WASHINGTON, D. C. 20549
In the following interview, the portfolio management team discusses the market environment and the performance of Tax-Exempt Portfolio — DWS Tax-Free Money Fund Class S during the six-month period ended October 31, 2008.
As an investor of the Portfolio, you incur two types of costs: ongoing expenses and transaction costs. Ongoing expenses include management fees, distribution and service (12b-1) fees and other Portfolio expenses. Examples of transaction costs include sales charges (loads), redemption fees and account maintenance fees, which are not shown in this section. The following tables are intended to help you understand your ongoing expenses (in dollars) of investing in the Portfolio and to help you compare these expenses with the ongoing expenses of investing in other mutual funds. The example in the table is based on an investment of $1,000 invested at the beginning of the six-month period and held for the entire period (May 1, 2008 to October 31, 2008).
Please note that the expenses shown in these tables are meant to highlight your ongoing expenses only and do not reflect any transaction costs. The "Expenses Paid per $1,000" line of the tables is useful in comparing ongoing expenses only and will not help you determine the relative total expense of owning different funds. An account maintenance fee of $6.25 per quarter for Class S shares may apply for certain accounts whose balances do not meet the applicable minimum initial investment. This fee is not included in these tables. If it was, the estimate of expenses paid for Class S shares during the period would be higher, and account value during the period would be lower, by this amount.
For more information, please refer to the Portfolio's prospectus.
| Principal Amount ($) | Value ($) |
| |
Municipal Investments 95.8% |
Alabama 0.2% |
Alabama, Huntsville-Randolph School, Educational Building Authority Lease Revenue, Randolph School Project, 1.8%*, 2/1/2038, Compass Bank (a) | 10,000,000 | 10,000,000 |
Alaska 1.8% |
Alaska, State Housing Finance Corp., Governmental Purpose, Series B, 2.0%*, 12/1/2030 | 75,570,000 | 75,570,000 |
Arizona 2.3% |
Arizona, Salt River Project, Series 2008-1095, 144A, 1.82%*, 1/1/2033 | 4,500,000 | 4,500,000 |
Arizona, Board of Regents, State University System Revenue, Series A, 1.8%*, 7/1/2034, Lloyds TSB Bank PLC (a) | 6,500,000 | 6,500,000 |
Arizona, Health Facilities Authority Revenue, Banner Health, Series B, 1.75%*, 1/1/2035, Scotiabank (a) | 12,500,000 | 12,500,000 |
Arizona, Health Facilities Authority Revenue, The Terraces, 1.75%*, 12/1/2037, Sovereign Bank FSB (a) | 10,000,000 | 10,000,000 |
Arizona, Salt River Project, Agricultural Improvement & Power District, Electric Systems Revenue, Series R-12039, 144A, 1.86%*, 1/1/2035 | 3,000,000 | 3,000,000 |
Arizona, Senior Sports & Tourism Authority Revenue, Multi-Purpose Stadium, 1.73%*, 7/1/2036, Allied Irish Bank PLC (a) | 4,000,000 | 4,000,000 |
Maricopa County, AZ, RBC Municipal Products, Inc. Trust: | | |
Series C-1, AMT, 144A, 1.97%*, 1/1/2016, Royal Bank of Canada (a) | 29,595,000 | 29,595,000 |
Series C-6, AMT, 144A, 1.97%*, 5/1/2016, Royal Bank of Canada (a) | 13,995,000 | 13,995,000 |
Pinal County, AZ, Electrical District No. 3, Electrical Systems Revenue, Series U-1, 144A, 1.87%*, 10/3/2011 | 16,995,000 | 16,995,000 |
| 101,085,000 |
California 3.9% |
California, Bay Area Toll Authority, Toll Bridge Revenue, Series C, 1.25%*, 4/1/2039 | 40,000,000 | 40,000,000 |
California, Eastern Municipal Water District, Water & Sewer Revenue, Certificates of Participation, Series G, 1.6%*, 7/1/2038 | 3,000,000 | 3,000,000 |
California, Municipal Finance Authority, Multi-Family Housing Revenue, Series 2410, 144A, AMT, 1.97%*, 1/1/2020, JPMorgan Chase Bank (a) | 4,135,000 | 4,135,000 |
California, Statewide Communities Development Authority, Multi-Family Housing Revenue: | | |
Series 2680, 144A, 1.92%*, 5/15/2016, JPMorgan Chase Bank (a) | 13,600,000 | 13,600,000 |
Series 2681, 144A, AMT, 2.07%*, 5/15/2018, JPMorgan Chase Bank (a) | 14,190,000 | 14,190,000 |
Los Angeles, CA, Unified School District, Tax & Revenue Anticipation Notes, Series A, 3.0%, 7/30/2009 | 6,000,000 | 6,065,085 |
San Diego County, CA, Regional Transportation Commission, Sales Tax Revenue, Series C, 2.8%*, 4/1/2038 | 67,300,000 | 67,300,000 |
San Francisco, CA, City & County Multi-Family Housing Revenue, Series 34G, 144A, 1.84%*, 12/1/2018 | 15,685,000 | 15,685,000 |
University of California Revenues, Series 2169, 144A, 1.6%*, 5/15/2031 (b) | 2,800,000 | 2,800,000 |
| 166,775,085 |
Colorado 3.5% |
Colorado, Centerra Metropolitan District 1 Revenue, Refunding and Improvement, 1.8%*, 12/1/2029, Compass Bank (a) | 15,000,000 | 15,000,000 |
Colorado, College Investment Revenue, Education Loan, Series I-A, AMT, 1.85%*, 12/1/2042, Lloyds TSB Bank PLC (a) | 30,000,000 | 30,000,000 |
Colorado, Educational & Cultural Facilities Authority Revenue, Bear Creek School Project, 1.7%*, 10/1/2032, US Bank NA (a) | 6,400,000 | 6,400,000 |
Colorado, Educational & Cultural Facilities Authority Revenue, Fremont Christian School Project, 1.7%*, 6/1/2038, US Bank NA (a) | 16,610,000 | 16,610,000 |
Colorado, Goldsmith Metropolitan District, 1.9%*, 12/1/2034, Compass Bank (a) | 5,300,000 | 5,300,000 |
Colorado, Health Facilities Authority Revenue, Bethesda Adult Communities, Series A, 1.7%*, 8/15/2034, LaSalle Bank NA (a) | 5,000,000 | 5,000,000 |
Colorado, Housing & Finance Authority, Series AA3, 2.5%*, 5/1/2036 | 7,670,000 | 7,670,000 |
Colorado, Housing & Finance Authority, Solid Waste Revenue, Waste Management, Inc. Projects, AMT, 1.75%*, 7/1/2027, JPMorgan Chase Bank (a) | 14,160,000 | 14,160,000 |
Colorado, Lowry Economic Redevelopment Authority Revenue, Series A, 1.8%*, 12/1/2020, Compass Bank (a) | 7,000,000 | 7,000,000 |
Colorado, RBC Municipal Products, Inc. Trust, Series C-11, 144A, 1.82%*, 12/1/2031, Royal Bank of Canada (a) | 17,580,000 | 17,580,000 |
Colorado, Revenue Bond, Series 2007-319, 144A, 1.87%*, 6/7/2010, Bank of America NA (a) | 26,660,000 | 26,660,000 |
| 151,380,000 |
Delaware 0.9% |
Delaware, Eagle Tax Exempt Trust, AMT, 144A, 1.92%*, 4/15/2049 | 24,955,000 | 24,955,000 |
Delaware, State Economic Development Authority Revenue, YMCA Delaware Project, 1.68%*, 5/1/2036, PNC Bank NA (a) | 6,490,000 | 6,490,000 |
Sussex County, DE, First Mortgage Revenue, Cadbury Lewes, Series C, 1.9%*, 1/1/2016, Citizens Bank of PA (a) | 6,515,000 | 6,515,000 |
| 37,960,000 |
District of Columbia 2.6% |
District of Columbia, Center for Internships & Academic Revenue, 1.68%*, 7/1/2036, Branch Banking & Trust (a) | 3,400,000 | 3,400,000 |
District of Columbia, Housing Finance Agency, Multi-Family Housing Revenue, Series R-433, 144A, AMT, 1.93%*, 6/1/2038 | 7,780,000 | 7,780,000 |
District of Columbia, John F. Kennedy Center Revenue, 1.5%*, 10/1/2029, Bank of America NA (a) | 15,310,000 | 15,310,000 |
District of Columbia, Maret School, Inc. Revenue, 1.85%*, 10/1/2033, SunTrust Bank (a) | 2,865,000 | 2,865,000 |
District of Columbia, Metropolitan Airport Authority Systems, Series C, AMT, 3.0%*, 10/1/2021 (b) | 50,000,000 | 50,000,000 |
District of Columbia, The American University Issue Revenue, 4.25%*, 10/1/2015 | 34,700,000 | 34,700,000 |
| 114,055,000 |
Florida 6.1% |
Broward County, FL, School Board, Certificates of Participation, 1.5%*, 7/1/2021 (b) | 14,000,000 | 14,000,000 |
Florida, BB&T Municipal Trust: | | |
Series 1010, 144A, 1.5%*, 1/15/2019, Branch Banking & Trust (a) | 7,375,000 | 7,375,000 |
Series 1029, 1.5%*, 7/1/2024, Branch Banking & Trust (a) | 11,160,000 | 11,160,000 |
Series 1031, 1.5%*, 8/1/2024, Branch Banking & Trust (a) | 12,895,000 | 12,895,000 |
Series 1012, 144A, 1.5%*, 11/1/2024, Branch Banking & Trust (a) | 9,900,000 | 9,900,000 |
Florida, Capital Trust Agency Housing Revenue, Atlantic Housing Foundation, Series A, 1.8%*, 7/15/2024 | 19,000,000 | 19,000,000 |
Florida, Development Finance Corp., Enterprise Board Program, Out of Door Academy, 1.65%*, 7/1/2038, Northern Trust Co. (a) | 11,500,000 | 11,500,000 |
Florida, Housing Finance Corp., Multi-Family Mortgage Revenue, Clear Harbor Apartments, AMT, 1.88%*, 6/15/2042, Citibank NA (a) | 3,295,000 | 3,295,000 |
Florida, Housing Finance Corp., Multi-Family Revenue, Victoria Park, Series J-1, 1.77%*, 10/15/2032 | 7,720,000 | 7,720,000 |
Florida, RBC Municipal Products, Inc. Trust, Series E-4, 144A, AMT, 1.97%*, 6/1/2010, Royal Bank of Canada (a) | 9,995,000 | 9,995,000 |
Florida, Revenue Bonds: | | |
Series 2008-1141, 144A, 1.82%*, 10/1/2041 (b) | 7,500,000 | 7,500,000 |
Series 10003, 144A, 2.12%*, 12/1/2031, Bank of America NA (a) | 4,000,000 | 4,000,000 |
Highlands County, FL, Health Facilities Authority Revenue: | | |
Series B-3, 1.85%*, 11/15/2031, SunTrust Bank (a) | 5,000,000 | 5,000,000 |
Series A, 1.85%*, 11/15/2034, SunTrust Bank (a) | 5,000,000 | 5,000,000 |
Hillsborough County, FL, Housing Finance Authority, Multi-Family Revenue, Hunt Club Apartments, 3.0%*, 8/15/2041, SunTrust Bank (a) | 8,000,000 | 8,000,000 |
Jacksonville, FL, Health Facilities Authority, Hospital Revenue, Series E, 1.6%*, 8/15/2027, Branch Banking & Trust (a) | 5,875,000 | 5,875,000 |
Jacksonville, FL, Transportation Revenue, Series B, 5.45%*, 10/1/2027 | 13,500,000 | 13,500,000 |
Lee County, FL, Industrial Development Authority, Health Care Facilities Revenue, Hope Hospice Project, 1.65%*, 10/1/2027, Northern Trust Co. (a) | 15,000,000 | 15,000,000 |
Leesburg, FL, Hospital Revenue, The Villages Regional Hospital Project, 1.77%*, 7/1/2036, Scotiabank (a) | 8,000,000 | 8,000,000 |
Orange County, FL, Health Facilities Authority Revenue, Orlando Regional Healthcare: | | |
Series E, 1.85%*, 10/1/2026, SunTrust Bank (a) | 5,500,000 | 5,500,000 |
Series F, 2.5%*, 10/1/2026, SunTrust Bank (a) | 5,800,000 | 5,800,000 |
Series G, 4.5%*, 10/1/2026, SunTrust Bank (a) | 5,500,000 | 5,500,000 |
Orange County, FL, Housing Finance Authority, Multi-Family Revenue, Series 1179, 144A, AMT, 2.0%*, 10/1/2031 | 7,410,000 | 7,410,000 |
Orange County, FL, Housing Finance Authority, Multi-Family Revenue, Laurel Oaks Apartments, Phase I, AMT, 3.0%*, 8/15/2042, SunTrust Bank (a) | 10,780,000 | 10,780,000 |
Orange County, FL, Housing Finance Authority, Multi-Family Revenue, Laurel Oaks Apartments, Phase II, AMT, 3.0%*, 8/15/2042, SunTrust Bank (a) | 8,660,000 | 8,660,000 |
Orlando & Orange County, FL, Expressway Authority Revenue, Series B-2, 1.8%*, 7/1/2040, SunTrust Bank (a) | 19,000,000 | 19,000,000 |
Osceola County, FL, Housing Finance Authority, Multi-Family Revenue, Arrow Ridge Apartments, Series A, AMT, 2.5%*, 10/1/2032 | 4,200,000 | 4,200,000 |
Palm Beach County, FL, Community Foundation, Palm Beach Project Revenue, 1.7%*, 3/1/2034, Northern Trust Co. (a) | 4,750,000 | 4,750,000 |
Sarasota County, FL, Health Care Facilities Authority Revenue, Bay Village Project, 1.52%*, 12/1/2023, Bank of America NA (a) | 4,720,000 | 4,720,000 |
Seminole County, FL, Industrial Development Authority Revenue, Masters Academy Project, 1.75%*, 11/1/2034, Allied Irish Bank PLC (a) | 8,470,000 | 8,470,000 |
| 263,505,000 |
Georgia 4.3% |
Atlanta, GA, Development Authority Revenue, Botanical Garden Improvements Project, 1.85%*, 11/1/2029, SunTrust Bank (a) | 9,500,000 | 9,500,000 |
Cobb County, GA, Kennestone Hospital Authority Revenue, Series A, 1.97%*, 4/1/2040, SunTrust Bank (a) | 20,000,000 | 20,000,000 |
Fayette County, GA, Hospital Authority Revenue, Anticipation Certificates, Community Hospital Project, 1.85%*, 6/1/2035, SunTrust Bank (a) | 14,000,000 | 14,000,000 |
Floyd County, GA, Development Authority Revenue, Berry College, 1.85%*, 6/1/2038, SunTrust Bank (a) | 11,000,000 | 11,000,000 |
Fulton County, GA, Development Authority Revenue, Doris & Alex Weber School Project, 1.68%*, 12/1/2030, Branch Banking & Trust (a) | 5,000,000 | 5,000,000 |
Fulton County, GA, Development Authority Revenue, Georgia Tech Facilities Project: | | |
Series A, 1.75%*, 5/1/2037, SunTrust Bank (a) | 3,500,000 | 3,500,000 |
Series B, 1.8%*, 6/1/2032, SunTrust Bank (a) | 3,400,000 | 3,400,000 |
Fulton County, GA, Development Authority Revenue, Kings Ridge Christian School, 1.68%*, 5/1/2026, Branch Banking & Trust (a) | 2,500,000 | 2,500,000 |
Fulton County, GA, Development Authority Revenue, Piedmont Healthcare, Inc. Project, 1.85%*, 6/1/2037, SunTrust Bank (a) | 9,000,000 | 9,000,000 |
Fulton County, GA, Development Authority Revenue, The Lovett School Project, 1.85%*, 4/1/2033, SunTrust Bank (a) | 8,000,000 | 8,000,000 |
Fulton County, GA, Development Authority Revenue, Woodward Academy, Inc. Project, 1.85%*, 12/1/2033, SunTrust Bank (a) | 5,000,000 | 5,000,000 |
Georgia, Metropolitan Atlanta, Series 2008-3046X, 144A, 2.82%*, 7/1/2037 (b) | 6,665,000 | 6,665,000 |
Georgia, Private Colleges & Universities Authority Revenue, Mercer University Project: | | |
Series A, 1.8%*, 10/1/2036, Branch Banking & Trust (a) | 5,500,000 | 5,500,000 |
Series C, 1.8%*, 10/1/2031, Branch Banking & Trust (a) | 8,750,000 | 8,750,000 |
Georgia, RBC Municipal Products, Inc. Trust: | | |
Series C-3, 144A, AMT, 1.97%*, 3/1/2016, Royal Bank of Canada (a) | 10,000,000 | 10,000,000 |
Series C-9, AMT, 1.97%*, 8/1/2016, Royal Bank of Canada (a) | 30,495,000 | 30,495,000 |
Georgia, Solar Eclipse Funding Trust, Series 2007-0072, 144A, 1.78%*, 6/1/2032, US Bank NA (a) | 10,600,000 | 10,600,000 |
Richmond County, GA, Hospital Authority Revenue, Anticipation Certificates, University Health Services, Inc. Project, 1.85%*, 1/1/2036, SunTrust Bank (a) | 10,000,000 | 10,000,000 |
Walker, Dade, & Catoosa Counties, GA, Hospital Authority Revenue, Anticipation Certificates, Hutcheson Medical Center, 2.37%*, 10/1/2028, Regions Bank (a) | 11,800,000 | 11,800,000 |
| 184,710,000 |
Hawaii 0.1% |
Hawaii, State General Obligation, Series 2008-0002, "A", 144A, 1.85%*, 5/1/2028 | 4,950,000 | 4,950,000 |
Idaho 1.8% |
Idaho, Housing & Finance Association, Single Family Mortgage: | | |
Series A, AMT, 2.65%*, 7/1/2033 | 6,280,000 | 6,280,000 |
Series B, AMT, 2.65%*, 7/1/2032 | 6,785,000 | 6,785,000 |
"I", Series B, AMT, 2.65%*, 7/1/2033 | 6,160,000 | 6,160,000 |
Idaho, Non-Profit Housing & Finance Association Facilities Revenue, College of Idaho Project, 1.7%*, 7/1/2030, US Bank NA (a) | 5,000,000 | 5,000,000 |
Idaho, State General Obligation, Tax Anticipation Notes, 3.0%, 6/30/2009 | 52,500,000 | 52,935,886 |
| 77,160,886 |
Illinois 6.9% |
Aurora, IL, Single Family Mortgage Revenue, Series C55, 144A, AMT, 2.0%*, 6/1/2045 | 12,980,000 | 12,980,000 |
Channahon, IL, Morris Hospital Revenue: | | |
Series A, 1.6%*, 12/1/2023, US Bank NA (a) | 1,400,000 | 1,400,000 |
Series B, 1.6%*, 12/1/2032, US Bank NA (a) | 4,285,000 | 4,285,000 |
Series C, 1.6%*, 12/1/2032, US Bank NA (a) | 5,470,000 | 5,470,000 |
Chicago, IL, Board of Education, Series R-3075, 144A, 2.58%*, 12/1/2025 (b) | 3,935,000 | 3,935,000 |
Chicago, IL, Metropolitan Water Reclamation District, Greater Chicago: | | |
Series 2008-052, 144A, 1.82%*, 12/1/2035 | 8,395,000 | 8,395,000 |
Series R-11283, 144A, 1.85%*, 12/1/2021 | 2,390,000 | 2,390,000 |
Chicago, IL, O'Hare International Airport Revenue, Series R-11312, 144A, 2.57%*, 1/1/2033 (b) | 7,000,000 | 7,000,000 |
Chicago, IL, Wastewater Transmission Revenue: | | |
Series C-2, 1.25%*, 1/1/2039, Bank of America NA (a) | 15,500,000 | 15,500,000 |
Series C-3, 1.25%*, 1/1/2039, Northern Trust Co. (a) | 10,500,000 | 10,500,000 |
Cook County, IL, Catholic Theological Union Project Revenue, 1.7%*, 2/1/2035, Harris Trust & Savings Bank (a) | 6,000,000 | 6,000,000 |
Cook County, IL, Industrial Development Revenue, Devorahco LLC Project, Series A, AMT, 1.75%*, 12/1/2034, LaSalle Bank NA (a) | 2,000,000 | 2,000,000 |
Cook County, IL, Sales Tax Anticipation Notes, 3.0%, 8/3/2009 | 17,500,000 | 17,683,704 |
Illinois, Development Finance Authority, Industrial Development Revenue, Home Run Inn Frozen Foods, AMT, 3.05%*, 4/1/2020, Bank One NA (a) | 1,880,000 | 1,880,000 |
Illinois, Development Finance Authority, Industrial Development Revenue, Katlaw, Tretam & Co. Project, AMT, 1.75%*, 8/1/2027, LaSalle Bank NA (a) | 3,370,000 | 3,370,000 |
Illinois, Development Finance Authority, Industrial Project Revenue, Grecian Delight Foods Project, AMT, 1.75%*, 8/1/2019, LaSalle Bank NA (a) | 3,500,000 | 3,500,000 |
Illinois, Educational Facilities Authority Revenues, University of Chicago: | | |
Series B-1, 1.85%*, 7/1/2036 | 8,100,000 | 8,100,000 |
Series B-2, 1.85%*, 7/1/2036 | 8,600,000 | 8,600,000 |
Illinois, Finance Authority Pollution Control Revenue, Commonwealth Edison Co., Series D, 1.8%*, 3/1/2020, SunTrust Bank (a) | 10,000,000 | 10,000,000 |
Illinois, Finance Authority Revenue, "A", 144A, 1.86%*, 12/1/2042 | 8,565,000 | 8,565,000 |
Illinois, Finance Authority Revenue, Clare Oaks: | | |
Series C, 1.7%*, 11/1/2040, Sovereign Bank FSB (a) | 5,000,000 | 5,000,000 |
Series D, 1.7%*, 11/1/2040, Sovereign Bank FSB (a) | 10,000,000 | 10,000,000 |
Illinois, Finance Authority Revenue, Northwest Community Hospital, Series C, 1.4%*, 7/1/2032, Wells Fargo Bank NA (a) | 5,800,000 | 5,800,000 |
Illinois, Finance Authority Revenue, Swedish Covenant Hospital, Series B, 2.0%*, 8/15/2038, Allied Irish Bank PLC (a) | 7,500,000 | 7,500,000 |
Illinois, Finance Authority, Student Housing Revenue, Dekalb LLC Project, Series A, 1.85%*, 7/1/2038, Sovereign Bank FSB (a) | 4,500,000 | 4,500,000 |
Illinois, Regional Transit Improvements, Series 2008-3043X, 144A, 3.32%*, 7/1/2026 | 6,665,000 | 6,665,000 |
Illinois, Sales Tax Revenue, Series R-4516, 144A, 1.85%*, 6/15/2023 | 8,840,000 | 8,840,000 |
Illinois, State General Obligation: | | |
Series R-11295, 144A, 1.85%*, 1/1/2027 | 2,995,000 | 2,995,000 |
Series PT-3524, 2.17%*, 1/1/2020 | 10,455,000 | 10,455,000 |
Illinois, State Toll Highway Authority Revenue, Series A-1, 2.7%*, 7/1/2030 | 32,000,000 | 32,000,000 |
Illinois, University of Illinois Revenue, "A", 144A, 2.03%*, 4/1/2035 | 14,300,000 | 14,300,000 |
Justice, IL, Multi-Family Housing Revenue, Candlewood Apartments Project, AMT, 1.91%*, 1/15/2033 | 10,700,000 | 10,700,000 |
Mundelein, IL, Industrial Development Revenue, MacLean Fogg Co. Project, AMT, 1.85%*, 1/1/2015, Northern Trust Co. (a) | 6,500,000 | 6,500,000 |
Tinley Park, IL, Industrial Development Revenue, Harbor Tool Manufacturing, Inc. Project, AMT, 1.75%*, 7/1/2020, LaSalle Bank NA (a) | 1,960,000 | 1,960,000 |
Woodstock, IL, Multi-Family Housing Revenue, Willow Brooke Apartments, AMT, 1.88%*, 4/1/2042, Wells Fargo Bank NA (a) | 28,000,000 | 28,000,000 |
| 296,768,704 |
Indiana 1.0% |
Indiana, Health & Educational Facility, Financing Authority Revenue, Clarian Health: | | |
Series D, 1.43%*, 2/15/2030, Branch Banking & Trust (a) | 8,980,000 | 8,980,000 |
Series C, 1.75%*, 2/15/2030, Branch Banking & Trust (a) | 9,000,000 | 9,000,000 |
Indiana, Health & Educational Facility, Financing Authority Revenue, Greenwood Village South Project, Series A, 1.7%*, 5/1/2036, Sovereign Bank FSB (a) | 9,345,000 | 9,345,000 |
Indiana, Health Facility Financing Authority Revenue, Clark Memorial Hospital, Series A, 1.95%*, 4/1/2024, Bank One NA (a) | 2,000,000 | 2,000,000 |
Indiana, State Development Finance Authority, Industrial Development Revenue, Red Gold, Inc. Project, Series A, 2.2%*, 6/30/2009, Harris Trust and Savings Bank (a) | 3,700,000 | 3,700,000 |
Terre Haute, IN, Westminster Village Revenue, Series A, 1.7%*, 8/1/2036, Sovereign Bank FSB (a) | 9,245,000 | 9,245,000 |
| 42,270,000 |
Iowa 0.9% |
Iowa, Finance Authority, Multi-Family Revenue, Housing Windsor on River, Series A, AMT, 1.89%*, 5/1/2042, Wells Fargo Bank NA (a) | 17,000,000 | 17,000,000 |
Iowa, Finance Authority, Student Housing Revenue, Des Moines LLC Project, Series A, 1.79%*, 6/1/2039, Citibank NA (a) | 10,000,000 | 10,000,000 |
Iowa, Higher Education Loan Authority Revenue, Private College Facility, Grinnell College, 1.68%*, 12/1/2011 | 12,500,000 | 12,500,000 |
| 39,500,000 |
Kansas 0.7% |
Kansas, State Development Finance Authority, Multi-Family Revenue, Oak Ridge Park II Project, Series X, AMT, 1.95%*, 12/1/2036, Marshall & Ilsley (a) | 3,650,000 | 3,650,000 |
Leawood, KS, Genaral Obligation, Series 1, 3.0%, 10/1/2009 | 15,800,000 | 15,981,241 |
Lenexa, KS, Series 2007-302, 144A, 1.87%*, 2/1/2012 | 12,495,000 | 12,495,000 |
| 32,126,241 |
Kentucky 1.9% |
Kentucky, Asset/Liability Commission, General Fund Revenue, Tax & Revenue Anticipation Notes, Series A, 3.0%, 6/25/2009 | 53,000,000 | 53,410,778 |
Kentucky, Economic Development Finance Authority, Solid Waste Disposal Revenue, Republic Services, Inc. Project, 1.5%*, 10/1/2028, JPMorgan Chase Bank (a) | 18,025,000 | 18,025,000 |
Kentucky, Housing Corp. Revenue, Series F, AMT, 2.25%*, 7/1/2029 | 9,050,000 | 9,050,000 |
| 80,485,778 |
Louisiana 0.4% |
Louisiana, Local Government Environmental Facilities & Community Development Authority Revenue, Downreit, Inc., Series B, 1.65%*, 10/1/2037, ABN AMRO Bank NV (a) | 10,635,000 | 10,635,000 |
Louisiana, St. Tammany Parish Development District Revenue, 1.85%*, 7/1/2038, SunTrust Bank (a) | 5,000,000 | 5,000,000 |
| 15,635,000 |
Maine 0.2% |
Maine, State Housing Authority Mortgage Purchase: | | |
Series G, AMT, 2.0%*, 11/15/2037 | 5,000,000 | 5,000,000 |
Series B, AMT, 2.05%*, 11/15/2041 | 5,000,000 | 5,000,000 |
| 10,000,000 |
Maryland 0.9% |
Baltimore, MD, Municipal Securities Trust Receipts, SGA 152, "A", 144A, 2.05%*, 7/1/2020, Societe Generale (a) | 10,000,000 | 10,000,000 |
Chestertown, MD, Economic Development Project Revenue, Washington College, Series A, 1.77%*, 3/1/2038, RBS Citizens NA (a) | 7,000,000 | 7,000,000 |
Maryland, BB&T Municipal Trust, University & College Improvements, Series 46, 144A, 1.6%*, 7/1/2016 | 3,850,000 | 3,850,000 |
Maryland, State Economic Development Corp. Revenue, YMCA Central Maryland Project, 1.68%*, 4/1/2031, Branch Banking & Trust (a) | 3,850,000 | 3,850,000 |
Maryland, State Economic Development Corp. Revenue, Howard Hughes Medical Institute, Series A, 1.1%*, 2/15/2043 | 3,000,000 | 3,000,000 |
Maryland, State Health & Higher Educational Facilities Authority Revenue, Sheppard Pratt, Series B, 1.85%*, 7/1/2028, SunTrust Bank (a) | 6,895,000 | 6,895,000 |
Maryland, State Health & Higher Educational Facilities Authority Revenue, Upper Chesapeake Hospital, Series B, 1.72%*, 1/1/2043, Branch Banking & Trust (a) | 5,800,000 | 5,800,000 |
| 40,395,000 |
Massachusetts 5.7% |
Massachusetts, Bay Transportation Authority,Sales Tax Revenue, Series A-1, 1.5%*, 7/1/2021 | 52,700,000 | 52,700,000 |
Massachusetts, Bay Transportation Authority, General Transportation Systems, 2.5%*, 3/1/2030 | 55,000,000 | 55,000,000 |
Massachusetts, Macon Trust: | | |
Series 2007-343, 144A, 1.82%*, 12/1/2012, Bank of America NA (a) | 27,388,000 | 27,388,000 |
Series 2007-310, 144A, 1.87%*, 6/15/2012, Bank of America NA (a) | 4,250,000 | 4,250,000 |
Massachusetts, State Development Finance Agency Revenue, Series R-11286, 1.85%*, 7/1/2038 | 3,995,000 | 3,995,000 |
Massachusetts, State Development Finance Agency Revenue, Charles River School, 1.92%*, 5/1/2037, Citizens Bank of MA (a) | 5,000,000 | 5,000,000 |
Massachusetts, State Development Finance Agency Revenue, Clark University, 2.05%*, 10/1/2038, TD Banknorth NA (a) | 5,000,000 | 5,000,000 |
Massachusetts, State Development Finance Agency Revenue, Dean College, 1.9%*, 10/1/2038, RBS Citizens NA (a) | 6,000,000 | 6,000,000 |
Massachusetts, State Development Finance Agency Revenue, Governor Dummer Academy, 1.9%*, 8/1/2036, Citizens Bank of MA (a) | 3,000,000 | 3,000,000 |
Massachusetts, State Development Finance Agency Revenue, Tabor Academy, Series A, 1.9%*, 12/1/2036, Citizens Bank of MA (a) | 7,670,000 | 7,670,000 |
Massachusetts, State Development Finance Agency Revenue, The Fay School, Inc., 1.92%*, 4/1/2038, TD Banknorth NA (a) | 5,400,000 | 5,400,000 |
Massachusetts, State Development Finance Agency Revenue, Wentworth Institute, 1.9%*, 10/1/2030, RBS Citizens NA (a) | 9,710,000 | 9,710,000 |
Massachusetts, State Development Finance Agency Revenue, YMCA of Greater Worcester, 1.78%*, 9/1/2041, TD Banknorth NA (a) | 5,265,000 | 5,265,000 |
Massachusetts, State Health & Educational Facilities Authority Revenue, Boston University, Series N, 1.4%*, 10/1/2034, Bank of America NA (a) | 40,000,000 | 40,000,000 |
Massachusetts, State Health & Educational Facilities Authority Revenue, Tufts University, Series N-1, 1.5%*, 8/15/2040 | 6,000,000 | 6,000,000 |
Massachusetts, State Industrial Finance Agency Revenue, Groton School Issue, Series B, 1.78%*, 3/1/2028 | 8,710,000 | 8,710,000 |
| 245,088,000 |
Michigan 2.3% |
Eastern Michigan University Revenues, 6.0%*, 6/1/2036, Dexia Credit Local (a) | 13,000,000 | 13,000,000 |
Forest Hills, MI, Public Schools, Series 1791, 144A, 1.83%*, 5/1/2009 | 7,805,000 | 7,805,000 |
Michigan, Kent Hospital Finance Authority Revenue, Spectrum Health System, Series C, 1.72%*, 1/15/2026, Bank of New York (a) | 10,000,000 | 10,000,000 |
Michigan, RBC Municipal Products, Inc. Trust, Series L-25, 144A, AMT, 2.5%*, 9/1/2033, Royal Bank of Canada (a) | 66,745,000 | 66,745,000 |
| 97,550,000 |
Minnesota 1.0% |
Coon Rapids, MN, Industrial Development Revenue, Kurt Manufacturing Project: | | |
AMT, 1.91%*, 11/1/2017, US Bank NA (a) | 3,500,000 | 3,500,000 |
AMT, 1.91%*, 11/1/2027, US Bank NA (a) | 5,000,000 | 5,000,000 |
Minneapolis & St. Paul, MN, Housing & Redevelopment Authority, Allina Health Care System Revenue, Series C-2, 1.6%*, 11/15/2034, Wells Fargo Bank NA (a) | 10,000,000 | 10,000,000 |
Minnesota, School Districts Tax & Aid Anticipation Borrowing Program Certificates, 3.0%, 9/4/2009 | 12,000,000 | 12,134,140 |
Minnesota, State Residential Housing Finance Agency, Series C, AMT, 1.82%*, 7/1/2048 | 6,000,000 | 6,000,000 |
University of Minnesota, Series A, 1.25%*, 1/1/2034 | 5,600,000 | 5,600,000 |
| 42,234,140 |
Missouri 0.5% |
Missouri, State Health & Educational Facilities Authority Revenue, Lutheran Senior Services Project, 1.7%*, 2/1/2039, US Bank NA (a) | 6,000,000 | 6,000,000 |
Missouri, State Health & Educational Facilities Authority Revenue, Rockhurst High School, 1.85%*, 9/1/2027, Allied Irish Bank PLC (a) | 4,640,000 | 4,640,000 |
Platte County, MO, Industrial Development Authority Revenue, Complete Home Concepts, Series A, AMT, 1.9%*, 1/1/2039, Columbian Bank (a) | 6,800,000 | 6,800,000 |
Springfield, MO, Industrial Development Authority Revenue, Abec, Inc. Project, AMT, 1.98%*, 6/1/2028, US Bank NA (a) | 3,200,000 | 3,200,000 |
| 20,640,000 |
Nebraska 0.4% |
Nebraska, Investment Finance Authority, Single Family Housing Revenue: | | |
Series B, AMT, 1.95%*, 9/1/2034 | 4,520,000 | 4,520,000 |
Series D, AMT, 1.95%*, 9/1/2034 | 3,935,000 | 3,935,000 |
Series E, AMT, 1.95%*, 9/1/2034 | 4,030,000 | 4,030,000 |
Omaha, NE, Public Power District Electric Revenue, Series R-11291, 144A, 1.85%*, 2/1/2034 | 2,495,000 | 2,495,000 |
| 14,980,000 |
Nevada 1.6% |
Clark County, NV, Airport Revenue, Series D-3, 1.8%*, 7/1/2029, Byerische Landesbank (a) | 14,350,000 | 14,350,000 |
Clark County, NV, School District, Series B, 5.0%, 6/15/2009 | 7,000,000 | 7,136,837 |
Nevada, Housing Division Single Family Mortgage Revenue: | | |
Series A, AMT, 1.95%*, 10/1/2039 | 14,700,000 | 14,700,000 |
Series B, AMT, 1.95%*, 4/1/2042 | 8,000,000 | 8,000,000 |
Nevada, Housing Division, Multi-Unit Housing, Apache Project, Series A, AMT, 2.0%*, 10/15/2032 | 4,400,000 | 4,400,000 |
Nevada, State Director Department of Business & Industry, Nevada Cancer Institute Project, 1.5%*, 12/1/2033, Bank of America NA (a) | 20,450,000 | 20,450,000 |
| 69,036,837 |
New Hampshire 1.1% |
New Hampshire, Health & Education Facilities Authority Revenue, Currier Museum of Art, 1.92%*, 8/1/2036, Citizens Bank of NH (a) | 11,000,000 | 11,000,000 |
New Hampshire, Health & Education Facilities Authority Revenue, Dartmouth College Issue, 1.6%*, 6/1/2032 | 2,100,000 | 2,100,000 |
New Hampshire, Health & Education Facilities Authority Revenue, Havenwood Heritage Heights, Series B, 1.5%*, 1/1/2030, Citizens Bank of NH (a) | 15,155,000 | 15,155,000 |
New Hampshire, Health & Education Facilities Authority Revenue, Kendal at Hanover, Series B, 1.82%*, 10/1/2030, RBS Citizens NA (a) | 13,330,000 | 13,330,000 |
New Hampshire, Higher Educational & Health Facilities Authority Revenue, Greater Manchester YMCA, 1.82%*, 10/1/2028, RBS Citizens NA (a) | 3,800,000 | 3,800,000 |
| 45,385,000 |
New Jersey 1.2% |
New Jersey, Economic Development Authority, Industrial Development Revenue, CST-Products LLC Project, AMT, 1.9%*, 4/1/2026, National Bank of Canada (a) | 2,960,000 | 2,960,000 |
New Jersey, State Tax & Revenue Anticipation Notes, Series A, 3.0%, 6/25/2009 | 50,000,000 | 50,448,153 |
| 53,408,153 |
New Mexico 1.7% |
Albuquerque, NM, Health Facilities Revenue, Lovelace Respiratory Research Institute, Series A, 1.65%*, 9/1/2025, Wells Fargo Bank NA (a) | 5,400,000 | 5,400,000 |
Bernalillo County, NM, Gross Receipts Tax Revenue, Series 2004-B, 144A, 3.32%*, 4/1/2027 | 10,320,000 | 10,320,000 |
University of New Mexico Revenues: | | |
1.8%*, 6/1/2026 | 19,480,000 | 19,480,000 |
Series C, 1.85%*, 6/1/2030 | 36,840,000 | 36,840,000 |
| 72,040,000 |
New York 0.6% |
Hempstead, NY, Industrial Development Agency Revenue, Series 92G, 144A, AMT, 1.81%*, 10/1/2045 | 11,345,000 | 11,345,000 |
New York, State Housing Finance Agency Revenue, 100 Maiden Lane, Series A, 2.1%*, 5/15/2037 | 2,500,000 | 2,500,000 |
New York, State Mortgage Agency Revenue, Series R-181, 144A, AMT, 1.93%*, 4/1/2032 | 9,500,000 | 9,500,000 |
New York, NY, General Obligation, Series 2831, 1.8%*, 1/1/2015 | 4,200,000 | 4,200,000 |
| 27,545,000 |
North Carolina 4.8% |
Cleveland County, NC, Industrial Facilities & Pollution Control Financing Authority, Curtiss-Wright Flight Systems, AMT, 1.75%*, 11/1/2023, Bank of America NA (a) | 4,150,000 | 4,150,000 |
North Carolina, BB&T Municipal Trust: | | |
Series 1008, 144A, 1.5%*, 3/1/2024, Branch Banking & Trust (a) | 6,395,000 | 6,395,000 |
Series 1009, 144A, 1.5%*, 3/1/2024, Branch Banking & Trust (a) | 13,720,000 | 13,720,000 |
Series 1011, 144A, 1.5%*, 4/1/2024, Branch Banking & Trust (a) | 8,750,000 | 8,750,000 |
Series 1024, 144A, 1.5%*, 5/31/2024, Branch Banking & Trust (a) | 5,500,000 | 5,500,000 |
Series 1025, 144A, 1.5%*, 6/1/2024, Branch Banking & Trust (a) | 11,800,000 | 11,800,000 |
Series 1027, 144A, 1.5%*, 3/1/2016, Branch Banking & Trust (a) | 11,085,000 | 11,085,000 |
Series 1032, 1.5%*, 1/7/2024, Branch Banking & Trust (a) | 12,995,000 | 12,995,000 |
North Carolina, Capital Educational Facilities Finance Agency Revenue, High Point University Project: | | |
1.68%*, 12/1/2028, Branch Banking & Trust (a) | 3,755,000 | 3,755,000 |
1.68%*, 5/1/2030, Branch Banking & Trust (a) | 4,500,000 | 4,500,000 |
North Carolina, Capital Facilities Finance Agency, Educational Facilities Revenue, Salem Academy & College Project, 1.68%*, 8/1/2030, Branch Banking & Trust (a) | 7,400,000 | 7,400,000 |
North Carolina, Capital Facilities Finance Agency, Educational Facilities Revenue, Summit School, Inc. Project, 1.68%*, 6/1/2033, Branch Banking & Trust (a) | 2,700,000 | 2,700,000 |
North Carolina, Capital Facilities Finance Agency, Educational Revenue, Forsyth Country Day School, 1.68%*, 12/1/2031, Branch Banking & Trust (a) | 11,960,000 | 11,960,000 |
North Carolina, Charlotte-Mecklenburg Hospital Authority, Health Care Systems Revenue, Series K, 5.0%*, 1/15/2047 (b) | 23,290,000 | 23,290,000 |
North Carolina, Medical Care Commission, Health Care Facilities Revenue, First Mortgage Deerfield, Series B, 1.68%*, 11/1/2038, Branch Banking & Trust (a) | 10,035,000 | 10,035,000 |
North Carolina, Medical Care Commission, Health Care Facilities Revenue, Wake Forest University, Series A, 1.58%*, 7/1/2034, Branch Banking & Trust (a) | 7,870,000 | 7,870,000 |
North Carolina, Medical Care Commission, Hospital Revenue, Southeastern Regional Medical Center, 1.68%*, 6/1/2037, Branch Banking & Trust (a) | 2,500,000 | 2,500,000 |
North Carolina, Medical Care Commission, Retirement Facilities Revenue, First Mortgage Southminster, Series C, 1.71%*, 10/1/2014, Sovereign Bank FSB (a) | 10,000,000 | 10,000,000 |
North Carolina, Medical Care Commission, Retirement Facilities Revenue, First Mortgage, United Methodist Church, Series B, 1.68%*, 10/1/2035, Branch Banking & Trust (a) | 4,905,000 | 4,905,000 |
North Carolina, Piedmont Triad Airport Authority Revenue: | | |
Series A, 1.5%*, 7/1/2032, Branch Banking & Trust (a) | 4,340,000 | 4,340,000 |
Series B, AMT, 1.75%*, 7/1/2029, Branch Banking & Trust (a) | 3,965,000 | 3,965,000 |
North Carolina, State Education Assistance Authority Revenue, Student Loan, Series A-2, AMT, 1.85%*, 9/1/2035, Royal Bank of Canada (a) | 23,000,000 | 23,000,000 |
Raleigh Durham, NC, Airport Authority Revenue, Series C, AMT, 2.05%*, 5/1/2036, SunTrust Bank (a) | 10,000,000 | 10,000,000 |
University of North Carolina Revenues, Series R-11292, 144A, 1.85%*, 12/1/2036 | 3,085,000 | 3,085,000 |
| 207,700,000 |
Ohio 2.4% |
Akron, Bath & Copley, OH, Joint Township Hospital District Revenue, Health Care Facility, Summner Project, 2.05%*, 12/1/2032, KBC Bank NV (a) | 5,050,000 | 5,050,000 |
Butler County, OH, Healthcare Facilities Revenue, LifeSphere Project, 1.85%*, 5/1/2030, US Bank NA (a) | 5,575,000 | 5,575,000 |
Columbus, OH, General Obligation, Series R-11293, 144A, 1.85%*, 9/1/2020 | 6,000,000 | 6,000,000 |
Ohio, Clipper Tax-Exempt Certificate Trust, Series 2006-8, AMT, 1.94%*, 4/1/2013 | 6,697,000 | 6,697,000 |
Ohio, Housing Finance Agency, Mortgage Revenue, Residential-Mortgage Backed, Series D, AMT, 1.88%*, 9/1/2036 | 45,000,000 | 45,000,000 |
Ohio, State Higher Educational Facility Commission Revenue, University Hospitals Health System: | | |
Series A, 2.0%*, 1/15/2035, Allied Irish Bank PLC (a) | 10,000,000 | 10,000,000 |
Series B, 1.41%*, 1/15/2035, RBS Citizens NA (a) | 8,600,000 | 8,600,000 |
Series E, 1.95%*, 1/15/2035, RBS Citizens NA (a) | 5,000,000 | 5,000,000 |
Ohio, State Housing Finance Authority Revenue, Series 2008-3308, 144A, AMT, 2.02%*, 3/1/2033 | 13,300,000 | 13,300,000 |
| 105,222,000 |
Oklahoma 1.3% |
Oklahoma, Development Finance Authority, Continuing Care Retirement, Inverness Village Project, Series A, 1.75%*, 1/1/2042, KBC Bank NV (a) | 16,000,000 | 16,000,000 |
Oklahoma, State Student Loan Authority Revenue, Series IIA-1, AMT, 1.95%*, 3/1/2037, Bank of America NA (a) | 30,000,000 | 30,000,000 |
Oklahoma City, OK, Water Utility Trust, 1.45%, 11/25/2008 | 9,650,000 | 9,650,000 |
| 55,650,000 |
Oregon 1.5% |
Oregon, Portland Housing Revenue, Series 2007-313, 144A, 1.87%*, 12/1/2039 | 11,805,000 | 11,805,000 |
Oregon, State Facilities Authority Revenue, PeaceHealth System, Series C, 1.65%*, 5/1/2047, Wells Fargo Bank NA (a) | 4,200,000 | 4,200,000 |
Oregon, State General Obligation, Tax Anticipation Notes, Series A, 3.0%, 6/30/2009 | 35,000,000 | 35,295,225 |
Salem, OR, Hospital Facility Authority Revenue, Capital Manor, Inc. Project: | | |
1.87%*, 5/1/2034, Bank of America NA (a) | 8,985,000 | 8,985,000 |
1.87%*, 5/1/2037, Bank of America NA (a) | 5,665,000 | 5,665,000 |
| 65,950,225 |
Pennsylvania 2.1% |
Adams County, PA, Industrial Development Authority Revenue, Brethren Home Community Project, 1.68%*, 6/1/2032, PNC Bank NA (a) | 7,785,000 | 7,785,000 |
Beaver County, PA, Industrial Development Authority, Pollution Control Revenue, FirstEnergy, Series B, 1.95%*, 12/1/2041, Royal Bank of Scotland (a) | 5,000,000 | 5,000,000 |
Chester County, PA, Industrial Development Authority, University Student Housing Revenue LLC, Series A, 1.7%*, 2/1/2043, Citizens Bank of PA (a) | 8,000,000 | 8,000,000 |
Delaware County, PA, Authority Revenue, Riddle Village Project, 1.7%*, 6/1/2037, Sovereign Bank FSB (a) | 9,800,000 | 9,800,000 |
Delaware River Port Authority, Pennsylvania & New Jersey Revenue, Series B, 1.82%*, 1/1/2026, TD Banknorth NA (a) | 11,000,000 | 11,000,000 |
Latrobe, PA, Industrial Development Authority Revenue, Greensburg Diocese, 1.86%*, 6/1/2033, Allied Irish Bank PLC (a) | 2,100,000 | 2,100,000 |
Monroe County, PA, Hospital Authority Revenue, Stars-Pocono Medical Center, Series B, 1.72%*, 1/1/2032, PNC Bank NA (a) | 7,250,000 | 7,250,000 |
Northampton County, PA, Higher Educational Authority Revenue, Lafayette College, Series A, 1.75%*, 11/1/2028 | 17,900,000 | 17,900,000 |
Pennsylvania, BB&T Municipal Trust, Series 1, 1.5%*, 9/15/2015 | 5,000,000 | 5,000,000 |
Pennsylvania, State Turnpike Commission Revenue, Series B, 4.0%*, 12/1/2012 | 18,550,000 | 18,550,000 |
| 92,385,000 |
Rhode Island 0.3% |
Rhode Island, Housing & Mortgage Finance Corp., Series R-11207, 144A, AMT, 1.93%*, 10/1/2047 | 9,625,000 | 9,625,000 |
Rhode Island, Single Family Housing, Series 2008-1110, 144A, AMT, 2.02%*, 10/1/2032 | 5,250,000 | 5,250,000 |
| 14,875,000 |
South Carolina 1.1% |
Greenwood County, SC, Exempt Facility Industrial Revenue, Fuji Photo Film Project, AMT, 1.95%*, 9/1/2011 | 10,300,000 | 10,300,000 |
South Carolina, Greenville Hospital System Facilities Revenue, Series B, 1.8%*, 5/1/2033, SunTrust Bank (a) | 6,000,000 | 6,000,000 |
South Carolina, Jobs Economic Development Authority Revenue, Goodwill Industries of Upper South Carolina, Inc. Project, 1.68%*, 9/1/2028, Branch Banking & Trust (a) | 6,400,000 | 6,400,000 |
South Carolina, Macon Trust, Series 2007-303, 144A, 1.87%*, 2/1/2012, Bank of America NA (a) | 9,080,000 | 9,080,000 |
South Carolina, Revenue Bond, Series 2007-304, 144A, 1.87%*, 3/1/2040 | 13,895,000 | 13,895,000 |
| 45,675,000 |
South Dakota 2.1% |
South Dakota, Conservancy District Revenue, State Revolving Fund Program, 1.9%*, 8/1/2029 | 40,000,000 | 40,000,000 |
South Dakota, Economic Development Finance Authority, Industrial Development Revenue, Wilson Trailer Project, 144A, AMT, 1.95%*, 2/1/2028, First American Bank (a) | 10,000,000 | 10,000,000 |
South Dakota, Housing Development Authority Revenue: | | |
Series R-13080, 144A, 1.85%*, 5/1/2018 | 21,065,000 | 21,065,000 |
Series R-13081, 144A, AMT, 1.93%*, 5/1/2037 | 11,545,000 | 11,545,000 |
South Dakota, State Health & Educational Facilities Authority Revenue, Avera Health, Series A-2, 1.75%*, 7/1/2038, US Bank NA (a) | 9,000,000 | 9,000,000 |
| 91,610,000 |
Tennessee 1.6% |
Chattanooga, TN, Health Educational & Housing Facility Board Revenue, Catholic Health, Series C, 1.5%*, 5/1/2039 | 9,150,000 | 9,150,000 |
Clarksville, TN, Public Building Authority Revenue, Murfreesboro Lane, 1.85%*, 7/1/2024, SunTrust Bank (a) | 4,935,000 | 4,935,000 |
Clarksville, TN, Public Building Authority Revenue, Pooled Financing, Municipal Bond Fund, 1.5%*, 6/1/2029, Bank of America NA (a) | 14,325,000 | 14,325,000 |
Nashville & Davidson County, TN, Metropolitan Government, Health & Educational Facilities Board Revenue, Belmont University Project: | | |
1.8%*, 12/1/2025, SunTrust Bank (a) | 11,355,000 | 11,355,000 |
1.85%*, 12/1/2022, SunTrust Bank (a) | 10,300,000 | 10,300,000 |
Nashville, TN, Metropolitan Nashville Airport Authority Revenue, Series A, 1.85%*, 7/1/2019, Societe Generale (a) | 5,900,000 | 5,900,000 |
Nashville, TN, Metropolitan Nashville Airport Authority, Special Facilities Revenue, Aero Nashville LLC Project, Series A, AMT, 1.97%*, 7/1/2036, JPMorgan Chase Bank (a) | 5,205,000 | 5,205,000 |
Shelby County, TN, Health, Educational & Housing Facilities Board Revenue, Trezevant Manor Project, Series A, 1.82%*, 9/1/2039, LaSalle Bank NA (a) | 7,225,000 | 7,225,000 |
| 68,395,000 |
Texas 13.4% |
ABN AMRO, Munitops Certificates Trust, Series 2004-38, 144A, 1.82%*, 2/15/2011 | 9,205,000 | 9,205,000 |
Atascosa County, TX, Industrial Development Corp., Pollution Control Revenue, San Miguel Electric Cooperative, Inc., 2.0%*, 6/30/2020 | 33,100,000 | 33,100,000 |
Austin, TX, Hotel Occupancy Tax Revenue, Series A, 4.0%*, 11/15/2029, Dexia Credit Local (a) | 6,260,000 | 6,260,000 |
Austin, TX, Water & Wastewater System Revenue, Series R-11455, 2.58%*, 11/15/2033 (b) | 5,635,000 | 5,635,000 |
Harris County, TX, Cultural Education Facilities Finance Corp., Special Facilities Revenue, Texas Medical Center, Series B-2, 1.9%*, 9/1/2031, Compass Bank (a) | 4,850,000 | 4,850,000 |
Harris County, TX, Flood Control District, Series B, 5.0%*, 10/1/2024 | 14,050,000 | 14,050,000 |
Harris County, TX, Health Facilities Development Corp., Hospital Revenue, Baylor College of Medicine, Series B, 1.6%*, 11/15/2047, Northern Trust Co. (a) | 5,000,000 | 5,000,000 |
Harris County, TX, Highway Improvements, Series A, 144A, 2.34%*, 8/15/2030 (b) | 9,900,000 | 9,900,000 |
Harris County, TX, Series 1111, 144A, 1.92%*, 8/15/2009 (b) | 3,845,000 | 3,845,000 |
Houston, TX, Utility System Revenue: | | |
Series 2008-3304, 144A, 1.82%*, 11/15/2036 (b) | 17,540,000 | 17,540,000 |
Series R-10282, 144A, 2.57%*, 11/15/2036 (b) | 9,900,000 | 9,900,000 |
Houston, TX, Water & Sewer System Revenue, Series 27TPZ, 144A, 1.6%*, 12/1/2028 (b) | 13,460,000 | 13,460,000 |
Kendall County, TX, Health Facilities Development Corp. Revenue, Morningside Ministries, Series A, 1.7%*, 1/1/2041, Allied Irish Bank PLC (a) | 6,100,000 | 6,100,000 |
Leander, TX, Independent School District, Series R-11662, 144A, 1.86%*, 8/15/2025 | 3,750,000 | 3,750,000 |
North Texas, Tollway Authority, 1.68%, 12/4/2008 | 6,000,000 | 6,000,000 |
San Antonio, TX, Electric & Gas Systems, 1.61%, 11/6/2008 | 38,000,000 | 38,000,000 |
San Antonio, TX, Revenue Bond, Series 2008-1150, 144A, 1.82%*, 2/1/2029 | 11,985,000 | 11,985,000 |
Tarrant County, TX, Health Facilities Development Corp. Revenue, Cumberland Rest, Inc. Project, 2.5%*, 8/15/2036, HSH Nordbank AG (a) | 27,000,000 | 27,000,000 |
Texas, Alliance Airport Authority, Inc., Special Facilities Revenue, Series 2088, 144A, AMT, 1.7%*, 4/1/2021 | 24,570,000 | 24,570,000 |
Texas, Department of Housing, Series 2008-3022X, 144A, AMT, 2.02%*, 9/1/2032 | 6,740,000 | 6,740,000 |
Texas, Macon Trust, Series 2007-307, AMT, 2.07%*, 4/1/2009 | 23,995,000 | 23,995,000 |
Texas, North East Independent School District, "A", 144A, 1.84%*, 8/1/2037 | 8,935,000 | 8,935,000 |
Texas, RBC Municipal Products, Inc. Trust, Series L-46, 144A, AMT, 2.5%*, 12/1/2034, Royal Bank of Canada (a) | 52,995,000 | 52,995,000 |
Texas, Solar Eclipse Funding Trust, 144A, 1.78%*, 8/1/2037, US Bank NA (a) | 4,985,000 | 4,985,000 |
Texas, State Tax & Revenue Anticipation Notes, 3.0%, 8/28/2009 | 150,000,000 | 151,685,671 |
Texas, State Veteran Housing Assistance Fund II, Series A, AMT, 5.5%*, 12/1/2038 | 18,000,000 | 18,000,000 |
Texas, University of Houston, Series 2008-3315, 144A, 2.82%*, 2/15/2033 (b) | 9,335,000 | 9,335,000 |
Texas, University of Texas, Systems Revenue: | | |
1.6%, 11/13/2008 | 3,200,000 | 3,200,000 |
1.65%, 1/5/2009 | 11,500,000 | 11,500,000 |
Travis County, TX, Health Facilities Development Corp., Retirement Facilities Revenue, Longhorn Village Project, Series B, 1.8%*, 7/1/2037, Bank of Scotland (a) | 13,800,000 | 13,800,000 |
Tyler, TX, Independent School District, School Building, Series A, 1.75%*, 2/15/2025 | 12,000,000 | 12,000,000 |
University of Texas, Permanent Funding, 1.6%, 11/13/2008 | 13,000,000 | 13,000,000 |
| 580,320,671 |
Utah 1.9% |
Utah, Housing Corp., Series 2008-3300, 144A, AMT, 2.02%*, 1/1/2039 | 5,000,000 | 5,000,000 |
Utah, Transportation Authority Revenue, Series 2008-3045X, 144A, 2.82%*, 6/15/2036 (b) | 2,500,000 | 2,500,000 |
Utah, Water Finance Agency Revenue, Series B-3, 1.8%*, 7/1/2036, JPMorgan Chase Bank (a) | 75,400,000 | 75,400,000 |
| 82,900,000 |
Vermont 0.3% |
Vermont, Educational & Health Buildings, Finance Agency Revenue, Norwich University Project, 1.5%*, 9/1/2038, Citizens Bank (a) | 11,500,000 | 11,500,000 |
Virginia 1.8% |
Lynchburg, VA, Industrial Development Authority Revenue, Central Health Hospital: | | |
Series A, 1.85%*, 1/1/2028, SunTrust Bank (a) | 7,000,000 | 7,000,000 |
Series B, 1.60%*, 1/1/2035, Branch Banking & Trust (a) | 4,550,000 | 4,550,000 |
Series C, 1.60%*, 1/1/2035, Branch Banking & Trust (a) | 9,050,000 | 9,050,000 |
Norfolk, VA, State General Obligation, AMT, 1.91%*, 8/1/2037 | 11,820,000 | 11,820,000 |
Virginia, Chesapeake Bay Bridge & Tunnel District Revenue, Series A, 1.6%*, 5/28/2021, Branch Banking & Trust (a) | 8,250,000 | 8,250,000 |
Virginia, RBC Municipal Products, Inc. Trust: | | |
Series C-2, 144A, AMT, 1.97%*, 1/1/2014, Royal Bank of Canada (a) | 9,620,000 | 9,620,000 |
Series C-8, 144A, AMT, 1.97%*, 9/1/2039, Royal Bank of Canada (a) | 25,665,000 | 25,665,000 |
Winchester, VA, Industrial Development Authority, Residential Care Facility Revenue, Westminster Cantenbury, Series B, 1.68%*, 1/1/2035, Branch Banking & Trust (a) | 2,900,000 | 2,900,000 |
| 78,855,000 |
Washington 2.0% |
King County, WA, Housing Authority Revenue, Summerfield Apartments Project, 2.32%*, 9/1/2035, US Bank NA (a) | 1,655,000 | 1,655,000 |
Port of Seattle, WA, 2.0%, 11/12/2008 | 18,760,000 | 18,760,000 |
Washington, RBC Municipal Products, Inc. Trust, Series C-7, 144A, AMT, 1.97%*, 12/1/2009, Royal Bank of Canada (a) | 22,545,000 | 22,545,000 |
Washington, Solar Eclipse Funding Trust, Series 2007-0094, 144A, 1.6%*, 10/1/2036, US Bank NA (a) | 4,205,000 | 4,205,000 |
Washington, State Economic Development Finance Authority, Solid Waste Disposal Revenue, Waste Management, Inc. Project, Series D, AMT, 1.75%*, 7/1/2030, JPMorgan Chase Bank (a) | 8,000,000 | 8,000,000 |
Washington, State General Obligation: | | |
Series 2599, 144A, 1.83%*, 1/1/2016 | 4,505,000 | 4,505,000 |
Series 3087, 144A, 1.83%*, 7/1/2016 | 4,480,000 | 4,480,000 |
Series R-11477, 2.35%*, 7/1/2025 (b) | 5,445,000 | 5,445,000 |
Washington, State Higher Education Facilities Authority Revenue, Seattle University Project, Series A, 1.78%*, 5/1/2028, US Bank NA (a) | 9,595,000 | 9,595,000 |
Washington, State Housing Finance Commission, Multi-Family Housing Revenue, Lake City Senior Apartments Project, Series A, AMT, 2.1%*, 7/1/2039 | 4,800,000 | 4,800,000 |
Washington, State Housing Finance Commission, Multi-Family Housing Revenue, Vintage Silverdale, Series A, AMT, 1.75%*, 9/15/2039 | 4,000,000 | 4,000,000 |
| 87,990,000 |
West Virginia 0.6% |
West Virginia, State Hospital Finance Authority Revenue, Cabell Huntington Hospital, Series A, 1.6%*, 1/1/2034, Branch Banking & Trust (a) | 8,480,000 | 8,480,000 |
West Virginia, State Hospital Finance Authority Revenue, Charleston Area Medical Center, Series A, 1.75%*, 9/1/2037, Branch Banking & Trust (a) | 18,605,000 | 18,605,000 |
| 27,085,000 |
Wisconsin 0.7% |
Milwaukee, WI, General Obligation, Series V8, 1.6%*, 2/1/2025 | 2,700,000 | 2,700,000 |
Plymouth, WI, Industrial Development Revenue, Masters Gallery Foods, Series A, AMT, 1.8%*, 5/1/2038, Wells Fargo Bank NA (a) | 5,300,000 | 5,300,000 |
Wisconsin, Clipper Tax-Exempt Certificates Trust, Series 2007-5, 144A, 1.92%*, 9/1/2017 | 6,755,000 | 6,755,000 |
Wisconsin, State Health & Educational Facilities Authority Revenue, Gundersen Lutheran, Series A, 2.7%*, 12/1/2015 (b) | 16,460,000 | 16,460,000 |
| 31,215,000 |
Wyoming 0.8% |
Platte County, WY, Pollution Control Revenue, Tri-State Generation & Transmission Association, Inc.: | | |
Series A, 1.3%*, 7/1/2014, National Rural Utilities Cooperative Finance Corp. (a) | 26,400,000 | 26,400,000 |
Series B, 1.3%*, 7/1/2014, National Rural Utilities Cooperative Finance Corp. (a) | 6,700,000 | 6,700,000 |
Sweet County, WY, Water Poll, 5.0%, 11/3/2008 | 1,700,000 | 1,700,000 |
| 34,800,000 |
Other 0.6% |
Federal Home Loan Mortgage Corp., Multi-Family Housing, "A", Series M017, 1.92%*, 9/15/2050 | 24,992,000 | 24,992,000 |
Total Municipal Investments (Cost $4,139,358,720) | 4,139,358,720 |
|
Government & Agency Obligations 1.4% |
US Government Sponsored Agency |
Federal Home Loan Bank, 1.3%**, 11/24/2008 (Cost $59,950,167) | 60,000,000 | 59,950,167 |
Cash Account Trust (the "Trust") is registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end investment management company organized as a Massachusetts business trust.
The Trust offers three portfolios: Money Market Portfolio, Government & Agency Securities Portfolio and Tax-Exempt Portfolio (the "Portfolios"). The financial statements of Government & Agency Securities Portfolio and Money Market Portfolio are presented in separate annual reports.
Tax-Exempt Portfolio (the "Portfolio") offers nine classes of shares: Capital Assets Funds Shares, Davidson Cash Equivalent Shares, DWS Tax-Exempt Cash Institutional Shares, DWS Tax-Exempt Money Fund, DWS Tax-Free Money Fund Class S, Premier Money Market Shares, Service Shares, Tax-Exempt Cash Managed Shares and Tax-Free Investment Class.
The financial highlights for all classes of shares, other than DWS Tax-Free Money Fund Class S, are provided separately and are available upon request.
The Portfolio's investment income, realized and unrealized gains and losses, and certain Portfolio-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 of that Portfolio, except that each class bears certain expenses unique to that class such as distribution and service fees, shareholder service fees 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 Trust have equal rights with respect to voting subject to class-specific arrangements.
The Portfolio'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 Portfolio in the preparation of its financial statements.
The Portfolio adopted Financial Accounting Standards Board Statement of Financial Accounting Standards No. 157, Fair Value Measurements ("FAS 157"), effective at the beginning of the Portfolio's fiscal year. FAS 157 establishes a three-tier hierarchy to maximize the use of observable market data and minimize the use of unobservable inputs and requires additional disclosure about the classification of fair value measurements.
Various inputs are used in determining the value of the Portfolio's investments. These inputs are summarized in three broad levels. Level 1 includes quoted prices in active markets for identical securities. Level 2 includes other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.). Level 3 includes significant unobservable inputs (including the Portfolio's own assumptions in determining the fair value of investments). The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. Securities held by a money market fund are reflected as Level 2 because the securities are valued at amortized cost (which approximates fair value) and, accordingly, the inputs used to determine value are not quoted prices in an active market.
The aggregate value by input level, as of October 31, 2008, for the Portfolio's investments is included at the end of the Portfolio's Investment Portfolio.
The Portfolio has reviewed the tax positions for the open tax years as of April 30, 2008 and has determined that no provision for income tax is required in the Portfolio's financial statements. The Portfolio's federal tax returns for the prior three fiscal years remain subject to examination by the Internal Revenue Service.
Permanent book and tax basis differences relating to shareholder distributions will result in reclassifications to paid in capital. Temporary book and tax basis differences will reverse in a subsequent period. There were no significant book-to-tax differences for the Portfolio.
The tax character of current year distributions will be determined at the end of the current fiscal year.
Prior to June 1, 2008, in addition to portfolio management services, the Advisor provided certain administrative services in accordance with the Investment Management Agreement. For the period from May 1, 2008 through May 31, 2008, the Portfolio paid a monthly management fee based on the Trust's combined average daily net assets, computed and accrued daily and payable monthly, at 1/12 of the following annual rates:
Effective June 1, 2008, under the Amended and Restated Investment Management Agreement with the Advisor, the Portfolio pays a monthly management fee based on the Trust's combined average daily net assets, computed and accrued daily and payable monthly, at 1/12 of the following annual rates:
Accordingly, for the six months ended October 31, 2008, the Portfolio incurred a management fee equivalent to the following annualized effective rate of the Portfolio's average daily net assets:
For the period from March 19, 2007 through March 18, 2010, the Advisor has contractually agreed to waive all or a portion of its management fee and reimburse or pay certain operating expenses of the DWS Tax-Free Money Fund Class S to the extent necessary to maintain total operating expenses at 0.70% of average daily net assets (excluding certain expenses such as extraordinary expenses, taxes, brokerage and interest).
The Advisor also has agreed to maintain expenses of certain other classes of the Trust. These rates are disclosed in the respective share classes' semiannual reports that are provided separately and are available upon request.
In addition, DIDI provides information and administrative services for a fee ("Service Fee") for the shares listed in the following table. A portion of these fees may be paid pursuant to a Rule 12b-1 plan.
The Portfolio has entered into an arrangement with its custodian and transfer agent whereby credits realized as a result of uninvested cash balances are used to reduce a portion of the Portfolio's custodian expenses. During the six months ended October 31, 2008, the Portfolio's custodian fee was reduced as follows:
The Portfolio and other affiliated funds (the "Participants") share in a $490 million revolving credit facility provided by a syndication of banks. The Portfolio may borrow for temporary or emergency purposes, including the meeting of redemption requests that otherwise might require the untimely disposition of securities. The Participants are charged an annual commitment fee which is allocated based on net assets, among each of the Participants. Interest is calculated at the Federal Funds Rate plus 0.35 percent. The Portfolio may borrow up to a maximum of 33 percent of its net assets under the agreement.
The U.S. Department of the Treasury (the "Treasury") has established a Temporary Guarantee Program for Money Market Funds (the "Program"). The Portfolio is participating in the Program.
The Program is designed to protect the value of accounts in the Portfolio as of the close of business on September 19, 2008. According to the terms of the Program, any investment made by a shareholder after September 19, 2008 in excess of the amount held in the account as of the close of business on that date will not be covered by the Program. Any purchase of shares of the Portfolio for an account opened after September 19, 2008 will also not be covered under the Program. The Program guarantee will apply to the lesser of (i) the number of shares held in an account as of the close of business on September 19, 2008, or (ii) the number of shares held in the account on the date the Program guarantee is triggered. Subject to certain conditions and limitations, the Program guarantee is triggered if the Portfolio's net asset value falls below $0.995 and the Portfolio is liquidated. Guarantee payments under the Program will not exceed the amount available within the Treasury's Exchange Stabilization Fund ("ESF") on the date of payment. As of the date of this report, ESF assets are approximately $49 billion. The Treasury and the Secretary of the Treasury have the authority to use assets from the ESF for purposes other than those of the Program.
The Portfolio will bear the expenses of participating in the Program. For the initial three months of the Program, the Portfolio paid 0.01% of the product of (i) the number of shares outstanding as of September 19, 2008, and (ii) $1.00, as required under the Program. For the period from December 19, 2008 through April 30, 2009, the rate has been increased to 0.015%. The Program is set to terminate on April 30, 2009, unless extended by the Treasury. The Treasury may extend the program through the close of business on September 18, 2009. If the Program is extended beyond April 30, 2009, the Portfolio would need to pay an additional fee and there can be no assurances that the Portfolio will continue to participate.
Neither the Portfolio nor Deutsche Investment Management Americas Inc., the Portfolio's investment advisor, are in any manner approved, endorsed, sponsored or authorized by the Treasury.
A description of the Portfolio's policies and procedures for voting proxies for portfolio securities and information about how the portfolio voted proxies related to its portfolio securities during the 12-month period ended June 30 is available on our Web site — www.dws-investments.com (click on "proxy voting" at the bottom of the page) — or on the SEC's Web site — www.sec.gov. To obtain a written copy of the portfolio's policies and procedures without charge, upon request, call us toll free at (800) 621-1048.
Following the Portfolio's fiscal first and third quarter-end, a complete portfolio holdings listing is filed with the SEC on Form N-Q. The form will be available on the SEC's Web site at www.sec.gov, and it also may be reviewed and copied at the SEC's Public Reference Room in Washington, D.C. Information on the operation of the SEC's Public Reference Room may be obtained by calling (800) SEC-0330.
DWS Investments Distributors, Inc.
222 South Riverside Plaza
Chicago, IL 60606
The Special Meeting of Shareholders of the Tax-Exempt Portfolio of Cash Account Trust (the "Fund") was held on March 31, 2008 at the offices of Deutsche Asset Management, 345 Park Avenue, New York, NY 10154. The following matters were voted upon by the shareholders of said Fund (the resulting votes are presented below):
1. Election of the Board of Trustees
The Special Meeting of Shareholders was reconvened on May 1, 2008, at which time the following matters were voted upon by the shareholders (the resulting votes are presented below):
The meeting of shareholders was reconvened on August 15, 2008, at which time the following matter was not approved by shareholders because the matter failed to receive sufficient shareholder votes:
The Board of Trustees, including the Independent Trustees, approved the renewal of your Fund's investment management agreement (the "Agreement") with Deutsche Investment Management Americas Inc. ("DIMA") in September 2008.
In terms of the process that the Board followed prior to approving the Agreement, shareholders should know that:
In connection with the contract review process, the Contract Committee and the Board considered the factors discussed below, among others. The Board also considered that DIMA and its predecessors have managed the Fund since its inception, and the Board believes that a long-term relationship with a capable, conscientious advisor is in the best interests of the Fund. The Board considered, generally, that shareholders chose to invest or remain invested in the Fund knowing that DIMA managed the Fund, and that the Agreement was approved by the Fund's shareholders at a special meeting held in 2008. DIMA is part of Deutsche Bank, a major global banking institution that is engaged in a wide range of financial services. The Board believes that there are significant advantages to being part of a global asset management business that offers a wide range of investing expertise and resources, including hundreds of portfolio managers and analysts with research capabilities in many countries throughout the world.
While shareholders may focus primarily on fund performance and fees, the Fund's Board considers these and many other factors, including the quality and integrity of DIMA's personnel and such other issues as back-office operations, fund valuations, and compliance policies and procedures.
On the basis of this evaluation and the ongoing review of investment results by the Board, the Board concluded that the nature, quality and extent of services provided by DIMA historically have been and continue to be satisfactory.
On the basis of the information provided, the Board concluded that management fees were reasonable and appropriate in light of the nature, quality and extent of services provided by DIMA.
Based on all of the information considered and the conclusions reached, the Board (including a majority of the Independent Trustees) determined that the continuation of the Agreement is in the best interests of the Fund. In making this determination the Board did not give particular weight to any single factor identified above. The Board considered these factors over the course of numerous meetings, certain of which were in executive session with only the Independent Trustees and their counsel present. It is possible that individual Trustees may have weighed these factors differently in reaching their individual decisions to approve the continuation of the Agreement.
Pursuant to an Order entered into by Deutsche Investment Management Americas and affiliates (collectively, "DeAM") with the Attorney General of New York, I, Thomas H. Mack, have been appointed the Independent Fee Consultant for the DWS Funds (formerly the DWS Scudder Funds). My duties include preparing an annual written evaluation of the management fees DeAM charges the Funds, considering among other factors the management fees charged by other mutual fund companies for like services, management fees DeAM charges other clients for like services, DeAM's costs of supplying services under the management agreements and related profit margins, possible economies of scale if a Fund grows larger, and the nature and quality of DeAM's services, including fund performance. This report summarizes my evaluation for 2008, including my qualifications, the evaluation process for each of the DWS Funds, consideration of certain complex-level factors, and my conclusions. I served in substantially the same capacity in 2007.
For more than 35 years I have served in various professional capacities within the investment management business. I have held investment analysis and advisory positions, including securities analyst, portfolio strategist and director of investment policy with a large investment firm. I have also performed business management functions, including business development, financial management and marketing research and analysis.
Since 1991, I have been an independent consultant within the asset management industry. I have provided services to over 125 client organizations, including investment managers, mutual fund boards, product distributors and related organizations. Over the past ten years I have completed a number of assignments for mutual fund boards, specifically including assisting boards with management contract renewal.
I hold a Master of Business Administration degree, with highest honors, from Harvard University and Master of Science and Bachelor of Science (highest honors) degrees from the University of California at Berkeley. I am an independent director and audit committee financial expert for two closed-end mutual funds, serve on the board of directors of a private market research company, and have served in various leadership and financial oversight capacities with non-profit organizations.
My work focused primarily on evaluating, fund-by-fund, the fees charged to each of the 129 Fund portfolios in the DWS Fund family. For each Fund, I considered each of the key factors mentioned above, as well as any other relevant information. In doing so I worked closely with the Funds' Independent Directors in their annual contract renewal process, as well as in their approval of contracts for several new funds (documented separately).
In evaluating each Fund's fees, I reviewed comprehensive materials provided by or on behalf of DeAM, including expense information prepared by Lipper Analytical, comparative performance information, profitability data, manager histories, and other materials. I also accessed certain additional information from the Lipper, Strategic Insight, and Morningstar databases and drew on my industry knowledge and experience.
To facilitate evaluating this considerable body of information, I prepared for each Fund a document summarizing the key data elements in each area as well as additional analytics discussed below. This made it possible to consider each key data element in the context of the others.
In the course of contract renewal, DeAM agreed to implement a number of fee and expense adjustments requested by the Independent Directors which will favorably impact future fees and expenses, and my evaluation includes the effects of these changes.
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 provided management fee schedules for all of its US domiciled fund and non-fund investment management accounts in any of the investment categories where there is a DWS Fund. These similar products included the other DWS Funds, non-fund pooled accounts, institutional accounts and sub-advisory accounts. Using this information, I calculated for each Fund the fee that would be charged to each similar product, at the subject Fund's asset level.
Evaluating information regarding non-fund products is difficult because there are varying levels of services required for different types of accounts, with mutual funds generally requiring considerably more regulatory and administrative types of service as well as having more frequent cash flows than other types of accounts. Also, while mutual fund fees for similar fund products can be expected to be similar, there will be some differences due to different pricing conditions in different distribution channels (e.g. retail funds versus those used in variable insurance products), differences in underlying investment processes and other factors.
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 — an expected decline in management cost per dollar of fund assets as fund assets grow — are very rarely quantified and documented because of inherent difficulties in collecting and analyzing relevant data. However, in virtually every investment category that I reviewed, larger funds tend to have lower fees and lower total expenses than smaller funds. To see how each DWS Fund compares with this industry observation, I reviewed:
The trend in Fund assets over the last five years and the accompanying trend in total expenses. This shows if the Fund has grown and, if so, whether total expense (management fees as well as other expenses) have declined as a percent of assets.
Whether the Fund has break-points in its management fee schedule, the extent of the fee reduction built into the schedule and the asset levels where the breaks take effect, and in the case of a sub-advised Fund how the Fund's break-points compare with those of the sub-advisory fee schedule.
How the Fund's contractual fee schedule compares with trends in the industry data. To accomplish this, I constructed a chart showing how actual latest-fiscal-year contractual fees of the Fund and of other similar funds relate to average fund assets, with the subject Fund's contractual fee schedule superimposed.
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.
While this evaluation was conducted mainly at the individual fund level, there are some issues relating to the reasonableness of fees that can alternatively be considered across the whole fund complex:
I reviewed DeAM's profitability analysis for all DWS Funds, with a view toward determining if the allocation procedures used were reasonable and how profit levels compared with public data for other investment managers.
I considered whether DeAM and affiliates receive any significant ancillary or "fall-out" benefits that should be considered in interpreting the direct profitability results. These would be situations where serving as the investment manager of the Funds is beneficial to another part of the Deutsche Bank organization.
I considered how aggregated DWS Fund expenses had varied over the years, by asset class and in the context of trends in asset levels.
I reviewed the structure of the DeAM organization, trends in staffing levels, and information on compensation of investment management and other professionals compared with industry data.
Based on the process and analysis discussed above, which included reviewing a wide range of information from management and external data sources and considering among other factors the fees DeAM charges other clients, the fees charged by other fund managers, DeAM's costs and profits associated with managing the Funds, economies of scale, possible fall-out benefits, and the nature and quality of services provided, in my opinion the management fees charged the DWS Funds are reasonable.
This privacy statement is issued by Deutsche Investment Management Americas Inc., DWS Investments Distributors, Inc., DWS Investor Services, Inc., DWS Trust Company and the DWS Funds.
In the normal course of business, clients give us nonpublic personal information on applications and other forms, on our Web sites, and through transactions with us or our affiliates. Examples of the nonpublic personal information collected are name, address, Social Security number, and transaction and balance information. To be able to serve our clients, certain of this client information is shared with affiliated and nonaffiliated third party service providers such as transfer agents, custodians and broker-dealers to assist us in processing transactions and servicing your account with us.
In addition, we may disclose the information we collect to companies that perform marketing services on our behalf or to other financial institutions with which we have joint marketing agreements. These organizations may only use client information for the purpose designated by the companies listed above, and additional requirements beyond federal law may be imposed by certain states. To the extent that these state laws apply, we will comply with them before we share information about you.
We may also disclose nonpublic personal information about you to other parties as required or permitted by law. For example, we are required to or we may provide information to government entities or regulatory bodies in response to requests for information or subpoenas, to private litigants in certain circumstances, to law enforcement authorities, or any time we believe it necessary to protect the firm.
