<PAGE>
DEAN WITTER TAX-EXEMPT SECURITIES TRUST Two World Trade Center, New York, New
York 10048
LETTER TO THE SHAREHOLDERS December 31, 1997
DEAR SHAREHOLDER:
We are pleased to present the annual report on the operations of
Dean Witter Tax-Exempt Securities Trust for the year ended December 31, 1997.
As 1997 drew to a close the securities markets were dominated by the Asian
financial crisis and its potential impact on the U.S. economy. Foreign
currency turmoil strengthened the value of the U.S. dollar and created a
"flight to quality" demand for Treasuries. Long-term interest rates fell to
yields last seen more than 20 years ago. Domestic employment conditions
improved throughout the year and the unemployment rate reached its lowest
level since 1973. Inflation remained in check despite the economy's strength.
The bond market rally was also aided by prospects of the first federal budget
surplus in more than two decades.
Municipal Market Data
Boston, MA
617.856.2900
Samantha Peterson
July 7, 1997
[THE NARRATIVE AND/OR TABULAR INFORMATION BELOW IS A FAIR AND ACCURATE
DESCRIPTION OF GRAPHIC OR IMAGE MATERIAL OMITTED FOR THE PURPOSE OF EDGAR
FILING.]
BOND YIELDS 1994-1997
MMD 30 Year AAA Insured and Treasury Yields:
Monthly from 12/93 - Present
Date AAA Ins Tay % Relationship
---- ------- --- --------------
12/31/93 5.40 6.34 85.17%
1/31/94 5.40 6.24 86.54%
2/28/94 5.80 6.66 87.09%
3/31/94 6.40 7.09 90.27%
4/29/94 6.35 7.32 86.75%
5/31/94 6.25 7.43 84.12%
6/30/94 6.50 7.61 85.41%
7/29/94 6.25 7.39 84.57%
8/31/94 6.30 7.45 84.56%
9/30/94 6.55 7.81 83.87%
10/31/94 6.75 7.96 84.80%
11/30/94 7.00 8.00 87.50%
12/30/94 6.75 7.88 85.66%
1/31/95 6.40 7.70 83.12%
2/28/95 6.15 7.44 82.66%
3/31/95 6.15 7.43 82.77%
4/28/95 6.20 7.34 84.47%
5/31/95 5.80 6.66 87.09%
6/30/95 6.10 6.62 92.15%
7/31/95 6.10 6.86 88.92%
8/31/95 6.00 6.66 90.09%
9/29/95 5.95 6.48 91.82%
10/31/95 5.75 6.33 90.84%
11/30/95 5.50 6.14 89.58%
12/29/95 5.35 5.94 90.07%
1/31/96 5.40 6.03 89.55%
2/29/96 5.60 6.46 86.69%
3/29/96 5.85 6.66 87.84%
4/30/96 5.95 6.89 86.36%
5/31/96 6.05 6.99 86.55%
6/28/96 5.90 6.89 85.63%
7/31/96 5.85 6.97 83.93%
8/30/96 5.90 7.11 82.98%
9/30/96 5.70 6.93 82.25%
10/31/96 5.65 6.64 85.09%
11/29/96 5.60 6.35 86.61%
12/31/96 5.60 6.63 84.46%
1/31/97 5.70 6.79 83.95%
2/28/97 5.65 6.80 83.09%
3/31/97 5.90 7.10 83.10%
4/30/97 5.75 6.94 82.85%
5/30/97 5.65 6.91 81.77%
6/30/97 5.60 6.78 82.60%
7/30/97 5.30 6.30 84.00%
8/31/97 5.50 6.61 83.00%
9/30/97 5.40 6.40 84.40%
10/31/97 5.35 6.15 86.90%
11/30/97 5.30 6.05 87.60%
12/31/97 5.15 5.92 86.90%
<PAGE>
DEAN WITTER TAX-EXEMPT SECURITIES TRUST
LETTER TO THE SHAREHOLDERS, December 31, 1997, continued
MUNICIPAL MARKET CONDITIONS
The long-term insured revenue index began 1997 yielding 5.60 percent.
Municipal yields rose in the first quarter but subsequently declined in a
sustained rally. The Fed tightened monetary policy in March in a preemptive
move against a possible increase in inflation. Index yields moved as high as
5.90 percent. However, inflation remained benign and the Asian financial
crisis drove municipal yields as low as 5.15 percent by year end.
As usually happens when interest rates change rapidly, the municipal rally
lagged the rally in Treasuries. The ratio of municipal yields to Treasury
yields improved from an historically rich 83 percent of Treasuries in March
to a more attractive 87 percent in December. A rising ratio means that
municipals have underperformed Treasuries and have become relatively more
attractive.
Total municipal volume increased 20 percent in 1997. New-issue supply reached
$220 billion, with half the underwritings enhanced by bond insurance. Much of
this growth came from refunding issues sold in the second half of the year.
Overall, refundings represented one-quarter of total new issues.
PERFORMANCE
On July 28, 1997, Dean Witter Tax-Exempt Securities Trust began offering four
classes of shares: A, B, C and D -each with its own sales charge and
distribution fee structure. Existing shares of the Fund were designated Class
D shares. The Fund's Class D performance has been restated to reflect the
absence of any sales charge. Because the distribution arrangement for Class A
most closely resembles the distribution arrangement prior to the
implementation of multiple classes (i.e., Class A is sold with a front-end
sales charge), and because of the high eligibility requirement of Class D,
historical performance information for Class A has been restated to reflect
the maximum sales charge applicable to Class A (4.25 percent) and the effect
of Class A's 12b-1 fee (0.25 percent). A revised prospectus, which includes
complete details regarding the Fund's conversion to multiple classes of
shares, was mailed to shareholders in mid-summer.
For the year ended December 31, 1997, the Fund's Class D shares registered a
total return of 8.73 percent. For the same period, the Fund's Class A shares
registered a total return of 8.47 percent (without reduction of the Class A
front-end sales charge). The Fund's performance for the year compares to total
returns of 9.19 percent for the Lehman Brothers Municipal Bond Index and
9.03 percent for the Lipper Analytical Services, Inc. General Municipal Debt
Funds Index.
<PAGE>
DEAN WITTER TAX-EXEMPT SECURITIES TRUST
LETTER TO THE SHAREHOLDERS, December 31, 1997, continued
The accompanying charts illustrate the growth of a $10,000 investment in the
Fund's Class A and Class D shares for the 10 years ended December 31, 1997,
versus similar hypothetical investments in the issues that comprise the Lehman
Brothers Municipal Bond Index and the funds that comprise the Lipper General
Municipal Debt Funds Index.
[THE NARRATIVE AND/OR TABULAR INFORMATION BELOW IS A FAIR AND ACCURATE
DESCRIPTION OF GRAPHIC OR IMAGE MATERIAL OMITTED FOR THE PURPOSE OF EDGAR
FILING.]
GROWTH OF $10,000 - CLASS A SHARES
($ IN THOUSANDS)
Lehman Lipper Gen.
Date Total Muni Bond IX(4) Muni Debt IX (5)
--------- --------- ---------------- ----------------
DECEMBER 31, 1987 $9,575 $10,000 $10,000
DECEMBER 31, 1988 $10,795 $11,016 $11,166
DECEMBER 31, 1989 $11,910 $12,205 $12,278
DECEMBER 31, 1990 $12,576 $13,094 $13,015
DECEMBER 31, 1991 $14,139 $14,684 $14,582
DECEMBER 31, 1992 $15,386 $15,979 $15,880
DECEMBER 31, 1993 $17,072 $17,941 $17,853
DECEMBER 31, 1994 $16,084 $17,014 $16,775
DECEMBER 31, 1995 $18,831 $19,984 $19,679
DECEMBER 31, 1996 $19,462 $20,870 $20,328
DECEMBER 31, 1997 $21,111 (3) $22,788 $22,164
AVERAGE ANNUAL TOTAL RETURNS
1 YEAR 5 YEARS 10 YEARS
---------- ----------- ------------
8.47 (1) 6.53 (1) 8.23 (1)
3.86 (2) 5.61 (2) 7.76 (2)
Past performance is not predictive of future returns
Prior to July 28, 1997 the fund offered only one class of shares. Because the
distribution arrangement for Class A most closely resembled the distribution
arrangement applicable prior to the implementation of multiple classes (i.e.,
Class A is sold with a front-end sales charge), historical performance
information has been restated to reflect the actual maximum sales charge
applicable to Class A (i.e., 4.25%) as compared to the 4.0% sales charge in
effect prior to July 28, 1997. In addition, Class A shares are now subject to
an ongoing 12b-1 fee which is reflected in the restated performance for that
class.
(1) Figure shown assumes reinvestment of all distributions and does not reflect
the deduction of any sales charges.
(2) Figure shown assumes reinvestment of all distributions and the deduction
of the maximum applicable front-end sales charge (4.25%). See the Fund's
current prospectus for complete details on fees and sales charges.
(3) Closing value assuming a complete redemption on December 31, 1997.
(4) The Lehman Brothers Municipal Bond Index tracks the performance of
municipal bonds with maturities of 2 years or more and a minimum credit rating
of Baa or BBB, as measured by Moody's Investors Service, Inc. or Standard &
Poor's Corp. The index does not include any expenses, fees, or charges. The
Index is unmanaged and should not be considered an investment.
(5) The Lipper General Municipal Debt Funds Index is an equally-weighted
performance index of the largest qualifying funds (based on net assets) in the
Lipper General Municipal Debt Funds objective. The Index, which is adjusted for
capital gains distributions and income dividends, is unmanaged and should not
be considered an investment. There are currently 30 funds represented in this
Index.
<PAGE>
[THE NARRATIVE AND/OR TABULAR INFORMATION BELOW IS A FAIR AND ACCURATE
DESCRIPTION OF GRAPHIC OR IMAGE MATERIAL OMITTED FOR THE PURPOSE OF EDGAR
FILING.]
GROWTH OF $10,000 - CLASS D SHARES
Lehman Lipper Gen.
Date Total Muni Bond IX (3) Muni Debt IX (4)
---------- --------- ---------------- ----------------
DECEMBER 31, 1987 $10,000 $10,000 $10,000
DECEMBER 31, 1988 $11,302 $11,016 $11,166
DECEMBER 31, 1989 $12,501 $12,205 $12,278
DECEMBER 31, 1990 $13,233 $13,094 $13,015
DECEMBER 31, 1991 $14,914 $14,684 $14,582
DECEMBER 31, 1992 $16,270 $15,979 $15,880
DECEMBER 31, 1993 $18,097 $17,941 $17,853
DECEMBER 31, 1994 $17,092 $17,014 $16,775
DECEMBER 31, 1995 $20,061 $19,984 $19,679
DECEMBER 31, 1996 $20,786 $20,870 $20,328
DECEMBER 31, 1997 $22,600 (2) $22,788 $22,164
AVERAGE ANNUAL TOTAL RETURNS
1 YEAR 5 YEARS 10 YEARS
---------- ----------- ------------
8.73 (1) 6.79 (1) 8.50 (1)
Past performance is not predictive of future returns
Prior to July 28, 1997 the fund offered only one class of shares. Because all
shares of the Fund held prior to July 28, 1997 were designated Class D shares,
the Fund's historical performance had been restated to reflect the absence of
any sales charge in the case of Class D shares.
(1) Figure shown assumes reinvestment of all distributions. There is no sales
charge.
(2) Closing value assuming a complete redemption on December 31, 1997.
(3) The Lehman Brothers Municipal Bond Index tracks the performance of
municipal bonds with maturities of 2 years or more and a minimum credit rating
of Baa or BBB, as measured by Moody's Investors Service, Inc. or Standard &
Poor's Corp. The index does not include any expenses, fees, or charges. The
Index is unmanaged and should not be considered an investment.
(4) The Lipper General Municipal Debt Funds Index is an equally-weighted
performance index of the largest qualifying funds (based on net assets) in the
Lipper General Municipal Debt Funds objective. The Index, which is adjusted for
capital gains distributions and income dividends, is unmanaged and should not
be considered an investment. There are currently 30 funds represented in this
Index.
<PAGE>
DEAN WITTER TAX-EXEMPT SECURITIES TRUST
LETTER TO THE SHAREHOLDERS, December 31, 1997, continued
[THE NARRATIVE AND/OR TABULAR INFORMATION BELOW IS A FAIR AND ACCURATE
DESCRIPTION OF GRAPHIC OR IMAGE MATERIAL OMITTED FOR THE PURPOSE OF EDGAR
FILING.]
LARGEST SECTORS AS OF DECEMBER 31, 1997
(% OF NET ASSETS)
Transportation
15%
General Obligation
13%
Electric
11%
Refunded
11%
Water & Sewer
11%
Mortgage
9%
Hospital
8%
IDR/PCR*
7%
All Others
15%
Portfolio structure is subject to change.
* Industrial Development/Pollution Control Revenue
CREDIT RATINGS AS OF DECEMBER 31, 1997
(% OF TOTAL LONG-TERM PORTFOLIO)
AAA or Aaa
59%
AA or Aa
17%
A or A
14%
BBB or Baa
6%
Ba or BB
2%
NR
2%
As measured by Moody's Investor Services, Inc. or
Standard & Poor's Corp.
Portfolio structure is subject to change.
<PAGE>
CALL STRUCTURE as of December 31, 1997
(% of Total Long-Term Portfolio) Weighted Average
Call Protection: 7 Years
Year Callable Percent Callable
- ------------- ----------------
1998 7%
1999 5%
2000 3%
2001 9%
2002 8%
2003 11%
2004 7%
2005 12%
2006 9%
2007 12%
2008+ 17%
<PAGE>
DEAN WITTER TAX-EXEMPT SECURITIES TRUST
LETTER TO THE SHAREHOLDERS, December 31, 1997, continued
PORTFOLIO STRUCTURE
In anticipation of tightening moves by the Federal Reserve Board, the Fund
increased its cash position, sold market-sensitive issues and retained
refunded bonds during the first half of 1997. These defensive actions reduced
the Fund's volatility. By the end of the summer the Fund began to draw down
cash and extend maturity by purchasing new issues and selling refunded bonds
as market conditions improved.
At the end of 1997 the portfolio's average maturity was 18 years. The
distribution of bond call dates (illustrated in the accompanying chart)
produced an average call protection of 7 years. The Fund's net assets of
$1,199 million were diversified among 13 long-term sectors and 142 credits.
Credit quality remained a major focus with over 75 percent of long-term
holdings rated double or triple "A."
LOOKING AHEAD
The economic fundamentals are in place for another year of solid but less
spectacular domestic growth in 1998. Events in the Far East have strengthened
the U.S. dollar and led to lower interest rates. The Asian financial crisis
seems likely to slow U.S. growth and moderate inflationary pressures in the
economy.
We appreciate your ongoing support of Dean Witter Tax-Exempt Securities Trust
and look forward to continuing to serve your investment needs.
Very truly yours,
/s/ Charles A. Fiumefreddo
CHARLES A. FIUMEFREDDO
Chairman of the Board
<PAGE>
DEAN WITTER TAX-EXEMPT SECURITIES TRUST
PORTFOLIO OF INVESTMENTS December 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
TAX-EXEMPT MUNICIPAL BONDS (97.5%)
General Obligation (13.4%)
North Slope Borough, Alaska,
$ 5,000 Ser 1992 A Conv (MBIA) ......................................... 5.90 % 06/30/03 $5,403,400
18,000 Ser 1994 B (FSA) .............................................. 0.00 06/30/05 12,741,660
18,500 Ser 1995 A (MBIA) .............................................. 0.00 06/30/06 12,506,000
10,000 Ser 1996 B (MBIA) .............................................. 0.00 06/30/07 6,396,100
13,925 Ser 1996 B (MBIA) .............................................. 0.00 06/30/06 9,374,310
1,000 Santa Margarita/Dana Point Authority, California,
Impr Dists #3, 3A, 4 & 4A 1994 Ser B Refg (MBIA) ............... 5.75 08/01/20 1,047,510
4,000 Connecticut, College Savings 1989 Ser A ......................... 0.00 07/01/08 2,458,440
1,000 Atlanta, Georgia, Public Impr Ser 1994 A ........................ 6.125 12/01/23 1,090,940
2,000 Chicago, Illinois, Refg Ser 1995 B (FGIC) ....................... 5.125 01/01/25 1,966,960
1,000 Chicago Park District, Illinois, Ser 1995 ...................... 6.60 11/15/14 1,122,030
1,000 Chelsea, Massachusetts, School Act of 1948 (AMBAC) .............. 6.50 06/15/12 1,105,760
Massachusetts,
20,000 Refg 1996 Ser A (AMBAC) ........................................ 6.00 11/01/10 22,689,800
8,000 Refg 1993 Ser A ................................................ 5.50 02/01/11 8,259,840
4,000 Clark County, Nevada, Transportation Ser 1992 A (AMBAC) ......... 6.50 06/01/17 4,745,920
New York City, New York,
1,500 1995 Ser D (MBIA) .............................................. 6.20 02/01/07 1,679,910
10,000 1990 Ser D ..................................................... 6.00 08/01/08 10,204,800
15,000 North Carolina, 1997 Ser A ..................................... 5.20 03/01/16 15,486,750
1,000 Delaware City School District, Ohio, Constr & Impr (FGIC) ...... 5.75 12/01/20 1,049,710
10,000 Pennsylvania, First Ser 1995 (FGIC) ............................. 5.50 05/01/12 10,544,500
7,000 Shelby County, Tennessee, Refg 1995 Ser A ....................... 5.625 04/01/14 7,383,180
20,000 King County, Washington, Ltd Tax 1995 (MBIA) ................... 6.00 01/01/23 21,500,600
2,000 Washington, 1995 Ser A ......................................... 5.80 09/01/08 2,148,660
- ------- -----------
173,925 160,906,780
- ------- -----------
Educational Facilities Revenue (6.1%)
1,000 California Educational Facilities Authority, Claremont Colleges
Ser 1992 ....................................................... 6.375 05/01/22 1,065,410
500 Atlanta Urban Residential Finance Authority, Georgia, Morehouse
College Refg Ser 1995 (MBIA) .................................. 5.75 12/01/14 537,560
10,000 Indiana University, Student Fee Ser K (MBIA) .................... 5.875 08/01/20 10,659,300
6,000 Maryland Health & Higher Educational Facilities Authority, The
John Hopkins University Refg Ser 1998 (WI) ..................... 5.125 07/01/20 5,959,920
7,000 Massachusetts Health & Educational Facilities Authority, Boston
University Ser 1991 (MBIA) .................................... 6.66 10/01/31 7,653,240
15,000 New Hampshire Higher Educational & Health Facilities Authority,
Dartmouth College Ser 1993 .................................... 5.375 06/01/23 15,094,950
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER TAX-EXEMPT SECURITIES TRUST
PORTFOLIO OF INVESTMENTS December 31, 1997, continued
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- -----------------------------------------------------------------------------------------------------------------
$ 2,000 New Jersey Development Authority, The Seeing Eye Inc 1991 ....... 7.30 % 04/01/11 $2,135,960
2,000 New Jersey Economic Development Authority, Educational Testing
Service Ser B 1995 (MBIA) ...................................... 6.125 05/15/15 2,200,560
New York State Dormitory Authority,
500 City University 1994 3rd Resolution Ser 1 (AMBAC) .............. 6.30 07/01/24 556,225
500 Cooper Union Ser 1996 (AMBAC) .................................. 5.375 07/01/20 506,610
5,000 State University Ser 1989 B .................................... 0.00 05/15/02 4,137,150
20,000 State University Ser 1990 B .................................... 7.00 05/15/16 21,551,600
1,000 Virginia Polytechnic Institute & State University, Ser 1996 A ... 5.50 06/01/16 1,038,110
- ------- ----------
70,500 73,096,595
- ------- ----------
Electric Revenue (11.0%)
25,000 Salt River Project Agricultural Improvement & Power District,
Arizona, Refg 1993 Ser C (Secondary MBIA)** .................... 5.50 01/01/10 27,129,500
10,000 Sacramento Municipal Utility District, California, Refg 1994 Ser
I (MBIA) ....................................................... 5.75 01/01/15 10,625,000
10,000 Municipal Electric Authority of Georgia, Ser Y (Secondary MBIA) 6.50 01/01/17 11,846,600
5,000 New York State Power Authority, General Purpose Ser CC .......... 5.25 01/01/18 4,993,850
Eugene, Oregon, Electric Utility
1,195 Ser 1996 (FSA) ................................................. 5.375 08/01/11 1,244,867
1,260 Ser 1996 (FSA) ................................................. 5.375 08/01/12 1,305,398
1,000 Ser 1996 (FSA) ................................................. 5.375 08/01/13 1,031,780
Puerto Rico Electric Power Authority,
15,000 Power Ser O ................................................... 0.00 07/01/17 5,523,000
1,500 Power Ser X ................................................... 6.00 07/01/15 1,615,875
15,000 South Carolina Public Service Authority, 1995 Refg Ser A
(AMBAC) ........................................................ 6.25 01/01/22 16,593,900
1,000 Austin, Texas, Combined Utilities Refg Ser 1994 (FGIC) .......... 6.25 05/15/16 1,103,360
20,000 San Antonio, Texas, Electric & Gas Refg Ser 1994 C .............. 4.70 02/01/06 19,946,200
Intermountain Power Agency, Utah,
2,000 Refg 1996 Ser D (Secondary FSA) ............................... 5.00 07/01/21 1,956,720
10,000 Refg 1997 Ser B (MBIA) ........................................ 5.75 07/01/19 10,605,000
15,000 Washington Public Power Systems, Proj #2 Refg Ser 1994 A
(Secondary MBIA) .............................................. 6.00 07/01/07 16,644,300
- ------- -----------
132,955 132,165,350
- ------- -----------
Hospital Revenue (8.0%)
11,465 Birmingham - Carraway Special Care Facilities Financing
Authority, Alabama, Carraway Methodist Ser 1995 A (Connie Lee) . 6.25 08/15/09 13,041,667
3,000 Baxter County, Arkansas, Baxter County Regional Hospital Impr &
Refg Ser 1992 .................................................. 7.50 09/01/21 3,319,020
5,270 Antelope Valley Healthcare District, California, Ser 1997 B
(FSA) ......................................................... 5.20 01/01/17 5,275,586
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER TAX-EXEMPT SECURITIES TRUST
PORTFOLIO OF INVESTMENTS December 31, 1997, continued
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- -----------------------------------------------------------------------------------------------------------------
$ 2,000 Orange County Health Facilities Authority, Florida, Adventist
Health/
Sunbelt Ser 1995 (AMBAC) ....................................... 5.25 % 11/15/20 $1,999,880
8,545 Illinois Health Facilities Authority, Rockford Memorial Hospital
1991 Ser B (AMBAC) ............................................ 6.75 08/15/18 9,434,876
Maryland Health & Higher Educational Facilities Authority,
6,000 Helix Health Ser 1997 (AMBAC) ................................. 5.00 07/01/27 5,873,160
1,000 Kernan Hospital Ser 1994 (Connie Lee) .......................... 6.10 07/01/24 1,087,140
5,000 Massachusetts Health & Educational Facilities Authority,
Hallmark Health System 1997 Ser A (FSA)(WI) ................... 5.00 07/01/27 4,850,000
Rochester, Minnesota,
5,000 Mayo Foundation/Medical Center Ser 1992 I ...................... 5.75 11/15/21 5,151,050
3,700 Mayo Foundation/Medical Center Ser 1992 F ...................... 6.25 11/15/21 4,012,687
10,000 Missouri Health & Educational Facilities Authority,
Barnes-Jewish Inc/ Christian Health Services Ser 1993 A ....... 5.25 05/15/14 10,299,200
1,300 New Hampshire Higher Educational & Health Facilities Authority,
St Joseph Hospital Ser 1994 (Connie Lee) ....................... 6.35 01/01/07 1,454,492
6,000 New York State Medical Care Facilities Finance Agency,
Presbyterian Hospital - FHA Insured Mtge 1984 Ser A Refg ...... 5.25 08/15/14 6,084,360
University of North Carolina,
2,000 Hospitals at Chapel Hill Ser 1996 .............................. 5.25 02/15/19 2,004,540
5,000 Hospitals at Chapel Hill Ser 1996 .............................. 5.00 02/15/29 4,809,050
2,000 Jackson, Tennessee, Jackson-Madison County General Hospital
Refg & Impr Ser 1995 (AMBAC) .................................. 5.625 04/01/15 2,088,180
5,000 North Central Texas Health Facilities Development Corporation,
University
Medical Center Inc Ser 1997 (FSA) .............................. 5.45 04/01/15 5,141,950
10,000 Fredericksburg Industrial Development Authority, Virginia,
Medicorp Health Refg Ser 1996 (AMBAC) ......................... 5.25 06/15/16 10,060,500
- ------- ----------
92,280 95,987,338
- ------- ----------
Industrial Development/Pollution Control Revenue (6.7%)
1,500 Hawaii Department of Budget & Finance, Hawaiian Electric Co
Ser 1995 A (AMT)(MBIA) ......................................... 6.60 01/01/25 1,656,510
1,425 Maryland Industrial Development Financing Authority, Medical
Waste
Assocs LP 1989 Ser (AMT) ....................................... 8.75 11/15/10 1,452,645
19,500 Claiborne County, Mississippi, Middle South Energy Inc Ser C ... 9.875 12/01/14 21,019,830
10,000 Clark County, Nevada, Nevada Power Co Ser 1992 A (AMT) (FGIC) ... 6.70 06/01/22 10,998,100
5,000 Washoe County, Nevada, Sierra Pacific Power Co Ser 1987 (AMBAC) . 6.30 12/01/14 5,448,850
5,000 New York City Industrial Development Agency, New York, Brooklyn
Navy Yard Cogeneration Partners, LP Proj Ser 1997 (AMT) ....... 5.75 10/01/36 5,060,850
5,000 Alliance Airport Authority, Texas, AMR Corp Ser 1990 (AMT) ...... 7.50 12/01/29 5,466,650
10,000 Dallas-Fort Worth International Airport Facility Improvement
Corporation, Texas, American Airlines Inc Ser 1995 ............ 6.00 11/01/14 10,557,700
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER TAX-EXEMPT SECURITIES TRUST
PORTFOLIO OF INVESTMENTS December 31, 1997, continued
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- -----------------------------------------------------------------------------------------------------------------
$ 7,000 Matagorda County Navigation District #1, Texas, Central Power &
Light Co Collateralized Ser 1984 A ............................. 7.50 % 12/15/14 $7,612,360
10,000 Weston, Wisconsin, Wisconsin Public Service Corp Refg Ser 1993 A 6.90 02/01/13 11,272,900
- ------- ----------
74,425 80,546,395
- ------- ----------
Mortgage Revenue - Multi-Family (2.3%)
500 Honolulu, Hawaii, Waipahu Towers GNMA Collateralized 1995 Ser A
(AMT) .......................................................... 6.90 06/20/35 538,120
1,000 Massachusetts Housing Finance Agency, Rental 1994 Ser A
(AMT)(AMBAC) ................................................... 6.65 07/01/19 1,063,090
6,435 Michigan Housing Development Authority, Rental Ser A (Bifurcated
FSA) ........................................................... 6.50 04/01/23 6,793,108
9,000 New Jersey Housing & Mortgage Finance Agency, 1995 Ser A (AMBAC) 6.05 11/01/20 9,470,880
New York City Housing Development Corporation, New York,
4,436 Rupper Proj - FHA Ins Sec 223F ................................. 6.50 11/15/18 4,658,933
4,293 Stevenson Commons Proj - FHA Ins Sec 223F ...................... 6.50 05/15/18 4,508,119
- ------- ----------
25,664 27,032,250
- ------- ----------
Mortgage Revenue - Single Family (6.9%)
7,000 Alaska Housing Finance Corporation, Governmental 1995 Ser A
(MBIA) ......................................................... 5.875 12/01/24 7,241,500
2,440 California Housing Finance Agency, Home Cap Apprec 1983 Ser B .. 0.00 08/01/15 408,310
2,500 Colorado Housing Finance Authority, Ser 1997 Ser C-2 (AMT) ..... 6.875 11/01/28 2,766,425
12,100 Illinois Housing Development Authority, Residential 1991 Ser C
(AMT) .......................................................... 6.875 02/01/18 12,897,632
Missouri Housing Development Commission, Homeownership
3,975 GNMA - FNMA 1996 Ser C (AMT) .................................. 7.45 09/01/27 4,508,207
4,000 1997 Ser C-1 .................................................. 6.55 09/01/28 4,408,440
5,600 Nebraska Investment Finance Authority, GNMA-Backed 1990 Ser
(AMT) .......................................................... 7.631 09/10/30 5,960,696
3,775 North Carolina Housing Finance Agency, Ser Q (AMT) .............. 8.00 03/01/18 4,106,219
6,150 Ohio Housing Finance Agency, GNMA-Backed 1990 Ser A (AMT) ....... 6.903 03/01/31 6,536,712
10,000 Pennsylvania Housing Finance Agency, Ser 1991-31 (AMT) ......... 7.00 10/01/23 10,750,800
Tennessee Housing Development Agency,
11,000 Mortgage Finance 1993 Ser A .................................... 5.95 07/01/28 11,355,409
4,000 Mortgage Finance 1993 Ser A .................................... 5.90 07/01/18 4,141,960
1,000 Mortgage Finance 1994 Ser B (AMT) .............................. 6.55 07/01/19 1,058,020
670 Utah Housing Finance Agency, Federally Insured/Guaranteed Loans
1994 Issue E (AMT) ............................................. 6.50 07/01/26 702,039
5,800 Wisconsin Housing & Economic Development Authority, Home
Ownership 1991 Ser (AMT) ....................................... 7.097 10/25/22 6,172,824
- ------- ----------
80,010 83,015,193
- ------- ----------
Public Facilities Revenue (1.6%)
2,000 North City West School Facilities Authority, California,
Community Dist #1 Special Tax Ser 1995 B (FSA) ................. 6.00 09/01/19 2,178,500
3,500 Denver, Colorado, Excise Tax Ser 1985 A ......................... 5.00 11/01/08 3,500,000
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER TAX-EXEMPT SECURITIES TRUST
PORTFOLIO OF INVESTMENTS December 31, 1997, continued
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- -----------------------------------------------------------------------------------------------------------------
$ 6,000 Saint Louis Industrial Development Authority, Missouri, Kiel
Center Refg Ser 1992 (AMT) ..................................... 7.75 % 12/01/13 $ 6,555,600
5,000 Ohio Building Authority, Correctional 1985 Ser C ................ 9.75 10/01/05 6,720,400
- ------- -----------
16,500 18,954,500
- ------- -----------
Resource Recovery Revenue (3.6%)
Connecticut Resources Recovery Authority,
7,000 American REF-FUEL Co of Southeastern Connecticut 1988 Ser A
(AMT) 8.00 11/15/15 7,411,250
4,950 Bridgeport RESCO Ser A ......................................... 7.625 01/01/09 5,139,090
7,000 Savannah Resource Recovery Development Authority, Georgia,
Savannah Energy Systems Co Ser 1992 ........................... 6.30 12/01/06 7,527,730
10,000 Northeast Maryland Waste Disposal Authority, Montgomery County
Ser 1993 A (AMT) .............................................. 6.30 07/01/16 10,686,000
5,000 Onondaga County Resource Recovery Agency, New York, 1992 Ser
(AMT) ......................................................... 6.875 05/01/06 5,346,050
1,750 Charleston County Resource Recovery, South Carolina, Foster
Wheeler
1997 Ser (AMT)(AMBAC) .......................................... 5.25 01/01/10 1,797,075
5,000 Fairfax County Economic Development Authority, Virginia, Ogden
Martin Systems of Fairfax Inc Ser 1988 A (AMT) ................ 7.75 02/01/11 5,320,050
- -------- -----------
40,700 43,227,245
- -------- -----------
Transportation Facilities Revenue (15.3%)
1,000 Lee County, Florida, Ser 1995 (MBIA) ........................... 5.75 10/01/22 1,053,290
Mid-Bay Bridge Authority, Florida,
8,965 Ser 1993 A (AMBAC) ............................................ 5.85 10/01/13 9,811,117
1,500 Ser 1997 A (AMBAC) ............................................ 0.00 10/01/20 459,510
3,000 Ser 1997 A (AMBAC) ............................................ 0.00 10/01/21 870,930
10,000 Atlanta, Georgia, Airport Ser 1990 (AMT) ....................... 6.25 01/01/21 10,519,600
8,100 Metropolitan Atlanta Rapid Transit Authority, Georgia, Sales Tax
Refg Ser K ..................................................... 7.25 07/01/10 8,390,709
5,000 Hawaii, Airports Second Ser 1991 (AMT) .......................... 7.00 07/01/18 5,447,100
850 Regional Transportation Authority, Illinois, Ser 1994 A ......... 6.25 06/01/15 924,945
Kentucky Turnpike Authority,
9,000 Economic Development Road Refg Ser 1995 (AMBAC) ................ 6.50 07/01/08 10,542,510
1,000 Economic Development Road Refg Ser 1995 (AMBAC) ................ 5.625 07/01/15 1,054,160
30,000 Resource Recovery Road 1987 Ser A .............................. 5.00 07/01/08 30,003,600
2,500 Maine Turnpike Authority, Ser 1994 (MBIA) ....................... 6.00 07/01/18 2,704,025
Massachusetts Turnpike Authority,
25,000 Metropolitan Highway 1997 Ser A (MBIA) ......................... 5.00 01/01/37 24,168,250
15,000 Western 1997 Ser A (MBIA) ...................................... 5.55 01/01/17 15,221,250
11,000 New Jersey Highway Authority, Sr Parkway Refg 1992 Ser ......... 6.25 01/01/14 11,932,250
6,595 Albuquerque, New Mexico, Airport Refg Ser 1997 (AMT) (AMBAC) ... 6.375 07/01/15 7,351,315
1,000 New York State Thruway Authority, General 1995 Ser C (FGIC) .... 6.00 01/01/25 1,082,490
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER TAX-EXEMPT SECURITIES TRUST
PORTFOLIO OF INVESTMENTS December 31, 1997, continued
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- -----------------------------------------------------------------------------------------------------------------
$ 1,500 Port Authority of New York & New Jersey, Cons One Hundredth Ser
Second Installment##............................................ 5.75 % 12/15/20 $ 1,568,205
20,000 Ohio Turnpike Commission, 1996 Ser A (MBIA) ..................... 5.50 02/15/26 20,593,200
5,000 Pennsylvania Turnpike Commission, Ser L of 1991 (MBIA) ......... 6.00 06/01/15 5,328,950
10,000 Puerto Rico Highway & Transportation Authority, Refg Ser X ...... 5.50 07/01/15 10,506,900
4,000 Virginia Transportation Board, US Route 58 Corridor Ser 1993 B . 5.625 05/15/13 4,137,360
- ------- -----------
180,010 183,671,666
- ------- -----------
Water & Sewer Revenue (10.8%)
Birmingham Water Works & Sewer Board, Alabama,
10,000 Ser 1994 ....................................................... 5.50 01/01/20 10,181,200
1,000 Ser 1993-A .................................................... 6.00 01/01/20 1,061,480
2,000 Jefferson County, Alabama, Sewer Refg Ser 1997-A (FGIC) ......... 5.375 02/01/27 2,016,340
10,000 Phoenix Civic Improvement Corporation, Arizona, Jr Lien Water
Ser 1994 ....................................................... 5.45 07/01/19 10,245,900
10,000 California Department of Water Resources, Central Valley Ser L .. 5.50 12/01/23 10,108,300
1,000 Castaic Lake Water Agency, California, Refg Ser 1994 A COPs
(MBIA) ......................................................... 6.00 08/01/18 1,082,230
10,000 East Bay Municipal Utility District, California, Water Refg Ser
1993 (MBIA) ................................................... 5.00 06/01/21 9,717,400
10,000 Los Angeles, California, Wastewater Ser 1994-A (MBIA) .......... 5.875 06/01/24 10,630,000
1,000 Dade County, Florida, Water & Sewer Ser 1995 (FGIC) ............ 5.50 10/01/15 1,042,290
5,000 Upper Oconee Basin Water Authority, Georgia, Ser 1997 (FGIC) .... 5.25 07/01/27 5,004,550
1,000 Chicago, Illinois, Wastewater Ser 1994 (MBIA) ................... 6.375 01/01/24 1,110,340
Massachusetts Water Resources Authority,
2,000 1992 Ser A .................................................... 6.50 07/15/07 2,292,360
10,000 Refg 1992 Ser B ................................................ 5.50 11/01/15 10,164,200
10,000 1993 Ser C ..................................................... 5.25 12/01/15 10,245,400
10,000 1996 Ser A (FGIC) .............................................. 5.50 11/01/21 10,303,799
Detroit, Michigan,
4,000 Sewage Refg 1993-A (FGIC) ..................................... 5.70 07/01/13 4,206,000
10,000 Water Supply 1997 Ser A ........................................ 5.00 07/01/21 9,770,300
2,000 Bayonne Municipal Utilities Authority, New Jersey, Water System
Ser 1997 (MBIA) ................................................ 5.00 01/01/28 1,957,400
2,000 Asheville, North Carolina, Water Ser 1996 (FGIC) ................ 5.70 08/01/25 2,107,160
Philadelphia, Pennsylvania,
1,250 Water & Wastewater Ser 1995 (MBIA) ............................ 6.25 08/01/11 1,433,338
5,000 Water & Wastewater Ser 1993 (FSA) ............................. 5.50 06/15/15 5,127,300
7,500 Water & Wastewater Ser 1997 A (AMBAC) ......................... 5.00 08/01/22 7,323,375
2,075 Prince William County Authority, Virginia, Water & Sewer Ser
1997 (FGIC) .................................................... 4.75 07/01/29 1,949,380
- ------- -----------
126,825 129,080,042
- ------- -----------
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER TAX-EXEMPT SECURITIES TRUST
PORTFOLIO OF INVESTMENTS December 31, 1997, continued
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- -----------------------------------------------------------------------------------------------------------------
Other Revenue (1.2%)
$ 1,005 Mashantucket (Western) Pequot Tribe, Connecticut, Special 1996
Ser A (a) ..................................................... 6.50 % 09/01/05 $ 1,119,560
1,000 New Jersey Economic Development Authority, Market Transition Sr
Lien Ser 1994 A (MBIA) ......................................... 5.875 07/01/11 1,081,120
New York Local Government Assistance Corporation,
5,000 Ser 1994 A .................................................... 5.50 04/01/17 5,331,950
5,000 Ser 1997 B (MBIA)(WI) .......................................... 4.875 04/01/20 4,825,150
3,000 Houston, Texas, Sr Lien Hotel Occupancy Tax Refg Ser 1995 (FSA) . 5.50 07/01/11 3,137,700
- --------- ----------
15,005 15,495,480
- --------- ----------
Refunded (10.6%)
9,000 Los Angeles Convention and Exhibition Center Authority,
California,
Ser 1985 COPs .................................................. 9.00 12/01/05++ 11,848,590
995 Mashantucket (Western) Pequot Tribe, Connecticut, Special 1996
Ser A (ETM)(a) ................................................ 6.50 09/01/05 1,127,095
2,500 Mid-Bay Bridge Authority, Florida, Ser 1991 A (ETM) ............ 6.875 10/01/22 3,028,050
1,500 Hawaii, 1995 Ser CJ ............................................ 6.25 01/01/05+ 1,671,360
1,500 Massachusetts Health & Educational Facilities Authority,
Malden Hospital -FHA Ins Mtge Ser A (ETM) ..................... 5.00 08/01/16 1,510,800
9,000 Massachusetts, 1994 Ser C (FGIC) ................................ 6.75 11/01/04+ 10,361,340
1,000 Essex County Improvement Authority, New Jersey, County Jail &
Youth House Projects Ser 1994 (AMBAC) .......................... 6.90 12/01/04+ 1,169,050
14,000 New York State Dormitory Authority, Suffolk County Judicial Ser
1986 (ETM) .................................................... 7.375 07/01/16 17,683,540
6,000 New York State Environmental Facilities Corporation, Huntington
1989 Ser A (AMT) .............................................. 7.50 10/01/99++ 6,393,780
9,740 New York City, New York, 1990 Ser D ............................ 6.00 08/01/99+ 9,946,975
25,000 Intermountain Power Agency, Utah, Refg 1985 Ser H GAINS ........ 0.00# 07/01/03+ 25,878,000
5,000 Salt Lake City, Utah, IHC Hospital Inc Ser 1983 (ETM) .......... 5.00 06/01/15 4,999,800
28,000 Fairfax County Industrial Development Authority, Virginia,
Fairfax Hospital Inova Health Ser 1991 ......................... 6.801 08/15/01+ 30,946,720
- --------- --------------
113,235 126,565,100
- --------- --------------
1,142,034 TOTAL TAX-EXEMPT MUNICIPAL BONDS (Identified Cost $1,065,267,642) ....................1,169,743,934
- --------- --------------
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER TAX-EXEMPT SECURITIES TRUST
PORTFOLIO OF INVESTMENTS December 31, 1997, continued
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- -----------------------------------------------------------------------------------------------------------------
SHORT-TERM TAX-EXEMPT MUNICIPAL OBLIGATIONS (1.9%)
$ 12,700 Escambia County, Florida, Gulf Power Co Ser 1997 (Demand
01/02/98) ..................................................... 5.05*% 07/01/22 $12,700,000
6,000 Missouri Health & Educational Facilities Authority Washington
University Ser 1996 D (Demand 01/02/98) ........................ 5.00* 02/01/30 6,000,000
4,000 Harris County Health Facilities Development Corporation, Texas,
Methodist Hospital Ser 1994 (Demand 01/02/98) ................. 4.90* 12/01/25 4,000,000
- ---------- --------------
22,700 TOTAL SHORT-TERM TAX-EXEMPT MUNICIPAL OBLIGATIONS (Identified Cost $22,700,000) .... 22,700,000
- ---------- --------------
$1,164,734 TOTAL INVESTMENTS (Identified Cost $1,087,967,642) (b) ................ 99.4 % 1,192,443,934
==========
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES ........................ 0.6 6,936,765
-------- --------------
NET ASSETS ............................................................ 100.0 % $1,199,380,699
======== ==============
</TABLE>
- ------------
AMT Alternative Minimum Tax.
COPs Certificates of Participation.
ETM Escrowed to maturity.
GAINS Growth and Income Security.
WI Security was purchased on a when issued basis.
## Joint exemption in New York and New Jersey.
+ Prerefunded to call date shown.
++ Refunded to call date shown by forward delivery contract.
** This security was segregated in connection with the purchase of
when issued securities.
# Currently a zero coupon bond; will convert to 10.0% coupon on
July 1, 2000.
* Current coupon of variable rate demand obligation.
(a) Resale is restricted to qualified institutional investors.
(b) The aggregate cost for federal income tax purposes approximates
identified cost. The aggregate gross unrealized appreciation is
$105,197,572 and the aggregate gross unrealized depreciation is
$721,280, resulting in net unrealized appreciation of
$104,476,292.
Bond Insurance:
AMBAC AMBAC Indemnity Corporation.
Connie Lee Connie Lee Insurance Company.
FGIC Financial Guaranty Insurance Company.
FSA Financial Security Assurance Inc.
MBIA Municipal Bond Investors Assurance Corporation.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER TAX-EXEMPT SECURITIES TRUST
PORTFOLIO OF INVESTMENTS December 31, 1997, continued
Geographic Summary of Investments
Based on Market Value as a Percent of Net Assets
December 31, 1997
<TABLE>
<CAPTION>
<S> <C>
Alabama ......... 2.2%
Alaska .......... 4.5
Arizona ......... 3.1
Arkansas ........ 0.3
California ...... 5.3
Colorado ........ 0.5
Connecticut ..... 1.4
Florida ......... 2.6
Georgia ......... 3.7
Hawaii .......... 0.8
Illinois ........ 2.3
Indiana ......... 0.9
Kentucky ........ 3.5
Maine ........... 0.2
Maryland ........ 2.1%
Massachusetts ... 10.8
Michigan ........ 1.7
Minnesota ....... 0.8
Mississippi ..... 1.7
Missouri ........ 2.6
Nebraska ........ 0.5
Nevada .......... 1.8
New Hampshire ... 1.4
New Jersey ...... 2.6
New Mexico ...... 0.6
New York ........ 9.7
North Carolina .. 2.4
Ohio ............ 2.9
Oregon .......... 0.3%
Pennsylvania .... 3.4
Puerto Rico ..... 1.5
South Carolina .. 1.5
Tennessee ....... 2.2
Texas ........... 4.7
Utah ............ 3.7
Virginia ........ 4.5
Washington ...... 3.4
Wisconsin ....... 1.4
Joint Exemptions* (0.1)
----
Total ........... 99.4%
====
</TABLE>
- ------------
* Joint exemptions have been included in more than one geographic location.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER TAX-EXEMPT SECURITIES TRUST
FINANCIAL STATEMENTS
STATEMENTS OF ASSETS AND LIABILITIES
December 31, 1997
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $1,087,967,642)........................ $1,192,443,934
Cash..................................................... 8,731,624
Receivable for:
Interest............................................... 17,554,911
Shares of beneficial interest sold..................... 853,318
Investments sold....................................... 404,700
Prepaid expenses and other assets........................ 42,097
--------------
TOTAL ASSETS........................................... 1,220,030,584
--------------
LIABILITIES:
Payable for:
Investments purchased.................................. 15,332,934
Dividends and distributions to shareholders .......... 4,457,299
Investment management fee.............................. 469,410
Shares of beneficial interest repurchased.............. 190,025
Plan of distribution fee............................... 53,409
Accrued expenses and other payables...................... 146,808
--------------
TOTAL LIABILITIES...................................... 20,649,885
--------------
NET ASSETS............................................... $1,199,380,699
==============
COMPOSITION OF NET ASSETS:
Paid-in-capital.......................................... $1,090,477,778
Net unrealized appreciation.............................. 104,476,292
Accumulated undistributed net investment income ......... 34,517
Accumulated undistributed net realized gain.............. 4,392,112
--------------
NET ASSETS............................................. $1,199,380,699
==============
CLASS A SHARES:
Net Assets............................................... $3,857,465
Shares Outstanding (unlimited authorized, $.01 par
value).................................................. 319,033
NET ASSET VALUE PER SHARE................................ $12.09
======
MAXIMUM OFFERING PRICE PER SHARE,
(net asset value plus 4.44% of net asset value) ....... $12.63
======
CLASS B SHARES:
Net Assets............................................... $95,572,595
Shares Outstanding (unlimited authorized, $.01 par
value).................................................. 7,872,615
NET ASSET VALUE PER SHARE.............................. $12.14
======
CLASS C SHARES:
Net Assets............................................... $2,953,120
Shares Outstanding (unlimited authorized, $.01 par
value).................................................. 243,831
NET ASSET VALUE PER SHARE.............................. $12.11
=======
CLASS D SHARES:
Net Assets............................................... $1,096,997,519
Shares Outstanding (unlimited authorized, $.01 par
value).................................................. 90,784,537
NET ASSET VALUE PER SHARE.............................. $12.08
======
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER TAX-EXEMPT SECURITIES TRUST
FINANCIAL STATEMENTS, continued
STATEMENT OF OPERATIONS
For the year ended December 31, 1997*
<TABLE>
<CAPTION>
<S> <C>
NET INVESTMENT INCOME:
INTEREST INCOME........................... $66,655,912
-------------
EXPENSES
Investment management fee................. 5,004,702
Transfer agent fees and expenses.......... 359,253
Plan of distribution fee (Class A
shares).................................. 2,466
Plan of distribution fee (Class B
shares).................................. 83,261
Plan of distribution fee (Class C
shares).................................. 4,834
Registration fees......................... 77,286
Professional fees......................... 61,455
Shareholder reports and notices........... 59,993
Custodian fees............................ 48,638
Trustees' fees and expenses............... 16,542
Other..................................... 31,602
-------------
TOTAL EXPENSES.......................... 5,750,032
Less: expense offset...................... (48,464)
-------------
NET EXPENSES............................ 5,701,568
-------------
NET INVESTMENT INCOME................... 60,954,344
-------------
NET REALIZED AND UNREALIZED GAIN:
Net realized gain......................... 9,545,783
Net change in unrealized appreciation .... 25,338,447
-------------
NET GAIN................................ 34,884,230
-------------
NET INCREASE.............................. $95,838,574
=============
</TABLE>
- ------------
* Class A, Class B and Class C shares were issued July 28, 1997.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER TAX-EXEMPT SECURITIES TRUST
FINANCIAL STATEMENTS, continued
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR
ENDED ENDED
DECEMBER 31, 1997* DECEMBER 31, 1996
- ------------------------------------------------------ ------------------ -----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income ................................. $ 60,954,344 $ 68,165,561
Net realized gain...................................... 9,545,783 2,959,135
Net change in unrealized appreciation ................. 25,338,447 (29,830,436)
------------------ -----------------
NET INCREASE......................................... 95,838,574 41,294,260
------------------ -----------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A shares........................................ (48,774) --
Class B shares........................................ (673,417) --
Class C shares........................................ (30,406) --
Class D shares........................................ (60,167,993) (68,543,874)
Net realized gain
Class A shares........................................ (16,080) --
Class B shares........................................ (395,740) --
Class C shares........................................ (12,228) --
Class D shares........................................ (4,910,430) (8,374,759)
------------------ -----------------
TOTAL DIVIDENDS AND DISTRIBUTIONS...................... (66,255,068) (76,918,633)
------------------ -----------------
Net decrease from transactions in shares of beneficial
interest.............................................. (20,236,797) (99,650,138)
------------------ -----------------
NET INCREASE (DECREASE).............................. 9,346,709 (135,274,511)
NET ASSETS:
Beginning of period.................................... 1,190,033,990 1,325,308,501
------------------ -----------------
END OF PERIOD
(Including undistributed net investment income of
$34,517 and $0, respectively)........................ $1,199,380,699 $1,190,033,990
================== =================
</TABLE>
- ------------
* Class A, Class B and Class C shares were issued July 28, 1997.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER TAX-EXEMPT SECURITIES TRUST
NOTES TO FINANCIAL STATEMENTS December 31, 1997
1. ORGANIZATION AND ACCOUNTING POLICIES
Dean Witter Tax-Exempt Securities Trust (the "Fund") is registered under the
Investment Company Act of 1940, as amended, as a diversified, open-end
management investment company. The Fund's investment objective is to provide
a high level of current income which is exempt from federal income tax,
consistent with the preservation of capital. The Fund was incorporated in
Maryland in 1979, commenced operations on March 27, 1980 and reorganized as a
Massachusetts business trust on April 30, 1987. On July 28, 1997, the Fund
commenced offering three additional classes of shares, with the then current
shares designated as Class D shares.
The Fund offers Class A shares, Class B shares, Class C shares and Class D
shares. The four classes are substantially the same except that most Class A
shares are subject to a sales charge imposed at the time of purchase, some
Class A shares, and most Class B shares and Class C shares are subject to a
contingent deferred sales charge imposed on shares redeemed within one year,
six years and one year, respectively. Class D shares are not subject to a
sales charge. Additionally, Class A shares, Class B shares and Class C shares
incur distribution expenses.
The preparation of financial statements in accordance with generally accepted
account principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures. Actual results could differ from
those estimates.
The following is a summary of significant accounting policies:
A. VALUATION OF INVESTMENTS -- Portfolio securities are valued for the Fund
by an outside independent pricing service approved by the Trustees. The
pricing service has informed the Fund that in valuing the Fund's portfolio
securities, it uses both a computerized matrix of tax-exempt securities and
evaluations by its staff, in each case based on information concerning market
transactions and quotations from dealers which reflect the bid side of the
market each day. The Fund's portfolio securities are thus valued by reference
to a combination of transactions and quotations for the same or other
securities believed to be comparable in quality, coupon, maturity, type of
issue, call provisions, trading characteristics and other features deemed to
be relevant. Short-term debt securities having a maturity date of more than
sixty days at time of purchase are valued on a mark-to-market basis until
sixty days prior to maturity and thereafter at amortized cost based on their
value on the 61st day. Short-term debt securities having a maturity date of
sixty days or less at the time of purchase are valued at amortized cost.
<PAGE>
DEAN WITTER TAX-EXEMPT SECURITIES TRUST
NOTES TO FINANCIAL STATEMENTS December 31, 1997, continued
B. ACCOUNTING FOR INVESTMENTS -- Security transactions are accounted for on
the trade date (date the order to buy or sell is executed). Realized gains
and losses on security transactions are determined by the identified cost
method. The Fund amortizes premiums and accretes discounts over the life of
the respective securities. Interest income is accrued daily.
C. MULTIPLE CLASS ALLOCATIONS -- Investment income, expenses (other than
distribution fees), and realized and unrealized gains and losses are
allocated to each class of shares based upon the relative net asset value on
the date such items are recognized. Distribution fees are charged directly to
the respective class.
D. FEDERAL INCOME TAX STATUS -- It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its taxable and nontaxable income to its
shareholders. Accordingly, no federal income tax provision is required.
E. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- The Fund records dividends
and distributions to its shareholders on the record date. The amount of
dividends and distributions from net investment income and net realized
capital gains are determined in accordance with federal income tax
regulations which may differ from generally accepted accounting principles.
These "book/tax" differences are either considered temporary or permanent in
nature. To the extent these differences are permanent in nature, such amounts
are reclassified within the capital accounts based on their federal tax-basis
treatment; temporary differences do not require reclassification. Dividends
and distributions which exceed net investment income and net realized capital
gains for financial reporting purposes but not for tax purposes are reported
as dividends in excess of net investment income or distributions in excess of
net realized capital gains. To the extent they exceed net investment income
and net realized capital gains for tax purposes, they are reported as
distributions of paid-in-capital.
2. INVESTMENT MANAGEMENT AGREEMENT
Pursuant to an Investment Management Agreement with Dean Witter InterCapital
Inc. (the "Investment Manager"), the Fund pays the Investment Manager a
management fee, accrued daily and payable monthly, by applying the following
annual rates to the Fund's net assets determined as of the close of each
business day: 0.50% to the portion of daily net assets not exceeding $500
million; 0.425% to the portion of daily net assets exceeding $500 million but
not exceeding $750 million; 0.375% to the portion of daily net assets
exceeding $750 million but not exceeding $1 billion; 0.35% to the portion of
daily net assets exceeding $1 billion but not exceeding $1.25 billion; and
0.325% to the portion of daily net assets exceeding $1.25 billion.
<PAGE>
DEAN WITTER TAX-EXEMPT SECURITIES TRUST
NOTES TO FINANCIAL STATEMENTS December 31, 1997, continued
Under the terms of the Agreement, in addition to managing the Fund's
investments, the Investment Manager maintains certain of the Fund's books and
records and furnishes, at its own expense, office space, facilities,
equipment, clerical, bookkeeping and certain legal services and pays the
salaries of all personnel, including officers of the Fund who are employees
of the Investment Manager. The Investment Manager also bears the cost of
telephone services, heat, light, power and other utilities provided to the
Fund.
3. PLAN OF DISTRIBUTION
Shares of the Fund are distributed by Dean Witter Distributors Inc. (the
"Distributor"), an affiliate of the Investment Manager. The Fund has adopted
a Plan of Distribution (the "Plan"), pursuant to Rule 12b-1 under the Act.
The Plan provides that the Fund will pay the Distributor a fee which is
accrued daily and paid monthly at the following annual rates: (i) Class A -up
to 0.25% of the average daily net assets of Class A; (ii) Class B -0.60% of
the average daily net assets of Class B; and (iii) Class C -up to 0.70% of
the average daily net assets of Class C. In the case of Class A shares,
amounts paid under the Plan are paid to the Distributor for services
provided. In the case of Class B and Class C shares, amounts paid under the
Plan are paid to the Distributor for services provided and the expenses borne
by it and others in the distribution of the shares of these Classes,
including the payment of commissions for sales of these Classes and incentive
compensation to, and expenses of, the account executives of Dean Witter
Reynolds Inc. ("DWR"), an affiliate of the Investment Manager and
Distributor, and others who engage in or support distribution of the shares
or who service shareholder accounts, including overhead and telephone
expenses; printing and distribution of prospectuses and reports used in
connection with the offering of these shares to other than current
shareholders; and preparation, printing and distribution of sales literature
and advertising materials. In addition, the Distributor may utilize fees paid
pursuant to the Plan, in the case of Class B shares, to compensate DWR and
other selected broker-dealers for their opportunity costs in advancing such
amounts, which compensation would be in the form of a carrying charge on any
unreimbursed expenses.
In the case of Class B shares, provided that the Plan continues in effect,
any cumulative expenses incurred by the Distributor but not yet recovered may
be recovered through the payment of future distribution fees from the Fund
pursuant to the Plan and contingent deferred sales charges paid by investors
upon redemption of Class B shares. Although there is no legal obligation for
the Fund to pay expenses incurred in excess of payments made to the
Distributor under the Plan and the proceeds of contingent deferred sales
charges paid by investors upon redemption of shares, if for any reason the
Plan is terminated, the
<PAGE>
DEAN WITTER TAX-EXEMPT SECURITIES TRUST
NOTES TO FINANCIAL STATEMENTS December 31, 1997, continued
Trustees will consider at that time the manner in which to treat such
expenses. The Distributor has advised the Fund that such excess amounts,
including carrying charges, totaled $2,732,178 at
December 31, 1997.
In the case of Class A shares and Class C shares, expenses incurred pursuant
to the Plan in any calendar year in excess of 0.25% or 0.70% of the average
daily net assets of Class A or Class C, respectively, will not be reimbursed
by the Fund through payments in any subsequent year, except that expenses
representing a gross sales credit to account executives may be reimbursed in
the subsequent calendar year. For the period ended December 31, 1997, the
distribution fee was accrued for Class A shares and Class C shares at the
annual rate of 0.25% and 0.70%, respectively.
The Distributor has informed the Fund that for the period July 28, 1997 to
December 31, 1997, it received contingent deferred sales charges from certain
redemptions of the Fund's Class B and Class C shares of $10,314 and $530,
respectively. For the period January 1, 1997 to July 27, 1997 it received
$448,316 in front-end sales charges from sales of the Fund's shares and for
the period July 28, 1997 to December 31, 1997 received $69,207 in front-end
sales charges from sales of the Fund's Class A shares. The respective
shareholders pay such charges which are not an expense of the Fund.
4. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES
The cost of purchases and proceeds from sales of portfolio securities,
excluding short-term investments, for the year ended December 31, 1997
aggregated $170,043,446 and $253,694,468, respectively.
Dean Witter Trust FSB, an affiliate of the Investment Manager, is the Fund's
transfer agent. At December 31, 1997, the Fund had transfer agent fees and
expenses payable of approximately $10,400.
The Fund has an unfunded noncontributory defined benefit pension plan
covering all independent Trustees of the Fund who will have served as
independent Trustees for at least five years at the time of retirement.
Benefits under this plan are based on years of service and compensation
during the last five years of service. Aggregate pension costs for the year
ended December 31, 1997 included in Trustees' fees and expenses in the
Statement of Operations amounted to $2,739. At December 31, 1997, the Fund
had an accrued pension liability of $48,294 which is included in accrued
expenses in the Statement of Assets and Liabilities.
<PAGE>
DEAN WITTER TAX-EXEMPT SECURITIES TRUST
NOTES TO FINANCIAL STATEMENTS December 31, 1997, continued
5. SHARES OF BENEFICIAL INTEREST
Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR
ENDED ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
------------------------------- -------------------------------
SHARES AMOUNT SHARES AMOUNT
-------------- --------------- -------------- ---------------
<S> <C> <C> <C> <C>
CLASS A SHARES*
Sold................................................ 338,676 $ 4,050,692 -- --
Reinvestment of dividends and distributions......... 2,037 24,532 -- --
Redeemed............................................ (21,680) (260,983) -- --
-------------- --------------- -------------- ---------------
Net increase - Class A.............................. 319,033 3,814,241 -- --
-------------- --------------- -------------- ---------------
CLASS B SHARES*
Sold................................................ 966,475 10,102,415 -- --
Reinvestment of dividends and distributions......... 50,270 609,389 -- --
Shares issued in connection with the acquisition of
Dean Witter National Municipal Trust............... 7,189,021 86,346,821 -- --
Redeemed............................................ (333,151) (2,490,026) -- --
-------------- --------------- -------------- ---------------
Net increase - Class B.............................. 7,872,615 94,568,599 -- --
-------------- --------------- -------------- ---------------
CLASS C SHARES*
Sold................................................ 246,149 2,956,204 -- --
Reinvestment of dividends and distributions......... 2,294 27,678 -- --
Redeemed............................................ (4,612) (55,937) -- --
-------------- --------------- -------------- ---------------
Net increase - Class C.............................. 243,831 2,927,945 -- --
-------------- --------------- -------------- ---------------
CLASS D SHARES
Sold................................................ 1,386,806 16,302,673 3,179,464 $ 37,259,996
Reinvestment of dividends and distributions......... 3,036,080 35,979,041 3,684,669 43,078,883
Redeemed............................................ (14,721,910) (173,829,296) (15,389,992) (179,989,017)
-------------- --------------- -------------- ---------------
Net decrease - Class D.............................. (10,299,024) (121,547,582) (8,525,859) (99,650,138)
-------------- --------------- -------------- ---------------
Net decrease in Fund................................ (1,863,545) $ (20,236,797) (8,525,859) $ (99,650,138)
============== =============== ============== ===============
</TABLE>
- ------------
* For the period July 28, 1997 (issue date) through December 31, 1997.
6. ACQUISITION OF DEAN WITTER NATIONAL MUNICIPAL TRUST
As of the close of business on November 7, 1997, the Fund acquired all the net
assets of Dean Witter National Municipal Trust ("National Municipal") pursuant
to a plan of reorganization approved by the shareholders of National Municipal
on October 24, 1997. The acquisition was accomplished by a tax-free exchange of
7,189,021 Class B shares of the Fund at a net asset value of $12.01 per share
for 7,972,312 shares of National Municipal. The net assets of the Fund and
National Municipal immediately before the acquisition were $1,108,511,637 and
$86,346,821, respectively, including unrealized appreciation of $5,153,021.
Immediately after the acquisition, the combined net assets of the Fund amounted
to $1,194,858,458.
<PAGE>
DEAN WITTER TAX-EXEMPT SECURITIES TRUST
FINANCIAL HIGHLIGHTS
Selected ratios and per share data for a share of beneficial interest
outstanding throughout each period:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------------------------------------
1997* 1996 1995 1994 1993 1992 1991 1990 1989 1988
- -------------------------------- -------- -------- -------- --------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS D SHARES
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of
period.......................... $11.77 $12.09 $11.01 $12.41 $11.88 $11.65 $11.09 $11.28 $10.96 $10.45
-------- -------- -------- --------- -------- -------- -------- -------- -------- --------
Net investment income ........... 0.63 0.65 0.67 0.70 0.77 0.79 0.80 0.80 0.81 0.81
Net realized and unrealized gain
(loss).......................... 0.36 (0.24) 1.19 (1.37) 0.54 0.23 0.56 (0.18) 0.32 0.51
-------- -------- -------- --------- -------- -------- -------- -------- -------- --------
Total from investment
operations...................... 0.99 0.41 1.86 (0.67) 1.31 1.02 1.36 0.62 1.13 1.32
-------- -------- -------- --------- -------- -------- -------- -------- -------- --------
Less dividends and distributions
from:
Net investment income........... (0.63) (0.65) (0.67) (0.70) (0.77) (0.79) (0.80) (0.81) (0.81) (0.81)
Net realized gain............... (0.05) (0.08) (0.11) (0.03) (0.01) -- -- -- -- --
-------- -------- -------- --------- -------- -------- -------- -------- -------- --------
Total dividends and
distributions................... (0.68) (0.73) (0.78) (0.73) (0.78) (0.79) (0.80) (0.81) (0.81) (0.81)
-------- -------- -------- --------- -------- -------- -------- -------- -------- --------
Net asset value, end of period .. $12.08 $11.77 $12.09 $11.01 $12.41 $11.88 $11.65 $11.09 $11.28 $10.96
======== ======== ======== ========= ======== ======== ======== ======== ======== ========
TOTAL INVESTMENT RETURN +........ 8.73% 3.61% 17.37% (5.55)% 11.23% 9.09% 12.71% 5.86% 10.61% 13.02%
RATIOS TO AVERAGE NET ASSETS:
Expenses......................... 0.49% 0.48% 0.48% 0.47% 0.47% 0.49% 0.51% 0.51% 0.51% 0.54%
Net investment income............ 5.34% 5.52% 5.76% 6.02% 6.23% 6.74% 7.05% 7.25% 7.31% 7.51%
SUPPLEMENTAL DATA:
Net assets, end of period, in
millions........................ $1,097 $1,190 $1,325 $1,295 $1,582 $1,323 $1,145 $1,010 $1,033 $ 908
Portfolio turnover rate.......... 16% 18% 21% 16% 13% 4% 10% 19% 13% 17%
</TABLE>
- ------------
* Prior to July 28, 1997, the Fund issued one class of shares. All shares
of the Fund held prior to that date have been designated Class D shares.
+ Calculated based on the net asset value as of the last business day of
the period.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER TAX-EXEMPT SECURITIES TRUST
FINANCIAL HIGHLIGHTS, continued
<TABLE>
<CAPTION>
FOR THE PERIOD
JULY 28, 1997*
THROUGH
DECEMBER 31, 1997
- ---------------------------------------- -----------------
<S> <C>
CLASS A SHARES
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period .... $ 12.00
-----------------
Net investment income ................... 0.25
Net realized and unrealized gain ........ 0.14
-----------------
Total from investment operations ....... 0.39
-----------------
Less dividends and distributions from:
Net investment income .................. (0.25)
Net realized gain ...................... (0.05)
-----------------
Total dividends and distributions ...... (0.30)
-----------------
Net asset value, end of period .......... $ 12.09
=================
TOTAL INVESTMENT RETURN +................ 3.31%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses ................................ 0.76%(2)(3)
Net investment income ................... 4.96%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands $ 3,857
Portfolio turnover rate.................. 16%
CLASS B SHARES
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period .... $ 12.00
-----------------
Net investment income ................... 0.23
Net realized and unrealized gain ........ 0.19
-----------------
Total from investment operations ....... 0.42
-----------------
Less dividends and distributions from:
Net investment income .................. (0.23)
Net realized gain ...................... (0.05)
-----------------
Total dividends and distributions ...... (0.28)
-----------------
Net asset value, end of period .......... $ 12.14
=================
TOTAL INVESTMENT RETURN +................ 3.57%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses ................................ 1.14%(2)(3)
Net investment income ................... 4.87%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands $95,573
Portfolio turnover rate ................. 16%
</TABLE>
- ------------
* The date shares were first issued.
+ Does not reflect the deduction of sales charge. Calculated based on
the net asset value as of the last business day of the period.
(1) Not annualized.
(2) Annualized.
(3) Does not reflect the effect of expense offset of 0.02%.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER TAX-EXEMPT SECURITIES TRUST
FINANCIAL HIGHLIGHTS, continued
<TABLE>
<CAPTION>
FOR THE PERIOD
JULY 28, 1997*
THROUGH
DECEMBER 31, 1997
- ---------------------------------------- -----------------
<S> <C>
CLASS C SHARES
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period .... $12.00
-----------------
Net investment income ................... 0.23
Net realized and unrealized gain ........ 0.16
-----------------
Total from investment operations ....... 0.39
-----------------
Less dividends and distributions from:
Net investment income .................. (0.23)
Net realized gain ...................... (0.05)
-----------------
Total dividends and distributions ...... (0.28)
-----------------
Net asset value, end of period .......... $12.11
=================
TOTAL INVESTMENT RETURN +................ 3.28%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses................................. 1.20%(2)(3)
Net investment income ................... 4.41%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands $2,953
Portfolio turnover rate ................. 16%
</TABLE>
- ------------
* The date shares were first issued.
+ Does not reflect the deduction of sales charge. Calculated based on
the net asset value as of the last business day of the period.
(1) Not annualized.
(2) Annualized.
(3) Does not reflect the effect of expense offset of 0.02%.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER TAX-EXEMPT SECURITIES TRUST
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE SHAREHOLDERS AND TRUSTEES
OF DEAN WITTER TAX-EXEMPT SECURITIES TRUST
In our opinion, the accompanying statement of assets and liabilities,
including the portfolio of investments, and the related statements of
operations and of changes in net assets and the financial highlights present
fairly, in all material respects, the financial position of Dean Witter
Tax-Exempt Securities Trust (the "Fund") at December 31, 1997, the results of
its operations for the year then ended, the changes in its net assets for
each of the two years in the period then ended and the financial highlights
for each of the periods presented, in conformity with generally accepted
accounting principles. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the responsibility of
the Fund's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
financial statements in accordance with generally accepted auditing standards
which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audits, which included confirmation of securities at December 31, 1997 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York 10036
February 10, 1998
1997 Federal Tax Notice (unaudited)
During the year ended December 31, 1997, the Fund paid to shareholders
the following per share amounts from net investment income: Class A,
$0.25; Class B, $0.23; Class C, $0.23; and Class D, $0.63 per share.
All of the Fund's dividends from net investment income were exempt
interest dividends, excludable from gross income for Federal income tax
purposes. For the year ended December 31, 1997, the Fund paid to Class
A, B, C and D shareholders $0.05 per share from long-term capital
gains. Of this $0.05 distribution, $0.04 is taxable as 28% rate gain
and $0.01 is taxable as 20% rate gain.
<PAGE>
TRUSTEES
Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn
John R. Haire
Wayne E. Hedien
Dr. Manuel H. Johnson
Michael E. Nugent
Philip J. Purcell
John L. Schroeder
OFFICERS
Charles A. Fiumefreddo
Chairman and Chief Executive Officer
Barry Fink
Vice President, Secretary and
General Counsel
James F. Willison
Vice President
Joseph R. Arcieri
Vice President
Thomas F. Caloia
Treasurer
TRANSFER AGENT
Dean Witter Trust FSB
Harborside Financial Center - Plaza Two
Jersey City, New Jersey 07311
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
1177 Avenue of the Americas
New York, New York 10036
INVESTMENT MANAGER
Dean Witter InterCapital Inc.
Two World Trade Center
New York, New York 10048
This report is submitted for the general information of shareholders of the
Fund. For more detailed information about the Fund, its officers and trustees,
fees, expenses and other pertinent information, please see the prospectus of
the Fund.
This report is not authorized for distribution to prospective investors in the
Fund unless preceded or accompanied by an effective prospectus.
DEAN WITTER
TAX-EXEMPT
SECURITIES TRUST
ANNUAL REPORT
DECEMBER 31, 1997
