UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM N-CSR
Investment Company Act file number | 811-04760 |
DWS Advisor Funds
(Exact Name of Registrant as Specified in Charter)
One South Street
Baltimore, MD 21202
(Address of principal executive offices) (Zip code)
Registrant’s Telephone Number, including Area Code: (212) 454-7190
Paul Schubert
345 Park Avenue
New York, NY 10154
(Name and Address of Agent for Service)
Date of fiscal year end: | 12/31 |
Date of reporting period: | 12/31/07 |
ITEM 1. REPORT TO STOCKHOLDERS
NY Tax Free Money Fund
Investment Class
Tax Free Money Fund Investment
Annual Report to
Shareholders
December 31, 2007
Contents
click here Portfolio Management Review
click here Information About Each Fund's Expenses
NY Tax Free Money Fund
click here Portfolio Summary
click here Investment Portfolio
click here Financial Statements
click here Financial Highlights
Tax Free Money Fund Investment
click here Portfolio Summary
click here Investment Portfolio
click here Financial Statements
click here Financial Highlights
click here Notes to Financial Statements
click here Report of Independent Registered Public Accounting Firm
click here Tax Information
click here Investment Management Agreement Approval
click here Summary of Management Fee Evaluation by Independent Fee Consultant
click here Trustees and Officers
click here Account Management Resources
This report must be preceded or accompanied by a prospectus. We advise you to consider the funds' objectives, risks, charges and expenses carefully before investing. The prospectus contains this and other important information about the funds. Please read the prospectus carefully before you invest.
An investment in these funds is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the funds seek to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the funds. Please read each fund's prospectus for specific details regarding its risk profile.
DWS Scudder is part of Deutsche Asset Management, which is the marketing name in the US for the asset management activities of Deutsche Bank AG, Deutsche Investment Management Americas Inc., Deutsche Bank Trust Company Americas and DWS Trust Company.
NOT FDIC/NCUA INSURED NO BANK GUARANTEE MAY LOSE VALUE NOT A DEPOSIT NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY
Tax Free Funds: A Team Approach to Investing
Deutsche Investment Management Americas Inc. (``DIMA'' or the ``Advisor''), which is part of Deutsche Asset Management, is the investment advisor for NY Tax Free Money Fund and Tax Free Money Fund Investment, each a series of DWS Advisor Funds (the ``Trust''). DIMA and its predecessors have more than 80 years of experience managing mutual funds, and DIMA provides a full range of investment advisory services to institutional and retail clients.
Deutsche Asset Management is a global asset management organization that offers a wide range of investing expertise and resources. This well-resourced global investment platform brings together a wide variety of experience and investment insight across industries, regions, asset classes and investing styles.
DIMA is an indirect, wholly owned subsidiary of Deutsche Bank AG. Deutsche Bank AG is a major global banking institution that is engaged in a wide range of financial services, including investment management, mutual funds, retail, private and commercial banking, investment banking and insurance.
A group of investment professionals is responsible for the day-to-day management of each fund.
In the following interview, Lead Portfolio Manager Sonelius Kendrick-Smith discusses the market environment and the portfolio management team's approach to managing the funds during the most recent 12-month period.
The views expressed in the following discussion reflect those of the portfolio managers only through the end of the period of the report as stated on the cover. The management team's views are subject to change at any time based on market and other conditions and should not be construed as a recommendation. Past performance is no guarantee of future results.
Q: Will you discuss the market environment for the funds during the most recent fiscal year?
A: In the first quarter of 2007, increasing defaults by subprime mortgage borrowers and losses on residential mortgage-backed securities sparked volatility in the financial markets as investors wondered to what degree Wall Street and the banking community would be hurt by a retrenchment in this market. As we entered the second half of the year, it became clear that several financial firms would need to shed excess debt and sell assets in order to cover significant losses. For much of August, buyers in the credit markets almost disappeared, replaced entirely by sellers. In the short end of the yield curve, asset-backed securities' yields spiked significantly, reflecting investors' credit concerns, as did the London Interbank Offered Rate (LIBOR), the industry standard for measuring one-year money market rates.1,2,3 In response to this "credit crunch," as well as to fears of an oncoming economic recession, the US Federal Reserve Board (the Fed) cut the federal funds rate — the overnight rate charged by banks when they borrow from each other — a total of one percentage point over three Federal Open Market Committee (FOMC) meetings from September, 2007, through December, 2007. As a means of injecting further liquidity into the global monetary system — as well as to persuade major banks to resume their accustomed levels of interbank lending — the Fed also set up a temporary "term auction facility."4 By the end of the year, these measures seemed to restore a more typical flow of funds and extension of credit, and LIBOR receded to a more customary interest rate "spread" (or difference in yield) compared with the federal funds rate.
1 The yield curve is a graph with a left to right line that shows how high or low yields are, from the shortest to the longest maturities. Typically the line rises from left to right as investors who are willing to tie up their money for a longer period of time are rewarded with higher yields.2 Asset-backed securities — bonds or notes collateralized by a specified cash flow of assets such as from home loan payments, credit card receivables or student loan payments.
3 The LIBOR, or the London Interbank Offered Rate, is the most widely used benchmark, or reference rate, for short-term interest rates. LIBOR is the rate of interest at which banks borrow funds from other banks, in large volume, in the international market.
4 Term auction facility (TAF) — a special lending operation that lets banks access funds through the Fed without having to borrow directly at the higher discount rate; in turn, the TAF has enabled the Fed. in coordination with other major central banks, to inject needed cash into the financial system and help relieve the global credit crunch that has strained financial markets and the economy.
5 Monoline insurance companies — insure billions of dollars in tax-exempt securities up to a AAA rating by guaranteeing the timely repayment of bond principal and interest. These insurers are referred to as "monoline" because other types of insurers, such as property/casualty and life insurance companies, are barred from offering this type of financial guarantee insurance.
An issue that plagued the tax-free investment markets specifically was that of the so-called "monoline" insurance companies that insure municipal instruments.5 In the fall of 2007, the AAA rating for a number of municipal insurers came under pressure when it came to light that during the course of the year several of these insurance companies had incurred significant losses on insurance for complex structured-mortgage securities, such as collateralized debt obligations. One very important consequence of a credit downgrade on a monoline insurer would be the effective credit downgrade of all the securities it insures. As of the end of the year, several monoline insurers were working to markedly expand their capital base in order to avoid a credit downgrade from the major ratings agencies.
As of December 31, 2007, the one-year LIBOR stood at 4.22%, compared with 5.73% on September 7, 2007 (during the height of the global credit crunch) and 5.33% on December 31, 2006.
Performance is historical and does not guarantee future results. Current performance may be lower or higher than the performance data quoted.
7-Day Current Yield — NY Tax Free Money Fund — Investment Class | |
December 31, 2007 | 2.68%* |
December 31, 2006 | 3.10%* |
7-Day Current Yield — Tax Free Money Fund Investment | |
December 31, 2007 | 2.74%** |
December 31, 2006 | 3.13%** |
Yields are historical, will fluctuate and do not guarantee future performance. The 7-day current yield refers to the income paid by the portfolio over a 7-day period expressed as an annual percentage rate of the fund's shares outstanding. Please call the Service Center at (800) 730-1313 for the product's most recent month-end performance.
Q: What has been the strategy for the funds?
A: In searching for possible investments, we continued to focus on the highest-quality securities while seeking competitive yields across the municipal investment spectrum. During a difficult period for the credit markets, we sought to balance higher yield with top quality by maintaining a strong position in floating-rate securities as we took advantage of comparatively higher floating-rate interest coupons. The interest rate of floating-rate securities adjusts periodically based on indices such as the Securities Industry and Financial Market Association Index of Variable Rate Demand Notes.6 Because the interest rates of these instruments adjust as market conditions change, they provide flexibility in an uncertain interest rate environment. Within the funds' floating-rate positions, we maintained a core allocation in municipal trust receipts (MTRs).7 MTRs, which are financing vehicles for longer-term bonds, offer slightly higher yields than conventional variable rate instruments.
6 The Securities Industry and Financial Market Association Index of Variable Rate Demand Notes is a weekly high-grade market index consisting of seven-day, tax-exempt, variable-rate demand notes produced by Municipal Market Data Group. Actual issues are selected from Municipal Market Data's database of more than 10,000 active issues.7 Municipal trust receipts (MTRs) are typically structured by a bank, broker-dealer or other financial institution by depositing municipal securities into a trust or partnership coupled with a conditional right to sell, or put, the holder's interest in the underlying securities at par plus accrued interest to a financial institution. These trusts are structured so that the purchaser of the MTR is considered to be investing in the underlying municipal securities. The structure is intended to allow the tax-exempt status of interest generated by the underlying asset to pass through to the purchaser.
In addition, we took a cautious approach in extending maturity. In part, this was because of the problems within the monoline insurance industry. Our policy was to look beyond insured AAA ratings, examine the underlying creditworthiness of each issue closely, and choose what we consider to be safe and highly liquid securities. Our cautious approach cost the fund some additional yield but we felt that the turbulent conditions in the investment markets made these measures necessary.
In terms of issuers, we focused on essential services securities in the areas of transportation and education as well as selected hospitals. We avoided rural and community network hospitals, as it is difficult to obtain up-to-date financial reporting for these issuers.
Regarding New York's finances, we believe that the state's fiscal health is solid, despite the recent turbulence in the financial markets (on which New York City's budget has long been dependent). The lack of large 2007 bonuses for Wall Street employees (actually paid in early 2008, and an important yearly stimulus for the New York City economy) has so far been balanced by a heavy influx of foreign tourism as travelers take advantage of the weak US dollar.
Q: Will you describe your investment philosophy?
A: We continue to insist on the highest credit quality within the funds. We also plan to maintain conservative investment strategies and standards. We continue to apply a careful approach to investing on behalf of the funds and to seek competitive tax-free yield for our shareholders.
Information About Each Fund's Expenses
As an investor, you incur two types of costs: ongoing expenses and transaction costs. Ongoing expenses include management fees and other Fund expenses. Examples of transaction costs include 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 each 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, each Fund limited these expenses; had it not done so, expenses would have been higher. The example in the table is based on an investment of $1,000 invested at the beginning of the period and held for the entire six-month period (July 1, 2007 to December 31, 2007).
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. If these transaction costs had been included, your costs would have been higher.
NY Tax Free Money Fund
Expenses and Value of a $1,000 Investment for the six months ended December 31, 2007 | |
Actual Fund Return | Investment Class |
Beginning Account Value 7/1/07 | $ 1,000.00 |
Ending Account Value 12/31/07 | $ 1,014.50 |
Expenses Paid per $1,000* | $ 3.81 |
Hypothetical 5% Fund Return | Investment Class |
Beginning Account Value 7/1/07 | $ 1,000.00 |
Ending Account Value 12/31/07 | $ 1,021.42 |
Expenses Paid per $1,000* | $ 3.82 |
Annualized Expense Ratio | Investment Class |
NY Tax Free Money Fund | .75% |
For more information, please refer to the Fund's prospectus.
Tax Free Money Fund Investment
Expenses and Value of a $1,000 Investment for the six months ended December 31, 2007 |
|
Actual Fund Return |
|
Beginning Account Value 7/1/07 | $ 1,000.00 |
Ending Account Value 12/31/07 | $ 1,014.70 |
Expenses Paid per $1,000* | $ 3.81 |
Hypothetical 5% Fund Return |
|
Beginning Account Value 7/1/07 | $ 1,000.00 |
Ending Account Value 12/31/07 | $ 1,021.42 |
Expenses Paid per $1,000* | $ 3.82 |
Annualized Expense Ratio |
|
Tax Free Money Fund Investment | .75% |
For more information, please refer to the Fund's prospectus.
NY Tax Free Money Fund
Asset Allocation (As a % of Investment Portfolio) | 12/31/07 | 12/31/06 |
|
|
|
Municipal Investments Municipal Variable Rate Demand Notes | 87% | 72% |
Municipal Bonds and Notes | 13% | 28% |
| 100% | 100% |
Weighted Average Maturity |
|
|
|
|
|
NY Tax Free Money Fund | 19 days | 28 days |
iMoneyNet State Specific Retail Money Funds Average* | 28 days | 27 days |
For more complete details about the Portfolio's holdings, see page 13. A quarterly Fact Sheet is available upon request. Information concerning portfolio holdings of the Funds as of month end will be posted to www.dws-scudder.com after the 14th day following month end. In addition, the Funds' top ten holdings and other information about the Funds is posted on www.dws-scudder.com as of the calendar quarter-end on or after the 14th day following quarter-end. Please see the Account Management Resources section for more contact information.
Following the Funds' 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 Portfolio as of December 31, 2007
NY Tax Free Money Fund
| Principal Amount ($) | Value ($) |
|
| |
Municipal Investments 99.8% | ||
New York 96.5% | ||
Austin, NY, Trust: |
|
|
Series 2007-135, 144A, 3.47%*, 6/15/2030 | 5,165,000 | 5,165,000 |
Series 2007-132, 144A, 3.47%*, 6/15/2030 | 8,000,000 | 8,000,000 |
Broome County, NY, Industrial Development Agency Revenue, Parlor City Paper Box Co., AMT, 3.5%*, 10/1/2016, NBT Bank NA (a) | 710,000 | 710,000 |
Erie County, NY, Industrial Development Agency, Civic Facility Revenue, Suburban Adult Services, Inc., 3.48%*, 6/1/2022, KeyBank NA (a) | 3,340,000 | 3,340,000 |
Guilderland, NY, Industrial Development Agency, Civic Facility Revenue, Multi-Mode-Wildwood Project, Series A, 3.48%*, 7/1/2032, KeyBank NA (a) | 5,200,000 | 5,200,000 |
Hempstead, NY, Industrial Development Agency Revenue, Series 92-G, 144A, AMT, 3.49%*, 10/1/2045 | 3,000,000 | 3,000,000 |
Nassau County, NY, Industrial Development Agency Revenue, Series 75-G, 144A, AMT, 3.5%*, 12/1/2033 | 2,000,000 | 2,000,000 |
Nassau County, NY, Industrial Development Agency Revenue, Continuing Care Retirement, Amsterdam at Harborside, Series C, 3.75%*, 1/1/2028, LaSalle Bank NA (a) | 3,550,000 | 3,550,000 |
New Rochelle, NY, City School District, Tax Anticipation Notes, 4.25%, 6/30/2008 | 3,500,000 | 3,509,354 |
New York, General Obligation: |
|
|
Series 1318, 144A, 3.47%*, 6/1/2013 (b) | 1,490,000 | 1,490,000 |
Series 1996, 144A, 3.47%*, 4/1/2014 | 4,000,000 | 4,000,000 |
New York, Hudson Yards Infrastructure Corp. Revenue, Series 1649, 144A, 3.52%*, 8/15/2014 (b) | 1,035,000 | 1,035,000 |
New York, Lehman Municipal Trust Receipts, Various States, Series M2-D, 144A, 3.49%*, 3/15/2037 | 5,000,000 | 5,000,000 |
New York, Metropolitan Transportation Authority Revenue: |
|
|
3.05%, 8/12/2008 | 4,000,000 | 4,000,000 |
3.45%, 1/15/2008 | 2,500,000 | 2,500,000 |
Series R-12047, 3.55%*, 11/15/2030 (b) | 3,680,000 | 3,680,000 |
New York, State Dormitory Authority Revenue, Park Ridge Hospital, Inc., 3.44%*, 7/1/2029, JPMorgan Chase Bank (a) | 3,130,000 | 3,130,000 |
New York, State Dormitory Authority Revenue, Secondary Issues: |
|
|
Series 2381, 144A, 3.47%*, 12/15/2014 | 2,000,000 | 2,000,000 |
Series 1971, 144A, 3.48%*, 7/1/2027 | 5,000,500 | 5,000,500 |
Series R-12121, 3.49%*, 3/15/2031 | 2,100,000 | 2,100,000 |
New York, State Environmental Facilities Corp., Clean Drinking Water, Series D, 4.5%, 3/15/2008 | 2,790,000 | 2,794,377 |
New York, State General Obligation, Series B, 3.7%*, 3/15/2030, Dexia Credit Local France (a) | 3,000,000 | 3,000,000 |
New York, State Housing Finance Agency Revenue, Series A, AMT, 3.42%*, 5/1/2029 | 3,795,000 | 3,795,000 |
New York, State Housing Finance Agency Revenue, 100 Maiden Lane, Series A, 3.6%*, 5/15/2037 | 800,000 | 800,000 |
New York, State Housing Finance Agency Revenue, 316 Eleventh Ave. Housing, Series A, AMT, 3.5%*, 5/15/2041 | 10,000,000 | 10,000,000 |
New York, State Housing Finance Agency Revenue, Helena Housing, Series A, AMT , 3.42%*, 5/15/2036 | 5,200,000 | 5,200,000 |
New York, State Power Authority, Series 2, 3.43%, 1/9/2008 | 6,000,000 | 6,000,000 |
New York, State Thruway Authority, Personal Income Tax Revenue, Series PT-3027, 144A, 3.54%*, 3/15/2025 (b) | 1,995,000 | 1,995,000 |
New York, Tobacco Settlement Financing Corp.: |
|
|
Series R-2033, 144A, 3.5%*, 6/1/2021 (b) | 1,935,000 | 1,935,000 |
Series R-6500, 144A, 3.5%*, 6/1/2021 (b) | 2,605,000 | 2,605,000 |
New York, Triborough Bridge & Tunnel Authority Revenue, Series B-13, 144A, 3.5%*, 11/15/2021 (b) | 2,055,000 | 2,055,000 |
New York City, NY, Housing Development Corp., Multi-Family Rent Housing Revenue, 155 West 21st Street Development, Series A, AMT, 3.5%*, 11/15/2037 | 5,000,000 | 5,000,000 |
New York City, NY, Housing Development Corp., Multi-Family Mortgage Revenue, Boricua Village Apartments, Site A-2, AMT, 3.5%*, 9/1/2042, Citibank NA (a) | 4,000,000 | 4,000,000 |
New York City, NY, Industrial Development Agency Revenue, Empowerment Zone, Tiago, AMT, 3.5%*, 1/1/2037, ING Bank NV (a) | 1,000,000 | 1,000,000 |
New York City, NY, Industrial Development Agency, Civic Facility Revenue, Abraham Joshua Heschel Project, 3.41%*, 4/1/2032, Allied Irish Bank PLC (a) | 1,365,000 | 1,365,000 |
New York City, NY, Industrial Development Agency, Civic Facility Revenue, Allen Stevenson School, 3.45%*, 12/1/2034, Allied Irish Bank PLC (a) | 1,075,000 | 1,075,000 |
New York City, NY, Industrial Development Agency, Civic Facility Revenue, Congregation Lev Bais Yaakov, 3.49%*, 7/1/2037, KeyBank NA (a) | 3,525,000 | 3,525,000 |
New York City, NY, Industrial Development Agency, Civic Facility Revenue, Jewish Board of Family Services, 3.44%*, 7/1/2025, Allied Irish Bank PLC (a) | 4,000,000 | 4,000,000 |
New York City, NY, Municipal Finance Authority, Water & Sewer Systems Revenue, Series 1289, 3.47%*, 12/15/2013 | 965,000 | 965,000 |
New York City, NY, Municipal Finance Authority, Water & Sewer Systems Revenue, 2nd Generation Resolution: |
|
|
Series AA-2, 3.6%*, 6/15/2032 | 1,080,000 | 1,080,000 |
Series AA-3, 3.42%*, 6/15/2032 | 2,400,000 | 2,400,000 |
Series 2008-BB-4, 3.44%*, 6/15/2033 | 6,000,000 | 6,000,000 |
New York City, NY, Transitional Finance Authority Revenue: |
|
|
Series A, 144A, 3.48%*, 11/1/2030 | 1,000,000 | 1,000,000 |
Series A-40, 144A, 3.5%*, 11/1/2026 (b) | 935,000 | 935,000 |
Series 3-E, 3.7%*, 11/1/2022 | 700,000 | 700,000 |
New York City, NY, Trust Cultural Resources Revenue, Series 162, 144A, 3.48%*, 7/1/2029 (b) | 3,035,000 | 3,035,000 |
New York, NY, Series R-11299, 144A, 3.49%*, 2/1/2022 | 4,400,000 | 4,400,000 |
New York, UBS Municipal (CRVS), Various States, Series 2007-42, 144A, 3.46%*, 10/1/2015 | 3,000,000 | 3,000,000 |
Onondaga County, NY, Industrial Development Agency, Civic Facility Revenue, YMCA of Greater Syracuse, Series A, 3.48%*, 11/1/2025, Citizens Bank NA (a) | 2,500,000 | 2,500,000 |
Ontario County, NY, Industrial Development Agency, Civic Facility Revenue, F. Thompson Hospital, Series B, 3.44%*, 7/1/2030, KeyBank of New York (a) | 3,000,000 | 3,000,000 |
Otsego County, NY, Industrial Development Agency, Civic Facility Revenue, Noonan Community Service Corp. Project, Series A, 3.42%*, 3/1/2025, Wilber National Bank (a) | 1,200,000 | 1,200,000 |
Otsego County, NY, Industrial Development Agency, Civic Facility Revenue, Templeton Foundation Project, Series A, 3.48%*, 6/1/2027, KeyBank NA (a) | 3,375,000 | 3,375,000 |
Schoharie County, NY, Industrial Development Agency, Civic Facility Revenue, Bassett Hospital Project, Series A, 3.48%*, 2/1/2021, KeyBank NA (a) | 390,000 | 390,000 |
Seneca County, NY, Industrial Development Agency, Solid Waste Disposal Revenue, Macon Trust, Series W, 144A, AMT, 3.54%*, 10/1/2035 | 3,500,000 | 3,500,000 |
Smithtown, NY, Center School District, Tax Anticipation Notes, 4.0%, 6/27/2008 | 3,000,000 | 3,008,536 |
Suffolk County, NY, Tax Anticipation Notes, 3.5%, 8/14/2008 | 3,000,000 | 3,011,940 |
Tompkins County, NY, Industrial Development Agency Revenue, Civic Facilities, Series A, 3.47%*, 12/1/2021, Citizens Bank NA (a) | 1,105,000 | 1,105,000 |
Tompkins County, NY, Industrial Development Agency Revenue, Civic Facilities, Tomkins Cortland, 3.47%*, 1/1/2037, Citizens Bank NA (a) | 6,805,000 | 6,805,000 |
Ulster County, NY, Industrial Development Agency, Civic Facility Revenue, Kingston Regional, Senior Living, Series C, 3.39%*, 9/15/2037, Sovereign Bank FSB (a) | 1,500,000 | 1,500,000 |
Yates County, NY, Industrial Development Agency, Civic Facility Revenue, Series B, 3.43%*, 9/1/2015, KeyBank NA (a) | 1,835,000 | 1,835,000 |
183,299,707 | ||
Puerto Rico 3.3% | ||
Commonwealth of Puerto Rico, Highway & Transportation Authority Revenue, Series C-63, 144A, 3.48%*, 7/1/2036 (b) | 3,000,000 | 3,000,000 |
Puerto Rico, Public Finance Corp., Series 522-X, 144A, 3.46%*, 8/1/2022 (b) | 3,345,000 | 3,345,000 |
6,345,000 |
| % of Net Assets | Value ($) |
|
| |
Total Investment Portfolio (Cost $189,644,707)+ | 99.8 | 189,644,707 |
Other Assets and Liabilities, Net | 0.2 | 301,360 |
Net Assets | 100.0 | 189,946,067 |
+ The cost for federal income tax purposes was $189,644,707.
(a) Security incorporates a letter of credit from a major bank.
(b) Bond is insured by one of these companies.
Insurance Coverage | As a % of Total Investment Portfolio |
Ambac Financial Group | 4.8 |
Financial Security Assurance, Inc. | 4.5 |
MBIA Corp. | 3.9 |
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.
CRVS: Custodial Residual and Variable Security
The accompanying notes are an integral part of the financial statements.
Statement of Assets and Liabilities as of December 31, 2007 | |
Assets | NY Tax Free Money Fund |
Investments in securities, valued at amortized cost | $ 189,644,707 |
Cash | 28,273 |
Receivable for investments sold | 2,656,495 |
Interest receivable | 953,148 |
Receivable for Fund shares sold | 211,695 |
Other assets | 31,026 |
Total assets | 193,525,344 |
Liabilities | |
Distributions payable | 117,331 |
Payable for Fund shares redeemed | 184,630 |
Payable for investments purchased | 3,011,940 |
Accrued management fee | 19,911 |
Other accrued expenses and payables | 245,465 |
Total liabilities | 3,579,277 |
Net assets, at value | $ 189,946,067 |
Net Assets Consist of | |
Undistributed net investment income | 45,608 |
Paid-in capital | 189,900,459 |
Net assets, at value | $ 189,946,067 |
Net Asset Value | |
Investment Class Net Asset Value, offering and redemption price per share ($78,007,678 ÷ 77,999,375 shares of capital stock outstanding, $.001 par value, unlimited number of shares authorized) | $ 1.00 |
Tax-Exempt New York Money Market Fund Net Asset Value, offering and redemption price per share ($111,938,389 ÷ 111,923,826 shares of capital stock outstanding, $.001 par value, unlimited number of shares authorized) | $ 1.00 |
The accompanying notes are an integral part of the financial statements.
Statement of Operations for the year ended December 31, 2007 | |
Investment Income | NY Tax Free Money Fund |
Income: Interest | $ 4,707,796 |
Expenses: Management fee | 159,349 |
Administration fees | 129,492 |
Services to shareholders | 194,835 |
Custodian fees | 11,250 |
Distribution and service fees | 448,437 |
Professional fees | 55,921 |
Trustees' fees and expenses | 5,565 |
Registration fees | 32,195 |
Other | 32,280 |
Total expenses before expense reductions | 1,069,324 |
Expense reductions | (10,848) |
Total expenses after expense reductions | 1,058,476 |
Net investment income | 3,649,320 |
Net realized gain (loss) | 4,697 |
Net increase (decrease) in net assets resulting from operations | $ 3,654,017 |
The accompanying notes are an integral part of the financial statements.
Statement of Changes in Net Assets — NY Tax Free Money Fund | ||
Increase (Decrease) in Net Assets | Years Ended December 31, | |
2007 | 2006 | |
Operations: Net investment income | $ 3,649,320 | $ 2,200,822 |
Net realized gain (loss) | 4,697 | 3,626 |
Net increase (decrease) in net assets resulting from operations | 3,654,017 | 2,204,448 |
Distributions to shareholders from: Net investment income: Investment Class | (2,159,586) | (2,200,822) |
Tax-Exempt New York Money Market Fund* | (1,489,734) | — |
Total distributions | (3,649,320) | (2,200,822) |
Fund share transactions: Investment Class Proceeds from shares sold | 375,968,056 | 224,192,113 |
Reinvestment of distributions | 813,409 | 552,803 |
Cost of shares redeemed | (353,394,718) | (260,266,744) |
Net increase (decrease) in net assets from Investment Class share transactions | 23,386,747 | (35,521,828) |
Tax-Exempt New York Money Market Fund* Proceeds from shares sold | 172,060,912 | — |
Net assets acquired in tax-free reorganization | 42,838,790 | — |
Reinvestment of distributions | 1,489,579 | — |
Cost of shares redeemed | (104,453,703) | — |
Net increase (decrease) in net assets from Tax-Exempt New York Money Market Fund share transactions | 111,935,578 | — |
Increase (decrease) in net assets | 135,327,022 | (35,518,202) |
Net assets at beginning of period | 54,619,045 | 90,137,247 |
Net assets at end of period (including undistributed net investment income of $45,608 and $0, respectively) | $ 189,946,067 | $ 54,619,045 |
The accompanying notes are an integral part of the financial statements.
Statement of Changes in Net Assets — NY Tax Free Money Fund (continued) | ||
Increase (Decrease) in Net Assets | Years Ended December 31, | |
2007 | 2006 | |
Other Information Investment Class | ||
Shares outstanding at beginning of period | 54,612,628 | 90,134,456 |
Shares sold | 375,968,056 | 224,192,113 |
Shares issued to shareholders in reinvestment of distributions | 813,409 | 552,803 |
Shares redeemed | (353,394,718) | (260,266,744) |
Net increase (decrease) in Fund shares from Investment Class Share transactions | 23,386,747 | (35,521,828) |
Shares outstanding at end of period | 77,999,375 | 54,612,628 |
Tax-Exempt New York Money Market Fund* |
|
|
Shares outstanding at beginning of period | — | — |
Shares sold | 172,060,912 | — |
Shares issued in tax-free reorganization | 42,827,038 | — |
Shares issued to shareholders in reinvestment of distributions | 1,489,579 | — |
Shares redeemed | (104,453,703) | — |
Net increase (decrease) in Fund shares from Tax-Exempt New York Money Market Fund share transactions | 111,923,826 | — |
Shares outstanding at end of period | 111,923,826 | — |
The accompanying notes are an integral part of the financial statements.
NY Tax Free Money Fund Investment Class | |||||
Years Ended December 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per Share Data | |||||
Net asset value, beginning of period | $ 1.00 | $ 1.00 | $ 1.00 | $ 1.00 | $ 1.00 |
Income from investment operations: Net investment income | .029 | .027 | .017 | .005 | .003 |
Net realized and unrealized gain (loss)a | — | — | — | — | — |
Total from investment operations | .029 | .027 | .017 | .005 | .003 |
Less distributions from: Net investment income | (.029) | (.027) | (.017) | (.005) | (.003) |
Net asset value, end of period | $ 1.00 | $ 1.00 | $ 1.00 | $ 1.00 | $ 1.00 |
Total Return (%)b | 2.94 | 2.71 | 1.70 | .47 | .32 |
Ratios to Average Net Assets and Supplemental Data | |||||
Net assets, end of period ($ millions) | 78 | 55 | 90 | 110 | 89 |
Ratio of expenses before expense reductions (%) | .76 | .98 | .87 | .88 | .83 |
Ratio of expenses after expense reductions (%) | .75 | .75 | .75 | .75 | .75 |
Ratio of net investment income (%) | 2.89 | 2.67 | 1.67 | .49 | .33 |
a Amount is less than $.0005 per share. b Total return would have been lower had certain expenses not been reduced. |
Tax Free Money Fund Investment
Asset Allocation | 12/31/07 | 12/31/06 |
|
|
|
Municipal Investments Municipal Variable Rate Demand Notes | 83% | 83% |
Municipal Bonds and Notes | 17% | 17% |
| 100% | 100% |
Weighted Average Maturity |
|
|
|
|
|
Tax Free Money Fund Investment | 24 days | 29 days |
iMoneyNet National Retail Tax Free Money Funds Average* | 31 days | 31 days |
Asset allocation and weighted average maturity are subject to change.
For more complete details about the Portfolio's holdings, see page 23. A quarterly Fact Sheet is available upon request. Information concerning portfolio holdings of the Funds as of month end will be posted to www.dws-scudder.com after the 14th day following month end. In addition, the Funds' top ten holdings and other information about the Funds is posted on www.dws-scudder.com as of the calendar quarter-end on or after the 14th day following quarter-end. Please see the Account Management Resources section for more contact information.
Following the Funds' fiscal first and third quarter-end, a complete portfolio holdings listing is filed with the SEC on Form N-Q. The form will be available on the SEC's Web site at www.sec.gov, and it also may be reviewed and copied at the SEC's Public Reference Room in Washington, D.C. Information on the operation of the SEC's Public Reference Room may be obtained by calling (800) SEC-0330.
Investment Portfolio as of December 31, 2007
Tax Free Money Fund Investment
| Principal Amount ($) | Value ($) |
|
| |
Municipal Investments 100.2% | ||
Alabama 0.3% | ||
Montgomery, AL, Industrial Development Board, Pollution Control & Solid Waste Disposal, General Electric Co. Project, 3.67%*, 5/1/2021 | 400,000 | 400,000 |
Arizona 2.6% | ||
Arizona, Salt River Project, Agricultural Improvement & Power District, Electric Systems Revenue, Series R-12039, 144A, 3.56%*, 1/1/2035 | 3,000,000 | 3,000,000 |
California 7.5% | ||
California, State Weekly Public Kindergarten University, Series A-8, 3.28%*, 5/1/2034, Citibank NA (a) | 2,000,000 | 1,999,960 |
California, Statewide Communities Development Authority, Multi Family Housing Revenue, Series R-13021CE, 144A, AMT, 3.76%*, 12/1/2041 | 3,000,000 | 3,000,000 |
San Bernardino County, CA, Certificates of Participation, Medical Center Financing Project, 3.27%*, 8/1/2026 (b) | 1,100,000 | 1,100,000 |
Sequoia, CA, Lehman Municipal Trust Receipts, Various States, Series 06-K93-D, 144A, 3.56%*, 7/1/2028 (b) | 2,590,000 | 2,590,000 |
8,689,960 | ||
Colorado 5.7% | ||
Colorado, Educational & Cultural Facilities Authority Revenue, Trinity School Project, 3.45%*, 9/1/2026, Branch Banking & Trust (a) | 2,000,000 | 2,000,000 |
Colorado, Postsecondary Educational Facilities Authority Revenue, Mullen High School Project, 3.52%*, 8/1/2017, Wells Fargo Bank NA (a) | 2,465,000 | 2,465,000 |
Colorado, Health Facilities Authority Revenue, Catholic Health, Series B-4, 3.4%*, 3/1/2023 | 2,100,000 | 2,100,000 |
| 6,565,000 | |
District of Columbia 1.3% | ||
District of Columbia, Lehman Municipal Trust receipts, Various States, Series KL4-D, 144A, 3.64%*, 6/1/2021 (b) | 1,500,000 | 1,500,000 |
Florida 5.9% | ||
Miami-Dade County, FL, General Obligation, 3.38%, 3/12/2008 | 1,000,000 | 1,000,000 |
Orange County, FL, Health Facilities Authority Revenue, Orlando Regional Healthcare, Series A-1, 3.75%*, 10/1/2041 (b) | 1,050,000 | 1,050,000 |
Orlando, FL, Government Financing, 3.55%, 1/10/2008 | 3,720,000 | 3,720,000 |
Palm Beach County, FL, Jewish Community Campus Project Revenue, 3.35%*, 3/1/2030, Northern Trust Co. (a) | 1,110,000 | 1,110,000 |
6,880,000 | ||
Hawaii 1.7% | ||
ABN AMRO Munitops Certificates Trust, Series 2004-16, 3.49%*, 7/1/2012 (b) | 2,000,000 | 2,000,000 |
Illinois 15.0% | ||
Chicago, IL, General Obligation: |
|
|
Series R-10267, 144A, 3.5%*, 1/1/2042 (b) | 2,710,000 | 2,710,000 |
Series R-12217, 144A, 3.56%*, 1/1/2017 (b) | 2,050,000 | 2,050,000 |
Chicago, IL, Board of Education, Series R-3075, 144A, 3.51%*, 12/1/2025 (b) | 1,300,000 | 1,300,000 |
Chicago, IL, Lehman Municipal Trust Receipts, Various States, Wastewater, Series 06-P89-D, 144A, 3.69%*, 1/1/2022 (b) | 2,395,000 | 2,395,000 |
Cook County, IL, Community Consolidated School District No. 21 Wheeling, Tax Anticipation Warrants, 5.75%, 4/1/2008 | 3,905,000 | 3,926,252 |
Crestwood, IL, Trinity Christian College Revenue, 3.44%*, 9/1/2028, Fifth Third Bank (a) | 1,970,000 | 1,970,000 |
Illinois, State General Obligation, Series R-11295, 144A, 3.5%*, 1/1/2027 | 3,000,000 | 3,000,000 |
17,351,252 | ||
Indiana 2.4% | ||
Indiana, State Educational Facilities Authority Revenue, St. Mary Woods Project, 3.46%*, 4/1/2024, Bank One NA (a) | 2,800,000 | 2,800,000 |
Iowa 2.1% | ||
Iowa, Finance Authority Hospital Facility Revenue, Iowa Health System, Series B, 3.45%*, 7/1/2015 (b) | 1,400,000 | 1,400,000 |
Iowa, Finance Authority Small Business Development Revenue, Corporate Center Associates LP Project, 3.5%*, 9/1/2015, Wells Fargo Bank NA (a) | 1,000,000 | 1,000,000 |
2,400,000 | ||
Kentucky 4.4% | ||
Jeffersontown, KY, Lease Program Revenue, Kentucky League of Cities Funding Trust, 3.53%*, 3/1/2030, US Bank NA (a) | 3,620,000 | 3,620,000 |
Lexington-Fayette Urban County, KY, Industrial Development Revenue, YMCA Central Kentucky, Inc. Project, 3.46%*, 7/1/2019, Bank One Kentucky NA (a) | 1,460,000 | 1,460,000 |
5,080,000 | ||
Louisiana 1.7% | ||
Louisiana, BB&T Municipal Trust, Various States, Series 4000, 144A, 3.55%*, 7/1/2018, Branch Banking & Trust (a) | 2,015,000 | 2,015,000 |
Michigan 1.0% | ||
Holt, MI, General Obligation, Public Schools, 3.4%*, 5/1/2030 | 1,150,000 | 1,150,000 |
Missouri 1.7% | ||
Missouri, State Public Utilities Commission Revenue, Interim Construction Notes, 4.75%, 9/1/2008 | 2,000,000 | 2,012,264 |
Montana 2.5% | ||
Montana, State Health Facility Authority Revenue, Series P18U-D, 144A, 3.59%*, 2/15/2025 (b) | 2,835,000 | 2,835,000 |
Nebraska 2.2% | ||
Omaha, NE, Public Power District, Electric Revenue, Series R-11291, 144A, 3.5%*, 2/1/2034 | 2,500,000 | 2,500,000 |
New Hampshire 3.3% | ||
New Hampshire, Higher Educational & Health Facilities Authority Revenue, Greater Manchester YMCA, 3.49%*, 10/1/2028, RBS Citizens NA (a) | 3,800,000 | 3,800,000 |
North Carolina 3.0% | ||
North Carolina, Capital Educational Facilities Finance Agency Revenue, High Point University Project, 3.45%*, 12/1/2028, Branch Banking & Trust (a) | 3,455,000 | 3,455,000 |
Ohio 4.3% | ||
Ohio, State Higher Educational Facility Community Revenue, Pooled Program, Series A, 3.47%*, 9/1/2020, Fifth Third Bank (a) | 1,000,000 | 1,000,000 |
Summit County, OH, Port Authority Facilities Revenue, Barberton YMCA Project, 3.48%*, 6/1/2017, National City Bank (a) | 3,935,000 | 3,935,000 |
4,935,000 | ||
Oregon 1.7% | ||
Portland, OR, Sewer System Revenue, Series PT-2435, 3.59%*, 10/1/2023 (b) | 1,990,000 | 1,990,000 |
Pennsylvania 7.8% | ||
Berks County, PA, Industrial Development Authority Revenue, Richard J. Caron Foundation Project, 3.55%*, 9/1/2025, Wachovia Bank NA (a) | 2,480,000 | 2,480,000 |
Latrobe, PA, Industrial Development Authority Revenue, Greensburg Diocese, 3.44%*, 6/1/2033, Allied Irish Bank PLC (a) | 2,180,000 | 2,180,000 |
Montgomery County, PA, Redevelopment Authority, Muli-Family Housing Revenue, Forge Gate Apartments Project, Series A, 3.34%*, 8/15/2031 | 1,410,000 | 1,410,000 |
Philadelphia, PA, General Obligation, School District, Tax & Revenue Anticipation Notes, Series A, 4.5%, 6/27/2008, Bank of America NA (a) | 3,000,000 | 3,011,009 |
9,081,009 | ||
South Carolina 2.0% | ||
Charleston County, SC, Hospital Facilities Revenue, CareAlliance Health Services, 3.79%*, 8/15/2030, Bank of America NA (a) | 800,000 | 800,000 |
South Carolina, Jobs Economic Development Authority Revenue, MUFC Central Energy Plant, 3.48%*, 8/15/2032, Bank of America NA (a) | 1,570,000 | 1,570,000 |
2,370,000 | ||
Texas 14.0% | ||
Harris County, TX, Tax Anticipation Notes, 4.5%, 2/29/2008 | 2,000,000 | 2,002,646 |
Keller, TX, Independent School District, Series 2007-122, 144A, 3.5%*, 8/15/2032 | 3,085,000 | 3,085,000 |
Lufkin, TX, Health Facilities Development Corp., Health Systems Revenue, Memorial Health Systems, Series A, 3.81%*, 2/15/2028, Allied Irish Bank PLC (a) | 1,000,000 | 1,000,000 |
North East, TX, Independent School District, Series 2342, 144A, 3.51%*, 2/1/2018 | 1,200,000 | 1,200,000 |
North East, TX, Independent School District, Series 2355, 144A, 3.51%*, 8/1/2015 | 1,400,000 | 1,400,000 |
Texas, Solar Eclipse Funding Trust, 144A, 3.48%*, 8/1/2037 | 3,500,000 | 3,500,000 |
Texas, State Tax & Revenue Anticipation Notes, 4.5%, 8/28/2008 | 4,000,000 | 4,020,243 |
16,207,889 | ||
Vermont 1.7% | ||
Vermont, State Student Assistance Corp., Student Loan Revenue, 3.0%*, 1/1/2008, State Street Bank & Trust Co. (a) | 2,000,000 | 2,000,000 |
Washington 2.2% | ||
Seattle, WA, Water Systems Revenue, Series 2170, 144A, 3.46%*, 2/1/2031 (b) | 2,530,000 | 2,530,000 |
Wisconsin 1.6% | ||
Milwaukee, WI, General Obligation, Series V8, 3.48%*, 2/1/2025 | 1,900,000 | 1,900,000 |
Wyoming 0.6% | ||
Platte County, WY, Pollution Control Revenue, Tri-State Generation & Transmission Association, Inc., Series B, 3.75%*, 7/1/2014, National Rural Utilities Cooperative Finance Corp. (a) | 700,000 | 700,000 |
|
| % of Net Assets | Value ($) |
|
| |
Total Investment Portfolio (Cost $116,147,374)+ | 100.2 | 116,147,374 |
Other Assets and Liabilities, Net | (0.2) | (194,299) |
Net Assets | 100.0 | 115,953,075 |
+ The cost for federal income tax purposes was $116,147,374.
(a) Bond is insured by one of these companies:
Insurance Coverage | As a % of Total Investment Portfolio |
Ambac Financial Group | 5.0 |
Financial Security Assurance, Inc. | 12.2 |
MBIA Corp. | 4.7 |
AMT: Subject to Alternative Minimum Tax.
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.
The accompanying notes are an integral part of the financial statements.
Statement of Assets and Liabilities as of December 31, 2007 | |
Assets | Tax Free Money Fund Investment |
Investments in securities, valued at amortized cost | $ 116,147,374 |
Receivable for investments sold | 5,000 |
Interest receivable | 759,485 |
Other assets | 17,462 |
Total assets | 116,929,321 |
Liabilities | |
Cash overdraft | 603,132 |
Dividends payable | 228,715 |
Accrued management fees | 16,711 |
Other accrued expenses and payables | 127,688 |
Total liabilities | 976,246 |
Net assets, at value | $ 115,953,075 |
Net Assets Consist of | |
Undistributed net investment income | 3,120 |
Paid-in capital | 115,949,955 |
Net assets, at value | $ 115,953,075 |
Net Asset Value | |
Net Asset Value, offering and redemption price per share ($115,953,075 ÷ 115,949,037 shares outstanding, $.001 par value, unlimited number of shares authorized) | $ 1.00 |
The accompanying notes are an integral part of the financial statements.
Statement of Operations for the year ended December 31, 2007 | |
Investment Income | Tax Free Money Fund Investment |
Income: Interest | $ 3,896,599 |
Expenses: Management fee | 159,405 |
Administration fee | 106,270 |
Services to shareholders | 279,381 |
Custodian fees | 10,142 |
Distribution service fees | 255,550 |
Audit and tax fees | 46,999 |
Trustees' fees and expenses | 16,780 |
Other | 8,660 |
Total expenses before expense reductions | 883,187 |
Expense reductions | (87,722) |
Total expenses after expense reductions | 795,465 |
Net investment income | 3,101,134 |
Net realized gain (loss) | 1,879 |
Net increase (decrease) in net assets resulting from operations | $ 3,103,013 |
The accompanying notes are an integral part of the financial statements.
Statement of Changes in Net Assets — Tax Free Money Fund Investment | ||
Increase (Decrease) in Net Assets | Years Ended December 31, | |
2007 | 2006 | |
Operations: Net investment income | $ 3,101,134 | $ 3,435,702 |
Net realized gain (loss) | 1,879 | 818 |
Net increase (decrease) in net assets resulting from operations | 3,103,013 | 3,436,520 |
Distributions to shareholders from: Net investment income | (3,101,134) | (3,435,701) |
Fund share transactions: Proceeds from shares sold | 429,345,636 | 566,794,514 |
Reinvestment of distributions | 461,294 | 1,012,569 |
Cost of shares redeemed | (424,218,976) | (631,167,896) |
Net increase (decrease) in net assets from Fund share transactions | 5,587,954 | (63,360,813) |
Increase (decrease) in net assets | 5,589,833 | (63,359,994) |
Net assets at beginning of period | 110,363,242 | 173,723,236 |
Net assets at end of period (including undistributed net investment income of $3,120 and $0, respectively) | $ 115,953,075 | $ 110,363,242 |
Other Information | ||
Shares outstanding at beginning of period | 110,361,083 | 173,721,896 |
Shares sold | 429,345,636 | 566,794,514 |
Shares issued to shareholders in reinvestment of distributions | 461,294 | 1,012,569 |
Shares redeemed | (424,218,976) | (631,167,896) |
Net increase (decrease) in Fund shares | 5,587,954 | (63,360,813) |
Shares outstanding at end of period | 115,949,037 | 110,361,083 |
The accompanying notes are an integral part of the financial statements.
Tax Free Money Fund Investment
Years Ended December 31, | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per Share Data | |||||
Net asset value, beginning of period | $ 1.00 | $ 1.00 | $ 1.00 | $ 1.00 | $ 1.00 |
Income from investment operations: Net investment income | .029 | .027 | .017 | .005 | .003 |
Net realized and unrealized gain (loss)a | — | — | — | — | — |
Total from investment operations | .029 | .027 | .017 | .005 | .003 |
Less distributions from: Net investment income | (.029) | (.027) | (.017) | (.005) | (.003) |
Net asset value, end of period | $ 1.00 | $ 1.00 | $ 1.00 | $ 1.00 | $ 1.00 |
Total Return (%)b | 2.96 | 2.71 | 1.72 | .49 | .33 |
Ratios to Average Net Assets and Supplemental Data | |||||
Net assets, end of period ($ millions) | 116 | 110 | 174 | 135 | 168 |
Ratio of expenses before expense reductions (%) | .83 | .88 | .82 | .84 | .80 |
Ratio of expenses after expense reductions (%) | .75 | .75 | .75 | .75 | .75 |
Ratio of net investment income (%) | 2.92 | 2.61 | 1.73 | .46 | .32 |
a Amount is less than $.0005 per share. b Total return would have been lower had certain expenses not been reduced. |
A. Significant Accounting Policies
DWS Advisor Funds (the ``Trust'') is registered under the Investment Company Act of 1940, as amended (the ``1940 Act''), as a Massachusetts business trust. NY Tax Free Money Fund and Tax Free Money Fund Investment (each a ``Fund,'' and collectively, the ``Funds'') are two of the funds the Trust offers to investors. Each Fund is an open-end, diversified management investment company. NY Tax Free Money Fund offers two classes of shares: Investment Class and Tax-Exempt New York Money Market Fund (effective March 22, 2007). The financial highlights for Tax-Exempt New York Money Market Fund are provided separately and are available upon request.
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.
Each 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 Funds in the preparation of their financial statements.
Security Valuation. Portfolio securities are valued utilizing the amortized cost method permitted in accordance with Rule 2a-7 under the 1940 Act and certain conditions therein. Under this method, which does not take into account unrealized capital gains or losses on securities, an instrument is initially valued at its cost and thereafter assumes a constant accretion/amortization rate to maturity of any discount or premium.
In September 2006, the Financial Accounting Standards Board ("FASB") released Statement of Financial Accounting Standards No. 157, "Fair Value Measurements" ("FAS 157"). FAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. FAS 157 is effective for fiscal years beginning after November 15, 2007. As of December 31, 2007, management does not believe the adoption of FAS 157 will impact the amounts reported in the financial statements, however, additional disclosures will be required about the inputs used to develop the measurements of fair value and the effect of certain of the measurements reported in the statement of operations for a fiscal period.
Federal Income Taxes. Each Fund's policy is to comply with the requirements of the Internal Revenue Code of 1986, as amended, which are applicable to regulated investment companies, and to distribute all of its taxable and tax-exempt income to its shareholders. Accordingly, the Funds paid no federal income taxes and no federal income tax provisions were required.
During the year ended December 31, 2007, Tax Free Money Fund Investment utilized $1,339 of prior year capital loss carryforward.
Each Fund has reviewed the tax positions for each of the three open tax years as of December 31, 2007 and has determined that no provision for income tax is required in each Fund's financial statements. Each of the Fund's federal tax returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service.
Distributions of Income. The net investment income of each Fund is declared as a daily dividend and is distributed to shareholders monthly.
Permanent book and tax differences relating to shareholder distributions will result in reclassifications to paid-in capital. Temporary book and tax differences will reverse in a subsequent period. There were no significant book to tax differences for the Funds.
At December 31, 2007, the Funds' components of distributable earnings (accumulated losses) on a tax-basis are as follows:
| NY Tax Free Money Fund | Tax Free Money Fund Investment |
Undistributed tax-exempt income | $ 45,608 | $ 3,120 |
In addition, the tax character of distributions paid to shareholders by the Funds is summarized as follows:
| Years Ended December 31, | |
| 2007 | 2006 |
NY Tax Free Money Fund: Distributions from tax-exempt incomeDistributions from ordinary income* | $ 3,644,623 4,697 | $ 2,200,822 — |
Tax Free Money Fund Investment Distributions from tax-exempt income | $ 3,101,134 | $ 3,435,701 |
*For tax purposes short-term capital gains distributions are considered ordinary income distributions.
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 Funds may enter into contracts with service providers that contain general indemnification clauses. The Funds' maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Funds that have not yet been made. However, based on experience, the Funds expect the risk of loss to be remote.
Other. Investment transactions are accounted for on a 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 discounts and premiums are accreted/amortized for both tax and financial reporting purposes.
B. 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 Funds in accordance with their 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 Funds.
Under the Investment Management Agreement with the Advisor, Tax Free Money Fund Investment pays an annual management fee of 0.15% based on its average daily net assets, computed and accrued daily and payable monthly.
For the period from January 1, 2007 through March 21, 2007, under the Investment Management Agreement with the Advisor, NY Tax Free Money Fund paid a monthly management fee of 0.15% based on its average daily net assets, computed and accrued daily and payable monthly.
Effective March 22, 2007, under the Amended and Restated Management Agreement with the Advisor, NY Tax Free Money Fund pays a monthly management fee of 0.12% based on its average daily net assets, computed and accrued daily and payable monthly.
Accordingly, for the year ended December 31 2007, the management fee payable is equal to an annual effective rate of 0.12% and 0.15% of average daily net assets, computed and accrued daily and payable monthly, for NY Tax Free Money Fund and Tax Free Money Fund Investment, respectively.
For the period from January 1, 2007 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 for Tax Free Money Fund Investment, to the extent necessary, to maintain the operating expenses at 0.75% of its average daily net assets (excluding certain expenses such as extraordinary expenses, taxes, brokerage and interest expenses).
For the period from January 1, 2007 through March 21, 2010, the Advisor has contractually agreed to waive all or a portion of its management fee and reimburse or pay certain operating expenses for NY Tax Free Money Fund Investment Class, to the extent necessary, to maintain total operating expenses at 0.75% of its average daily net assets (excluding certain expenses such as extraordinary expenses, taxes, brokerage and interest expenses).
For the period from March 22, 2007 through March 21, 2010, the Advisor has contractually agreed to waive all or a portion of its management fee and reimburse or pay certain operating expenses of Tax-Exempt NY Money Market Fund to the extent necessary, to maintain the operating expenses at 1.00% of its average daily net assets (excluding certain expenses such as extraordinary expenses, taxes, brokerage and interest expenses).
Administration Fee. Pursuant to an Administrative Services Agreement, DIMA provides most administrative services to the Funds. For all services provided under the Administrative Services Agreement, the Funds pay the Advisor an annual fee ("Administration fee") of 0.10% of each Fund's average daily net assets, computed and accrued daily and payable monthly. For the year ended December 31, 2007, the Advisor received an Administration fee as follows:
| Total Aggregated | Unpaid at December 31, 2007 |
NY Tax Free Money Fund | $ 129,492 | $ 16,593 |
Tax Free Money Fund Investment | $ 106,270 | $ 10,940 |
Service Provider Fees. DWS Scudder Investments Service Company ("DWS-SISC"), an affiliate of the Advisor, is the transfer agent, dividend-paying agent and shareholder service agent for the Funds. Pursuant to a sub-transfer agency agreement among DWS-SISC and DST Systems, Inc. ("DST"), DWS-SISC has delegated certain transfer agent, dividend-paying agent and shareholder service agent functions to DST. DWS-SISC compensates DST out of the shareholder servicing fee it receives from the Funds. For the year ended December 31, 2007 (since March 22, 2007 for Tax-Exempt New York Money Market Fund), the amount charged to the Funds by DWS-SISC were as follows:
| Total Aggregated | Waived | Unpaid at December 31, 2007 |
NY Tax Free Money Fund: Investment Class | $ 134,426 | $ 8,008 | $ 46,326 |
NY Tax Free Money Fund: Tax-Exempt New York Money Market Fund | $ 60,107 | $ — | $ 22,216 |
Tax Free Money Fund Investment | $ 279,381 | $ 85,209 | $ 26,884 |
Distribution and Service Fees. DWS Scudder Distributors, Inc. ("DWS-SDI") is the Funds' Distributor. The Tax-Exempt New York Money Market Fund pays the Distributor an annual fee, pursuant to Rule 12b-1, based on its average daily net assets, which is calculated daily and payable monthly at 0.50% of the Tax-Exempt New York Money Market Fund's average daily net assets. For the period from March 22, 2007 through December 31, 2007, the Distribution Fee was as follows:
| Total Aggregated | Unpaid at December 31, 2007 |
NY Tax Free Money Fund: | $ 274,322 | $ 47,488 |
In addition, DWS-SDI provides information and administrative services for a fee ("Service Fee") to NY Tax Free Money Fund Investment Class and Tax Free Money Fund Investment at an annual rate of up to 0.25% of average daily net assets of the Investment Class. DWS-SDI in turn has various agreements with financial services firms that provide these services and pays these fees based upon the assets of the shareholder accounts the firms service. For the year ended December 31, 2007, the Service Fee was as follows:
| Total Aggregated | Unpaid at December 31, 2007 | Annualized Effective Rate |
NY Tax Free Money Fund: Investment Class | $ 174,115 | $ 18,426 | .23% |
Tax Free Money Fund Investment | $ 255,550 | $ 31,577 | .24% |
Typesetting and Filing Service Fees. Under an agreement with DIMA, DIMA is compensated for providing typesetting and certain regulatory filing services to the Funds. For the year ended December 31, 2007, the amount charged to each Fund by DIMA included in the Statement of Operations under "other" is as follows:
| Total Aggregated | Unpaid at December 31, 2007 |
NY Tax Free Money Fund | $ 25,520 | $ 16,409 |
Tax Free Money Fund Investment | $ 4,011 | $ 4,011 |
Trustees' Fees and Expenses. As compensation for his or her services, each Independent Trustee receives an aggregate annual fee, plus a fee for each meeting attended (plus reimbursement for reasonable out-of-pocket expenses incurred in connection with his or her attendance at board and committee meetings) from each fund in the Fund Complex for which he or she serves. In addition, the Chairperson of the Board and the Chairperson of each committee of the Board receives additional compensation for their services. Payment of such fees and expenses is allocated among all such funds described above in direct proportion to their relative net assets.
C. Fee Reductions
The Funds have entered into arrangements with its custodian and transfer agent whereby credits realized as a result of uninvested cash balances are used to reduce a portion of each Fund's custodian expenses. During the year ended December 31, 2007, each Fund's custodian fee was reduced under these agreements as follows:
| Custody Credits | Transfer Agent Credits |
NY Tax Free Money Fund | $ 197 | $ 2,643 |
Tax Free Money Fund Investment | $ 557 | $ 1,956 |
D. Line of Credit
The Funds and other affiliated funds (the ``Participants'') share in a $750 million revolving credit facility administered by JPMorgan Chase Bank, N.A. for temporary or emergency purposes, 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 upon net assets, among each of the Participants. Interest is calculated at the Federal Funds Rate plus 0.35 percent. Each Fund may borrow up to a maximum of 5 percent of its net assets under the agreement.
E. Acquisition of Assets
On March 22, 2007, the NY Tax Free Money Fund acquired all of the net assets of Investor's Municipal Cash Fund: Tax-Exempt New York Money Market Fund. The acquisition was accomplished by a tax-free exchange of 42,827,038 shares and net assets at that date of $42,838,790, were combined with those of the NY Tax Free Money Fund. The aggregate net assets of the NY Tax Free Money Fund immediately before the acquisition were $59,475,160. The combined net assets of the NY Tax Free Money Fund immediately following the acquisition were $102,313,950.
Report of Independent Registered Public Accounting Firm
To the Trustees of DWS Advisor Funds and Shareholders of Tax Free Money Fund Investment and Investment Class of NY Tax Free Money Fund:
In our opinion, the accompanying statements of assets and liabilities, including the investment portfolios, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of NY Tax Free Money Fund and Tax Free Money Fund Investment (the ``Funds'') at December 31, 2007, and the results of each of their operations, the changes in each of their net assets and the financial highlights for each of the periods indicated therein, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as ``financial statements'') are the responsibility of the Funds' management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at December 31, 2007 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
Boston, Massachusetts | PricewaterhouseCoopers LLP |
Of the dividends paid from net investment income for the NY Tax Free Money Fund and Tax Free Money Fund Investment for the taxable year ended December 31, 2007, 100% are designated as exempt interest dividends for federal income tax purposes.
Please contact a tax advisor if you have questions about federal or state income tax laws, or on how to prepare your tax returns. If you have specific questions about your account, please call (800) 621-1048.
Investment Management Agreement Approval
New York Tax Free Money Fund — Investment Class
The Fund's Trustees approved the continuation of the Fund's current investment management agreement with DIMA in September 2007.
In terms of the process that the Trustees 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. In connection with reviewing the Fund's investment management agreement, the Trustees also review the terms of the Fund's Rule 12b-1 plan, distribution agreement, administration agreement, transfer agency agreement and other material service agreements.
In connection with the Board's 2007 contract review, the Board formed a special committee to facilitate careful review of the funds' contractual arrangements. After reviewing the Fund's arrangements, that committee recommended that the Board vote to approve the continuation of the Fund's investment management agreement.
The Trustees regularly meet privately with their independent counsel to discuss contract review and other matters. In addition, the Trustees were also advised by two consultants, including the Fund's independent fee consultant, in the course of their 2007 review of the Fund's contractual arrangements. In particular, the Trustees considered the report prepared by the independent fee consultant in connection with their deliberations.
The Trustees believe that a long-term relationship with a capable, conscientious advisor is in the best interest of shareholders. As you may know, DIMA is part of Deutsche Bank, a major global banking institution that is engaged in a wide range of financial services. The Trustees believe 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.
Shareholders may focus primarily on fund performance and fees, but the Fund's Trustees consider 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.
In determining to approve the continuation of the Fund's current investment management agreement, the Board considered all factors that it believes relevant to the interests of Fund shareholders, including:
The investment management fee schedule for the Fund, including (i) comparative information provided by Lipper regarding investment management fee rates paid to other investment advisors by similar funds and (ii) fee rates paid to DIMA by similar funds and institutional accounts advised by DIMA (if any). With respect to management fees paid to other investment advisors by similar funds, the Trustees noted that the contractual fee rates paid by the Fund were lower than the median (1st quartile) of the applicable Lipper peer group (based on Lipper data provided as of December 31, 2006). The Board gave a lesser weight to fees paid by similar institutional accounts advised by DIMA, in light of the material differences in the scope of services provided to mutual funds as compared to those provided to institutional accounts. Taking into account the foregoing, the Board concluded that the fee schedule in effect for the Fund represents reasonable compensation in light of the nature, extent and quality of the investment services being provided to the Fund.
The extent to which economies of scale would be realized as the Fund grows. In this regard, the Board noted that while the Fund's current investment management fee schedule does not include breakpoints, the Board intends to consider implementation of one or more breakpoints once the Fund reaches an efficient operating size. The Board concluded that the Fund's fee schedule represents an appropriate sharing between Fund shareholders and DIMA of such economies of scale as may exist in the management of the Fund at current asset levels.
The total operating expenses of the Fund. In this regard, the Board noted that the total (net) operating expenses of the Fund (Investment Class shares) are expected to be higher than the median of the applicable Lipper expense universe (based on Lipper data provided as of December 31, 2006). The Board considered the expenses of this class to be representative for purposes of evaluating other classes of shares. 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.
The investment performance of the Fund and DIMA, both absolute and relative to various benchmarks and industry peer groups. The Board noted that for each of the one-, three- and five-year periods ended December 31, 2006, the Fund's performance (Investment Class shares) was in the 4th quartile of the applicable iMoneyNet universe. The Board also observed that the Fund has underperformed its benchmark in each of the one-, three- and five-year periods ended December 31, 2006. The Board recognized that DIMA has made significant changes in its investment personnel and processes in recent years in an effort to improve long-term performance.
The nature, extent and quality of the advisory services provided by DIMA. The Board considered extensive information regarding DIMA, including DIMA's personnel (including particularly those personnel with responsibilities for providing services to the Fund), resources, policies and investment processes. The Board also considered the terms of the current investment management agreement, including the scope of services provided under the agreement. In this regard, the Board concluded that the quality and range of services provided by DIMA have benefited and should continue to benefit the Fund and its shareholders.
The costs of the services to, and profits realized by, DIMA and its affiliates from their relationships with the Fund. The Board reviewed information concerning the costs incurred and profits realized by DIMA during 2006 from providing investment management services to the Fund (and, separately, to the entire DWS Scudder fund complex), and reviewed with DIMA the cost allocation methodology used to determine DIMA's profitability. In analyzing DIMA's costs and profits, the Board also reviewed the fees paid to and services provided by DIMA and its affiliates with respect to administrative services, transfer agent services, shareholder servicing and distribution (including fees paid pursuant to 12b-1 plans), as well as information regarding other possible benefits derived by DIMA and its affiliates as a result of DIMA's relationship with the Fund. As part of this review, the Board considered information provided by an independent accounting firm engaged to review DIMA's cost allocation methodology and calculations. The Board concluded that the Fund's investment management fee schedule represented reasonable compensation in light of the costs incurred by DIMA and its affiliates in providing services to the Fund. 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 Scudder 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.
The practices of DIMA regarding the selection and compensation of brokers and dealers executing portfolio transactions for the Fund. The Board considered that a portion of the Fund's brokerage may be allocated to affiliates of DIMA, subject to compliance with applicable SEC rules. The Board also considered that, subject to ongoing review by the Board, a limited portion of the Fund's brokerage may be allocated to brokers who acquire (and provide to DIMA and its affiliates) research services from third parties that are generally useful to DIMA and its affiliates in managing client portfolios. The Board indicated that it would continue to monitor the allocation of the Fund's brokerage to ensure that the principle of "best price and execution" remains paramount in the portfolio trading process.
DIMA's commitment to and record of compliance, including its written compliance policies and procedures. In this regard, the Board considered DIMA's commitment to indemnify the Fund against any costs and liabilities related to lawsuits or regulatory actions arising from allegations regarding market timing, revenue sharing, fund valuation or other subjects arising from or relating to pending regulatory inquiries. The Board also 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.
Deutsche Bank's commitment to its US mutual fund business. The Board considered recent and ongoing efforts by Deutsche Bank to restructure its US mutual fund business to improve efficiency and competitiveness and to reduce compliance and operational risk. The Board considered assurances received from Deutsche Bank that it would commit the resources necessary to maintain high-quality services to the Fund and its shareholders. The Board also considered Deutsche Bank's strategic plans for its US mutual fund business, the potential benefits to Fund shareholders and Deutsche Bank's management of one of Europe's most successful fund groups.
Based on all of the foregoing, the Board determined to continue the Fund's current investment management agreement, and concluded that the continuation of such agreement was in the best interests of the Fund's shareholders.
In reaching this conclusion the Board did not give particular weight to any single factor identified above. The Board considered these factors over the course of numerous meetings, many 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 current agreement.
Tax Free Money Fund Investment
The Fund's Trustees approved the continuation of the Fund's current investment management agreement with DIMA in September 2007.
In terms of the process that the Trustees 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. In connection with reviewing the Fund's investment management agreement, the Trustees also review the terms of the Fund's Rule 12b-1 plan, distribution agreement, administration agreement, transfer agency agreement and other material service agreements.
In connection with the Board's 2007 contract review, the Board formed a special committee to facilitate careful review of the funds' contractual arrangements. After reviewing the Fund's arrangements, that committee recommended that the Board vote to approve the continuation of the Fund's investment management agreement.
The Trustees regularly meet privately with their independent counsel to discuss contract review and other matters. In addition, the Trustees were also advised by two consultants, including the Fund's independent fee consultant, in the course of their 2007 review of the Fund's contractual arrangements. In particular, the Trustees considered the report prepared by the independent fee consultant in connection with their deliberations.
The Trustees believe that a long-term relationship with a capable, conscientious advisor is in the best interest of shareholders. As you may know, DIMA is part of Deutsche Bank, a major global banking institution that is engaged in a wide range of financial services. The Trustees believe 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.
Shareholders may focus primarily on fund performance and fees, but the Fund's Trustees consider 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.
In determining to approve the continuation of the Fund's current investment management agreement, the Board considered all factors that it believes relevant to the interests of Fund shareholders, including:
The investment management fee schedule for the Fund, including (i) comparative information provided by Lipper regarding investment management fee rates paid to other investment advisors by similar funds and (ii) fee rates paid to DIMA by similar funds and institutional accounts advised by DIMA (if any). With respect to management fees paid to other investment advisors by similar funds, the Trustees noted that the contractual fee rates paid by the Fund were lower than the median (1st quartile) of the applicable Lipper peer group (based on Lipper data provided as of December 31, 2006). The Board gave a lesser weight to fees paid by similar institutional accounts advised by DIMA, in light of the material differences in the scope of services provided to mutual funds as compared to those provided to institutional accounts. Taking into account the foregoing, the Board concluded that the fee schedule in effect for the Fund represents reasonable compensation in light of the nature, extent and quality of the investment services being provided to the Fund.
The extent to which economies of scale would be realized as the Fund grows. In this regard, the Board noted that while the Fund's current investment management fee schedule does not include breakpoints, the Board intends to consider implementation of one or more breakpoints once the Fund reaches an efficient operating size. The Board concluded that the Fund's fee schedule represents an appropriate sharing between Fund shareholders and DIMA of such economies of scale as may exist in the management of the Fund at current asset levels.
The total operating expenses of the Fund. In this regard, the Board noted that the total (net) operating expenses of the Fund (Investment Class shares) are expected to be lower than the median (2nd quartile) of the applicable Lipper expense universe (based on Lipper data provided as of December 31, 2006). The Board considered the expenses of this class to be representative for purposes of evaluating other classes of shares. 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.
The investment performance of the Fund and DIMA, both absolute and relative to various benchmarks and industry peer groups. The Board noted that for each of the one-, three- and five-year periods ended December 31, 2006, the Fund's performance (Investment Class shares) was in the 3rd quartile, 3rd quartile and 4th quartile, respectively, of the applicable iMoneyNet universe. The Board also observed that the Fund has underperformed its benchmark in the each of the one-, three- and five-year periods ended December 31, 2006. The Board recognized that DIMA has made significant changes in its investment personnel and processes in recent years in an effort to improve long-term performance.
The nature, extent and quality of the advisory services provided by DIMA. The Board considered extensive information regarding DIMA, including DIMA's personnel (including particularly those personnel with responsibilities for providing services to the Fund), resources, policies and investment processes. The Board also considered the terms of the current investment management agreement, including the scope of services provided under the agreement. In this regard, the Board concluded that the quality and range of services provided by DIMA have benefited and should continue to benefit the Fund and its shareholders.
The costs of the services to, and profits realized by, DIMA and its affiliates from their relationships with the Fund. The Board reviewed information concerning the costs incurred and profits realized by DIMA during 2006 from providing investment management services to the Fund (and, separately, to the entire DWS Scudder fund complex), and reviewed with DIMA the cost allocation methodology used to determine DIMA's profitability. In analyzing DIMA's costs and profits, the Board also reviewed the fees paid to and services provided by DIMA and its affiliates with respect to administrative services, transfer agent services, shareholder servicing and distribution (including fees paid pursuant to 12b-1 plans), as well as information regarding other possible benefits derived by DIMA and its affiliates as a result of DIMA's relationship with the Fund. As part of this review, the Board considered information provided by an independent accounting firm engaged to review DIMA's cost allocation methodology and calculations. The Board concluded that the Fund's investment management fee schedule represented reasonable compensation in light of the costs incurred by DIMA and its affiliates in providing services to the Fund. 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 Scudder 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.
The practices of DIMA regarding the selection and compensation of brokers and dealers executing portfolio transactions for the Fund. The Board considered that a portion of the Fund's brokerage may be allocated to affiliates of DIMA, subject to compliance with applicable SEC rules. The Board also considered that, subject to ongoing review by the Board, a limited portion of the Fund's brokerage may be allocated to brokers who acquire (and provide to DIMA and its affiliates) research services from third parties that are generally useful to DIMA and its affiliates in managing client portfolios. The Board indicated that it would continue to monitor the allocation of the Fund's brokerage to ensure that the principle of "best price and execution" remains paramount in the portfolio trading process.
DIMA's commitment to and record of compliance, including its written compliance policies and procedures. In this regard, the Board considered DIMA's commitment to indemnify the Fund against any costs and liabilities related to lawsuits or regulatory actions arising from allegations regarding market timing, revenue sharing, fund valuation or other subjects arising from or relating to pending regulatory inquiries. The Board also 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.
Deutsche Bank's commitment to its US mutual fund business. The Board considered recent and ongoing efforts by Deutsche Bank to restructure its US mutual fund business to improve efficiency and competitiveness and to reduce compliance and operational risk. The Board considered assurances received from Deutsche Bank that it would commit the resources necessary to maintain high-quality services to the Fund and its shareholders. The Board also considered Deutsche Bank's strategic plans for its US mutual fund business, the potential benefits to Fund shareholders and Deutsche Bank's management of one of Europe's most successful fund groups.
Based on all of the foregoing, the Board determined to continue the Fund's current investment management agreement, and concluded that the continuation of such agreement was in the best interests of the Fund's shareholders.
In reaching this conclusion the Board did not give particular weight to any single factor identified above. The Board considered these factors over the course of numerous meetings, many 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 current agreement.
Summary of Management Fee Evaluation by Independent Fee Consultant
October 26, 2007
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 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 2007, including my qualifications, the evaluation process for each of the DWS Scudder Funds, consideration of certain complex-level factors, and my conclusions.
Qualifications
For more than 30 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 several 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 Scudder Fund
My work focused primarily on evaluating, fund-by-fund, the fees charged to each of the 136 Fund portfolios in the DWS Scudder 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 Scudder Fund. These similar products included the other DWS Scudder 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 Scudder 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 Scudder 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 Scudder 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 Scudder Funds are reasonable.
Thomas H. Mack
The following table presents certain information regarding the Board Members and Officers of the Trust as of December 31, 2007. Each Board Member's year of birth is set forth in parentheses after his or her name. Unless otherwise noted, (i) each Board Member has engaged in the principal occupation(s) noted in the table for at least the most recent five years, although not necessarily in the same capacity, and (ii) the address of each Independent Board Member is c/o Dawn-Marie Driscoll, PO Box 100176, Cape Coral, FL 33904. Except as otherwise noted below, the term of office for each Board Member is until the election and qualification of a successor, or until such Board Member sooner dies, resigns, is removed or as otherwise provided in the governing documents of the fund. Because the fund does not hold an annual meeting of shareholders, each Board Member will hold office for an indeterminate period. The Board Members may also serve in similar capacities with other funds in the fund complex.
Independent Board Members |
| |
Name, Year of Birth, Position with the Fund and Length of Time Served | Business Experience and Directorships During the Past Five Years | Number of Funds in Fund Complex Overseen |
Dawn-Marie Driscoll (1946) Chairperson since 2006 Board Member since 2006 | President, Driscoll Associates (consulting firm); Executive Fellow, Center for Business Ethics, Bentley College; formerly, Partner, Palmer & Dodge (1988-1990); Vice President of Corporate Affairs and General Counsel, Filene's (1978-1988). Directorships: Trustee of eight open-end mutual funds managed by Sun Capital Advisers, Inc. (since 2007); Director of ICI Mutual Insurance Company (since 2007); Advisory Board, Center for Business Ethics, Bentley College; Trustee, Southwest Florida Community Foundation (charitable organization). Former Directorships: Investment Company Institute (audit, executive, nominating committees) and Independent Directors Council (governance, executive committees) | 76 |
Henry P. Becton, Jr. (1943) Board Member since 2006 | Vice Chair, WGBH Educational Foundation. Directorships: Association of Public Television Stations; Becton Dickinson and Company1 (medical technology company); Belo Corporation1 (media company); Boston Museum of Science; Public Radio International. Former Directorships: American Public Television; Concord Academy; New England Aquarium; Mass. Corporation for Educational Telecommunications; Committee for Economic Development; Public Broadcasting Service | 76 |
Keith R. Fox (1954) Board Member since 2006 | Managing General Partner, Exeter Capital Partners (a series of private equity funds). Directorships: Progressive Holding Corporation (kitchen goods importer and distributor); Natural History, Inc. (magazine publisher); Box Top Media Inc. (advertising); The Kennel Shop (retailer) | 76 |
Kenneth C. Froewiss (1945) Board Member since 2006 | Clinical Professor of Finance, NYU Stern School of Business (1997-present); Member, Finance Committee, Association for Asian Studies (2002-present); Director, Mitsui Sumitomo Insurance Group (US) (2004-present); prior thereto, Managing Director, J.P. Morgan (investment banking firm) (until 1996) | 76 |
Martin J. Gruber7 (1937) Board Member since 1999 | Nomura Professor of Finance, Leonard N. Stern School of Business, New York University (since September 1965); Director, Japan Equity Fund, Inc. (since January 1992), Thai Capital Fund, Inc. (since January 2000), Singapore Fund, Inc. (since January 2000), National Bureau of Economic Research (since January 2006). Formerly, Trustee, TIAA (pension funds) (January 1996-January 2000); Trustee, CREF and CREF Mutual Funds (January 2000-March 2005); Chairman, CREF and CREF Mutual Funds (February 2004-March 2005); and Director, S.G. Cowen Mutual Funds (January 1985-January 2001) | 76 |
Richard J. Herring (1946) Board Member since 1999 | Jacob Safra Professor of International Banking and Professor, Finance Department, The Wharton School, University of Pennsylvania (since July 1972); Co-Director, Wharton Financial Institutions Center (since July 2000); Director, Japan Equity Fund, Inc. (since September 2007), Thai Capital Fund, Inc. (since September 2007), Singapore Fund, Inc. (since September 2007). Formerly, Vice Dean and Director, Wharton Undergraduate Division (July 1995-June 2000); Director, Lauder Institute of International Management Studies (July 2000-June 2006) | 76 |
Graham E. Jones7 (1933) Board Member since 2002 | Senior Vice President, BGK Realty, Inc. (commercial real estate) (since 1995). Formerly, Trustee of various investment companies managed by Sun Capital Advisors, Inc. (1998-2005), Morgan Stanley Asset Management (1985-2001) and Weiss, Peck and Greer (1985-2005) | 76 |
Rebecca W. Rimel (1951) Board Member since 2002 | President and Chief Executive Officer, The Pew Charitable Trusts (charitable organization) (1994 to present); Trustee, Thomas Jefferson Foundation (charitable organization) (1994 to present); Trustee, Executive Committee, Philadelphia Chamber of Commerce (2001 to present). Formerly, Executive Vice President, The Glenmede Trust Company (investment trust and wealth management) (1983-2004); Board Member, Investor Education (charitable organization) (2004-2005); Director, Viasys Health Care1 (January 2007-June 2007) | 76 |
William N. Searcy, Jr. (1946) Board Member since 2002 | Private investor since October 2003; Trustee of eight open-end mutual funds managed by Sun Capital Advisers, Inc. (since October 1998). Formerly, Pension & Savings Trust Officer, Sprint Corporation1 (telecommunications) (November 1989-September 2003) | 76 |
Jean Gleason Stromberg (1943) Board Member since 2006 | Retired. Formerly, Consultant (1997-2001); Director, US Government Accountability Office (1996-1997); Partner, Fulbright & Jaworski, L.L.P. (law firm) (1978-1996). Directorships: The William and Flora Hewlett Foundation; Service Source, Inc. Former Directorships: Mutual Fund Directors Forum (2002-2004), American Bar Retirement Association (funding vehicle for retirement plans) (1987-1990 and 1994-1996) | 76 |
Carl W. Vogt7 (1936) Board Member since 2006 | Retired Senior Partner, Fulbright & Jaworski, L.L.P. (law firm); formerly, President (interim) of Williams College (1999-2000); formerly, President of certain funds in the Deutsche Asset Management family of funds (formerly, Flag Investors family of funds) (registered investment companies) (1999-2000). Directorships: Yellow Corporation (trucking); American Science & Engineering (x-ray detection equipment). Former Directorships: ISI Family of Funds (registered investment companies, four funds overseen); National Railroad Passenger Corporation (Amtrak); Waste Management, Inc. (solid waste disposal). Formerly, Chairman and Member, National Transportation Safety Board | 74 |
Interested Board Member | ||
Name, Year of Birth, Position with the Fund and Length of Time Served | Business Experience and Directorships During the Past Five Years | Number of Funds in Fund Complex Overseen |
Axel Schwarzer2 (1958) Board Member since 2006 | Managing Director4, Deutsche Asset Management; Head of Deutsche Asset Management Americas; CEO of DWS Scudder; formerly, board member of DWS Investments, Germany (1999-2005); formerly, Head of Sales and Product Management for the Retail and Private Banking Division of Deutsche Bank in Germany (1997-1999); formerly, various strategic and operational positions for Deutsche Bank Germany Retail and Private Banking Division in the field of investment funds, tax driven instruments and asset management for corporates (1989-1996) | 82 |
Officers3 | |
Name, Year of Birth, Position with the Fund and Length of Time Served | Principal Occupation(s) During Past 5 Years and Other Directorships Held |
Michael G. Clark5 (1965) President, 2006-present | Managing Director4, Deutsche Asset Management (2006-present); President of DWS family of funds; Director, ICI Mutual Insurance Company (since October 2007); formerly, Director of Fund Board Relations (2004-2006) and Director of Product Development (2000-2004), Merrill Lynch Investment Managers; Senior Vice President Operations, Merrill Lynch Asset Management (1999-2000) |
John Millette6 (1962) Vice President and Secretary, 2003-present | Director4, Deutsche Asset Management |
Paul H. Schubert5 (1963) Chief Financial Officer, 2004-present Treasurer, 2005-present | Managing Director4, Deutsche Asset Management (since July 2004); formerly, Executive Director, Head of Mutual Fund Services and Treasurer for UBS Family of Funds (1998-2004); Vice President and Director of Mutual Fund Finance at UBS Global Asset Management (1994-1998) |
Patricia DeFilippis5 (1963) Assistant Secretary, 2005-present | Vice President, Deutsche Asset Management (since June 2005); formerly, Counsel, New York Life Investment Management LLC (2003-2005); legal associate, Lord, Abbett & Co. LLC (1998-2003) |
Elisa D. Metzger5 (1962) Assistant Secretary 2005-present | Director4, Deutsche Asset Management (since September 2005); formerly, Counsel, Morrison and Foerster LLP (1999-2005) |
Caroline Pearson6 (1962) Assistant Secretary, 2002-present | Managing Director4, Deutsche Asset Management |
Paul Antosca6 (1957) Assistant Treasurer, 2007-present | Director4, Deutsche Asset Management (since 2006); Vice President, The Manufacturers Life Insurance Company (U.S.A.) (1990-2006) |
Jack Clark6 (1967) Assistant Treasurer, 2007-present | Director4, Deutsche Asset Management (since 2007); formerly, Vice President, State Street Corporation (2002-2007) |
Kathleen Sullivan D'Eramo6 (1957) Assistant Treasurer, 2003-present | Director4, Deutsche Asset Management |
Diane Kenneally6 (1966) Assistant Treasurer, 2007-present | Director4, Deutsche Asset Management |
Jason Vazquez4 (1972) Anti-Money Laundering Compliance Officer, 2007-present | Vice President, Deutsche Asset Management (since 2006); formerly, AML Operations Manager for Bear Stearns (2004-2006), Supervising Compliance Principal and Operations Manager for AXA Financial (1999-2004) |
Robert Kloby5 (1962) Chief Compliance Officer, 2006-present | Managing Director4, Deutsche Asset Management (2004-present); formerly, Chief Compliance Officer/Chief Risk Officer, Robeco USA (2000-2004); Vice President, The Prudential Insurance Company of America (1988-2000); E.F. Hutton and Company (1984-1988) |
J. Christopher Jackson5 (1951) Chief Legal Officer, 2006-present | Director4, Deutsche Asset Management (2006-present); formerly, Director, Senior Vice President, General Counsel and Assistant Secretary, Hansberger Global Investors, Inc. (1996-2006); Director, National Society of Compliance Professionals (2002-2005) (2006-2009) |
2 The mailing address of Axel Schwarzer is c/o Deutsche Investment Management Americas Inc., 345 Park Avenue, New York, New York 10154. Mr. Schwarzer is an interested Board Member by virtue of his positions with Deutsche Asset Management.
3 As a result of their respective positions held with the Advisor, these individuals are considered "interested persons" of the Advisor within the meaning of the 1940 Act. Interested persons receive no compensation from the funds.
4 Executive title, not a board directorship.
5 Address: 345 Park Avenue, New York, New York 10154.
6 Address: Two International Place, Boston, MA 02110.
7 At present, substantially all DWS mutual funds are overseen by one of two boards of trustees (the "Boards"). Each Board, including the Board that oversees your Fund (the "New York Board"), has determined that the formation of a single consolidated Board overseeing these funds is in the best interests of the Funds and their shareholders. In this connection, each Board has approved a plan outlining the process for implementing the consolidation of the New York Board with the other primary DWS fund board (the "Chicago Board"). (The geographic references in the preceding sentences merely indicate where each Board historically held most of its meetings.)
The consolidation of the two Boards is expected to take effect on or about April 1, 2008 (the "Consolidation Date"). To accomplish the consolidation, the New York Board will nominate and elect four individuals (John W. Ballantine, Paul K. Freeman, William McClayton and Robert H. Wadsworth) who currently serve on the Chicago Board to the Board of your Fund and each other fund overseen by the New York Board. Information regarding these four individuals is set forth below. In addition, the Chicago Board has determined to nominate and recommend that shareholders of each fund overseen by that Board elect eight members of your Fund's Board (Henry P. Becton, Jr., Dawn-Marie Driscoll, Keith R. Fox, Kenneth C. Froewiss, Richard J. Herring, Rebecca W. Rimel, William N. Searcy, Jr. and Jean Gleason Stromberg). As a result, as of the Consolidation Date, it is expected that the four Chicago Board members and eight New York Board members named above (each of whom will be an Independent Board Member), together with Axel Schwarzer, CEO of DWS Scudder, will constitute the Board of substantially all DWS Scudder funds (134 funds), including your Fund. To facilitate the Board consolidation, three members of the New York Board (Martin J. Gruber, Graham E. Jones and Carl W. Vogt) have agreed to resign as of the Consolidation Date, which is prior to their normal retirement dates.
Following the Consolidation Date, it is expected that the consolidated Board will implement certain changes to the Fund's current committee structure and other governance practices, including the appointment of new committee chairs and members.
Name and Year of Birth Chicago Board Members to be Elected to New York Board | Business Experience and Directorships During the Past 5 Years | Position with the DWS Funds and Length of Time Served |
John W. Ballantine (1946) | Retired; formerly, Executive Vice President and Chief Risk Management Officer, First Chicago NBD Corporation/The First National Bank of Chicago (1996-1998); Executive Vice President and Head of International Banking (1995-1996). Directorships: Healthways, Inc. (provider of disease and care management services); Portland General Electric (utility company); Stockwell Capital Investments PLC (private equity). Former Directorships: First Oak Brook Bancshares, Inc. and Oak Brook Bank | Chicago Board Member since 1999 |
Paul K. Freeman (1950) | Consultant, World Bank/Inter-American Development Bank; formerly, Project Leader, International Institute for Applied Systems Analysis (1998-2001); Chief Executive Officer, The Eric Group, Inc. (environmental insurance) (1986-1998). Formerly, Trustee of funds managed by DIMA or its affiliates (1993-2002). | Chicago Board Member since 2002, Chairperson since 2007 |
William McClayton (1944) | Chief Administrative Officer, Diamond Management & Technology Consultants, Inc. (global management consulting firm) (2001-present); formerly, Senior Partner, Arthur Andersen LLP (accounting) (1966-2001). Directorship: Board of Managers, YMCA of Metropolitan Chicago. Formerly, Trustee, Ravinia Festival. | Chicago Board Member since 2004 |
Robert H. Wadsworth (1940) | President, Robert H. Wadsworth & Associates, Inc. (consulting firm) (1983 to present). Formerly, Trustee of funds managed by DIMA or its affiliates (1999-2004). | Chicago Board Member since 2004 |
The fund's Statement of Additional Information ("SAI") includes additional information about the Board Members. The SAI is available, without charge, upon request. If you would like to request a copy of the SAI, you may do so by calling the following toll-free number: (800) 621-1048.
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Automated Information Line | Institutional Investor Services (800) 703-1313 Personalized account information, information on other DeAM funds and services via touchtone telephone and the ability to exchange or redeem shares. | |
For More Information | (800) 730-1313, option 1 To speak with a fund service representative. | |
Written Correspondence | Deutsche Asset Management PO Box 219210Kansas City, MO 64121-9210 | |
Proxy Voting | A description of the fund's policies and procedures for voting proxies for portfolio securities and information about how the fund voted proxies related to its portfolio securities during the 12-month period ended June 30 is available on our Web site — www.dws-scudder.com (click on "proxy voting"at the bottom of the page) — or on the SEC's Web site — www.sec.gov. To obtain a written copy of the fund's policies and procedures without charge, upon request, call us toll free at (800) 621-1048. | |
Principal Underwriter | If you have questions, comments or complaints, contact: DWS Scudder Distributors, Inc. 222 South Riverside PlazaChicago, IL 60606-5808 www.dws-scudder.com (800) 621-1148 |
| NY Tax Free Money Fund — Investment Class | Tax Free Money Fund Investment |
Nasdaq Symbol | BNYXX | BTXXX |
CUSIP Number | 23336Y 698 | 23336Y 714 |
Fund Number | 844 | 839 |
Notes
Notes
ITEM 2. | CODE OF ETHICS |
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| As of the end of the period, December 31, 2007, NY Tax Free Money Fund and Tax Free Money Fund Investment have a code of ethics, as defined in Item 2 of Form N-CSR, that applies to the Principal Executive Officer and Principal Financial Officer.
There have been no amendments to, or waivers from, a provision of the code of ethics during the period covered by this report that would require disclosure under Item 2.
A copy of the code of ethics is filed as an exhibit to this Form N-CSR.
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ITEM 3. | AUDIT COMMITTEE FINANCIAL EXPERT |
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| The Funds’ audit committee is comprised solely of trustees who are “independent” (as such term has been defined by the Securities and Exchange Commission (“SEC”) in regulations implementing Section 407 of the Sarbanes-Oxley Act (the “Regulations”)). The Funds’ Board of Trustees has determined that there are several “audit committee financial experts” serving on the Funds’ audit committee. The Board has determined that Keith R Fox, the chair of the Funds’ audit committee, qualifies as an “audit committee financial expert” (as such term has been defined by the Regulations) based on its review of Mr. Fox’s pertinent experience and education. The SEC has stated that the designation or identification of a person as an audit committee financial expert pursuant to this Item 3 of Form N-CSR does not impose on such person any duties, obligations or liability that are greater than the duties, obligations and liability imposed on such person as a member of the audit committee and board of directors in the absence of such designation or identification. |
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ITEM 4. | PRINCIPAL ACCOUNTANT FEES AND SERVICES |
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NY TAX FREE MONEY FUND
FORM N-CSR DISCLOSURE RE: AUDIT FEES
The following table shows the amount of fees that PricewaterhouseCoopers, LLP (“PWC”), the Fund’s independent registered public accounting firm, billed to the Fund during the Fund’s last two fiscal years. The Audit Committee approved in advance all audit services and non-audit services that PWC provided to the Fund.
The Audit Committee has delegated certain pre-approval responsibilities to its Chairman (or, in his absence, any other member of the Audit Committee).
Services that the Fund’s Independent Registered Public Accounting Firm Billed to the Fund
Fiscal Year | Audit Fees Billed to Fund | Audit-Related | Tax Fees Billed to Fund | All |
2007 | $46,350 | $0 | $0 | $0 |
2006 | $38,000 | $128 | $0 | $0 |
The above “Audit- Related Fees” were billed for agreed upon procedures performed.
Services that the Fund’s Independent Registered Public Accounting Firm Billed to the Adviser and Affiliated Fund Service Providers
The following table shows the amount of fees billed by PWC to Deutsche Investment Management Americas, Inc. (“DeIM” or the “Adviser”), and any entity controlling, controlled by or under common control with DeIM (“Control Affiliate”) that provides ongoing services to the Fund (“Affiliated Fund Service Provider”), for engagements directly related to the Fund’s operations and financial reporting, during the Fund’s last two fiscal years.
Fiscal Year | Audit-Related | Tax Fees Billed to Adviser and Affiliated Fund Service Providers | All |
2007 | $58,500 | $25,000 | $0 |
2006 | $155,500 | $11,930 | $0 |
The “Audit-Related Fees” were billed for services in connection with the agreed-upon procedures related to fund mergers and additional costs related to annual audits and the above “Tax Fees” were billed in connection with tax consultation and agreed-upon procedures.
Non-Audit Services
The following table shows the amount of fees that PWC billed during the Fund’s last two fiscal years for non-audit services. The Audit Committee pre-approved all non-audit services that PWC provided to the Adviser and any Affiliated Fund Service Provider that related directly to the Fund’s operations and financial reporting. The Audit Committee requested and received information from PWC about any non-audit services that PWC rendered during the Fund’s last fiscal year to the Adviser and any Affiliated Fund Service Provider. The Committee considered this information in evaluating PWC’s independence.
Fiscal Year | Total (A) | Total Non-Audit Fees billed to Adviser and Affiliated Fund Service Providers (engagements related directly to the operations and financial reporting of the Fund) (B) | Total Non-Audit Fees billed to Adviser and Affiliated Fund Service Providers (all other engagements) (C) | Total of (A), (B) |
2007 | $0 | $25,000 | $600,000 | $625,000 |
2006 | $0 | $11,930 | $0 | $11,930 |
All other engagement fees were billed for services provided by PWC for services related to consulting on an IT project.
TAX FREE MONEY FUND INVESTMENT
FORM N-CSR DISCLOSURE RE: AUDIT FEES
The following table shows the amount of fees that PricewaterhouseCoopers, LLP (“PWC”), the Fund’s independent registered public accounting firm, billed to the Fund during the Fund’s last two fiscal years. The Audit Committee approved in advance all audit services and non-audit services that PWC provided to the Fund.
The Audit Committee has delegated certain pre-approval responsibilities to its Chairman (or, in his absence, any other member of the Audit Committee).
Services that the Fund’s Independent Registered Public Accounting Firm Billed to the Fund
Fiscal Year | Audit Fees Billed to Fund | Audit-Related | Tax Fees Billed to Fund | All |
2007 | $37,100 | $0 | $0 | $0 |
2006 | $38,000 | $128 | $0 | $0 |
The above “Audit- Related Fees” were billed for agreed upon procedures performed.
Services that the Fund’s Independent Registered Public Accounting Firm Billed to the Adviser and Affiliated Fund Service Providers
The following table shows the amount of fees billed by PWC to Deutsche Investment Management Americas, Inc. (“DeIM” or the “Adviser”), and any entity controlling, controlled by or under common control with DeIM (“Control Affiliate”) that provides ongoing services to the Fund (“Affiliated Fund Service Provider”), for engagements directly related to the Fund’s operations and financial reporting, during the Fund’s last two fiscal years.
Fiscal Year | Audit-Related | Tax Fees Billed to Adviser and Affiliated Fund Service Providers | All |
2007 | $58,500 | $25,000 | $0 |
2006 | $155,500 | $11,930 | $0 |
The “Audit-Related Fees” were billed for services in connection with the agreed-upon procedures related to fund mergers and additional costs related to annual audits and the above “Tax Fees” were billed in connection with tax consultation and agreed-upon procedures.
Non-Audit Services
The following table shows the amount of fees that PWC billed during the Fund’s last two fiscal years for non-audit services. The Audit Committee pre-approved all non-audit services that PWC provided to the Adviser and any Affiliated Fund Service Provider that related directly to the Fund’s operations and financial reporting. The Audit Committee requested and received information from PWC about any non-audit services that PWC rendered during the Fund’s last fiscal year to the Adviser and any Affiliated Fund Service Provider. The Committee considered this information in evaluating PWC’s independence.
Fiscal Year | Total (A) | Total Non-Audit Fees billed to Adviser and Affiliated Fund Service Providers (engagements related directly to the operations and financial reporting of the Fund) (B) | Total Non-Audit Fees billed to Adviser and Affiliated Fund Service Providers (all other engagements) (C) | Total of (A), (B) |
2007 | $0 | $25,000 | $600,000 | $625,000 |
2006 | $0 | $11,930 | $0 | $11,930 |
All other engagement fees were billed for services provided by PWC for services related to consulting on an IT project.
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ITEM 5. | AUDIT COMMITTEE OF LISTED REGISTRANTS |
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| Not Applicable |
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ITEM 6. | SCHEDULE OF INVESTMENTS |
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| Not Applicable |
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ITEM 7. | DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES |
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| Not applicable. |
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ITEM 8. | PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES |
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| Not applicable. |
ITEM 9. | PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS |
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| Not Applicable. |
ITEM 10. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS |
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| The Committee on Independent Trustees/Directors selects and nominates Independent Trustees/Directors. Fund shareholders may submit nominees that will be considered by the committee when a Board vacancy occurs. Submissions should be mailed to: c/o Dawn-Marie Driscoll, PO Box 100176, Cape Coral, FL 33910. |
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ITEM 11. | CONTROLS AND PROCEDURES |
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| (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. |
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| (b) There have been no changes in the registrant’s internal control over financial reporting that occurred during the registrant’s last half-year (the registrant’s second fiscal half-year in the case of the annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal controls over financial reporting. |
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ITEM 12. | EXHIBITS |
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| (a)(1) Code of Ethics pursuant to Item 2 of Form N-CSR is filed and attached hereto as EX-99.CODE ETH. |
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| (a)(2) Certification pursuant to Rule 30a-2(a) under the Investment Company Act of 1940 (17 CFR 270.30a-2(a)) is filed and attached hereto as Exhibit 99.CERT. |
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| (b) Certification pursuant to Rule 30a-2(b) under the Investment Company Act of 1940 (17 CFR 270.30a-2(b)) is furnished and attached hereto as Exhibit 99.906CERT. |
Form N-CSR Item F
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Registrant: | Tax Free Money Fund Investment and NY Tax Free Money Fund |
(Investment), a series of DWS Advisor Funds
By: | /s/Michael G. Clark |
| Michael G. Clark |
President
Date: | February 29, 2008 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Registrant: | Tax Free Money Fund Investment and NY Tax Free Money Fund |
(Investment), a series of DWS Advisor Funds
By: | /s/Michael G. Clark |
| Michael G. Clark |
President
Date: | February 29, 2008 |
By: | /s/Paul Schubert |
| Paul Schubert |
Chief Financial Officer and Treasurer
Date: | February 29, 2008 |