UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549



FORM N-CSRS



Investment Company Act file number  811-3657



DWS State Tax-Free Income Series

(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: | 08/31
|------------------------ | -----



Date of reporting period:
        2/28/09   ITEM 1.REPORT TO STOCKHOLDERS  
 FEBRUARY 28, 2009
Semiannual Report
to ShareholdersDWS California Tax-Free
Income Fundctf_cover10 Contents 4Performance Summary
10Information About Your Fund's Expenses
12Portfolio Management Review
18Portfolio Summary
19Investment Portfolio
29Financial Statements
34Financial Highlights
38Notes to Financial Statements
47Investment Management Agreement Approval
52Summary of Management Fee Evaluation by Independent
Fee Consultant
57Summary of Administrative Fee Evaluation by Independent
Fee Consultant
58Account Management Resources
59Privacy 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. The
fund invests in individual bonds whose yields and market values fluctuate so that your
investment may be worth more or less than its original cost. Bond investments are
subject to interest rate risk such that when interest rates rise, the prices of bonds, and
thus the value of the fund, can decline and the investor can lose principal value.
Additionally, this fund is nondiversified and can take larger positions in fewer issuers,
increasing its overall potential risk. A portion of the fund's returns may be subject to
federal, state, local and alternative minimum tax. Please read this fund's prospectus for
specific details regarding its investments and risk profile. Please refer to the prospectus
for further details. DWS Investments is part of Deutsche Bank's Asset Management division and, within the US,
represents the retail asset management activities of Deutsche Bank AG, Deutsche Bank Trust
Company Americas, Deutsche Investment Management Americas Inc. and DWS Trust
Company. NOT FDIC/NCUA INSURED NO BANK GUARANTEE MAY LOSE VALUE
NOT A DEPOSIT NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY Performance SummaryFebruary 28, 2009 Classes A, B and C 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. 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
December 1, 2008 are 1.35%, 2.15% and 2.13% for Class A, Class B and Class C
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 February 28, 2009. 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 for Class B and C shares and for the 1-year,
3-year, 5-year and 10-year periods for Class A shares reflect a fee waiver and/or expense
reimbursement. Without this waiver/reimbursement, returns and rankings would have
been lower. Performance figures do not reflect the deduction of taxes that a shareholder would pay on
fund distributions or the redemption of fund shares. Returns and rankings may differ by
share class. A portion of the Fund's distributions may be subject to federal, state and local tax and the
alternative minimum tax. Average Annual Total Returns(Unadjusted for Sales Charge) as of 2/28/09DWS California Tax-Free
Income Fund
6-Month
1-Year
3-Year
5-Year
10-YearClass A
-1.67%
3.05%
1.66%
2.26%
3.81%Class B
-2.04%
2.25%
.90%
1.52%
3.01%Class C
-2.07%
2.11%
.87%
1.48%
2.99%Barclays Capital Municipal
Bond Index+
.05%
5.18%
2.95%
3.13%
4.61% Sources: Lipper Inc. and Deutsche Investment Management Americas Inc.   Total returns shown for periods less than one year are not annualized.  Net Asset Value and Distribution InformationClass A
Class B
Class CNet Asset Value:
2/28/09
$      6.86
$      6.87
$      6.818/31/08
$      7.24
$      7.25
$      7.19Distribution Information:
Six Months as of 2/28/09:Income Dividends
$      .15
$      .13
$      .13Capital Gain Distributions
$      .09
$      .09
$      .09February Income Dividend
$      .0261
$      .0218
$      .0218SEC 30-day Yield as of 2/28/09++
3.81%
3.17%
3.18%Tax Equivalent Yield as of 2/28/09++
6.46%
5.38%
5.39%Current Annualized Distribution Rate (Based on Net
Asset Value) as of 2/28/09++
4.96%
4.14%
4.17% + + The SEC yield is net investment income per share earned over the month ended February
28, 2009, shown as an annualized percentage of the maximum offering price per share on
the last day of the period. The SEC yield is computed in accordance with a standardized
method prescribed by the Securities and Exchange Commission. The SEC yields would
have been 3.12% and 3.17% for Class B and Class C shares, respectively, had certain
expenses not been reduced. Tax equivalent yield is based on the Fund's yield and a
marginal income tax rate of 41.05% (combined California state and federal income tax
rate). Current annualized distribution rate is the latest monthly dividend as an annualized
percentage of net asset value on February 28, 2009. Distribution rate simply measures the
level of dividends and is not a complete measure of performance. The current annualized
distribution rate would have been 4.09% and 4.16% for Class B and Class C shares,
respectively, had certain expenses not been reduced. Yields and distribution rates are
historical, not guaranteed, and will fluctuate.  Class A Lipper Rankings  California Municipal Debt Funds Categoryas of
2/28/09Period
Rank

Number of
Funds Tracked
Percentile
Ranking (%)1-Year
13
of
120
113-Year
7
of
106
75-Year
16
of
101
1610-Year
12
of
72
17 Source: Lipper Inc. Rankings are historical and do not guarantee future results. Rankings
are based on total return unadjusted for sales charges with distributions reinvested. If
sales charges had been included, results might have been less favorable. Rankings are
for Class A shares; other share classes may vary. Growth of an Assumed $10,000 Investment(Adjusted for Maximum Sales Charge)[]DWS California Tax-Free Income Fund  Class A
[]Barclays Capital Municipal Bond Index+ctf_g10ka0Yearly periods ended February 28 The Fund's growth of an assumed $10,000 investment is adjusted for the maximum sales
charge of 4.5%. This results in a net initial investment of $9,550. Comparative Results(Adjusted for Maximum Sales Charge) as of 2/28/09DWS California Tax-Free Income Fund
1-Year
3-Year
5-Year
10-YearClass A
Growth of $10,000
$9,841
$10,034
$10,677
$13,878Average annual total return
-1.59%
.11%
1.32%
3.33%Class B
Growth of $10,000
$9,933
$10,091
$10,693
$13,451Average annual total return
-.67%
.30%
1.35%
3.01%Class C
Growth of $10,000
$10,211
$10,264
$10,764
$13,422Average annual total return
2.11%
.87%
1.48%
2.99%Barclays Capital
Municipal Bond Index+
Growth of $10,000
$10,518
$10,910
$11,667
$15,692Average annual total return
5.18%
2.95%
3.13%
4.61% The growth of $10,000 is cumulative. +  The Barclays Capital Municipal Bond Index (name changed from Lehman Brothers
Municipal Bond Index, effective November 3, 2008) is an unmanaged, market
value-weighted measure of municipal bonds issued across the United States. Index issues
have a credit rating of at least Baa and a maturity of at least two years. Index returns,
unlike Fund returns, do not reflect any fees or expenses. It is not possible to invest directly
into an index. Barclays Capital completed an acquisition of Lehman Brothers' North
American Investment Banking and Capital Markets businesses. As part of the transaction,
Lehman Brothers indices have become part of Barclays Capital.  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 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 total annual fund operating expense ratio, gross of any fee waivers or
expense reimbursements, as stated in the fee table of the prospectus dated
December 1, 2008 is 1.15% 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 February 28, 2009. 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 for Class S shares reflect a fee waiver
and/or expense reimbursement. Without this waiver/reimbursement, returns and rankings
would have been lower. Performance figures do not reflect the deduction of taxes that a shareholder would pay on
fund distributions or the redemption of fund shares. Returns and rankings may differ by
share class. A portion of the Fund's distributions may be subject to federal, state and local tax and the
alternative minimum tax. Average Annual Total Returnsas of 2/28/09DWS California Tax-Free
Income Fund
6-Month
1-Year
3-Year
5-Year
Life of
Class*Class S
-1.57%
3.13%
1.88%
2.44%
3.98%Barclays Capital Municipal
Bond Index+
.05%
5.18%
2.95%
3.13%
4.53% Sources: Lipper Inc. and Deutsche Investment Management Americas Inc.  Total returns shown for period less than one year are not annualized.  * Class S shares commenced operations on June 18, 2001. Index returns began on
June 30, 2001.  Net Asset Value and Distribution InformationClass SNet Asset Value:
2/28/09
$      6.848/31/08
$      7.22Distribution Information:
Six Months as of 2/28/09:Income Dividends
$      .16Capital Gain Distributions
$      .09February Income Dividend
$      .0270SEC 30-day Yield as of 2/28/09++
4.18%Tax Equivalent Yield as of 2/28/09++
7.09%Current Annualized Distribution Rate as of 2/28/09++
5.15% ++ The SEC yield is net investment income per share earned over the month ended February
28, 2009, shown as an annualized percentage of the maximum offering price per share on
the last day of the period. The SEC yield is computed in accordance with a standardized
method prescribed by the Securities and Exchange Commission. The SEC yield would have
been 4.13% for Class S shares had certain expenses not been reduced. Tax equivalent
yield is based on the Fund's yield and a marginal income tax rate of 41.05% (combined
California state and federal income tax rate). Current annualized distribution rate is the
latest monthly dividend as an annualized percentage of net asset value on February 28,
2009. Distribution rate simply measures the level of dividends and is not a complete
measure of performance. The current annualized distribution rate would have been 5.10%
for Class S shares had certain expenses not been reduced. Yields and distribution rates are
historical, not guaranteed, and will fluctuate.  Class S Lipper Rankings  California Municipal Debt Funds Categoryas of
2/28/09Period
Rank

Number of
Funds Tracked
Percentile
Ranking (%)1-Year
12
of
120
103-Year
5
of
106
55-Year
6
of
101
6 Source: Lipper Inc. Rankings are historical and do not guarantee future results. Rankings
are based on total return with distributions reinvested. Rankings are for Class S shares;
other share classes may vary. Growth of an Assumed $10,000 Investment[]DWS California Tax-Free Income Fund  Class S
[]Barclays Capital Municipal Bond Index+ctf_g10k90Yearly periods ended February 28 Comparative Resultsas of 2/28/09DWS California Tax-Free Income Fund
1-Year
3-Year
5-Year
Life of
Class*Class S
Growth of $10,000
$10,313
$10,574
$11,280
$13,503Average annual total return
3.13%
1.88%
2.44%
3.98%Barclays Capital
Municipal Bond Index+
Growth of $10,000
$10,518
$10,910
$11,667
$14,048Average annual total return
5.18%
2.95%
3.13%
4.53% The growth of $10,000 is cumulative. * Class S shares commenced operations on June 18, 2001. Index returns began on
June 30, 2001.  +  The Barclays Capital Municipal Bond Index (name changed from Lehman Brothers
Municipal Bond Index, effective November 3, 2008) is an unmanaged, market
value-weighted measure of municipal bonds issued across the United States. Index issues
have a credit rating of at least Baa and a maturity of at least two years. Index returns,
unlike Fund returns, do not reflect any fees or expenses. It is not possible to invest directly
into an index. Barclays Capital completed an acquisition of Lehman Brothers' North
American Investment Banking and Capital Markets businesses. As part of the transaction,
Lehman Brothers indices have become part of Barclays Capital.  Information About Your Fund's Expenses As an investor of the Fund, you incur two types of costs: ongoing expenses
and transaction costs. Ongoing expenses include management fees,
distribution and service (12b-1) fees and other Fund expenses. Examples of
transaction costs include sales charges (loads), redemption fees and
account maintenance fees, which are not shown in this section. The
following tables are intended to help you understand your ongoing expenses
(in dollars) of investing in the Fund and to help you compare these expenses
with the ongoing expenses of investing in other mutual funds. In the most
recent six-month period, Class B, C and S shares limited these expenses;
had they not done so, expenses would have been higher. The example in
the table is based on an investment of $1,000 invested at the beginning of
the six-month period and held for the entire period(September 1, 2008 to
February 28, 2009). 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 February 28, 2009Actual Fund Return
Class A
Class B
Class C
Class SBeginning Account Value 9/1/08
$       1,000.00
$       1,000.00
$       1,000.00
$       1,000.00Ending Account Value 2/28/09
$       983.30
$       979.60
$       979.30
$       984.30Expenses Paid per $1,000**
$       5.41
$       9.18
$       9.18
$       4.28Hypothetical 5% Fund Return
Class A
Class B
Class C
Class SBeginning Account Value 9/1/08
$       1,000.00
$       1,000.00
$       1,000.00
$       1,000.00Ending Account Value 2/28/09
$       1,019.34
$       1,015.52
$       1,015.52
$       1,020.48Expenses Paid per $1,000**
$       5.51
$       9.35
$       9.35
$       4.36 Annualized Expense Ratios
Class A
Class B
Class C
Class SDWS California Tax-Free Income Fund
1.10%
1.87%
1.87%
.87% Expenses and Value of a $1,000 Investment (excluding interest expense)*for the six months ended February 28, 2009Actual Fund Return
Class A
Class B
Class C
Class SBeginning Account Value 9/1/08
$       1,000.00
$       1,000.00
$       1,000.00
$       1,000.00Ending Account Value 2/28/09
$       983.30
$       979.60
$       979.30
$       984.30Expenses Paid per $1,000**
$       4.18
$       7.95
$       7.95
$       3.05Hypothetical 5% Fund Return
Class A
Class B
Class C
Class SBeginning Account Value 9/1/08
$       1,000.00
$       1,000.00
$       1,000.00
$       1,000.00Ending Account Value 2/28/09
$       1,020.58
$       1,016.76
$       1,016.76
$       1,021.72Expenses Paid per $1,000**
$       4.26
$       8.10
$       8.10
$       3.11 * Interest expense represents interest and fees on floating rate notes issued in conjunction
with inverse floating rate securities. Interest income from such transactions is included in
income from investment operations.  ** Expenses are equal to the Fund's annualized expense ratio for each share class, multiplied
by the average account value over the period, multiplied by the number of days in the most
recent six-month period, then divided by 365.  Annualized Expense Ratios
Class A
Class B
Class C
Class SDWS California Tax-Free Income Fund
.85%
1.62%
1.62%
.62% For more information, please refer to the Fund's prospectus. Portfolio Management Review In the following interview, the portfolio management team discusses
DWS California Tax-Free Income Fund's performance for the
semiannual period 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: Can you characterize conditions in the municipal bond market
during the semiannual period ended February 28, 2009? A:In the aggregate, municipal bonds were essentially flat and
modestly underperformed their taxable counterparts. The municipal
bond market, as measured by the Barclays Capital Municipal Bond
Index, returned 0.05% for the six-month period ended February 28,
2009.1 This compared to a positive 1.88% return for the broad
taxable bond market for the same period, as measured by the
Barclays Capital US Aggregate Index.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
Federal Deposit Insurance Corporation's (FDIC's) seizure and sale of
certain operations of giant thrift Washington Mutual to JPMorgan
Chase. The net result was an evaporation of liquidity as the credit
markets seized in September. In this environment, investors fled to Treasuries and most other
asset classes, including municipals, suffered. Underwriters of some
tender option bond programs, which provide a vehicle for achieving
leveraged exposure to the municipal market, discontinued or greatly
reduced their programs. This forced market participants, including
the fund, to unwind positions into a somewhat illiquid market,
putting further pressure on municipals. To illustrate, the municipal
market fell 4.69% in September as gauged by the Barclays Capital
Municipal Bond Index. New municipal supply over the six months was relatively light, as
issuance ground to a halt for a time in the wake of the failure of
Lehman Brothers. For the first two months of 2009, however,
issuance rebounded and was modestly above that of the same
period the year before. On the demand side, the largest source of
support for municipals over the six months came from retail
investors attracted by favorable yields, while mutual fund flows
strengthened as the period progressed. Demand was undercut by
decreased support from broker dealers and the sidelining of
institutional investors who had been using leveraging and hedging
strategies in an attempt to benefit from disparities between the
tax-free and taxable markets. The US Federal Reserve Board (the Fed) responded to the liquidity
crisis in all of the credit markets by dropping the targeted federal
funds rate - the overnight interbank lending rate and a benchmark
for interest rates generally  to the unprecedented level of
between 0% and 0.25%. During the period, yields on short- and
intermediate-term municipals fell, while yields on longer-term issues
ended the period somewhat higher. Since a bond's yield moves in
the opposite direction of its price, this meant that intermediate-term
municipal bonds generally provided the best returns. Municipal Bond Yield Curve(as of 8/31/08 and 2/28/09)ctf_yield110 Source: Municipal Market Data as of February 28, 2009. For illustrative purposes only; not
meant to represent the performance of any DWS product. The overall result of a decline in short-term yields and an increase in
long-term yields was a steepening of the tax-free yield curve over
the period.3 On the municipal bond curve, yields on two-year issues
fell by 83 basis points while bonds with 30-year maturities
experienced a yield increase of 13 basis points, resulting in a total
steepening of 96 basis points (100 basis points equals one
percentage point. See the accompanying graph for a depiction of
municipal bond yield changes between the beginning and end of the
period.) With respect to credit quality, falling revenues in the current
recession have negatively impacted municipal finances across the
nation.4 At the same time, downgrades to leading monoline insurers
continued during the period, and most insured issues have been
trading on the basis of the underlying credits, leading to additional
spread widening.5 In addition, the proportion of new issues with
insurance is much lower than in the past. The net result of
deteriorating fundamentals and a decreased role for insurance has
been an increase in non-AAA products and a widening of credit
spreads.6 Q: How did DWS California Tax-Free Income Fund perform for the
semiannual period ended February 28, 2009? A:DWS California Tax-Free Income Fund's Class A shares posted a
return for the six-month period of -1.67%. (Returns are unadjusted
for sales charges. If sales charges had been included, returns would
have been lower. Past performance is no guarantee of future
results. Please see pages 4 through 9 for the performance of
other share classes and more complete performance information.)
This return compares to 0.05% for the fund's benchmark, the
Barclays Capital Municipal Bond Index. The fund outperformed the
-6.03% average of its peer group, the Lipper California Debt Funds
category.7 Q: How was the fund positioned and how did this positioning
impact performance over the period? A:The fund's positioning along the yield curve was the leading
positive contributor to performance. We do not attempt to predict
the direction of interest rates, and instead seek to maintain a neutral
duration (relative to the Barclays Capital Municipal Bond Index) and
corresponding sensitivity to interest-rate changes.8 Within this
framework, however, we will make judgments about which
maturities present the most attractive opportunities. In this vein, we
have been gradually moving out on the curve to take advantage of
the improved yield differentials available from longer-term securities.
That said, fund holdings overall have still been more focused on the
intermediate area of the maturity spectrum. The fund's maturity
positioning helped performance as the curve continued to steepen
over the period, driven by both falling short- and intermediate-term
yields and rising yields (and falling prices) on longer-term issues.
Given the steepening that has occurred over the past year, we
expect to continue to move in the direction of an increased
weighting in longer-term issues. While we have been gradually increasing exposure to lower-rated
issues, the fund maintained a tilt toward higher quality during the
period. This positioning helped the fund's relative performance as
credit spreads widened and prices of lower-quality issues fell. In
particular, the fund's holdings of prerefunded bonds aided
performance as investors were attracted to the quality and liquidity
of these issues, helping to minimize the impact on the fund as
tender option bond programs unwound.9 The fund was slightly overweighted in California general obligation
(GO) bonds, and this constrained performance as the state's
budgetary issues raised concerns and caused GO spreads to
widen.10The fund's position in Puerto Rico issues, which are
tax-exempt in all states, suffered as a result of insurer downgrades,
which caused these issues to trade on the basis of the underlying
credit rather than the insurance guarantee. In recent months, lower-quality issues have become more attractive
relative to higher-quality issues, and we have continued to use
intensive credit analysis to selectively increase the fund's exposure
in this area. It is important to note, however, that the lower
proportion of AAA-rated bonds represented in the fund's portfolio
versus past periods is primarily the result of downgrades
experienced by leading bond insurers, rather than any shift in
fund strategy. Q: What is your current assessment of the California municipal
bond market? A:During the period, the state of California's general obligation debt
was downgraded from A+ to A by Standard & Poor's Corporation,
while Moody's Investors Service, Inc. left its rating at A1 but placed
the state on its watch list for a downgrade.11 Indeed, the state has
fared worse than much of the rest of the country in the current
recession. In particular, the state has been significantly impacted by
the national housing downturn, following several years of benefiting
from rising revenues and increasing surpluses. Legislative deadlock in the face of a significant budgetary gap
delayed California from passing a budget for the 2009 fiscal year.
However, the state pleasantly surprised many observers in February,
passing a 2010 budget several months early that addresses deficits
for the second half of fiscal 2009 and all of fiscal 2010 through a
combination of spending cuts and tax increases. While California continues to face structural deficits, the state
has sufficient flexibility to finance them. The implementation of the
US fiscal stimulus package holds the potential to help
stabilize California's finances and improve the state's economic and
employment picture. We remain constructive with respect to the
long-term outlook for the state's debt. 1 The unmanaged Barclays Capital Municipal Bond Index is a market-value-weighted
measure of municipal bonds issued across the United States. Index issues have a credit
rating of at least Baa and a maturity of at least two years.  2 The Barclays Capital US Aggregate Index is an unmanaged index representing domestic
taxable investment-grade bonds, with index components for government and corporate
securities, mortgage pass-through securities and asset-backed securities with average
maturities of one year or more.  Index returns, unlike fund returns, do not reflect any fees or expenses. It is not possible to
invest directly into an index.  3 The yield curve is a graph with a left-to-right line that shows how high or low yields are,
from the shortest to the longest maturities. Typically (and when the yield curve is
characterized as "steep," this is especially true) the line rises from left to right as investors
who are willing to tie up their money for a longer period are rewarded with higher yields.  4 Credit quality is a measure of a bond issuer's ability to repay interest and principal in a
timely manner. Rating agencies assign letter designations such as AAA, AA and so forth.
The lower the rating, the higher the probability of default.  5 Monoline insurers (also referred to as "monoline insurance companies" or simply
"monolines") guarantee the timely repayment of bond principal and interest when an
issuer defaults. They are so named because they originally provided services to only
one industry.  6 Credit spread reflects the difference in yield between bonds of different credit qualities but
comparable maturities.  7 The Lipper California Debt Funds category is comprised of funds that limit their assets to
those securities that are exempt from taxation in California. Lipper figures represent the
average of the total returns reported by all of the mutual funds designated by Lipper Inc. as
falling into the Lipper California Debt Funds category. Category returns assume
reinvestment of dividends. It is not possible to invest in a Lipper category.  8 Duration is a measure of bond price volatility. Duration can be defined as the approximate
percentage change in price for a 100-basis-point (one single percentage point) change in
market interest rate levels. A duration of 1.25, for example, means that the price of a bond
or bond portfolio should rise by approximately 1.25% for a one-percentage-point drop in
interest rates, and that it should fall by 1.25% for a one-percentage-point rise in interest
rates.  9 Prerefunded bonds have their principle cash amount already held aside by the original
issuer of the debt. A subset of the municipal and corporate bond classes, the funds
required to pay off prerefunded bonds are held in escrow until the maturity date, usually by
purchasing Treasury or agency paper.  10 "Overweight" means the fund holds a higher weighting in a given sector or security than
the benchmark. "Underweight" means the fund holds a lower weighting.  11 The ratings of Moody's Investors Service, Inc. (Moody's) and Standard & Poor's
Corporation (S&P) represent these companies' 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.  Portfolio Summary Asset Allocation(As a % of Investment Portfolio)
2/28/09
8/31/08Revenue Bonds
69%
63%US Government Secured
7%
17%General Obligation Bonds
24%
20%100%
100% Quality
2/28/09
8/31/08AAA
5%
21%AA
42%
21%A
20%
40%BBB
30%
7%Not Rated
3%
11%100%
100% Effective Maturity
2/28/09
8/31/08Less than 1 year
4%
13%1-4.99 years
20%
26%5-9.99 years
39%
46%10-14.99 years
15%
10%15+ years
22%
5%100%
100% Interest Rate Sensitivity
2/28/09
8/31/08Duration
6.7 years
6.5 years Weighted average effective maturity: 9.6 years and 6.8 years, respectively. Asset allocation, quality, effective maturity and interest rate sensitivity are subject to change. The quality ratings represent the lower of Moody's Investors Service, Inc. ("Moody's") or
Standard & Poor's Corporation ("S&P") credit ratings. The ratings of Moody's and S&P
represent their opinions as to the quality of the securities they rate. Ratings are relative and
subjective and are not absolute standards of quality. The Fund's credit quality does not remove
market risk. For more complete details about the Fund's investment portfolio, see page 19. 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 February 28, 2009 (Unaudited) Principal
Amount ($)
Value ($)Municipal Bonds and Notes 94.0%California 79.3%Anaheim, CA, Other General Obligation Lease, Public Financing
Authority, Public Improvements Project:Series C, Zero Coupon, 9/1/2017 (a)
1,455,000
973,075Series C, Zero Coupon, 9/1/2018 (a)
1,000,000
625,590Series C, 6.0%, 9/1/2014 (a)
1,000,000
1,153,320Series C, 6.0%, 9/1/2016 (a)
1,000,000
1,184,310Series A, 6.0%, 9/1/2024 (a)
3,500,000
3,942,190Anaheim, CA, Redevelopment Agency Tax Allocation, Merged
Redevelopment Project Area, Series A, 5.0%, 2/1/2025 (a)
5,000,000
4,983,500Benicia, CA, School District General Obligation, Unified School
District:Series A, Zero Coupon, 8/1/2017 (a)
1,735,000
1,193,958Series A, Zero Coupon, 8/1/2018 (a)
1,510,000
975,007Big Bear Lake, CA, Water Revenue:6.0%, 4/1/2015 (a)
3,400,000
3,861,1426.0%, 4/1/2022 (a)
13,500,000
15,649,470Brentwood, CA, Infrastructure Financing Authority, Water
Revenue, 5.75%, 7/1/2038
2,000,000
2,090,980Burbank, CA, School District General Obligation, Unified School
District, Series B, Zero Coupon, 8/1/2014 (a)
3,000,000
2,481,450Cabrillo, CA, County General Obligation Lease, Unified School
District, Series A, Zero Coupon, 8/1/2019 (a)
4,000,000
2,465,680California, Bay Area Toll Authority, Toll Bridge Revenue:Series C, 0.35%*, 4/1/2045
1,500,000
1,500,000Series B, 0.37%*, 4/1/2039
2,000,000
2,000,000Series D-1, 0.4%*, 4/1/2045
500,000
500,000California, Center Unified School District, Series C,
Zero Coupon, 9/1/2014 (a)
2,240,000
1,846,723California, Health Facilities Finance Authority Revenue, Kaiser
Permanente, Series A, Zero Coupon, 10/1/2012 (a)
4,900,000
4,371,584California, Health Facilities Financing Authority Revenue,
Providence Health & Services, Series C, 6.5%, 10/1/2033 (b)
2,000,000
2,104,780California, Health Facilities Financing Authority Revenue, Sutter
Health, Series A, 5.25%, 8/15/2022
1,665,000
1,692,922California, Higher Education Revenue, Educational
Facilities Authority, University of San Diego,
Zero Coupon, 10/1/2014 (a)
1,470,000
1,207,987California, Housing Finance Agency Revenue, Home Mortgage,
Series C, AMT, 1.3%*, 8/1/2037
3,000,000
3,000,000California, Residential Efficiency Financing Authority,
Certificates of Participation, Capital Improvements,
Series 2007, 5.5%, 4/1/2017 (a)
35,000
35,117California, Senior Care Revenue, Statewide Community
Development Authority, ETM, 5.6%, 11/15/2013
4,750,000
5,148,572California, Single Family Housing Revenue, Mortgage Finance
Authority, Series B, AMT, 7.3%, 6/1/2031
25,000
25,673California, Special Assessment Revenue, Golden State Tobacco
Securitization Corp.:Series A-1, 5.0%, 6/1/2033
10,000,000
6,228,800Series A-1, 5.75%, 6/1/2047
4,815,000
2,902,675California, State Agency General Obligation Lease, Public
Works Board, Department of Corrections:Series A, 7.4%, 9/1/2010 (a)
1,000,000
1,070,150Series A-2, 7.4%, 9/1/2010
3,365,000
3,601,055California, State Department of Water Resources, Power
Supply Revenue, Series G-2, 0.3%*, 5/1/2011, Lloyds
Banking Group PLC (c)
530,000
530,000California, State General Obligation:5.125%, 4/1/2024
7,400,000
7,402,8865.125%, 11/1/2024
1,000,000
999,710California, State General Obligation, Economic Recovery, Series
A, 5.0%, 7/1/2015 (a)
5,000,000
5,319,850California, State General Obligation, Various Purposes:5.0%, 11/1/2026
10,000,000
9,724,8005.0%, 6/1/2029 (a)
10,000,000
9,605,3005.0%, 12/1/2031 (a)
10,000,000
9,416,300California, State Public Works Board, Lease Revenue,
Department of Mental Health, Series A, 5.5%, 6/1/2022
2,600,000
2,612,584California, State University Revenue:Series C, 5.0%, 11/1/2019 (a)
10,000,000
10,731,900Series A, 5.0%, 11/1/2024 (a)
5,000,000
5,042,750California, Statewide Communities Development Authority
Revenue, Certificates of Participation, Cedars-Sinai Medical
Center, 6.5%, 8/1/2012
11,060,000
11,878,772California, Statewide Communities Development Authority
Revenue, Certificates of Participation, Children's Hospital of
Los Angeles, 6.0%, 6/1/2010 (a)
1,000,000
1,022,500California, Statewide Communities Development Authority
Revenue, Kaiser Permanente, Series B, 1.741%**, 4/1/2036
5,000,000
2,762,500California, Statewide Communities Development Authority
Revenue, St. Joseph, 5.125%, 7/1/2024 (a)
10,000,000
9,529,300California, Statewide Communities Development Authority,
Certificates of Participation, Sutter Health, 6.0%, 8/15/2017
(a)
1,000,000
1,030,490Capistrano, CA, School District General Obligation, Unified
School District, Improvement District No. 1, Series A,
6.25%, 8/1/2018 (a)
1,000,000
1,057,690Carlsbad, CA, School District General Obligation, Unified School
District, Zero Coupon, 11/1/2018 (a)
3,050,000
1,987,990Castaic Lake, CA, Water Agency Revenue, Certificates of
Participation, 1994 Refunding Project, Series A, 0.36%*,
8/1/2020, Wells Fargo Bank NA (c)
2,385,000
2,385,000Chino Basin, CA, Water & Sewer Revenue, Regional Financing
Authority, 5.9%, 8/1/2011 (a)
1,290,000
1,415,839Chino Valley, CA, Unified School District, Election 2002, Series
C, 5.25%, 8/1/2030 (a)
5,000,000
4,974,350Contra Costa County, CA, GNMA Mortgage-Backed Securities
Program, AMT, ETM, 7.75%, 5/1/2022
2,715,000
3,521,355Corona, CA, Sales & Tax Revenue, Community Facilities
District, Series 90-1-A, 5.5%, 9/1/2015 (a)
9,240,000
10,369,405Corona-Norco, CA, Sales & Tax Revenue, Unified School
District Public Financing Authority, Series A,
5.75%, 9/1/2014 (a) (b)
2,365,000
2,366,372Dry Creek, CA, School District General Obligation, Joint
Elementary School District:Series A, Zero Coupon, 8/1/2021 (a)
1,920,000
1,079,827Series A, Zero Coupon, 5/1/2022 (a)
1,385,000
738,717East Bay, CA, Municipal Utility District, Wastewater Systems
Revenue, Series A, 5.0%, 6/1/2037 (a)
10,000,000
9,894,700Encinitas, CA, State General Obligation, Unified School District,
Zero Coupon, 8/1/2017 (a)
4,000,000
2,810,000Escondido, CA, School District General Obligation, Unified High
School District:Zero Coupon, 5/1/2015 (a)
3,165,000
2,449,742Zero Coupon, 5/1/2016 (a)
3,335,000
2,439,152ETM, Zero Coupon, 11/1/2017 (a)
5,500,000
4,139,410Zero Coupon, 11/1/2018 (a)
4,605,000
2,879,184ETM, Zero Coupon, 11/1/2020 (a)
7,000,000
4,430,720Foothill, CA:ETM, Zero Coupon, 1/1/2018 (a)
10,000,000
7,408,800ETM, Zero Coupon, 1/1/2020 (a)
10,000,000
6,599,000Series A, Prerefunded, 7.15%, 1/1/2013
975,000
1,047,696Foothill, CA, School District General Obligation, Zero Coupon,
8/1/2016 (a)
4,755,000
3,628,350Foothill, CA, Toll Road Revenue, Eastern Corridor Agency:Zero Coupon, 1/15/2017 (a)
5,975,000
3,213,355Zero Coupon, 1/15/2018 (a)
6,250,000
3,080,500Step-up Coupon, 0% to 7/15/2009, 5.8% to 1/15/2020 (a)
6,500,000
6,436,950Zero Coupon, 1/15/2025
10,000,000
2,615,300Step-up Coupon, 0% to 7/15/2009, 5.875% to 1/15/2026
5,000,000
4,481,900Fresno, CA, School District General Obligation, Unified School
District:Series C, 5.9%, 2/1/2017 (a)
1,760,000
1,976,322Series A, 6.4%, 8/1/2016 (a)
2,000,000
2,335,940Healdsburg, CA, School District General Obligation, Unified
School District, Zero Coupon, 7/15/2014 (a)
400,000
325,196Las Virgenes, CA, School District General Obligation, Unified
School District:Series A, Zero Coupon, 11/1/2013 (a)
2,150,000
1,894,752Series A, Zero Coupon, 11/1/2014 (a)
1,050,000
888,804Long Beach, CA, Harbor Revenue:Series A, AMT, 6.0%, 5/15/2016 (a)
8,430,000
9,051,881Series A, AMT, 6.0%, 5/15/2019 (a)
10,600,000
11,081,558Long Beach, CA, Port Authority Revenue:Series A, AMT, 5.75%, 5/15/2016
12,570,000
12,834,850Series A, AMT, 6.0%, 5/15/2017 (a)
1,500,000
1,609,110Series A, AMT, 6.0%, 5/15/2018 (a)
4,000,000
4,250,560Los Angeles County, CA, Core City General Obligation Lease,
Convention and Exhibition Center Authority, Series A,
6.125%, 8/15/2011 (a)
1,000,000
1,103,710Los Angeles County, CA, Multi-Family Housing Authority
Revenue, Canyon Country Villas Project, Series H,
0.4%*, 12/1/2032
2,000,000
2,000,000Los Angeles, CA, Airport Revenue, Series B, AMT,
5.5%, 8/1/2016 (a)
6,500,000
6,636,760Los Angeles, CA, Pollution Control Revenue, 6.0%, 6/1/2021 (a)
2,000,000
2,341,040Los Angeles, CA, Unified School District, Series F,
5.0%, 1/1/2034
7,540,000
7,269,389Lucia Mar, CA, School District General Obligation, Series A,
Zero Coupon, 8/1/2016 (a)
1,000,000
740,060Merced, CA, School District General Obligation,
High School District:Series A, Zero Coupon, 8/1/2014 (a)
2,045,000
1,647,943Series A, Zero Coupon, 8/1/2015 (a)
2,090,000
1,597,972Series A, Zero Coupon, 8/1/2016 (a)
2,140,000
1,545,059Millbrae, CA, Senior Care Revenue, Magnolia of Millbrae
Project, Series A, AMT, 7.375%, 9/1/2027
3,535,000
2,911,143Modesto, CA, General Obligation Lease, Community Project,
Series A, 5.6%, 11/1/2014 (a)
1,370,000
1,356,259Montebello, CA, School District General Obligation, Unified
School District, Zero Coupon, 8/1/2013 (a)
1,945,000
1,692,150Murrieta Valley, CA, General Obligation, Unified School District:Series A, Zero Coupon, 9/1/2016 (a)
2,500,000
1,808,9755.0%, 9/1/2026 (a)
7,155,000
7,273,988Northern California, Power Agency, Prerefunded,
7.0%, 7/1/2016
210,000
272,091Oakland, CA, Port Authority Revenue, AMT, 5.75%, 11/1/2014
(a)
2,500,000
2,528,025Palmdale, CA, School District General Obligation, School
Building Project, Zero Coupon, 10/1/2019 (a)
1,420,000
889,602Pittsburg, CA, Redevelopment Agency Tax Allocation, Los
Medanos Community Project, Series A, 6.5%, 9/1/2028
10,000,000
10,017,400Rancho, CA, Water District Financing Authority Revenue:Series A, 5.0%, 8/1/2027 (a)
14,100,000
13,998,903Series A, 5.0%, 8/1/2029 (a)
8,400,000
8,169,168Redwood City, CA, School District General Obligation,
Elementary School District, Zero Coupon, 8/1/2017 (a)
1,635,000
1,148,588Richmond, CA, Water & Sewer Revenue, ETM, Zero Coupon,
8/1/2020 (a)
2,495,000
1,547,624Riverside County, CA, Hospital & Healthcare Revenue, Asset
Leasing Corp.:Zero Coupon, 6/1/2015 (a)
1,750,000
1,387,645Zero Coupon, 6/1/2016 (a)
2,395,000
1,800,800Sacramento County, CA, Sales & Special Tax Revenue,
Community Facilities District No. 1:5.5%, 12/1/2010
1,085,000
1,091,9556.0%, 9/1/2011
850,000
854,2936.125%, 9/1/2014
605,000
607,0096.3%, 9/1/2021
1,500,000
1,470,165Sacramento County, CA, Water Finance Authority Revenue,
Water Agency Zones 40 & 41:Series B, 2.046%**, 6/1/2039 (a)
10,000,000
4,775,000Series A, 5.0%, 6/1/2026 (a)
11,435,000
11,464,845Sacramento, CA, Electric Revenue, Municipal Utility District:Series U, 5.0%, 8/15/2026 (a)
2,615,000
2,611,940Series U, 5.0%, 8/15/2027 (a)
2,025,000
1,996,164Series U, 5.0%, 8/15/2028 (a)
2,045,000
1,990,378Series K, 5.75%, 7/1/2018 (a) (b)
5,170,000
5,958,632Series G, 6.5%, 9/1/2013 (a)
1,270,000
1,412,812Sacramento, CA, Other General Obligation Lease, City
Financing Authority:Series B, 5.0%, 11/1/2014
4,200,000
4,456,746Series A, 5.4%, 11/1/2020 (a) (b)
5,000,000
5,423,009Sacramento, CA, Sales & Special Tax Revenue, Finance
Authority, Series B, Zero Coupon, 11/1/2016 (a)
2,685,000
1,707,660Saddleback Valley, CA, Sales & Special Tax Revenue, Unified
School District, Public Financing Authority:Series A, 6.0%, 9/1/2013 (a)
1,000,000
1,142,930Series A, 6.0%, 9/1/2014 (a) (b)
2,195,000
2,476,362Series A, 6.0%, 9/1/2015 (a)
1,000,000
1,164,220San Bernardino, CA, County General Obligation, Medical Center
Financing Project:5.5%, 8/1/2017 (a)
3,965,000
4,176,4536.0%, 8/1/2009 (a)
1,045,000
1,058,481San Bernardino, CA, Other Revenue Lease:Series A, 5.25%, 11/1/2013 (a)
3,115,000
3,368,436Series A, 5.25%, 11/1/2014 (a)
2,330,000
2,519,569San Bruno Park, CA, School District, General Obligation:Zero Coupon, 8/1/2014 (a)
1,010,000
843,936Zero Coupon, 8/1/2017 (a)
1,000,000
715,970Zero Coupon, 8/1/2019 (a)
1,100,000
688,512San Diego, CA, School District General Obligation, Election of
1998:Series B, 6.0%, 7/1/2019 (a) (b)
3,350,000
4,047,135Series B, 6.05%, 7/1/2018 (a)
770,000
934,203San Francisco, CA, Bay Area Rapid Transit District, Election of
2004, Series B, 5.0%, 8/1/2027 (b)
5,085,000
5,232,770San Francisco, CA, City & County Airports Commission,
International Airport Revenue:Series 24A, AMT, 5.75%, 5/1/2012 (a)
2,570,000
2,648,513Series 25, AMT, 5.75%, 5/1/2012 (a)
2,890,000
2,978,289Series 24A, AMT, 5.75%, 5/1/2013 (a)
2,730,000
2,815,094Series 25, AMT, 5.75%, 5/1/2013 (a)
3,070,000
3,151,723Series 24A, AMT, 5.75%, 5/1/2014 (a)
2,890,000
2,968,752Series 24A, AMT, 5.75%, 5/1/2015 (a)
3,060,000
3,128,207Series 24A, AMT, 5.875%, 5/1/2016 (a)
3,250,000
3,321,142Series 24A, AMT, 6.0%, 5/1/2011 (a)
2,160,000
2,244,521Series 25, AMT, 6.0%, 5/1/2011 (a)
2,730,000
2,836,825San Joaquin Hills, CA, Toll Road Revenue, Transportation
Corridor Agency:ETM, Zero Coupon, 1/1/2010
1,500,000
1,486,425Series A, Zero Coupon, 1/15/2015 (a)
12,065,000
8,421,611Series A, Zero Coupon, 1/15/2016 (a)
3,485,000
2,265,738Series A, Zero Coupon, 1/15/2017 (a)
3,965,000
2,377,533Series A, Zero Coupon, 1/15/2018 (a)
2,640,000
1,450,812Series A, Zero Coupon, 1/15/2019 (a)
3,185,000
1,611,419San Jose, CA, School District General Obligation, Unified
School District, Series A, ETM, Zero Coupon, 8/1/2017 (a)
1,350,000
1,026,770San Juan, CA, San Juan Project, Series D, ETM,
6.75%, 7/1/2020 (a)
1,595,000
1,978,885San Mateo County, CA, Joint Powers Financing Authority
Lease Revenue, Youth Services Campus, Series A,
5.0%, 7/15/2033
3,500,000
3,384,920San Ysidro, CA, School District General Obligation,
6.125%, 8/1/2021 (a)
1,400,000
1,606,528Santa Ana, CA, Other General Obligation, Police Administration
and Holding Facility, Series A, 6.25%, 7/1/2024 (a)
2,000,000
2,318,400Santa Cruz County, CA, County General Obligation Lease,
Capital Facilities Project:5.5%, 9/1/2017 (a)
1,005,000
1,051,0295.5%, 9/1/2018 (a)
1,060,000
1,099,4745.6%, 9/1/2019 (a)
1,115,000
1,153,2225.6%, 9/1/2020 (a)
1,180,000
1,200,3315.65%, 9/1/2024 (a)
1,445,000
1,410,0315.65%, 9/1/2025 (a)
1,520,000
1,467,8185.65%, 9/1/2026 (a)
1,605,000
1,537,911Santa Margarita/Dana Point, CA, Special Assessment Revenue,
Improvement District Authority:Series B, 7.25%, 8/1/2012 (a)
3,675,000
4,066,792Series B, 7.25%, 8/1/2013 (a)
3,400,000
3,817,962Santaluz, CA, Special Tax Bonds, Santaluz Community Facilities
District No. 2, Improvement Area No. 1:6.25%, 9/1/2021
1,985,000
1,783,6026.375%, 9/1/2030
4,890,000
4,078,260Southern California, Electric Revenue, Public Power Authority,
Power Project, 6.75%, 7/1/2010
6,000,000
6,432,600Southern California, Electric Revenue, Public Power Authority,
Transmission Project, Zero Coupon, 7/1/2015
2,000,000
1,607,820Southern California, Metropolitan Water District, Waterworks
Revenue:Series A, ETM, 5.75%, 7/1/2021
880,000
1,043,390Series A, 5.75%, 7/1/2021
1,120,000
1,308,227Tahoe Truckee, CA, School District General Obligation, Unified
School District Capital Improvement, Series A, Zero Coupon,
8/1/2022 (a)
3,600,000
1,775,952Temple City, CA, School District General Obligation, Series A,
Zero Coupon, 8/1/2015 (a)
1,250,000
983,838Ukiah, CA, School District General Obligation, Unified School
District, Zero Coupon, 8/1/2016 (a)
2,000,000
1,470,460West Covina, CA, Sales & Special Tax Revenue, Fashion Plaza,
5.75%, 9/1/2009
305,000
311,881557,622,215Puerto Rico 13.5%Commonwealth of Puerto Rico, Aqueduct & Sewer Authority
Revenue, Series A, 6.0%, 7/1/2038
8,000,000
7,246,400Commonwealth of Puerto Rico, General Obligation,
Public Improvement:Series A, 5.25%, 7/1/2022
2,000,000
1,802,140Series A, 5.5%, 7/1/2019 (a)
22,650,000
21,533,355Puerto Rico, Electric Power Authority Revenue:Series JJ, 5.375%, 7/1/2017 (a)
2,105,000
2,079,803Series JJ, 5.375%, 7/1/2018 (a)
8,710,000
8,614,974Series KK, 5.5%, 7/1/2015 (a)
25,000,000
25,945,750Puerto Rico, Industrial Development Revenue, Industrial Tourist
Educational, Medical & Environmental Central Facilities:Series A, 5.625%, 7/1/2015 (a)
2,190,000
2,182,313Series A, 5.625%, 7/1/2016 (a)
2,215,000
2,184,1015.625%, 7/1/2017 (a)
2,345,000
2,280,981Puerto Rico, Public Buildings Authority Revenue, Government
Facilities, Series A, ETM, 6.25%, 7/1/2013 (a)
1,000,000
1,187,670Puerto Rico, Sales & Special Tax Revenue,
Commonwealth Infrastructure Finance Authority, Series A,
5.5%, 10/1/2020
2,000,000
2,131,600Puerto Rico, Sales & Special Tax Revenue, Highway &
Transportation Authority:Series Z, 6.0%, 7/1/2018 (a)
7,250,000
7,633,130Series Z, 6.25%, 7/1/2014 (a)
1,000,000
1,028,410Series A, 6.25%, 7/1/2016 (a)
750,000
801,750Puerto Rico, State General Obligation:5.5%, 7/1/2015 (a)
3,665,000
3,628,0575.65%, 7/1/2015 (a)
1,000,000
997,8106.5%, 7/1/2015 (a)
4,000,000
4,159,36095,437,604Virgin Islands 1.2%Virgin Islands, Sales & Special Tax Revenue, Public Finance
Authority, Series A, Prerefunded, 6.5%, 10/1/2024
7,500,000
8,216,400Total Municipal Bonds and Notes (Cost $653,831,570)
661,276,219Municipal Inverse Floating Rate Notes (d) 13.6%California, Bay Area Toll Authority, Toll Bridge Revenue, Series
F, 5.0%, 4/1/2031 (e)
11,475,000
11,286,143Trust: California, Bay Area Toll Authority, Toll Bridge
Revenue, Series 1962, 144A, 13.523%, 4/1/2031, Leverage
Factor at purchase date: 3 to 1California, Bay Area Toll Authority, Toll Bridge Revenue, Series
F, 5.0%, 4/1/2025 (e)
13,870,000
14,129,452Trust: California, Bay Area Toll Authority, Toll Bridge
Revenue, Series 1962-3, 144A, 17.798%, 4/1/2025,
Leverage Factor at purchase date: 4 to 1California, Bay Area Toll Authority, Toll Bridge Revenue, Series
F, 5.0%, 4/1/2026 (e)
17,205,000
17,416,259Trust: California, Bay Area Toll Authority, Toll Bridge
Revenue, Series 1962-2, 144A, 17.815%, 4/1/2026,
Leverage Factor at purchase date: 4 to 1California, State Community Center, College District, Election
of 2002, Series A, 5.0%, 8/1/2026 (a) (e)
10,630,000
10,856,897Trust: California, State Community Center, Series
2008-1154, 144A, 8.72%, 8/1/2026, Leverage Factor at
purchase date: 2 to 1California, State Department of Water Resources,
Water Revenue, Central Valley Project, Series AE,
5.0%, 12/1/2023 (e)
3,158,944
3,326,711California, State Department of Water Resources,
Water Revenue, Central Valley Project, Series AE,
5.0% 12/1/2024 (e)
2,257,732
2,377,637California, State Department of Water Resources,
Water Revenue, Central Valley Project, Series AE,
5.0% 12/1/2025 (e)
1,881,443
1,981,365Trust: California, State Department of Water Resources,
Water Revenue, Series 2705, 144A, 12.463%, 12/1/2023,
Leverage Factor at purchase date: 3 to 1Los Angeles, CA, Department of Water & Power Revenue,
Series A, 5.0%, 7/1/2039 (e)
10,000,000
9,740,500Trust: Los Angeles, CA, Department of Water and Power
Revenue, Series 3325, 144A, 16.67%, 7/1/2039, Leverage
Factor at purchase date: 4 to 1San Diego County, CA, Water Authority Revenue, Certificates
of Participation, Series 2008-A, 5.0%, 5/1/2027 (a) (e)
2,137,063
2,145,106San Diego County, CA, Water Authority Revenue, Certificates
of Participation, Series 2008-A, 5.0%, 5/1/2028 (a) (e)
1,944,611
1,951,929Trust: San Diego County, CA, Water Utility Improvements,
Certificate of Participation, Series 2008-1104, 144A, 8.723%,
5/1/2027, Leverage Factor at purchase date: 2 to 1San Francisco, CA, Bay Area Rapid Transit District, Election of
2004, Series B, 5.0%, 8/1/2032 (e)
10,002,999
10,084,806Trust: San Francisco, CA, General Obligation, Series 3161,
144A, 12.978%, 8/1/2032, Leverage Factor at purchase date:
3 to 1Santa Clara County, CA, San Jose Unified School District,
Election of 2002, Series D, 5.0%, 8/1/2032 (e)
10,000,000
9,890,900Trust: Santa Clara County, CA, San Jose Unified School
District, Series 1158, 144A, 9.07%, 8/1/2032, Leverage
Factor at purchase date: 2 to 1Total Municipal Inverse Floating Rate Notes (Cost $99,374,488)
95,187,705 % of Net
Assets
Value ($)Total Investment Portfolio(Cost $753,206,058)+
107.6
756,463,924Other Assets and Liabilities, Net
(7.6)
(53,267,542)Net Assets
100.0
703,196,382 * Variable rate demand notes are securities whose interest rates are reset periodically at
market levels. These securities are often payable on demand and are shown at their
current rates as of February 28, 2009.  ** Floating rate notes are securities whose yields vary with a designated market index or
market rate, such as the coupon-equivalent of the US Treasury Bill rate. These securities
are shown at their current rate as of February 28, 2009.  +  The cost for federal income tax purposes was $752,376,115. At February 28, 2009, net
unrealized appreciation for all securities based on tax cost was $4,087,809. This consisted
of aggregate gross unrealized appreciation for all securities in which there was an excess
of value over tax cost of $28,698,114 and aggregate gross unrealized depreciation for all
securities in which there was an excess of tax cost over value of $24,610,305.  (a) Bond is insured by one of these companies:  Insurance Coverage
As a % of Total
Investment PortfolioAmbac Financial Group, Inc.
6.8Financial Guaranty Insurance Company
13.1Financial Security Assurance, Inc.
15.1MBIA Corporation
28.6Radian Asset Assurance, Inc.
1.8XL Capital Assurance, Inc.
1.4 (b) At February 28, 2009, these securities have been pledged in whole or in part, as collateral
for open interest rate swaps.  (c) Security incorporates a letter of credit from the bank listed.  (d) Securities represent the underlying municipal obligations of inverse floating rate obligations
held by the Fund.  (e) Security forms part of the below tender option bond trust. Principal Amount and Value
shown take into account the leverage factor.  144A: Security exempt from registration under Rule 144A of the Securities Act of 1933. These
securities may be resold in transactions exempt from registration, normally to qualified
institutional buyers. AMT: Subject to alternative minimum tax. ETM: Bonds bearing the description ETM (escrow to maturity) are collateralized usually by US
Treasury securities which are held in escrow and used to pay principal and interest on bonds so
designated. Prerefunded: Bonds which are prerefunded are collateralized usually by US Treasury securities
which are held in escrow and used to pay principal and interest on tax-exempt issues and to
retire the bonds in full at the earliest refunding date. At February 28, 2009, open interest rate swaps were as follows: Effective/
Expiration
Date
Notional
Amount ($)
Cash Flows Paid
by the Fund
Cash Flows
Received by the
Fund
Unrealized
Appreciation/(Depreciation) ($)2/17/2009
2/17/2023
17,300,0001
Fixed  4.915%
Floating  LIBOR
(2,716,951)12/10/2008
12/10/2023
11,500,0002
Fixed  5.06%
Floating  LIBOR
(2,131,742)1/8/2010
1/8/2026
12,500,0003
Fixed  3.133%
Floating  LIBOR
642,045Total unrealized depreciation
(4,206,648)Counterparties:1Goldman Sachs & Co.2Citigroup Global Markets, Inc.3JPMorgan Chase Securities, Inc. LIBOR: Represents the London InterBank Offered Rate. Fair Value Measurements Financial Accounting Standards Board Statement of Financial Accounting Standards No. 157,
"Fair Value Measurements," establishes a three-tier hierarchy for measuring fair value and
requires additional disclosure about the classification of fair value measurements. Various inputs are used in determining the value of the Fund's investments. These inputs are
summarized in three broad levels. Level 1 includes quoted prices in active markets for identical
securities. Level 2 includes other significant observable inputs (including quoted prices for
similar securities, interest rates, prepayment speeds and credit risk). Level 3 includes
significant unobservable inputs (including the Fund's own assumptions in determining the fair
value of investments). The inputs or methodology used for valuing securities are not
necessarily an indication of the risk associated with investing in those securities. The following is a summary of the inputs used as of February 28, 2009 in valuing the Fund's
investments. For information on the Fund's policy regarding the valuation of investments,
please refer to the Security Valuation section of Note A in the accompanying Notes to the
Financial Statements. Valuation Inputs
Investments in
Securities
Other Financial
Instruments++Level 1
$       
$       Level 2
756,463,924
(4,206,648)Level 3

Total
$    756,463,924
$    (4,206,648) + + Other financial instruments are derivative instruments not reflected in the Investment
Portfolio, such as swaps contracts, which are valued at the unrealized appreciation
(depreciation) on the instrument.  The accompanying notes are an integral part of the financial statements. Financial Statements Statement of Assets and Liabilitiesas of February 28, 2009 (Unaudited)AssetsInvestments in securities, at value (cost $753,206,058)
$       756,463,924Cash
470,398Receivable for investments sold
3,587,629Receivable for Fund shares sold
2,839,518Interest receivable
8,266,337Unrealized appreciation on interest rate swaps
642,045Due from Advisor
9,224Other assets
33,713Total assets
772,312,788LiabilitiesPayable for floating rate notes issued
62,217,792Dividends payable
501,607Payable for Fund shares redeemed
885,850Unrealized depreciation on interest rate swaps
4,848,693Accrued management fee
254,691Other accrued expenses and payables
407,773Total liabilities
69,116,406Net assets, at value
$    703,196,382Net Assets Consist ofUndistributed net investment income
771,663Net unrealized appreciation (depreciation) on:Investments
3,257,866Interest rate swaps
(4,206,648)Accumulated net realized gain (loss)
(818,238)Paid-in capital
704,191,739Net assets, at value
$    703,196,382 The accompanying notes are an integral part of the financial statements. Statement of Assets and Liabilitiesas of February 28, 2009 (Unaudited) (continued)Net Asset ValueClass A
Net Asset Value and redemption price(a) per share
($439,823,677 ÷ 64,154,882 outstanding shares of beneficial interest, no
par value, unlimited number of shares authorized)
$    6.86Maximum offering price per share (100 ÷ 95.50 of $6.86)
$    7.18Class B
Net Asset Value, offering and redemption price(a) (subject to contingent
deferred sales charge) per share ($1,648,187 ÷ 239,965 outstanding shares
of beneficial interest, no par value, unlimited number of shares authorized)
$    6.87Class C
Net Asset Value, offering and redemption price(a) (subject to contingent
deferred sales charge) per share ($11,923,422 ÷ 1,750,298 outstanding
shares of beneficial interest, no par value, unlimited number of shares
authorized)
$    6.81Class S
Net Asset Value, offering and redemption price(a)per share
($249,801,096 ÷ 36,501,463 outstanding shares of beneficial interest, no
par value, unlimited number of shares authorized)
$    6.84 (a) Redemption price per share for shares held less than 15 days is equal to net asset value
less a 2% redemption fee.  The accompanying notes are an integral part of the financial statements. Statement of Operationsfor the six months ended February 28, 2009 (Unaudited)Investment IncomeIncome:Interest
$       20,281,619Expenses:Management fee
1,514,147Administration fee
351,656Distribution and service fees
522,859Services to shareholders
240,453Custodian fee
12,535Professional fees
48,444Trustees' fees and expenses
17,172Reports to shareholders
25,434Registration fees
32,079Interest expense and fees on floating rate notes
872,049Other
35,295Total expenses before expense reductions
3,672,123Expense reductions
(46,178)Total expenses after expense reductions
3,625,945Net investment income (loss)
16,655,674Realized and Unrealized Gain (Loss)Net realized gain (loss) from:Investments
3,322,917Interest rate swaps
(2,974,103)348,814Change in net unrealized appreciation (depreciation) on:Investments
(29,699,161)Interest rate swaps
(2,906,717)(32,605,878)Net gain (loss)
(32,257,064)Net increase (decrease) in net assets resulting from operations
$    (15,601,390) The accompanying notes are an integral part of the financial statements. Statement of Cash Flowsfor the six months ended February 28, 2009 (Unaudited)Increase (Decrease) in Cash:
Cash Flows from Operating ActivitiesNet increase (decrease) in net assets resulting from operations
$       (15,601,390)Adjustments to reconcile net increase (decrease) in net assets from
operations to net cash provided by operating activities:Purchases of long-term investments
(353,360,314)Net amortization/accretion of premium (discount)
(2,562,794)Proceeds from sales and maturities of long-term investments
439,218,434(Increase) decrease in interest receivable
1,057,390(Increase) decrease in other assets
(10,011)(Increase) decrease in receivable for investments sold
(2,787,621)Increase (decrease) in other accrued expenses and payables
(108,851)Change in net unrealized (appreciation) depreciation on investments
29,699,161Change in net unrealized (appreciation) depreciation on  interest rate
swaps
2,906,717Net realized (gain) loss from investments
(3,322,917)Cash provided (used) by operating activities
95,127,804Cash Flows from Financing ActivitiesDistributions paid (net of reinvestment of distributions)
(9,389,763)Increase (decrease) in payable for floating rate notes issued
(55,712,320)Proceeds from shares sold
105,365,582Cost of shares redeemed
(135,239,135)Cash provided (used) for financing activities
(94,975,636)Increase (decrease) in cash
152,168Cash at beginning of period
318,230Cash at end of period
$    470,398Supplemental Disclosure of Non-Cash Financing Activities:Reinvestment of distributions
$       16,985,571Interest paid on notes
$       (872,049) The accompanying notes are an integral part of the financial statements. Statement of Changes in Net AssetsIncrease (Decrease) in Net Assets
Six Months
Ended
February 28,
2009
(Unaudited)
Year Ended
August 31, 2008Operations:Net investment income
$       16,655,674
$       35,818,880Net realized gain (loss)
348,814
8,775,258Change in net unrealized appreciation (depreciation)
(32,605,878)
(20,080,296)Net increase (decrease) in net assets resulting from
operations
(15,601,390)
24,513,842Distributions to shareholders from:Net investment income:Class A
(10,160,161)
(24,850,660)Class B
(38,047)
(153,704)Class C
(209,010)
(354,691)Class S
(5,993,728)
(10,251,791)Net realized gains:Class A
(6,100,550)
(1,669,020)Class B
(25,353)
(13,351)Class C
(157,722)
(25,483)Class S
(3,646,311)
(639,092)Total distributions
(26,330,882)
(37,957,792)Fund share transactions:Proceeds from shares sold
107,632,782
90,052,171Reinvestment of distributions
16,985,571
22,172,132Cost of shares redeemed
(135,648,725)
(202,483,380)Redemption fees

10,954Net increase (decrease) in net assets from Fund share
transactions
(11,030,372)
(90,248,123)Increase (decrease) in net assets
(52,962,644)
(103,692,073)Net assets at beginning of period
756,159,026
859,851,099Net assets at end of period (including undistributed
net investment income of $771,663 and $516,935,
respectively)
$    703,196,382
$    756,159,026 The accompanying notes are an integral part of the financial statements. Financial Highlights Class A
Years Ended August 31,
2009a
2008
2007
2006
2005
2004Selected Per Share DataNet asset value, beginning
of period
$    7.24
$    7.35
$    7.53
$    7.61
$    7.57
$    7.42Income (loss) from investment
operations:
Net investment incomeb
.16
.31
.31
.32
.33
.33Net realized and unrealized gain
(loss)
(.30)
(.09)
(.18)
(.08)
.04
.15Total from investment
operations
(.14)
.22
.13
.24
.37
.48Less distributions from:
Net investment income
(.15)
(.31)
(.31)
(.32)
(.33)
(.33)Net realized gains
(.09)
(.02)
(.00)***


Total distributions
(.24)
(.33)
(.31)
(.32)
(.33)
(.33)Redemption fees

.00***
.00***
.00***
.00***
Net asset value, end of period
$    6.86
$    7.24
$    7.35
$    7.53
$    7.61
$    7.57Total Return (%)c
(1.67)**
3.09d
1.71
3.27
5.01
6.59Ratios to Average Net Assets and Supplemental DataNet assets, end of period
($ millions)
440
498
612
613
617
652Ratio of expenses before expense
reductions (including interest
expense) (%)e
1.10*
1.35
1.31
1.32
1.10
.94Ratio of expenses after expense
reductions (including interest
expense) (%)e
1.10*
1.34
1.31
1.32
1.10
.94Ratio of expenses after expense
reductions (excluding interest
expense) (%)
.85*
.85
.83
.83
.83
.81Ratio of net investment
income (%)
4.67*
4.29
4.14
4.30
4.34
4.42Portfolio turnover rate (%)
45**
56
37
32
23
25aFor the six months ended February 28, 2009 (Unaudited).bBased on average shares outstanding during the period.cTotal return does not reflect the effect of any sales charges.dTotal return would have been lower had certain expenses not been reduced.eInterest 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 August 31,
2009a
2008
2007
2006
2005
2004Selected Per Share DataNet asset value, beginning
of period
$    7.25
$    7.37
$    7.54
$    7.62
$    7.58
$    7.43Income (loss) from investment
operations:
Net investment incomeb
.13
.26
.26
.27
.28
.28Net realized and unrealized gain
(loss)
(.29)
(.10)
(.18)
(.08)
.04
.15Total from investment
operations
(.16)
.16
.08
.19
.32
.43Less distributions from:
Net investment income
(.13)
(.26)
(.25)
(.27)
(.28)
(.28)Net realized gains
(.09)
(.02)
(.00)***


Total distributions
(.22)
(.28)
(.25)
(.27)
(.28)
(.28)Redemption fees

.00***
.00***
.00***
.00***
Net asset value, end of period
$    6.87
$    7.25
$    7.37
$    7.54
$    7.62
$    7.58Total Return (%)c,d
(2.04)**
2.14
1.10
2.57
4.17
5.94Ratios to Average Net Assets and Supplemental DataNet assets, end of period
($ millions)
2
3
5
8
10
16Ratio of expenses before expense
reductions (including interest
expense) (%)e
1.93*
2.15
2.11
2.20
1.96
1.76Ratio of expenses after expense
reductions (including interest
expense) (%)e
1.87*
2.12
2.04
2.00
1.78
1.65Ratio of expenses after expense
reductions (excluding interest
expense) (%)
1.62*
1.63
1.57
1.51
1.51
1.52Ratio of net investment
income (%)
3.90*
3.51
3.40
3.61
3.66
3.71Portfolio turnover rate (%)
45**
56
37
32
23
25aFor the six months ended February 28, 2009 (Unaudited).bBased on average shares outstanding during the period.cTotal return does not reflect the effect of any sales charges.dTotal return would have been lower had certain expenses not been reduced.eInterest 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 August 31,
2009a
2008
2007
2006
2005
2004Selected Per Share DataNet asset value, beginning
of period
$    7.19
$    7.31
$    7.48
$    7.56
$    7.52
$    7.37Income (loss) from investment
operations:
Net investment incomeb
.13
.26
.26
.26
.27
.28Net realized and unrealized gain
(loss)
(.29)
(.11)
(.18)
(.08)
.04
.14Total from investment
operations
(.16)
.15
.08
.18
.31
.42Less distributions from:
Net investment income
(.13)
(.25)
(.25)
(.26)
(.27)
(.27)Net realized gain
(.09)
(.02)
(.00)***


Total distributions
(.22)
(.27)
(.25)
(.26)
(.27)
(.27)Redemption fees

.00***
.00***
.00***
.00***
Net asset value, end of period
$    6.81
$    7.19
$    7.31
$    7.48
$    7.56
$    7.52Total Return (%)c,d
(2.07)**
2.15
1.05
2.52
4.26
5.82Ratios to Average Net Assets and Supplemental DataNet assets, end of period
($ millions)
12
11
9
9
9
8Ratio of expenses before expense
reductions (including interest
expense) (%)e
1.88*
2.13
2.09
2.12
1.91
1.73Ratio of expenses after expense
reductions (including interest
expense) (%)e
1.87*
2.12
2.09
2.04
1.82
1.69Ratio of expenses after expense
reductions (excluding interest
expense) (%)
1.62*
1.63
1.61
1.55
1.55
1.56Ratio of net investment
income (%)
3.90*
3.51
3.35
3.57
3.62
3.67Portfolio turnover rate (%)
45**
56
37
32
23
25aFor the six months ended February 28, 2009 (Unaudited).bBased on average shares outstanding during the period.cTotal return does not reflect the effect of any sales charges.dTotal return would have been lower had certain expenses not been reduced.eInterest 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 August 31,
2009a
2008
2007
2006
2005
2004Selected Per Share DataNet asset value, beginning
of period
$    7.22
$    7.34
$    7.52
$    7.59
$    7.56
$    7.42Income (loss) from investment
operations:
Net investment incomeb
.16
.33
.33
.33
.34
.35Net realized and unrealized gain
(loss)
(.29)
(.10)
(.19)
(.06)
.04
.15Total from investment
operations
(.13)
.23
.14
.27
.38
.50Less distributions from:
Net investment income
(.16)
(.33)
(.32)
(.34)
(.35)
(.36)Net realized gains
(.09)
(.02)
(.00)***


Total distributions
(.25)
(.35)
(.32)
(.34)
(.35)
(.36)Redemption fees

.00***
.00***
.00***
.00***
Net asset value, end of period
$    6.84
$    7.22
$    7.34
$    7.52
$    7.59
$    7.56Total Return (%)
(1.57)c**
3.17c
1.92
3.63
5.10
6.81Ratios to Average Net Assets and Supplemental DataNet assets, end of period
($ millions)
250
244
233
251
272
281Ratio of expenses before expense
reductions (including interest
expense) (%)d
.91*
1.15
1.10
1.10
.89
.74Ratio of expenses after expense
reductions (including interest
expense) (%)d
.87*
1.12
1.10
1.10
.89
.74Ratio of expenses after expense
reductions (excluding interest
expense) (%)
.62*
.63
.62
.61
.62
.61Ratio of net investment income
(loss) (%)
4.90*
4.51
4.35
4.51
4.55
4.62Portfolio turnover rate (%)
45**
56
37
32
23
25aFor the six months ended February 28, 2009 (Unaudited).bBased on average shares outstanding during the period.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. Notes to Financial Statements(Unaudited) A. Significant Accounting Policies DWS California Tax-Free Income Fund (the "Fund") is a non-diversified series
of DWS State Tax-Free Income Series (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 without an initial sales
charge but are subject to higher ongoing expenses than Class A shares and
a contingent deferred sales charge payable upon certain redemptions. Class
B shares automatically convert to Class A shares six years after issuance.
Class C shares are offered to investors without an initial sales charge but are
subject to higher ongoing expenses than Class A shares and a contingent
deferred sales charge payable upon certain redemptions within one year of
purchase. Class C shares do not automatically convert into another class.
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. If the pricing services
are unable to provide valuations, the securities are valued at the mean of the
most recent bid and ask quotation or evaluated price, as applicable, obtained
from one or more broker dealers. Such services may use various pricing
techniques which take into account appropriate factors such as yield, quality,
coupon rate, maturity, type of issue, trading characteristics and other data,
as well as broker quotes. Money market instruments purchased with an original or remaining maturity
of sixty days or less, maturing at par, are valued at amortized cost. Securities and other assets for which market quotations are not readily
available or for which the above valuation procedures are deemed not to
reflect fair value are valued in a manner that is intended to reflect their fair
value as determined in accordance with procedures approved by the
Trustees. The Fund adopted Financial Accounting Standards Board ("FASB")
Statement of Financial Accounting Standards No. 157, "Fair Value
Measurements," effective at the beginning of the Fund's fiscal year.
Disclosure about the classification of fair value measurements is included at
the end of the Fund's Investment Portfolio. New Accounting Pronouncement. In 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. 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 the 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. 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 February 28, 2009 was approximately
$73,032,000, with a weighted average interest rate of 2.39%. 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 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. 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 or fixed income market changes and for duration management,
risk management or 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. Federal Income Taxes. The Fund's policy is to comply with the requirements
of the Internal Revenue Code, as amended, which are applicable to
regulated investment companies, and to distribute all of its taxable and
tax-exempt income to its shareholders. The Fund has reviewed the tax positions for the open tax years as of August
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 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
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 the 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 is 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
February 28, 2009. Previously, the Fund has utilized the direct method for
presentation of its Statement of Cash Flows. The Fund has changed its
presentation to the indirect method, which it believes provides a useful
format and conforms to more common industry practice. B. Purchases and Sales of Securities During the six months ended February 28, 2009, purchases and sales of
investment securities (excluding short-term investments) aggregated
$353,360,314 and $439,218,434, respectively. C. Related Parties Management Agreement. Under the Investment Management Agreement
with Deutsche Investment Management Americas Inc. ("DIMA" or the
"Advisor"), an indirect, wholly owned subsidiary of Deutsche Bank AG, the
Advisor directs the investments of the Fund in accordance with its
investment objectives, policies and restrictions. The Advisor determines the
securities, instruments and other contracts relating to investments to be
purchased, sold or entered into by the Fund. In addition to portfolio
management services, the Advisor provides certain administrative services
in accordance with the Investment Management Agreement. Under the Investment Management Agreement, the Fund pays a monthly
management fee, computed and accrued daily and payable monthly at the
following annual rates: First $250 million of the Fund's average daily net assets
.45%Next $750 million of such net assets
.42%Next $1.5 billion of such net assets
.40%Next $2.5 billion of such net assets
.38%Next $2.5 billion of such net assets
.35%Next $2.5 billion of such net assets
.33%Next $2.5 billion of such net assets
.31%Over $12.5 billion of such net assets
.30% Accordingly, for the six months ended February 28, 2009, the fee pursuant
to the Investment Management Agreement was equivalent to an annualized
effective rate of 0.43% of the Fund's average daily net assets. For the period from September 1, 2008 through September 30, 2008, 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
certain classes as follows: Class B
1.63%Class S
.63% 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 the Fund of
certain classes as follows: Class B
1.62%Class C
1.62%Class S
.62% For the six months ended February 28, 2009, the Advisor agreed to
reimburse the Fund $11,476 of sub-recordkeeping expenses for Class S
shares. Administration Fee. Pursuant to an Administrative Services Agreement,
DIMA provides most administrative services to the Fund. For all services
provided under the Administrative Services Agreement, the Fund pays the
Advisor an annual fee ("Administration Fee") of 0.10% of the Fund's average
daily net assets, computed and accrued daily and payable monthly. For the
six months ended February 28, 2009, the Advisor received an Administration
Fee of $351,656, of which $54,312 is unpaid. Service Provider Fees. DWS Investments Service Company ("DISC"), an
affiliate of the Advisor, is the transfer agent, dividend-paying agent and
shareholder service agent of the Fund. Pursuant to a sub-transfer agency
agreement between DISC and DST Systems, Inc. ("DST"), DISC has
delegated certain transfer agent, dividend-paying agent and shareholder
service agent functions to DST. DISC compensates DST out of the
shareholder servicing fee it receives from the Fund. For the six months
ended February 28, 2009, the amounts charged to the Fund by DISC were
as follows: Services to Shareholders
Total
Aggregated
Waived
Unpaid at
February 28,
2009Class A
$       58,594
$       
$       25,991Class B
693
613
80Class C
1,138
349
163Class S
32,703
32,703
$    93,128
$    33,665
$    26,234 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, respectively. For the six months ended February 28,
2009, the Distribution Fee was as follows: Distribution Fee
Total
Aggregated
Unpaid at
February 28,
2009Class B
$       7,557
$       1,121Class C
40,813
6,351$    48,370
$    7,472 In addition, DIDI provides information and administrative services for a fee
("Service Fee") to Class A, B and C shareholders at an annual rate of up to
0.25% of average daily net assets for each such class. DIDI in turn has
various agreements with financial services firms that provide these services
and pays these fees based upon the assets of shareholder accounts the
firms service. For the six months ended February 28, 2009, the Service Fee
was as follows: Service Fee
Total
Aggregated
Unpaid at
February 28,
2009
Annualized
Effective RateClass A
$       458,389
$       106,924
.21%Class B
2,441
399
.24%Class C
13,659
205
.25%$    474,489
$    107,528 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
February 28, 2009 aggregated $10,201. 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 February 28, 2009, the CDSC for Class B and C shares
aggregated $2,912 and $1,900, respectively. A deferred sales charge of up
to 0.85% is assessed on certain redemptions of 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 February 28, 2009, the
amount charged to the Fund by DIMA included in the Statement of
Operations under "reports to shareholders" aggregated $11,988, all of
which is unpaid. Trustees' Fees and Expenses. The Fund paid each Trustee not affiliated with
the Advisor retainer fees plus specific amounts for various committee
services and for the Board Chairperson and Vice Chairperson. D. Fee Reductions In addition, the Fund has entered into an arrangement with its custodian and
transfer agent whereby credits realized as a result of uninvested cash
balances are used to reduce a portion of the Fund's custodian expenses.
During the six months ended February 28, 2009, the Fund's custodian fee
was reduced by $457 and $580, respectively, for custody and transfer agent
credits earned. E. 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. F. Share Transactions The following table summarizes share and dollar activity in the Fund: Six Months Ended
February 28, 2009
Year Ended
August 31, 2008Shares
Dollars
Shares
DollarsShares soldClass A
2,123,388
$       14,442,713
6,859,296
$       50,146,486Class B
13,240
91,611
43,959
321,675Class C
485,415
3,267,813
439,832
3,206,101Class S
13,342,941
89,830,645
5,038,293
36,377,909$    107,632,782

$    90,052,171Shares issued to shareholders in reinvestment of distributionsClass A
1,689,642
$       11,295,637
2,009,907
$       14,723,822Class B
5,957
39,908
13,753
101,089Class C
34,009
225,475
32,568
236,953Class S
812,761
5,424,551
972,446
7,110,268$    16,985,571

$    22,172,132Shares redeemedClass A
(8,479,012)
$       (56,837,660)
(23,321,269)
$       (169,485,541)Class B
(179,891)
(1,226,378)
(378,871)
(2,773,184)Class C
(340,152)
(2,191,120)
(156,712)
(1,138,710)Class S
(11,438,701)
(75,393,567)
(3,973,698)
(29,085,945)$    (135,648,725)

$    (202,483,380)Redemption fees

$    

$    10,954Net increase (decrease)Class A
(4,665,982)
$       (31,099,310)
(14,452,066)
$       (104,608,724)Class B
(160,694)
(1,094,859)
(321,159)
(2,350,420)Class C
179,272
1,302,168
315,688
2,304,344Class S
2,717,001
19,861,629
2,037,041
14,406,677$    (11,030,372)

$    (90,248,123) 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 Independent Trustees regularly meet privately with their
independent counsel (and, as needed, other advisors) to discuss contract
review and other matters. In addition, the Independent Trustees were
also advised by the Fund's independent fee consultant in the course of
their review of the Fund's contractual arrangements and considered a
comprehensive report prepared by the independent fee consultant in
connection with their deliberations (the "IFC Report"). •   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 2008. 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, 2nd 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 each of
the one-, 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 (3rd 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. ctf_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. ctf_sigmack0Thomas H. Mack Account Management Resources For More
Information
The automated telephone system allows you to access personalized
account information and obtain information on other DWS funds using
either your voice or your telephone keypad. Certain account types
within Classes A, B, C and S also have the ability to purchase,
exchange or redeem shares using this system.For more information, contact your financial advisor. You may
also access our automated telephone system or speak with a
DWS Investments representative by calling the appropriate
number below:For shareholders of Classes A, B and C:
(800) 621-1048For shareholders of Class S:
(800) 728-3337Web Site
www.dws-investments.com
View your account transactions and balances, trade shares, monitor
your asset allocation, and change your address, 24 hours a day.Obtain prospectuses and applications,blank forms, interactive
worksheets, news about DWS funds, subscription to fund updates by
e-mail, retirement planning information, and more.Written
Correspondence
DWS Investments
PO Box 219151
Kansas City, MO 64121-9151Proxy Voting
The fund's policies and procedures for voting proxies for portfolio
securities and information about how the fund voted proxies related to
its portfolio securities during the 12-month period endedJune 30are
available on our Web site  www.dws-investments.com (click on
"proxy voting"at the bottom of the page)  or on the SEC's Web site
 www.sec.gov. To obtain a written copy of the fund's policies and
procedures without charge, upon request, call us toll free at (800)
621-1048.Principal
Underwriter
If you have questions, comments or complaints, contact:DWS Investments Distributors, Inc.
222 South Riverside Plaza
Chicago, IL 60606-5808(800) 621-1148 Class A
Class B
Class C
Class SNasdaq Symbol
KCTAX
KCTBX
KCTCX
SDCSXCUSIP Number
23337H 108
23337H 207
23337H 306
23337H 405Fund Number
9
209
309
2409 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 ctf_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 California Tax-Free Income Fund, a series of DWS State Tax-Free Income Series
  By:
        /s/Michael G. Clark
 Michael G. Clark
 President  Date:
        April 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 California Tax-Free Income Fund, a series of DWS State Tax-Free Income Series
  By:
        /s/Michael G. Clark
 Michael G. Clark
 President  Date:
        April 28, 2009
   By:
        /s/Paul Schubert
 Paul Schubert
 Chief Financial Officer and Treasurer  Date:                                        April 28, 2009