UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-12
DWS Municipal Income Trust
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PERSONS WHO POTENTIALLY ARE TO RESPOND TO THE COLLECTION OF INFORMATION
CONTAINED IN THIS FORM ARE NOT REQUIRED TO RESPOND UNLESS THE FORM DISPLAYS A
CURRENTLY VALID OMB CONTROL NUMBER.
SEC 1913 (01-07)
DWS HIGH INCOME TRUST
DWS MULTI-MARKET INCOME TRUST
DWS MUNICIPAL INCOME TRUST
DWS STRATEGIC MUNICIPAL INCOME TRUST
DWS STRATEGIC INCOME TRUST
222 SOUTH RIVERSIDE PLAZA
CHICAGO, ILLINOIS 60606
NOTICE OF JOINT ANNUAL MEETING OF SHAREHOLDERS
MAY 24, 2007 AND PROXY STATEMENT
April 10, 2007
To the Shareholders:
You are invited to attend a joint annual meeting of the shareholders of DWS High
Income Trust ("KHI"), DWS Multi-Market Income Trust ("KMM"), DWS Municipal
Income Trust ("KTF"), DWS Strategic Municipal Income Trust ("KSM") and DWS
Strategic Income Trust ("KST") (individually, a "Fund" and collectively, the
"Funds"). The meeting will be held at the offices of Deutsche Investment
Management Americas Inc. ("DeIM" or the "Advisor"), Two International Place,
13th Floor, Boston, Massachusetts 02110, on Thursday, May 24, 2007 at 3:00 p.m.
Eastern time, to consider the following proposal (the "Proposal") and to
transact such other business, if any, as may properly come before the meeting:
1. To elect Trustees to the Board of each Fund as outlined below:
(a) For KHI, KMM and KST only, to elect nine Trustees to the Board of each
Fund; and
(b) For KTF and KSM only, to elect nine Trustees to the Board of each Fund,
with seven Trustees to be elected by the holders of Preferred and Common
Shares voting together and two Trustees to be elected by holders of the
Preferred Shares only.
The Board of each Fund has fixed the close of business on March 30, 2007 as the
record date (the "Record Date") for determining the shareholders of each Fund
entitled to notice of and to vote at the meeting or any adjournments or
postponements thereof. Shareholders are entitled to one vote for each share
held.
THE BOARD OF EACH FUND RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF THE TRUSTEES
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PLEASE INDICATE YOUR VOTING INSTRUCTIONS ON THE ENCLOSED PROXY CARD. SIGN, DATE
AND RETURN YOUR PROXY CARD IN THE ENVELOPE PROVIDED. TO SAVE YOUR FUND THE COST
OF ADDITIONAL SOLICITATIONS, PLEASE MAIL YOUR PROXY CARD. IF YOU WISH TO ATTEND
THE MEETING AND VOTE YOUR SHARES IN PERSON AT THAT TIME, YOU WILL STILL BE ABLE
TO DO SO.
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The accompanying proxy is solicited by the Board of each Fund for voting at the
joint annual meeting of shareholders to be held on May 24, 2007, and at any and
all postponements or adjournments thereof (the "Meeting"). The shareholders of
each Fund will vote separately on the Proposal. This proxy statement was first
mailed to shareholders on or about April 10, 2007.
The Board of each Fund recommends shareholders vote FOR the election of the
Trustees. The vote required to elect the Trustees to the Board of each Fund is
described under "Miscellaneous."
The Board of each Fund has fixed the close of business on March 30, 2007 as the
Record Date for the determination of shareholders entitled to notice of and to
vote at the Meeting. As of the Record Date, shares of the Funds were issued and
outstanding as follows:
FUND SHARES
---- ------
KHI...................................... 32,210,540.94
KMM...................................... 20,581,593.69
KTF
Common................................. 38,973,230.54
Preferred.............................. 53,000.00
KSM
Common................................. 10,936,007.97
Preferred.............................. 2,800.00
KST...................................... 3,494,937.77
KTF AND KSM ONLY. Pursuant to the Amended and Restated Agreement and Declaration
of Trust of each Fund, the Boards may authorize separate classes of shares of
beneficial interest. The Board of each Fund has authorized, and each Fund has
issued, common shares of beneficial interest (the "Common Shares") and preferred
shares of beneficial interest (the "Preferred Shares"). The Common Shares and
the Preferred Shares have different powers, rights, preferences and privileges,
qualifications, limitations and restrictions with respect to, among other
things, dividends, liquidation, redemption and voting as more fully set forth in
the
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Certificate of Designation for Preferred Shares that established the Preferred
Shares. For KTF, the Common Shares were first issued on October 20, 1988 and the
Preferred Shares were first issued on July 24, 1989 (Series A, B, C and D) and
November 24, 1999 (Series E). For KSM, the Common Shares were first issued on
March 22, 1989 and the Preferred Shares were first issued on September 21, 1999.
At the Meeting, the holders of the Preferred Shares, voting as a separate class,
are entitled to elect two Trustees, and the holders of the Common Shares and the
Preferred Shares, voting together as a single class, are entitled to elect the
seven remaining Trustees.
The following table identifies the Funds entitled to vote on the Proposal.
PROPOSAL PAGE
-------- ----
1.a. To elect nine Trustees to the Board of the
Fund.
KHI, KMM and KST............................... 3
1.b. To elect nine Trustees to the Board of the Fund
with seven Trustees to be elected by the
holders of Preferred and Common Shares voting
together and two Trustees to be elected by
holders of the Preferred Shares only. KTF and
KSM............................................ 3
ELECTION OF TRUSTEES TO THE BOARDS
THE BOARD OF EACH FUND RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF THE NOMINEES
NAMED BELOW.
At the Meeting, shareholders of each Fund will be asked to elect nine
individuals to constitute the Board of Trustees of each Fund. Board members are
elected annually pursuant to each Trust's Declaration of Trust and By-Laws. The
nine individuals nominated for election as Trustees of each Fund were nominated
after careful consideration by each Fund's present Board of Trustees. The
nominees are listed below. The nine nominees are currently Trustees of each Fund
and are currently trustees or directors of other funds advised by DeIM. All the
nominees were last elected to each Board at the previous joint annual meeting of
shareholders. Mr. Schwarzer is a senior executive officer of DeIM and is an
"interested person" (an "Interested Person") of the Funds within the meaning of
the Investment Company Act of 1940, as amended (the "1940 Act"), due to the fact
that he is an officer of the Advisor. Mr. Schwarzer currently oversees 85 fund
portfolios in the DWS Fund Complex. He is referred to as an "Interested
Trustee." Each of the remaining eight nominees is not an Interested Person of
the Advisor or the Funds within the meaning of the 1940 Act and is referred to
as a "Non-interested Trustee" or "Independent Trustee". As of March 1, 2007, the
Independent Trustees, except for Mr. Wadsworth, oversee 58 fund portfolios in
the DWS Fund Complex; Mr. Wadsworth oversees 61 fund portfolios in the DWS Fund
Complex. The Independent Trustees are often referred to as the "Chicago Board."
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The persons named as proxies on the enclosed proxy card(s) will vote for the
election of all the nominees (as to each relevant Fund) unless authority to vote
for any or all of the nominees is withheld in the proxy. Each Trustee so elected
will serve as a Trustee of the respective Fund until the next meeting of
shareholders, if any, called for the purpose of electing Trustees and until the
election and qualification of a successor or until such Trustee sooner dies,
resigns or is removed as provided in the organizational documents of each Fund.
KTF AND KSM ONLY. As indicated above, holders of the Preferred Shares are
entitled to elect two Trustees. Messrs. Schwarzer and Wadsworth are nominees for
election by holders of the Preferred Shares of each Fund. In addition, seven
other Trustees are to be elected by holders of the Common Shares and the
Preferred Shares, voting together as a single class. Ms. Peterson and Messrs.
Ballantine, Dunaway, Edgar, Freeman, Hoffman and McClayton are nominees for
election by all shareholders.
All the nominees listed below have consented to serve as Trustees of the
respective Funds, if elected. In case any nominee shall be unable or shall fail
to act as a Trustee by virtue of an unexpected occurrence, persons named as
proxies will vote in their discretion for such other nominee or nominees as the
current Trustees may recommend. The following table presents certain information
about the nominees as of March 1, 2007. Each nominee's year of birth is set
forth in parentheses after his or her name. Unless otherwise noted, each nominee
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. The
mailing address for each nominee except Mr. Schwarzer is c/o Deutsche Investment
Management Americas Inc., 222 South Riverside Plaza, Chicago, Illinois 60606.
The mailing address for Mr. Schwarzer is 345 Park Avenue, New York, New York
10154.
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NOMINEES FOR ELECTION AS TRUSTEES
NAME, YEAR OF
BIRTH,
POSITION(S)
HELD WITH NUMBER OF FUNDS
THE FUND AND PRINCIPAL OCCUPATION(S) IN DWS FUND
LENGTH OF DURING PAST 5 YEARS AND OTHER COMPLEX
TIME SERVED(1) DIRECTORSHIPS HELD OVERSEEN
-------------- ----------------------------- ---------------
NON-INTERESTED
TRUSTEES
PAUL K. Consultant, World Bank/Inter- 58
FREEMAN American Development Bank.
(1950) Formerly: Project Leader,
Chairperson International Institute for
since 2007, Applied Systems Analysis
and Trustee, (1998-2001); Chief Executive
2002-present Officer, The Eric Group, Inc.
(environmental insurance)
(1986-1998)
JOHN W. Retired. Formerly: Executive 58
BALLANTINE Vice President and Chief Risk
(1946) Management Officer, First
Trustee, 1999- Chicago NBD Corporation/The
Present First National Bank of
Chicago (1996-1998);
Executive Vice President and
Head of International Banking
(1995-1996). Directorships:
Healthways Inc. (provider of
disease and care management
services); Portland General
Electric (utility company);
Stockwell Capital Investments
PLC (private equity). Former
Directorships: First Oak
Brook Bancshares, Inc. and
Oak Brook Bank
DONALD L. Retired. Formerly: Executive 58
DUNAWAY (1937) Vice President, A. O. Smith
Trustee, 1980- Corporation (diversified
present manufacturer) (1963-1994)
JAMES R. EDGAR Distinguished Fellow, 58
(1946) University of Illinois,
Trustee, 1999- Institute of Government and
present Public Affairs (1999-
present). Formerly: Governor,
State of Illinois (1991-
1999). Directorships: John
B. Sanfilippo & Son, Inc.
(processor/packager/marketer
of nuts, snacks and candy
products); Horizon Group
Properties, Inc.; Youbet.com
(online wagering platform);
Alberto-Culver Company
(manufactures, distributes
and markets health and beauty
care products)
ROBERT B. Retired. Formerly: Chairman, 58
HOFFMAN (1936) Harnischfeger Industries,
Trustee, 1981- Inc. (machinery for the
present mining and paper industries)
(1999-2000); prior thereto,
Vice Chairman and Chief
Financial Officer, Monsanto
Company (agricultural,
pharmaceutical and
nutritional/food products)
(1994-1999). Directorship:
RCP Advisors, LLC (a private
equity investment advisory
firm)
5
NAME, YEAR OF
BIRTH,
POSITION(S)
HELD WITH NUMBER OF FUNDS
THE FUND AND PRINCIPAL OCCUPATION(S) IN DWS FUND
LENGTH OF DURING PAST 5 YEARS AND OTHER COMPLEX
TIME SERVED(1) DIRECTORSHIPS HELD OVERSEEN
-------------- ----------------------------- ---------------
WILLIAM Managing Director of Finance 58
MCCLAYTON and Administration, Diamond
(1944) Management & Technology
Trustee, 2004- Consultants, Inc. (global
present management consulting firm)
(2001-present). Formerly:
Partner, Arthur Andersen LLP
(1986-2001); Trustee, Ravinia
Festival; Board of Managers,
YMCA of Metropolitan Chicago
SHIRLEY D. Retired. Formerly: President, 58
PETERSON Hood College (1995-2000);
(1941) prior thereto, Partner,
Trustee, 1995- Steptoe & Johnson (law
present firm); Commissioner, Internal
Revenue Service; Assistant
Attorney General (Tax), US
Department of Justice.
Directorships: Federal Mogul
Corp. (supplier of automotive
components and subsystems);
AK Steel (steel production);
Goodyear Tire & Rubber Co.
(April 2004-present);
Champion Enterprises, Inc.
(manufactured home building);
Wolverine World Wide, Inc.
(designer, manufacturer and
marketer of footwear) (April
2005-present); Trustee, Bryn
Mawr College. Former
Directorship: Bethlehem
Steel Corp.
ROBERT H. President, Robert H. 61
WADSWORTH Wadsworth & Associates, Inc.
(1940) (consulting firm) (1983 to
Trustee, 2004- present). Formerly, Trustee
present of New York Board Funds.
INTERESTED
TRUSTEE(2)
AXEL SCHWARZER Managing Director(3), 85
(1958) Deutsche Asset Management;
Trustee, 2006- Head of Deutsche Asset
present Management Americas; CEO of
DWS Scudder; formerly, board
member of DWS Investments,
Germany (1999-2005);
formerly, Head of Sales and
Product Management for the
Retail and Private Banking
Division of Deutsche Bank in
Germany (1997-1999);
formerly, various strategic
and operational positions for
Deutsche Bank Germany Retail
and Private Banking Division
in the field of investment
funds, tax driven instruments
and asset management for
corporations (1989-1996)
--------
(1) Length of time served represents the date that each Trustee was first
elected to the common board of directors/trustees which oversees a number
of investment companies,
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including the Funds, managed by the Advisor. As of March 1, 2007, each
Independent Trustee other than Mr. Wadsworth served on the boards of 22
trusts/corporations comprised of 58 funds. Mr. Wadsworth served on the
boards of 25 trusts/corporations comprised of 61 funds.
(2) As a result of his position with the Advisor, Mr. Schwarzer is considered
an "interested person" of the Funds within the meaning of the 1940 Act.
(3) Executive title, not a board directorship.
As of March 1, 2007, none of the Non-interested Trustees owned securities
beneficially of the Advisor, or any person directly or indirectly controlling,
controlled by or under common control with the Advisor.
RESPONSIBILITIES OF THE BOARD OF TRUSTEES - BOARD AND COMMITTEE MEETINGS
The primary responsibility of each Board is to represent the interests of the
shareholders of the Funds and to provide oversight of the management of the
Funds. Each Board proposed for election at the Meeting is comprised of one
individual who would be an Interested Trustee, and eight individuals who would
be Independent Trustees. Securities and Exchange Commission ("SEC") rules
currently require a majority of the board members of a fund to be "independent"
if the fund takes advantage of certain exemptive rules under the 1940 Act. If
the proposed Board of Trustees is approved by shareholders, 89% will be
Independent Trustees. Each of the nominees that will be considered an
Independent Trustee, if elected, has been selected and nominated solely by the
current Independent Trustees of each Fund.
Each Board meets multiple times during the year to review the investment
performance of each Fund and other operational matters, including regulatory and
compliance related policies and procedures. Furthermore, the Independent
Trustees review the fees paid to the Advisor and its affiliates for investment
advisory services and other services. Each Board has adopted specific policies
and guidelines that, among other things, seek to further enhance the
effectiveness of the Independent Trustees in performing their duties. For
example, the Independent Trustees select independent legal counsel to work with
them in reviewing fees, advisory and other contracts and overseeing fund
matters, and regularly meet privately with their counsel.
During fiscal year 2006, the Board of each Fund met nine times. Each Trustee
attended at least 75% of the respective meetings of the Board and the Committees
(if a member thereof) held during calendar year 2006.
Each Fund has adopted a policy that generally a Trustee or senior officer will
be present at annual shareholder meetings in order to facilitate communication
with shareholders. Two Trustees, Mr. Freeman and Ms. Peterson, attended the
Funds' last annual meeting held on May 25, 2006.
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Each Board has adopted Governance Procedures and Guidelines and has established
a number of Committees, as described below. For each Committee, each Board has
adopted a written charter setting forth the Committee's responsibilities.
AUDIT COMMITTEE
The Audit Committee makes recommendations regarding the selection of the
independent registered public accounting firm for each Fund, confers with the
independent registered public accounting firm regarding each Fund's financial
statements, the results of audits and related matters, reviews and discusses
each Fund's audited financial statements with management and performs such other
tasks as the full Board deems necessary or appropriate. The Committee is
comprised of only Non-interested Trustees who are "independent" as defined in
the New York Stock Exchange ("NYSE") and the Chicago Stock Exchange ("CHX")
listing standards applicable to closed-end funds. The Audit Committee held seven
meetings during fiscal year 2006. A copy of the Audit Committee Charter for each
Fund is attached as Appendix 1 hereto.
For the 2006 fiscal year for each Fund, the Committee reviewed and discussed the
audited financial statements with management. The Committee also discussed with
the independent registered public accounting firm the matters required to be
discussed by Statement on Auditing Standards No. 61 (Communications with Audit
Committees). The Funds' independent registered public accounting firm provided
the Committee the written disclosure required by Independence Standards Board
Standard No. 1 (Independence Discussions with Audit Committees), and the
Committee discussed with representatives of the independent registered public
accounting firm their firm's independence, including the matters described
beginning on page 12. Based on its review of each Fund's financial statements
and discussions with management and the independent registered public accounting
firm and other written disclosure provided by the independent registered public
accounting firm, the Committee recommended to each Board that the audited
financial statements be included in the annual report provided to shareholders
for each Fund's 2006 fiscal year. The current members of the Audit Committee
are:
William McClayton (Chair)
Donald L. Dunaway
Robert B. Hoffman
NOMINATING AND GOVERNANCE COMMITTEE
The Nominating and Governance Committee seeks and reviews candidates for
consideration as nominees for membership on the Board and oversees the
administration of the Governance Procedures and Guidelines.
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The Nominating and Governance Committee is comprised of only Non-interested
Trustees who are "independent" as defined in the NYSE and the CHX listing
standards applicable to closed-end funds. The members of the Nominating and
Governance Committee are Shirley D. Peterson (Chair), James R. Edgar and William
McClayton. The Nominating and Governance Committee held four meetings during
fiscal year 2006. Each Fund's Nominating and Governance Committee is governed by
the Nominating and Governance Committee Charter, a copy of which is attached
hereto as Appendix 2.
The Nominating and Governance Committee receives and reviews information on
individuals qualified to be recommended to the full Board as nominees for
election as Trustees, including any recommendations by shareholders.
Shareholders may recommend candidates for Board positions by forwarding their
correspondence by U.S. mail or courier service to the Funds' Secretary for the
attention of the Chairman of the Nominating and Governance Committee, Two
International Place, Boston, Massachusetts 02110-4103. Suggestions for
candidates must include a resume of the candidate.
The Nominating and Governance Committee's principal criterion for selection of
candidates is their ability to carry out the responsibilities of the Board. In
addition, the following factors are taken into consideration: (a) the Board
collectively should represent a broad cross section of backgrounds, functional
disciplines and experience to enable the Board to provide effective oversight of
a Fund's regulatory and business issues, (b) candidates should exhibit high
standards of personal integrity, commitment to representing shareholders and
independence of thought and judgment, and (c) candidates should commit to
dedicate sufficient time, energy and attention to ensure the diligent
performance of all duties, including attendance at meetings of the Board and
committees on which the Board member serves and review in advance of all meeting
materials.
CONTRACT REVIEW COMMITTEE
The Contract Review Committee, which consists entirely of Independent Trustees,
oversees the annual contract review process. The members of the Contract Review
Committee are Paul K. Freeman (Chair), John W. Ballantine, Donald L. Dunaway,
William McClayton and Robert H. Wadsworth. The Contract Review Committee held
two meetings during fiscal year 2006.
VALUATION COMMITTEE
The Valuation Committee reviews Valuation Procedures adopted by the Board,
determines fair value of the Funds' securities as needed in accordance with the
Valuation Procedures and performs such other tasks as the full Board deems
necessary. Currently, the members of the Valuation
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Committee are John W. Ballantine (Chair), Robert H. Wadsworth, Donald L. Dunaway
(alternate) and William McClayton (alternate). The Valuation Committee held one
meeting during fiscal year 2006.
OPERATIONS COMMITTEE
The Operations Committee oversees the operations of the Funds, such as reviewing
each Fund's administrative fees and expenses, portfolio transaction policies,
custody and transfer agency arrangements and shareholder services. The members
of the Operations Committee are Robert H. Wadsworth (Chair), John W. Ballantine
and James R. Edgar. The Operations Committee held six meetings during fiscal
year 2006.
FIXED-INCOME OVERSIGHT COMMITTEE
The Fixed-Income Oversight Committee oversees investment activities of the
Funds, such as investment performance and risk, expenses and services provided
under the investment management agreements. The members of the Fixed-Income
Oversight Committee are Donald L. Dunaway (Chair), Shirley D. Peterson and
Robert H. Wadsworth. The Fixed-Income Oversight Committee held five meetings
during fiscal year 2006.
SHAREHOLDER COMMUNICATION WITH THE TRUSTEES
The Board of each Fund provides a process for shareholders to send
communications to the Board. (These communications do not include shareholders'
proposals described below under "Miscellaneous -- Proposals of Shareholders.")
Correspondence should be sent by U.S. mail or courier service to the Funds'
Secretary, Two International Place, Boston, Massachusetts 02110-4103, who will
forward it to the Chairperson of the Board (currently Mr. Freeman) if addressed
to the Board, or to a specific Trustee if addressed to that Trustee.
COMPENSATION OF TRUSTEES
Each Independent Trustee receives an annual base retainer, paid quarterly, and,
as applicable, an additional annual fixed fee(s) for serving as committee
member, committee chairman and/or as the Independent Board chairman. The
Trustees serve as board members of various other funds advised by the Advisor.
The Advisor supervises the Funds' investments, pays the compensation and
expenses of its personnel who serve as a Trustee or as officers on behalf of the
Funds and receives a management fee for its services.
The Board of Trustees of the Funds established a deferred compensation plan for
the Independent Trustees ("Deferred Compensation Plan"). Under the Deferred
Compensation Plan, the Independent Trustees may defer receipt of all, or a
portion, of the compensation they earn for their
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services to the Funds, in lieu of receiving current payments of such
compensation. Any deferred amount is treated as though an equivalent dollar
amount has been invested in shares of one or more funds advised by the Advisor
("Shadow Shares"). Governor Edgar currently has elected to defer at least a
portion of his fees. In addition, previously, Mr. Dunaway elected to defer fees
that were payable, which are now included under the Deferred Compensation Plan.
The equivalent Shadow Shares are reflected below in the table describing the
Trustees' share ownership.
Trustees who are officers, directors, employees or stockholders of the Advisor
or its affiliates receive no direct compensation from the Fund, although they
are compensated as employees of the Advisor, or its affiliates, and as a result
may be deemed to participate in fees paid by the Fund. The Independent Trustees
are not entitled to benefits under any fund pension or retirement plan.
The following table shows compensation received by each Independent Trustee from
the Funds and aggregate compensation from the fund complex during the calendar
year 2006.
AGGREGATE
COMPENSATION
FROM DWS FUND
NAME OF TRUSTEE KHI KMM KTF KSM KST COMPLEX(2)(3)(4)
--------------- ------ ------ ------ ------ ------ ----------------
John W. Ballantine..... $2,720 $2,800 $3,800 $1,720 $2,440 $222,670
Donald L. Dunaway...... $2,560 $2,640 $3,560 $1,600 $2,280 $210,170
James R. Edgar(1)...... $2,200 $2,240 $3,040 $1,360 $1,960 $180,170
Paul K. Freeman........ $2,680 $2,720 $3,680 $1,680 $2,360 $217,670
Robert B. Hoffman...... $2,560 $2,600 $3,520 $1,600 $2,280 $207,670
William McClayton...... $2,370 $2,410 $3,270 $1,470 $2,120 $193,560
Shirley D.
Peterson(5).......... $2,960 $3,040 $4,120 $1,880 $2,640 $242,670
Robert H. Wadsworth.... $2,400 $2,440 $3,320 $1,480 $2,120 $228,250
--------
(1) Includes deferred fees. Pursuant to a Deferred Compensation Plan, as
discussed above, deferred amounts are treated as though an equivalent
dollar amount has been invested in Shadow Shares (as defined above) of
funds managed by the Advisor in which compensation may be deferred by
Governor Edgar. Total deferred fees (including interest thereon and the
return from the assumed investment in the funds managed by the Advisor)
payable from the Funds to Governor Edgar are $18,301, $18,020, $27,773,
$11,376 and $17,530 from KHI, KMM, KTF, KSM and KST, respectively.
(2) For each Trustee, except Mr. Wadsworth, total compensation includes
compensation for service on the boards of 21 trusts/corporations
comprised of 69 funds/portfolios. Mr. Wadsworth's total compensation was
for service on the boards of 24 trusts/corporations comprised of 72
funds/portfolios. Each Trustee, except Mr. Wadsworth, currently serves on
the boards of 24 trusts/corporations comprised of 63 funds/portfolios.
Mr. Wadsworth currently serves on the boards of 25 trusts/corporations
comprised of 66 funds/portfolios.
(3) Aggregate compensation reflects amounts paid to the Trustees for numerous
special meetings of ad hoc committees of the Chicago Board in connection
with reviewing the Funds' rebranding initiatives to change to the DWS
Family of Funds and with respect to legal and regulatory matters. Such
amounts totaled $5,170 for each of Messrs. Ballantine, Dunaway, Edgar,
Freeman, Hoffman, McClayton and Ms. Peterson. These meeting fees were
borne by the Advisor.
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(4) For calendar year 2007, John W. Ballantine, Donald L. Dunaway, James R.
Edgar, Paul K. Freeman, Robert B. Hoffman, William McClayton, Shirley D.
Peterson, Robert H. Wadsworth are expected to receive aggregate
compensation from the DWS Fund complex in the amounts of $215,000,
$202,500, $190,000, $240,000, $185,000, $205,000, 187,500 and $243,250,
respectively. The differences in compensation amounts from calendar year
2006 are due to the changes in Board and committee chairpersons and
committee assignments that became effective January 1, 2007.
(5) Includes $50,000 in annual retainer fees received by Ms. Peterson as
Chairperson of the Board, for which she served through December 31, 2006.
Mr. Freeman, prior to his service as an Independent Trustee of the Funds, served
as a board member of certain funds in the Deutsche Bank complex ("DB Funds"). In
connection with his resignation and the resignation of certain other board
members as trustees of the DB Funds on July 30, 2002 (the "Effective Date"),
which was part of a restructuring of the boards overseeing the DB Funds,
Deutsche Asset Management, Inc. ("DAMI") agreed to recommend, and, if necessary
obtain, directors and officers ("D&O") liability insurance coverage for the
prior board members, including Mr. Freeman, that is at least as equivalent in
scope and amount to the D&O coverage provided to the prior board members for the
six-year period following the Effective Date. In the event that D&O insurance
coverage is not available in the commercial marketplace on commercially
reasonable terms from a conventional third party insurer, DAMI reserved the
right to provide substantially equivalent protection in the form of an indemnity
or financial guarantee from an affiliate of DAMI. The D&O policy in effect prior
to the Effective Date provided aggregate coverage of $25,000,000, subject to a
$250,000 per claim deductible.
TRUSTEE FUND OWNERSHIP
Under each Fund's Governance Procedures and Guidelines, the Independent Trustees
have established the expectation that within three years of becoming a Trustee,
an Independent Trustee will have invested an amount in those funds he or she
oversees (which shall include amounts held under a deferred fee agreement that
are valued based on "Shadow Shares" in such funds) in the aggregate in excess of
$150,000. An Interested Trustee is also encouraged to own an amount of shares
(based upon his or her own individual judgment) of those funds that he or she
oversees that is suitable for his or her own appropriate investment needs. The
following table sets forth for each Independent Trustee and the Interested
Trustee the dollar range of securities owned in each Fund and all funds in the
fund complex
12
overseen by each Independent Trustee and the Interested Trustee as of December
31, 2006.
AGGREGATE
DOLLAR
RANGE OF
SECURITIES
OWNED IN
ALL FUNDS
IN THE DWS
FUND
COMPLEX
NAME OF OVERSEEN
TRUSTEE/NOMINEE KHI KMM KTF KSM KST BY TRUSTEE
--------------- -------- -------- -------- --- -------- -----------
John W. Ballantine...... 0 0 0 0 0 Over
$150,000
Donald L. Dunaway....... 0 0 0 0 0 Over
$150,000(1)
James R. Edgar.......... 0 0 0 0 0 Over
$150,000(1)
Paul K. Freeman......... 0 0 0 0 0 Over
$150,000
Robert B. Hoffman....... 0 0 0 0 0 Over
$150,000
William McClayton....... 0 0 0 0 0 $10,001-
$50,000(2)
Shirley D. Peterson..... 0 0 0 0 0 $100,001-
$150,000
Axel Schwarzer(3)....... 0 0 0 0 0 $100,001-
$150,000
Robert H. Wadsworth..... $10,001- $10,001- $10,001- 0 Over Over
$50,000 $50,000 $50,000 $100,000 $150,000
--------
(1) The dollar range of shares shown includes Shadow Shares of certain DWS
Family of Funds in which Mr. Dunaway and Governor Edgar are deemed to be
invested pursuant to the Funds' Deferred Compensation Plan as more fully
described above under "Compensation of Trustees."
(2) Mr. McClayton was appointed to the Chicago Board on December 30, 2004.
(3) Mr. Schwarzer is the Interested Trustee.
13
SHARE OWNERSHIP. The following table sets forth, for each Independent Trustee
and the Interested Trustee and for the Independent Trustees, the Interested
Trustee and the officers as a group, the amount of shares beneficially owned in
each Fund as of December 31, 2006.
NAME OF
TRUSTEE/NOMINEE KHI KMM KTF(1) KSM(1) KST
--------------- ----- ----- ------ ------ -----
John W. Ballantine............ 0 0 0 0 0
Donald L. Dunaway............. 0 0 0 0 0
James R. Edgar................ 0 0 0 0 0
Paul K. Freeman............... 0 0 0 0 0
Robert B. Hoffman............. 0 0 0 0 0
William McClayton............. 0 0 0 0 0
Shirley D. Peterson........... 0 0 0 0 0
Axel Schwarzer(2)............. 0 0 0 0 0
Robert H. Wadsworth........... 5,000 4,000 1,000 0 6,800
ALL TRUSTEES/NOMINEES AND
OFFICERS AS A GROUP......... 5,000 4,000 1,000 0 6,800
--------
(1) Common Shares.
(2) Mr. Schwarzer is the Interested Trustee.
As of December 31, 2006, each executive officer, Independent Trustee and
Interested Trustee individually, and the officers, Independent Trustees and
Interested Trustee as a group, owned beneficially less than 1% of the
outstanding shares of each Fund. As of December 31, 2006, the Independent
Trustees, Interested Trustee and executive officers did not own any Preferred
Shares of KTF or KSM. As of December 31, 2006, no person is known to any Fund to
have owned beneficially more than 5% of any class of shares of any Fund.
AGREEMENT TO INDEMNIFY INDEPENDENT TRUSTEES FOR CERTAIN EXPENSES
In connection with litigation or regulatory action related to possible improper
market timing or other improper trading activity or possible improper marketing
and sales activity in the Funds (see "Regulatory and Litigation Matters" on page
15), the Advisor has agreed, subject to applicable law and regulation, to
indemnify and hold harmless the Funds against any and all loss, damage,
liability and expense, arising from market timing or marketing and sales matters
alleged in any enforcement actions brought by governmental authorities involving
or potentially affecting the Funds or the Advisor ("Enforcement Actions") or
that are the basis for private actions brought by shareholders of the Funds
against the Funds, their directors and officers, the Advisor and/or certain
other parties ("Private Litigation"), or any proceedings or actions that may be
threatened or commenced in the future by any person (including governmental
authorities), arising from or similar to the matters alleged in the
14
Enforcement Actions or Private Litigation. In recognition of its undertaking to
indemnify the Funds and in light of the rebuttable presumption generally
afforded to independent directors/trustees of investment companies that they
have not engaged in disabling conduct, the Advisor has also agreed, subject to
applicable law and regulation, to indemnify Messrs. Ballantine, Dunaway, Edgar,
Freeman and Hoffman and Ms. Peterson (each of whom is an Independent Trustee)
against certain liabilities the Independent Trustees may incur from the matters
alleged in any Enforcement Actions or Private Litigation or arising from or
similar to the matters alleged in the Enforcement Actions or Private Litigation,
and advance expenses that may be incurred by the Independent Trustees in
connection with any Enforcement Actions or Private Litigation. The Advisor is
not, however, required to provide indemnification and advancement of expenses:
(1) with respect to any proceeding or action with respect to which a Fund's
Board determines that the Independent Trustee ultimately would not be entitled
to indemnification or (2) for any liability of the Independent Trustee to the
Funds or their shareholders to which the Independent Trustee would otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the Independent Trustee's duties as a director or trustee
of the Funds as determined in a final adjudication in such action or proceeding.
The estimated amount of any expenses that may be advanced to the Independent
Trustees or indemnity that may be payable under the indemnity agreements is
currently unknown. These agreements by the Advisor will survive the termination
of the investment management agreements between the Advisor and the Funds.
FUND OFFICERS
The following table presents certain information about the executive officers of
each Fund as of March 1, 2007. Each individual's year of birth is set forth in
parentheses after his or her name. Unless otherwise noted, each individual 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.
NAME, DATE OF BIRTH,
POSITION(S) HELD WITH THE PRINCIPAL OCCUPATION(S) DURING
FUND AND LENGTH OF PAST 5 YEARS
TIME SERVED AND OTHER DIRECTORSHIPS HELD
------------------------- -------------------------------
MICHAEL G. CLARK (1965) Managing Director(1), Deutsche
President, 2006-present Asset Management (2006-
present); President of DWS
family of Funds. Formerly,
Director of Fund Board
Relations (2004-2006) and
Director of Product Development
(2000-2004), Merrill Lynch
Investment Managers; Senior
Vice President Operations,
Merrill Lynch Asset Management
(1999-2000)
15
NAME, DATE OF BIRTH,
POSITION(S) HELD WITH THE PRINCIPAL OCCUPATION(S) DURING
FUND AND LENGTH OF PAST 5 YEARS
TIME SERVED AND OTHER DIRECTORSHIPS HELD
------------------------- -------------------------------
PHILIP J. COLLORA (1945) Director(1), Deutsche Asset
Vice President and Management
Assistant Secretary,
1986-present
PAUL H. SCHUBERT (1963) Managing Director(1), Deutsche
Chief Financial Officer, Asset Management (since July
2004-present, 2004). Formerly, Executive
Treasurer, Director, Head of Mutual Fund
2005-present 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)
JOHN MILLETTE (1962) Director(1), Deutsche Asset
Secretary, 2001-present Management
PATRICIA DEFILIPPIS (1963) Vice President, Deutsche Asset
Assistant Secretary, Management (since June 2005).
2005-present Formerly, Counsel, New York
Life Investment Management LLC
(2003-2005); Legal Associate,
Lord, Abbett & Co. LLC (1998-
2003)
ELISA D. METZGER (1962) Director(1), Deutsche Asset
Assistant Secretary, Management (since September
2005-present 2005). Formerly, Counsel,
Morrison and Foerster LLP
(1999-2005)
CAROLINE PEARSON (1962) Managing Director(1), Deutsche
Assistant Secretary, Asset Management
1998-present
PAUL ANTOSCA (1957) Director(1), Deutsche Asset
Assistant Treasurer, Management (since 2006).
2007-present Formerly, Vice President, The
Manufacturers Life Insurance
Company (U.S.A.) (1990-2006)
KATHLEEN SULLIVAN D'ERAMO Director(1), Deutsche Asset
(1957) Management
Assistant Treasurer,
2003-present
JASON VAZQUEZ (1972) Vice President, Deutsche Asset
Anti-Money Laundering Management (since 2006).
Compliance Officer, Formerly, AML Operations
2007-present Manager for Bear Stearns (2004-
2006); Supervising Compliance
Principal and Operations
Manager for AXA Financial
(1999-2004)
ROBERT KLOBY (1962) Managing Director(1), Deutsche
Chief Compliance Officer Asset Management (2004-
2006-present present). Formerly, Chief
Compliance Officer/Chief Risk
Officer, Robeco USA (2000-
2004); Vice President, The
Prudential Insurance Company of
America (1988-2000); E.F.
Hutton and Company (1984-1988)
--------
(1) Executive title, not a board directorship.
16
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Each Board, including the Independent Trustees, has selected Ernst & Young LLP
("E&Y") to act as independent registered public accounting firm to audit the
books and records of each Fund for the current fiscal year. E&Y has served each
Fund in this capacity since the Fund was organized and has no direct or indirect
financial interest in any Fund except as the independent registered public
accounting firm. E&Y will not be represented at the Meeting.
In connection with the audit of the 2005 and 2006 financial statements, the
Funds entered into an engagement letter with E&Y. The terms of the engagement
letter required by E&Y, and agreed to by the Audit Committee, include provisions
in which the parties consent to the sole jurisdiction of federal courts in New
York, Boston or the Northern District of Illinois, as well as a waiver of right
to a trial by jury and an exclusion of punitive damages.
The following table shows fees billed by E&Y to each Fund during that Fund's two
most recent fiscal years: (i) for audit and non-audit services provided to the
Fund, and (ii) for engagements for non-audit services pre-approved by the Audit
Committee for the Advisor and certain entities controlling, controlled by, or
under common control with the Advisor that provide ongoing services to the Fund
(collectively, the "Advisor Entities"), which engagements relate directly to the
operations and financial reporting of the Fund. The Audit Committee of each
Board has reviewed whether E&Y's receipt of non-audit fees from the Fund, DeIM
and all Advisor Entities is compatible with maintaining E&Y's independence.
AUDIT RELATED ALL OTHER
AUDIT FEES(2) TAX FEES(3) FEES(4)
FEES(1) -------------- ---------------- --------------
------- ADVISOR ADVISOR ADVISOR
NAME OF FUND FUND FUND ENTITIES FUND ENTITIES FUND ENTITIES
------------ ------- ---- -------- ------ -------- ---- --------
DWS High
Income Trust
2005............... $45,576 $0 $406,000 $6,215 $ 70,570 $0 $0
2006............... $46,499 $0 $ 80,000 $6,341 $316,254 $0 $0
DWS Multi-Market
Income Trust
2005............... $45,593 $0 $406,000 $6,217 $ 70,570 $0 $0
2006............... $46,574 $0 $ 80,000 $6,351 $316,254 $0 $0
DWS Municipal
Income Trust
2005............... $47,134 $0 $406,000 $6,427 $ 70,570 $0 $0
2006............... $49,067 $0 $ 80,000 $6,691 $316,254 $0 $0
17
AUDIT RELATED ALL OTHER
AUDIT FEES(2) TAX FEES(3) FEES(4)
FEES(1) -------------- ---------------- --------------
------- ADVISOR ADVISOR ADVISOR
NAME OF FUND FUND FUND ENTITIES FUND ENTITIES FUND ENTITIES
------------ ------- ---- -------- ------ -------- ---- --------
DWS Strategic
Municipal
Income Trust
2005............... $45,248 $0 $406,000 $6,170 $ 70,570 $0 $0
2006............... $46,590 $0 $ 80,000 $6,353 $316,254 $0 $0
DWS Strategic
Income Trust
2005............... $44,789 $0 $406,000 $6,108 $ 70,570 $0 $0
2006............... $45,860 $0 $ 80,000 $6,254 $316,254 $0 $0
--------
(1) "Audit Fees" are the aggregate fees billed for professional services for
the audit of each Fund's annual financial statements and services
provided in connection with statutory and regulatory filings or
engagements.
(2) "Audit Related Fees" are the aggregate fees billed for assurance and
related services reasonably related to the performance of the audit or
review of financial statements and are not reported under "Audit Fees."
They were for services in connection with an assessment of internal
controls and additional related procedures.
(3) "Tax Fees" are the aggregate fees billed for professional services for
tax advice, tax compliance and tax planning. Fees billed were for tax
compliance and tax return preparation.
(4) "All Other Fees" are the aggregate fees billed for products and services
other than "Audit Fees," "Audit Related Fees" and "Tax Fees."
Audit Committee Pre-Approval Policies and Procedures. Generally, the Audit
Committee must pre-approve (i) all services to be performed for a Fund by a
Fund's independent registered public accounting firm and (ii) all non-audit
services to be performed by a Fund's independent registered public accounting
firm for the Advisor Entities with respect to operations and financial reporting
of the Fund, except that the Chairman of the Audit Committee may grant the pre-
approval for non-audit services described in items (i) and (ii) above for non-
prohibited services for engagements of less than $100,000. All such delegated
pre-approvals shall be presented to the Audit Committee no later than the next
Audit Committee meeting.
All Non-Audit Fees. The table below shows the aggregate non-audit fees billed
by E&Y for services rendered to the Funds and to the Advisor Entities for the
two most recent fiscal years for each Fund. In assessing E&Y's independence, the
Audit Committee considers the opinions of Fund management.
KHI KMM KTF KSM KST
---------- ---------- ---------- ---------- ----------
2005............... $ 117,371 $ 117,373 $ 117,583 $ 117,326 $ 117,264
2006............... $1,271,215 $1,271,225 $1,271,565 $1,271,227 $1,271,128
In 2005, E&Y advised the Audit Committee that various E&Y member firms provided
certain non-audit services to Deutsche Bank entities and
18
affiliates (collectively, the "DB entities") between 2003 and 2005 that raise
issues under the SEC auditor independence rules. The DB entities are within the
"Investment Company Complex" (as defined by SEC rules) and therefore covered by
the SEC auditor independence rules applicable to the Funds.
First, E&Y advised the Audit Committee that in connection with providing
permitted expatriate tax compliance services for DB entities during 2003 and
2004, member firms in China and Japan ("E&Y China" and "E&Y Japan,"
respectively) received funds from the DB entities that went into E&Y
"representative bank trust accounts" and were used to pay the foreign income
taxes of the expatriates. E&Y has advised the Audit Committee that handling
those funds was in violation of Rule 2-01 of Regulation S-X. (Rule 2-
01(c)(4)(viii) provides that an accountant's independence is impaired if the
accountant has custody of assets of the audit client.)
Second, E&Y advised the Audit Committee that in connection with providing
monthly payroll services to employees of certain DB entities from May 2003 to
February 2005, a member firm in Chile ("E&Y Chile") received funds from the DB
entities that went into an E&Y trust account and were used to pay the net
salaries and social security taxes of executives of the DB entities. E&Y has
advised the Audit Committee that handling those taxes was in violation of Rule
2-01 of Regulation S-X.
Third, E&Y advised the Audit Committee that in connection with providing certain
services in assisting a DB entity with various regulatory reporting
requirements, a member firm in France ("E&Y France") entered into an engagement
with the DB entity that resulted in E&Y France staff functioning under the
direct responsibility and direction of a DB entity supervisor. E&Y advised the
Audit Committee that, although the services provided were "permitted services"
under Rule 2-01 of Regulation S-X, the structure of the engagement was in
violation of Rule 2-01 of Regulation S-X. (Rule 2-01(c)(4)(vi) provides that an
accountant's independence is impaired if the accountant acts as an employee of
an audit client.)
The Audit Committee was informed that E&Y China received approximately $1,500,
E&Y Japan received approximately $41,000, E&Y Chile received approximately
$11,724 and E&Y France received approximately $100,000 for the services they
provided to the DB entities. E&Y advised the Audit Committee that it conducted
an internal review of the situation and, in view of the fact that similar
expatriate tax compliance services were provided to a number of E&Y audit
clients unrelated to DB or the Funds, E&Y advised the SEC and the Public Company
Accounting Oversight Board of the independence issues arising from those
services. E&Y advised the Audit Committee that E&Y believes its independence as
registered public accounting firm for the Funds was not impaired during the
period the services were provided. In reaching this conclusion, E&Y
19
noted a number of factors, including that none of the E&Y personnel who provided
the non-audit services to the DB entities were involved in the provision of
audit services to the Funds, the E&Y professionals responsible for the Funds'
audits were not aware that these non-audit services took place, and that the
fees charged are not significant to E&Y overall or to the fees charged to the
Investment Company Complex. E&Y also noted that E&Y China, E&Y Japan and E&Y
Chile are no longer providing these services and that the E&Y France engagement
has been restructured.
MISCELLANEOUS
SECTION 16 BENEFICIAL OWNERSHIP REPORTING COMPLIANCE. Section 30(h) of the 1940
Act and Section 16(a) of the Securities Exchange Act of 1934 require each Fund's
officers and Trustees, the Advisor, affiliated persons of the Advisor and
persons who own more than ten percent of a registered class of the Fund's equity
securities to file forms reporting their affiliation with that Fund and reports
of ownership and changes in ownership of that Fund's shares with the SEC and the
NYSE. These persons and entities are required by SEC regulation to furnish the
Funds with copies of all Section 16(a) forms they file. Based solely upon its
review of the copies of such forms received by it, and written representations
from certain reporting persons that no year-end reports were required for those
persons, each Fund believes that during the fiscal year ended November 30, 2006,
all filings were timely, except that Mr. Wadsworth filed a late Form 4 for both
the DWS Multi-Market Income Trust and the DWS Strategic Income Trust.
INVESTMENT MANAGER. Deutsche Investment Management Americas Inc., 345 Park
Avenue, New York, New York 10154, serves as each Fund's Advisor and manager
pursuant to an investment management agreement.
Deutsche Asset Management ("DeAM") is the marketing name in the U.S. for the
asset management activities of Deutsche Bank AG, DeIM, DAMI, Deutsche Bank Trust
Company Americas and DWS Trust Company. DeAM is a global asset management
organization that offers a wide range of investing expertise and resources,
including hundreds of portfolio managers and analysts and an office network that
reaches the world's major investment centers. This global investment platform
brings together a wide variety of experience and investment insight, across
industries, regions, asset classes and investing styles. DeIM is an indirect,
wholly-owned subsidiary of Deutsche Bank AG. Deutsche Bank AG is a major global
banking institution that is engaged in a wide range of financial services,
including investment management, mutual fund, retail, private and commercial
banking, investment banking and insurance.
REGULATORY AND LITIGATION MATTERS. On December 21, 2006, DeAM settled
proceedings with the SEC and the New York Attorney General on behalf of DAMI and
DeIM, the investment advisors to many of the DWS Scudder funds, regarding
allegations of improper trading at DeAM and at the legacy
20
Scudder and Kemper organizations prior to their acquisition by DeAM in April
2002. These regulators alleged that although the prospectuses for certain funds
in the regulators' view indicated that the funds did not permit market timing,
DAMI and DeIM breached their fiduciary duty to those funds in that their efforts
to limit trading activity in the funds were not effective at certain times. The
regulators also alleged that DAMI and DeIM breached their fiduciary duty to
certain funds by entering into certain market timing arrangements with
investors. These trading arrangements originated in businesses that existed
prior to the currently constituted DeAM organization, which came together as a
result of various mergers of the legacy Scudder, Kemper and Deutsche fund
groups, and all of the arrangements were terminated prior to the start of the
regulatory investigations that began in the summer of 2003. No current DeAM
employee approved these trading arrangements. Under the terms of the
settlements, DAMI and DeIM neither admit nor deny any wrongdoing.
The terms of the SEC settlement, which identified improper trading in the legacy
Deutsche and Kemper mutual funds only, provide for payment of disgorgement in
the amount of $17.2 million. The terms of the settlement with the New York
Attorney General provide for payment of disgorgement in the amount of $102.3
million, which is inclusive of the amount payable under the SEC settlement, plus
a civil penalty in the amount of $20 million. The total amount payable by DeAM,
approximately $122.3 million, would be distributed to funds and/or shareholders
of the affected funds in accordance with a distribution plan to be developed by
a distribution consultant. The funds' investment advisors do not believe these
amounts will have a material adverse financial impact on them or materially
affect their ability to perform under their investment management agreements
with the DWS funds. The above-described amounts are not material to Deutsche
Bank, and have already been reserved.
Among the terms of the settled orders, DeAM is subject to certain undertakings
regarding the conduct of its business in the future, including: formation of a
Code of Ethics Oversight Committee to oversee all matters relating to issues
arising under the advisors' Code of Ethics; establishment of an Internal
Compliance Controls Committee having overall compliance oversight responsibility
of the advisors; engagement of an Independent Compliance Consultant to conduct a
comprehensive review of the advisors' supervisory compliance and other policies
and procedures designed to prevent and detect breaches of fiduciary duty,
breaches of the Code of Ethics and federal securities law violations by the
advisors and their employees; and commencing in 2008, the advisors shall undergo
a compliance review by an independent third party.
In addition, DeAM is subject to certain further undertakings relating to the
governance of the mutual funds, including that: at least 75% of the members of
the Boards of Trustees/Directors overseeing the DWS Funds
21
continue to be independent of DeAM; the Chairmen of the DWS Funds' Boards of
Trustees/Directors continue to be independent of DeAM; DeAM maintain existing
management fee reductions for certain funds for a period of five years and not
increase management fees for certain funds during this period; the funds retain
a senior officer (or independent consultants) responsible for assisting in the
review of fee arrangements and monitoring compliance by the funds and the
investment advisors with securities laws, fiduciary duties, codes of ethics and
other compliance policies, the expense of which shall be borne by DeAM; and
periodic account statements, fund prospectuses and the mutual funds' web site
contain additional disclosure and/ or tools that assist investors in
understanding the fees and costs associated with an investment in the funds and
the impact of fees and expenses on fund returns.
DeAM has also settled proceedings with the Illinois Secretary of State regarding
market timing matters. The terms of the Illinois settlement provide for investor
education contributions totaling approximately $4 million and a payment in the
amount of $2 million to the Securities Audit and Enforcement Fund.
Additionally, on September 28, 2006, the SEC and the National Association of
Securities Dealers ("NASD") announced final agreements in which DeIM, DAMI and
Scudder Distributors, Inc. ("SDI") (now known as DWS Scudder Distributors, Inc.)
settled administrative proceedings regarding disclosure of brokerage allocation
practices in connection with sales of the Scudder Funds' (now known as the DWS
Scudder Funds) shares during 2001-2003. The agreements with the SEC and NASD are
reflected in orders which state, among other things, that DeIM and DAMI failed
to disclose potential conflicts of interest to the fund Boards and to
shareholders relating to SDI's use of certain funds' brokerage commissions to
reduce revenue sharing costs to broker-dealer firms with whom it had
arrangements to market and distribute Scudder Fund shares. These directed
brokerage practices were discontinued in October 2003.
Under the terms of the settlements, in which DeIM, DAMI and SDI neither admitted
nor denied any of the regulators' findings, DeIM, DAMI and SDI agreed to pay
disgorgement, prejudgment interest and civil penalties in the total amount of
$19.3 million. The portion of the settlements distributed to the funds was
approximately $17.8 million and was paid to the funds as prescribed by the
settlement orders based upon the amount of brokerage commissions from each fund
used to satisfy revenue sharing agreements with broker-dealers who sold fund
shares.
As part of the settlements, DeIM, DAMI and SDI also agreed to implement certain
measures and undertakings relating to revenue sharing payments including making
additional disclosures in the fund Prospectuses or Statements of Additional
Information, adopting or modifying
22
relevant policies and procedures and providing regular reporting to the fund
Boards.
The matters alleged in the regulatory settlements described above also serve as
the general basis of a number of private class action lawsuits involving the DWS
funds. These lawsuits name as defendants various persons, including certain DWS
funds, the funds' investment advisors and their affiliates, and certain
individuals, including in some cases fund Trustees/Directors, officers, and
other parties. Each DWS fund's investment advisor has agreed to indemnify the
applicable DWS funds in connection with these lawsuits, or other lawsuits or
regulatory actions that may be filed making similar allegations.
With respect to the lawsuits, based on currently available information, the
funds' investment advisors believe the likelihood that the pending lawsuits will
have a material adverse financial impact on a DWS fund is remote and such
actions are not likely to materially affect their ability to perform under their
investment management agreements with the DWS funds.
SOLICITATION OF PROXIES. The cost of preparing, printing and mailing the
enclosed proxy, accompanying notice and Proxy Statement and all other costs in
connection with solicitation of proxies will be paid by the Funds, including any
additional solicitation made by letter, telephone, facsimile or made
electronically. In addition to solicitation by mail, certain officers and
representatives of the Funds, officers and employees of the Advisor and certain
financial services firms and their representatives, who will receive no extra
compensation for their services, may solicit proxies electronically, by
telephone, by telegram or personally. Proxies that are obtained telephonically
or electronically will be recorded in accordance with the procedures believed by
the Funds to be reasonably designed to ensure that both the identity of the
shareholder casting the vote and the voting instructions of the shareholder are
accurately determined.
If a shareholder wishes to participate in the Meeting, but does not wish to give
a proxy by telephone or electronically, the shareholder may still submit the
proxy card(s) originally sent with this Proxy Statement or attend in person.
Should shareholders require additional information regarding the proxy or
replacement proxy card(s), they may call 1-800-561-3991. Any proxy given by a
shareholder is revocable until voted at the Meeting.
PROPOSALS OF SHAREHOLDERS. It is currently anticipated that the 2008 annual
meeting of shareholders will be held in May. A shareholder wishing to submit a
proposal for inclusion in a Fund's proxy statement for the 2008 annual meeting
of shareholders pursuant to Rule 14a-8 under the Securities Exchange Act of 1934
should send such written proposal to the Secretary of the Fund within a
reasonable time before the solicitation of proxies for such meeting. A Fund will
treat any such proposal received no
23
later than December 12, 2007 as timely. A shareholder wishing to provide notice
in the manner prescribed by Rule 14a-4(c)(1) to a Fund of a proposal submitted
outside of the process of Rule 14a-8 must submit such written notice to the
Secretary of the Fund within a reasonable time before the solicitation of
proxies for such meeting. A Fund will treat any such notice received no later
than February 25, 2008 as timely. The timely submission of a proposal, however,
does not guarantee its inclusion under either rule.
OTHER MATTERS TO COME BEFORE THE MEETING. The Boards are not aware of any
matters that will be presented for action at the Meeting other than the Proposal
set forth herein. Should any other matters requiring a vote of shareholders
arise, the proxy in the accompanying form will confer upon the person or persons
entitled to vote the shares represented by such proxy the discretionary
authority to vote the shares with respect to any such other matters.
VOTING, QUORUM. Each valid proxy will be voted in accordance with the
instructions on the proxy and as the persons named in the proxy determine on
such other business as may come before the Meeting. If no instructions are
given, the proxy will be voted in favor of the election of the Trustees.
Shareholders who execute proxies may revoke them at any time before they are
voted, either by writing to the Fund or in person at the time of the Meeting.
Election of Trustees for a Fund requires a plurality vote of the shares of such
Fund voting at the Meeting. As noted previously, the holders of the Preferred
Shares of KTF and KSM, voting as a separate class for each respective Fund, are
entitled to elect two Trustees and the holders of the Common Shares and
Preferred Shares of KTF and KSM, voting together as a single class for each
Fund, are entitled to elect the seven remaining Trustees. Broker non-votes will
have no effect; the persons receiving the largest number of votes will be
elected.
At least 30% of the shares of a Fund must be present, in person or by proxy, in
order to constitute a quorum for that Fund. Thus, the meeting for a particular
Fund could not take place on its scheduled date if less than 30% of the shares
of that Fund were represented. In the event that the necessary quorum to
transact business is not present at the Meeting with respect to one or more
Funds, the persons named as proxies may vote those proxies that have been
received to adjourn the Meeting to a later date with respect to those Funds.
Adjournment will subject a Fund to additional expenses. In the event that a
quorum is present with respect to a Fund but sufficient votes in favor of the
Proposal have not been received, the persons named as proxies may propose one or
more adjournments of the Meeting as to that Fund to permit further solicitation
of proxies. Any adjournment of the Meeting with respect to one or more Funds for
the further solicitation of proxies will require the affirmative vote of a
majority of the shares for such
24
Fund present in person or by proxy at the session of the Meeting to be
adjourned. The persons named as proxies will vote those proxies they are
entitled to vote in their discretion as to any such adjournment. A shareholder
vote may be taken on the Proposal prior to such adjournment. Such vote will be
considered final regardless of whether the Meeting is adjourned for one or more
Funds to permit additional solicitation with respect to the Proposal. For
purposes of determining the presence of a quorum for transacting business at the
Meeting, broker "non-votes" will be treated as shares that are present but which
have not been voted. Broker non-votes are proxies received by a Fund from
brokers or nominees when the broker or nominee has not received instructions
from the beneficial owner or other persons entitled to vote. Accordingly,
shareholders are urged to forward their voting instructions promptly.
HOUSEHOLDING INFORMATION. Each Fund provides periodic reports to its
shareholders that highlight relevant information, including investment results
and a review of portfolio changes. In order to reduce the amount of mail you
receive and to help reduce expenses of the Funds, we generally send a single
copy of annual reports and proxy statements to each household. If you do not
want the mailing of these documents to be combined with those for other members
of your household, or if you are receiving multiple copies of these documents
and you want to request delivery of a single copy, please contact the Advisor at
(800) 621-1048, or write to the Advisor at 222 South Riverside Plaza, Chicago,
Illinois 60606.
A COPY OF A FUND'S ANNUAL REPORT IS AVAILABLE WITHOUT CHARGE UPON REQUEST BY
WRITING TO SUCH FUND, 222 SOUTH RIVERSIDE PLAZA, CHICAGO, ILLINOIS 60606 OR BY
CALLING (800) 621-1048.
THE BOARD OF EACH FUND RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF THE
TRUSTEES.
PLEASE COMPLETE, SIGN AND RETURN THE ENCLOSED PROXY CARD(S) (OR TAKE ADVANTAGE
OF AVAILABLE ELECTRONIC OR TELEPHONIC VOTING PROCEDURES) PROMPTLY. NO POSTAGE IS
REQUIRED IF MAILED IN THE UNITED STATES.
By order of the Boards,
-s- John Millette
John Millette
Secretary
25
APPENDIX 1
DWS FUNDS
(CHICAGO BOARD)
AUDIT COMMITTEE CHARTER
AS AMENDED, MARCH 9, 2005
I. PURPOSE
The Audit Committee is a committee of the Board of the Fund. Its primary
function is to assist the Board(1) in fulfilling certain of its
responsibilities. This Charter sets forth the duties and responsibilities of the
Audit Committee.
The Audit Committee serves as an independent and objective party to monitor the
Fund's accounting policies, financial reporting and internal control system, as
well as the work of the independent auditors. The Audit Committee assists Board
oversight of (1) the integrity of the Fund's financial statements; (2) the
Fund's compliance with legal and regulatory requirements;(2) (3) the independent
auditors's qualifications and independence; and (4) the performance of the
Fund's independent auditors. The Audit Committee also serves to provide an open
avenue of communication among the independent auditors, the Adviser's internal
audit department, Fund management, and the Board.(3)
- Fund management has the primary responsibility to establish and maintain
systems for accounting, reporting and internal control.
- The independent auditors have the primary responsibility to plan and implement
a proper audit, including consideration of the Fund's accounting, reporting
and internal control practices.
----------
(1) To the extent the Fund is organized as a Massachusetts business trust, any
references to "directors" or "board members" shall be deemed to mean
"trustees."
(2) The Board has delegated to other committees oversight of various legal and
regulatory requirements. The Audit Committee's function is limited to the
activities set out in Section IV.
(3) If the Fund is listed on the New York Stock Exchange, the Corporate
Governance Standards require the Audit Committee's charter to address, as
one of the Committee's purposes, that it assist Board oversight of "the
performance of the company's internal audit function." Since the Fund has no
internal audit function, this has not been included as one of the purposes
of the Committee, although the Committee does serve to provide an open
avenue of communication with the Adviser's internal audit department, and
reviews the scope, resources and findings and recommendations of the
Adviser's internal audit department as set forth in Section IV.B.2.
A1-1
The Audit Committee may have additional functions and responsibilities as deemed
appropriate by the Board and the Audit Committee.(4)
Although the Audit Committee has the responsibilities and powers set forth in
this Charter, it is not the duty of the Audit Committee to plan or conduct
audits or to determine that the Fund's financial statements are complete and
accurate and have been prepared in accordance with generally accepted accounting
principles.
II. COMPOSITION
The Audit Committee shall be comprised of three or more board members as
determined by the Board, each of whom shall be an independent board member, and
free from any relationship that, in the opinion of the Board, would interfere
with the exercise of his or her independent judgment as a member of the Audit
Committee. For purposes of the Audit Committee, a board member is independent
if:
- he or she is not an "interested person" of the Fund as that term is defined in
the Investment Company Act of 1940; and
- he or she does not accept, directly or indirectly, any consulting, Advisory,
or other compensatory fee from the Fund (except in the capacity as a Board or
committee member).
Each member of the Audit Committee shall be financially literate, as such
qualification is interpreted by the Board in its business judgment (or must
become financially literate within a reasonable time after his or her
appointment to the Audit Committee). The Audit Committee will review the
qualifications of its members and determine whether any of its members qualify
as an "audit committee financial expert"(5) as defined
----------
(4) If the Fund is a listed closed-end investment company, the Audit Committee
also has as a purpose the preparation of an audit committee report to be
included in the annual proxy statement. This report is described in footnote
12.
(5) An "audit committee financial expert" of a company is defined as a person
who has all of the following attributes: (1) an understanding of generally
accepted accounting principles ("GAAP") and financial statements; (2) the
ability to assess the general application of GAAP in connection with the
accounting for estimates, accruals and reserves; (3) experience preparing,
auditing, analyzing or evaluating financial statements that present a
breadth and level of complexity of accounting issues that are generally
comparable to the breadth and complexity of issues that can reasonably be
expected to be raised by the company's financial statements, or experience
actively supervising one or more persons engaged in such activities; (4) an
understanding of internal controls and procedures for financial reporting;
and (5) an understanding of audit committee functions. An audit committee
financial expert must have acquired such attributes through any one or more
of the following: (1) education and experience as a principal financial
officer, principal accounting officer, controller, public accountant or
auditor or experience in one or more positions that involve the performance
of similar functions (or active supervision of such persons); or (2)
experience overseeing or assessing the performance of companies or public
accountants with respect to the preparation, auditing or evaluation of
financial statements; or (3) other relevant experience.
A1-2
in Form N-CSR.(6) The Audit Committee will submit such determination to the
Board for its final determination.
The members and Chairman of the Audit Committee shall be elected by the Board
annually and serve until their successors shall be duly elected and qualified.
No member of the Audit Committee shall serve on the audit committee of three or
more public companies (or three or more investment company complexes) in
addition to his or her service on the Audit Committee of the Fund (excluding
service on the audit committees of other funds in the fund complex), unless the
Board determines that such simultaneous service would not impair the ability of
the Audit Committee member to serve effectively on the Audit Committee.
III. MEETINGS
The Audit Committee shall meet six times annually, or more frequently as
circumstances dictate. Special meetings (including telephone meetings) may be
called by the Chairman or a majority of the members of the Audit Committee upon
reasonable notice to the other members of the Audit Committee.
As part of its job to foster open communication, the Audit Committee shall meet
annually with senior Fund management responsible for accounting and financial
reporting, the independent auditors, and representatives of the Adviser's
internal audit department in separate executive sessions to discuss any matters
that the Audit Committee, or any of such other persons, believes should be
discussed privately.
IV. RESPONSIBILITIES AND DUTIES
To fulfill its responsibilities and duties the Audit Committee shall:
A. Charter.
Review this Charter, annually, and recommend changes, if any, to the
Board.
B. Internal Controls.
1. Review, annually, with Fund management and the independent
auditors:
(a) the organizational structure, reporting relationship,
adequacy of resources and qualifications of the senior
----------
(6) If the Fund is listed on the New York Stock Exchange, at least one member of
the Audit Committee must have accounting or related financial management
expertise, as the Board interprets such qualification in its business
judgment.
A1-3
Fund management personnel responsible for accounting and
financial reporting; and
(b) their separate evaluation of the adequacy and effectiveness
of the Fund's system of internal controls, including those of
the Fund's service providers.
2. Review, with Fund management, the independent auditors and the
Adviser's internal audit department:
(a) the Adviser's internal audit department's internal audit
scope and plan related to the Fund's systems for accounting,
reporting and internal controls;
(b) the responsibilities, resources and staffing of the Adviser's
internal audit department with respect to the activities in
IV.B.2.(a) above; and
(c) any significant internal audit findings or recommendations
related to the Fund's systems for accounting, reporting and
internal controls and Fund management's response.
3. Establish procedures for the receipt, retention and treatment of
complaints received by the Fund and/or the Audit Committee
regarding accounting, internal accounting controls or auditing
matters and the confidential, anonymous submission by officers and
directors of the Fund or employees of the Adviser, principal
underwriter and any provider of accounting-related services to the
Fund of concerns regarding questionable accounting or auditing
matters.
4. Review, annually, with Fund management and the independent
auditors, policies for valuation of Fund portfolio securities, and
the frequency and magnitude of pricing errors.
C. Independent Auditors.
1. Approve, and recommend to the Board, the appointment, retention or
termination of the independent auditors, and approve the fees and
other compensation to be paid to the independent auditors. Such
selection shall be pursuant to a written engagement letter approved
by the Audit Committee, which shall provide that:
(a) the Audit Committee shall be directly responsible for the
appointment, compensation, retention and oversight (such
oversight shall include resolving disagreements between Fund
management and the independent
A1-4
auditors regarding financial reporting) of the independent
auditors; and
(b) the independent auditors shall report directly to the Audit
Committee.
2. Pre-approve any engagement of the independent auditors to provide
any services to the Fund, including the fees and other compensation
to be paid to the independent auditors. Notwithstanding the above,
the independent auditors shall not perform any of the following
non-audit services for the Fund (""prohibited non-audit services"):
(a) bookkeeping or other services related to the accounting
records or financial statements of the Fund;
(b) financial information systems design and implementation;
(c) appraisal or valuation services, fairness opinions, or
contribution-in-kind reports;
(d) actuarial services;
(e) internal audit outsourcing services;
(f) management functions or human resources;
(g) broker or dealer, investment adviser, or investment banking
services;
(h) legal services and expert services unrelated to the audit;
and
(i) any other services that the Public Company Accounting
Oversight Board determines are impermissible.
3. Pre-approve any engagement of the independent auditors, including
the fees and other compensation to be paid to the independent
auditors, to provide any non-audit services to the Adviser (or any
"control affiliate"(7) of the Adviser providing ongoing services to
the Fund), if the engagement relates directly to the operations and
financial reporting of the Fund.
- The Chairman of the Audit Committee (or, in his absence, any
member of the Audit Committee) may grant the pre-approval
referenced in Sections IV.C. 2 and 3 above for non-prohibited
services for engagements of less than $100,000.
----------
(7) "Control affiliate" means any entity controlling, controlled by, or under
common control with the Adviser.
A1-5
All such delegated pre-approvals shall be presented to the Audit
Committee no later than the next Audit Committee meeting.
- Pre-approval of non-audit services for the Fund pursuant to
Section IV.C. 2 above is not required, if:
(a) the aggregate amount of all non-audit services provided to
the Fund is less than 5% of the total fees paid by the Fund
to the independent auditors during the fiscal year in which
the non-audit services are provided; and
(b) the services were not recognized by Fund management at the
time of the engagement as non-audit services; and
(c) such services are promptly brought to the attention of the
Audit Committee by Fund management and the Audit Committee
approves them (which may be by delegation) prior to the
completion of the audit.
- Pre-approval of non-audit services for the Adviser (or any
affiliate of the Adviser providing ongoing services to the Fund)
pursuant to Section IV.C.3 above is not required, if:
(i) the aggregate amount of all non-audit services provided is
less than 5% of the total fees paid by the Fund, the Adviser
and any "control affiliate" of the Adviser providing ongoing
services to the Fund to the independent auditors during the
fiscal year in which the non-audit services are provided;
(ii) the services were not recognized by Fund management at the
time of the engagement as non-audit services; and
(iii) such services are promptly brought to the attention of the
Audit Committee by Fund management and the Audit Committee
approves them (which may be by delegation) prior to the
completion of the audit.
4. On an annual basis, request, receive in writing and review a report
by the independent auditors describing:
(a) the independent auditors' internal quality-control
procedures;
(b) any material issues raised by the most recent internal
quality-control review, or peer review, of the independent
auditors, or by any inquiry or investigations by governmental
or professional authorities, within the preceding five years,
respecting one or more
A1-6
independent audits carried out by the independent auditors,
and any steps taken to deal with any such issues; and
(c) all relationships between the independent auditors and the
Fund, so as to assess the auditors' independence, including
identification of all relationships the independent auditors
have with the Fund and all significant relationships the
independent auditors have with the Adviser (and any "control
affiliate" of the Adviser) and any material service provider
the Fund (including, but not limited to, disclosures
regarding the independent auditors' independence required by
Independence Standards Board Standard No. 1 and compliance
with the applicable independence provisions of Rule 2-01 of
Regulation S-X).
In assessing the auditors' independence, the Audit Committee shall take into
account the opinions of Fund management and the Adviser's internal audit
department. The Committee will present its conclusions with respect to the
independent auditors to the Board, and recommend that the Board take appropriate
action, if any, in response to the independent auditors' report to satisfy
itself of the independent auditors' independence.
5. On an annual basis, review and evaluate the lead audit partner
(such review to include consideration of whether, in addition to
the regular rotation of the lead audit partner as required by law,
in order to assure continuing auditor independence, there should be
regular consideration of rotation of the firm serving as
independent auditors).
6. On an annual basis, meet with the independent auditors and Fund
management to review the arrangements for and scope of the proposed
audit for the current year and the audit procedures to be utilized.
7. Review the management letter prepared by the independent auditors
and Fund management's response.
D. Financial Reporting Processes.
1. If the Fund is a listed closed-end investment company,
(a) review with Fund management and the independent auditors, the
Fund's audited financial statements and recommend to the
Board, if appropriate, that the audited financial statements
be included in the Fund's annual report to shareholders
required by Section 30(e) of the Investment Company Act of
1940 and Rule 30d-1 thereunder;
A1-7
(b) review with Fund management and the independent auditors the
Fund's semi-annual financial statements; and
(c) review the Fund's policy and procedures with respect to
declaring dividends and issuing dividend announcements and
related press releases, as well as financial information and
dividend guidance provided to analysts and rating agencies.
2. Review with Fund management and the independent auditors the
matters that auditing professional standards require to be
communicated to the Audit Committee, including, but not limited to,
the matters required to be discussed by Statement on Auditing
Standards No. 61, including:
- the independent auditors' judgments about the quality, and not
just the acceptability, of the Fund's accounting principles as
applied in its financial reporting;
- the process used by Fund management in formulating estimates and
the independent auditors' conclusions regarding the reasonableness
of those estimates;
- all significant adjustments arising from the audit, whether or not
recorded by the Fund;
- when the independent auditors are aware that Fund management has
consulted with other accountants about significant accounting and
auditing matters, the independent auditors' views about the
subject of the consultation;
- any disagreements with Fund management regarding accounting or
reporting matters;
- any difficulties encountered in the course of the audit, including
any restrictions on the scope of the independent auditors'
activities or on access to requested information; and
- significant deficiencies in the design or operation of internal
controls.
3. The independent auditors shall report, within 90 days prior to the
filing of the Fund's annual financial statements with the SEC, to
the Audit Committee:
(a) all critical accounting policies and practices to be used;
(b) all alternative treatments of financial information within
GAAP for policies and practices related to
A1-8
material items that have been discussed with Fund management,
the ramifications of the use of such alternative disclosures
and treatments, and the treatment preferred by the
independent auditor;
(c) other material written communications between the independent
auditors and Fund management including, but not limited to,
any management letter or schedule of unadjusted differences;
and
(d) all non-audit services provided to an entity in the
"investment company complex"(8) as defined in paragraph
(f)(14) of Rule 2-01 of Regulation S-X that were not pre-
approved by the Audit Committee.
4. Review, annually, with Fund management and the independent
auditors, the Fund's "disclosure controls and procedures"(9) and
the Fund's "internal control over financial reporting"(10) as
defined in Rule 30a-3(c) and (d) under the Investment Company Act
of 1940.
----------
(8) "Investment company complex" includes: (1) an investment company and its
investment adviser or sponsor; (2) any entity controlled by or controlling
an investment adviser or sponsor in (1) above, or any entity under common
control with any investment adviser or sponsor in (1) above if the entity:
(A) is an investment adviser or sponsor or (B) is engaged in the business of
providing administrative, custodian, underwriter, or transfer agent services
to any investment company, investment adviser, or sponsor; and (3) an
investment company or entity that would be an investment company but for the
exclusions provided by Section 3(c) of the 1940 Act that has an investment
adviser or sponsor included in (1) and (2) above. Investment adviser does
not include a subadviser whose role is primarily portfolio management and is
subcontracted with or overseen by another investment adviser. Sponsor is an
entity that establishes a unit investment trust.
(9) "Disclosure controls and procedures" means controls and other procedures of
a registered management investment company that are designed to ensure that
information required to be disclosed by the investment company on Form N-CSR
and Form N-Q is recorded, processed, summarized and reported, within the
time periods specified in the SEC's rules and forms. Disclosure controls and
procedures include, without limitation, controls and procedures designed to
ensure that information required to be disclosed by an investment company in
the reports that it files or submits on Form N-CSR and Form N-Q is
accumulated and communicated to the investment company's management,
including its principal executive officer or officers and principal
financial officer or officers, or person performing similar functions, as
appropriate to allow timely decisions regarding required disclosure.
(10) "Internal control over financial reporting" is a process designed by, or
under the supervision of, the Fund's principal executive and principal
financial officers, or persons performing similar functions, and effected
by the Fund's Board, management and other personnel, to provide reasonable
assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance
with GAAP and includes those policies and procedures that:
1. Pertain to the maintenance of records that in reasonable detail
accurately and fairly reflect the transactions and dispositions of the
assets of the Fund;
2. Provide reasonable assurance that transactions are recorded as necessary
to permit preparation of financial statements in accordance with GAAP,
and that receipts and expenditures of the Fund are being made only in
accordance with authorization of management and directors of the Fund;
and
A1-9
5. Review with Fund management and the independent auditors a report
by Fund management covering any Form N-CSR and Form N-Q filed, and
any required certification of such filing, along with the results
of Fund management's most recent evaluation of the Fund's
"disclosure controls and procedures" and "internal control over
financial reporting."
E. Process Improvements.
Review with the independent auditors and Fund management significant
changes or improvements in accounting and auditing processes that have
been implemented.
F. Legal and Compliance.
1. Review any legal or regulatory matters that arise that could have a
material impact on the Fund's financial statements.
2. Review policies and procedures with respect to financial statement
risk assessment and risk management, including the steps Fund
management has taken to monitor and control such risk
exposures.(11)
3. Establish clear hiring policies for the Fund with respect to
employees or former employees of the independent auditors.
G. Other Responsibilities.
1. Review, annually, the performance of the Audit Committee.
2. If the Fund is a listed closed-end investment company, prepare a
report of the Audit Committee as required to be included in the
annual proxy statement.(12)
3. Investigate any other matter brought to its attention within the
scope of its duties, and have the authority in its discretion
--------------------------------------------------------------------------------
3. Provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of the Fund's assets that
could have a material effect on the financial statements.
(11) The Board has delegated to other committees oversight related to investment
risks.
(12) Item 306 of Regulation S-K requires each proxy statement relating to a
shareholder meeting at which directors are to be elected to include a
report, followed by the name of each Audit Committee member, stating
whether: (1) the Committee has reviewed and discussed the audited financial
statements with management, (2) the Committee has discussed with the
independent auditors the matters required to be discussed by SAS 61, (3)
the Committee has received the written disclosures and the letter from the
independent auditors required by Independence Standards Board Standard No.
1, and has discussed with the independent auditors their independence, and
(4) based on the review and discussions referred to in paragraphs (1)
through (3), the Audit Committee recommended to the Board that the audited
financial statements be included in the Fund's annual report to
shareholders required by Section 30(e) of the Investment Company Act of
1940 and Rule 30d-1 thereunder.
A1-10
to retain legal, accounting or other experts or consultants to
advise the Audit Committee, at the expense of the Fund, if, in the
Committee's judgment, that is appropriate.
4. Perform any other activities consistent with this Charter, the
Fund's Charter, By-Laws and governing law, as the Audit Committee
or the Board deems necessary or appropriate.
5. Maintain minutes of Committee meetings; report its significant
activities to the Board; and make such recommendations to the Board
as the Audit Committee may deem necessary or appropriate.
V. FUNDING
The Audit Committee shall receive appropriate funding, as determined by the
Audit Committee, for payment of (i) compensation to the independent auditors for
approved audit or non-audit services for the Fund; (ii) compensation to any
legal, accounting or other experts or consultants retained by the Audit
Committee pursuant to Section IV.G.3 above and (iii) ordinary administrative
expenses of the Audit Committee that are necessary or appropriate in carrying
out its duties.
A1-11
APPENDIX 2
DWS FUNDS
(CHICAGO BOARD)
NOMINATING AND GOVERNANCE COMMITTEE CHARTER
AS AMENDED, FEBRUARY 17, 2006
I. PURPOSE
The Nominating and Governance Committee is a committee of the Board of the Fund.
Its primary function is to identify and recommend individuals for membership on
the Board and oversee the administration of the Board Governance and Procedures
Guidelines. It is also intended to serve as the Fund's "qualified legal
compliance committee" ("QLCC").
II. COMPOSITION
The Nominating and Governance Committee shall be comprised of three or more
board members(1) as determined by the Board, each of whom shall be an
independent board member, and free from any relationship that, in the opinion of
the Board, would interfere with the exercise of his or her independent judgment
as a member of the Nominating and Governance Committee. For purposes of the
Nominating and Governance Committee, a board member is independent if he or she
is not an "interested person" of the Fund as that term is defined in the
Investment Company Act of 1940. In addition, so long as the Nominating and
Governance Committee serves as the Fund's QLCC, at least one member of the
Nominating and Governance Committee shall also be a member of the Fund's Audit
Committee.
The members and Chairman of the Nominating and Governance Committee shall be
elected by the Board annually and serve until their successors shall be duly
elected and qualified.
III. MEETINGS
The Nominating and Governance Committee shall meet three times annually, or more
frequently as circumstances dictate. Special meetings (including telephone
meetings) may be called by the Chairman or a majority of the members of the
Nominating and Governance Committee upon reasonable notice to the other members
of the Nominating and Governance Committee.
----------
(1) To the extent the Fund is organized as a Massachusetts business trust, any
references to "directors" or "board members" shall be deemed to mean
"trustees."
A2-1
IV. RESPONSIBILITIES AND DUTIES
To fulfill its responsibilities and duties as the Nominating and Governance
Committee, the Committee shall:
A. Board Nominations and Functions.
1. Identify and recommend individuals for membership on the Board.
Candidates shall be selected based upon a thorough identification
and evaluation process that is designed to recruit and retain well-
qualified Board members who will enhance the Board's ability to
serve the interests of shareholders. In addition, the following
factors are taken into consideration:
(a) The Board collectively should represent a broad cross section
of backgrounds, functional disciplines and experience to
enable the Board to provide effective oversight of the Fund's
regulatory and business issues.
(b) Candidates should exhibit high standards of personal
integrity, commitment to representing shareholders and
independence of thought and judgment.
(c) Candidates should commit to dedicate sufficient time, energy
and attention to ensure the diligent performance of all
duties, including attendance at meetings of the Board and
committees on which the Board member serves and review in
advance of all meeting materials.
2. Evaluate candidates recommended for membership on the Board.
Recommendations for candidates may come from shareholders, from
other directors or from the Fund's investment manager. Shareholders
may recommend candidates for Board positions by forwarding their
correspondence by U.S. mail or courier service to the Fund's
Secretary for the attention of the Chairman of the Nominating and
Governance Committee. Suggestions for candidates must include a
resume of the candidate.
3. Retain any search firm to identify Board member candidates, at the
expense of the Fund, if, in the Committee's judgment, this is
appropriate.
4. Periodically review the composition of the Board to determine
whether it may be appropriate to add individuals with different
backgrounds or skill sets from those already on the Board.
A2-2
5. Review the Board Governance Procedures and Guidelines, annually,
and recommend changes, if any, to the Board.
6. Review annually Independent Director compensation, including
compensation deferral programs and Fund ownership criteria, and
recommend any appropriate changes to the Independent Directors as a
group.
7. Coordinate with legal counsel to the Independent Directors an
annual evaluation of the performance of the Board.
8. Oversee the development and implementation by the Fund's investment
manager and legal counsel for the Independent Directors of a
program for the orientation of new Independent Directors and
ongoing education for Independent Directors.
B. Committee Nominations and Functions.
1. Identify and recommend individuals for membership on all committees
and review committee assignments at least annually.
2. Review as necessary the responsibilities of any committees of the
Board, whether there is a continuing need for each committee,
whether there is a need for additional committees of the Board, and
whether committees should be combined or reorganized.
C. Insurance.
1. At least annually, review the Fund's fidelity bond for
appropriateness of the type and amount of coverage as well as the
premium. Review the terms of any joint allocation agreement.
2. At least annually, review the Fund's directors and officers and
errors and omissions insurance coverage for appropriateness of the
type and amount of coverage as well as the premium. Review the
terms of any joint allocation agreement.
3. At least annually, review other insurance policies and assess needs
for other types of coverage.
D. Proxy Voting.
1. At least annually, review the proxy voting policies and procedures.
2. Review quarterly reports regarding proxy voting conflicts.
A2-3
E. Compliance and Legal Matters.
1. Review compliance with the relevant codes of ethics and consider
any proposed changes to the codes of ethics.
2. Review Fund governance structure for compliance with legal
requirements.
3. Monitor the performance of legal counsel employed by the Fund and
the Independent Directors, and be responsible for the supervision
of counsel to the Independent Directors.
4. As needed, review Fund litigation matters.
V. QUALIFIED LEGAL COMPLIANCE COMMITTEE
The Nominating and Governance Committee shall serve as the Fund's QLCC within
the meaning of the rules of the Securities and Exchange Commission codified in
Part 205 in Title 17 of the Code of Federal Regulations. To fulfill its
responsibilities and duties as the QLCC, the Nominating and Governance Committee
shall:
A. Receipt, Retention and Consideration of Reports.
1. Adopt written procedures for the confidential receipt, retention
and consideration of any reports of evidence of a material
violation of any federal or state securities laws, a material
breach of a fiduciary duty arising under any federal or state laws
or a similar material violation of any federal or state law by the
Fund or any of its officers, trustees, employees or agents (a
"Report of Material Violation").
2. Consider, on a confidential basis, the appropriate treatment of a
Report of Material Violation.
B. Investigation of Reports of Material Violation.
1. Upon receipt of a Report of Material Violation, the Nominating and
Governance Committee shall:
(a) Inform the Fund's President of the report, unless the
Nominating and Governance Committee determines such
notification would be futile;
(b) Determine whether an investigation is necessary.
2. If after considering the Report of Material Violation, the
Nominating and Governance Committee determines an investigation is
necessary or appropriate, it shall:
(a) Notify the full Board of the Fund;
A2-4
(b) Initiate an investigation, which may be conducted by the
Nominating and Governance Committee, by counsel, by the
Fund's Chief Compliance Officer or by another party
authorized by the Nominating and Governance Committee; and
(c) Retain such additional experts or personnel as the Nominating
and Governance Committee deems necessary.
C. Making Recommendations for Adoption of Appropriate Response.
At the conclusion of any such investigation, the Nominating and
Governance Committee shall:
1. Recommend that the Fund implement an appropriate response to
evidence of a material violation, which may include:
(a) A finding that no material violation has occurred, is ongoing
or is about to occur;
(b) The adoption of appropriate remedial measures, including
appropriate steps or sanctions to stop any material
violations that are ongoing, to prevent any material
violation that has yet to occur and to remedy or otherwise
appropriately address any material violation that has already
occurred and to minimize the likelihood of its recurrence; or
(c) A report, after the retention or direction of counsel to
review the reported evidence of a material violation, that
either (i) the Fund has substantially implemented any
remedial recommendations made by such counsel after a
reasonable investigation and evaluation of the reported
evidence or (ii) the Fund may, consistent with a conclusion
not in conflict with such counsel's professional obligations,
assert a colorable defense on behalf of the Fund, its
officers, directors, employees or agents, in an investigation
or judicial or administrative proceeding relating to the
reported evidence of a material violation.
2. Inform the President and the Board of the Fund of the results of
any such investigation and the appropriate remedial measures to be
adopted.
A2-5
D. Authority to Notify the SEC.
The Nominating and Governance Committee shall take all other action
that it deems appropriate, including notifying the Securities and
Exchange Commission, in the event that the Fund fails in any material
respect to implement an appropriate response that the Nominating and
Governance Committee, as the QLCC, has recommended the Fund take.
E. Reporting to the Board of the Fund.
The Nominating and Governance Committee shall report periodically to
the Board. This report will include a review of the Reports of
Material Violation received, the investigation conducted, conclusions
reached and responses recommended by the Nominating and Governance
Committee acting as the QLCC and other matters that the Nominating and
Governance Committee acting as the QLCC deems appropriate or as
requested by the Board of the Fund.
F. Procedures.
The Nominating and Governance Committee acting as the QLCC may act
only by majority vote.
VI. OTHER POWERS AND RESPONSIBILITIES
A. Review this Charter, annually, and recommend changes, if any, to the
Board.
B. Investigate any other matter brought to its attention within the scope
of its duties, with the power to retain outside counsel or other experts
for this purpose at the expense of the Fund, if, in its judgment, that
is appropriate.
C. Perform any other activities consistent with this Charter, the Fund's
Charter, By-Laws and governing law, as the Nominating and Governance
Committee or the Board deems necessary or appropriate.
D. Maintain minutes of Committee meetings, report its significant
activities to the Board, and make such recommendations to the Board as
the Nominating and Governance Committee deems necessary or appropriate.
A2-6
PROXY
TO VOTE BY MAIL, PLEASE DETACH PROXY CARD HERE
--------------------------------------------------------------------------------
DWS MUNICIPAL INCOME TRUST--PREFERRED SHARES
FOR THE JOINT ANNUAL MEETING OF SHAREHOLDERS
MAY 24, 2007
The signer(s) of this proxy hereby appoint Philip J. Collora, Patricia
DeFilippis, John Millette and Caroline Pearson, and each of them, attorneys and
proxies, with power of substitution in each, to vote all shares for the
signer(s) at the Joint Annual Meeting of Shareholders to be held at the offices
of Deutsche Investment Management Americas Inc., Two International Place,
Boston, Massachusetts 02110 on May 24, 2007, at 3:00 p.m. Eastern time and at
any adjournments or postponements thereof, as specified herein and on any
matters incident to the conduct of this meeting or any other business that may
properly come before this meeting. I hereby revoke any and all proxies with
respect to such shares previously given by me. I acknowledge receipt of the
Proxy Statement relating to the Joint Annual Meeting.
This instruction may be revoked at any time prior to its exercise at the Joint
Annual Meeting by execution of a subsequent proxy card, by written notice to the
Fund's secretary or by voting in person at the Joint Annual Meeting.
YOUR VOTE IS NEEDED! PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE. NO POSTAGE REQUIRED.
PLEASE BE SURE TO SIGN AND DATE THIS PROXY ON THE REVERSE SIDE.
(CONTINUED, AND TO BE SIGNED, ON THE REVERSE SIDE.)
TO VOTE BY MAIL, PLEASE DETACH PROXY CARD HERE
--------------------------------------------------------------------------------
[X] PLEASE MARK
VOTES AS IN
THIS EXAMPLE.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES. THE PROPOSAL HAS
BEEN PROPOSED BY THE FUND. THE BOARD OF TRUSTEES RECOMMENDS A VOTE "FOR" THE
ELECTION OF THE TRUSTEES.
VOTE ON THE PROPOSAL:
1. To elect nine Trustees to the Board of the Fund: WITHHOLD FOR ALL
01) John W. Ballantine, 02) Donald L. Dunaway, FOR ALL ALL EXCEPT
03) James R. Edgar, 04) Paul K. Freeman, [ ] [ ] [ ]
05) Robert B. Hoffman, 06) William McClayton,
07) Shirley D. Peterson, 08) Axel Schwarzer,
09) Robert H. Wadsworth
TO WITHHOLD AUTHORITY TO VOTE
FOR ANY INDIVIDUAL NOMINEE, MARK
THE "FOR ALL EXCEPT" BOX AND
WRITE THE NOMINEE'S NUMBER ON
THE LINE PROVIDED BELOW.
_________________________________
ALL PROPERLY EXECUTED PROXIES WILL BE
VOTED AS DIRECTED. IF NO INSTRUCTIONS
ARE INDICATED ON A PROPERLY EXECUTED
PROXY, THE PROXY WILL BE VOTED AS
RECOMMENDED BY THE BOARD OF TRUSTEES.
Date_____________________________, 2007
_______________________________________
Signature
_______________________________________
Signature (if held jointly)
Note: All registered owners of accounts
shown above must sign. Please sign
exactly as your name appears on this
Proxy. If signing for a corporation,
estate or trust, please indicate your
capacity or title.
PROXY
TO VOTE BY MAIL, PLEASE DETACH PROXY CARD HERE
--------------------------------------------------------------------------------
DWS MUNICIPAL INCOME TRUST--COMMON SHARES
FOR THE JOINT ANNUAL MEETING OF SHAREHOLDERS
MAY 24, 2007
The signer(s) of this proxy hereby appoint Philip J. Collora, Patricia
DeFilippis, John Millette and Caroline Pearson, and each of them, attorneys and
proxies, with power of substitution in each, to vote all shares for the
signer(s) at the Joint Annual Meeting of Shareholders to be held at the offices
of Deutsche Investment Management Americas Inc., Two International Place,
Boston, Massachusetts 02110 on May 24, 2007, at 3:00 p.m. Eastern time and at
any adjournments or postponements thereof, as specified herein and on any
matters incident to the conduct of this meeting or any other business that may
properly come before this meeting. I hereby revoke any and all proxies with
respect to such shares previously given by me. I acknowledge receipt of the
Proxy Statement relating to the Joint Annual Meeting.
This instruction may be revoked at any time prior to its exercise at the Joint
Annual Meeting by execution of a subsequent proxy card, by written notice to the
Fund's secretary or by voting in person at the Joint Annual Meeting.
YOUR VOTE IS NEEDED! IF NOT VOTING ELECTRONICALLY, PLEASE SIGN, DATE AND RETURN
PROMPTLY IN THE ENCLOSED ENVELOPE. NO POSTAGE REQUIRED.
PLEASE BE SURE TO SIGN AND DATE THIS PROXY ON THE REVERSE SIDE.
TO VOTE BY TOUCH-TONE PHONE OR INTERNET, SEE INSTRUCTIONS ON REVERSE SIDE.
(CONTINUED, AND TO BE SIGNED, ON THE REVERSE SIDE.)
DWS MUNICIPAL INCOME TRUST--COMMON SHARES OFFERS SHAREHOLDERS OF RECORD
THREE WAYS TO SUBMIT YOUR PROXY
TELEPHONE PROXY INTERNET PROXY PROXY BY MAIL
This method of submitting Visit the Internet voting Simply sign and date your
a proxy is available for Web site at proxy card and return it
residents of the U.S., http://proxy.georgeson.com. in the postage-paid
Puerto Rico and Canada. Have this proxy card envelope to Georgeson
On a touch tone ready and follow the Inc., Wall Street
telephone, call TOLL FREE instructions on your Station, P.O. Box 1102,
1-800-786-8302, 24 hours screen. You will incur New York, NY 10269-0646.
a day, 7 days a week. only your usual Internet If you are submitting
Have this proxy card charges. Available 24 your proxy by telephone
ready, then follow the hours a day, 7 days a or the Internet, please
prerecorded instructions. week until 5:00 p.m. do not mail your proxy
Your vote will be Eastern Time on May 23, card.
confirmed and cast as you 2007.
have directed. Available
24 hours a day, 7 days a
week until 5:00 p.m.
Eastern Time on May 23,
2007.
_______________________
| |
|_______________________|
TO VOTE BY MAIL, PLEASE DETACH PROXY CARD HERE
--------------------------------------------------------------------------------
[X] PLEASE MARK
VOTES AS IN
THIS EXAMPLE.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES. THE PROPOSAL HAS
BEEN PROPOSED BY THE FUND. THE BOARD OF TRUSTEES RECOMMENDS A VOTE "FOR" THE
ELECTION OF THE TRUSTEES.
VOTE ON THE PROPOSAL:
1. To elect seven Trustees to the Board of the Fund: WITHHOLD FOR ALL
01) John W. Ballantine, 02) Donald L. Dunaway, FOR ALL ALL EXCEPT
03) James R. Edgar, 04) Paul K. Freeman, [ ] [ ] [ ]
05) Robert B. Hoffman, 06) William McClayton,
07) Shirley D. Peterson,
TO WITHHOLD AUTHORITY TO VOTE
FOR ANY INDIVIDUAL NOMINEE, MARK
THE "FOR ALL EXCEPT" BOX AND
WRITE THE NOMINEE'S NUMBER ON
THE LINE PROVIDED BELOW.
_________________________________
ALL PROPERLY EXECUTED PROXIES WILL BE
VOTED AS DIRECTED. IF NO INSTRUCTIONS
ARE INDICATED ON A PROPERLY EXECUTED
PROXY, THE PROXY WILL BE VOTED AS
RECOMMENDED BY THE BOARD OF TRUSTEES.
Date_____________________________, 2007
_______________________________________
Signature
_______________________________________
Signature (if held jointly)
Note: All registered owners of accounts
shown above must sign. Please sign
exactly as your name appears on this
Proxy. If signing for a corporation,
estate or trust, please indicate your
capacity or title.