ar113012mit.htm
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549

FORM N-CSR

Investment Company Act file number:  811-05655

 
DWS Municipal Income Trust
 (Exact Name of Registrant as Specified in Charter)

345 Park Avenue
New York, NY 10154-0004
 (Address of Principal Executive Offices) (Zip Code)

Registrant’s Telephone Number, including Area Code: (212) 250-3220

Paul Schubert
60 Wall Street
New York, NY 10005
 (Name and Address of Agent for Service)

Date of fiscal year end:
11/30
   
Date of reporting period:
11/30/2012

ITEM 1.
REPORT TO STOCKHOLDERS
   
 
NOVEMBER 30, 2012
Annual Report
to Shareholders
 
DWS Municipal Income Trust
Ticker Symbol: KTF
 
Contents
4 Portfolio Management Review
10 Performance Summary
12 Investment Portfolio
25 Statement of Assets and Liabilities
26 Statement of Operations
27 Statement of Cash Flows
28 Statement of Changes in Net Assets
29 Financial Highlights
31 Notes to Financial Statements
40 Report of Independent Registered Public Accounting Firm
41 Tax Information
42 Shareholder Meeting Results
43 Dividend Reinvestment Plan
45 Investment Management Agreement Approval
49 Board Members and Officers
54 Additional Information
 
The fund's investment objective is to provide a high level of current income exempt from federal income tax.
 
Closed-end funds, unlike open-end funds, are not continuously offered. There is a one time public offering and once issued, shares of closed-end funds are sold in the open market through a stock exchange. Shares of closed-end funds frequently trade at a discount to net asset value. The price of the fund's shares is determined by a number of factors, several of which are beyond the control of the fund. Therefore, the fund cannot predict whether its shares will trade at, below or above net asset value.
 
Bond investments are subject to interest-rate and credit risks. When interest rates rise, bond prices generally fall. Credit risk refers to the ability of an issuer to make timely payments of principal and interest. Investing in derivatives entails special risks relating to liquidity, leverage and credit that may reduce returns and/or increase volatility. Leverage results in additional risks and can magnify the effect of any gains or losses. Although the fund seeks income that is federally tax-free, a portion of the fund's distributions may be subject to federal, state and local taxes, including the alternative minimum tax.
 
DWS Investments is part of the Asset & Wealth Management division of Deutsche Bank AG.
 
NOT FDIC/NCUA INSURED NO BANK GUARANTEE MAY LOSE VALUE NOT A DEPOSIT NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY
 
Portfolio Management Review (Unaudited)
 
Market Overview and Fund Performance
 
All performance information below is historical and does not guarantee future results. Investment return and principal fluctuate, so your shares may be worth more or less when redeemed. Current performance may differ from performance data shown. Please visit www.dws-investments.com for the fund's most recent month-end performance. Fund performance includes reinvestment of all distributions. Please refer to pages 10 through 11 for more complete performance information.
 
Investment Objective
The fund's investment objective is to provide a high level of current income exempt from federal income tax. Under normal circumstances, at least 80% of the fund's net assets, plus the amount of any borrowings for investment purposes, will be invested in municipal securities. The fund will invest substantially all of its net assets in tax-exempt municipal securities valued at the time of purchase within the four highest grades (Baa or BBB or better) by Moody's Investors Service, Inc. ("Moody's") or Standard & Poor's Corporation ("S&P"), or unrated municipal securities which in the opinion of the fund's investment advisor have credit characteristics equivalent to, and will be of comparable quality to, municipal securities rated within the four highest grades by Moody's or S&P.
 
DWS Municipal Income Trust returned 24.85% based on net asset value, while the fund's return based on market value was 24.22% for the annual period ended November 30, 2012. For the same period, the trust's benchmark, the unmanaged, unleveraged Barclays Municipal Bond Index, returned 10.17%. This outperformed the broad taxable bond market, as measured by the Barclays U.S. Aggregate Bond Index, which returned 5.51% for the same period. Lastly, over the period, the fund's traded shares went from a premium of 4.94% to a premium of 4.41%. The fund maintained its dividend of 7 cents per share through the fiscal period.
 
During the reporting period, the fund issued 37,773 floating rate municipal term preferred shares ("MTPS") in a private offering. The fund used the proceeds of the MTPS issuance to repurchase approximately 95% of its outstanding remarketed preferred shares ("Remarketed Preferred Shares") tendered at a price equal to 96% of the Remarketed Preferred Shares' per share liquidation preference plus any unpaid accrued dividends. The Remarketed Preferred Shares tender offer and corresponding MTPS issuance did not result in a change in the amount of the fund's overall leverage. (For more information regarding these transactions, see "Note A. Organization and Significant Accounting Policies — Preferred Shares" in the Notes to Financial Statements.)
 
The municipal market was supported throughout most of the annual period ended November 30, 2012 by strong investor demand coupled with manageable new issue supply. Demand was driven in part by extraordinarily low yields available on U.S. Treasury issues. Banks seeking high-quality liquid assets participated in a significant way over the past 12 months. While issuance was above that of the prior 12 months, a significant portion was attributable to refunding of existing issues, resulting in relatively low net new issuance.
 
Given continued moderate inflation and concerns over growth and employment, the U.S. Federal Reserve Board (the Fed) kept the target for its benchmark short-term interest rate between 0% and 0.25% for the entire period. In addition, the Fed committed to keeping the benchmark rate near zero until mid-2015, or as long as necessary to attain more historically normal levels of employment absent inflationary pressures. Municipal yields opened the period at very low levels by historical standards and declined across all maturities for the 12 months ended November 30, 2012. With short rates anchored by the Fed, the municipal yield curve flattened over the period. (When the yield curve is steep, it means that longer-term bonds provide a greater yield advantage vs. short-term bonds.) For the full 12 months ended November 30, 2012, yields on 2-year municipal issues fell by 12 basis points, from 0.42% to 0.30%, while bonds with 30-year maturities experienced a yield decline of 137 basis points, from 3.84% to 2.47%, resulting in a flattening of 125 basis points between 2 and 30 years. (100 basis points equals one percentage point. See the graph on the following page for municipal bond yield changes from the beginning to the end of the period.)
 
 
For the 12 months ended November 30, 2012, most municipal market credit spreads — the incremental yield offered by lower-quality issues vs. AAA-rated issues — narrowed substantially, reflecting the search for yield on the part of investors.
 
Positive and Negative Contributors to Performance
 
The fund has the ability to leverage returns to shareholders through the issuance of preferred shares whose dividend rate is tied to short-term interest rates. With the Fed anchoring short-term rates near zero, the fund's cost of leverage remained low for the 12 months, helping performance. In addition, the fund has achieved leverage through tender-option bond programs under which high-quality municipal bonds are placed into a trust and serve as backing for the trust to issue short-term variable rate notes. The proceeds from these variable rate notes are then used to purchase additional bonds, increasing the fund's market exposure and income generation. This approach has also benefited from prevailing near-zero short-term rates.
 
 
AAA Municipal Bond Yield Curve (as of 11/30/11 and 11/30/12)
 
Source: Thompson Reuters
 
This chart is for illustrative purposes only and is not intended to represent the yield of any DWS fund. Performance is historical and does not guarantee future results.
 
Given a steep yield curve and Fed policy oriented toward keeping interest rates low, the fund maintained significant exposure to bonds with remaining maturities in the 20-to-30-year range. This helped performance, as longer-term issues benefited the most from falling interest rates and rising bond prices. The fund also had a position in 20-year bonds subject to being called after five years. These holdings performed well, as investors were attracted to their combination of attractive yield and relatively low duration and corresponding interest rate risk.
 
 
The fund had significant exposure to bonds in the A quality range. This positioning helped performance as credit spreads narrowed overall during the period. In particular, the fund's overweighting of hospital-related bonds added to relative return. By contrast, the fund had relatively low exposure to bonds in the lease, transport and special tax sectors, all of which outperformed over the period ending November 30, 2012, constraining returns to a degree.
 
"Demand for municipals was driven in part by extraordinarily low yields available on U.S. Treasury issues."
 
Outlook and Positioning
 
Municipal yields on an absolute basis are very low by historical standards. At the end of November 2012, the 10-year municipal yield of 1.47% was 90.7% of the 1.62% yield on comparable maturity U.S. Treasuries, as compared to a ratio of 105.7% twelve months earlier. While the municipal yield curve has flattened considerably, we continue to see value in the 20-to-30-year maturity range.
 
Many state and local governments have continued to show progress in stabilizing their finances. Nonetheless, there remain troubled pockets. For new purchases, we continue to take a cautious approach with respect to general obligation bonds issued by localities, given uncertain levels of state support going forward. There are also significant uncertainties with respect to the national economic backdrop, including a looming showdown on the budget. We will closely monitor the implications of developments in Washington for the national economy and tax policy.
 
Portfolio Management Team
 
Philip G. Condon, Managing Director
 
Co-Lead Portfolio Manager of the fund. Joined the fund in 1998.
 
• Head of U.S. Retail Fixed Income Funds.
 
• Joined Deutsche Asset Management in 1983.
 
BA and MBA, University of Massachusetts at Amherst.
 
Michael J. Generazo, Director
 
Co-Lead Portfolio Manager of the fund. Joined the fund in 2010.
 
• Joined Deutsche Asset Management in 1999.
 
BS, Bryant College; MBA, Suffolk University.
 
The views expressed reflect those of the portfolio management team only through the end of the period of the report as stated on the cover. The management team's views are subject to change at any time based on market and other conditions and should not be construed as a recommendation. Past performance is no guarantee of future results. Current and future portfolio holdings are subject to risk.
 
Terms to Know
 
The Barclays Municipal Bond Index is an unmanaged, unleveraged, market-value- weighted measure of municipal bonds issued across the United States. Index issues have a credit rating of at least Baa and a maturity of at least two years.
 
The Barclays U.S. Aggregate Bond Index is an unmanaged, unleveraged index representing domestic taxable investment-grade bonds, with index components for government and corporate securities, mortgage pass-through securities, and asset-backed securities with an average maturity of one year or more.
 
Index returns do not reflect any fees or expenses and it is not possible to invest directly into an index.
 
The yield curve is a graphical representation of how yields on bonds of different maturities compare. Normally, yield curves slant up, as bonds with longer maturities typically offer higher yields than short-term bonds.
 
Leverage is the use of various financial instruments or borrowed capital, such as margin, to increase an investment's potential return.
 
Credit quality measures a bond issuer's ability to repay interest and principal in a timely manner. Rating agencies assign letter designations, such as AAA, AA and so forth. The lower the rating, the higher the probability of default. Credit quality does not remove market risk and is subject to change.
 
Performance Summary November 30, 2012 (Unaudited)
 
Performance is historical, assumes reinvestment of all dividend and capital gain distributions, and does not guarantee future results. Investment return and principal value fluctuate with changing market conditions so that, when sold, shares may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. Please visit www.dws-investments.com for the Fund's most recent month-end performance.
 
Fund specific data and performance are provided for informational purposes only and are not intended for trading purposes.
 
Average Annual Total Returns as of 11/30/12
DWS Municipal Income Trust
1-Year
3-Year
5-Year
10-Year
Based on Net Asset Value(a)
24.85%
14.72%
11.86%
8.71%
Based on Market Price(a)
24.22%
18.33%
15.63%
10.24%
Barclays Municipal Bond Index(b)
10.17%
7.13%
6.23%
5.45%
Morningstar Closed-End Municipal National Intermediate Funds Category(c)
16.34%
9.66%
7.04%
5.97%
 
(a) Total return based on net asset value reflects changes in the Fund's net asset value during each period. Total return based on market price reflects changes in market price. Each figure assumes that dividend and capital gain distributions, if any, were reinvested. These figures will differ depending upon the level of any discount from or premium to net asset value at which the Fund's shares traded during the period.
 
(b) The Barclays Municipal Bond Index is an unmanaged, unleveraged, market-value-weighted measure of municipal bonds issued across the United States. Index issues have a credit rating of at least Baa and a maturity of at least two years. Index returns do not reflect any fees or expenses and it is not possible to invest directly into an index.
 
(c) Morningstar's Closed-End Municipal National Intermediate Funds category represents muni national intermediate portfolios that invest in bonds issued by various state and local governments to fund public projects. The income from these bonds is generally free from federal taxes. To lower risk, these portfolios spread their assets across many states and sectors. These portfolios have durations of 4.5 to 7.0 years (or, if duration is unavailable, average maturities of five to 12 years). Morningstar figures represent the average of the total returns based on net asset value reported by all of the closed-end funds designated by Morningstar, Inc. as falling into the Closed-End Municipal National Intermediate Funds category. Category returns assume reinvestment of all distributions. It is not possible to invest directly in a Morningstar category.
 
Net Asset Value and Market Price
 
   
As of 11/30/12
   
As of 11/30/11
 
Net Asset Value
  $ 14.74     $ 12.56  
Market Price
  $ 15.39     $ 13.18  
 
Prices and net asset value fluctuate and are not guaranteed.
 
Distribution Information
 
Twelve Months as of 11/30/12:
Income Dividends (common shareholders)
  $ .84  
Capital Gain Distributions
  $ .01  
November Income Dividend (common shareholders)
  $ .0700  
Current Annualized Distribution Rate (based on Net Asset Value) as of 11/30/12
    5.70 %
Current Annualized Distribution Rate (based on Market Price) as of 11/30/12
    5.46 %
Tax Equivalent Distribution Rate (based on Net Asset Value) as of 11/30/12
    8.77 %
Tax Equivalent Distribution Rate (based on Market Price) as of 11/30/12
    8.40 %
 
Current annualized distribution rate is the latest monthly dividend shown as an annualized percentage of net asset value/market price on November 30, 2012. Distribution rate simply measures the level of dividends and is not a complete measure of performance. Tax equivalent distribution rate is based on the Fund's distribution rate and a marginal income tax rate of 35%. Distribution rates are historical, not guaranteed and will fluctuate.
Morningstar Rankings — Closed-End Municipal National Intermediate Funds Category as of 11/30/12
Period
Rank
 
Number of Funds Tracked
Percentile Ranking (%)
1-Year
1
of
11
1
3-Year
1
of
11
1
5-Year
1
of
9
1
10-Year
1
of
8
1
 
Source: Morningstar, Inc. Rankings are historical and do not guarantee future results. Rankings are based on net asset value total return with distributions reinvested.
 
Investment Portfolio as of November 30, 2012
   
Principal Amount ($)
   
Value ($)
 
       
Municipal Bonds and Notes 113.7%
 
Alabama 0.1%
 
Camden, AL, Industrial Development Board Revenue, Series B, AMT, Prerefunded, 6.375%, 12/1/2024
    1,000,000       1,061,010  
Alaska 0.9%
 
Valdez, AK, Marine Terminal Revenue, Exxon Pipeline Co. Project, Series C, 0.17%*, 12/1/2033
    5,400,000       5,400,000  
Arizona 1.1%
 
Arizona, Salt Verde Financial Corp., Gas Revenue:
 
5.0%, 12/1/2037
    1,050,000       1,267,182  
5.5%, 12/1/2029
    1,400,000       1,752,450  
Phoenix, AZ, Civic Improvement Corp., Airport Revenue, Series A, 5.0%, 7/1/2040
    3,000,000       3,416,310  
        6,435,942  
California 21.9%
 
California, Bay Area Toll Authority, Toll Bridge Revenue, San Francisco Bay Area, Series F-1, 5.125%, 4/1/2039
    5,000,000       5,889,550  
California, Health Facilities Financing Authority Revenue, Catholic Healthcare West, Series A, 6.0%, 7/1/2039
    3,500,000       4,219,495  
California, M-S-R Energy Authority, Series A, 7.0%, 11/1/2034
    3,180,000       4,701,407  
California, San Gorgonio Memorial Healthcare, Election of 2006, Series C, 7.2%, 8/1/2039
    5,000,000       5,955,200  
California, South Bayside Waste Management Authority, Solid Waste Enterprise Revenue, Shoreway Environmental Center, Series A, 6.25%, 9/1/2029
    5,345,000       6,311,643  
California, Special Assessment Revenue, Golden State Tobacco Securitization Corp., Series 2003-A-1, Prerefunded, 6.75%, 6/1/2039
    11,730,000       12,116,034  
California, State General Obligation:
 
5.0%, 2/1/2033
    5,000,000       5,921,700  
5.25%, 4/1/2035
    4,295,000       5,175,604  
5.5%, 3/1/2040
    1,370,000       1,654,659  
6.0%, 4/1/2038
    10,000,000       12,426,200  
California, State Infrastructure & Economic Development Bank Revenue, Pacific Gas & Electric Co., Series D, 0.13%*, 12/1/2016, LOC: Sumitomo Mitsui Banking
    3,500,000       3,500,000  
California, State Public Works Board, Lease Revenue, Capital Projects, Series I-1, 6.375%, 11/1/2034
    2,000,000       2,468,840  
California, State Public Works Board, Lease Revenue, Department of Corrections, Series C, Prerefunded, 5.5%, 6/1/2021
    2,500,000       2,631,425  
California, State Public Works Board, Lease Revenue, Department of General Services, Buildings 8 & 9, Series A, 6.25%, 4/1/2034
    6,640,000       8,014,812  
California, Statewide Communities Development Authority Revenue, American Baptist Homes of the West, 6.25%, 10/1/2039, GTY: American Baptist Homes of the Midwest
    1,250,000       1,391,013  
California, Statewide Communities Development Authority Revenue, Los Angeles County Museum of Art, Series B, 0.16%*, 12/1/2037, LOC: Union Bank NA
    185,000       185,000  
Corona-Norco, CA, Unified School District, Election of 2006, Series A, 5.0%, 8/1/2031, INS: AGMC
    5,130,000       5,692,915  
Irvine, CA, Unified School District, Special Tax, Community Facilities District, Series 1-B, 0.18%*, 9/1/2051, LOC: Bank of America NA
    1,000,000       1,000,000  
Kern, CA, High School District, Election of 2004, Series B, 5.0%, 8/1/2030, INS: AGMC
    13,270,000       14,046,428  
Los Angeles, CA, Community College District, Election of 2008, Series C, 5.25%, 8/1/2039
    3,000,000       3,754,590  
Los Angeles, CA, Department of Airports Revenue, Los Angeles International Airport, Series B, 5.0%, 5/15/2035
    8,500,000       9,735,390  
Port Oakland, CA, Series A, AMT, 5.0%, 11/1/2027, INS: NATL
    5,850,000       6,428,448  
San Diego, CA, Community College District, Election of 2006, 5.0%, 8/1/2036
    2,850,000       3,378,960  
        126,599,313  
Colorado 1.3%
 
Colorado, E-470 Public Highway Authority Revenue, Series A-1, 5.5%, 9/1/2024, INS: NATL
    2,500,000       2,736,800  
Colorado, Health Facilities Authority Revenue, Covenant Retirement Communities, Inc., 5.0%, 12/1/2035
    2,500,000       2,598,400  
University of Colorado, Hospital Authority Revenue, Series A, 5.0%, 11/15/2042
    1,785,000       2,038,309  
        7,373,509  
Florida 11.8%
 
Broward County, FL, Airport Systems Revenue, Series Q-1, 5.0%, 10/1/2037
    8,510,000       9,875,344  
Miami-Dade County, FL, Aviation Revenue, Series A, 5.5%, 10/1/2041
    10,000,000       11,665,500  
Miami-Dade County, FL, Aviation Revenue, Miami International Airport:
               
Series A, AMT, 5.25%, 10/1/2033, INS: AGC
    8,500,000       9,384,850  
Series A-1, 5.375%, 10/1/2035
    2,000,000       2,341,600  
Miami-Dade County, FL, Educational Facilities Authority Revenue, University of Miami, Series A, 5.75%, 4/1/2028
    3,000,000       3,382,470  
Miami-Dade County, FL, Expressway Authority, Toll Systems Revenue, Series A, 5.0%, 7/1/2035, INS: AGMC
    3,000,000       3,436,050  
North Brevard County, FL, Hospital District Revenue, Parrish Medical Center Project:
               
5.5%, 10/1/2028
    5,290,000       5,958,286  
5.75%, 10/1/2038
    5,000,000       5,657,950  
Orlando & Orange County, FL, Expressway Authority Revenue:
               
Series C, 5.0%, 7/1/2035
    2,705,000       3,098,172  
Series A, 5.0%, 7/1/2040
    11,895,000       13,511,055  
        68,311,277  
Georgia 7.6%
 
Atlanta, GA, Airport Revenue:
 
Series A, 5.0%, 1/1/2035
    1,030,000       1,170,801  
Series C, AMT, 5.0%, 1/1/2037
    1,690,000       1,910,376  
Atlanta, GA, Water & Wastewater Revenue, Series A, 6.25%, 11/1/2039
    5,815,000       7,138,610  
Gainesville & Hall County, GA, Hospital Authority Revenue, Anticipation Certificates, Northeast Georgia Healthcare, Series A, 5.5%, 2/15/2045
    2,135,000       2,443,593  
Georgia, Main Street Natural Gas, Inc., Gas Project Revenue:
 
Series A, 5.0%, 3/15/2020
    7,250,000       8,397,313  
Series A, 5.5%, 9/15/2024
    5,000,000       6,196,650  
Series A, 5.5%, 9/15/2028
    10,000,000       12,452,700  
Georgia, Medical Center Hospital Authority Revenue, Anticipation Certificates, Columbus Regional Healthcare Systems, 6.5%, 8/1/2038, INS: AGC
    3,300,000       3,906,375  
        43,616,418  
Hawaii 2.1%
 
Hawaii, State Airports Systems Revenue, Series A, 5.0%, 7/1/2039
    4,200,000       4,764,522  
Hawaii, State Department of Budget & Finance, Special Purpose Revenue, Hawaiian Electric Co., Inc., 6.5%, 7/1/2039, GTY: Hawaiian Electric Co., Inc.
    1,000,000       1,184,750  
Honolulu City & County, HI, Wastewater Systems Revenue, Series A, 5.25%, 7/1/2036
    5,215,000       6,346,134  
        12,295,406  
Idaho 0.9%
 
Idaho, Health Facilities Authority Revenue, St. Luke's Regional Medical Center:
               
5.0%, 7/1/2035, INS: AGMC
    2,500,000       2,836,025  
6.75%, 11/1/2037
    2,135,000       2,573,273  
        5,409,298  
Illinois 8.3%
 
Chicago, IL, Airport Revenue, O'Hare International Airport:
 
Series A, 5.75%, 1/1/2039
    5,000,000       6,042,500  
Series B, 6.0%, 1/1/2041
    9,000,000       11,378,880  
Chicago, IL, General Obligation, Series A, 5.25%, 1/1/2035
    2,025,000       2,338,146  
Chicago, IL, Water Revenue, 5.0%, 11/1/2032
    3,000,000       3,592,530  
Illinois, Finance Authority Revenue, Advocate Health Care Network:
               
Series B, 5.375%, 4/1/2044
    2,500,000       2,811,775  
Series D, 6.5%, 11/1/2038
    1,000,000       1,232,730  
Illinois, Finance Authority Revenue, Memorial Health Systems, 5.5%, 4/1/2039
    4,200,000       4,733,148  
Illinois, Finance Authority Revenue, Northwest Community Hospital, Series A, 5.5%, 7/1/2038
    5,750,000       6,404,292  
Illinois, Metropolitan Pier & Exposition Authority, Dedicated State Tax Revenue, McCormick Place, Series B, 5.0%, 6/15/2050, INS: AGMC
    3,000,000       3,348,600  
Illinois, Railsplitter Tobacco Settlement Authority, 6.0%, 6/1/2028
    915,000       1,127,783  
Illinois, State Finance Authority Revenue, Ascension Health Credit Group:
               
Series A, 5.0%, 11/15/2032
    730,000       856,772  
Series A, 5.0%, 11/15/2037
    520,000       598,733  
Illinois, State Finance Authority Revenue, OSF Healthcare System, Series A, 5.0%, 5/15/2041
    1,580,000       1,759,314  
University of Illinois, Auxiliary Facilities Systems, Series A, 5.25%, 4/1/2041
    1,250,000       1,442,563  
        47,667,766  
Indiana 0.4%
 
Indiana, Finance Authority Hospital Revenue, Deaconess Hospital Obligation, Series A, 6.75%, 3/1/2039
    1,745,000       2,097,263  
Kentucky 1.7%
 
Kentucky, Economic Development Finance Authority, Louisville Arena Project Revenue, Series A-1, 6.0%, 12/1/2042, INS: AGC
    4,000,000       4,480,680  
Louisville & Jefferson County, KY, Metropolitan Government Health Systems Revenue, Norton Healthcare, Inc., 5.0%, 10/1/2030
    5,000,000       5,364,300  
        9,844,980  
Louisiana 1.0%
 
Louisiana, Public Facilities Authority, Hospital Revenue, Lafayette General Medical Center, 5.5%, 11/1/2040
    3,000,000       3,390,030  
Louisiana, St. John Baptist Parish Revenue, Marathon Oil Corp., Series A, 5.125%, 6/1/2037
    2,315,000       2,498,487  
        5,888,517  
Maryland 0.5%
 
Maryland, State Health & Higher Educational Facilities Authority Revenue, Anne Arundel Health Systems, Series A, 6.75%, 7/1/2039
    1,100,000       1,357,037  
Maryland, State Health & Higher Educational Facilities Authority Revenue, Washington County Hospital, 5.75%, 1/1/2033
    1,500,000       1,655,580  
        3,012,617  
Massachusetts 1.6%
 
Massachusetts, Airport Revenue, U.S. Airways, Inc. Project, Series A, AMT, 5.875%, 9/1/2023, INS: NATL
    5,000,000       5,005,800  
Massachusetts, State Health & Educational Facilities Authority Revenue, Suffolk University, Series A, 5.75%, 7/1/2039
    3,570,000       4,066,837  
        9,072,637  
Michigan 4.9%
 
Detroit, MI, Water & Sewerage Department, Sewerage Disposal System Revenue, Series A, 5.25%, 7/1/2039
    1,120,000       1,249,898  
Michigan, State Building Authority Revenue, Series I-A, 5.375%, 10/15/2041
    7,500,000       9,004,800  
Michigan, State Building Authority Revenue, Facilities Program:
               
Series H, 5.125%, 10/15/2033
    2,495,000       2,846,196  
Series I, 6.0%, 10/15/2038
    1,000,000       1,216,630  
Michigan, State Hospital Finance Authority Revenue, Henry Ford Health Hospital, 5.75%, 11/15/2039
    5,000,000       5,862,800  
Michigan, State Hospital Finance Authority, Trinity Health Credit Group, Series C, 5.0%, 12/1/2034
    4,950,000       5,725,615  
Royal Oak, MI, Hospital Finance Authority Revenue, William Beaumont Hospital, 8.25%, 9/1/2039
    1,800,000       2,348,460  
        28,254,399  
Minnesota 0.2%
 
Minneapolis, MN, Health Care Systems Revenue, Fairview Health Services, Series A, 6.75%, 11/15/2032
    1,140,000       1,392,875  
Mississippi 0.4%
 
Mississippi, State Business Finance Commission, Gulf Opportunity Zone, Chevron U.S.A., Inc. Project, Series A, 0.17%*, 12/1/2030, GTY: Chevron Corp.
    300,000       300,000  
Warren County, MS, Gulf Opportunity Zone, International Paper Co., Series A, 6.5%, 9/1/2032
    1,525,000       1,773,499  
        2,073,499  
Nevada 3.1%
 
Clark County, NV, Airport Revenue, Series B, 5.125%, 7/1/2036
    4,305,000       4,912,995  
Henderson, NV, Health Care Facility Revenue, Catholic Healthcare West, Series B, 5.25%, 7/1/2031
    10,000,000       10,772,600  
Las Vegas Valley, NV, Water District, Series B, 5.0%, 6/1/2037
    1,830,000       2,161,358  
        17,846,953  
New Jersey 4.4%
 
New Jersey, Economic Development Authority Revenue, Cigarette Tax, Prerefunded, 5.75%, 6/15/2034
    1,090,000       1,181,233  
New Jersey, Hospital & Healthcare Revenue, General Hospital Center at Passaic, ETM, 6.75%, 7/1/2019, INS: AGMC
    5,000,000       6,222,750  
New Jersey, Industrial Development Revenue, Economic Development Authority, Harrogate, Inc., Series A, 5.875%, 12/1/2026
    1,400,000       1,401,204  
New Jersey, State Transportation Trust Fund Authority, Transportation Systems:
               
Series B, 5.5%, 6/15/2031
    1,200,000       1,481,040  
Series A, 5.5%, 6/15/2041
    5,460,000       6,602,997  
Series A, 6.0%, 12/15/2038
    1,955,000       2,391,082  
Series A, Prerefunded, 6.0%, 12/15/2038
    1,045,000       1,370,559  
New Jersey, State Turnpike Authority Revenue:
 
Series A, 5.0%, 1/1/2035
    1,065,000       1,265,422  
Series E, 5.25%, 1/1/2040
    1,750,000       2,006,795  
New Jersey, Tobacco Settlement Financing Corp., Series 1-A, 5.0%, 6/1/2041
    1,700,000       1,537,718  
        25,460,800  
New York 8.5%
 
New York, Metropolitan Transportation Authority Revenue:
 
Series D, 5.0%, 11/15/2032
    2,565,000       3,056,095  
Series E, 5.0%, 11/15/2042
    765,000       894,782  
New York, State Agency General Obligation Lease, Higher Education Revenue, Dormitory Authority, City University, Series A, 5.625%, 7/1/2016
    1,490,000       1,676,652  
New York, State Environmental Facilities Corp., State Clean Water & Drinking Revolving Funds, New York City Municipal Water Finance Authority Projects, 5.0%, 6/15/2036
    2,000,000       2,417,440  
New York, State Liberty Development Corp. Revenue, World Trade Center Port Authority Construction:
               
5.0%, 12/15/2041
    4,255,000       4,988,860  
5.25%, 12/15/2043
    5,000,000       5,952,700  
New York, State Thruway Authority Revenue, Series I, 5.0%, 1/1/2037
    1,340,000       1,581,508  
New York, Tobacco Settlement Financing Corp., Series B-1C, 5.5%, 6/1/2019
    15,500,000       15,900,210  
New York City, NY, Municipal Water Finance Authority, Water & Sewer Revenue, Second General Resolution, Series EE, 5.375%, 6/15/2043
    3,750,000       4,624,050  
Niagara Falls, NY, School District General Obligation, 5.6%, 6/15/2014, INS: AGMC
    1,180,000       1,276,619  
Port Authority of New York & New Jersey, AMT, 5.0%, 10/1/2034
    6,000,000       6,989,160  
        49,358,076  
North Carolina 0.8%
 
North Carolina, Electric Revenue, Municipal Power Agency, Series C, Prerefunded, 5.375%, 1/1/2017
    1,000,000       1,004,390  
North Carolina, Medical Care Commission, Health Care Facilities Revenue, University Health System, Series D, 6.25%, 12/1/2033
    3,000,000       3,682,590  
        4,686,980  
North Dakota 0.7%
 
Fargo, ND, Sanford Health Systems Revenue, 6.25%, 11/1/2031
    3,240,000       4,109,454  
Ohio 2.6%
 
Kent, OH, State University Revenues, General Receipts, Series A, 5.0%, 5/1/2037
    1,500,000       1,746,555  
Lucas County, OH, Hospital Revenue, Promedica Healthcare, Series A, 6.5%, 11/15/2037
    1,500,000       1,923,990  
Ohio, American Municipal Power, Inc. Revenue, Fremont Energy Center Project, Series B, 5.0%, 2/15/2037
    1,445,000       1,655,305  
Ohio, State Hospital Facility Revenue, Cleveland Clinic Health:
 
Series A, 5.5%, 1/1/2039
    5,000,000       5,745,950  
Series B, 5.5%, 1/1/2039
    3,500,000       4,022,165  
        15,093,965  
Oregon 0.2%
 
Port of Portland, OR, Special Obligation Revenue, Horizon Air Industries, Inc. Project, AMT, 0.18%*, 6/15/2027, LOC: Bank of America NA
    1,000,000       1,000,000  
Pennsylvania 2.2%
 
Allegheny County, PA, Hospital Development Authority Revenue, University of Pittsburgh Medical, 5.625%, 8/15/2039
    1,700,000       1,953,113  
Franklin County, PA, Industrial Development Authority Revenue, Chambersburg Hospital Project, 5.375%, 7/1/2042
    7,000,000       7,835,450  
Philadelphia, PA, Airport Revenue, Series A, 5.0%, 6/15/2035
    2,835,000       3,159,409  
        12,947,972  
Puerto Rico 3.7%
 
Puerto Rico, Sales Tax Financing Corp., Sales Tax Revenue:
 
Series A, 5.375%, 8/1/2039
    3,200,000       3,474,848  
Series A, 6.5%, 8/1/2044
    15,000,000       17,689,350  
        21,164,198  
Rhode Island 0.4%
 
Rhode Island, Health & Educational Building Corp., Higher Education Facility Revenue, University of Rhode Island, Series A, 6.25%, 9/15/2034
    2,000,000       2,396,600  
South Carolina 1.7%
 
Greenwood County, SC, Hospital Revenue, Self Regional Healthcare, Series B, 5.0%, 10/1/2031
    1,000,000       1,170,200  
South Carolina, Jobs Economic Development Authority, Hospital Facilities Revenue, Palmetto Health Alliance:
               
Series C, Prerefunded, 7.0%, 8/1/2030
    5,420,000       5,662,157  
South Carolina, State Ports Authority Revenue, 5.25%, 7/1/2040
    2,550,000       2,946,933  
        9,779,290  
Tennessee 1.6%
 
Clarksville, TN, Natural Gas Acquisition Corp., Gas Revenue, 5.0%, 12/15/2021
    2,000,000       2,269,240  
Jackson, TN, Hospital Revenue, Jackson-Madison Project, 5.625%, 4/1/2038
    4,000,000       4,600,160  
Sullivan County, TN, Health, Educational & Housing Facilities Board, Hospital Revenue, Wellmont Health Systems Project, Series C, 5.25%, 9/1/2036
    2,050,000       2,190,282  
        9,059,682  
Texas 13.2%
 
Harris County, TX, Health Facilities Development Corp., Hospital Revenue, Memorial Hermann Healthcare System, Series B, 7.25%, 12/1/2035
    1,000,000       1,269,950  
Harris County, TX, Houston Port Authority, Series A, AMT, 6.25%, 10/1/2029
    3,000,000       3,748,620  
Harris County,TX, Cultural Education Facilities Finance Corp. Revenue, YMCA of Greater Houston Area, Series A, 0.18%*, 6/1/2038, LOC: JPMorgan Chase Bank NA
    200,000       200,000  
Houston, TX, Airport Revenue, People Mover Project, Series A, AMT, 5.5%, 7/15/2017, INS: AGMC
    3,300,000       3,311,682  
North Texas, Tollway Authority Revenue:
 
First Tier, Series A, 5.625%, 1/1/2033
    3,500,000       4,082,015  
Second Tier, Series F, 5.75%, 1/1/2038
    6,500,000       7,335,575  
First Tier, 6.0%, 1/1/2043
    5,000,000       6,020,000  
North Texas, Tollway Authority Revenue, Special Project Systems, Series D, 5.0%, 9/1/2032
    2,000,000       2,386,480  
Texas, Dallas/Fort Worth International Airport Revenue:
 
Series F, AMT, 5.0%, 11/1/2035
    2,000,000       2,234,460  
Series A, 5.25%, 11/1/2038
    4,000,000       4,643,880  
Texas, Industrial Development Revenue, Waste Disposal Authority, Series A, AMT, 6.1%, 8/1/2024
    2,000,000       2,007,420  
Texas, Municipal Gas Acquisition & Supply Corp. I, Gas Supply Revenue:
               
Series B, 0.81%**, 12/15/2017
    6,925,000       6,748,343  
Series B, 0.96%**, 12/15/2026
    1,500,000       1,239,420  
Series D, 6.25%, 12/15/2026
    5,000,000       6,635,000  
Texas, SA Energy Acquisition Public Facility Corp., Gas Supply Revenue:
               
5.5%, 8/1/2021
    1,155,000       1,378,885  
5.5%, 8/1/2025
    7,250,000       8,753,142  
Texas, Southwest Higher Education Authority, Inc., Southern Methodist University Project, 5.0%, 10/1/2035
    1,600,000       1,903,680  
Texas, Municipal Gas Acquisition & Supply Corp., III Gas Supply Revenue:
               
5.0%, 12/15/2030(a)
    250,000       278,938  
5.0%, 12/15/2031(a)
    500,000       555,650  
5.0%, 12/15/2032(a)
    500,000       554,325  
Texas, State Transportation Commission, Turnpike Systems Revenue, Series A, 5.0%, 8/15/2041
    3,200,000       3,632,928  
West Harris County, TX, Regional Water Authority, Water Systems Revenue, 5.0%, 12/15/2035
    6,500,000       7,572,825  
        76,493,218  
Virginia 0.3%
 
Washington County, VA, Industrial Development Authority, Hospital Facility Revenue, Mountain States Health Alliance, Series C, 7.75%, 7/1/2038
    1,370,000       1,728,186  
Washington 2.7%
 
Washington, State Health Care Facilities Authority Revenue, Virginia Mason Medical Center, Series A, 6.125%, 8/15/2037
    6,000,000       6,704,100  
Washington, State Health Care Facilities Authority, Swedish Health Services, Series A, Prerefunded, 6.75%, 11/15/2041
    1,825,000       2,620,846  
Washington, State Motor Vehicle Tax-Senior 520 Corridor Program, Series C, 5.0%, 6/1/2031
    5,000,000       6,130,250  
        15,455,196  
Wisconsin 0.9%
 
Wisconsin, State Health & Educational Facilities Authority Revenue, Froedtert Health System, Inc., Series A, 5.0%, 4/1/2042
    2,650,000       3,058,152  
Wisconsin, State Health & Educational Facilities Authority Revenue, Prohealth Care, Inc. Obligation Group, 6.625%, 2/15/2039
    1,555,000       1,864,740  
        4,922,892  
Total Municipal Bonds and Notes (Cost $557,795,881)
      657,310,188  
   
Municipal Inverse Floating Rate Notes (b) 40.4%
 
California 2.0%
 
California, San Francisco Bay Area Toll Authority, Toll Bridge Revenue, Series F, 5.0%, 4/1/2031 (c)
    10,000,000       11,670,568  
Trust: California, San Francisco Bay Area Toll Authority, Toll Bridge Revenue, Series 1962-5, 144A, 13.594%, 4/1/2014, Leverage Factor at purchase date: 3 to 1
               
Florida 6.6%
 
Miami-Dade County, FL, Transit Sales Surtax Revenue, 5.0%, 7/1/2023, INS: AGMC (c)
    3,740,000       4,369,944  
Miami-Dade County, FL, Transit Sales Surtax Revenue, 5.0%, 7/1/2024, INS: AGMC (c)
    3,915,000       4,574,420  
Miami-Dade County, FL, Transit Sales Surtax Revenue, 5.0%, 7/1/2025, INS: AGMC (c)
    4,122,500       4,816,870  
Miami-Dade County, FL, Transit Sales Surtax Revenue, 5.0%, 7/1/2026, INS: AGMC (c)
    4,317,500       5,044,714  
Miami-Dade County, FL, Transit Sales Surtax Revenue, 5.0%, 7/1/2032, INS: AGMC (c)
    16,470,000       19,244,110  
Trust: Miami-Dade County, FL, Transit Improvements, Series 2008-1160, 144A, 9.251%, 7/1/2016, Leverage Factor at purchase date: 2 to 1
               
        38,050,058  
Massachusetts 4.6%
 
Massachusetts, State Water Pollution Abatement Trust, Series 13, 5.0%, 8/1/2032 (c)
    18,250,000       21,018,790  
Massachusetts, State Water Pollution Abatement Trust, Series 13, 5.0%, 8/1/2037 (c)
    5,000,000       5,758,572  
Trust: Massachusetts, State Pollution Control, Water Utility Improvements, Series 3159, 144A, 13.532%, 8/1/2015, Leverage Factor at purchase date: 3 to 1
               
        26,777,362  
Nevada 5.9%
 
Clark County, NV, General Obligation, Limited Tax-Bond Bank, 5.0%, 6/1/2028 (c)
    9,447,355       11,085,148  
Clark County, NV, General Obligation, Limited Tax-Bond Bank, 5.0%, 6/1/2029 (c)
    9,919,723       11,639,405  
Clark County, NV, General Obligation, Limited Tax-Bond Bank, 5.0%, 6/1/2030 (c)
    9,627,878       11,296,966  
Trust: Clark County, NV, General Obligation, Series 3158, 144A, 13.533%, 6/1/2016, Leverage Factor at purchase date: 3 to 1
               
        34,021,519  
New York 11.6%
 
New York, State Dormitory Authority, State Personal Income Tax Revenue, Series A, 5.0%, 3/15/2026 (c)
    10,000,000       11,601,500  
Trust: New York, State Dormitory Authority Revenue, Series 3160, 144A, 13.534%, 3/15/2015, Leverage Factor at purchase date: 3 to 1
               
New York, State Dormitory Authority, State Personal Income Tax Revenue, Series A, 5.0%, 3/15/2024 (c)
    10,000,000       11,707,400  
Trust: New York, State Dormitory Authority Revenue, Secondary Issues, Series 1955-3, 144A, 17.9%, 3/15/2015, Leverage Factor at purchase date: 4 to 1
               
New York, State Dormitory Authority Revenues, State Supported Debt, University Dormitory Facilities, 5.0%, 7/1/2025 (c)
    5,425,000       6,246,555  
New York, State Dormitory Authority Revenues, State Supported Debt, University Dormitory Facilities, 5.0%, 7/1/2027 (c)
    8,080,000       9,303,625  
Trust: New York, State Dormitory Authority Revenues, Series 3169, 144A, 13.531%, 7/1/2025, Leverage Factor at purchase date: 3 to 1
               
New York, Triborough Bridge & Tunnel Authority Revenues, Series C, 5.0%, 11/15/2033 (c)
    6,000,000       6,956,940  
Trust: New York, Triborough Bridge & Tunnel Authority Revenues, Series 2008-1188, 144A, 9.22%, 11/15/2033, Leverage Factor at purchase date: 2 to 1
               
New York City, NY, Transitional Finance Authority Revenue, Series C-1, 5.0%, 11/1/2027 (c)
    17,560,000       20,984,024  
Trust: New York City, NY, Series 2008-1190, 144A, 9.22%, 11/1/2027, Leverage Factor at purchase date: 2 to 1
               
        66,800,044  
Tennessee 6.4%
 
Nashville & Davidson County, TN, Metropolitan Government, 5.0%, 1/1/2027 (c)
    10,756,695       12,672,083  
Trust: Nashville & Davidson County, TN, Metropolitan Government, Series 2631-3, 144A, 17.895%, 1/1/2016, Leverage Factor at purchase date: 4 to 1
               
Nashville & Davidson County, TN, Metropolitan Government, 5.0%, 1/1/2026 (c)
    10,200,000       12,015,702  
Trust: Nashville & Davidson County, TN, Metropolitan Government, Series 2631-2, 144A, 17.9%, 1/1/2016, Leverage Factor at purchase date: 4 to 1
               
Nashville & Davidson County, TN, Metropolitan Government, 5.0%, 1/1/2028 (c)
    10,564,925       12,309,015  
Trust: Nashville & Davidson County, TN, Metropolitan Government, Series 2631-4, 144A, 17.908%, 1/1/2016, Leverage Factor at purchase date: 4 to 1
               
        36,996,800  
Virginia 3.3%
 
Virginia, State Resource Authority, Clean Water Revenue, 5.0%, 10/1/2027 (c)
    8,190,000       9,846,279  
Virginia, State Resource Authority, Clean Water Revenue, 5.0%, 10/1/2028 (c)
    7,630,000       9,173,030  
Trust: Virginia, State Resource Authority, Clean Water Revenue, Series 2917, 144A, 11.282%, 10/1/2028, Leverage Factor at purchase date: 2.5 to 1
               
        19,019,309  
Total Municipal Inverse Floating Rate Notes (Cost $200,732,943)
      233,335,660  
 

   
% of Net Assets
   
Value ($)
 
       
Total Investment Portfolio (Cost $758,528,824)
    154.1       890,645,848  
MTPS, at Liquidation Value
    (32.7 )     (188,865,000 )
Other Assets and Liabilities, Net
    (19.7 )     (114,002,209 )
Remarketed Preferred Shares, at Liquidation Value
    (1.7 )     (9,885,000 )
Net Assets Applicable to Common Shareholders
    100.0       577,893,639  
 
* Variable rate demand notes are securities whose interest rates are reset periodically at market levels. These securities are payable on demand and are shown at their current rate as of November 30, 2012.
 
** Floating rate securities' yields vary with a designated market index or market rate, such as the coupon-equivalent of the U.S. Treasury Bill rate. These securities are shown at their current rate as of November 30, 2012.
 
The cost for federal income tax purposes was $630,149,786. At November 30, 2012, net unrealized appreciation for all securities based on tax cost was $134,649,486. This consisted of aggregate gross unrealized appreciation for all securities in which there was an excess of value over tax cost of $135,886,684 and aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over value of $1,237,198.
 
(a) When-issued security.
 
(b) Securities represent the underlying municipal obligations of inverse floating rate obligations held by the Fund.
 
(c) Security forms part of the below tender option bond trust. Principal Amount and Value shown take into account the leverage factor.
 
144A: Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers.
 
AGC: Assured Guaranty Corp.
 
AGMC: Assured Guaranty Municipal Corp.
 
AMT: Subject to alternative minimum tax.
 
ETM: Bonds bearing the description ETM (escrow to maturity) are collateralized usually by U.S. Treasury securities which are held in escrow and used to pay principal and interest on bonds so designated.
 
GTY: Guaranty Agreement
 
INS: Insured
 
LOC: Letter of Credit
 
NATL: National Public Finance Guarantee Corp.
 
Prerefunded: Bonds which are prerefunded are collateralized usually by U.S. Treasury securities which are held in escrow and used to pay principal and interest on tax-exempt issues and to retire the bonds in full at the earliest refunding date.
 
Fair Value Measurements
 
Various inputs are used in determining the value of the Fund's investments. These inputs are summarized in three broad levels. Level 1 includes quoted prices in active markets for identical securities. Level 2 includes other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds and credit risk). Level 3 includes significant unobservable inputs (including the Fund's own assumptions in determining the fair value of investments). The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
 
The following is a summary of the inputs used as of November 30, 2012 in valuing the Fund's investments. For information on the Fund's policy regarding the valuation of investments, please refer to the Security Valuation section of Note A in the accompanying Notes to Financial Statements.
Assets
 
Level 1
   
Level 2
   
Level 3
   
Total
 
   
Municipal Investments (d)
  $     $ 890,645,848     $     $ 890,645,848  
Total
  $     $ 890,645,848     $     $ 890,645,848  
 
There have been no transfers between fair value measurement levels during the year ended November 30, 2012.
 
(d) See Investment Portfolio for additional detailed categorizations.
 
The accompanying notes are an integral part of the financial statements.
 
Statement of Assets and Liabilities
as of November 30, 2012
 
Assets
 
Investments in non-affiliated securities, at value (cost $758,528,824)
  $ 890,645,848  
Cash
    531,378  
Receivable for investments sold
    1,045,000  
Interest receivable
    12,392,603  
Other assets
    15,101  
Deferred offering costs
    546,270  
Total assets
    905,176,200  
Liabilities
 
Payable for investments purchased — when-issued securities
    1,351,363  
Payable for floating rate notes issued
    125,846,576  
Distributions payable
    203  
Accrued management fee
    348,938  
Accrued Trustees' fees
    7,216  
Other accrued expenses and payables
    978,265  
MTPS, at liquidation value
    188,865,000  
Total liabilities
    317,397,561  
Remarketed Preferred Shares, at liquidation value
    9,885,000  
Net assets applicable to common shareholders, at value
  $ 577,893,639  
Net Assets Applicable to Common Shareholders Consist of
 
Undistributed net investment income
    16,891,953  
Net unrealized appreciation (depreciation) on investments
    132,117,024  
Accumulated net realized gain (loss)
    (4,342,142 )
Paid-in capital
    433,226,804  
Net assets applicable to common shareholders, at value
  $ 577,893,639  
Net Asset Value
 
Net Asset Value per common share ($577,893,639 ÷ 39,218,238 outstanding shares of beneficial interest, $.01 par value, unlimited number of common shares authorized)
  $ 14.74  
 
The accompanying notes are an integral part of the financial statements.
 
Statement of Operations
for the year ended November 30, 2012
 
Investment Income
 
Income:
Interest
  $ 41,009,074  
Expenses:
Management fee
    4,029,504  
Services to shareholders
    51,824  
Custodian fee
    13,139  
Professional fees
    223,655  
Reports to shareholders
    71,914  
Registration fees
    21,860  
Trustees' fees and expenses
    29,374  
Interest expense
    1,078,632  
Remarketing agent fee
    451,815  
Stock Exchange listing fees
    34,651  
Other
    183,355  
Total expenses
    6,189,723  
Net investment income
    34,819,351  
Realized and Unrealized Gain (Loss)
 
Net realized gain (loss) from investments
    6,261,141  
Change in net unrealized appreciation (depreciation) on investments
    70,314,113  
Net gain (loss)
    76,575,254  
Net increase (decrease) in net assets resulting from operations
  $ 111,394,605  
Distributions to Remarketed Preferred Shares
    (333,612 )
Net increase (decrease) in net assets applicable to common shareholders
  $ 111,060,993  
 
The accompanying notes are an integral part of the financial statements.
 
Statement of Cash Flows
for the year ended November 30, 2012
 
Increase (Decrease) in Cash:
Cash Flows from Operating Activities
 
Net increase (decrease) in net assets resulting from operations (excluding distributions to Remarketed Preferred Shareholders)
  $ 111,394,605  
Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by operating activities:
Purchases of long-term investments
    (344,406,008 )
Net amortization of premium/(accretion of discount)
    192,735  
Proceeds from sales and maturities of long-term investments
    353,425,293  
(Increase) decrease in interest receivable
    165,662  
(Increase) decrease in other assets
    138,610  
(Increase) decrease in receivable for investments sold
    25,000  
Increase (decrease) in payable for investments purchased — when-issued securities
    80,167  
Increase (decrease) in accrued expenses and payables
    862,636  
Change in unrealized (appreciation) depreciation on investments
    (70,314,113 )
Net realized (gain) loss from investments
    (6,261,141 )
Cash provided (used) by operating activities
    45,303,446  
Cash Flows from Financing Activities
 
(Increase) decrease in deferred offering cost on MTPS
    (546,270 )
Increase from issuance of MTPS
    188,865,000  
Decrease from repurchase of Remarketed Preferred Shares
    (181,310,400 )
Distributions paid (net of reinvestment of distributions)
    (32,137,084 )
Increase (decrease) in payable for floating rate notes issued
    (19,750,000 )
Cash provided (used) for financing activities
    (44,878,754 )
Increase (decrease) in cash
    424,692  
Cash at beginning of period
    106,686  
Cash at end of period
  $ 531,378  
Supplemental Disclosure
 
Reinvestment of distributions
  $ 1,464,003  
Interest expense
  $ (1,078,632 )
 
The accompanying notes are an integral part of the financial statements.
 
Statement of Changes in Net Assets
   
Years Ended November 30,
 
Increase (Decrease) in Net Assets
 
2012
   
2011
 
Operations:
Net investment income
  $ 34,819,351     $ 36,398,412  
Net realized gain (loss)
    6,261,141       (1,118,083 )
Change in net unrealized appreciation (depreciation)
    70,314,113       18,472,809  
Net increase (decrease) in net assets resulting from operations
    111,394,605       53,753,138  
Distributions to Remarketed Preferred Shareholders
    (333,612 )     (441,372 )
Net increase (decrease) in net assets applicable to common shareholders
    111,060,993       53,311,766  
Distributions to common shareholders from:
Net investment income
    (32,895,083 )     (32,829,776 )
Net realized gains
    (371,559 )      
Total distributions
    (33,266,642 )     (32,829,776 )
Fund share transactions:
Net increase resulting from the tender of Remarketed Preferred Shares
    7,554,600        
Net proceeds from shares issued to common shareholders in reinvestment of distributions
    1,464,003       662,845  
Net increase (decrease) in net assets from Fund share transactions
    9,018,603       662,845  
Increase (decrease) in net assets
    86,812,954       21,144,835  
Net assets at beginning of period applicable to common shareholders
    491,080,685       469,935,850  
Net assets at end of period applicable to common shareholders (including undistributed net investment income of $16,891,953 and $16,013,995, respectively)
  $ 577,893,639     $ 491,080,685  
Other Information
 
Common shares outstanding at beginning of period
    39,111,469       39,055,581  
Shares issued to common shareholders in reinvestment of distributions
    106,769       55,888  
Common shares outstanding at end of period
    39,218,238       39,111,469  
 
The accompanying notes are an integral part of the financial statements.
 
Financial Highlights
   
Years Ended November 30,
 
     
2012
   
2011
   
2010
   
2009
   
2008
 
Selected Per Share Data Applicable to Common Shareholders
 
Net asset value, beginning of period
  $ 12.56     $ 12.03     $ 11.94     $ 9.72     $ 11.79  
Income (loss) from investment operations:
Net investment incomea
    .89       .93       .94       1.01       .91  
Net realized and unrealized gain (loss)
    1.96       .45       .00 *     2.03       (2.15 )
Total from investment operations
    2.85       1.38       .94       3.04       (1.24 )
Distributions to remarketed preferred shareholders from net investment income (common share equivalent)
    (.01 )     (.01 )     (.01 )     (.04 )     (.24 )
Net increase (decrease) in net assets from operations applicable to common shareholders
    2.84       1.37       .93       3.00       (1.48 )
Less distributions applicable to common shareholders from:
Net investment income
    (.84 )     (.84 )     (.84 )     (.78 )     (.59 )
Net realized gains
    (.01 )                        
Total distributions
    (.85 )   $ (.84 )   $ (.84 )   $ (.78 )   $ (.59 )
NAV accretion resulting from Remarketed Preferred Shares tendered at a discounta
    .19                          
Net asset value, end of period
  $ 14.74     $ 12.56     $ 12.03     $ 11.94     $ 9.72  
Market price, end of period
  $ 15.39     $ 13.18     $ 12.12     $ 11.36     $ 8.26  
Total Return
 
Based on net asset value (%)c
    24.85       12.03       7.94       32.65       (12.55 )b
Based on market price (%)c
    24.22       16.69       14.30       48.52       (16.00 )
Ratios to Average Net Assets Applicable to Common Shareholders and Supplemental Data
 
Net assets, end of period ($ millions)
    578       491       470       465       379  
Ratio of expenses before fee reductions (%) (including interest expense)d,e
    1.16       1.23       1.24       1.49       2.04  
Ratio of expenses after fee reductions (%) (including interest expense)d,f
    1.16       1.23       1.24       1.49       2.03  
Ratio of expenses after fee reductions (%) (excluding interest expense)g
    .96       .98       .98       1.14       1.15  
Ratio of net investment income (%)h
    6.52       7.81       7.61       9.17       8.08  
Portfolio turnover rate (%)
    40       33       34       61       119  
Financial Highlights (continued)
 
   
Years Ended November 30,
 
    2012       2011       2010       2009       2008  
Senior Securities
 
Preferred shares information at period end, aggregate amount outstanding:
Remarketed Preferred Shares ($ millions)
    10       199       199       199       265  
MTPS ($ millions)
    189                          
Asset coverage per share ($)i
    19,538       17,354       16,822       16,706       12,151  
Liquidation and market price per share ($)
    5,000       5,000       5,000       5,000       5,000  
 

a Based on average common shares outstanding during the period.
b Total return would have been lower had certain fees not been reduced.
c Total return based on net asset value reflects changes in the Fund's net asset value during each period. Total return based on market price reflects changes in market price. Each figure assumes that dividend and capital gain distributions, if any, were reinvested. These figures will differ depending upon the level of any discount from or premium to net asset value at which the Fund's shares traded during the period.
d Interest expense represents interest and fees on short-term floating rate notes issued in conjunction with inverse floating rate securities and interest paid to shareholders of MTPS.
e The ratio of expenses before fee reductions (based on net assets of common and Preferred Shares, including interest expense) were 0.84%, 0.87%, 0.88%, 0.95% and 1.28% for the periods ended November 30, 2012, 2011, 2010, 2009 and 2008, respectively.
f The ratio of expenses after fee reductions (based on net assets of common and Preferred Shares, including interest expense) were 0.84%, 0.87%, 0.88%, 0.95% and 1.27% for the periods ended November 30, 2012, 2011, 2010, 2009 and 2008, respectively.
g The ratio of expenses after fee reductions (based on net assets of common and Preferred Shares, excluding interest expense) were 0.71%, 0.69%, 0.69%, 0.72% and 0.72% for the periods ended November 30, 2012, 2011, 2010, 2009 and 2008, respectively.
h The ratio of net investment income after distributions paid to Remarketed Preferred Shareholders were 6.46%, 7.72%, 7.49%, 8.85% and 5.97% for the periods ended November 30, 2012, 2011, 2010, 2009 and 2008, respectively.
i Asset coverage per share equals net assets of common shares plus the liquidation value of the Preferred Shares divided by the total number of Preferred Shares outstanding at the end of the period.
* Amount is less than $.005.
 
Notes to Financial Statements
 
A. Organization and Significant Accounting Policies
 
DWS Municipal Income Trust (the "Fund") is registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as a closed-end, diversified management investment company organized as a Massachusetts business trust.
 
The Fund's financial statements are prepared in accordance with accounting principles generally accepted in the United States of America which require the use of management estimates. Actual results could differ from those estimates. The policies described below are followed consistently by the Fund in the preparation of its financial statements.
 
Security Valuation. Investments are stated at value determined as of the close of regular trading on the New York Stock Exchange on each day the exchange is open for trading.
 
Various inputs are used in determining the value of the Fund's investments. These inputs are summarized in three broad levels. Level 1 includes quoted prices in active markets for identical securities. Level 2 includes other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, and credit risk). Level 3 includes significant unobservable inputs (including the Fund's own assumptions in determining the fair value of investments). The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
 
Municipal debt securities are valued at prices supplied by independent pricing services approved by the Fund's Board, whose valuations are intended to reflect the mean between the bid and asked prices. If the pricing services are unable to provide valuations, the securities are valued at the mean of the most recent bid and asked quotations or evaluated prices, as applicable, obtained from one or more broker-dealers. Such services may use various pricing techniques which take into account appropriate factors such as yield, quality, coupon rate, maturity, type of issue, trading characteristics and other data, as well as broker quotes. These securities are generally categorized as Level 2.
 
Securities and other assets for which market quotations are not readily available or for which the above valuation procedures are deemed not to reflect fair value are valued in a manner that is intended to reflect their fair value as determined in accordance with procedures approved by the Board and are generally categorized as Level 3. In accordance with the Fund's valuation procedures, factors used in determining value may include, but are not limited to, the type of the security; the size of the holding; the initial cost of the security; the existence of any contractual restrictions on the security's disposition; the price and extent of public trading in similar securities of the issuer or of comparable companies; quotations or evaluated prices from broker-dealers and/or pricing services; information obtained from the issuer, analysts, and/or the appropriate stock exchange (for exchange-traded securities); an analysis of the company's or issuer's financial statements; an evaluation of the forces that influence the issuer and the market(s) in which the security is purchased and sold and with respect to debt securities; the maturity, coupon, creditworthiness, currency denomination and the movement of the market in which the security is normally traded. The value determined under these procedures may differ from published values for the same securities.
 
Disclosure about the classification of fair value measurements is included in a table following the Fund's Investment Portfolio.
 
New Accounting Pronouncement. In December 2011, Accounting Standards Update 2011-11 (ASU 2011-11), Disclosures about Offsetting Assets and Liabilities, was issued and is effective for fiscal years beginning on or after January 1, 2013, and interim periods within those annual periods. ASU 2011-11 is intended to enhance disclosure requirements on the offsetting of financial assets and liabilities. Management is currently evaluating the application of ASU 2011-11 and its impact, if any, on the Fund's financial statements.
 
When Issued/Delayed Delivery Securities. The Fund may purchase or sell securities with delivery or payment to occur at a later date beyond the normal settlement period. At the time the Fund enters into a commitment to purchase or sell a security, the transaction is recorded and the value of the transaction is reflected in the net asset value. The price of such security and the date when the security will be delivered and paid for are fixed at the time the transaction is negotiated. The value of the security may vary with market fluctuations. At the time the Fund enters into a purchase transaction it is required to segregate cash or other liquid assets at least equal to the amount of the commitment.
 
Certain risks may arise upon entering into when-issued or delayed delivery transaction from the potential inability of counterparties to meet the terms of their contracts or if the issuer does not issue the securities due to political, economic, or other factors. Additionally, losses may arise due to changes in the value of the underlying securities.
 
Inverse Floaters. The Fund invests in inverse floaters. Inverse floaters are debt instruments with a weekly floating rate of interest that bears an inverse relationship to changes in the short-term interest rate market. Inverse floaters are created by depositing a fixed-rate municipal bond into a special purpose trust (the "Trust"). In turn the Trust issues a short-term floating rate note and an inverse floater. The income stream from the underlying bond in the Trust is divided between the floating rate note and the inverse floater. The income provided by the inverse floater bears an inverse relationship with the short-term rate paid to the floating rate note holder. The short-term floating rate note is issued in a face amount equal to some fraction of the underlying bond's par amount and is paid to a third party, usually a tax-exempt money market fund, at rates that generally reset weekly. The inverse floater earns all of the interest from the underlying fixed-rate bond less the amount of interest paid on the floating rate note and the expenses of the Trust. The inverse floater represents an investment in the underlying bond on a leveraged basis; the Fund bears all of the price risk of the underlying bond in the Trust and receives all the benefits from any potential appreciation of the underlying bond's value. The floating rate notes issued by the Trust are valued at cost, which approximates fair value.
 
By holding the inverse floater, the Fund has the right to collapse the Trust by causing the holders of the floating rate instrument to tender their notes at par and have the broker transfer the underlying bond to the Fund. The floating rate note holder can also elect to tender the note for redemption at par at each reset date. The Fund accounts for these transactions as a form of secured borrowing, by reflecting the value of the underlying bond in the investments of the Fund and the amount owed to the floating rate note holder as a liability under the caption "Payable for floating rate notes issued" in the Statement of Assets and Liabilities. Income earned on the underlying bond is included in interest income, and interest paid on the floaters and the expenses of the Trust are included in "Interest expense" in the Statement of Operations.
 
The Fund may enter into shortfall and forbearance agreements by which the Fund agrees to reimburse the Trust, in certain circumstances, for the difference between the liquidation value of the underlying bond held by the Trust and the liquidation value of the floating rate notes plus any shortfalls in interest cash flows. This could potentially expose the Fund to losses in excess of the value of the Fund's inverse floater investments. In addition, the value of inverse floaters may decrease significantly when interest rates increase. The market for inverse floaters may be more volatile and less liquid than other municipal bonds of comparable maturity. The Trust could be terminated outside of the Fund's control, resulting in a reduction of leverage and disposal of portfolio investments at inopportune times and prices. Investments in inverse floaters generally involve greater risk than in an investment in fixed-rate bonds.
 
The weighted average outstanding daily balance of the floating rate notes issued during the year ended November 30, 2012 was approximately $133,594,000, with a weighted average interest rate of 0.75%.
 
Federal Income Taxes. The Fund's policy is to comply with the requirements of the Internal Revenue Code, as amended, which are applicable to regulated investment companies, and to distribute all of its taxable and tax-exempt income to its shareholders.
 
Under the Regulated Investment Company Modernization Act of 2010, net capital losses may be carried forward indefinitely, and their character is retained as short-term and/or long-term. Previously, net capital losses were carried forward for eight years and treated as short-term losses. As a transition rule, the Act requires that post-enactment net capital losses be used before pre-enactment net capital losses.
 
At November 30, 2012, the Fund had a net tax basis capital loss carryforward of approximately $6,630,000 of pre-enactment losses, which may be applied against any realized net taxable capital gains of each succeeding year until fully utilized or until November 30, 2016 ($1,969,000), November 30, 2017 ($2,864,000), November 30, 2018 ($500,000) and November 30, 2019 ($1,297,000), the respective expiration dates, whichever occurs first.
 
The Fund has reviewed the tax positions for the open tax years as of November 30, 2012 and has determined that no provision for income tax is required in the Fund's financial statements. The Fund's federal tax returns for the prior three fiscal years remain open subject to examination by the Internal Revenue Service.
 
Distribution of Income and Gains. Net investment income of the Fund is declared and distributed to shareholders monthly. Net realized gains from investment transactions, in excess of available capital loss carryforwards, would be taxable to the Fund if not distributed, and, therefore, will be distributed to shareholders at least annually.
 
The timing and characterization of certain income and capital gain distributions are determined annually in accordance with federal tax regulations, which may differ from accounting principles generally accepted in the United States of America. These differences primarily relate to certain securities sold at a loss and accretion of market discount on debt securities. As a result, net investment income (loss) and net realized gain (loss) on investment transactions for a reporting period may differ significantly from distributions during such period. Accordingly, the Fund may periodically make reclassifications among certain of its capital accounts without impacting the net asset value of the Fund.
 
At November 30, 2012, the Fund's components of distributable earnings (accumulated losses) on a tax basis were as follows:
Undistributed tax-exempt income
  $ 16,523,635  
Undistributed ordinary income
  $ 368,521  
Capital loss carryforwards
  $ (6,630,000 )
Net unrealized appreciation (depreciation) on investments
  $ 134,649,486  
 
In addition, the tax character of distributions paid to shareholders by the Fund is summarized as follows:
   
Years Ended November 30,
 
   
2012
   
2011
 
Distributions from ordinary income*
  $ 376,534     $  
Distributions from tax-exempt income
  $ 33,295,489     $ 33,271,148  
 
* For tax purposes, short-term capital gain distributions are considered ordinary income distributions.
 
Preferred Shares. At November 30, 2012, the Fund had issued and outstanding 321 Series B, 1,652 Series C, and 4 Series E remarketed preferred shares ("Remarketed Preferred Shares"), each at a liquidation value of $5,000 per share. The Remarketed Preferred Shares are senior in priority to the common shares as to the payment of dividends and distributions of assets upon dissolution, liquidation, or winding up of the affairs of the Fund. The dividend rate on each series of Remarketed Preferred Shares is set through a remarketing process, and the dividends are generally paid every seven days. The remarketing agent receives a fee from the Fund at an annualized rate of 0.25% times the liquidation value of the Fund's Remarketed Preferred Shares (remarketing agent fee) and is responsible for the payment of any commissions to broker-dealers participating in the remarketing process based on shares sold. Currently, the remarketing agent is the only participating broker-dealer.
 
For remarketing to be successful, the number of Remarketed Preferred Shares bid must meet or exceed the number of Remarketed Preferred Shares being offered for sale. Since February 2008, remarketings of the Remarketed Preferred Shares have failed. Under the terms of the Remarketed Preferred Shares designation statement, in the event of a failed remarketing, the Remarketed Preferred Shares' dividend rate adjusts to a "maximum rate." The maximum rate is 125% of the Commercial Paper Rate (generally defined as the 60-day AA/Aa commercial paper rate). The next succeeding dividend period following the remarketing failure automatically adjusts to a 7-day period, which continues until the next successful remarketing. Remarketed preferred shareholders may offer their shares for sale at the next scheduled remarketing, subject to the same risk that the subsequent remarketing will not attract sufficient demand for a successful remarketing to occur. Broker-dealers may also try to facilitate secondary trading in the Remarketed Preferred Shares, although such secondary trading may be limited and may only be available for shareholders willing to sell at a discount.
 
While prolonged remarketing failures have affected the liquidity for the Remarketed Preferred Shares, a failed remarketing does not represent a default on or loss of capital of, the Fund's Remarketed Preferred Shares and the remarketed preferred shareholders have continued to receive dividends at the previously defined "maximum rate." During the year ended November 30, 2012, the dividend rates ranged from 0.088% to 0.313% for Series B, 0.088% to 0.313% for Series C, and 0.063% to 0.288% for Series E. Prolonged remarketing failures may increase the cost of leverage to the Fund.
 
On September 27, 2012, the Fund announced that its Board of Trustees authorized the Fund to conduct a tender offer for up to 100% of its then outstanding 39,750 shares of Remarketed Preferred Shares at a price equal to 96% of the Remarketed Preferred Shares' liquidation preference of $5,000 per share ($4,800 per share) plus any unpaid dividends accrued through the expiration date of the tender offer. The tender offer expired on November 16, 2012, and the Fund accepted for repurchase 37,773 shares of the Fund's Remarketed Preferred Shares (approximately 95% of the Fund's then outstanding Remarketed Preferred Shares) with an aggregate liquidation preference of $188,865,000 for an aggregate purchase price of $181,310,400. Specifically, the Fund repurchased all of the 8,100 Series A Remarketed Preferred Shares then outstanding, 7,704 of the 8,025 Series B Remarketed Preferred Shares then outstanding, 6,448 of the 8,100 Series C Remarketed Preferred Shares then outstanding, all of the 8,025 Series D Remarketed Preferred Shares then outstanding, and 7,496 of the 7,500 Series E Remarketed Preferred Shares then outstanding. On November 20, 2012, the Fund issued 37,773 floating rate municipal term preferred shares ("MTPS") in a private offering, each with a liquidation preference of $5,000 per share, for an aggregate liquidation preference of $188,865,000. The proceeds from the issuance of the MTPS were used to complete the purchase of Remarketed Preferred Shares accepted for purchase in the tender offer. The total liquidation preference of the Fund's outstanding preferred shares, comprised of untendered Remarketed Preferred Shares and MTPS, remained unchanged as a result of the Remarketed Preferred Shares tender offer and MTPS issuance.
 
MTPS are a floating rate form of preferred shares with a term redemption date of December 1, 2015, unless extended, and dividends that are set weekly to a fixed spread (dependent on the then current rating of the MTPS) against the Securities Industry and Financial Markets Association ("SIFMA") Municipal Swap Index. The Fund's MTPS rank on parity with the Remarketed Preferred Shares as to the payment of dividends and distribution of assets upon dissolution, liquidation or winding up of the affairs of the Fund. Like the Remarketed Preferred Shares, the Fund's MTPS are senior in priority to the common shares as to payments of dividends and distribution of assets upon dissolution, liquidation or winding up of the affairs of the Fund. The average annualized dividend rate on the Fund's MTPS from the date of initial issuance through November 30, 2012 was 1.26%.
 
The difference between the liquidation preference of the Remarketed Preferred Shares and the actual repurchase price of the tendered Remarketed Preferred Shares (i.e., the 4% discount on the per share liquidation preference of the tendered Remarketed Preferred Shares) was recognized by the Fund in the Statement of Changes in Net Assets as an increase in net assets applicable to common shares resulting from the tender of Remarketed Preferred Shares by the Fund.
 
In the Fund's Statement of Assets and Liabilities, the MTPS aggregate liquidation preference is shown as a liability since the MTPS have a stated mandatory redemption date. Dividends paid on MTPS are treated as interest expense and recorded as incurred. For the year ended November 30, 2012, interest expense related to MTPS amounted to $71,769. Costs directly related to the issuance of the MTPS have been deferred and are being amortized into expense over the life of the MTPS.
 
Under the terms of a Purchase Agreement between the Fund and the initial purchase of the MTPS, the Fund is subject to various investment restrictions that are, in certain respects, more restrictive than those to which the Fund is otherwise subject in accordance with its investment objective and policies. Such restrictions may limit the investment flexibility that might otherwise be pursued by the Fund if the MTPS were not outstanding.
 
In addition, the Fund is subject to certain restrictions on its investments imposed by guidelines of the rating agencies that rate the Remarketed Preferred Shares and the MTPS. These guidelines may impose asset coverage or portfolio composition requirements that are more stringent than those imposed on the Fund by the 1940 Act. Moreover, the Fund is required to maintain various asset coverage ratios with respect to the Remarketed Preferred Shares and MTPS as defined in the Fund's charter documents and the 1940 Act. The Fund is not permitted to declare common share dividends unless the Fund's Remarketed Preferred Shares and MTPS have a minimum asset coverage ratio of 200% at the time of declaration of the common share dividends after deducting the amount of such dividend. With respect to the payment of dividends and as to the distribution of assets of the Fund, Remarketed Preferred Shares and MTPS rank on parity with each other, and are both senior in priority to the Fund's outstanding common shares.
 
The 1940 Act requires that the preferred shareholders of the Fund, voting as a separate class, have the right to: a) elect at least two trustees at all times, and b) elect a majority of the trustees at any time when dividends on the preferred shares are unpaid for two full years. Unless otherwise required by law or under the terms of the preferred shares, each preferred shareholder is entitled to one vote and preferred shareholders will vote together with common shareholders as a single class.
 
Leverage involves risks and special considerations for the Fund's common shareholders, including the likelihood of greater volatility of net asset value and market price of, and dividends on, the Fund's common shares than a comparable portfolio without leverage; the risk that fluctuations in interest rates will reduce the return to common shareholders; and the effect of leverage in a declining market, which is likely to cause a greater decline in the net asset value of the Fund's common shares than if the Fund were not leveraged, which may result in a greater decline in the market price of the Fund's common shares. Changes in the value of the Fund's portfolio will be borne entirely by the common shareholders. If there is a net decrease (or increase) in the value of the Fund's investment portfolio, leverage will decrease (or increase) the net asset value per share to a greater extent than if leverage were not used. It is also possible that the Fund will be required to sell assets at a time when it would otherwise not do so, possibly at a loss, in order to redeem preferred shares to comply with asset coverage or other restrictions imposed by the rating agencies that rate the preferred shares. There is no assurance that the Fund's leveraging strategy will be successful.
 
Statement of Cash Flows. Information on financial transactions which have been settled through the receipt and disbursement of cash is presented in the Statement of Cash Flows. The cash amount shown in the Statement of Cash Flows represents the cash position at the Fund's custodian bank at November 30, 2012.
 
Contingencies. In the normal course of business, the Fund may enter into contracts with service providers that contain general indemnification clauses. The Fund's maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet been made. However, based on experience, the Fund expects the risk of loss to be remote.
 
Other. Investment transactions are accounted for on a trade date plus one basis for daily net asset value calculations. However, for financial reporting purposes, investment transactions are reported on trade date. Interest income is recorded on the accrual basis. Realized gains and losses from investment transactions are recorded on an identified cost basis. All premiums and discounts are amortized/accreted for financial reporting purposes, with the exception of securities in default of principal.
 
B. Purchases and Sales of Securities
 
During the year ended November 30, 2012, purchases and sales of investment securities (excluding short-term investments) aggregated $344,406,008 and $353,425,293, respectively.
 
C. Related Parties
 
Management Agreement. Under the Investment Management Agreement with Deutsche Investment Management Americas Inc. ("DIMA" or the "Advisor"), an indirect, wholly owned subsidiary of Deutsche Bank AG, the Advisor directs the investments of the Fund in accordance with its investment objectives, policies and restrictions. The Advisor determines the securities, instruments and other contracts relating to investments to be purchased, sold or entered into by the Fund. In addition to portfolio management services, the Advisor provides certain administrative services in accordance with the Investment Management Agreement. The management fee payable under the Investment Management Agreement is equal to an annualized rate of 0.55% of the Fund's average weekly net assets, computed and accrued daily and payable monthly. Average weekly net assets, for purposes of determining the management fee, means the average weekly value of the total assets of the Fund, minus the sum of accrued liabilities of the Fund (other than the liquidation value of the Remarketed Preferred Shares and MTPS).
 
Service Provider Fees. DWS Investments Service Company ("DISC"), an affiliate of the Advisor, is the transfer agent, dividend-paying agent and shareholder service agent for the Fund. Pursuant to a sub-transfer agency agreement between DISC and DST Systems, Inc. ("DST"), DISC has delegated certain transfer agent, dividend-paying agent and shareholder service agent functions to DST. DISC compensates DST out of the shareholder servicing fee it receives from the Fund. For the year ended November 30, 2012, the amount charged to the Fund by DISC aggregated $29,635, of which is $7,295 is unpaid.
 
Typesetting and Filing Service Fees. Under an agreement with DIMA, DIMA is compensated for providing typesetting and certain regulatory filing services to the Fund. For the year ended November 30, 2012, the amount charged to the Fund by DIMA included in the Statement of Operations under "reports to shareholders" aggregated $13,799, of which $7,220 is unpaid.
 
Trustees' Fees and Expenses. The Fund paid retainer fees to each Trustee not affiliated with the Advisor, plus specified amounts to the Board Chairperson and to each committee Chairperson.
 
Other Related Parties. Deutsche Bank Trust Company Americas, an affiliate of the Advisor, charges an administration fee for the Remarketed Preferred Shares and the MTPS. For the year ended November 30, 2012, the amount charged to the Fund by Deutsche Bank Trust Company Americas included in the Statement of Operations under "other" aggregated $25,000, all of which is unpaid.
 
D. Share Repurchases
 
The Fund is authorized to effect periodic repurchases of its outstanding shares in the open market from time to time when the Fund's shares trade at a discount to their net asset value. During the year ended November 30, 2012, the Fund did not repurchase shares in the open market.
 
Report of Independent Registered Public Accounting Firm
 
To the Board of Trustees and Shareholders of DWS Municipal Income Trust:
 
We have audited the accompanying statement of assets and liabilities of DWS Municipal Income Trust (the "Fund"), including the investment portfolio, as of November 30, 2012, and the related statements of operations and cash flows for the year then ended, the statement of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
 
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Fund's internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of November 30, 2012, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audits provide a reasonable basis for our opinion.
 
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of DWS Municipal Income Trust at November 30, 2012, the results of its operations and its cash flows for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles.
 
   
Boston, Massachusetts
January 25, 2013
   
 
Tax Information (Unaudited)
 
Of the dividends paid from net investment income for the taxable year ended November 30, 2012, 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) 728-3337.
 
Shareholder Meeting Results (Unaudited)
 
The Annual Meeting of Shareholders (the "Meeting") of DWS Municipal Income Trust (the "Fund") was held on September 28, 2012. At the close of business on August 7, 2012, the record date for the determination of shareholders entitled to vote at the Meeting, there were issued and outstanding 39,182,015 common shares and 39,750 preferred shares, each share being entitled to one vote, constituting all of the Fund's outstanding voting securities. At the Meeting, the holders of 35,421,257 common shares and 36,877 preferred shares were represented in person or by proxy, constituting a quorum. The following matter was voted upon by the shareholders of the Fund.
 
1. To elect the following five individuals as Trustees of the Fund.
 
All of the nominees received a sufficient number of votes to be elected. The resulting votes are presented below:
 
Class I Trustees — elected by Common and Preferred Shareholders voting together:
 
Number of Votes
 
For
Withheld
Dawn-Marie Driscoll
34,643,927
814,207
Richard J. Herring
34,705,117
753,017
William N. Searcy, Jr.
34,674,910
783,224
 
Trustees — elected by Preferred Shareholders only:
 
Number of Votes
 
For
Withheld
Keith R. Fox
36,622
255
Robert H. Wadsworth
36,622
255
 
Dividend Reinvestment Plan
 
A summary of the Fund's Dividend Reinvestment Plan (the "Plan") is set forth below. Shareholders may obtain a copy of the entire Plan by visiting the Fund's Web site at www.dws-investments.com or by writing or calling DWS Investment Service Company ("DISC") at:
 
P.O. Box 219066
 
Kansas City, Missouri 64121-9066
 
(800) 294-4366
 
If you wish to participate in the Plan and your shares are held in your own name, simply contact DISC for the appropriate form. If your shares are held in the name of a broker or other nominee, you should contact the broker or nominee in whose name your shares are held to determine whether and how you may participate in the Plan. The Fund's transfer agent and dividend disbursing agent (the "Transfer Agent") will establish a Dividend Investment Account (the "Account") for each shareholder participating in the Plan. The Transfer Agent will credit to the Account of each participant any cash dividends and capital gains distributions (collectively, "Distributions") paid on shares of the Fund (the "Shares"). Shares in a participant's Account are transferable upon proper written instructions to the Transfer Agent. Upon request to the Transfer Agent, a certificate for any or all full Shares in a participant's Account will be sent to the participant.
 
If, on the record date for a Distribution (the "Record Date"), Shares are trading at a discount from net asset value per Share, funds credited to a participant's Account will be used to purchase Shares (the "Purchase"). The Plan Agent (currently Computershare Inc.) will attempt, commencing five days prior to the Payment Date and ending at the close of business on the Payment Date ("Payment Date" as used herein shall mean the last business day of the month in which such Record Date occurs), to acquire Shares in the open market. If and to the extent that the Plan Agent is unable to acquire sufficient Shares to satisfy the Distribution by the close of business on the Payment Date, the Fund will issue to the Plan Agent, Shares valued at net asset value per Share in the aggregate amount of the remaining value of the Distribution. If, on the Record Date, Shares are trading at a premium over net asset value per Share, the Fund will issue on the Payment Date Shares valued at net asset value per Share on the Record Date to the Transfer Agent in the aggregate amount of the funds credited to the participants' Accounts. The Fund will increase the price at which Shares may be issued under the Plan to 95% of the fair market value of the shares on the Record Date if the net asset value per Share of the Shares on the Record Date is less than 95% of the fair market value of the Shares on the Record Date.
 
Although the Fund seeks income that is exempt from federal income tax, a portion of the Distributions may be subject to federal, state and local taxes, including the alternative minimum tax. The reinvestment of Distributions does not relieve the participant of any tax that many be payable on the Distributions. The Transfer Agent will report to each participant the taxable amount of Distributions credited to his or her account. Participants will be treated for federal income tax purposes as receiving the amount of the Distributions made by the Fund, which amount generally will be either equal to the amount of the cash distribution the shareholder would have received if the shareholder had elected to receive cash or, for shares issued by the Fund, the fair market value of the shares issued to the shareholder.
 
The cost of Shares acquired for each participant's Account in connection with a Purchase shall be determined by the average cost per Share, including brokerage commissions, of the Shares acquired in connection with that Purchase. There will be no brokerage charges with respect to Shares issued directly by the Fund as a result of Distributions. However, each participant will pay a pro rata share of brokerage commissions incurred with respect to open market purchases. Brokerage charges for purchasing small amounts of Shares for individual Accounts through the Plan will probably be less than the usual brokerage charges for such transactions, as the Plan Agent will be purchasing Shares for all participants in blocks and prorating the lower commission thus attainable.
 
A participant may from time to time make voluntary cash contributions to his Account in a minimum amount of $100 (no more than $500 may be contributed per month). Participants making voluntary cash investments will be charged a $0.75 service fee for each such investment and will be responsible for their pro rata share of brokerage commissions. Please contact DISC for more information on voluntary cash contributions.
 
The Fund reserves the right to amend the Plan, including provisions with respect to any Distribution paid, subsequent to notice thereof sent to participants in the Plan at least ninety days before the record date for such Distribution, except when such amendment is necessary or appropriate to comply with applicable law or the rules or policies of the Securities and Exchange Commission or any other regulatory authority, in which case such amendment shall be effective as soon as practicable. The Plan may be terminated by the Fund.
 
Shareholders may withdraw from the Plan at any time by giving the Transfer Agent a written notice. A notice of withdrawal will be effective for the next Distribution following receipt of the notice by the Transfer Agent provided the notice is received by the Transfer Agent at least ten days prior to the Record Date for the Distribution. When a participant withdraws from the Plan, or when the Plan is terminated by the Fund, the participant will receive a certificate for full Shares in the Account, plus a check for any fractional Shares based on market price; or, if a participant so desires, the Transfer Agent will notify the Plan Agent to sell his Shares in the Plan and send the proceeds to the participant, less brokerage commissions and a $2.50 service fee.
 
Shareholders will receive tax information annually for personal records and to assist in preparation of their federal income tax returns.
 
Investment Management Agreement Approval
 
The Board of Trustees approved the renewal of DWS Municipal Income Trust's investment management agreement (the "Agreement") with Deutsche Investment Management Americas Inc. ("DWS") in September 2012.
 
In terms of the process that the Board followed prior to approving the Agreement, shareholders should know that:
 
In September 2012, all of the Fund's Trustees were independent of DWS and its affiliates.
 
The Trustees met frequently during the past year to discuss fund matters and dedicated a substantial amount of time to contract review matters. Over the course of several months, the Board's Contract Committee, in coordination with the Board's Fixed Income and Quant Oversight Committee, reviewed comprehensive materials received from DWS, independent third parties and independent counsel. These materials included an analysis of the Fund's performance, fees and expenses, and profitability compiled by the Fund's independent fee consultant. The Board also received extensive information throughout the year regarding performance of the Fund.
 
The Independent Trustees regularly meet privately with their independent counsel to discuss contract review and other matters. In addition, the Independent Trustees were also advised by the Fund's independent fee consultant in the course of their review of the Fund's contractual arrangements and considered a comprehensive report prepared by the independent fee consultant in connection with their deliberations (the "IFC Report").
 
In connection with reviewing the Agreement, the Board also reviewed the terms of the Fund's transfer agency agreement and other material service agreements.
 
Based on its evaluation of the information provided, the Contract Committee presented its findings and recommendations to the Board. The Board then reviewed the Contract Committee's findings and recommendations.
 
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 DWS 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 DWS managed the Fund. DWS 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 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.
 
As part of the contract review process, the Board carefully considered the fees and expenses of each DWS fund overseen by the Board in light of the fund's performance. In many cases, this led to a negotiation with DWS of lower expense caps for the coming year than had previously been in place. As part of these negotiations, the Board indicated that it would consider relaxing these new lower caps in future years following sustained improvements in performance, among other considerations.
 
In June 2012, Deutsche Bank ("DB"), DWS's parent company, announced that DB's new management team had concluded the strategic review of its global asset management business announced in late 2011 by DB's prior management team, and would combine its Asset Management (of which DWS is a part) and Wealth Management divisions. Prior to approving the investment management agreements, the Independent Trustees were apprised of the expected management and structure of the new combined Asset & Wealth Management division ("AWM") and DWS. DB also advised the Independent Trustees that the U.S. asset management business is a critical and integral part of DB and AWM, and that DB would be reinvesting a significant portion of the substantial savings it expects to realize by combining its Asset Management and Wealth Management divisions into a combined AWM division, including enhancements to its investment capabilities. DB also confirmed its commitment to maintaining strong legal and compliance groups within the combined division.
 
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 DWS's personnel and such other issues as back-office operations, fund valuations, and compliance policies and procedures.
 
Nature, Quality and Extent of Services. The Board considered the terms of the Agreement, including the scope of advisory services provided under the Agreement. The Board noted that, under the Agreement, DWS provides portfolio management and administrative services to the Fund. The Board considered the experience and skills of senior management and investment personnel, the resources made available to such personnel, the ability of DWS to attract and retain high-quality personnel, and the organizational depth and stability of DWS. The Board reviewed the Fund's performance over short-term and long-term periods and compared those returns to various agreed-upon performance measures, including market indices and a peer universe compiled by the independent fee consultant using information supplied by Lipper Inc. ("Lipper"), an independent fund data service. The Board also noted that it has put into place a process of identifying "Focus Funds" (e.g., funds performing poorly relative to their benchmark or a peer universe compiled by an independent fund data service), and receives more frequent reporting and information from DWS regarding such funds, along with DWS's remedial plans to address underperformance. The Board believes this process is an effective manner of identifying and addressing underperforming funds. Based on the information provided, the Board noted that for the one-, three- and five-year periods ended December 31, 2011, the Fund's performance was in the 1st quartile, 2nd quartile and 1st quartile, respectively, of the applicable Lipper universe (the 1st quartile being the best performers and the 4th quartile being the worst performers). The Board also observed that the Fund has outperformed its benchmark in the one-, three- and five-year periods ended December 31, 2011.
 
Fees and Expenses. The Board considered the Fund's investment management fee schedule, operating expenses and total expense ratios, and comparative information provided by Lipper and the independent fee consultant regarding investment management fee rates paid to other investment advisors by similar funds (1st quartile being the most favorable and 4th quartile being the least favorable). With respect to management fees paid to other investment advisors by similar funds, the Board noted that the contractual fee rates paid by the Fund were lower than the median (1st quartile) of the applicable Lipper peer group (based on Lipper data provided as of December 31, 2011). The Board noted that the Fund's total operating expenses excluding certain investment related expenses and based on managed assets were expected to be lower than the median (2nd quartile) of the applicable Lipper expense universe (based on Lipper data provided as of December 31, 2011). The Board considered the Fund's management fee rate as compared to fees charged by DWS and certain of its affiliates for comparable funds and considered differences in fund and fee structures between the DWS Funds. The Board also considered how the Fund's total operating expenses compared to the total operating expenses of a more customized peer group selected by Lipper (based on such factors as asset size).
 
The information considered by the Board as part of its review of management fees included information regarding fees charged by DWS and its affiliates to similar institutional accounts and to similar funds offered primarily to European investors ("DWS Europe funds"), in each case as applicable. The Board observed that advisory fee rates for institutional accounts generally were lower than the management fees charged by similarly managed DWS U.S. mutual funds ("DWS Funds"), but also took note of the differences in services provided to DWS Funds as compared to institutional accounts. In the case of DWS Europe funds, the Board observed that fee rates for DWS Europe funds generally were higher than for similarly managed DWS Funds, but noted that differences in the types of services provided to DWS Funds relative to DWS Europe funds made it difficult to compare such fees.
 
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 DWS. The Board concluded that the Fund's fee schedule represents an appropriate sharing between the Fund and DWS of such economies of scale as may exist in the management of the Fund at current asset levels.
 
Profitability. The Board reviewed detailed information regarding revenues received by DWS under the Agreement. The Board considered the estimated costs and pre-tax profits realized by DWS from advising the DWS Funds, as well as estimates of the pre-tax profits attributable to managing the Fund in particular. The Board also received information regarding the estimated enterprise-wide profitability of DWS and its affiliates with respect to all fund services in totality and by fund. The Board and the independent fee consultant reviewed DWS's methodology in allocating its costs to the management of the Fund. Based on the information provided, the Board concluded that the pre-tax profits realized by DWS in connection with the management of the Fund were not unreasonable. The Board also reviewed information regarding the profitability of certain similar investment management firms. The Board noted that while information regarding the profitability of such firms is limited (and in some cases is not necessarily prepared on a comparable basis), DWS and its affiliates' overall profitability with respect to the DWS fund complex (after taking into account distribution and other services provided to the funds by DWS and its affiliates) was lower than the overall profitability levels of many comparable firms for which such data was available.
 
Other Benefits to DWS and Its Affiliates. The Board also considered the character and amount of other incidental benefits received by DWS and its affiliates. The Board also considered benefits to DWS related to brokerage and soft-dollar allocations, including allocating brokerage to pay for research generated by parties other than the executing broker dealers, which pertain primarily to funds investing in equity securities, along with the incidental public relations benefits to DWS related to DWS Funds advertising and cross-selling opportunities among DWS products and services. The Board concluded that management fees were reasonable in light of these fallout benefits.
 
Compliance. The Board considered the significant attention and resources dedicated by DWS to documenting and enhancing its compliance processes in recent years. The Board noted in particular (i) the experience and seniority of both DWS's chief compliance officer and the Fund's chief compliance officer; (ii) the large number of DWS compliance personnel; and (iii) the substantial commitment of resources by DWS and its affiliates to compliance matters.
 
Based on all of the information considered and the conclusions reached, the Board unanimously 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.
 
Board Members and Officers
 
The following table presents certain information regarding the Board Members and Officers of the fund. 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 Kenneth C. Froewiss, Chairman, DWS Mutual Funds, P.O. Box 78, Short Hills, NJ 07078. The Board is divided into three classes of Board Members, Class I, Class II and Class III. At each annual meeting of shareholders of the Trust, the class of Board Members elected at such meeting is elected to hold office until the annual meeting held in the third succeeding year and until the election and qualification of such Board Member's successor, if any, or until such Board Member sooner dies, resigns, retires or is removed. In addition, the holders of the preferred shares, voting as a separate class, are entitled to elect two Board Members. The Board Members elected by the holders of the preferred shares, voting as a separate class, are elected to hold office until the next annual meeting and until the election and qualification of such Board Member's successor, if any, or until such Board Member sooner dies, resigns, retires or is removed. The Board Members may also serve in similar capacities with other funds in the fund complex. The Length of Time Served represents the year in which the Board Member joined the board of one or more DWS funds now overseen by the Board.
 
Independent Board Members
Name, Year of Birth, Position with the Fund and Length of Time Served1
 
Business Experience and Directorships During the Past Five Years
Number of Funds in DWS Fund Complex Overseen
 
 
Other Directorships Held by Board Member
Kenneth C. Froewiss (1945)
Chairperson since 2013,9 and Board Member since 2001
 
Adjunct Professor of Finance, NYU Stern School of Business (September 2009-present; Clinical Professor from 1997-September 2009); 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)
103
William McClayton (1944)
Vice Chairperson since 2013,9 and Board Member since 2004
 
Private equity investor (since October 2009); previously, Managing Director, Diamond Management & Technology Consultants, Inc. (global consulting firm) (2001-2009); Directorship: Board of Managers, YMCA of Metropolitan Chicago; formerly: Senior Partner, Arthur Andersen LLP (accounting) (1966-2001); Trustee, Ravinia Festival
103
John W. Ballantine (1946)
Board Member since 1999
 
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: Stockwell Capital Investments PLC (private equity); former Directorships: First Oak Brook Bancshares, Inc. and Oak Brook Bank; Prisma Energy International
103
Chairman of the Board, Healthways, Inc.2 (provider of disease and care management services) (2003- present); Portland General Electric2 (utility company) (2003- present)
Henry P. Becton, Jr. (1943)
Board Member since 1990
 
Vice Chair and former President, WGBH Educational Foundation. Directorships: Public Radio International; Public Radio Exchange (PRX); The PBS Foundation; North Bennett Street School (Boston); former Directorships: Association of Public Television Stations; Boston Museum of Science; American Public Television; Concord Academy; New England Aquarium; Mass. Corporation for Educational Telecommunications; Committee for Economic Development; Public Broadcasting Service; Connecticut College
103
Lead Director, Becton Dickinson and Company2 (medical technology company); Lead Director, Belo Corporation2 (media company)
Dawn-Marie Driscoll (1946)
Board Member since 1987
 
President, Driscoll Associates (consulting firm); Emeritus Executive Fellow, Center for Business Ethics, Bentley University; formerly, Partner, Palmer & Dodge (1988-1990); Vice President of Corporate Affairs and General Counsel, Filene's (1978-1988). Directorships: Director of ICI Mutual Insurance Company (since 2007); Advisory Board, Center for Business Ethics, Bentley University; Trustee, Southwest Florida Community Foundation (charitable organization); former Directorships: Sun Capital Advisers Trust (mutual funds) (2007-2012), Investment Company Institute (audit, executive, nominating committees) and Independent Directors Council (governance, executive committees)
103
Keith R. Fox, CFA (1954)
Board Member since 1996
 
Managing General Partner, Exeter Capital Partners (a series of private investment funds) (since 1986). Directorships: Progressive International Corporation (kitchen goods importer and distributor); The Kennel Shop (retailer); former Chairman, National Association of Small Business Investment Companies; former Directorships: BoxTop Media Inc. (advertising); Sun Capital Advisers Trust (mutual funds) (2011-2012)
103
Paul K. Freeman (1950)
Board Member since 1993, and Chairperson (2009-Jan. 8, 2013)
 
Consultant, World Bank/Inter-American Development Bank; Executive and Governing Council of the Independent Directors Council (Chairman of Education Committee); formerly: Project Leader, International Institute for Applied Systems Analysis (1998-2001); Chief Executive Officer, The Eric Group, Inc. (environmental insurance) (1986-1998); Directorships: Denver Zoo Foundation (December 2012-present); former Directorships: Prisma Energy International
103
Richard J. Herring (1946)
Board Member since 1990
 
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); Co-Chair, U.S. Shadow Financial Regulatory Committee; Executive Director, Financial Economists Roundtable; formerly: Vice Dean and Director, Wharton Undergraduate Division (July 1995-June 2000); Director, Lauder Institute of International Management Studies (July 2000-June 2006)
103
Director, Japan Equity Fund, Inc. (since September 2007), Thai Capital Fund, Inc. (since 2007), Singapore Fund, Inc. (since September 2007), Independent Director of Barclays Bank Delaware (since September 2010)
Rebecca W. Rimel (1951)
Board Member since 1995
 
President and Chief Executive Officer, The Pew Charitable Trusts (charitable organization) (1994 to present); Trustee, Washington College (2011-2013); formerly: Executive Vice President, The Glenmede Trust Company (investment trust and wealth management) (1983-2004); Board Member, Investor Education (charitable organization) (2004-2005); Trustee, Executive Committee, Philadelphia Chamber of Commerce (2001-2007); Director, Viasys Health Care2 (January 2007-June 2007); Trustee, Pro Publica (charitable organization) (2007-2010); Trustee, Thomas Jefferson Foundation (charitable organization) (1994-2012)
103
Director, Becton Dickinson and Company2 (medical technology company) (2012- present); Director, CardioNet, Inc.2 (health care) (2009- present)
William N. Searcy, Jr. (1946)
Board Member since 1993
 
Private investor since October 2003; formerly: Pension & Savings Trust Officer, Sprint Corporation2 (telecommunications) (November 1989-September 2003); Trustee, Sun Capital Advisers Trust (mutual funds) (1998-2012)
103
Jean Gleason Stromberg (1943)
Board Member since 1997
 
Retired. Formerly, Consultant (1997-2001); Director, Financial Markets U.S. Government Accountability Office (1996-1997); Partner, Fulbright & Jaworski, L.L.P. (law firm) (1978-1996). Directorships: The William and Flora Hewlett Foundation; former Directorships: Service Source, Inc., Mutual Fund Directors Forum (2002-2004), American Bar Retirement Association (funding vehicle for retirement plans) (1987-1990 and 1994-1996)
103
Robert H. Wadsworth
(1940)
Board Member since 1999
 
President, Robert H. Wadsworth & Associates, Inc. (consulting firm) (1983 to present); Director, National Horizon, Inc. (non-profit organization); Director and Treasurer, The Phoenix Boys Choir Association
106
Interested Board Member and Officer4
Michael J. Woods5 (1967)
Board Member since 2013,9 and Executive Vice President since 20139
 
Managing Director,3 Deutsche Asset Management (2009-present); Head of the Americas Asset Management Business for Deutsche Bank, Member of the Asset and Wealth Management ("AWM") Extended Executive Committee, AWM Global Client Group Executive Committee and the AWM Active Asset Management Executive Committee; CEO and US Regional Head of DWS Investments; formerly: Sr. VP, Head of the Financial Intermediaries and Investments Group of Evergreen Investments (2007-2009), CEO and Vice Chairman of Board of Directors of XTF Global Asset Management (2006-2007), Managing Director — US Head of Sub-Advisory and Investment Only Business at Citigroup Asset Management (2000-2006). Mr. Woods is currently a board member of The Children's Village, The Big Brothers Big Sisters Organization, and The Mutual Fund Education Alliance.
39
 

Officers4
Name, Year of Birth, Position with the Fund and Length of Time Served6
 
Business Experience and Directorships During the Past Five Years
W. Douglas Beck, CFA7 (1967)
President, 2011-present
 
Managing Director,3 Deutsche Asset Management (2006-present); President of DWS family of funds and Head of Product Management, U.S. for DWS Investments; formerly: Executive Director, Head of Product Management (2002-2006) and President (2005-2006) of the UBS Funds at UBS Global Asset Management; Co-Head of Manager Research/Managed Solutions Group, Merrill Lynch (1998-2002)
John Millette8 (1962)
Vice President and Secretary, 1999-present
 
Director,3 Deutsche Asset Management
Paul H. Schubert7 (1963)
Chief Financial Officer, 2004-present
Treasurer, 2005-present
 
Managing Director,3 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)
Caroline Pearson8 (1962)
Chief Legal Officer, 2010-present
 
Managing Director,3 Deutsche Asset Management; formerly: Assistant Secretary for DWS family of funds (1997-2010)
Melinda Morrow7 (1970)
Vice President, 2012-present
 
Director,3 Deutsche Asset Management
Hepsen Uzcan8 (1974)
Assistant Secretary, since 20139
 
Vice President, Deutsche Asset Management
Paul Antosca8 (1957)
Assistant Treasurer, 2007-present
 
Director,3 Deutsche Asset Management
Jack Clark8 (1967)
Assistant Treasurer, 2007-present
 
Director,3 Deutsche Asset Management
Diane Kenneally8 (1966)
Assistant Treasurer, 2007-present
 
Director,3 Deutsche Asset Management
John Caruso7 (1965)
Anti-Money Laundering Compliance Officer, 2010-present
 
Managing Director,3 Deutsche Asset Management
Robert Kloby7 (1962)
Chief Compliance Officer, 2006-present
 
Managing Director,3 Deutsche Asset Management
 
1 The length of time served represents the year in which the Board Member joined the board of one or more DWS funds currently overseen by the Board.
 
2 A publicly held company with securities registered pursuant to Section 12 of the Securities Exchange Act of 1934.
 
3 Executive title, not a board directorship.
 
4 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 fund.
 
5 The mailing address of Mr