Net realized and unrealized gain
(loss)                                                                                                                                                                                                                                                                                                                                                                                                                                                         | (2.53)     | (.37)      | .05        | (.10)      | .39        | (.35)     
|Total from investment
operations                                                                                                                                                                                                                                                                                                                                                                                                                                                                | (2.21)     | .22        | .64        | .50        | 1.04       | .32       
|Less distributions from:
Net investment income                                                                                                                                                                                                                                                                                                                                                                                                                                                  | (.32)      | (.59)      | (.59)      | (.60)      | (.65)      | (.67)     
|Net realized gains                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | (.00)***   |           |           | (.00)***   | (.01)      | (.01)     
|Total distributions                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | (.32)      | (.59)      | (.59)      | (.60)      | (.66)      | (.68)     
|Redemption fees                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | .00***     | .00***     | .00***     | .00***     | .00***     |          
|Net asset value, end of period                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | $    9.93  | $    12.46 | $    12.83 | $    12.78 | $    12.88 | $    12.50
|Total Return (%)b                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | (17.94)c** | 1.73c      | 5.03c      | 4.01       | 8.48c      | 2.48c     
|Ratios to Average Net Assets and Supplemental Data                                                                                                                                                                                                                                                                                                                                                                                                                                             
|Net assets, end of period
($ millions)                                                                                                                                                                                                                                                                                                                                                                                                                                                          | 260        | 334        | 196        | 181        | 182        | 151       
|Ratio of expenses before expense
reductions (including interest
expense) (%)d                                                                                                                                                                                                                                                                                                                                                                                                                   | 1.51*      | 1.60       | 1.20       | 1.31       | 1.08       | 1.08      
|Ratio of expenses after expenses
reductions (including interest
expense) (%)d                                                                                                                                                                                                                                                                                                                                                                                                                   | 1.44*      | 1.57       | 1.20       | 1.31       | 1.02       | .88       
|Ratio of expenses after expense
reductions (excluding interest
expense) (%)                                                                                                                                                                                                                                                                                                                                                                                                                     | .92*       | .94        | .96        | .98        | .90        | .80       
|Ratio of net investment
income (%)                                                                                                                                                                                                                                                                                                                                                                                                                                                              | 5.48*      | 4.67       | 4.56       | 4.70       | 5.14       | 5.24      
|Portfolio turnover rate (%)                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | 57**       | 70         | 57         | 43         | 34         | 44        
|aFor the six months ended November 30, 2008 (Unaudited).bTotal return does not reflect the effect of any sales charges.cTotal return would have been lower had certain expenses not been reduced.dInterest 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.*Annualized**Not annualized***Amount is less than $.005.

|Class B
Years Ended May 31,                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | 2008a      | 2008       | 2007       | 2006       | 2005       | 2004      
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------- | ---------- | ---------- | ---------- | ---------- | ----------
|Selected Per Share Data                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|Net asset value, beginning of
period                                                                                                                                                                                                                                                                                                                                                                                                                                                            | $    12.46 | $    12.84 | $    12.78 | $    12.89 | $    12.51 | $    12.86
|Income from investment
operations:
Net investment income                                                                                                                                                                                                                                                                                                                                                                                                                                        | .28        | .49        | .49        | .50        | .55        | .57       
|Net realized and unrealized gain
(loss)                                                                                                                                                                                                                                                                                                                                                                                                                                                         | (2.53)     | (.38)      | .06        | (.11)      | .39        | (.34)     
|Total from investment
operations                                                                                                                                                                                                                                                                                                                                                                                                                                                                | (2.25)     | .11        | .55        | .39        | .94        | .23       
|Less distributions from:
Net investment income                                                                                                                                                                                                                                                                                                                                                                                                                                                  | (.27)      | (.49)      | (.49)      | (.50)      | (.55)      | (.57)     
|Net realized gains                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | (.00)***   |           |           | (.00)***   | (.01)      | (.01)     
|Total distributions                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | (.27)      | (.49)      | (.49)      | (.50)      | (.56)      | (.58)     
|Redemption fees                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | .00***     | .00***     | .00***     | .00***     | .00***     |          
|Net asset value, end of period                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | $    9.94  | $    12.46 | $    12.84 | $    12.78 | $    12.89 | $    12.51
|Total Return (%)b                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | (18.26)c** | .88c       | 4.31c      | 3.13       | 7.65c      | 1.74c     
|Ratios to Average Net Assets and Supplemental Data                                                                                                                                                                                                                                                                                                                                                                                                                                             
|Net assets, end of period
($ millions)                                                                                                                                                                                                                                                                                                                                                                                                                                                          | 16         | 28         | 41         | 50         | 54         | 56        
|Ratio of expenses before expense
reductions (including interest
expense) (%)d                                                                                                                                                                                                                                                                                                                                                                                                                   | 2.28*      | 2.37       | 1.97       | 2.09       | 1.85       | 1.90      
|Ratio of expenses after expenses
reductions (including interest
expense) (%)d                                                                                                                                                                                                                                                                                                                                                                                                                   | 2.19*      | 2.32       | 1.96       | 2.09       | 1.80       | 1.68      
|Ratio of expenses after expense
reductions (excluding interest
expense) (%)                                                                                                                                                                                                                                                                                                                                                                                                                     | 1.67*      | 1.69       | 1.73       | 1.76       | 1.68       | 1.60      
|Ratio of net investment
income (%)                                                                                                                                                                                                                                                                                                                                                                                                                                                              | 4.73*      | 3.92       | 3.79       | 3.92       | 4.36       | 4.44      
|Portfolio turnover rate (%)                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | 57**       | 70         | 57         | 43         | 34         | 44        
|aFor the six months ended November 30, 2008 (Unaudited).bTotal return does not reflect the effect of any sales charges.cTotal return would have been lower had certain expenses not been reduced.dInterest 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.*Annualized**Not annualized***Amount is less than $.005.

|Class C
Years Ended May 31,                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | 2008a      | 2008       | 2007       | 2006       | 2005       | 2004      
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------- | ---------- | ---------- | ---------- | ---------- | ----------
|Selected Per Share Data                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|Net asset value, beginning of
period                                                                                                                                                                                                                                                                                                                                                                                                                                                            | $    12.47 | $    12.84 | $    12.78 | $    12.89 | $    12.51 | $    12.87
|Income from investment
operations:
Net investment income                                                                                                                                                                                                                                                                                                                                                                                                                                        | .28        | .49        | .49        | .51        | .55        | .57       
|Net realized and unrealized
gain (loss)                                                                                                                                                                                                                                                                                                                                                                                                                                                         | (2.54)     | (.37)      | .06        | (.11)      | .39        | (.35)     
|Total from investment
operations                                                                                                                                                                                                                                                                                                                                                                                                                                                                | (2.26)     | .12        | .55        | .40        | .94        | .22       
|Less distributions from:
Net investment income                                                                                                                                                                                                                                                                                                                                                                                                                                                  | (.27)      | (.49)      | (.49)      | (.51)      | (.55)      | (.57)     
|Net realized gains                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | (.00)***   |           |           | (.00)***   | (.01)      | (.01)     
|Total distributions                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | (.27)      | (.49)      | (.49)      | (.51)      | (.56)      | (.58)     
|Redemption fees                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | .00c***    | .00***     | .00***     | .00***     | .00***     |          
|Net asset value, end of period                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | $    9.94  | $    12.47 | $    12.84 | $    12.78 | $    12.89 | $    12.51
|Total Return (%)b                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | (18.31)c** | .98c       | 4.31c      | 3.15       | 7.66c      | 1.69c     
|Ratios to Average Net Assets and Supplemental Data                                                                                                                                                                                                                                                                                                                                                                                                                                             
|Net assets, end of period
($ millions)                                                                                                                                                                                                                                                                                                                                                                                                                                                          | 73         | 87         | 57         | 64         | 63         | 58        
|Ratio of expenses before
expense reductions (including
interest expense) (%)d                                                                                                                                                                                                                                                                                                                                                                                                                   | 2.28*      | 2.31       | 1.96       | 2.07       | 1.84       | 1.87      
|Ratio of expenses after expenses
reductions (including interest
expense) (%)d                                                                                                                                                                                                                                                                                                                                                                                                                   | 2.19*      | 2.31       | 1.96       | 2.07       | 1.79       | 1.65      
|Ratio of expenses after expense
reductions (excluding interest
expense) (%)                                                                                                                                                                                                                                                                                                                                                                                                                     | 1.67*      | 1.68       | 1.73       | 1.74       | 1.67       | 1.57      
|Ratio of net investment
income (%)                                                                                                                                                                                                                                                                                                                                                                                                                                                              | 4.73*      | 3.93       | 3.79       | 3.94       | 4.37       | 4.47      
|Portfolio turnover rate (%)                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | 57**       | 70         | 57         | 43         | 34         | 44        
|aFor the six months ended November 30, 2008 (Unaudited).bTotal return does not reflect the effect of any sales charges.cTotal return would have been lower had certain expenses not been reduced.dInterest 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.*Annualized**Not annualized***Amount is less than $.005.

|Class S
Years Ended May 31,                                                                                                                                                                                                                                                                                                                                                                                                       | 2008a      | 2008       | 2007       | 2006       | 2005       | 2004      
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------- | ---------- | ---------- | ---------- | ---------- | ----------
|Selected Per Share Data                                                                                                                                                                                                                                                                                                                                                                                                          
|Net asset value, beginning of
period                                                                                                                                                                                                                                                                                                                                                                                              | $    12.47 | $    12.85 | $    12.79 | $    12.89 | $    12.52 | $    12.87
|Income from investment
operations:
Net investment income                                                                                                                                                                                                                                                                                                                                                                          | .34        | .62        | .62        | .63        | .67        | .67       
|Net realized and unrealized gain
(loss)                                                                                                                                                                                                                                                                                                                                                                                           | (2.54)     | (.38)      | .06        | (.10)      | .38        | (.34)     
|Total from investment
operations                                                                                                                                                                                                                                                                                                                                                                                                  | (2.20)     | .24        | .68        | .53        | 1.05       | .33       
|Less distributions from:
Net investment income                                                                                                                                                                                                                                                                                                                                                                                    | (.33)      | (.62)      | (.62)      | (.63)      | (.67)      | (.67)     
|Net realized gains                                                                                                                                                                                                                                                                                                                                                                                                                | (.00)***   |           |           | (.00)***   | (.01)      | (.01)     
|Total distributions                                                                                                                                                                                                                                                                                                                                                                                                               | (.33)      | (.62)      | (.62)      | (.63)      | (.68)      | (.68)     
|Redemption fees                                                                                                                                                                                                                                                                                                                                                                                                                   | .00***     | .00***     | .00***     | .00***     | .00***     |          
|Net asset value, end of period                                                                                                                                                                                                                                                                                                                                                                                                    | $    9.94  | $    12.47 | $    12.85 | $    12.79 | $    12.89 | $    12.52
|Total Return (%)                                                                                                                                                                                                                                                                                                                                                                                                                  | (17.90)b** | 1.90b      | 5.36b      | 4.19       | 8.52       | 2.59b     
|Ratios to Average Net Assets and Supplemental Data                                                                                                                                                                                                                                                                                                                                                                               
|Net assets, end of period
($ millions)                                                                                                                                                                                                                                                                                                                                                                                            | 520        | 787        | 669        | 473        | 488        | 517       
|Ratio of expenses before expense
reductions (including interest
expense) (%)c                                                                                                                                                                                                                                                                                                                                                     | 1.42*      | 1.53       | 1.04       | 1.14       | .92        | .86       
|Ratio of expenses after expenses
reductions (including interest
expense) (%)c                                                                                                                                                                                                                                                                                                                                                     | 1.19*      | 1.32       | .96        | 1.14       | .92        | .85       
|Ratio of expenses after expense
reductions (excluding interest
expense) (%)                                                                                                                                                                                                                                                                                                                                                       | .67*       | .69        | .73        | .81        | .80        | .77       
|Ratio of net investment
income (%)                                                                                                                                                                                                                                                                                                                                                                                                | 5.73*      | 4.92       | 4.79       | 4.87       | 5.24       | 5.27      
|Portfolio turnover rate (%)                                                                                                                                                                                                                                                                                                                                                                                                       | 57**       | 70         | 57         | 43         | 34         | 44        
|aFor the six months ended November 30, 2008 (Unaudited).bTotal returns would have been lower had certain expenses not been reduced.cInterest 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.*Annualized**Not annualized***Amount is less than $.005.

|Institutional Class
Years Ended May 31,                                                                                                                                                                                                                                                                                                                                                                                          | 2008a      | 2008       | 2007       | 2006       | 2005       | 2004      
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------- | ---------- | ---------- | ---------- | ---------- | ----------
|Selected Per Share Data                                                                                                                                                                                                                                                                                                                                                                                                         
|Net asset value, beginning of
period                                                                                                                                                                                                                                                                                                                                                                                             | $    12.48 | $    12.85 | $    12.79 | $    12.90 | $    12.52 | $    12.87
|Income from investment
operations:
Net investment income                                                                                                                                                                                                                                                                                                                                                                         | .34        | .62        | .62        | .63        | .67        | .67       
|Net realized and unrealized gain
(loss)                                                                                                                                                                                                                                                                                                                                                                                          | (2.53)     | (.37)      | .06        | (.10)      | .39        | (.34)     
|Total from investment
operations                                                                                                                                                                                                                                                                                                                                                                                                 | (2.19)     | .25        | .68        | .53        | 1.06       | .33       
|Less distributions from:
Net investment income                                                                                                                                                                                                                                                                                                                                                                                   | (.34)      | (.62)      | (.62)      | (.64)      | (.67)      | (.67)     
|Net realized gains                                                                                                                                                                                                                                                                                                                                                                                                               | (.00)***   |           |           | (.00)***   | (.01)      | (.01)     
|Total distributions                                                                                                                                                                                                                                                                                                                                                                                                              | (.34)      | (.62)      | (.62)      | (.64)      | (.68)      | (.68)     
|Redemption fees                                                                                                                                                                                                                                                                                                                                                                                                                  | .00***     | .00***     | .00***     | .00***     | .00***     |          
|Net asset value, end of period                                                                                                                                                                                                                                                                                                                                                                                                   | $    9.95  | $    12.48 | $    12.85 | $    12.79 | $    12.90 | $    12.52
|Total Return (%)                                                                                                                                                                                                                                                                                                                                                                                                                 | (17.86)b** | 2.00       | 5.40       | 4.18b      | 8.67       | 2.61      
|Ratios to Average Net Assets and Supplemental Data                                                                                                                                                                                                                                                                                                                                                                              
|Net assets, end of period
($ millions)                                                                                                                                                                                                                                                                                                                                                                                           | 10         | 6          | 3          | 3          | .36        | .16       
|Ratio of expenses before expense
reductions (including interest
expense) (%)c                                                                                                                                                                                                                                                                                                                                                    | 1.20*      | 1.32       | .92        | 1.14       | .88        | .81       
|Ratio of expenses after expenses
reductions (including interest
expense) (%)c                                                                                                                                                                                                                                                                                                                                                    | 1.20*      | 1.32       | .92        | 1.11       | .88        | .81       
|Ratio of expenses after expense
reductions (excluding interest
expense) (%)                                                                                                                                                                                                                                                                                                                                                      | .68*       | .69        | .69        | .78        | .76        | .73       
|Ratio of net investment
income (%)                                                                                                                                                                                                                                                                                                                                                                                               | 5.72*      | 4.92       | 4.83       | 4.90       | 5.28       | 5.31      
|Portfolio turnover rate (%)                                                                                                                                                                                                                                                                                                                                                                                                      | 57**       | 70         | 57         | 43         | 34         | 44        
|aFor the six months ended November 30, 2008 (Unaudited).bTotal return would have been lower had certain expenses not been reduced.cInterest 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.*Annualized**Not annualized***Amount is less than $.005.

Notes to Financial Statements(Unaudited)

A. Significant Accounting Policies

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

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

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

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

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

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

The Fund adopted Financial Accounting Standards Board ("FASB")
Statement of Financial Accounting Standards No. 157, Fair Value
Measurements ("FAS 157"), effective at the beginning of the Fund's fiscal
year. FAS 157 establishes a three-tier hierarchy to maximize the use of
observable market data and minimize the use of unobservable inputs and
requires additional disclosure about the classification of fair value
measurements.

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

The aggregate value by input level, as of November 30, 2008, for the Fund's
investments is included at the end of the Fund's Investment Portfolio.

New Accounting Pronouncement. In March 2008, the FASB issued
Statement of Financial Accounting Standards No. 161 ("FAS 161"),
"Disclosures about Derivative Instruments and Hedging Activities". FAS 161
requires enhanced disclosure about an entity's derivative and hedging
activities including qualitative disclosures about the objectives and
strategies for using derivatives, quantitative disclosures about fair value
amounts of gains and losses on derivative instruments, and disclosures
about credit-risk-related contingent features in derivative agreements. FAS
161 is effective for fiscal years and interim periods beginning after
November 15, 2008. Management is currently reviewing the enhanced
disclosure requirements for the adoption of FAS 161.

Swap Agreements. The Fund may enter into interest rate swap transactions
to reduce the interest rate risk inherent in the Fund's underlying
investments. The use of interest rate swaps is a highly specialized activity
that involves investment techniques and risks different from those
associated with ordinary portfolio security transactions. In an interest rate
swap, the Fund agrees to pay to the other party to the interest rate swap
(which is known as the "counterparty") a fixed rate payment in exchange for
the counterparty agreeing to pay to the Fund a variable rate payment, or the
Fund agrees to receive from the counterparty a fixed rate payment in
exchange for the counterparty agreeing to receive from the Fund a variable
rate payment, the accruals for which would begin at a specified date in the
future (the "effective date").The payment obligations are based on the
notional amount of the swap. Certain risks may arise when entering into
swap transactions including counterparty default, liquidity or unfavorable
changes in interest rates. The Fund generally intends, but is not obligated, to
terminate its interest rate swaps before the effective date. Payments
received or made at the end of the measurement period when the swap is
terminated are recorded as realized gain or loss in the Statement of
Operations. The value of the swap is adjusted daily based upon a price
supplied by a board approved pricing vendor and the change in value is
recorded as unrealized appreciation or depreciation.

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
("underlying bond"). Other investors in the trust usually consist of money
market fund investors receiving weekly floating interest rate payments who
have put options with the financial institutions. The Fund may enter into
shortfall and forbearance agreements by which a Fund agrees to reimburse
the trust, in certain circumstances, for the difference between the
liquidation value of the fixed rate municipal security held by the trust and the
liquidation value of the floating rate notes. Certain inverse floater securities
held by the Fund have been created with bonds purchased by the Fund and
subsequently transferred to the trust. These transactions are considered a
form of financing for accounting purposes. As a result, the Fund includes the
underlying bond in its investment portfolio and a corresponding liability in
the statement of assets and liabilities equal to the floating rate note issued.
When a trust is terminated and/or collapsed by either party, the related fixed
rate securities held by the trust are delivered back to the Fund where they
are either held or sold, and the related liability of the floating rate note
issued is adjusted. The Fund does not consider the Fund's investment in
inverse floaters borrowing within the meaning of the Investment Company
Act of 1940. Inverse floating rate notes exhibit added interest rate sensitivity
compared to other bonds with a similar maturity. Moreover, since these
securities are in a trust form, a sale may take longer to settle than the
standard two days after the trade date.

The weighted average outstanding daily balance of the floating rate notes
issued during the six months ended November 30, 2008 was approximately
$222,705,000, with a weighted average interest rate of 2.66%.

Futures Contracts. A futures contract is an agreement between a buyer or
seller and an established futures exchange or its clearinghouse in which the
buyer or seller agrees to take or make a delivery of a specific amount of a
financial instrument at a specified price on a specific date (settlement date).
The Fund may enter into futures contracts as a hedge against anticipated
interest rate changes and for duration management, risk management and
return enhancement purposes.

Upon entering into a futures contract, the Fund is required to deposit with a
financial intermediary an amount ("initial margin") equal to a certain
percentage of the face value indicated in the futures contract. Subsequent
payments ("variation margin") are made or received by the Fund dependent
upon the daily fluctuations in the value of the underlying security and are
recorded for financial reporting purposes as unrealized gains or losses by
the Fund. When entering into a closing transaction, the Fund will realize a
gain or loss equal to the difference between the value of the futures
contract to sell and the futures contract to buy. Futures contracts are valued
at the most recent settlement price.

Certain risks may arise upon entering into futures contracts, including the
risk that an illiquid secondary market will limit the Fund's ability to close out
a futures contract prior to the settlement date and that a change in the value
of a futures contract may not correlate exactly with the changes in the value
of the securities hedged. When utilizing futures contracts to hedge, the
Fund gives up the opportunity to profit from favorable price movements in
the hedged positions during the term of the contract. Risk of loss may
exceed amounts recognized on the Statement of Assets and Liabilities.

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.

At May 31, 2008, the Fund had a net tax basis capital loss carryforward of
approximately $15,748,000, which may be applied against any realized net
taxable capital gains of each succeeding year until fully utilized or until
May 31, 2009 ($2,732,000), May 31, 2010 ($4,526,000), May 31, 2012
($3,607,000), May 31, 2013 ($2,355,000), May 31, 2014 ($2,294,000) and
May 31, 2015 ($234,000), the respective expiration dates, whichever occurs
first.

The Fund has reviewed the tax positions for the open tax years as of
May 31, 2008 and has determined that no provision for income tax is
required in the Fund's financial statements. The Fund's federal tax returns
for the prior three fiscal years remain subject to examination by the Internal
Revenue Service.

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

The timing and characterization of certain income and capital gains
distributions are determined annually in accordance with federal tax
regulations which may differ from accounting principles generally accepted
in the United States of America. These differences primarily relate to
investments in futures contracts, 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.

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

Redemption Fees. The Fund imposes a redemption fee of 2% of the total
redemption amount on all Fund shares redeemed or exchanged within
15 days of buying them, either by purchase or exchange. This fee is
assessed and retained by the Fund for the benefit of the remaining
shareholders. The redemption fee was accounted for as an addition to
paid-in capital.

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

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

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

Statement of Cash Flows. Information on financial transactions which have
been settled through the receipt and disbursement of cash is presented in
the Statement of Cash Flows. The cash amount shown in the Statement of
Cash Flows represents the cash position at the Fund's custodian bank at
November 30, 2008. Previously, the Fund has utilized the direct method for
presentation of its Statement of Cash Flows. The Fund has changed its
presentation to the indirect method, which it believes provides a useful
format and conforms to more common industry practice.

B. Purchases and Sales of Securities

During the six months ended November 30, 2008, purchases and sales of
investment securities (excluding short-term investments) aggregated
$757,718,321 and $941,888,858, respectively.

C. Related Parties

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

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

|First $300 million of the Fund's average daily net assets | .565%
|--------------------------------------------------------- | -----
|Next $200 million of such net assets                      | .515%
|Next $500 million of such net assets                      | .490%
|Over $1 billion of such net assets                        | .470%

For the six months ended November 30, 2008, the Advisor waived a portion
of its management fee aggregating $13,224 and the amount charged
aggregated $2,908,527, which was equivalent to an annualized effective rate
of 0.51% of the Fund's average daily net assets.

For the period from June 1, 2008 through September 30, 2008, the Advisor
had contractually agreed to waive all or a portion of its management fee and
reimburse or pay certain operating expenses of the Fund (excluding certain
expenses such as extraordinary expenses, taxes, brokerage and interest) to
the extent necessary to maintain the operating expenses of certain classes
as follows:

|Class A | .93% 
|------- | -----
|Class B | 1.68%
|Class C | 1.68%
|Class S | .68% 

Effective October 1, 2008 through September 30, 2009, the Advisor has
contractually agreed to waive all or a portion of its management fee and
reimburse or pay certain operating expenses of the Fund (excluding certain
expenses such as extraordinary expenses, taxes, brokerage and interest) to
the extent necessary to maintain the operating expenses of each class as
follows:

|Class A             | .91% 
|------------------- | -----
|Class B             | 1.66%
|Class C             | 1.66%
|Class S             | .66% 
|Institutional Class | .66% 

For the six months ended November 30, 2008, the Advisor reimbursed
$545,500 of sub-recordkeeping fees for Class S shares.

Administration Fee. Pursuant to an Administrative Services Agreement,
DIMA provides most administrative services to the Fund. For all services
provided under the Administrative Services Agreement, the Fund pays the
Advisor an annual fee ("Administration Fee") of 0.10% of the Fund's average
daily net assets, computed and accrued daily and payable monthly. For the
six months ended November 30, 2008, the Advisor received an
Administration Fee of $571,314, of which $76,022 is unpaid.

Service Provider Fees. DWS Investments Service Company ("DISC"), an
affiliate of the Advisor, is the transfer agent, dividend-paying agent and
shareholder service agent for the Fund. Pursuant to a sub-transfer agency
agreement between DISC and DST Systems, Inc. ("DST"), DISC has
delegated certain transfer agent, dividend-paying agent and shareholder
service agent functions to DST. DISC compensates DST out of the
shareholder servicing fee it receives from the Fund. For the six months
ended November 30, 2008, the amounts charged to the Fund by DISC were
as follows:

|Services to Shareholders | Total
Aggregated | Waived        
|------------------------ | ---------------- | --------------
|Class A                  | $       36,397   | $       36,397
|Class B                  | 5,560            | 5,560         
|Class C                  | 19,158           | 19,158        
|Class S                  | 238,421          | 238,421       
|Institutional Class      | 277              | 194           
|                         | $    299,813     | $    299,730  

Distribution and Service Fees. Under the Fund's Class B and Class C 12b-1
Plans, DWS Investments Distributors, Inc. ("DIDI"), an affiliate of the
Advisor, receives a fee ("Distribution Fee") of 0.75% of average daily net
assets of each of Class B and C shares. In accordance with the Fund's
Underwriting and Distribution Services Agreement, DIDI enters into related
selling group agreements with various firms at various rates for sales of
Class B and C shares. Forthesix months ended November 30, 2008, the
Distribution Fee was as follows:

|Distribution Fee | Total
Aggregated | Unpaid at
November 30,
2008
|---------------- | ---------------- | ---------------------------
|Class B          | $       83,572   | $       12,745             
|Class C          | 325,456          | 47,952                     
|                 | $    409,028     | $    60,697                

In addition, DIDI provides information and administrative services for a fee
("Service Fee") to Class A, B and C shareholders at an annual rate of up to
0.25% of average daily net assets for each such class. DIDI in turn has
various agreements with financial services firms that provide these services
and pay these fees based upon the assets of shareholder accounts the
firms service. For the six months ended November 30, 2008, the Service
Fee was as follows:

|Service Fee | Total
Aggregated | Waived         | Unpaid at
November 30,
2008 | Annualized
Effective Rate
|----------- | ---------------- | -------------- | --------------------------- | -------------------------
|Class A     | $       403,163  | $       62,382 | $       54,287              | .21%                     
|Class B     | 27,897           | 4,236          | 2,801                       | .21%                     
|Class C     | 106,578          | 17,129         |                            | .21%                     
|            | $    537,638     | $    83,747    | $    57,088                 |                          

Underwriting Agreement and Contingent Deferred Sales Charge. DIDI is
the principal underwriter for the Fund. Underwriting commissions paid in
connection with the distribution of Class A shares for the six months ended
November 30, 2008 aggregated $38,768.

In addition, DIDI receives any contingent deferred sales charge ("CDSC")
from Class B share redemptions occurring within six years of purchase and
Class C share redemptions occurring within one year of purchase. There is
no such charge upon redemption of any share appreciation or reinvested
dividends. The CDSC is based on declining rates ranging from 4% to 1% for
Class B and 1% for Class C, of the value of the shares redeemed. For the
six months ended November 30, 2008, the CDSC for Class B and Class C
aggregated $27,223 and $26,701, respectively. A deferred sales charge of up
to 1% is assessed on certain redemptions of Class A shares. For the six
months ended November 30, 2008, DIDI received $13,694 for Class A
shares.

Typesetting and Filing Service Fees. Under an agreement with DIMA, DIMA
is compensated for providing typesetting and certain regulatory filing
services to the Fund. For the six months ended November 30, 2008, the
amount charged to the Fund by DIMA included in the Statement of
Operations under "reports to shareholders" aggregated $20,766, all of
which 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 and Vice Chairperson.

D. Investing in High-Yield Securities

Investing in high-yield securities may involve greater risks and
considerations not typically associated with investing in US Government
bonds and other high quality fixed-income securities. These securities are
non-investment grade securities, often referred to as "junk bonds."
Economic downturns may disrupt the high-yield market and impair the ability
of issuers to repay principal and interest. Also, an increase in interest rates
would likely have an adverse impact on the value of such obligations.
Moreover, high-yield securities may be less liquid due to the extent that
there is no established retail secondary market and because of a decline in
the value of such securities.

E. Fee Reductions

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 six
months ended November 30, 2008, the Fund's custodian fee was reduced
by $2,009 and $1,767, respectively, for the custody and transfer agent
credits earned.

F. Line of Credit

The Fund and other affiliated funds (the "Participants") share in a
$490 million revolving credit facility provided by a syndication of banks. The
Fund may borrow for temporary or emergency purposes, including the
meeting of redemption requests that otherwise might require the untimely
disposition of securities. The Participants are charged an annual
commitment fee which is allocated based on net assets, among each of the
Participants. Interest is calculated at 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.

At November 30, 2008, the Fund had a $2,000,000 outstanding loan.
Interest expense incurred on the borrowing was $17,582 for the six months
ended November 30, 2008. The average dollar amount of the borrowings
was $8,899,000, the weighted average interest rate on these borrowings
was 1.37% and the Fund had a loan outstanding for fifty two days
throughout the period.

G. Share Transactions

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

|                                                               | Six Months Ended
November 30, 2008 | Year Ended
May 31, 2008
|-------------------------------------------------------------- | ---------------------------------- | -----------------------
|                                                               | Shares                             | Dollars                
|Shares sold                                                   
|Class A                                                        | 5,155,663                          | $       60,961,743     
|Class B                                                        | 143,265                            | 1,672,682              
|Class C                                                        | 1,384,155                          | 16,355,946             
|Class S                                                        | 18,670,370                         | 211,343,973            
|Institutional Class                                            | 548,670                            | 6,546,408              
|                                                               |                                    | $    296,880,752       
|Shares issued to shareholders in reinvestment of distributions
|Class A                                                        | 536,807                            | $       6,141,275      
|Class B                                                        | 21,351                             | 245,468                
|Class C                                                        | 99,942                             | 1,141,169              
|Class S                                                        | 980,794                            | 11,253,668             
|Institutional Class                                            | 21,988                             | 251,603                
|                                                               |                                    | $    19,033,183        
|Shares redeemed                                               
|Class A                                                        | (6,325,658)                        | $       (70,013,092)   
|Class B                                                        | (815,840)                          | (9,609,932)            
|Class C                                                        | (1,062,510)                        | (11,766,982)           
|Class S                                                        | (30,426,844)                       | (340,674,055)          
|Institutional Class                                            | (51,992)                           | (597,404)              
|                                                               |                                    | $    (432,661,465)     
|Redemption fees                                                |                                    | $    7,871             
|Net increase (decrease)                                       
|Class A                                                        | (633,188)                          | $       (2,908,007)    
|Class B                                                        | (651,224)                          | (7,691,782)            
|Class C                                                        | 421,587                            | 5,731,410              
|Class S                                                        | (10,775,680)                       | (118,071,887)          
|Institutional Class                                            | 518,666                            | 6,200,607              
|                                                               |                                    | $    (116,739,659)     

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") in September 2008.

In terms of the process that the Board followed prior to approving the
Agreement, shareholders should know that:

•   At the present time, all but one of your Fund's Trustees are independent
of DIMA and its affiliates.

•   The Trustees meet frequently to discuss fund matters. Each year, the
Trustees dedicate part or all of several meetings to contract review
matters. Over the course of several months, the Board's Contract
Committee, in coordination with the Board's Fixed Income and Quant
Oversight Committee, reviewed comprehensive materials received from
DIMA, independent third parties and independent counsel. These
materials included an analysis of the Fund's performance, fees and
expenses, and profitability compiled by the Fund's independent fee
consultant. The Board also received extensive information throughout
the year regarding performance of the Fund.

•   The Trustees regularly meet privately with their independent counsel
(and, as needed, other advisors) to discuss contract review and other
matters. In addition, the Trustees were also advised by the Fund's
independent fee consultant in the course of their review of the Fund's
contractual arrangements and considered a comprehensive report
prepared by the independent fee consultant in connection with their
deliberations (the "IFC Report").

•   In connection with reviewing the Agreement, the Board also reviewed
the terms of the Fund's Rule 12b-1 plan, distribution agreement,
administrative services agreement, transfer agency agreement and other
material service agreements.

•   Based on its evaluation of the information provided, the Contract
Committee presented its findings and recommendations to the
Independent Trustees as a group. The Independent Trustees reviewed
the Contract Committee's findings and recommendations and presented
their recommendations to the full Board.

In connection with the contract review process, the Contract Committee
and the Board considered the factors discussed below, among others. The
Board also considered that DIMA and its predecessors have managed the
Fund since its inception, and the Board believes that a long-term relationship
with a capable, conscientious advisor is in the best interests of the Fund.
The Board considered, generally, that shareholders chose to invest or remain
invested in the Fund knowing that DIMA managed the Fund, and that the
Agreement was approved by the Fund's shareholders at a special meeting
held in 2006. DIMA is part of Deutsche Bank, a major global banking
institution that is engaged in a wide range of financial services. The Board
believes that there are significant advantages to being part of a global asset
management business that offers a wide range of investing expertise and
resources, including hundreds of portfolio managers and analysts with
research capabilities in many countries throughout the world.

While shareholders may focus primarily on fund performance and fees, the
Fund's Board considers these and many other factors, including the quality
and integrity of DIMA's personnel and such other issues as back-office
operations, fund valuations, and compliance policies and procedures.

Nature, Quality and Extent of Services. The Board considered the terms of
the Agreement, including the scope of advisory services provided under the
Agreement. The Board noted that, under the Agreement, DIMA provides
portfolio management services to the Fund and that, pursuant to a separate
administrative services agreement, DIMA provides administrative services
to the Fund. The Board considered the experience and skills of senior
management and investment personnel, the resources made available to
such personnel, the ability of DIMA to attract and retain high-quality
personnel, and the organizational depth and stability of DIMA. The Board
reviewed the Fund's performance over short-term and long-term periods and
compared those returns to various agreed-upon performance measures,
including market indices and a peer universe compiled by the independent
fee consultant using information supplied by Lipper Inc. ("Lipper"). The
Board also noted that it has put 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 DIMA regarding such funds, along with DIMA's remedial
plans to address underperformance. The Board believes this process is an
effective manner of identifying and addressing underperforming funds.
Based on the information provided, the Board noted that for the one-, three-
and five-year periods ended December 31, 2007, the Fund's performance
(Class A shares) was in the 1st quartile, 1st quartile and 3rd quartile,
respectively, of the applicable Lipper universe (the 1st quartile being the
best performers and the 4th quartile being the worst performers). The Board
also observed that the Fund has underperformed its benchmark in the
one-year period ended December 31, 2007 and has outperformed its
benchmark in the three- and five-year periods ended December 31, 2007.

On the basis of this evaluation and the ongoing review of investment results
by the Board, the Board concluded that the nature, quality and extent of
services provided by DIMA historically have been and continue to be
satisfactory.

Fees and Expenses. The Board considered the Fund's investment
management fee schedule, operating expenses, and total expense ratios,
and comparative information provided by Lipper and the independent fee
consultant regarding investment management fee rates paid to other
investment advisors by similar funds (1st quartile being the most favorable
and 4th quartile being the least favorable). With respect to management
fees paid to other investment advisors by similar funds, the Board noted that
the contractual fee rates paid by the Fund, which include the 0.10% fee paid
to DIMA under the Fund's administrative services agreement, were higher
than the median (4th quartile) of the applicable Lipper peer group (based on
Lipper data provided as of December 31, 2007). The Board noted that the
Fund's Class A shares' total (net) operating expenses (excluding 12b-1 fees)
were expected to be higher than the median (3rd quartile) of the applicable
Lipper expense universe (based on Lipper data provided as of December 31,
2007, and analyzing Lipper expense universe Class A expenses less any
applicable 12b-1 fees) ("Lipper Universe Expenses"). The Board also
reviewed each other share class's total (net) operating expenses relative to
the Lipper Universe Expenses. The Board considered the Fund's
management fee rate as compared to fees charged by DIMA and certain of
its affiliates for comparable mutual funds and considered differences in fund
and fee structures between the DWS Funds. The Board also considered
how the Fund's total (net) operating expenses compared to the total (net)
operating expenses of a more customized peer group selected by Lipper
(based on such factors as asset size). The Board also noted that the expense
limitations agreed to by DIMA helped to ensure that the Fund's total (net)
operating expenses would be competitive relative to the applicable Lipper
universe.

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 DIMA.

Profitability. The Board reviewed detailed information regarding revenues
received by DIMA under the Agreement. The Board considered the
estimated costs and pre-tax profits realized by DIMA from advising the DWS
Funds, as well as estimates of the pre-tax profits attributable to managing
the Fund in particular. The Board also received information regarding the
estimated enterprise-wide profitability of the DWS Investments 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.
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. The Board also reviewed information regarding the
profitability of certain similar investment management firms. The Board
noted that while information regarding the profitability of such firms is
limited (and in some cases is not necessarily prepared on a comparable
basis), DIMA and its affiliates' overall profitability with respect to the DWS
Investments fund complex (after taking into account distribution and other
services provided to the funds by DIMA and its affiliates) was lower than the
overall profitability levels of many comparable firms for which such data was
available.

Economies of Scale. The Board considered whether there are economies of
scale with respect to the management of the Fund and whether the Fund
benefits from any economies of scale. The Board noted that the Fund's
management fee schedule includes fee breakpoints. The Board concluded
that the Fund's fee schedule represents an appropriate sharing between the
Fund and DIMA of such economies of scale as may exist in the
management of the Fund at current asset levels.

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 DIMA for administrative services
provided to the Fund and any fees received by an affiliate of DIMA for
distribution services. The Board also considered benefits to DIMA related to
brokerage and soft-dollar allocations, including allocating brokerage to pay
for research generated by parties other than the executing broker dealers,
which pertain primarily to funds investing in equity securities, along with the
incidental public relations benefits to DIMA related to DWS Funds
advertising and cross-selling opportunities among DWS Investments
products and services. The Board concluded that management fees were
reasonable in light of these fallout benefits.

Compliance. The Board considered the significant attention and resources
dedicated by DIMA to documenting and enhancing its compliance
processes in recent years. The Board noted in particular (i) the experience
and seniority of DIMA's chief compliance officer; (ii) the large number of
compliance personnel who report to DIMA's chief compliance officer; and (iii)
the substantial commitment of resources by DIMA and its affiliates to
compliance matters.

Based on all of the information considered and the conclusions reached, the
Board (including a majority of the Independent Trustees) determined that the
continuation of the Agreement is in the best interests of the Fund. In
making this determination the Board did not give particular weight to any
single factor identified above. The Board considered these factors over the
course of numerous meetings, certain of which were in executive session
with only the Independent Trustees and their counsel present. It is possible
that individual Trustees may have weighed these factors differently in
reaching their individual decisions to approve the continuation of the
Agreement.

Summary of Management Fee Evaluation by
Independent Fee Consultant

October 24, 2008

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

Qualifications

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

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

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

Evaluation of Fees for each DWS Fund

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

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

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

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

Fees and Expenses Compared with Other Funds

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

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

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

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

DeAM's Fees for Similar Services to Others

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

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

Costs and Profit Margins

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

Economies of Scale

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

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

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

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

Quality of Service  Performance

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

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

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

Complex-Level Considerations

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

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

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

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

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

Findings

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

shyt_sigmack1Thomas H. Mack

Summary of Administrative Fee Evaluation
by Independent Fee Consultant

September 29, 2008

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

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

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

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

shyt_sigmack0Thomas H. Mack

Account Management Resources

|                      
|----------------------
|For More
Information  
|Web Site              
|Written
Correspondence
|Proxy Voting          
|Principal
Underwriter 

|              | Class A    | Class B    | Class C    | Class S    | Institutional
Class
|------------- | ---------- | ---------- | ---------- | ---------- | -------------------
|Nasdaq Symbol | NOTAX      | NOTBX      | NOTCX      | SHYTX      | NOTIX              
|CUSIP Number  | 23337W-105 | 23337W-204 | 23337W-303 | 23337W-501 | 23337W-600         
|Fund Number   | 152        | 252        | 352        | 2008       | 512                

Privacy Statement

Dear Valued Client:

We want to make sure you know our policy regarding the way in which our
clients' private information is handled at DWS Investments. The following
information is issued by DWS Investments Distributors, Inc., Deutsche
Investment Management Americas Inc., DeAM Investor Services, Inc.,
DWS Trust Company and the DWS Funds.

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

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

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

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

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

DWS Investments 
Attention: Correspondence  Chicago
P.O. Box 219415
Kansas City, MO  64121-9415     September 2008

Notes

Notes

shyt_backcover0




ITEM 2.
        CODE OF ETHICSNot applicable.ITEM 3.
        AUDIT COMMITTEE FINANCIAL EXPERTNot applicable.ITEM 4.
        PRINCIPAL ACCOUNTANT FEES AND SERVICESNot applicable.
  ITEM 5.
        AUDIT COMMITTEE OF LISTED REGISTRANTSNot ApplicableITEM 6.
        SCHEDULE OF INVESTMENTSNot ApplicableITEM 7.
        DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIESNot applicable.ITEM 8.
        PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIESNot applicable.
  ITEM 9.
        PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERSNot Applicable.
  ITEM 10.
        SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERSThe primary function of the Nominating and Governance Committee is to identify and recommend individuals for membership on the Board and oversee the administration of the Board Governance Guidelines. Shareholders may recommend candidates for Board positions by forwarding their correspondence by U.S. mail or courier service to Chairman of the Board, P.O. Box 100176, Cape Coral, FL 33910.ITEM 11.
        CONTROLS AND PROCEDURES(a)        The Chief Executive and Financial Officers concluded that the Registrants Disclosure Controls and Procedures are effective based on the evaluation of the Disclosure Controls and Procedures as of a date within 90 days of the filing date of this report.(b)        There have been no changes in the registrants internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrants internal controls over financial reporting.
  
  ITEM 12.
        EXHIBITS(a)(1)   Certification pursuant to Rule 30a-2(a) under the Investment Company Act of 1940 (17 CFR 270.30a-2(a)) is filed and attached hereto as Exhibit 99.CERT.(b)       Certification pursuant to Rule 30a-2(b) under the Investment Company Act of 1940 (17 CFR 270.30a-2(b)) is furnished and attached hereto as Exhibit 99.906CERT.


Form N-CSRS Item F  SIGNATURES  Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.  Registrant:
        DWS Strategic High Yield Tax Free Fund, a series of DWS Municipal Trust
  By:
        /s/Michael G. Clark
 Michael G. Clark
 President  Date:
        January 28, 2009
   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 Strategic High Yield Tax Free Fund, a series of DWS Municipal Trust
  By:
        /s/Michael G. Clark
 Michael G. Clark
 President  Date:
        January 28, 2009
   By:
        /s/Paul Schubert
 Paul Schubert
 Chief Financial Officer and Treasurer  Date:                                          
          January 28, 2009