<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 10, 1994
REGISTRATION NO.: 2-84376
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/
PRE-EFFECTIVE AMENDMENT NO. / /
POST-EFFECTIVE AMENDMENT NO. 11 /X/
AND/OR
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /X/
AMENDMENT NO. 12 /X/
-------------------
DEAN WITTER SELECT MUNICIPAL REINVESTMENT FUND
(FORMERLY NAMED SEARS TAX-EXEMPT REINVESTMENT FUND)
(A MASSACHUSETTS BUSINESS TRUST)
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
TWO WORLD TRADE CENTER
NEW YORK, NEW YORK 10048
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (212) 392-1600
SHELDON CURTIS, ESQ.
TWO WORLD TRADE CENTER
NEW YORK, NEW YORK 10048
(NAME AND ADDRESS OF AGENT FOR SERVICE)
COPY TO:
DAVID M. BUTOWSKY, ESQ.
GORDON ALTMAN BUTOWSKY
WEITZEN SHALOV & WEIN
114 WEST 47TH STREET
NEW YORK, NEW YORK 10036
-------------------
APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING:
As soon as practicable after this Post-Effective Amendment becomes effective.
IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE (CHECK APPROPRIATE BOX)
___ immediately upon filing pursuant to paragraph (b)
_X_ on February 11, 1994 pursuant to paragraph (b)
____ 60 days after filing pursuant to paragraph (a)
____ on (date) pursuant to paragraph (a) of rule 485.
THE REGISTRANT HAS REGISTERED AN INDEFINITE NUMBER OF ITS SHARES UNDER THE
SECURITIES ACT OF 1933 PURSUANT TO SECTION (A)(1) OF RULE 24F-2 OF THE
INVESTMENT COMPANY ACT OF 1940. THE REGISTRANT EXPECTS TO FILE THE RULE 24F-2
NOTICE FOR ITS FISCAL YEAR ENDED DECEMBER 31, 1993 WITH THE SECURITIES AND
EXCHANGE COMMISSION ON FEBRUARY 9, 1994.
AMENDING THE PROSPECTUS AND UPDATING FINANCIAL STATEMENTS
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<PAGE>
DEAN WITTER SELECT MUNICIPAL REINVESTMENT FUND
CROSS-REFERENCE SHEET
FORM N-1A
<TABLE>
<S> <C>
ITEM CAPTION
PART A PROSPECTUS
1. ......................................... Cover Page
2. ......................................... Prospectus Summary
3. ......................................... Financial Highlights
4. ......................................... Investment Objective and Policies; The Fund and its Management; Cover
Page; Investment Restrictions; Prospectus Summary; Financial
Highlights
5. ......................................... The Fund and Its Management; Back Cover; Investment Objective and
Policies
6. ......................................... Dividends, Distributions and Taxes; Additional Information
7. ......................................... Terms and Conditions of Participation; Prospectus Summary
8. ......................................... Redemptions and Repurchases
9. ......................................... Not Applicable
PART B STATEMENT OF ADDITIONAL INFORMATION
10. ......................................... Cover Page
11. ......................................... Table of Contents
12. ......................................... The Fund and Its Management
13. ......................................... Investment Practices and Policies; Investment Restrictions; Portfolio
Transactions and Brokerage
14. ......................................... The Fund and Its Management; Trustees and Officers
15. ......................................... The Fund and Its Management; Trustees and Officers
16. ......................................... The Fund and Its Management; Terms and Conditions of Participation;
Custodian and Transfer Agent; Independent Accountants
17. ......................................... Portfolio Transactions and Brokerage
18. ......................................... Description of Shares of the Fund
19. ......................................... Terms and Conditions of Participation; Redemptions and Repurchases
20. ......................................... Dividends, Distributions and Taxes
21. ......................................... Not applicable
22. ......................................... Performance Information
23. ......................................... Experts; Financial Statements
</TABLE>
PART C
Information required to be included in Part C is set forth under the
appropriate item, so numbered, in Part C of this Registration Statement.
<PAGE>
PROSPECTUS
FEBRUARY 11, 1994
Shares of the Dean Witter Select Municipal Reinvestment Fund (the
"Fund") are offered hereby without sales charge to the holders of certain Units
of the various series of the Dean Witter Select Municipal Trust in order to
provide a means for the automatic reinvestment of distributions of interest
income, capital gains and principal on such Units in Shares of the Fund on the
terms and conditions set forth in this Prospectus and in the Statement of
Additional Information. Shares of the Fund may in the future also be offered to
holders of units of other unit investment trusts.
The Fund is an open-end diversified management investment company
whose investment objective is to provide a high level of current income exempt
from federal income tax, consistent with the preservation of capital. The Fund
invests exclusively in tax-exempt securities; principally in tax-exempt
fixed-income securities with long-term maturities which are rated in the three
highest categories by Moody's Investors Service, Inc. or Standard & Poor's
Corporation (at times, the Fund may invest, without limit, in high quality
tax-exempt securities with short-term maturities), including Municipal Bonds,
Notes and Commercial Paper (see "Investment Objective and Policies"). Income and
capital gains distributed to investors may be subject to state and local taxes.
Capital gains distributions, if any, will be subject to federal income tax.
This Prospectus sets forth concisely the information you should
know before investing in the Fund. It should be read and retained for future
reference. Additional information about the Fund is contained in the Statement
of Additional Information, dated February 11, 1994, which has been filed with
the Securities and Exchange Commission, and which is available at no charge upon
request of the Fund at the address or telephone numbers listed below. The
Statement of Additional Information is incorporated herein by reference.
TABLE OF CONTENTS
Prospectus Summary/2
Summary of Fund Expenses/3
Financial Highlights/4
The Fund and its Management/4
Terms and Conditions of Participation/5
Investment Objective and Policies/7
Investment Restrictions/10
Redemptions and Repurchases/10
Dividends, Distributions and Taxes/11
Performance Information/13
Additional Information/13
Dean Witter
Select Municipal Reinvestment Fund
Two World Trade Center
New York, New York 10048
(212) 392-2550 or
(800) 526-3143
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, ANY BANK, AND THE SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
PROSPECTUS SUMMARY
- --------------------------------------------------------------------------------
The Fund The Fund is organized as a Trust, commonly known as a
Massachusetts business trust, and is an open-end diversified
management investment company investing exclusively in
tax-exempt securities.
- --------------------------------------------------------------------------------
Shares Offered Shares of beneficial interest of $.01 par value are offered to
holders of Units of any series of the Dean Witter Select
Municipal Trust offering a reinvestment option for
distributions on such Units (see pages 5 and 13).
- --------------------------------------------------------------------------------
Offering Price At net asset value without sales charge (see page 5).
- --------------------------------------------------------------------------------
Investment The investment objective of the Fund is to provide a high
Objective level of current income exempt from federal income tax,
consistent with the preservation of capital (see page 7).
- --------------------------------------------------------------------------------
Investment The Fund will invest exclusively in tax-exempt securities,
Policies principally in tax-exempt fixed-income securities with
long-term maturities which are rated in the three highest
categories by Moody's Investors Service, Inc. or Standard &
Poor's Corporation. At times, the Fund may invest, without
limit, in high quality tax-exempt securities with short-term
maturities (see page 7).
- --------------------------------------------------------------------------------
Investment Dean Witter InterCapital Inc., the Investment Manager of the
Manager Fund, and its wholly-owned subsidiary, Dean Witter Services
Company Inc., serve in various investment management,
advisory, management and administrative capacities to
seventy-nine investment companies and other portfolios with
assets of approximately $71.2 billion at December 31, 1993
(see page 4).
- --------------------------------------------------------------------------------
Management The Investment Manager receives a monthly fee at the annual
Fee rate of 0.50% of daily net assets. (see page 5).
- --------------------------------------------------------------------------------
Dividends and Income dividends are paid monthly; short-term capital gains,
Capital Gains if any, are distributed at least annually; long-term capital
Distributions gains, if any, are distributed at least annually or retained
for reinvestment by the Fund (see page 11). Dividends and
distributions are automatically reinvested in additional
Shares at net asset value unless the Shareholder elects to
receive cash.
- --------------------------------------------------------------------------------
Redemption Shares are redeemable by the shareholder at net asset value
(without redemption or other charge). An account may be
involuntarily redeemed if the total value of the account is
less than $100 and the Shareholder owns no Units or has
elected that no distributions on any Units owned by such
Shareholder be invested in Shares of the Fund (see page 11).
- --------------------------------------------------------------------------------
Risks The value of the Fund's portfolio securities, and therefore
the Fund's net asset value per share, may increase or decrease
due to various factors, principally changes in prevailing
interest rates and the ability and willingness of the issuers
of the Fund's portfolio securities to pay interest and
principal on such obligations. The Fund may invest in
when-issued securities and variable rate obligations (see page
9).
- --------------------------------------------------------------------------------
THE ABOVE IS QUALIFIED IN ITS ENTIRETY BY THE DETAILED INFORMATION APPEARING
ELSEWHERE
IN THIS PROSPECTUS AND IN THE STATEMENT OF ADDITIONAL INFORMATION.
2
<PAGE>
SUMMARY OF FUND EXPENSES
- --------------------------------------------------------------------------------
The following table illustrates all expenses and fees that a shareholder of
the Fund will incur. The expenses and fees set forth in the table are for the
fiscal year ended December 31, 1993.
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<S> <C>
Maximum Sales Charge Imposed on Purchases................................................ None
Maximum Sales Charge Imposed on Reinvested Dividends..................................... None
Deferred Sales Charge.................................................................... None
Redemption Fees.......................................................................... None
Exchange Fee............................................................................. None
</TABLE>
ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS)
<TABLE>
<S> <C>
Management Fees.......................................................................... 0.50%
Other Expenses........................................................................... 0.52%
Total Fund Operating Expenses............................................................ 1.02%
</TABLE>
EXAMPLE
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------- --------- --------- -----------
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000 investment,
assuming (1) 5% annual return and (2) redemption at the end of each time
period:....................................................................... $10 $32 $56 $125
</TABLE>
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES OR PERFORMANCE. ACTUAL EXPENSES OF THE FUND MAY BE GREATER OR
LESS THAN THOSE SHOWN.
The purpose of this table is to assist the investor in understanding the
various costs and expenses that an investor in the Fund will bear directly or
indirectly. For a more complete description of these costs and expenses, see
"The Fund and its Management."
3
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The following per share data and ratios for a share of beneficial interest
outstanding throughout each period have been audited by Price Waterhouse,
independent accountants. The financial highlights should be read in conjunction
with the financial statements, notes thereto and the unqualified report of
independent accountants which are contained in the Statement of Additional
Information. Further information about the performance of the Fund is contained
in the Fund's Annual Report to Shareholders, which may be obtained without
charge upon request to the Fund.
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------------------
1993 1992 1991 1990 1989 1988
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of
period............................. $ 12.12 $ 11.89 $ 11.25 $ 11.41 $ 11.08 $ 10.60
--------- --------- --------- --------- --------- ---------
Investment income--net............ 0.67 0.70 0.71 0.70 0.68 0.70
Realized and unrealized gain
(loss) on investments--net....... 0.75 0.32 0.62 (0.15) 0.33 0.49
--------- --------- --------- --------- --------- ---------
Total from investment operations.... 1.42 1.02 1.33 0.55 1.01 1.19
--------- --------- --------- --------- --------- ---------
Less dividends and distributions:
Dividends from net investment
income........................... (0.67) (0.70) (0.69) (0.71) (0.68) (0.70)
Distributions from net realized
gain on investments.............. (0.05) (0.09) -0- -0- -0- (0.01)
--------- --------- --------- --------- --------- ---------
Total dividends and distributions... (0.72) (0.79) (0.69) (0.71) (0.68) (0.71)
--------- --------- --------- --------- --------- ---------
Net asset value, end of period...... $ 12.82 $ 12.12 $ 11.89 $ 11.25 $ 11.41 $ 11.08
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
TOTAL INVESTMENT RETURN............... 11.99% 8.88% 12.04% 5.27% 9.47% 11.42%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands)......................... $96,265 $75,918 $67,903 $60,304 $52,485 $44,769
Ratio of expenses to average net
assets............................. 1.02% 1.14% 1.20% 1.21% 1.40% 1.41%
Ratio of net investment income to
average net assets................. 5.25% 5.79% 6.06% 6.12% 5.90% 6.27%
Portfolio turnover rate............. 9% 13% 30% 22% 15% 13%
<FN>
- ---------------
*NET OF EXPENSE REIMBURSEMENT.
<CAPTION>
1987 1986 1985 1984
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of
period............................. $ 11.85 $ 11.41 $ 10.14 $ 10.11
--------- --------- --------- ---------
Investment income--net............ 0.72 0.76 0.82 0.73
Realized and unrealized gain
(loss) on investments--net....... (1.15) 1.31 1.28 0.01
--------- --------- --------- ---------
Total from investment operations.... (0.43) 2.07 2.10 0.74
--------- --------- --------- ---------
Less dividends and distributions:
Dividends from net investment
income........................... (0.72) (0.77) (0.82) (0.71)
Distributions from net realized
gain on investments.............. (0.10) (0.86) (0.01) -0-
--------- --------- --------- ---------
Total dividends and distributions... (0.82) (1.63) (0.83) (0.71)
--------- --------- --------- ---------
Net asset value, end of period...... $ 10.60 $ 11.85 $ 11.41 $ 10.14
--------- --------- --------- ---------
--------- --------- --------- ---------
TOTAL INVESTMENT RETURN............... (3.53%) 19.33% 21.38% 7.91%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands)......................... $40,938 $38,058 $19,802 $7,070
Ratio of expenses to average net
assets............................. 1.36% 1.50%* 1.50%* 1.50%*
Ratio of net investment income to
average net assets................. 6.37% 6.30% 7.34% 7.98%
Portfolio turnover rate............. 43% 35% 129% 76%
<FN>
- ---------------
*NET OF EXPENSE REIMBURSEMENT.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
THE FUND AND ITS MANAGEMENT
- --------------------------------------------------------------------------------
Dean Witter Select Municipal Reinvestment Fund (the "Fund") is an open-end
diversified management investment company. The Fund is a trust of the type
commonly known as a "Massachusetts business trust" and was organized under the
laws of Massachusetts on June 1, 1983.
Dean Witter InterCapital Inc. ("InterCapital" or the "Investment Manager"),
whose address is Two World Trade Center, New York, New York 10048, is the Fund's
Investment Manager. The Investment Manager, which was incorporated in July,
1992, is a wholly-owned subsidiary of Dean Witter, Discover &
4
<PAGE>
Co. ("DWDC"), a balanced financial services organization providing a broad range
of nationally marketed credit and investment products.
InterCapital and its wholly-owned subsidiary, Dean Witter Services Company
Inc., serve in various investment management, advisory, management and
administrative capacities to seventy-nine investment companies, twenty-seven of
which are listed on the New York Stock Exchange, with combined total assets of
approximately $69.2 billion as of December 31, 1993. The Investment Manager also
manages portfolios of pension plans, other institutions and individuals which
aggregated approximately $2.0 billion at such date.
The Fund has retained the Investment Manager to provide administrative
services, manage its business affairs and manage the investment of the Fund's
assets, including the placing of orders for the purchase and sale of portfolio
securities. InterCapital has retained Dean Witter Services Company Inc. to
perform the aforementioned administrative services for the Fund.
The Fund's Trustees review the various services provided by or under the
direction of the Investment Manager to ensure that the Fund's general investment
policies and programs are being properly carried out and that administrative
services are being provided to the Fund in a satisfactory manner.
As full compensation for the services and facilities furnished to the Fund
and for expenses of the Fund assumed by the Investment Manager, the Fund pays
the Investment Manager monthly compensation calculated daily by applying the
annual rate of 0.50% to the Fund's net assets. For the fiscal year ended
December 31, 1993, the Fund accrued total compensation to the Investment Manager
amounting to 0.50% of the Fund's average daily net assets and the Fund's total
expenses amounted to 1.02% of the Fund's average daily net assets.
TERMS AND CONDITIONS OF PARTICIPATION
- --------------------------------------------------------------------------------
Dean Witter Select Municipal Trust (the "Unit Trust") consists of a number
of different unit investment trust series holding portfolios of state, municipal
and public authority bonds. The Fund has been established to facilitate
reinvestment of distributions on units (the "Units") of the various series of
the Unit Trust.
All persons who are or who become holders of Units of any series of the Unit
Trust offering a reinvestment option ("Holders") are eligible to invest in the
Fund. In addition to individuals, Holders may be brokers or nominees of banks or
other financial institutions which are or which become holders of Units.
Eligibility is subject to the following terms and conditions of participation:
Distributions on Units of series of the Unit Trust offering a reinvestment
option will be paid in cash unless Holders elect to reinvest such distributions
in the Fund by sending a notice in writing to the Trustee of the Unit Trust or
by notifying their broker, who in turn will advise the Trustee of the Unit Trust
of such election. Each Holder participating in the Fund will receive a copy of
the current Fund prospectus (the "Prospectus") and a form of notice of election;
a Holder not participating in the Fund may request a copy of the Prospectus. The
notice of election accompanying this Prospectus may be used by Holders of Units
registered in their names to elect to participate in the Fund or to change a
previous election. Notice of any change in the basis of participation or of
election to participate in the Fund must be received by the Trustee of the Unit
Trust in writing at least ten (10) calendar days prior to the record date for
the first distribution to which such notice is to apply.
5
<PAGE>
Under these Terms and Conditions, both distributions of interest income and
distributions of principal (including capital gains, if any) on Units of Holders
participating in the Fund will be invested without sales charge in shares of the
Fund ("Shares"). Holders who are participating in the Fund and whose Units are
therefore subject to these Terms and Conditions are herein called
"Shareholders".
Dean Witter Trust Company, Harborside Financial Center, Plaza Two, Jersey
City, New Jersey 07311, acts as the agent (the "Agent") for the Shareholders.
The Agent also serves as the Transfer Agent of the Fund's Shares, and Dividend
Disbursing Agent for payment of dividends and distributions on Shares of the
Fund, and performs certain other services for the Fund.
Under these Terms and Conditions, each distribution of interest income and
principal (including capital gains, if any) on a Shareholder's Units will, no
later than the business day following the date of such distribution,
automatically be received by the Agent on behalf of such Shareholder and be
applied to purchase Shares at net asset value without sales charge. The proceeds
of redemption or payment at maturity of securities held in the unit investment
trusts represented by the Shareholder's Units will be invested in Shares of the
Fund, rather than being distributed in cash to the Holder. The Fund's net
investment income dividends and net realized capital gains distributions, if
any, will be automatically reinvested in additional Shares of the Fund at net
asset value unless the Shareholder elects, by written notice to the Agent, not
to have such dividends and distributions reinvested in Shares (see "Dividends,
Distributions and Taxes").
In addition to their right to redeem their Shares and receive a payment
equal to the net asset value thereof (see "Redemptions and Repurchases"),
Shareholders may at any time by so notifying the Agent in writing (the Agent
will deliver a copy of such notice to the Trustee for the respective series of
the Unit Trust) elect to terminate their participation in the Fund and
thereafter receive all future distributions on their Units in cash.
Each Shareholder will be sent a confirmation of each shareholder-instituted
transaction and a summary, at least quarterly, of all transactions undertaken
for such Shareholder in receiving distributions on Units and purchasing Shares.
Distributions on Units which are applied to purchase Shares are considered to
have been distributed to Shareholders for federal income tax purposes, and all
taxes which are payable with respect to such distributions must be paid by
Shareholders regardless of participation in the Fund.
On tender for redemption of any or all of his or her Shares, a Shareholder
will be entitled to receive within seven days a payment representing the net
asset value of the Shares (including fractional Shares), provided that such
right of redemption may be suspended or postponed under certain circumstances
described under "Redemptions and Repurchases".
If the Holder is a broker or a nominee of a bank or another financial
institution, the Trustee and Agent will apply these Terms and Conditions on the
basis of the respective numbers of Units certified from time to time by such
Holder to be the total numbers of Units registered in such Holder's name and
held for the accounts of beneficial owners who are to participate in the Fund,
upon the bases of participation offered by the Fund at the time.
Experience may indicate that changes in these Terms and Conditions are
desirable or that this offering should be terminated, and, subject to the
provisions of the Investment Company Act of 1940, such changes may be made or
this offering may be terminated at the direction of the Trustees of the Fund
without prior notice to any Shareholder. The Trustees may at any time appoint a
substitute Agent or an additional agent to act for the Fund.
6
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
- --------------------------------------------------------------------------------
The investment objective of the Fund is to provide a high level of current
income which is exempt from federal income tax, consistent with the preservation
of capital. In pursuit of this objective, the Fund has adopted a policy of
investing exclusively in obligations on which the interest income is, in the
opinion of counsel to the issuing authorities, exempt from federal income tax.
The foregoing objective and policy are fundamental and neither can be changed
without shareholder approval. There is no assurance that the objective will be
achieved. The following policies may be changed by the Board of Trustees without
shareholder approval.
The Fund seeks to achieve its investment objective by investing principally
in Municipal Bonds, Municipal Notes and Municipal Commercial Paper (a) at least
75% of which are (i) Municipal Bonds rated at the time of purchase within the
three highest ratings for municipal obligations by Moody's Investors Service,
Inc. ("Moody's") or Standard & Poor's Corporation ("S&P"); (ii) Municipal Notes
of issuers which at the time of purchase are rated in the two highest grades by
Moody's or S&P or, if not rated, have outstanding one or more issues of
Municipal Bonds rated as set forth in clause (i) above and (iii) Municipal
Commercial Paper which is rated at the time of purchase in the two highest
grades by Moody's or S&P or, if not rated, is of comparable quality as
determined by the Trustees and (b) up to 25% of which may be Municipal Bonds or
Notes which are not rated by Moody's or S&P or, if rated, are not within the
three highest Bond rating categories of Moody's or S&P or the two highest Note
rating categories of Moody's or S&P. A description of tax-exempt securities
ratings is contained in the Appendix to the Statement of Additional Information.
While the Fund may invest up to 25% of its total assets in Municipal Bonds
and Notes which are unrated or, if rated, are not within the three highest Bond
rating categories of Moody's or S&P or the two highest Note rating categories of
Moody's or S&P, the Fund does not intend to invest in Municipal Bonds which are
rated below either Baa by Moody's or BBB by S&P (the lowest ratings considered
investment grade) or, if not rated, are deemed by the Investment Manager to be
below investment grade in amounts exceeding 5% of its total assets. Investments
in Municipal Bonds rated either Baa by Moody's or BBB by S&P may have
speculative characteristics and, therefore, changes in economic conditions or
other circumstances are more likely to weaken their capacity to make principal
and interest payments than would be the case with investments in securities with
higher credit ratings. Municipal Bonds rated below investment grade may not
currently be paying any interest and may have extremely poor prospects of ever
attaining any real investment standing.
The percentage and rating policies discussed above apply at the time of
acquisition of a security based upon the last previous determination of the
Fund's net asset value; any subsequent change in any ratings by a rating service
or change in percentages resulting from market fluctuations or other changes in
the amount of total assets will not require elimination of any security from the
Fund's portfolio until such time as the Investment Manager determines that it is
practicable to sell the security without undue market or tax consequences to the
Fund.
While the Fund will ordinarily invest primarily in long term (i.e., maturity
of one year or more) Municipal Bonds and Notes, at times the Fund may, without
limit, hold its assets in cash or invest its assets in tax-exempt securities
with short-term maturities which are rated in the two highest categories by
either Moody's or S&P (principally Municipal Bonds, Notes and Commercial Paper)
or, if not rated, are of comparable quality as determined by the Trustees. Such
investments may be substantial under any one or more of the following
circumstances: (a) pending investment of distributions on Units or
7
<PAGE>
proceeds of sale of portfolio securities; (b) pending settlement of purchases of
portfolio securities; (c) to maintain liquidity for the purpose of meeting
anticipated redemptions; or (d) in order to maintain a "defensive" posture when,
in the opinion of the Investment Manager, it is advisable to do so because of
market conditions.
Municipal Bonds and Municipal Notes are debt obligations of a state, its
agencies, authorities or municipalities which generally have maturities, at the
time of their issuance, of either one year or more (Bonds) or from six months to
three years (Notes). Municipal Commercial Paper refers to short-term obligations
of municipalities. Any Municipal Bond or Municipal Note which depends directly
or indirectly on the credit of the federal government, its agencies or
instrumentalities shall be considered to have a Moody's rating of Aaa or an S&P
rating of AAA.
The Fund does not anticipate that it will invest in tax-exempt securities
which are subject to the federal alternative minimum tax for individual
shareholders.
The two principal classifications of Municipal Bonds, Notes and Commercial
Paper are "general obligation" and "revenue" bonds, notes or commercial paper.
General obligation bonds, notes or commercial paper are secured by the issuer's
pledge of its faith, credit and taxing power for the timely payment of principal
and interest. Issuers of general obligation bonds, notes or commercial paper
include a state, its counties, cities, towns and other governmental units.
Revenue bonds, notes or commercial paper are payable from the revenues derived
from a particular facility or class of facilities or, in some cases, from
specific revenue sources. Revenue bonds, notes or commercial paper are issued
for a wide variety of purposes, including the financing of electric, gas, water
and sewer systems and other public utilities; industrial development and
pollution control facilities; single and multi-family housing units; public
buildings and facilities; air and marine ports; transportation facilities such
as toll roads, bridges and tunnels; and health and educational facilities such
as hospitals and dormitories. They rely primarily on user fees to pay debt
service, although the principal revenue source is often supplemented by
additional security features which are intended to enhance the creditworthiness
of the issuer's obligations. In some cases, particularly revenue bonds issued to
finance housing and public buildings, a direct or implied "moral obligation" of
a governmental unit may be pledged to the payment of debt service. In other
cases, a special tax or other charge may augment user fees.
Included within the revenue bonds category are participations in lease
obligations or installment purchase contracts (hereinafter collectively called
"lease obligations") of municipalities. State and local governments issue lease
obligations to acquire equipment and facilities.
Lease obligations may have risks not normally associated with general
obligation or other revenue bonds. Leases and installment purchase or
conditional sale contracts (which may provide for title to the leased asset to
pass eventually to the issuer or lessee) have developed as a means for
governmental issuers to acquire property and equipment without the necessity of
complying with the constitutional and statutory requirements generally
applicable for the issuance of debt. Certain lease obligations contain
"non-appropriation" clauses that provide that the governmental issuer has no
obligation to make future payments under the lease or contract unless money is
appropriated for such purpose by the appropriate legislative body on an annual
or other periodic basis. Consequently, continued lease payments on those lease
obligations containing "non-appropriation" clauses are dependent on future
legislative actions. If such legislative actions do not occur, the holders of
the lease obligation may experience difficulty in exercising their rights,
including disposition of the property.
Lease obligations represent a relatively new type of financing that has not
yet developed the depth of marketability associated with more conventional
municipal obligations, and, as a result,
8
<PAGE>
certain of such lease obligations may be considered illiquid securities. To
determine whether or not the Fund will consider such securities to be illiquid
(the Fund may not invest more than ten percent of its net assets in illiquid
securities), the Trustees of the Fund have established guidelines to be utilized
by the Fund in determining the liquidity of a lease obligation. The factors to
be considered in making the determination include: (1) the frequency of trades
and quoted prices for the obligation, (2) the number of dealers willing to
purchase or sell the security and the number of other potential purchasers, (3)
the willingness of dealers to undertake to make a market in the security, and
(4) the nature of the marketplace trades, including the time needed to dispose
of the security, the method of soliciting offers, and the mechanics of the
transfer.
The value of the Fund's portfolio securities, and therefore the Fund's net
asset value per share, may increase or decrease due to various factors,
principally changes in prevailing interest rates and the ability and willingness
of the issuers of the Fund's portfolio securities to pay interest and principal
on such obligations. Generally a rise in interest rates will result in a
decrease in the Fund's net asset value per share, while a drop in interest rates
will result in an increase in the Fund's net asset value per share. Because
there is no restriction on the maximum maturities of the obligations that may be
purchased for the Fund's portfolio, average portfolio maturity is not subject to
any limit. As a general matter, the longer the average portfolio maturity, the
greater will be the impact of fluctuations in interest rates on the value of the
Fund's net assets and on its net asset value per share.
VARIABLE RATE OBLIGATIONS. The interest rates payable on certain securities
in which the Fund may invest are not fixed and may fluctuate based upon changes
in market rates. Obligations of this type are called "variable rate"
obligations. The interest rate payable on a variable rate obligation is adjusted
either at predesignated periodic intervals or whenever there is a change in the
market rate of interest on which the interest rate payable is based.
WHEN-ISSUED AND DELAYED DELIVERY SECURITIES. The Fund may purchase
tax-exempt securities on a when-issued or delayed delivery basis; i.e., delivery
and payment can take place a month or more after the date of the transaction.
These securities are subject to market fluctuation and no interest accrues to
the purchaser prior to settlement. At the time the Fund makes the commitment to
purchase such securities, it will record the transaction and thereafter reflect
the value each day of such security in determining its net asset value.
PORTFOLIO MANAGEMENT
The Fund is actively managed by the Investment Manager with a view to
achieving the Fund's investment objective. The Fund is managed within
InterCapital's Municipal Fixed Income Group, which manages thirty-six tax-exempt
municipal funds and fund portfolios, with approximately $12 billion in assets as
of December 31, 1993. James F. Willison, Senior Vice President of InterCapital
and Manager of InterCapital's Municipal Fixed Income Group, has been the primary
portfolio manager of the Fund since its inception and has been a portfolio
manager at InterCapital for over five years.
Securities are purchased and sold principally in response to the Investment
Manager's current evaluation of an issuer's ability to meet its debt obligations
in the future, and the Investment Manager's current assessment of future changes
in the levels of interest rates on tax-exempt securities of varying maturities.
Securities purchased by the Fund are, generally, sold by dealers acting as
principal for their own accounts. The Fund may incur brokerage commissions on
transactions conducted through Dean Witter Reynolds Inc. ("DWR"), a
broker-dealer affiliate of InterCapital.
The portfolio trading engaged in by the Fund may result in its portfolio
turnover rate exceeding 100%. The Fund will incur underwriting discount costs
(on underwritten securities) and brokerage costs commensurate with its portfolio
turnover rate. Short-term gains and losses may result from such portfolio
transactions. See "Dividends, Distributions
9
<PAGE>
and Taxes" for a discussion of the tax implications of the Fund's trading
policy. A more extensive discussion of the Fund's portfolio brokerage policies
is set forth in the Statement of Additional Information.
INVESTMENT RESTRICTIONS
- --------------------------------------------------------------------------------
The following investment restrictions are among the restrictions that have
been adopted by the Fund as fundamental policies. Under the Investment Company
Act of 1940, as amended (the "Act"), a fundamental policy may not be changed
without the vote of a majority of the outstanding voting securities of the Fund,
as defined in the Act.
The Fund may not:
1. Invest more than 5% of the value of its total assets in the
securities of any one issuer (other than obligations issued or guaranteed by
the United States Government, its agencies or instrumentalities).
2. Purchase more than 10% of all outstanding debt securities of any one
issuer (other than obligations issued, or guaranteed
as to principal and interest, by the United States Government, its agencies
or instrumentalities).
3. Invest more than 25% of the value of its total assets in securities
of issuers in any one industry (other than obligations issued or guaranteed
by the United States Government, its agencies or instrumentalities.
Industrial development and pollution control bonds are grouped into
industries based upon the business in which the issuers of such obligations
are engaged).
All percentage limitations apply immediately after a purchase or initial
investment, and any subsequent change in any applicable percentage resulting
from market fluctuations or other changes in the amount of total or net assets
does not require elimination of any security from the portfolio.
REDEMPTIONS AND REPURCHASES
- --------------------------------------------------------------------------------
REDEMPTIONS. Shares of the Fund can be redeemed for cash at any time at net
asset value per share (without any redemption or other charge). A written
request for redemption is required. Each request for redemption must be sent to
the Agent, Dean Witter Trust Company, at P.O. Box 983, Jersey City, New Jersey
07303, which will redeem the shares at net asset value next determined (see
"Determination of Net Asset Value" below) after receipt of the redemption
request in good order. The term "good order" means that the request for
redemption is properly signed, accompanied by any documentation required by the
Agent, and bears signature guarantees when required by the Fund or the Agent. If
the proceeds are to be paid to any person other than the record owner, or if the
proceeds are to be paid to a corporation (other than Dean Witter Reynolds Inc.
for the account of the Shareholder), partnership, trust or fiduciary, or sent to
the Shareholder at an address other than the registered address, signature(s)
must be guaranteed by a commercial bank or trust company (not a savings bank),
or a member firm of a national securities exchange. A stock power may be
obtained from any dealer or commercial bank. The Fund may change the signature
guarantee requirements upon notice to Shareholders, which may be by means of a
new prospectus.
REPURCHASES. Dean Witter Reynolds Inc. ("DWR") is authorized to repurchase
shares upon the telephonic request of the Shareholder. The repurchase price is
the net asset value per share next determined as follows: Repurchase orders
received by DWR prior to 4:00 p.m. New York time on any business day will be
priced at the net asset value per share that is based on that day's close.
Repurchase orders received by DWR after 4:00 p.m. New York time will be priced
on the basis of the next
10
<PAGE>
business day's close. Neither the Fund nor DWR charges a fee. The offer by DWR
to repurchase shares from Shareholders may be suspended by DWR at any time. In
that event Shareholders may redeem their shares through the Fund's Agent as set
forth above under "Redemptions."
PAYMENT FOR SHARES REDEEMED OR REPURCHASED. Payment for shares presented
for redemption will be made by check within seven days after receipt by the
Agent of the written request in good order. Payment for shares repurchased will
be made by the Fund to DWR for the account of the Shareholder within three
business days of the repurchase request to DWR. Such payment may be postponed or
the right of redemption suspended under unusual circumstances at times when
normal trading is not taking place on the New York Stock Exchange.
REINSTATEMENT PRIVILEGE. A Shareholder who has had his or her Shares
redeemed or repurchased and has not previously exercised this reinstatement
privilege may, within thirty days after the date of the redemption or
repurchase, reinstate any portion or all of the proceeds of such redemption or
repurchase in Shares of the Fund at net asset value (without sales charge) next
determined after a reinstatement request, together with the proceeds, is
received by the Agent.
INVOLUNTARY REDEMPTION. Due to the relatively high cost of handling small
investments, the Fund reserves the right to redeem, at net asset value, the
Shares of any Shareholder whose Shares have a value of less than $100 as a
result of redemptions or repurchases, or such lesser amount as may be fixed by
the Board of Trustees, if the Shareholder owns no Units or has elected that no
distributions on any Units owned by such Shareholder be invested in Shares.
However, before the Fund redeems such Shares and sends the proceeds to the
Shareholder, it will notify the Shareholder that the value of his or her Shares
is less than $100 and allow him or her sixty days to elect to have distributions
on Units owned by such Shareholder invested in Shares or to purchase Shares to
bring his or her account up to a net asset value of $100 and thereby avoid such
redemption.
DETERMINATION OF NET ASSET VALUE
The net asset value per share of the Fund is determined as of 4:00 p.m., New
York time, on each day that the New York Stock Exchange is open, by taking the
value of all assets of the Fund, subtracting its liabilities, dividing by the
number of Shares outstanding and adjusting to the nearest cent. The net asset
value per share will not be determined on Good Friday and on such other federal
and non-federal holidays as are observed by the New York Stock Exchange.
Portfolio securities are valued for the Fund by an outside independent pricing
service approved by the Fund's Board of Trustees. The service utilizes a
computerized grid matrix of tax-exempt securities and evaluations by its staff
in determining what it believes is the fair value of the Fund's portfolio
securities. The Board believes that timely and reliable market quotations are
generally not readily available to the Fund for purposes of valuing tax-exempt
securities and that the valuations supplied by the pricing service are more
likely to approximate the fair value of such securities.
DIVIDENDS, DISTRIBUTIONS AND TAXES
- --------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS. The Fund intends to pay monthly dividends of
substantially all of its net investment income to the registered holders of its
Shares. Substantially all of the Fund's net short-term capital gains, if any, in
excess of any net long-term capital losses will be distributed at least once per
year. Such dividends are treated by the Shareholder as ordinary income for
federal income tax purposes. It is intended that monthly dividends will be paid
within fifteen days after the end of the respective month. The Fund may,
however, determine either to distribute at least once per year or to retain all
or part of any net long-term capital gains in excess of any net short-term
capital losses in any year for reinvestment.
11
<PAGE>
All dividends and any capital gains distributions will be paid in additional
Fund Shares (without sales charge) and automatically credited to the
Shareholder's account unless the Shareholder requests in writing that all
dividends and distributions be paid in cash. At any time a Shareholder may
request the Agent in writing to have subsequent dividends and capital gains
distributions paid to him or her in cash, rather than Shares. In order to
provide sufficient time to process the change, such requests should be received
by the Agent at least five (5) business days prior to the record date for which
it commences to take effect.
Each Shareholder will be sent a summary of his or her account, including
information as to reinvested dividends and capital gains distributions, at least
quarterly.
TAXES. Because the Fund currently intends to distribute all of its net
investment income and capital gains to shareholders and intends to otherwise
comply with all the provisions of Subchapter M of the Internal Revenue Code to
continue to qualify as a regulated investment company, it is not expected that
the Fund will be required to pay any federal income tax (if the Fund does retain
any net long-term capital gains it will pay federal income tax thereon, and
shareholders will be required to include such undistributed gains in their
taxable income and will be able to claim their share of the tax paid by the Fund
as a credit against their individual federal income tax).
The Fund intends to qualify to pay "exempt-interest dividends" to its
shareholders by maintaining, as of the close of each quarter of its taxable
year, at least 50% of the value of its total assets in tax-exempt securities.
Exempt-interest dividends reflect interest received by the Fund on tax-exempt
obligations. Shareholders will not incur any federal income tax on the amount of
exempt-interest dividends received by them from the Fund whether taken in cash
or reinvested in additional shares. Exempt-interest dividends are included,
however, in determining what portion, if any, of a person's Social Security
benefits are subject to federal income tax. It should be noted, however, that
certain corporations which are subject to the alternative minimum tax may have
to include a portion of exempt-interest dividends in calculating their
alternative minimum taxable income in situations where the "adjusted current
earnings" of the corporation exceeds its alternative minimum taxable income.
Under the Revenue Reconciliation Act of 1993, all or a portion of the Fund's
gain from the sale or redemption of tax-exempt obligations purchased at a market
discount after April 30, 1993 will be treated as ordinary income rather than
capital gain. This rule may increase the amount of ordinary income dividends
received by shareholders.
Within sixty days after the end of the calendar year, the Fund will mail to
Shareholders a statement indicating the percentage of the dividend distributions
for such year which constitutes exempt-interest dividends and the percentage, if
any, that is taxable, and to what extent the taxable portion is long-term or
short-term capital gain.
Shareholders will normally be subject to federal income tax on distributions
of net capital gains. For federal income tax purposes, distributions of long-
term capital gains, if any, are taxable as long-term capital gains, regardless
of how long the shareholder has held the Fund Shares and regardless of whether
the distribution is received in additional Shares or in cash. To avoid being
subject to a 31% backup withholding tax on capital gains distributions and the
proceeds of redemptions and repurchases, shareholders' taxpayer identification
numbers must be furnished and certified as to accuracy.
Any loss on the sale or exchange of shares of the Fund which are held for
six months or less is disallowed to the extent of the amount of any
exempt-interest dividend paid with respect to such shares. Treasury Regulations
may provide for a reduction in such required holding periods. If a Shareholder
receives a distribution that is taxed as a long-term capital gain on shares held
for six months or less and sells those shares at a loss, the loss will be
treated as a long-term capital loss.
The exemption of interest income for federal income tax purposes does not
necessarily result in
12
<PAGE>
exemption under the income or other tax laws of any state or local taxing
authority. Thus, Shareholders of the Fund may be subject to state and local
taxes on exempt-interest dividends. Interest on indebtedness incurred by
shareholders or related parties to purchase or carry shares of an investment
company paying exempt-interest dividends, such as the Fund, will not be
deductible by the investor for federal personal income tax purposes and may not
be deductible by the investor for state personal income tax purposes.
Shareholders should consult their tax advisers as to the applicability of
the above to their own tax situation.
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
From time to time the Fund may quote its "yield" and/or its "total return"
in advertisements and sales literature. Both the yield and the total return of
the Fund are based on historical earnings and are not intended to indicate
future performance. The yield of the Fund is computed by dividing the Fund's net
investment income over a 30-day period by an average value (using the average
number of shares entitled to receive dividends and the net asset value per share
at the end of the period), all in accordance with applicable regulatory
requirements. Such amount is compounded for six months and then annualized for a
twelve-month period to derive the Fund's yield. The Fund may also quote its
tax-equivalent yield, which is calculated by determining the pre-tax yield
which, after being taxed at a stated rate, would be equivalent to the yield
determined as described above.
The "average annual total return" of the Fund refers to a figure reflecting
the average annualized percentage increase (or decrease) in the value of an
initial investment in the Fund of $1,000 over periods of one and five years, as
well as over the life of the Fund. Average annual total return reflects all
income earned by the Fund, any appreciation or depreciation of the Fund's assets
and all expenses incurred by the Fund, for the stated periods. It also assumes
reinvestment of all dividends and distributions paid by the Fund.
In addition to the foregoing, the Fund may advertise its total return over
different periods of time by means of aggregate, average, year-by-year or other
types of total return figures. The Fund may also advertise the growth of
hypothetical investments of $10,000, $50,000 and $100,000 in shares of the Fund.
The Fund from time to time may also advertise its performance relative to
certain performance rankings and indexes compiled by independent organizations.
ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
VOTING RIGHTS. All Shares of beneficial interest of the Fund are of $0.01
par value and are equal as to earnings, assets and voting privileges.
The Fund is not required to hold Annual Meetings of Shareholders and in
ordinary circumstances the Fund does not intend to hold such meetings. The
Trustees may call Special Meetings of Shareholders for action by shareholder
vote as may be required by the Act or the Declaration of Trust. Under certain
circumstances the Trustees may be removed by action of the Trustees or by the
Shareholders.
Under Massachusetts law, shareholders of a business trust may, under certain
circumstances, be held personally liable as partners for the obligations of the
Fund. However, the Declaration of Trust contains an express disclaimer of
Shareholder liability for acts or obligations of the Fund, requires that Fund
obligations include such disclaimer, and provides for indemnification and
reimbursement of
13
<PAGE>
expenses out of the Fund's property for any Shareholder held personally liable
for the obligations of the Fund. Thus, the risk of a Shareholder incurring
financial loss on account of Shareholder liability is limited to circumstances
in which the Fund itself would be unable to meet its obligations. Given the
above limitations on Shareholder personal liability, and the nature of the
Fund's assets and operations, the possibility of the Fund being unable to meet
its obligations is remote and, in the opinion of Massachusetts counsel to the
Fund, the risk to Fund Shareholders of personal liability is remote.
SHAREHOLDER INQUIRIES. All inquiries regarding the Fund should be directed
to the Fund at the telephone numbers or address set forth on the front cover of
this Prospectus.
14
<PAGE>
No
Postage
Necessary
If
Mailed
In
The
United
States
BUSINESS REPLY MAIL
-
-
FIRST CLASS PERMIT NO. 40864 NEW YORK, N.Y.
-
-
-
POSTAGE WILL BE PAID BY ADDRESSEE
-
-
-
UNITED STATES TRUST COMPANY OF NEW YORK
-
DEAN WITTER UNIT TRUST REINVESTMENT PROGRAM
-
CORPORATE TRUST AND AGENCY SERVICES
P.O. BOX 888 COOPER STATION
NEW YORK, N.Y. 10276
<PAGE>
AUTHORIZATION FOR REINVESTMENT
I (we) hereby authorize United States Trust Company to direct my (our)
monthly payments representing interest and principal, if any, on my (our) Units
of the Dean Witter Select Municipal Trust to Dean Witter Trust Company, the
Agent for the Dean Witter Select Municipal Reinvestment Fund. I (we) understand
that this authorization applies to all my (our) Units of the Series of the Trust
indicated below, and that such authorization will remain in effect until such
time as I (we) notify United States Trust Company in writing to the contrary.
I (we) acknowledge receipt of the Prospectus for the Dean Witter Select
Municipal Reinvestment Fund. All dividends and capital gains of the Fund will be
reinvested unless the Fund's agent is notified in writing to the contrary.
Under penalties of perjury, I certify (1) that the number shown on this form
is my correct taxpayer identification number and (2) that I am not subject to
backup withholding either because I have not been notified that I am subject to
backup withholding as a result of a failure to report all interest or dividends,
or the Internal Revenue Service has notified me that I am no longer subject to
backup withholding.
<TABLE>
<S> <C>
Please print exact registration of Units: Dean Witter Select Municipal Trust Series for which this
Name authorization is given:
Address (Series number and portfolio)
City, State & Zip Dealer's Name
Soc. Sec./Tax I.D. Number Dealer's City & State
Account Number at Dealer
</TABLE>
Signature(s) of Unit Holder(s)______________ Date ______________________________
(All joint owners must sign)
Please contact your account executive if your Units are held by dealer.
<PAGE>
<TABLE>
<S> <C> <C>
Dean Witter
Select Municipal
Reinvestment
Fund
Dean Witter
Select Municipal Reinvestment Fund
Two World Trade Center
New York, New York 10048
Board of Trustees
Jack F. Bennett
Charles A. Fiumefreddo
Edwin J. Garn
John R. Haire
Dr. John E. Jeuck
Dr. Manuel H. Johnson
Paul Kolton
Michael E. Nugent
Albert T. Sommers
Edward R. Telling
Officers
Charles A. Fiumefreddo
Chairman and Chief Executive Officer
Sheldon Curtis
Vice President, Secretary and
General Counsel
James F. Willison
Vice President
Thomas F. Caloia
Treasurer
Custodian
The Bank of New York
110 Washington Street
New York, New York 10286
Transfer Agent and
Dividend Disbursing Agent
Dean Witter Trust Company
Harborside Financial Center
Plaza Two
Jersey City, New Jersey 07311
Independent Accountants
Price Waterhouse
1177 Avenue of the Americas
New York, New York 10036
Investment Manager
Dean Witter InterCapital Inc.
</TABLE>
Prospectus
2/11/94 February 11, 1994
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION DEAN WITTER
FEBRUARY 11, 1994 SELECT
MUNICIPAL
REINVESTMENT
FUND
- --------------------------------------------------------------------------------
Dean Witter Select Municipal Reinvestment Fund (the "Fund") is an open-end
diversified management investment company whose investment objective is to
provide a high level of current income exempt from federal income tax,
consistent with preservation of capital. The Fund invests exclusively in
tax-exempt securities; principally in tax-exempt fixed-income securities with
long-term maturities which are rated in the three highest categories by Moody's
Investors Service, Inc. or Standard & Poor's Corporation (at times, the Fund may
invest, without limit, in high quality tax-exempt securities with short-term
maturities). (See "Investment Practices and Policies".)
A Prospectus for the Fund dated February 11, 1994, which provides the basic
information you should know before investing in the Fund, may be obtained
without charge from the Fund at the address or telephone number listed below.
This Statement of Additional Information is not a prospectus. It contains
information in addition to and more detailed than that set forth in the
Prospectus. It is intended to provide you additional information regarding the
activities and operations of the Fund, and should be read in conjunction with
the Prospectus.
Dean Witter
Select Municipal Reinvestment Fund
Two World Trade Center
New York, New York 10048
(212) 392-2550
<PAGE>
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
The Fund and Its Management............................................................ 3
Trustees and Officers.................................................................. 6
Investment Practices and Policies...................................................... 8
Investment Restrictions................................................................ 13
Portfolio Transactions and Brokerage................................................... 14
Terms and Conditions of Participation.................................................. 15
Redemptions and Repurchases............................................................ 15
Dividends, Distributions and Taxes..................................................... 16
Performance Information................................................................ 17
Description of Shares of the Fund...................................................... 18
Custodian and Transfer Agent........................................................... 19
Independent Accountants................................................................ 19
Reports to Shareholders................................................................ 19
Legal Counsel.......................................................................... 20
Experts................................................................................ 20
Registration Statement................................................................. 20
Financial Statements--December 31, 1993................................................ 21
Appendix--Ratings of Investments....................................................... 29
</TABLE>
2
<PAGE>
THE FUND AND ITS MANAGEMENT
- --------------------------------------------------------------------------------
THE FUND
The Fund was organized under the laws of the Commonwealth of Massachusetts
on June 1, 1983 under the name Sears Tax-Exempt Reinvestment Fund and is a trust
of the type commonly known as a "Massachusetts business trust." On February 19,
1993, the Trustees of the Fund adopted an Amendment to the Declaration of Trust
of the Fund changing the name of the Fund to Dean Witter Select Municipal
Reinvestment Fund.
THE INVESTMENT MANAGER
Dean Witter InterCapital Inc. (the "Investment Manager" or "InterCapital"),
a Delaware corporation, whose address is Two World Trade Center, New York, New
York 10048, is the Fund's Investment Manager. InterCapital is a wholly-owned
subsidiary of Dean Witter, Discover & Co. ("DWDC"), a Delaware corporation. In
an internal reorganization which took place in January, 1993, InterCapital
assumed the investment advisory, administrative and management activities
previously performed by the InterCapital Division of Dean Witter Reynolds Inc.
("DWR"), a broker-dealer affiliate of InterCapital. (As hereinafter used in this
Statement of Additional Information, the terms "InterCapital" and "Investment
Manager" refer to DWR's InterCapital Division prior to the internal
reorganization and Dean Witter InterCapital Inc. thereafter). As part of that
reorganization, Dean Witter Distributors Inc. ("Distributors") assumed the
investment company share distribution activities previously performed by DWR.
The daily management of the Fund and research relating to the Fund's portfolio
are conducted by or under the direction of officers of the Fund and of the
Investment Manager, subject to periodic review by the Fund's Board of Trustees.
In addition, the Trustees of the Fund provide guidance on economic factors and
interest rate trends. Information as to these Trustees and officers is contained
under the caption "Trustees and Officers."
InterCapital is also the investment manager or investment adviser of the
following investment companies: Dean Witter Liquid Asset Fund Inc., InterCapital
Income Securities Inc., InterCapital Insured Municipal Bond Trust, InterCapital
Insured Municipal Trust, InterCapital Insured Municipal Income Trust,
InterCapital California Insured Municipal Income Trust, InterCapital Quality
Municipal Investment Trust, InterCapital Quality Municipal Income Trust,
InterCapital Quality Municipal Securities, InterCapital California Quality
Municipal Securities, InterCapital New York Quality Municipal Securities, High
Income Advantage Trust, High Income Advantage Trust II, High Income Advantage
Trust III, Dean Witter Government Income Trust, Dean Witter High Yield
Securities Inc., Dean Witter Tax-Free Daily Income Trust, Dean Witter Developing
Growth Securities Trust, Dean Witter Tax-Exempt Securities Trust, Dean Witter
Natural Resource Development Securities Inc., Dean Witter Dividend Growth
Securities Inc., Dean Witter American Value Fund, Dean Witter U.S. Government
Money Market Trust, Dean Witter Variable Investment Series, Dean Witter World
Wide Investment Trust, Dean Witter U.S. Government Securities Trust, Dean Witter
California Tax-Free Income Fund, Dean Witter Equity Income Trust, Dean Witter
New York Tax-Free Income Fund, Dean Witter Convertible Securities Trust, Dean
Witter Federal Securities Trust, Dean Witter Value-Added Market Series, Dean
Witter Utilities Fund, Dean Witter Managed Assets Trust, Dean Witter Strategist
Fund, Dean Witter California Tax-Free Daily Income Trust, Dean Witter World Wide
Income Trust, Dean Witter Intermediate Income Securities, Dean Witter Capital
Growth Securities, Dean Witter European Growth Fund Inc., Dean Witter Pacific
Growth Fund Inc., Dean Witter Precious Metals and Minerals Trust, Dean Witter
Global Short-Term Income Fund Inc., Dean Witter Multi-State Municipal Series
Trust, Dean Witter Premier Income Trust, Dean Witter Short-Term U.S. Treasury
Trust, Dean Witter New York Municipal Money Market Trust, Dean Witter
Diversified Income Trust, Dean Witter Health Sciences Trust, Dean Witter
Retirement Series, Dean Witter Global Dividend Growth Securities, Dean Witter
Limited Term Municipal Trust, Dean Witter Short-Term Bond Fund, Active Assets
Money Trust, Active Assets Tax-Free Trust, Active Assets California Tax-Free
Trust, Active Assets Government Securities Trust, Municipal Income Trust,
Municipal Income Trust II, Municipal Income Trust III, Municipal Income
Opportunities Trust, Municipal Income Opportunities Trust II, Municipal Income
Opportunities Trust III, Municipal Premium Income Trust and Prime Income Trust.
The foregoing investment companies, together with the Fund, are collectively
referred to as the Dean Witter Funds.
3
<PAGE>
In addition, Dean Witter Services Company Inc. ("DWSC"), a wholly-owned
subsidiary of InterCapital, serves as manager for the following companies for
which TCW Funds Management, Inc. is the investment adviser: TCW/DW Core Equity
Trust, TCW/DW North American Government Income Trust, TCW/DW Latin American
Growth Fund, TCW/DW Income and Growth Fund, TCW/DW Small Cap Growth Fund, TCW/DW
Balanced Fund, TCW/DW Term Trust 2000, TCW/DW Term Trust 2002 and TCW/DW Term
Trust 2003 (the "TCW/DW Funds"). InterCapital also serves as: (i) sub-adviser to
Templeton Global Opportunities Trust, an open-end investment company; (ii)
administrator of The BlackRock Strategic Term Trust Inc., a closed-end
investment company; and (iii) subadministrator of MassMutual Participation
Investors and Templeton Global Governments Income Trust, closed-end investment
companies.
The Investment Manager also serves as an investment adviser for Dean Witter
World Wide Investment Fund, an investment company organized under the laws of
Luxembourg, shares of which may not be offered in the United States or purchased
by American citizens outside the United States.
Pursuant to an Investment Management Agreement (the "Agreement") with the
Investment Manager, the Fund has retained the Investment Manager to manage the
investment of the Fund's assets, including the placing of orders for the
purchase and sale of portfolio securities. The Investment Manager obtains and
evaluates such information and advice relating to the economy, securities
markets, and specific securities as it considers necessary or useful to
continuously manage the assets of the Fund in a manner consistent with its
investment objective and policies.
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, such office space, facilities,
equipment, clerical help, bookkeeping and legal services as the Fund may
reasonably require in the conduct of its business, including the preparation of
prospectuses, proxy statements and reports required to be filed with federal and
state securities commissions (except insofar as the participation or assistance
of independent accountants and attorneys is, in the opinion of the Investment
Manager, necessary or desirable). In addition, the Investment Manager 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
service, heat, light, power and other utilities provided to the Fund.
On December 31, 1993, InterCapital effected an internal reorganization
pursuant to which administrative activities previously performed by InterCapital
are instead performed by DWSC. Pursuant to the reorganization, InterCapital has
entered into a Services Agreement pursuant to which DWSC provides administrative
services to the Fund that were previously performed directly by InterCapital.
The foregoing internal reorganization did not result in any change of the nature
or scope of the administrative services being provided to the Fund or any of the
fees being paid by the Fund for the overall services being performed under the
terms of the existing Investment Management Agreement.
Expenses not expressly assumed by the Investment Manager under the Agreement
(see "The Fund and Its Management" in the Prospectus) will be paid by the Fund.
The expenses borne by the Fund include, but are not limited to: charges and
expenses of any registrar, custodian, share transfer and dividend disbursing
agent; brokerage commissions; taxes, engraving and printing share certificates;
registration costs of the Fund and its shares under federal and state securities
laws; the cost and expense of printing, including typesetting, and distributing
prospectuses and statements of additional information of the Fund and
supplements thereto to the Fund's shareholders; all expenses of shareholders'
and trustees' meetings and of preparing, printing and mailing proxy statements
and reports to shareholders; fees and travel expenses of Trustees or members of
any advisory board or committee who are not employees of the Investment Manager
or any corporate affiliate of the Investment Manager; all expenses incident to
any dividend, withdrawal or redemption options; charges and expenses of any
outside service used for pricing of the Fund's shares; fees and expenses of
legal counsel, including counsel to the Trustees who are not interested persons
of the Fund or of the Investment Manager (not including compensation or expenses
of attorneys who are employees of the Investment Manager) and independent
accountants; membership dues of industry associations; interest on Fund
borrowings;
4
<PAGE>
postage; insurance premiums on property or personnel (including officers and
Trustees) of the Fund which inure to its benefit; extraordinary expenses
(including, but not limited to, legal claims and liabilities and litigation
costs and any indemnification relating thereto); and all other costs of the
Fund's operation.
As full compensation for the services and facilities furnished to the Fund
and expenses of the Fund assumed by the Investment Manager, the Fund pays the
Investment Manager monthly compensation calculated and accrued daily by applying
the annual rate of 0.50 of 1% to the Fund's net assets. For the fiscal years
ended December 31, 1991, 1992 and 1993, the amount of compensation accrued to
the Investment Manager under the Agreement was $318,643, $355,096 and $442,119,
respectively. Total operating expenses of the Fund are subject to applicable
limitations under rules and regulations of states where the Fund is authorized
to sell its shares, as the same may be amended from time to time. Presently, the
most restrictive limitation to which the Fund is subject is as follows: if in
any fiscal year the Fund's total operating expenses, exclusive of taxes,
interest, brokerage fees and extraordinary expenses (to the extent permitted by
applicable state securities laws and regulations), exceed 2 1/2% of the first
$30,000,000 of average daily net assets, 2% of the next $70,000,000 and 1 1/2%
of any excess over $100,000,000, the Investment Manager will reimburse the Fund
for the amount of such excess. Such amount, if any, will be calculated daily and
credited on a monthly basis. For the fiscal years ended December 31, 1991, 1992
and 1993, the Fund's expenses did not exceed the expense limitation.
The Agreement provides that in the absence of willful misfeasance, bad
faith, gross negligence or reckless disregard of its obligations thereunder, the
Investment Manager is not liable to the Fund or any of its investors for any act
or omission by the Investment Manager or for any losses sustained by the Fund or
its investors. The Agreement does not restrict the Investment Manager from
acting as investment manager or adviser to others.
The Agreement was initially approved by the Trustees on October 30, 1992 and
by the Shareholders at a Meeting of Shareholders on January 12, 1993. The
Agreement is substantially identical to a prior investment agreement which was
initially approved by the Trustees on July 19, 1983, by DWR as the then sole
shareholder of the Fund on August 11, 1983, and by the Shareholders at a Meeting
of Shareholders on April 22, 1985. The Agreement took effect on June 30, 1993
upon the spin-off by Sears, Roebuck and Co. of its remaining shares of DWDC. The
Agreement may be terminated at any time, without penalty, on thirty days' notice
by the Board of Trustees of the Fund, by the holders of a majority, as defined
in the Investment Company Act of 1940 (the "Act"), of the outstanding shares of
the Fund, or by the Investment Manager. The Agreement will automatically
terminate in the event of its assignment (as defined in the Act).
Under its terms, the Agreement will continue in effect until April 30, 1994,
and from year to year thereafter, provided continuance of the Agreement is
approved at least annually by the vote of the holders of a majority (as defined
in the Act) of the outstanding Shares of the Fund, or by the Trustees of the
Fund; provided that in either event such continuance is approved annually by the
vote of a majority of the Trustees of the Fund who are not parties to the
Agreement or "interested persons" (as defined in the Act) of any such party (the
"Independent Trustees"), which vote must be cast in person at a meeting called
for the purpose of voting on such approval.
The Fund has acknowledged that the name "Dean Witter" is a property right of
DWR. The Fund has agreed that DWR or its parent company may use or, at any time,
permit others to use the name "Dean Witter." The Fund has also agreed that in
the event the Agreement is terminated, or if the affiliation between
InterCapital and its parent company is terminated, the Fund will eliminate the
name "Dean Witter" from its name if DWR or its parent company shall so request.
5
<PAGE>
TRUSTEES AND OFFICERS
- --------------------------------------------------------------------------------
The Trustees and Executive Officers of the Fund, their principal business
occupations during the last five years and their affiliations, if any, with
InterCapital and with the Dean Witter Funds and the TCW/DW Funds are shown
below.
<TABLE>
<CAPTION>
NAME, POSITION WITH FUND AND ADDRESS PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS
- ------------------------------------------------------ ----------------------------------------------------------
<S> <C>
Jack F. Bennett Retired; Director or Trustee of the Dean Witter Funds;
Trustee formerly Senior Vice President and Director of Exxon
141 Taconic Road Corporation (1975-January, 1989) and Under Secretary of
Greenwich, Connecticut the U.S. Treasury for Monetary Affairs (1974-1975);
Director of Philips Electronics N.V., Tandem Computers
Inc. and Massachusetts Mutual Insurance Company; director
or trustee of various not-for-profit and business
organizations.
Charles A. Flumefreddo* Chairman, Chief Executive Officer and Director of
Chairman of the Board, President, InterCapital, Distributors and DWSC; Executive Vice
Chief Executive Officer and Trustee President and Director of DWR; Chairman, Director or
Two World Trade Center Trustee, President and Chief Executive Officer of the Dean
New York, New York Witter Funds; Chairman, Chief Executive Officer and
Trustee of the TCW/DW Funds; Chairman and Director of Dean
Witter Trust Company; Director and/or officer of various
DWDC subsidiaries; formerly Executive Vice President and
Director of DWDC (until February, 1993).
Edwin J. Garn Director or Trustee of the Dean Witter Funds; formerly
Trustee United States Senator (R-Utah) (1974-1992) and Chairman,
2000 Eagle Gate Tower Senate Banking Committee (1980-1986); formerly Mayor of
Salt Lake City, Utah Salt Lake City, Utah (1971-1974); formerly Astronaut,
Space Shuttle Discovery (April 12-19, 1985); Vice
Chairman, Huntsman Chemical Corporation (since January,
1993); Member of the board of various civic and charitable
organizations.
John R. Haire Chairman of the Audit Committee and Chairman of the
Trustee Committee of the Independent Directors or Trustees and
439 East 51st Street Director or Trustee of Dean Witter Funds; Trustee of the
New York, New York TCW/DW Funds; formerly President, Council for Aid to
Education (1978-October, 1989) and Chairman and Chief
Executive Officer of Anchor Corporation, an Investment
Advisor (1964-1978); Director of Washington National
Corporation (insurance) and Bowne & Co., Inc. (printing).
Dr. John E. Jeuck Retired; Director or Trustee of the Dean Witter Funds;
Trustee formerly Robert Law Professor of Business Administration.
70 East Cedar Street Graduate School of Business, University of Chicago (until
Chicago, Illinois July, 1989); Business consultant.
Dr. Manuel H. Johnson Senior Partner, Johnson Smick International, Inc., a
Trustee consulting firm; Koch Professor of International Eco-
7521 Old Dominion Drive nomics and Director of the Center for Global Market
Maclean, Virginia Studies at George Mason University (since September,
1990); Co-Chairman and a founder of the Group
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
NAME, POSITION WITH FUND AND ADDRESS PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS
- ------------------------------------------------------ ----------------------------------------------------------
<S> <C>
of Seven Council (G7C), an international economic
commission (since September, 1990); Director of Greenwich
Capital Markets, Inc. (broker-dealer); Director or Trustee
of the Dean Witter Funds; Trustee of the TCW/DW Funds;
formerly Vice Chairman of the Board of Governors of the
Federal Reserve System (February, 1986-August, 1990) and
Assistant Secretary of the U.S. Treasury (1982-1986).
Paul Kolton Director or Trustee of the Dean Witter Funds; Chairman of
Trustee the Audit Committee and Chairman of the Committee of the
9 Hunting Ridge Road Independent Trustees and Trustee of the TCW/DW Funds;
Stamford, Connecticut formerly Chairman of the Financial Accounting Standards
Advisory Council and Chairman and Chief Executive Officer
of the American Stock Exchange; Director of UCC Investors
Holding Inc. (Uniroyal Chemical Company, Inc.); director
or trustee of various not-for-profit organizations.
Michael E. Nugent General Partner, Triumph Capital, L.P., a private in-
Trustee vestment partnership (since April, 1988); Director or
237 Park Avenue Trustee of the Dean Witter Funds; Trustee of the TCW/DW
New York, New York Funds; formerly Vice President, Bankers Trust Company and
BT Capital Corporation (September, 1984-March, 1988);
Director of various business organizations.
Albert T. Sommers Senior Fellow and Economic Counselor (formerly Senior Vice
Trustee President and Chief Economist) of the Conference Board, a
845 Third Avenue not-for-profit business research organization; President,
New York, New York Albert T. Sommers, Inc., an economic consulting firm;
Director or Trustee of the Dean Witter Funds; formerly
Chairman, Price Advisory Committee of the Council on Wage
and Price Stability (December, 1979-December, 1980); Eco-
nomic Adviser, The Ford Foundation; Director of Grow
Group, Inc. (chemicals), MSI, Inc. (medical services) and
Westbridge Capital, Inc. (insurance).
Edward R. Telling* Retired; Director or Trustee of the Dean Witter Funds;
Sears Tower formerly Chairman of the Board of Directors and Chief
Chicago, Illinois Executive Officer (until December 31, 1985) and President
(from January, 1981-March, 1982 and from February,
1984-August, 1984) of Sears, Roebuck and Co.; formerly
Director of Sears, Roebuck and Co.
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
NAME, POSITION WITH FUND AND ADDRESS PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS
- ------------------------------------------------------ ----------------------------------------------------------
<S> <C>
Sheldon Curtis Senior Vice President, Secretary and General Counsel of
Vice President, Secretary and General Counsel InterCapital and DWSC; Senior Vice President and Secretary
Two World Trade Center of Dean Witter Trust Company; Senior Vice President,
New York, New York Assistant Secretary and Assistant General Counsel of
Distributors; Assistant Secretary of DWDC and DWR; Vice
President, Secretary and General Counsel of the Dean
Witter Funds and the TCW/DW Funds.
James F. Willison Senior Vice President of InterCapital; Vice President of
Vice President various Dean Witter Funds.
Two World Trade Center
New York, New York
Thomas F. Caloia First Vice President (since May, 1991) and Assistant
Treasurer Treasurer (since January, 1993) of InterCapital; First
Two World Trade Center Vice President and Assistant Treasurer of DWSC; Treasurer
New York, New York of the Dean Witter Funds and the TCW/DW Funds; previously
Vice President of InterCapital.
<FN>
- ------------------------
*Denotes Trustees who are "interested persons" of the Fund, as defined in the
Investment Company Act of 1940, as amended.
</TABLE>
In addition, Robert M. Scanlan, President of InterCapital, David A. Hughey
and Edmund C. Puckhaber, Executive Vice Presidents of InterCapital, and Peter M.
Avelar and Jonathan R. Page, Senior Vice Presidents of InterCapital, are Vice
Presidents of the Fund, and Barry Fink, First Vice President and Assistant
General Counsel of InterCapital, and Marilyn K. Cranney, Lawrence S. Lafer, Lou
Anne D. McInnis and Ruth Rossi, Vice Presidents and Assistant General Counsels
of InterCapital, are Assistant Secretaries of the Fund.
The Fund pays each Trustee who is not an employee or retired employee of the
Investment Manager or an affiliated company an annual fee of $1,200 ($1,600
prior to December 31, 1993) plus $50 for each meeting of the Board of Trustees,
the Audit Committee or the Committee of the Independent Trustees attended by the
Trustee in person (the Fund pays the Chairman of the Audit Committee an
additional annual fee of $1,000 ($1,200 prior to December 31, 1993) and pays the
Chairman of the Committee of the Independent Trustees an additional annual fee
of $2,400, in each case inclusive of the Committee meeting fees). The Fund also
reimburses such Trustees for travel and other out-of-pocket expenses incurred by
them in connection with attending such meetings. Trustees and officers of the
Fund who are or have been employed by the Investment Manager or an affiliated
company receive no compensation or expense reimbursement from the Fund. For the
fiscal year ended December 31, 1993, the Fund accrued a total of $23,074 for
Trustees' fees and expenses. As of the date of this Statement of Additional
Information, the aggregate shares of the Fund owned by the Fund's officers and
Trustees as a group was less than 1 percent of the Fund's shares of beneficial
interest outstanding.
INVESTMENT PRACTICES AND POLICIES
- --------------------------------------------------------------------------------
PORTFOLIO SECURITIES
TAX-EXEMPT SECURITIES. As discussed in the Prospectus, at least 75% of the
municipal obligations in which the Fund will invest will be (i) Municipal Bonds
rated at the time of purchase within the three highest ratings for municipal
obligations by Moody's Investors Service, Inc. ("Moody's") or Standard & Poor's
Corporation ("S&P"); (ii) Municipal Notes of issuers which at the time of
purchase are rated in the two highest grades by Moody's or S&P or, if not rated,
have outstanding one or more issues of Municipal Bonds rated as set forth in
clause (i) above and (iii) Municipal Commercial Paper which is rated at the
8
<PAGE>
time of purchase in the two highest grades by Moody's or S&P or, if not rated,
is of comparable quality as determined by the Trustees. Up to 25% of such
investments may be Municipal Bonds or Notes which are not rated by Moody's or
S&P or, if rated, are not within the three highest Bond rating categories of
Moody's or S&P or the two highest Note rating categories of Moody's or S&P. In
regard to the Moody's and S&P ratings discussed in the Prospectus, it should be
noted that the ratings represent the organizations' opinions as to the quality
of the securities which they undertake to rate and that the ratings are general
and not absolute standards of quality. For a description of Municipal Bonds,
Municipal Notes and Municipal Commercial Paper ratings by Moody's and S&P, see
the Appendix.
The percentage and rating policies discussed above and in the Prospectus
apply at the time of acquisition of a security based upon the last previous
determination of the Fund's net asset value; any subsequent change in any
ratings by a rating service or change in percentages resulting from market
fluctuations or other changes in the amount of total assets will not require
elimination of any security from the Fund's portfolio until such time as the
Investment Manager determines that it is practicable to sell the security
without undue market or tax consequences to the Fund. Therefore, the Fund may
hold securities which have been downgraded to ratings of Ba or BB or lower by
Moody's or S&P. Such securities are considered to be speculative investments.
Furthermore, the Fund does not have any minimum quality rating standard for
its downgraded or lower-rated investments. As such, the Fund may invest in
securities rated as low as Caa, Ca or C by Moody's or CCC, CC, C or CI by S&P.
Bonds rated Caa or Ca by Moody's may already be in default on payment of
interest or principal, while bonds rated C by Moody's, their lowest bond rating,
can be regarded as having extremely poor prospects of ever attaining any real
investment standing. Bonds rated CI by S&P, their lowest bond rating, are no
longer making interest payments.
The payment of principal and interest by issuers of certain municipal
obligations purchased by the Fund may be guaranteed by letters of credit or
other credit facilities offered by banks or other financial institutions. Such
guarantees will be considered in determining whether a municipal obligation
meets the Fund's investment quality requirements. In addition, some issues may
contain provisions which permit the Fund to demand from the issuer repayment of
principal at some specified period(s) prior to maturity.
MUNICIPAL BONDS. Municipal Bonds, as referred to in the Prospectus, are
debt obligations of a state, its cities, municipalities and municipal agencies
(all of which are generally referred to as "municipalities") which generally
have a maturity at the time of issue of one year or more, and the interest from
which is, in the opinion of bond counsel, exempt from federal income tax. They
are issued to raise funds for various public purposes, such as construction of a
wide range of public facilities, to refund outstanding obligations and to obtain
funds for general operating expenses or to loan to other public institutions and
facilities. In addition, certain types of industrial development bonds and
pollution control bonds are issued by or on behalf of public authorities to
provide funding for various privately operated facilities.
MUNICIPAL NOTES. Municipal Notes are short-term obligations of
municipalities, generally with a maturity at the time of issuance ranging from
six months to three years, the interest from which is, in the opinion of bond
counsel, exempt from federal income tax. The principal types of Municipal Notes
include tax anticipation notes and project notes, although there are other types
of Municipal Notes in which the Fund may invest. Notes sold in anticipation of
collection of taxes, a bond sale or receipt of other revenues are usually
general obligations of the issuing municipality or agency. Project Notes are
issued by local agencies and are guaranteed by the United States Department of
Housing and Urban Development. Such notes are secured by the full faith and
credit of the United States Government. Project notes are not currently being
issued.
MUNICIPAL COMMERCIAL PAPER. Municipal Commercial Paper refers to short-term
obligations of municipalities the interest from which is, in the opinion of bond
counsel, exempt from federal income tax. It may be issued at a discount and is
sometimes referred to as Short-term Discount Notes. Municipal Commercial Paper
is likely to be used to meet seasonal working capital needs of a municipality or
interim construction financing and to be paid from general revenues of the
municipality or refinanced with long-
9
<PAGE>
term debt. In most cases Municipal Commercial Paper is backed by letters of
credit, lending agreements, note repurchase agreements or other credit facility
agreements offered by banks or other institutions.
Obligations of issuers of Municipal Bonds, Municipal Notes and Municipal
Commercial Paper are subject to the provisions of bankruptcy, insolvency and
other laws affecting the rights and remedies of creditors, such as the Federal
Bankruptcy Act, and laws, if any, which may be enacted by Congress or any state
extending the time for payment of principal or interest, or both, or imposing
other constraints upon enforcement of such obligations or upon municipalities to
levy taxes. There is also the possibility that as a result of litigation or
other conditions the power or ability of any one or more issuers to pay, when
due, principal of and interest on its, or their, Municipal Bonds, Municipal
Notes and Municipal Commercial Paper may be materially affected.
SPECIAL INVESTMENT CONSIDERATIONS. Because of the special nature of
securities which are rated below investment grade by national credit rating
agencies ("lower-rated securities"), the Investment Manager must take account of
certain special considerations in assessing the risks associated with such
investments. For example, as the lower-rated securities market is relatively
new, its growth has paralleled a long economic expansion and it has not
weathered a recession in its present size and form. Therefore, an economic
downturn or increase in interest rates is likely to have a negative effect on
this market and on the value of the lower-rated securities held by the Fund, as
well as on the ability of the securities' issuers to repay principal and
interest on their borrowings.
The prices of lower-rated securities have been found to be less sensitive to
changes in prevailing interest rates than higher-rated investments, but are
likely to be more sensitive to adverse economic changes or individual corporate
developments. During an economic downturn or substantial period of rising
interest rates, highly leveraged issuers may experience financial stress which
would adversely affect their ability to service their principal and interest
payment obligations, to meet their projected business goals or to obtain
additional financing. If the issuer of a fixed-income security owned by the Fund
defaults, the Fund may incur additional expenses to seek recovery. In addition,
periods of economic uncertainty and change can be expected to result in an
increased volatility of market prices of lower-rated securities and a
concomitant volatility in the net asset value of a share of the Fund. Moreover,
the market prices of certain of the Fund's portfolio securities which are
structured as zero coupon securities are affected to a greater extent by
interest rate changes and thereby tend to be more volatile than securities which
pay interest periodically and in cash (see "Dividends, Distributions and Taxes"
for a discussion of the tax ramifications of investments in such securities).
The secondary market for lower-rated securities may be less liquid than the
markets for higher quality securities and, as such, may have an adverse effect
on the market prices of certain securities. The limited liquidity of the market
may also adversely affect the ability of the Fund's Trustees to arrive at a fair
value for certain lower-rated securities at certain times and should make it
difficult for the Fund to sell certain securities.
New laws and proposed new laws may have a potentially negative impact on the
market for lower-rated securities. For example, recent legislation requires
federally-insured savings and loan associations to divest their investments in
lower-rated securities. This legislation and other proposed legislation may have
an adverse effect upon the value of lower-rated securities and a concomitant
negative impact upon the net asset value of a share of the Fund.
VARIABLE RATE OBLIGATIONS. As stated in the Prospectus, the Fund may invest
in obligations of the type called "variable rate obligations". The interest rate
payable on a variable rate obligation is adjusted either at predesignated
periodic intervals or whenever there is a change in the market rate of interest
on which the interest rate payable is based. Other features may include the
right whereby the Fund may demand prepayment of the principal amount of the
obligation prior to its stated maturity (a "demand feature") and the right of
the issuer to prepay the principal amount prior to maturity. The principal
benefit of a variable rate obligation is that the interest rate adjustment
minimizes changes in the market value of
10
<PAGE>
the obligation. The principal benefit to the Fund of purchasing obligations with
a demand feature is that liquidity, and the ability of the Fund to obtain
repayment of the full principal amount of the obligation prior to maturity, is
enhanced.
The payment of principal and interest by issuers of certain municipal
obligations purchased by the Fund may be guaranteed by letters of credit or
other credit facilities offered by commercial banks or other financial
institutions, for example, insurance or finance companies or a consortium of
insurance companies such as the Municipal Bond Insurance Association (MBIA).
Letters of credit issued by commercial banks or the insurance arrangements may
be drawn upon (i) if an issuer fails to make payments of principal of, premium,
if any, or interest on a security backed by such letter of credit or insurance
arrangement or (ii) in the event interest on such a security is deemed to be
taxable and full payment of principal and any premium due is not made by the
issuer. A business failure of the bank or insurance company could affect its
ability to meet its obligations under a letter of credit or insurance
arrangement. Such guarantees and the creditworthiness of the guarantor will be
considered in determining whether a municipal obligation meets (and continues to
meet) the Fund's investment quality requirements.
WHEN-ISSUED AND DELAYED DELIVERY SECURITIES. As stated in the Prospectus,
the Fund may purchase tax-exempt securities on a when-issued or delayed delivery
basis. When such transactions are negotiated, the price is fixed at the time of
the commitment, but delivery and payment can take place a month or more after
the date of the commitment. While the Fund will only purchase securities on a
when-issued or delayed delivery basis with the intention of acquiring the
securities, the Fund may sell the securities before the settlement date, if it
is deemed advisable. The securities so purchased or sold are subject to market
fluctuation and no interest accrues to the purchaser during this period. At the
time the Fund makes the commitment to purchase a municipal obligation on a
when-issued or delayed delivery basis, it will record the transaction and
thereafter reflect the value, each day, of the municipal obligation in
determining its net asset value. The Fund will also establish a segregated
account with its custodian bank in which it will maintain cash or cash
equivalents or other high quality municipal obligations equal in value to
commitments for such when-issued or delayed delivery securities. The Fund does
not believe that its net asset value or income will be adversely affected by its
purchase of municipal obligations on a when-issued or delayed delivery basis.
PUT OPTIONS. The Fund may purchase securities together with the right to
resell them to the seller at an agreed upon price or yield within a specified
period prior to the maturity date of such securities. Such a right to resell is
commonly known as a "put," and the aggregate price which the Fund pays for
securities with puts may be higher than the price which otherwise would be paid
for the securities. Consistent with the Fund's investment objective and subject
to the supervision of the Board of Trustees, the primary purpose of this
practice is to permit the Fund to be fully invested in securities the interest
on which is exempt from federal income tax, while preserving the necessary
flexibility and liquidity to purchase securities on a when-issued basis, to meet
unusually large redemptions and to purchase at a later date securities other
than those subject to the put. The Fund's policy is, generally, to exercise the
puts on their expiration date, when the exercise price is higher than the
current market price for the related securities. Puts may be exercised prior to
the expiration date in order to fund obligations to purchase other securities or
to meet redemption requests. These obligations may arise during periods in which
proceeds from sales of Fund shares and from recent sales of portfolio securities
are insufficient to meet such obligations or when the funds available are
otherwise allocated for investment. In addition, puts may be exercised prior to
their expiration date in the event the Investment Manager revises its evaluation
of the creditworthiness of the issuer of the underlying security. In determining
whether to exercise puts prior to their expiration date and in selecting which
puts to exercise in such circumstances, the Investment Manager considers, among
other things, the amount of cash available to the Fund, the expiration dates of
the available puts, any future commitments for securities purchases, the yield,
quality and maturity dates of the underlying securities, alternative investment
opportunities and the desirability of retaining the underlying securities in the
Fund's portfolio.
11
<PAGE>
The Fund values securities which are subject to puts at market value and
values the put, apart from the security, at zero. Thus, the cost of the put will
be carried on the Fund's books as an unrealized loss from the date of
acquisition and will be reflected in realized gain or loss when the put is
exercised or expires. Since the value of the put is dependent on the ability of
the put writer to meet its obligation to repurchase, the Fund's policy is to
enter into put transactions only with municipal securities dealers who are
approved by the Fund's Board of Trustees. Each dealer will be approved on its
own merits and it is the Fund's general policy to enter into put transactions
only with those dealers which are determined to present minimal credit risks. In
connection with such determination, the Board of Trustees will review, among
other things, the ratings, if available, of equity and debt securities of such
municipal securities dealers, their reputations in the municipal securities
markets, the net worth of such dealers and their efficiency in consummating
transactions. Bank dealers normally will be members of the Federal Reserve
System, and other dealers will be members of the National Association of
Securities Dealers, Inc. or members of a national securities exchange. The
Trustees have directed the Investment Manager not to enter into put transactions
with, and to exercise outstanding puts of, any municipal securities dealer
which, in the judgment of the Investment Manager, ceases at any time to present
a minimal credit risk. In the event that a dealer should default on its
obligation to repurchase an underlying security, the Fund is unable to predict
whether all or any portion of any loss sustained could be subsequently recovered
from such dealer. During the fiscal year ended December 31, 1993, the Fund did
not purchase any put options and it has no intention to purchase such securities
during the foreseeable future.
It is the position of the staff of the Securities and Exchange Commission
that certain provisions of the Act may be deemed to prohibit the Fund from
purchasing puts from broker-dealers without an exemptive order. Until such an
order is obtained, the Fund will purchase puts only from commercial banks. There
is no assurance that such an order, if applied for, will be obtained. The
duration of puts, which will not exceed 60 days, will not be a factor in
determining the weighted average maturity of the Fund's portfolio securities.
In Revenue Rule 82-144, the Internal Revenue Service stated that, under
certain circumstances, a purchaser of tax-exempt obligations which are subject
to puts will be considered the owner of the obligations for federal income tax
purposes. In connection therewith, the Fund has received an opinion of counsel
to the effect that interest on municipal obligations subject to puts will be
tax-exempt to the Fund.
PORTFOLIO MANAGEMENT
The Fund may engage in short-term trading consistent with its investment
objective. Securities may be sold in anticipation of a market decline (a rise in
interest rates) or purchased in anticipation of a market rise (a decline in
interest rates). In addition, a security may be sold and another security of
comparable quality purchased at approximately the same time to take advantage of
what the Investment Manager believes to be a temporary disparity in the normal
yield relationship between the two securities. These yield disparities may occur
for reasons not directly related to the investment quality of particular issues
or the general movement of interest rates, such as changes in the overall demand
for, or supply of, various types of tax-exempt securities.
In general, purchases and sales may also be made to restructure the
portfolio in terms of average maturity, quality, coupon yield, or
diversification for any one or more of the following purposes: (a) to increase
income, (b) to improve portfolio quality, (c) to minimize capital depreciation,
(d) to realize gains or losses, or for such other reasons as the Investment
Manager deems relevant in light of economic and market conditions.
The Fund may invest in obligations customarily sold to institutional
investors in private transactions with the issuers thereof and up to 5% of its
total assets in securities for which a readily available market does not exist
at the time of purchase. With respect to any securities as to which a readily
available market does not exist, the Fund may be unable to dispose of such
securities promptly at reasonable prices.
12
<PAGE>
INVESTMENT RESTRICTIONS
- --------------------------------------------------------------------------------
In addition to the investment restrictions enumerated in the Prospectus, the
investment restrictions listed below have been adopted by the Fund as
fundamental policies, which may not be changed without the vote of a majority of
the outstanding voting securities of the Fund, as defined in the Act. Such a
majority is defined as the lesser of (a) 67% of the Shares present at a meeting
of Shareholders, if the holders of more than 50% of the outstanding Shares of
the Fund are present or represented by proxy or (b) more than 50% of the
outstanding Shares of the Fund. For purposes of the following restrictions and
those recited in the Prospectus: (a) an "issuer" of a security is the entity
whose assets and revenues are committed to the payment of interest and principal
on that particular security, provided that the guarantee of a security will be
considered a separate security, and provided further that a guarantee of a
security shall not be deemed to be a security issued by the guarantor if the
value of all securities issued or guaranteed by the guarantor and owned by the
Fund does not exceed 10% of the value of the total assets of the Fund; and (b)
all percentage limitations apply immediately after a purchase or initial
investment, and any subsequent change in any applicable percentage resulting
from market fluctuations or other changes in the amount of total or net assets
does not require elimination of any security from the portfolio.
The Fund may not:
1. Invest in common stock.
2. Invest in securities of any issuer if to the knowledge of the Fund,
any officer or trustee of the Fund or any officer or director of the
Investment Manager owns more than 1/2 of 1% of the outstanding securities of
such issuer, and such officers, trustees and directors who own more than 1/2
of 1% own in the aggregate more than 5% of the outstanding securities of
such issuer.
3. Purchase or sell real estate or interests therein, although it may
purchase securities secured by real estate or interests therein.
4. Purchase or sell commodities or commodity futures contracts.
5. Purchase oil, gas or other mineral leases, rights or royalty
contracts, or exploration or development programs.
6. Write, purchase or sell puts, calls, or combinations thereof except
that the Fund may acquire rights to resell municipal obligations at an
agreed-upon price and at or within an agreed-upon time.
7. Purchase securities of other investment companies, except in
connection with a merger, consolidation, reorganization or acquisition of
assets.
8. Borrow money, except that the Fund may borrow from a bank for
temporary or emergency purposes in amounts not exceeding 5% (taken at the
lower of cost or current value) of the value of its total assets (not
including the amount borrowed).
9. Pledge its assets or assign or otherwise encumber them except to
secure permitted borrowings. To meet the requirements of regulations in
certain states, the Fund, as a matter of operating policy but not as a
fundamental policy, will limit any pledge of its assets to 10% of its net
assets so long as shares of the Fund are being sold in those states.
10. Issue senior securities as defined in the Act except insofar as the
Fund may be deemed to have issued a senior security by reason of: (a)
purchasing any securities on a when-issued or delayed delivery basis; or (b)
borrowing money in accordance with restrictions described above.
11. Make loans of money or securities, except by the purchase of debt
obligations in which the Fund may invest consistent with its investment
objective and policies.
12. Make short sales of securities.
13
<PAGE>
13. Purchase securities on margin, except for such short-term loans as
are necessary for the clearance of purchases of portfolio securities.
14. Engage in the underwriting of securities, except insofar as the Fund
may be deemed an underwriter under the Securities Act of 1933 in disposing
of a portfolio security.
15. Invest for the purpose of exercising control or management of any
other issuer.
PORTFOLIO TRANSACTIONS AND BROKERAGE
- --------------------------------------------------------------------------------
The Investment Manager is responsible for decisions to buy and sell
securities for the Fund, the selection of brokers and dealers to effect the
transactions, and the negotiation of brokerage commissions, if any. The Fund
expects that the primary market for the securities in which it intends to invest
will generally be the over-the-counter market. Securities are generally traded
in the over-the-counter market on a "net" basis with dealers acting as principal
for their own accounts without charging a stated commission, although the price
of the security usually includes a profit to the dealer. The Fund also expects
that securities will be purchased at times in underwritten offerings where the
price includes a fixed amount of compensation, generally referred to as the
underwriter's concession or discount. On occasion, the Fund may also purchase
certain money market instruments directly from an issuer, in which case no
commissions or discounts are paid. During the fiscal years ended December 31,
1991, 1992 and 1993, the Fund did not pay any brokerage commissions.
The Investment Manager currently serves as investment manager to a number of
clients, including other investment companies, and may in the future act as
investment manager or adviser to others. It is the practice of the Investment
Manager to cause purchase and sale transactions to be allocated among the Fund
and others whose assets it manages in such manner as it deems equitable. In
making such allocations among the Fund and other client accounts, the main
factors considered are the respective investment objectives, the relative size
of portfolio holdings of the same or comparable securities, the availability of
cash for investment, the size of investment commitments generally held and the
opinions of persons responsible for managing the portfolios of the Fund and
other client accounts.
The policy of the Fund, regarding purchases and sales of securities for its
portfolio, is that primary consideration be given to obtaining the most
favorable prices and efficient execution of transactions. In seeking to
implement the Fund's policies, the Investment Manager effects transactions with
those brokers and dealers who the Investment Manager believes provide the most
favorable prices and are capable of providing efficient executions. If the
Investment Manager believes such prices and executions are obtainable from more
than one broker or dealer, it may give consideration to placing portfolio
transactions with those brokers and dealers who also furnish research and other
services to the Fund or the Investment Manager. Such services may include, but
are not limited to, any one or more of the following: information as to the
availability of securities for purchase or sale; statistical or factual
information or opinions pertaining to investment; wire services; and appraisals
or evaluations of portfolio securities.
The information and services received by the Investment Manager from brokers
and dealers may be of benefit to the Investment Manager in the management of
accounts of some of its other clients and may not, in every case, benefit the
Fund directly. While the receipt of such information and services is useful in
varying degrees and would generally reduce the amount of research or services
otherwise performed by the Investment Manager and thereby reduce its expenses,
it is of indeterminable value and the Fund will not reduce the management fee it
pays to the Investment Manager by any amount that may be attributable to the
value of such services.
Consistent with the policy described above, brokerage transactions in
securities listed on exchanges or admitted to unlisted trading privileges may be
effected through DWR. The commissions, fees or other remuneration received by
DWR must be reasonable and fair compared to the commissions, fees or other
remuneration paid to other brokers in connection with comparable transactions
involving similar securities being purchased or sold on an exchange during a
comparable period of time.
14
<PAGE>
This standard would allow DWR to receive no more than the remuneration which
would be expected to be received by an unaffiliated broker in a commensurate
arms-length transaction. Furthermore, the Trustees of the Fund, including a
majority of the Trustees who are not "interested" Trustees, have adopted
procedures which are reasonably designed to provide that any commissions, fees
or other remuneration paid to DWR are consistent with the foregoing standard.
During the fiscal years ended December 31, 1991, 1992 and 1993, the Fund did not
effect any securities transactions through DWR.
TERMS AND CONDITIONS OF PARTICIPATION
- --------------------------------------------------------------------------------
All persons who are or who become holders of Units of any series of the Dean
Witter Select Municipal Trust are eligible to invest in the Fund. Eligibility is
subject to the terms and conditions of participation set forth in the
Prospectus. Under the terms and conditions of participation, each distribution
of interest income and principal (including capital gains, if any) on a
Shareholder's Units will, no later than the business day following the date of
such distribution, automatically be received by Dean Witter Trust Company,
Harborside Financial Center, Plaza Two, Jersey City, New Jersey 07311, the
Fund's Transfer Agent, on behalf of such Shareholder and be applied to purchase
Shares at net asset value without sales charge.
DETERMINATION OF NET ASSET VALUE
As discussed in the Prospectus, the net asset value of a share of the Fund
is determined once daily at 4:00 p.m., New York time on each day that the New
York Stock Exchange is open. The New York Stock Exchange currently observes the
following holidays: New Year's Day; Presidents' Day; Good Friday; Memorial Day;
Independence Day; Labor Day; Thanksgiving Day; and Christmas Day.
As discussed in the Prospectus, portfolio securities are valued for the Fund
by an outside independent pricing service approved by the Board of Trustees. The
pricing service has informed the Fund that in valuing the Fund's portfolio
securities it uses both a computerized grid 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.
The Board of Trustees believes that timely and reliable market quotations are
generally not readily available to the Fund for purposes of valuing tax-exempt
securities and that the valuations supplied by the pricing service, using the
procedures outlined above and subject to periodic review, are more likely to
approximate the fair value of such securities. The Investment Manager will
periodically review and evaluate the procedures, methods and quality of services
provided by the pricing service then being used by the Fund and may, from time
to time, recommend to the Board of Trustees the use of other pricing services or
discontinuance of the use of any pricing service in whole or part. The Board may
determine to approve such recommendation or to make other provisions for pricing
of the Fund's portfolio securities.
REDEMPTIONS AND REPURCHASES
- --------------------------------------------------------------------------------
As discussed in the Prospectus, Shares of the Fund may be redeemed at net
asset value on any day the New York Stock Exchange is open and on such other
days on which the Fund's net asset value is calculated (see "Determination of
Net Asset Value"). Redemptions will be effected at the net asset value per share
next determined after the receipt of a written redemption request meeting the
applicable requirements discussed in the Prospectus.
PAYMENT FOR SHARES REDEEMED OR REPURCHASED. As discussed in the Prospectus,
payment for shares presented for repurchase or redemption will be made by check
within seven days after receipt by the Transfer Agent of the written request in
good order. Such payment may be postponed or the right of redemption suspended
at times (a) when the New York Stock Exchange is closed for other than customary
weekends and holidays, (b) when trading on that Exchange is restricted, (c) when
an emergency exists as a result of which disposal by the Fund of securities
owned by it is not reasonably
15
<PAGE>
practicable or it is not reasonably practicable for the Fund fairly to determine
the value of its net assets, or (d) during any other period when the Securities
and Exchange Commission by order so permits; provided that applicable rules and
regulations of the Securities and Exchange Commission shall govern as to whether
the conditions prescribed in (b) or (c) exist.
REINSTATEMENT PRIVILEGE. As discussed in the Prospectus, a Shareholder who
has had his or her Shares redeemed or repurchased and has not previously
exercised this reinstatement privilege may, within thirty days after the
redemption or repurchase, reinstate any portion or all of the proceeds of such
redemption or repurchase in Shares of the Fund at the net asset value next
determined after a reinstatement request, together with the proceeds, is
received by the Transfer Agent.
Exercise of the reinstatement privilege will not affect the federal income
tax treatment of any gain or loss realized upon the redemption or repurchase,
except that if the redemption or repurchase resulted in a loss and reinstatement
is made in Shares of the Fund, some or all of the loss, depending on the amount
reinstated, will not be allowed as a deduction for federal income tax purposes
but will be applied to adjust the cost basis of the shares acquired upon
reinstatement.
DIVIDENDS, DISTRIBUTIONS AND TAXES
- --------------------------------------------------------------------------------
As stated in the Prospectus, the Fund intends to distribute substantially
all of its net investment income and its net short-term capital gains, if any,
and will determine whether to retain all or part of any net long-term capital
gains for reinvestment. If any such gains are retained, the Fund will pay
federal income tax thereon, and will notify shareholders that, following an
election by the Fund, the shareholders will be required to include such
undistributed gains in their taxable income and will be able to claim their
share of the tax paid by the Fund as a credit against their individual federal
income tax.
Each shareholder will be sent a summary of his or her account, including
information as to reinvested dividends and capital gains distributions, at least
quarterly.
In computing interest income, the Fund will amortize any premiums and
original issue discounts on securities owned. Capital gains or losses realized
upon sale or maturity of such securities will be based on their amortized cost.
Gains or losses on the sales of securities by the Fund will be long-term
capital gains or losses if the securities have been held by the Fund for more
than twelve months. Gains or losses on the sale of securities held for twelve
months or less will be short-term capital gains or losses.
The Fund has qualified and intends to remain qualified as a regulated
investment company under Subchapter M of the Internal Revenue Code (the "Code").
If so qualified, the Fund will not be subject to federal income tax on its net
investment income and capital gains, if any, realized during any fiscal year to
the extent that it distributes such income and capital gains to its
Shareholders.
With respect to the Fund's investments in zero coupon bonds, the Fund
accrues income prior to any actual cash payments by their issuers. In order to
continue to comply with Subchapter M of the Code and remain able to forego
payment of federal income tax on its income and capital gains, the Fund must
distribute all of its net investment income, including income accrued from zero
coupon bonds. As such, the Fund may be required to dispose of some of its
portfolio securities under disadvantageous circumstances to generate the cash
required for distribution.
As discussed in the Prospectus, the Fund intends to qualify to pay
"exempt-interest dividends" to its Shareholders. An exempt-interest dividend is
that part of dividend distributions made by the Fund which consists of interest
received by the Fund on tax-exempt securities upon which the Shareholder incurs
no federal income taxes.
Within sixty days after the end of its fiscal year, the Fund will mail to
Shareholders a statement indicating the percentage of the dividend distributions
for such fiscal year which constitutes exempt-interest dividends and the
percentage, if any, that is taxable, and to what extent the taxable portion is
long-term or short-term capital gain. This percentage should be applied
uniformly to all monthly distributions made during the fiscal year to determine
the proportion of dividends that is tax-exempt. The
16
<PAGE>
percentage may differ from the percentage of tax-exempt dividend distributions
for any particular month. The Code provides that every person required to file a
tax return must include on such return the amount of exempt-interest dividends
received from the Fund during the taxable year.
The exemption of interest income for federal income tax purposes does not
necessarily result in exemption under the income or other tax laws of any state
or local taxing authority. Thus, Shareholders of the Fund may be subject to
state and local taxes on exempt-interest dividends. Shareholders should consult
their tax advisers about the status of dividends from the Fund in their own
states and localities. The Fund will report annually to Shareholders the
percentage of interest income earned by the Fund during the preceding year on
tax-exempt obligations, indicating, on a state-by-state basis, the source of
such income.
Shareholders will be subject to federal income tax on distributions of net
short-term capital gains. Such distributions are taxable to the Shareholder as
ordinary dividend income regardless of whether the Shareholder receives such
distributions in additional Shares or in cash. Since the Fund's income is
expected to be derived entirely from interest rather than dividends, none of
such dividend distributions will be eligible for the dividends received
deduction generally available to corporations. Net long-term capital gains
distributions are not eligible for the dividends received deduction.
Any loss on the sale or exchange of shares of the Fund which are held for
six months or less is disallowed to the extent of the amount of any
exempt-interest dividends paid with respect to such shares. Treasury Regulations
may provide for a reduction in such required holding period. If a Shareholder
receives a distribution that is taxed as long-term capital gain on Shares held
for six months or less and sells those Shares at a loss, the loss will be
treated as a long-term capital loss to the extent of the capital gains
distribution.
Interest on indebtedness incurred or continued by a Shareholder to purchase
or carry shares of the Fund is not deductible to the extent allocable to
exempt-interest dividends of the Fund (which allocation does not take into
account capital gain dividends of the Fund). Furthermore, entities or persons
who are "substantial users" (or related persons) of facilities financed by
industrial development bonds should consult their tax advisers before purchasing
Shares of the Fund. "Substantial user" is defined generally by Income Tax
Regulation 1.103-11(b) as including a "non-exempt person" who regularly uses in
a trade or business a part of a facility financed from the proceeds of
industrial development bonds.
From time to time, proposals have been introduced before Congress for the
purpose of restricting or eliminating the federal income tax exemption for
interest on municipal securities. It can be expected that similar proposals may
be introduced in the future. If such a proposal were enacted, the availability
of municipal securities for investment by the Fund could be affected. In such
event, the Fund would re-evaluate its investment objective and policies.
The Fund is organized as a Massachusetts business trust. Under the current
law, so long as it qualifies as a "regulated investment company" under the Code,
the Fund itself is not liable for any income or franchise tax in The
Commonwealth of Massachusetts.
Any dividends or capital gains distributions received by a shareholder from
any investment company will have the effect of reducing the net asset value of
the shareholder's stock in that fund by the exact amount of the dividend or
capital gains distribution. Furthermore, capital gains distributions are subject
to income tax. If the net asset value of the shares should be reduced below a
shareholder's cost as a result of the distribution of realized capital gains,
such distribution would be in part a return of capital but nonetheless taxable
to the shareholder.
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
As discussed in the Prospectus, from time to time the Fund may quote its
"yield" and/or its "total return" in advertisements and sales literature. Yield
is calculated for any 30-day period as follows: the amount of interest income
for each security in the Fund's portfolio is determined in accordance with
regulatory requirements; the total for the entire portfolio constitutes the
Fund's gross income for the period. Expenses accrued during the period are
subtracted to arrive at "net investment income". The resulting amount is divided
by the product of the net asset value per share on the last day of the period
17
<PAGE>
multiplied by the average number of Fund shares outstanding during the period
that were entitled to dividends. This amount is added to 1 and raised to the
sixth power. 1 is then subtracted from the result and the difference is
multiplied by 2 to arrive at the annualized yield.
To determine interest income from debt obligations, a yield-to-maturity,
expressed as a percentage, is determined for obligations held at the beginning
of the period, based on the current market value of the security plus accrued
interest, generally as of the end of the month preceding the 30-day period, or,
for obligations purchased during the period, based on the cost of the security
(including accrued interest). The yield-to-maturity is multiplied by the market
value (plus accrued interest) for each security and the result is divided by 360
and multiplied by 30 days or the number of days the security was held during the
period, if less. Modifications are made for determining yield-to-maturity on
certain tax-exempt securities. For the 30-day period ended December 31, 1993,
the Fund's yield, calculated pursuant to the formula described above, was 4.19%.
The Fund may also quote a "tax-equivalent yield" determined by dividing the
tax-exempt portion of the quoted yield by 1 minus the stated income tax rate and
adding the result to the portion of the yield that is not tax-exempt. The Fund's
tax-equivalent yield, based upon the maximum federal personal income tax bracket
of 39.6%, for the 30-day period ended December 31, 1993 was 6.55% based upon the
yield quoted above.
The Fund's "average annual total return" represents an annualization of the
Fund's total return over a particular period and is computed by finding the
annual percentage rate which will result in the ending redeemable value of a
hypothetical $1,000 investment made at the beginning of a one, five or ten year
period, or for the period from the date of commencement of the Fund's
operations, if shorter than any of the foregoing. For the purpose of this
calculation, it is assumed that all dividends and distributions are reinvested.
The formula for computing the average annual total return involves a percentage
obtained by dividing the ending redeemable value by the amount of the initial
investment, taking a root of the quotient (where the root is equivalent to the
number of years in the period) and subtracting 1 from the result.
The average annual total returns of the Fund for the year ended December 31,
1993, for the five years ended December 31, 1993, and for the ten years ended
December 31, 1993, were 11.99%, 9.50% and 10.21%, respectively.
In addition to the foregoing, the Fund may advertise its total return over
different periods of time by means of aggregate, average, year-by-year or other
types of total return figures. The Fund may compute its aggregate total return
for specified periods by determining the aggregate percentage rate which will
result in the ending value of a hypothetical $1,000 investment made at the
beginning of the period. For the purpose of this calculation, it is assumed that
all dividends and distributions are reinvested. The formula for computing
aggregate total return involves a percentage obtained by dividing the ending
value by the initial $1,000 investment and subtracting 1 from the result. Based
on the foregoing calculation, the Fund's total return for the year ended
December 31, 1993 was 11.99%, the total return for the five years ended December
31, 1993 was 57.44% and the total return for the ten years ended December 31,
1993 was 164.48%.
The Fund may also advertise the growth of hypothetical investments of
$10,000, $50,000 and $100,000 in shares of the Fund by adding 1 to the Fund's
aggregate total return to date (expressed as a decimal) and multiplying by
$10,000, $50,000 or $100,000. Investments of $10,000, $50,000 and $100,000 in
the Fund at inception (September 22, 1983) would have grown to $26,806, $134,030
and $268,060, respectively, at December 31, 1993.
The Fund from time to time may also advertise its performance relative to
certain performance rankings and indexes compiled by independent organizations.
DESCRIPTION OF SHARES OF THE FUND
- --------------------------------------------------------------------------------
The Shareholders of the Fund are entitled to a full vote for each full Share
held. The Fund is authorized to issue an unlimited number of shares of
beneficial interest. The Trustees themselves have the power to alter the number
and the terms of office of the Trustees (as provided for in the Declaration of
Trust), and they may at any time lengthen their own terms or make their terms of
unlimited duration and
18
<PAGE>
appoint their own successors, provided that always at least a majority of the
Trustees has been elected by the Shareholders of the Fund. Under certain
circumstances the Trustees may be removed by action of the Trustees. The
Shareholders also have the right under certain circumstances to remove the
Trustees. The voting rights of Shareholders are not cumulative, so that holders
of more than 50 percent of the Shares voting can, if they choose, elect all
Trustees being selected, while the holders of the remaining Shares would be
unable to elect any Trustees.
The Declaration of Trust permits the Trustees to authorize the creation of
additional series of shares (the proceeds of which would be invested in
separate, independently managed portfolios) and additional classes of shares
within any series (which would be used to distinguish among the rights of
different categories of shareholders, as might be required by future regulations
or other unforeseen circumstances). However, the Trustees have not authorized
any such additional series or classes of Shares.
The Declaration of Trust further provides that no Trustee, officer, employee
or agent of the Fund is liable to the Fund or to a Shareholder, nor is any
Trustee, officer, employee or agent liable to any third persons in connection
with the affairs of the Fund, except as such liability may arise from his/her or
its own bad faith, willful misfeasance, gross negligence, or reckless disregard
of his/her or its duties. It also provides that all third persons shall look
solely to the Fund property for satisfaction of claims arising in connection
with the affairs of the Fund. With the exceptions stated, the Declaration of
Trust provides that a Trustee, officer, employee or agent is entitled to be
indemnified against all liability in connection with the affairs of the Fund.
The Fund shall be of unlimited duration subject to the provisions in the
Declaration of Trust concerning termination by action of the Shareholders.
CUSTODIAN AND TRANSFER AGENT
- --------------------------------------------------------------------------------
The Bank of New York, 110 Washington Street, New York, New York 10286 is the
Custodian of the Fund's assets. Any of the Fund's cash balances with the
Custodian in excess of $100,000 are unprotected by federal deposit insurance.
Such balances may, at times, be substantial.
Dean Witter Trust Company, Harborside Financial Center, Plaza Two, Jersey
City, New Jersey 07311 is the Transfer Agent of the Fund's shares and Dividend
Disbursing Agent for payment of dividends and distributions on Fund shares and
Agent for Shareholders as described herein. Dean Witter Trust Company is an
affiliate of Dean Witter InterCapital Inc., the Fund's Investment Manager. As
Transfer Agent and Dividend Disbursing Agent, Dean Witter Trust Company's
responsibilities include maintaining shareholder accounts; disbursing cash
dividends and reinvesting dividends; processing account registration changes;
handling purchase and redemption transactions; mailing prospectuses and reports;
mailing and tabulating proxies; processing share certificate transactions; and
maintaining shareholder records and lists. For these services, Dean Witter Trust
Company receives a per shareholder account fee from the Fund.
INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
Price Waterhouse serves as the independent accountants of the Fund. The
independent accountants are responsible for auditing the annual financial
statements of the Fund.
REPORTS TO SHAREHOLDERS
- --------------------------------------------------------------------------------
The Fund will send to Shareholders, at least semi-annually, reports showing
the Fund's portfolio and other information. An annual report, containing
financial statements audited by independent accountants, will be sent to
Shareholders each year.
The Fund's fiscal year ends on December 31. The financial statements of the
Fund must be audited at least once a year by independent accountants whose
selection is made annually by the Fund's Board of Trustees.
19
<PAGE>
LEGAL COUNSEL
- --------------------------------------------------------------------------------
Sheldon Curtis, Esq., who is an officer and the General Counsel of the
Investment Manager, is an officer and the General Counsel of the Fund.
EXPERTS
- --------------------------------------------------------------------------------
The annual financial statements of the Fund for the year ended December 31,
1993, which are included in this Statement of Additional Information and
incorporated by reference in the Prospectus, have been so included and
incorporated in reliance on the report of Price Waterhouse, independent
accountants, given on the authority of said firm as experts in auditing and
accounting.
REGISTRATION STATEMENT
- --------------------------------------------------------------------------------
This Statement of Additional Information and the Prospectus do not contain
all of the information set forth in the Registration Statement the Fund has
filed with the Securities and Exchange Commission. The complete Registration
Statement may be obtained from the Securities and Exchange Commission upon
payment of the fee prescribed by the rules and regulations of the Commission.
20
<PAGE>
DEAN WITTER SELECT MUNICIPAL REINVESTMENT FUND
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Trustees of Dean Witter Select Municipal Reinvestment
Fund.
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 Select Municipal
Reinvestment Fund (formerly Sears Tax-Exempt Reinvestment Fund) (the "Fund") at
December 31, 1993, 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 ten years in the period then ended, 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 owned at December 31, 1993 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
PRICE WATERHOUSE
New York, New York
January 31, 1994
21
<PAGE>
DEAN WITTER SELECT MUNICIPAL REINVESTMENT FUND
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1993
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATE VALUE
- ----------- --------- --------- -------------
MUNICIPAL BONDS (97.1%)
<C> <S> <C> <C> <C>
GENERAL OBLIGATION (4.3%)
$ 1,000 Massachusetts, Fiscal Recovery 1990 Ser A.............................. 7.25% 6/1/96 $ 1,084,680
3,000 New York City, New York, 1990 Ser D.................................... 6.00 8/1/07 3,029,550
-------------
- -----------
4,114,230
4,000
-------------
- -----------
EDUCATIONAL FACILITIES REVENUE (14.7%)
2,000 Price-Elliot Research Park Inc, Arizona, Arizona State University Refg
Ser 1991 (MBIA Insured).............................................. 7.00 7/1/21 2,324,240
1,500 Georgetown University, District of Columbia Ser 1993................... 5.375 4/1/23 1,446,345
2,000 Morgan State University, Maryland, Academic & Auxiliary Fees
1990 Ser A (MBIA Insured) (Prerefunded).............................. 7.00 7/1/20 2,342,440
2,000 Massachusetts Health & Educational Facilities Authority, Boston College
Ser K................................................................ 5.25 6/1/18 1,941,000
1,500 Rutgers--The State University, New Jersey, Refg Ser R.................. 6.50 5/1/13 1,666,110
New York State Dormitory Authority, State University
2,000 Ser 1989 B........................................................... 0.00 5/15/03 1,201,680
550 Ser 1990 C (Prerefunded)............................................. 7.00 5/15/18 643,813
450 Ser 1990 C (Prerefunded)............................................. 7.00 5/15/18 526,757
1,000 Ohio Higher Educational Facility Commission, Oberlin College Ser 1993.. 5.375 10/1/15 1,012,510
1,000 Loudoun County Industrial Development Authority, Virginia,
The George Washington University Refg Ser of 1992.................... 6.25 5/15/22 1,060,220
-------------
- -----------
14,165,115
14,000
-------------
- -----------
ELECTRIC REVENUE (12.9%)
1,000 Northern California Power Agency, Geothermal #3-1987 Refg Ser A
(Crossover Refunded)................................................. 7.00 7/1/07 1,082,030
2,500 Nebraska Public Power District, Power Supply 1993 Ser.................. 6.125 1/1/15 2,659,500
1,000 Fayetteville, North Carolina, Public Works Ser 1990 (FGIC Insured)
(Prerefunded)........................................................ 6.50 3/1/14 1,137,460
665 North Carolina Municipal Power Agency #1, Catawba Ser 1985 A........... 7.00 1/1/20 703,770
1,000 Austin, Texas, Utilities Refg Ser 1993 A............................... 5.625 5/15/16 998,020
2,000 Intermountain Power Agency, Utah, Refg 1985 Ser H...................... 6.00 7/1/21 2,023,080
2,000 Snohomish County Public Utilities District #1, Washington, Ser 1993
(FGIC Insured)....................................................... 6.00 1/1/18 2,093,460
1,500 Tacoma, Washington, Electric 1991 C RIBS (AMBAC Insured)............... 10.118+ 1/1/15 1,751,250
-------------
- -----------
12,448,570
11,665
-------------
- -----------
HOSPITAL REVENUE (11.9%)
1,000 Maine Health & Higher Educational Facilities Authority, Maine Medical
Center Ser 1986 (Prerefunded)........................................ 7.375 10/1/13 1,118,560
2,000 Maryland Health & Higher Educational Facilities Authority,
University of Maryland Ser 1991 A (FGIC Insured) (Prerefunded)....... 6.50 7/1/21 2,266,520
2,000 Saint Cloud, Minnesota, The Saint Cloud Hospital Ser 1990 B (AMBAC
Insured)............................................................. 7.00 7/1/20 2,339,540
1,000 Clermont County, Ohio, Mercy Health Ser 1991A MVRICS (AMBAC Insured)... 10.391+ 10/5/21 1,247,500
550 Hamilton County, Ohio, St Francis-St George Hospital/Franciscan Sisters
of the Poor Health System Inc Ser 1985............................... 9.375 7/1/15 584,996
1,000 Stark County, Ohio, Timken Mercy Medical Center Refg
Ser 1986 A (Prerefunded)............................................. 7.50 12/1/07 1,127,420
2,500 North Central Texas Health Facilities Development Corporation,
University Medical Center Ser 1989................................... 8.20 4/1/19 2,795,175
-------------
- -----------
11,479,711
10,050
-------------
- -----------
</TABLE>
22
<PAGE>
DEAN WITTER SELECT MUNICIPAL REINVESTMENT FUND
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1993 (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATE VALUE
- ----------- --------- --------- -------------
<C> <S> <C> <C> <C>
INDUSTRIAL DEVELOPMENT/POLLUTION CONTROL REVENUE (12.2%)
$ 750 California Alternative Energy Source Financing Authority, SRI
International Cogeneration Ser 1985 (a).............................. 9.75% 12/1/05 $ 375,000
Connecticut Development Authority, Bridgeport Hydraulic Co
700 Refg Ser 1990........................................................ 7.25 6/1/20 791,987
2,000 Refg 1994 Ser A (MBIA Insured) (b)................................... 6.05 3/1/29 2,056,620
1,500 Michigan Strategic Fund, Ford Motor Co Refg Ser 1991 A................. 7.10 2/1/06 1,751,745
1,000 Claiborne County, Mississippi, Middle South Energy Inc Ser C........... 9.875 12/1/14 1,230,160
3,000 Ohio Water Development Authority, Dayton Power & Light Co
Collateralized Refg 1992 Ser A....................................... 6.40 8/15/27 3,261,810
1,500 Matagorda County Navigational District #1, Texas, Central Power & Light
Co Collateralized Ser 1984 A......................................... 7.50 12/15/14 1,720,380
500 Russell County Industrial Development Authority, Virginia, Appalachian
Power Co Ser G....................................................... 7.70 11/1/07 568,795
-------------
- -----------
11,756,497
10,950
-------------
- -----------
MORTGAGE REVENUE--MULTI-FAMILY (1.6%)
1,000 Michigan Housing Development Authority, Rental 1992 Ser A.............. 6.60 4/1/12 1,058,280
400 Pennsylvania Housing Finance Agency, Moderate Rehabilitation-- Section
8 Assisted Issue B................................................... 9.00 8/1/01 427,124
-------------
- -----------
1,485,404
1,400
-------------
- -----------
MORTGAGE REVENUE--SINGLE FAMILY (1.8%)
1,565 Maricopa County Industrial Development Authority, Arizona,
Refg 1991 Ser A...................................................... 7.50 8/1/12 1,690,372
10 Huntington Beach, California, Financing Program 1984 A................. 11.00 7/1/17 10,579
10 Riverside County, California, Issue of 1984............................ 10.50 9/1/14 10,457
-------------
- -----------
1,711,408
1,585
-------------
- -----------
PUBLIC FACILITIES REVENUE (5.5%)
2,000 California Public Works Board, Corrections 1993 Ser D.................. 5.375 6/1/12 1,959,840
1,000 Metropolitan Pier & Exposition Authority, Illinois, McCormick Place
Ser 1992............................................................. 6.50 6/15/27 1,070,930
1,000 Hennepin County, Minnesota, Ser 1991 COPs.............................. 6.80 5/15/17 1,111,060
1,000 Puerto Rico Infrastructure Financing Authority, Special Tax
Ser 1988 A........................................................... 7.90 7/1/07 1,153,040
-------------
- -----------
5,294,870
5,000
-------------
- -----------
RESOURCE RECOVERY REVENUE (2.4%)
1,000 Palm Beach County Solid Waste Authority, Florida, Refg & Impr Ser 1985
(Prerefunded)........................................................ 10.00 12/1/05 1,145,830
1,000 Massachusetts Industrial Finance Agency, SEMASS Ser 1991 A............. 9.00 7/1/15 1,140,670
-------------
- -----------
2,286,500
2,000
-------------
- -----------
RETIREMENT & LIFECARE FACILITIES REVENUE (0.0%)
352 Alachua County, Florida, Atrium Apartments Ser 1990 (c)................ 9.00 10/15/05 12,316
-------------
- -----------
TRANSPORTATION FACILITIES REVENUE (14.9%)
2,000 Los Angeles County Metropolitan Transportation Authority, California,
Sales Tax Refg Ser 1993 A (MBIA Insured)............................. 5.625 7/1/18 2,021,080
2,000 Los Angeles County Transportation Commission, California, Sales Tax Ser
1991 B............................................................... 6.50 7/1/13 2,180,440
3,500 Kentucky Turnpike Authority, Resource Recovery Road 1987
Ser A BIGS........................................................... 0.00 7/1/06 3,538,500
1,500 Albuquerque, New Mexico, Gross Receipts Tax-Airport Supported Sub Lien
Ser 12/84............................................................ 8.25 7/1/14 1,646,415
2,000 Pennsylvania Turnpike Commission, Ser A of 1986........................ 6.00 12/1/17 2,042,680
3,000 Puerto Rico Highway & Transportation Authority, Refg Ser X............. 5.25 7/1/21 2,881,950
-------------
- -----------
14,311,065
14,000
-------------
- -----------
</TABLE>
23
<PAGE>
DEAN WITTER SELECT MUNICIPAL REINVESTMENT FUND
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1993 (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATE VALUE
- ----------- --------- --------- -------------
<C> <S> <C> <C> <C>
WATER & SEWER REVENUE (13.1%)
$ 2,000 Maryland Water Quality Financing Administration, 1990 Ser A............ 7.25% 9/1/11 $ 2,281,040
2,000 Boston Water & Sewer Commission, Massachusetts, 1992 Ser A............. 6.00 11/1/15 2,078,280
1,500 Massachusetts Water Resources Authority, 1993 Ser C.................... 5.25 12/1/08 1,498,380
500 Minnesota Public Facilities Authority, Water Pollution Ser 1991 A...... 6.95 3/1/13 568,665
1,000 Columbus, Ohio, Sewerage Refg Ser 1992................................. 6.25 6/1/08 1,101,790
Spartanburg, South Carolina, Water Impr
1,250 Refg Ser A 1992...................................................... 6.25 6/1/12 1,334,263
1,700 Refg Ser A 1992...................................................... 6.25 6/1/17 1,801,541
2,000 Metropolitan Government of Nashville & Davidson County, Tennessee, Refg
of 1986.............................................................. 5.50 1/1/16 1,987,380
-------------
- -----------
12,651,339
11,950
-------------
- -----------
OTHER REVENUE (1.8%)
1,500 New York Local Government Assistance Corporation, Ser 1991 D........... 7.00 4/1/11 1,720,575
-------------
- -----------
88,452 TOTAL MUNICIPAL BONDS (IDENTIFIED COST $83,059,255).......................................... 93,437,600
- -----------
-------------
SHORT-TERM MUNICIPAL OBLIGATIONS (3.0%)
1,000 Newport Beach, California, Hoag Memorial Presbyterian Ser 1992 (Tender
1/3/94).............................................................. 4.45* 10/1/22 1,000,000
1,900 Illinois Health Facilities Authority, Franciscan Sisters Health Care
Corp Ser 1992 (Tender 1/3/94)........................................ 4.50* 1/1/18 1,900,000
-------------
- -----------
TOTAL SHORT-TERM MUNICIPAL OBLIGATIONS
2,900 (IDENTIFIED COST $2,900,000)...............................................................
- ----------- 2,900,000
------------
$ 91,352 TOTAL INVESTMENTS (IDENTIFIED COST $85,959,255)(D).............. 100.1 % 96,337,600
- -----------
- -----------
LIABILITIES IN EXCESS OF CASH
AND OTHER ASSETS.............................................. (0.1) (72,697)
---------- ------------
NET ASSETS...................................................... 100.0 % $96,264,903
---------- ------------
---------- ------------
<FN>
- ------------------
+ CURRENT COUPON RATE FOR RESIDUAL INTEREST BONDS. THIS RATE RESETS
PERIODICALLY AS THE AUCTION RATE ON THE RELATED SHORT-TERM SECURITIES
FLUCTUATES.
* VARIABLE OR FLOATING RATE SECURITIES. COUPON RATE SHOWN REFLECTS CURRENT
RATE.
(A) BOND IN DEFAULT. PARTIAL INTEREST PAID. INTEREST INCOME IS RECORDED AS
RECEIVED.
(B) SECURITY PURCHASED ON A WHEN ISSUED BASIS.
(C) NON-INCOME PRODUCING, BOND IN DEFAULT.
(D) THE AGGREGATE COST FOR FEDERAL INCOME TAX PURPOSES IS $85,959,255; THE
AGGREGATE GROSS UNREALIZED APPRECIATION IS $10,941,000 AND THE AGGREGATE
GROSS UNREALIZED DEPRECIATION IS $562,655, RESULTING IN NET UNREALIZED
APPRECIATION OF $10,378,345.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
24
<PAGE>
DEAN WITTER SELECT MUNICIPAL REINVESTMENT FUND
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1993
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $85,959,255)............ $ 96,337,600
Cash....................................... 435,400
Receivables for:
Interest................................. 1,674,703
Shares of beneficial interest sold....... 11,858
Investments sold......................... 5,000
Prepaid expenses........................... 7,016
------------
TOTAL ASSETS....................... 98,471,577
------------
LIABILITIES:
Payables for:
Investments purchased.................... 1,978,480
Shares of beneficial interest
repurchased............................ 98,204
Investment management fee payable (Note
2)....................................... 40,598
Accrued expenses (Note 3).................. 89,392
------------
TOTAL LIABILITIES.................. 2,206,674
------------
NET ASSETS:
Paid in capital............................ 85,276,101
Accumulated undistributed realized gain on
investments--net......................... 273,674
Unrealized appreciation on
investments--net......................... 10,378,345
Accumulated undistributed investment
income--net.............................. 336,783
------------
NET ASSETS......................... $ 96,264,903
------------
------------
NET ASSET VALUE PER SHARE, 7,508,472 shares
outstanding (unlimited authorized shares
of $.01 par value).......................
$12.82
------------
------------
</TABLE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1993
<TABLE>
<S> <C>
INVESTMENT INCOME:
INTEREST INCOME........................... $ 5,541,024
-----------
EXPENSES
Investment management fee (Note 2)...... 442,119
Transfer agent fees and expenses (Note
3).................................... 298,668
Professional fees....................... 46,235
Registration fees....................... 40,457
Shareholder reports and notices......... 35,961
Trustees' fees and expenses............. 23,074
Other................................... 14,899
-----------
TOTAL EXPENSES...................... 901,413
-----------
INVESTMENT INCOME--NET............ 4,639,611
-----------
REALIZED AND UNREALIZED GAIN ON
INVESTMENTS--NET (Note 1):
Realized gain on investments--net....... 687,390
Change in unrealized appreciation on
investments--net...................... 4,565,906
-----------
NET GAIN ON INVESTMENTS............. 5,253,296
-----------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS....... $ 9,892,907
-----------
-----------
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE YEAR ENDED FOR THE YEAR ENDED
DECEMBER 31, 1993 DECEMBER 31, 1992
------------------ ------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Investment income--net................................................ $ 4,639,611 $ 4,113,189
Realized gain on investments--net..................................... 687,390 542,452
Change in unrealized appreciation on investments--net................. 4,565,906 1,385,344
------------------ ------------------
Net increase in net assets resulting from operations.............. 9,892,907 6,040,985
------------------ ------------------
Dividends and distributions to shareholders from:
Investment income--net................................................ (4,564,504) (4,094,845)
Realized gain on investments--net..................................... (387,730) (519,600)
------------------ ------------------
Total dividends and distributions................................. (4,952,234) (4,614,445)
------------------ ------------------
Transactions in shares of beneficial interest--net increase (Note 4).... 15,406,570 6,588,302
------------------ ------------------
Total increase.................................................... 20,347,243 8,014,842
NET ASSETS:
Beginning of period..................................................... 75,917,660 67,902,818
------------------ ------------------
END OF PERIOD (including undistributed net investment income of $336,783
and $261,676, respectively)............................................ $ 96,264,903 $ 75,917,660
------------------ ------------------
------------------ ------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
25
<PAGE>
Dean Witter Select Municipal Reinvestment Fund
Notes to Financial Statements
- --------------------------------------------------------------------------------
1.__Organization and Accounting Policies--Dean Witter Select Municipal
Reinvestment Fund (the "Fund") is registered under the Investment Company Act of
1940, as amended, as a diversified, open-end management investment company and
was organized as a Massachusetts business trust on June 1, 1983. The Fund
commenced operations on September 22, 1983. On February 19, 1993 the Fund
changed its name from Sears Tax-Exempt Reinvestment Fund to Dean Witter Select
Municipal Reinvestment Fund.
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 Fund's Trustees. The
pricing service has informed the Fund that in valuing the Fund's portfolio
securities, it uses both a computerized grid 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.
B._ACCOUNTING FOR INVESTMENTS--Security transactions are accounted for on
the trade date (date the order to buy or sell is executed). In computing net
investment income, the Fund amortizes premiums and original issue discounts.
Additionally, with respect to market discount on bonds purchased after April
30, 1993, a portion of any capital gain realized upon disposition is
recharacterized as taxable investment income. Realized gains and losses on
security transactions are determined on the identified cost method. Interest
income is accrued daily except where collection is not expected.
C._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 non-taxable income to its
shareholders. Accordingly, no federal income tax provision is required.
D._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 reclassifications.
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 (the "Agreement") with Dean Witter InterCapital Inc. (the "Investment
Manager"), the Fund pays its Investment Manager a management fee, accrued daily
and payable monthly at an annual rate of .50 of 1% of the net assets of the Fund
determined as of the close of each business day. 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 office
space and facilities, equipment, clerical, bookkeeping and certain legal
26
<PAGE>
Dean Witter Select Municipal Reinvestment Fund
Notes to Financial Statements (CONTINUED)
- --------------------------------------------------------------------------------
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.__Security Transactions and Transactions with Affiliates--The cost of
purchases and the proceeds from sales of portfolio securities for the year ended
December 31, 1993, excluding short-term investments, aggregated $21,930,295 and
$7,755,471, respectively.
Dean Witter Trust Company, an affiliate of the Investment Manager, is the
Fund's transfer agent. During the year ended December 31, 1993, the Fund
incurred transfer agent fees and expenses of $298,668, of which $41,799 was
payable at December 31, 1993.
4.__Shares of Beneficial Interest--Transactions in shares of beneficial interest
were as follows:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED FOR THE YEAR ENDED
DECEMBER 31, 1993 DECEMBER 31, 1992
------------------------ ------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Sold..................................... 4,540,460 $ 57,002,124 2,943,453 $ 35,205,749
Reinvestment of dividends and
distributions........................... 382,816 4,821,330 377,822 4,514,572
---------- ------------ ---------- ------------
4,923,276 61,823,454 3,321,275 39,720,321
Repurchased.............................. (3,677,938) (46,416,884) (2,769,655) (33,132,019)
---------- ------------ ---------- ------------
Net increase............................. 1,245,338 $ 15,406,570 551,620 $ 6,588,302
---------- ------------ ---------- ------------
---------- ------------ ---------- ------------
</TABLE>
1993 FEDERAL TAX NOTICE (UNAUDITED)
During the year ended December 31, 1993 the Fund paid to shareholders $0.667 per
share from net investment income. 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 same period the Fund paid to
shareholders $0.053 per share from long-term capital gains.
27
<PAGE>
Dean Witter Select Municipal Reinvestment Fund
Financial Highlights
- --------------------------------------------------------------------------------
Selected data and ratios for a share of beneficial interest outstanding
throughout each period:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
---------------------------------------------------------------------------------------------
1993 1992 1991 1990 1989 1988 1987
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of
period........................... $ 12.12 $ 11.89 $ 11.25 $ 11.41 $ 11.08 $ 10.60 $ 11.85
--------- --------- --------- --------- --------- --------- ---------
Investment income--net.......... 0.67 0.70 0.71 0.70 0.68 0.70 0.72
Realized and unrealized gain
(loss) on investments--net..... 0.75 0.32 0.62 (0.15) 0.33 0.49 (1.15)
--------- --------- --------- --------- --------- --------- ---------
Total from investment
operations....................... 1.42 1.02 1.33 0.55 1.01 1.19 (0.43)
--------- --------- --------- --------- --------- --------- ---------
Less dividends and distributions:
Dividends from net investment
income......................... (0.67) (0.70) (0.69) (0.71) (0.68) (0.70) (0.72)
Distributions from net realized
gain on investments............ (0.05) (0.09) -0- -0- -0- (0.01) (0.10)
--------- --------- --------- --------- --------- --------- ---------
Total dividends and
distributions.................... (0.72) (0.79) (0.69) (0.71) (0.68) (0.71) (0.82)
--------- --------- --------- --------- --------- --------- ---------
Net asset value, end of period.... $ 12.82 $ 12.12 $ 11.89 $ 11.25 $ 11.41 $ 11.08 $ 10.60
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
Total Investment Return............. 11.99% 8.88% 12.04% 5.27% 9.47% 11.42% (3.53%)
Ratios/Supplemental Data:
Net assets, end of period (in
thousands)....................... $96,265 $75,918 $67,903 $60,304 $52,485 $44,769 $40,938
Ratio of expenses to average net
assets........................... 1.02% 1.14% 1.20% 1.21% 1.40% 1.41% 1.36%
Ratio of net investment income to
average net assets............... 5.25% 5.79% 6.06% 6.12% 5.90% 6.27% 6.37%
Portfolio turnover rate........... 9% 13% 30% 22% 15% 13% 43%
<FN>
- ---------------
*NET OF EXPENSE REIMBURSEMENT.
<CAPTION>
1986 1985 1984
--------- --------- ---------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of
period........................... $ 11.41 $ 10.14 $ 10.11
--------- --------- ---------
Investment income--net.......... 0.76 0.82 0.73
Realized and unrealized gain
(loss) on investments--net..... 1.31 1.28 0.01
--------- --------- ---------
Total from investment
operations....................... 2.07 2.10 0.74
--------- --------- ---------
Less dividends and distributions:
Dividends from net investment
income......................... (0.77) (0.82) (0.71)
Distributions from net realized
gain on investments............ (0.86) (0.01) -0-
--------- --------- ---------
Total dividends and
distributions.................... (1.63) (0.83) (0.71)
--------- --------- ---------
Net asset value, end of period.... $ 11.85 $ 11.41 $ 10.14
--------- --------- ---------
--------- --------- ---------
Total Investment Return............. 19.33% 21.38% 7.91%
Ratios/Supplemental Data:
Net assets, end of period (in
thousands)....................... $38,058 $19,802 $7,070
Ratio of expenses to average net
assets........................... 1.50%* 1.50%* 1.50%*
Ratio of net investment income to
average net assets............... 6.30% 7.34% 7.98%
Portfolio turnover rate........... 35% 129% 76%
<FN>
- ---------------
*NET OF EXPENSE REIMBURSEMENT.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
28
<PAGE>
APPENDIX--RATINGS OF INVESTMENTS
- --------------------------------------------------------------------------------
MOODY'S INVESTORS SERVICE INC. ("MOODY'S")
MUNICIPAL BOND RATINGS
Aaa Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as
"gilt edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong position
of such issues.
Aa Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally
known as high grade bonds. They are rated lower than the best bonds
because margins of protection may not be as large as in Aaa securities or
fluctuation of protective elements may be of greater amplitude or there
may be other elements present which make the long-term risks appear
somewhat larger than in Aaa securities.
A Bonds which are rated A possess many favorable investment attributes and
are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate, but elements
may be present which suggest a susceptibility to impairment sometime in
the future.
Baa Bonds which are rated Baa are considered as medium grade obligations;
i.e., they are neither highly protected nor poorly secured. Interest
payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and in fact have speculative characteristics as
well.
Bonds rated Aaa, Aa, A and Baa are considered investment grade bonds.
Ba Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate, and therefore not
well safeguarded during both good and bad times over the future.
Uncertainty of position characterizes bonds in this class.
B Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance
of other terms of the contract over any long period of time may be small.
Caa Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to
principal or interest.
Ca Bonds which are rated Ca present obligations which are speculative in a
high degree. Such issues are often in default or have other marked
shortcomings.
C Bonds which are rated C are the lowest rated class of bonds, and issues so
rated can be regarded as having extremely poor prospects of ever attaining
any real investment standing.
CONDITIONAL RATING: Bonds for which the security depends upon the
completion of some act or the fulfillment of some condition are rated
conditionally. These are bonds secured by (a) earnings of projects under
construction, (b) earnings of projects unseasoned in operation experience, (c)
rentals which begin when facilities are completed, or (d) payments to which some
other limiting condition attaches. Parenthetical rating denotes probable credit
stature upon completion of construction or elimination of basis of condition.
29
<PAGE>
RATING REFINEMENTS: Moody's may apply numerical modifiers, 1, 2 and 3 in
each generic rating classification from Aa through B in its municipal bond
rating system. The modifier 1 indicates a mid-range ranking; and a modifier 3
indicates that the issue ranks in the lower end of its generic rating category.
MUNICIPAL NOTE RATINGS
Moody's ratings for state and municipal notes and other short-term loans are
designated Moody's Investment Grade (MIG). MIG 1 denotes best quality and means
there is present strong protection from established cash flows, superior
liquidity support or demonstrated broad-based access to the market for
refinancing. MIG 2 denotes high quality and means that margins of protection are
ample although not as large as in MIG 1. MIG 3 denotes favorable quality and
means that all security elements are accounted for but that the undeniable
strength of the previous grades, MIG 1 and MIG 2, is lacking. MIG 4 denotes
adequate quality and means that the protection commonly regarded as required of
an investment security is present and that while the notes are not distinctly or
predominantly speculative, there is specific risk.
VARIABLE RATE DEMAND OBLIGATIONS
A short-term rating, in addition to the Bond or MIG ratings, designated VMIG
may also be assigned to an issue having a demand feature. The assignment of the
VMIG symbol reflects such characteristics as payment upon periodic demand rather
than fixed maturity dates and payment relying on external liquidity. The VMIG
rating criteria are identical to the MIG criteria discussed above.
COMMERCIAL PAPER RATINGS
Moody's Commercial Paper ratings are opinions of the ability to repay
punctually promissory obligations not having an original maturity in excess of
nine months. These ratings apply to Municipal Commercial Paper as well as
taxable Commercial Paper. Moody's employs the following three designations, all
judged to be investment grade, to indicate the relative repayment capacity of
rated issuers: Prime-1, Prime-2, Prime-3.
Issuers rated Prime-1 have a superior capacity for repayment of short-term
promissory obligations. Issuers rated Prime-2 have a strong capacity for
repayment of short-term promissory obligations; and Issuers rated Prime-3 have
an acceptable capacity for repayment of short-term promissory obligations.
Issuers rated Not Prime do not fall within any of the Prime rating categories.
STANDARD & POOR'S CORPORATION ("STANDARD & POOR'S")
MUNICIPAL BOND RATINGS
A Standard & Poor's municipal bond rating is a current assessment of the
creditworthiness of an obligor with respect to a specific obligation. This
assessment may take into consideration obligors such as guarantors, insurers, or
lessees. The ratings are based on current information furnished by the issuer or
obtained by Standard & Poor's from other sources it considers reliable. The
ratings are based, in varying degrees, on the following considerations: (1)
likelihood of default-capacity and willingness of the obligor as to the timely
payment of interest and repayment of principal in accordance with the terms of
the obligation; (2) nature of and provisions of the obligation; and (3)
protection afforded by, and relative position of, the obligation in the event of
bankruptcy, reorganization or other arrangement under the laws of bankruptcy and
other laws affecting creditors' rights.
Standard & Poor's does not perform an audit in connection with any rating
and may, on occasion, rely on unaudited financial information. The ratings may
be changed, suspended or withdrawn as a result of changes in, or unavailability
of, such information, or for other reasons.
AAA Debt rated "AAA" has the highest rating assigned by Standard & Poor's.
Capacity to pay interest and repay principal is extremely strong.
30
<PAGE>
AA Debt rated "AA" has a very strong capacity to pay interest and repay
principal and differs from the highest-rated issues only in small degree.
A Debt rated "A" has a strong capacity to pay interest and repay principal
although they are somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than debt in higher-rated
categories.
BBB Debt rated "BBB" is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than for debt in
higher-rated categories.
Bonds rated AAA, AA, A and BBB are considered investment grade bonds.
BB Debt rated "BB" has less near-term vulnerability to default than other
speculative grade debt. However, it faces major ongoing uncertainties or
exposure to adverse business, financial or economic conditions which could
lead to inadequate capacity to meet timely interest and principal payment.
B Debt rated "B" has a greater vulnerability to default but presently has
the capacity to meet interest payments and principal repayments. Adverse
business, financial or economic conditions would likely impair capacity or
willingness to pay interest and repay principal.
CCC Debt rated "CCC" has a current identifiable vulnerability to default, and
is dependent upon favorable business, financial and economic conditions to
meet timely payments of interest and repayments of principal. In the event
of adverse business, financial or economic conditions, it is not likely to
have the capacity to pay interest and repay principal.
CC The rating "CC" is typically applied to debt subordinated to senior debt
which is assigned an actual or implied "CCC" rating.
C The rating "C" is typically applied to debt subordinated to senior debt
which is assigned an actual or implied "CCC"-debt rating.
CI The rating "CI" is reserved for income bonds on which no interest is being
paid.
NR Indicates that no rating has been requested, that there is insufficient
information on which to base a rating or that Standard & Poor's does not
rate a particular type of obligation as a matter of policy.
Bonds rated "BB," "B," "CCC," "CC" and "C" are regarded as having
predominantly speculative characteristics with respect to capacity to pay
interest and repay principal. "BB" indicates the least degree of
speculation and "C" the highest degree of speculation. While such debt
will likely have some quality and protective characteristics, these are
outweighed by large uncertainties or major risk exposures to adverse
conditions.
Plus (+) or minus (-): The ratings from "AA" to "CCC" may be modified by
the addition of a plus or minus sign to show relative standing within the
major ratings categories.
The foregoing ratings are sometimes followed by a "p" which indicates that
the rating is provisional. A provisional rating assumes the successful
completion of the project being financed by the bonds being rated and
indicates that payment of debt service requirements is largely or entirely
dependent upon the successful and timely completion of the project. This
rating, however, while addressing credit quality subsequent to completion
of the project, makes no comment on the likelihood or risk of default upon
failure of such completion.
31
<PAGE>
MUNICIPAL NOTE RATINGS
Commencing on July 27, 1984, Standard & Poor's instituted a new rating
category with respect to certain municipal note issues with a maturity of less
than three years. The new note ratings denote the following:
SP-1 denotes a very strong or strong capacity to pay principal and interest.
Issues determined to possess overwhelming safety characteristics are given
a plus (+) designation (SP-1+).
SP-2 denotes a satisfactory capacity to pay principal and interest.
SP-3 denotes a speculative capacity to pay principal and interest.
COMMERCIAL PAPER RATINGS
Standard and Poor's commercial paper rating is a current assessment of the
likelihood of timely payment of debt having an original maturity of no more than
365 days. The commercial paper rating is not a recommendation to purchase or
sell a security. The ratings are based upon current information furnished by the
issuer or obtained by S&P from other sources it considers reliable. The ratings
may be changed, suspended, or withdrawn as a result of changes in or
unavailability of such information. Ratings are graded into group categories,
ranging from "A" for the highest quality obligations to "D" for the lowest.
Ratings are applicable to both taxable and tax-exempt commercial paper. The
categories are as follows:
Issues assigned A ratings are regarded as having the greatest capacity for
timely payment. Issues in this category are further refined with the designation
1, 2 and 3 to indicate the relative degree of safety.
A-1 indicates that the degree of safety regarding timely payment is very
strong.
A-2 indicates capacity for timely payment on issues with this designation is
strong. However, the relative degree of safety is not as overwhelming as
for issues designated "A-1".
A-3 indicates a satisfactory capacity for timely payment. Obligations carrying
this designation are, however, somewhat more vulnerable to the adverse
effects of changes in circumstances than obligations carrying the higher
designations.
32
<PAGE>
DEAN WITTER SELECT MUNICIPAL REINVESTMENT FUND
PART C OTHER INFORMATION
Item 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) FINANCIAL STATEMENTS
(1) Financial statements and schedules, included
in Prospectus (Part A):
Page in
Prospectus
----------
Financial highlights from the years
ended December 31, 1984, 1985, 1986, 1987, 1988,
1989, 1990, 1991, 1992 and 1993...................... 4
(2) Financial statements included in the Statement of
Additional Information (Part B):
Page in
SAI
-------
Portfolio of Investments at December 31, 1993........ 22
Statement of assets and liabilities at
December 31, 1993.................................... 25
Statement of operations for the year
ended December 31, 1993.............................. 25
Statement of changes in net assets for the years
ended December 31, 1992 and 1993..................... 25
Notes to Financial Statements ....................... 26
(3) Financial statements included in Part C:
None
(b) EXHIBITS:
5. - Form of Investment Management Agreement between
Registrant and Dean Witter InterCapital Inc.
8. - Form of Amended and Restated Transfer Agency and
Service Agreement
9. - Form of Services Agreement between Dean Witter
InterCapital Inc. and Dean Witter Services
Company Inc.
1
<PAGE>
11. - Consent of Independent Accountants
16. - Schedules for Computation of Performance
Quotations
All other exhibits previously filed and incorporated
by reference.
Item 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH
REGISTRANT.
None
Item 26. NUMBER OF HOLDERS OF SECURITIES.
<TABLE>
<CAPTION>
(1) (2)
Number of Record Holders
Title of Class at January 12, 1994
-------------- ------------------------
<S> <C>
Shares of Beneficial Interest 17,783
</TABLE>
Item 27. INDEMNIFICATION
Pursuant to Section 5.3 of the Registrant's Declaration of
Trust and under Section 4.8 of the Registrant's By-Laws, the
indemnification of the Registrant's trustees, officers, employees
and agents is permitted if it is determined that they acted under
the belief that their actions were in or not opposed to the best
interest of the Registrant, and, with respect to any criminal
proceeding, they had reasonable cause to believe their conduct
was not unlawful. In addition, indemnification is permitted only
if it is determined that the actions in question did not render
them liable by reason of willful misfeasance, bad faith or gross
negligence in the performance of their duties or by reason of
reckless disregard of their obligations and duties to the
Registrant. Trustees, officers, employees and agents will be
indemnified for the expense of litigation if it is determined
that they are entitled to indemnification against any liability
established in such litigation. The Registrant may also advance
money for these expenses provided that they give their undertakings
to repay the Registrant unless their conduct is
later determined to permit indemnification.
Pursuant to Section 5.2 of the Registrant's Declaration of
Trust and paragraph 8 of the Registrant's Investment Management
Agreement, neither the Investment Manager nor any trustee,
officer, employee or agent of the Registrant shall be liable for
any action or failure to act, except in the case of bad faith,
willful misfeasance, gross negligence or reckless disregard of
duties to the Registrant.
Insofar as indemnification for liabilities arising under
2
<PAGE>
the Securities Act of 1933 (the "Act") may be permitted to
trustees, officers and controlling persons of the Registrant
pursuant to the foregoing provisions or otherwise, the
Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a trustee, officer, or
controlling person of the Registrant in connection with the
successful defense of any action, suit or proceeding) is asserted
against the Registrant by such trustee, officer or controlling
person in connection with the shares being registered, the
Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Act, and will be governed by the final adjudication of such
issue.
The Registrant hereby undertakes that it will apply the
indemnification provision of its by-laws in a manner consistent
with Release 11330 of the Securities and Exchange Commission
under the Investment Company Act of 1940, so long as the
interpretation of Sections 17(h) and 17(i) of such Act remains in
effect.
Registrant, in conjunction with the Investment Manager,
Registrant's Trustees, and other registered investment management
companies managed by the Investment Manager, maintains insurance
on behalf of any person who is or was a Trustee, officer,
employee, or agent of Registrant, or who is or was serving at the
request of Registrant as a trustee, director, officer, employee
or agent of another trust or corporation, against any liability
asserted against him and incurred by him or arising out of his
position. However, in no event will Registrant maintain
insurance to indemnify any such person for any act for which
Registrant itself is not permitted to indemnify him.
Item 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.
See "The Fund and Its Management" in the Prospectus regarding the
business of the investment adviser. The following information is
given regarding officers of Dean Witter InterCapital Inc.
Information regarding the other officers of InterCapital is
included in Item 29(b) below. The term "Dean Witter Funds" used
below refers to the following Funds: (1) InterCapital Income
Securities Inc., (2) High Income Advantage Trust, (3) High Income
Advantage Trust II, (4) High Income Advantage Trust III, (5)
Municipal Income Trust, (6) Municipal Income Trust II, (7)
Municipal Income Trust III, (8) Dean Witter Government Income
Trust, (9) Municipal Premium Income Trust, (10) Municipal Income
3
<PAGE>
Opportunities Trust, (11) Municipal Income Opportunities Trust
II, (12) Municipal Income Opportunities Trust III, (13) Prime
Income Trust, (14) InterCapital Insured Municipal Bond Trust,
(15) InterCapital Quality Municipal Income Trust, (16)
InterCapital Quality Municipal Investment Trust, (17)
InterCapital Insured Municipal Income Trust, (18) InterCapital
California Insured Municipal Income Trust, (19) InterCapital
Insured Municipal Trust, (20) InterCapital Quality Municipal
Securities (21) InterCapital New York Quality Municipal
Securities, and (22) InterCapital California Municipal
Securities, registered closed-end investment companies, and (1)
Dean Witter Equity Income Trust, (2) Dean Witter Tax-Exempt
Securities Trust, (3) Dean Witter Tax-Free Daily Income Trust,
(4) Dean Witter Dividend Growth Securities Inc., (5) Dean Witter
Convertible Securities Trust, (6) Dean Witter Liquid Asset Fund
Inc., (7) Dean Witter Developing Growth Securities Trust, (8)
Dean Witter Retirement Series, (9) Dean Witter Federal Securities
Trust, (10) Dean Witter World Wide Investment Trust, (11) Dean
Witter U.S. Government Securities Trust, (12) Dean Witter Select
Municipal Reinvestment Fund, (13) Dean Witter High Yield
Securities Inc., (14) Dean Witter Intermediate Income Securities,
(15) Dean Witter New York Tax-Free Income Fund, (16) Dean Witter
California Tax-Free Income Fund, (17) Dean Witter Health Sciences
Trust, (18) Dean Witter California Tax-Free Daily Income Trust,
(19) Dean Witter Managed Assets Trust, (20) Dean Witter American
Value Fund, (21) Dean Witter Strategist Fund, (22) Dean Witter
Utilities Fund, (23) Dean Witter World Wide Income Trust, (24)
Dean Witter New York Municipal Money Market Trust, (25) Dean
Witter Capital Growth Securities, (26) Dean Witter Precious
Metals and Minerals Trust, (27) Dean Witter European Growth Fund
Inc., (28) Dean Witter Global Short-Term Income Fund Inc., (29)
Dean Witter Pacific Growth Fund Inc., (30) Dean Witter Multi-
State Municipal Series Trust, (31) Dean Witter Premier Income
Trust, (32) Dean Witter Short-Term U.S. Treasury Trust, (33) Dean
Witter Diversified Income Trust, (34) Dean Witter U.S. Government
Money Market Trust, (35) Dean Witter Global Dividend Growth
Securities, (36) Active Assets California Tax-Free Trust, (37)
Dean Witter Natural Resource Development Securities Inc., (38)
Active Assets Government Securities Trust, (39) Active Assets
Money Trust, (40) Active Assets Tax-Free Trust, (41) Dean Witter
Limited Term Municipal Trust, (42) Dean Witter Variable
Investment Series, (43) Dean Witter Value-Added Market Series and
(44) Dean Witter Short-Term Bond Fund, registered open-end
investment companies. InterCapital is a wholly-owned subsidiary
of Dean Witter, Discover & Co. The principal address of the Dean
Witter Funds is Two World Trade Center, New York, New York 10048.
The term "TCW/DW Funds" refers to the following Funds: (1) TCW/DW
Core Equity Trust, (2) TCW/DW North American Government Income
Trust, (3) TCW/DW Latin American Growth Fund, (4) TCW/DW Income
and Growth Fund, (5) TCW/DW Small Cap Growth Fund, (6) TCW/DW
Balanced Fund, registered open-end investment companies and (7)
TCW/DW Term Trust 2000, (8) TCW/DW Term Trust 2002 and (9)
TCW/DW Term Trust 2003, registered closed-end investment
companies.
4
<PAGE>
<TABLE>
<CAPTION>
Other Substantial Business
Position with Profession, Vocation or Employment
Dean Witter including Name, Principal Address
Name InterCapital Inc. and Nature of Conncetion
- -------------- ------------------ -----------------------------------
<S> <C> <C>
Charles A. Chairman, Chief Executive Vice
Fiumefreddo Executive Officer President and Director
and Director of Dean Witter
Reynolds Inc.
("DWR"); Chairman,
Director or Trustee,
President and Chief
Executive Officer of
the Dean Witter Funds;
Chairman, Chief
Executive Officer and
Trustee of the TCW/DW
Funds; Chairman and
Director of Dean
Witter Trust Company
("DWTC"); Chairman,
Chief Executive
Officer and Director
of Dean Witter
Distributors Inc.
("Distributors") and
Dean Witter Services
Company Inc. ("DWSC");
Formerly Executive
Vice President and
Director of Dean
Witter, Discover & Co.
("DWDC"); Director
and/or officer of
various DWDC
subsidiaries.
Philip J. Director Chairman, Chief
Purcell Executive Officer and
Director of DWDC and
DWR; Director of
DWSC and Distributors.
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
Other Substantial Business
Position with Profession, Vocation or Employment
Dean Witter including Name, Principal Address
Name InterCapital Inc. and Nature of Conncetion
- -------------- ------------------ -----------------------------------
<S> <C> <C>
Richard M. Director President and Chief
DeMartini Operating Officer of
Dean Witter Capital
and Director of DWDC,
DWR, DWSC and
Distributors.
James F. Director President and Chief
Higgins Operating Officer of
Dean Witter Financial;
Director of DWDC, DWR,
DWSC and Distributors.
Thomas C. Executive Vice Executive Vice
Schneider President, Chief President, Chief
Financial Officer Financial Officer
and Director and Director of
DWDC, DWR, DWSC
and Distributors.
Christine A. Director Executive Vice
Edwards President, Secretary,
General Counsel and
Director of DWDC, DWR,
DWSC and Distributors.
Robert M. President and Vice President of
Scanlan Chief Operating the Dean Witter Funds
Officer and the TCW/DW Funds;
President of DWSC;
Executive Vice
President of
Distributors; Executive
Vice President and
Director of DWTC.
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
Other Substantial Business
Position with Profession, Vocation or Employment
Dean Witter including Name, Principal Address
Name InterCapital Inc. and Nature of Conncetion
- -------------- ------------------ -----------------------------------
<S> <C> <C>
David A. Hughey Executive Vice Vice President of the
President and Dean Witter Funds and
Chief Administrative the TCW/DW Funds;
Officer Executive Vice
President, Chief
Administrative Officer
and Director of DWTC;
Executive Vice
President and Chief
Administrative Officer
of DWSC and
Distributors.
Edmund C. Executive Vice Vice President of the
Puckhaber President Dean Witter Funds.
John Van Executive Vice President and Chief
Heuvelen President Executive Officer of
DWTC.
Sheldon Curtis Senior Vice Vice President,
President, Secretary and
General Counsel General Counsel of the
and Secretary Dean Witter Funds and
the TCW/DW Funds;
Senior Vice President
and Secretary of
DWTC; Assistant
Secretary of DWR and
DWDC; Senior Vice
President, General
Counsel and Secretary
of DWSC; Senior Vice
President, Assistant
General Counsel and
Assistant Secretary of
Distributors.
Peter M. Avelar Senior Vice Vice President of
President various Dean Witter
Funds.
Mark Bavoso Senior Vice Vice President of
President various Dean Witter
Funds.
Thomas H. Connelly Senior Vice Vice President of
President various Dean Witter
Funds.
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
Other Substantial Business
Position with Profession, Vocation or Employment
Dean Witter including Name, Principal Address
Name InterCapital Inc. and Nature of Conncetion
- -------------- ------------------ -----------------------------------
<S> <C> <C>
Edward Gaylor Senior Vice Vice President of
President various Dean Witter
Funds.
Rajesh K. Gupta Senior Vice Vice President of
President various Dean Witter
Funds.
Kenton J. Senior Vice Vice President of
Hinchliffe President various Dean Witter
Funds.
John B. Kemp, III Senior Vice Director of the
President Provident Savings
Bank, Jersey City,
New Jersey.
Anita Kolleeny Senior Vice Vice President of
President various Dean Witter
Funds.
Jonathan R. Page Senior Vice Vice President of
President various Dean Witter
Funds.
Ira Ross Senior Vice Vice President of
President various Dean Witter
Funds.
Rochelle G. Senior Vice Vice President of
Siegel President various Dean Witter
Funds.
Paul D. Vance Senior Vice Vice President of
President various Dean Witter
Funds.
Elizabeth A. Senior Vice
Vetell President
James F. Willison Senior Vice Vice President of
President various Dean Witter
Funds.
Ronald Worobel Senior Vice Vice President of
President various Dean Witter
Funds.
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
Other Substantial Business
Position with Profession, Vocation or Employment
Dean Witter including Name, Principal Address
Name InterCapital Inc. and Nature of Conncetion
- -------------- ------------------ -----------------------------------
<S> <C> <C>
Thomas F. Caloia First Vice Treasurer of the
President and Dean Witter Funds
Assistant Treasurer and the TCW/DW Funds;
First Vice President
and Assistant Treasury
of DWSC; Assistant
Treasurer of
Distributors.
Barry Fink First Vice Assistant Secretary
President of the Dean Witter
Funds and TCW/DW
Funds; First Vice
President and
Assistant Secretary of
DWSC.
Michael First Vice First Vice President
Interrante President and and Controller of
Controller DWSC; Assistant
Treasurer of
Distributors.
Robert Zimmerman First Vice
President
Joseph Arcieri Vice President
Douglas Brown Vice President
Rosalie Clough Vice President
B. Catherine Vice President
Connelly
Marilyn K. Vice President Assistant Secretary
Cranney and Assistant of the Dean Witter
Secretary Funds and the TCW/DW
Funds; Vice President
and Assistant
Secretary of DWSC;
Assistant
Secretary of DWR and
DWDC.
Salvatore Vice President Vice President of
DeSteno DWSC.
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
Other Substantial Business
Position with Profession, Vocation or Employment
Dean Witter including Name, Principal Address
Name InterCapital Inc. and Nature of Conncetion
- -------------- ------------------ -----------------------------------
<S> <C> <C>
Dwight Doolan Vice President
Bruce Dunn Vice President
Geoffrey D. Flynn Vice President Vice President of DWSC.
Bette Freedman Vice President
Deborah Genovese Vice President
Peter W. Gurman Vice President
Shant Harootunian Vice President
John Hechtlinger Vice President
David Johnson Vice President
Christopher Jones Vice President
Stanley Kapica Vice President
Paula LaCosta Vice President Vice President of
various Dean Witter
Funds.
Lawrence S. Lafer Vice President Assistant Secretary
and Assistant of the Dean Witter
Secretary Funds and the TCW/DW
Funds; Vice President
and Assistant
Secretary of DWSC.
Thomas Lawlor Vice President
Lou Anne D. Vice President Assistant Secretary
McInn and Assistant of the Dean Witter
Secretary Funds and the TCW/DW
Funds; Vice President
and Assistant
Secretary of DWSC.
James Mulcahy Vice President
James Nash Vice President
Hugh Rose Vice President
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
Other Substantial Business
Position with Profession, Vocation or Employment
Dean Witter including Name, Principal Address
Name InterCapital Inc. and Nature of Conncetion
- -------------- ------------------ -----------------------------------
<S> <C> <C>
Ruth Rossi Vice President Assistant Secretary
and Assistant of the Dean Witter
Secretary Funds and the TCW/DW
Funds; Vice President
and Assistant
Secretary of DWSC.
Howard A. Schloss Vice President
Rose Simpson Vice President
Diane Lisa Sobin Vice President Vice President of
various Dean Witter
Funds.
Kathleen Vice President Vice President of
Stromberg various Dean Witter
Funds.
Vinh Q. Tran Vice President Vice President of
various Dean Witter
Funds.
Alice Weiss Vice President Vice President of
various Dean
Witter Funds.
Marianne Zalys Vice President
</TABLE>
Item 29. PRINCIPAL UNDERWRITERS
Inapplicable.
Item 30. LOCATION OF ACCOUNTS AND RECORDS
All accounts, books and other documents required to be maintained
by Section 31(a) of the Investment Company Act of 1940 and the Rules
thereunder are maintained by the Investment Manager at its offices,
except records relating to holders of shares issued by the Registrant,
which are maintained by the Registrant's Transfer Agent, at its place
of business as shown in the prospectus.
11
<PAGE>
Item 31. MANAGEMENT SERVICES
Registrant is not a party to any such management-related service
contract.
Item 32. UNDERTAKINGS
Registrant hereby undertakes to furnish each person to whom a
prospectus is delivered with a copy of the Registrant's latest annual
report to shareholders, upon request and without charge.
12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Registration Statement pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this Post-
Effective Amendment to the Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of New York and
State of New York on the 10th day of February, 1994.
DEAN WITTER SELECT MUNICIPAL REINVESTMENT FUND
By /s/ Sheldon Curtis
----------------------------------
Sheldon Curtis
Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this Post-
Effective Amendment No. 11 has been signed below by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signatures Title Date
---------- ----- ----
<S> <C> <C>
(1) Principal Executive Officer President, Chief
Executive Officer,
Trustee and Chairman
By /s/ Charles A. Fiumefreddo 02/10/94
---------------------------
Charles A. Fiumefreddo
(2) Principal Financial Officer Treasurer and Principal
Accounting Officer
By /s/ Thomas F. Caloia 02/10/94
---------------------------
Thomas F. Caloia
(3) Majority of the Trustees
Charles A. Fiumefreddo (Chairman)
Edward R. Telling
By /s/ Sheldon Curtis 02/10/94
---------------------------
Sheldon Curtis
Attorney-in-Fact
Jack F. Bennett Paul Kolton
John R. Haire Michael E. Nugent
John E. Jeuck Albert T. Sommers
Manuel H. Johnson Edwin J. Garn
By /s/ David M. Butowsky 02/10/94
---------------------------
David M. Butowsky
Attorney-in-Fact
</TABLE>
<PAGE>
DEAN WITTER SELECT MUNICIPAL REINVESTMENT FUND
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C>
5. - Investment Management Agreement between Registrant and
Dean Witter InterCapital Inc.
8. - Amended and Restated Transfer Agency and Service Agreement
9. - Form of Services Agreement between Dean Witter
InterCapital Inc. and Dean Witter Services Company Inc.
11. - Consent of Independent Accountants
16. - Schedules for Computation of Performance Quotations
</TABLE>
<PAGE>
INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT made as of the 30th day of June, 1993 by and between Dean Witter
Select Municipal Reinvestment Fund, an unincorporated business trust organized
under the laws of the Commonwealth of Massachusetts (hereinafter called the
"Fund"), and Dean Witter InterCapital Inc., a Delaware corporation (hereinafter
called the "Investment Manager"):
WHEREAS, The Fund is engaged in business as an open-end management
investment company and is registered as such under the Investment Company Act of
1940, as amended (the "Act"); and
WHEREAS, The Investment Manager is registered as an investment adviser under
the Investment Advisers Act of 1940, and engages in the business of acting as
investment adviser; and
WHEREAS, The Fund desires to retain the Investment Manager to render
management and investment advisory services in the manner and on the terms and
conditions hereinafter set forth; and
WHEREAS, The Investment Manager desires to be retained to perform services
on said terms and conditions:
Now, Therefore, this Agreement
W I T N E S S E T H:
that in consideration of the premises and the mutual covenants hereinafter
contained, the Fund and the Investment Manager agree as follows:
1. The Fund hereby retains the Investment Manager to act as investment
manager of the Fund and, subject to the supervision of the Trustees, to
supervise the investment activities of the Fund as hereinafter set forth.
Without limiting the generality of the foregoing, the Investment Manager shall
obtain and evaluate such information and advice relating to the economy,
securities and commodities markets and securities and commodities as it deems
necessary or useful to discharge its duties hereunder; shall continuously manage
the assets of the Fund in a manner consistent with the investment objectives and
policies of the Fund; shall determine the securities and commodities to be
purchased, sold or otherwise disposed of by the Fund and the timing of such
purchases, sales and dispositions; and shall take such further action, including
the placing of purchase and sale orders on behalf of the Fund, as the Investment
Manager shall deem necessary or appropriate. The Investment Manager shall also
furnish to or place at the disposal of the Fund such of the information,
evaluations, analyses and opinions formulated or obtained by the Investment
Manager in the discharge of its duties as the Fund may, from time to time,
reasonably request.
2. The Investment Manager shall, at its own expense, maintain such staff
and employ or retain such personnel and consult with such other persons as it
shall from time to time determine to be necessary or useful to the performance
of its obligations under this Agreement. Without limiting the generality of the
foregoing, the staff and personnel of the Investment Manager shall be deemed to
include persons employed or otherwise retained by the Investment Manager to
furnish statistical and other factual data, advice regarding economic factors
and trends, information with respect to technical and scientific developments,
and such other information, advice and assistance as the Investment Manager may
desire. The Investment Manager shall, as agent for the Fund, maintain the Fund's
records and books of account (other than those maintained by the Fund's transfer
agent, registrar, custodian and other agencies). All such books and records so
maintained shall be the property of the Fund and, upon request therefor, the
Investment Manager shall surrender to the Fund such of the books and records so
requested.
3. The Fund will, from time to time, furnish or otherwise make available to
the Investment Manager such financial reports, proxy statements and other
information relating to the business and affairs of the Fund as the Investment
Manager may reasonably require in order to discharge its duties and obligations
hereunder.
4. The Investment Manager shall bear the cost of rendering the investment
management and supervisory services to be performed by it under this Agreement,
and shall, at its own expense, pay the compensation of the officers and
employees, if any, of the Fund, and provide such office space, facilities
and equipment and such clerical help and bookkeeping services as the Fund shall
reasonably require in the conduct of its
<PAGE>
business. The Investment Manager shall also bear the cost of telephone service,
heat, light, power and other utilities provided to the Fund.
5. The Fund assumes and shall pay or cause to be paid all other expenses of
the Fund, including without limitation: the charges and expenses of any
registrar, any custodian or depository appointed by the Fund for the safekeeping
of its cash, portfolio securities or commodities and other property, and any
stock transfer or dividend agent or agents appointed by the Fund; brokers'
commissions chargeable to the Fund in connection with portfolio transactions to
which the Fund is a party; all taxes, including securities or commodities
issuance and transfer taxes, and fees payable by the Fund to federal, state or
other governmental agencies; the cost and expense of engraving or printing
certificates representing shares of the Fund; all costs and expenses in
connection with the registration and maintenance of registration of the Fund and
its shares with the Securities and Exchange Commission and various states and
other jurisdictions (including filing fees and legal fees and disbursements of
counsel); the cost and expense of printing, including typesetting, and
distributing prospectuses and statements of additional information of the Fund
and supplements thereto to the Fund's shareholders; all expenses of
shareholders' and Trustees' meetings and of preparing, printing and mailing
proxy statements and reports to shareholders; fees and travel expenses of
Trustees or members of any advisory board or committee who are not employees of
the Investment Manager or any corporate affiliate of the Investment Manager; all
expenses incident to the payment of any dividend, distribution, withdrawal or
redemption, whether in shares or in cash; charges and expenses of any outside
service used for pricing of the Fund's shares; charges and expenses of legal
counsel, including counsel to the Trustees of the Fund who are not interested
persons (as defined in the Act) of the Fund or the Investment Manager, and of
independent accountants, in connection with any matter relating to the Fund;
membership dues of industry associations; interest payable on Fund borrowings;
postage; insurance premiums on property or personnel (including officers and
Trustees) of the Fund which inure to its benefit; extraordinary expenses
(including but not limited to, legal claims and liabilities and litigation costs
and any indemnification related thereto); and all other charges and costs of the
Fund's operation unless otherwise explicitly provided herein.
6. For the services to be rendered, the facilities furnished, and the
expenses assumed by the Investment Manager, the Fund shall pay to the Investment
Manager monthly compensation determined by applying the annual rate of 0.50% to
the Fund's daily net assets. Except as hereinafter set forth, compensation under
this Agreement shall be calculated and accrued daily and the amounts of the
daily accruals shall be paid monthly. Such calculations shall be made by
applying 1/365ths of the annual rates to the Fund's net assets each day
determined as of the close of business on that day or the last previous business
day. If this Agreement becomes effective subsequent to the first day of a month
or shall terminate before the last day of a month, compensation for that part of
the month this Agreement is in effect shall be prorated in a manner consistent
with the calculation of the fees as set forth above.
Subject to the provisions of paragraph 7 hereof, payment of the Investment
Manager's compensation for the preceding month shall be made as promptly as
possible after completion of the computations contemplated by paragraph 7
hereof.
7. In the event the operating expenses of the Fund, including amounts
payable to the Investment Manager pursuant to paragraph 6 hereof, for any fiscal
year ending on a date on which this Agreement is in effect, exceed the expense
limitations applicable to the Fund imposed by state securities laws or
regulations thereunder, as such limitations may be raised or lowered from time
to time, the Investment Manager shall reduce its management fee to the extent of
such excess and, if required, pursuant to any such laws or regulations, will
reimburse the Fund for annual operating expenses in excess of any expense
limitation that may be applicable; provided, however, there shall be excluded
from such expenses the amount of any interest, taxes, brokerage commissions and
extraordinary expenses (including but not limited to legal claims and
liabilities and litigation costs and any indemnification related thereto) paid
or payable by the Fund. Such reduction, if any, shall be computed and accrued
daily, shall be settled on a monthly basis, and shall be based upon the expense
limitation applicable to the Fund as at the end of the last business day of the
month. Should two or more such expense limitations be applicable as at the end
of the last business day of the
2
<PAGE>
month, that expense limitation which results in the largest reduction in the
Investment Manager's fee shall be applicable.
For purposes of this provision, should any applicable expense limitation be
based upon the gross income of the Fund, such gross income shall include, but
not be limited to, interest on debt securities in the Fund's portfolio accrued
to and including the last day of the Fund's fiscal year, and dividends declared
on equity securities in the Fund's portfolio, the record dates for which fall on
or prior to the last day of such fiscal year, but shall not include gains from
the sale of securities.
8. The Investment Manager will use its best efforts in the supervision and
management of the investment activities of the Fund, but in the absence of
willful misfeasance, bad faith, gross negligence or reckless disregard of its
obligations hereunder, the Investment Manager shall not be liable to the Fund or
any of its investors for any error of judgment or mistake of law or for any act
or omission by the Investment Manager or for any losses sustained by the Fund or
its investors.
9. Nothing contained in this Agreement shall prevent the Investment Manager
or any affiliated person of the Investment Manager from acting as investment
adviser or manager for any other person, firm or corporation and shall not in
any way bind or restrict the Investment Manager or any such affiliated person
from buying, selling or trading any securities or commodities for their own
accounts or for the account of others for whom they may be acting. Nothing in
this Agreement shall limit or restrict the right of any Trustee, officer or
employee of the Investment Manager to engage in any other business or to devote
his or her time and attention in part to the management or other aspects of any
other business whether of a similar or dissimilar nature.
10. This Agreement shall remain in effect until April 30, 1994 and from year
to year thereafter provided such continuance is approved at least annually by
the vote of holders of a majority, as defined in the Investment Company Act of
1940, as amended (the "Act"), of the outstanding voting securities of the Fund
or by the Trustees of the Fund; provided that in either event such continuance
is also approved annually by the vote of a majority of the Trustees of the Fund
who are not parties to this Agreement or "interested persons" (as defined in the
Act) of any such party, which vote must be cast in person at a meeting called
for the purpose of voting on such approval; provided, however, that (a) the Fund
may, at any time and without the payment of any penalty, terminate this
Agreement upon thirty days' written notice to the Investment Manager, either by
majority vote of the Trustees of the Fund or by the vote of a majority of the
outstanding voting securities of the Fund; (b) this Agreement shall immediately
terminate in the event of its assignment (to the extent required by the Act and
the rules thereunder) unless such automatic terminations shall be prevented by
an exemptive order of the Securities and Exchange Commission; and (c) the
Investment Manager may terminate this Agreement without payment of penalty on
thirty days' written notice to the Fund. Any notice under this Agreement shall
be given in writing, addressed and delivered, or mailed post-paid, to the other
party at the principal office of such party.
11. This Agreement may be amended by the parties without the vote or consent
of the shareholders of the Fund to supply any omission, to cure, correct or
supplement any ambiguous, defective or inconsistent provision hereof, or if they
deem it necessary to conform this Agreement to the requirements of applicable
federal laws or regulations, but neither the Fund nor the Investment Manager
shall be liable for failing to do so.
12. This Agreement shall be construed in accordance with the laws of the
State of New York and the applicable provisions of the Act. To the extent the
applicable law of the State of New York, or any of the provisions herein,
conflicts with the applicable provisions of the Act, the latter shall control.
13. The Investment Manager and the Fund each agree that the name "Dean
Witter", which comprises a component of the Fund's name, is a property right of
Dean Witter Reynolds Inc. The Fund agrees and consents that (i) it will only use
the name "Dean Witter" as a component of its name and for no other purpose, (ii)
it will not purport to grant to any third party the right to use the name "Dean
Witter" for any purpose, (iii) the Investment Manager or its parent, Dean Witter
Reynolds Inc., or any corporate affiliate of the Investment Manager's parent,
may use or grant to others the right to use the name "Dean Witter", or any
combination or abbreviation thereof, as all or a portion of a corporate or
business name or for any
3
<PAGE>
commercial purpose, including a grant of such right to any other investment
company, (iv) at the request of the Investment Manager or its parent, the Fund
will take such action as may be required to provide its consent to the use of
the name "Dean Witter", or any combination or abbreviation thereof, by the
Investment Manager or its parent or any corporate affiliate of the Investment
Manager's parent, or by any person to whom the Investment Manager or its parent
or any corporate affiliate of the Investment Manager's parent shall have granted
the right to such use, and (v) upon the termination of any investment advisory
agreement into which the Investment Manager and the Fund may enter, or upon
termination of affiliation of the Investment Manager with its parent, the Fund
shall, upon request by the Investment Manager or its parent, cease to use the
name "Dean Witter" as a component of its name, and shall not use the name, or
any combination or abbreviation thereof, as a part of its name or for any other
commercial purpose, and shall cause its officers, Trustees and shareholders to
take any and all actions which the Investment Manager or its parent may request
to effect the foregoing and to reconvey to the Investment Manager or its parent
any and all rights to such name.
14. The Declaration of Trust establishing Dean Witter Select Municipal
Reinvestment Fund, dated June 1, 1983, a copy of which, together with all
amendments thereto (the "Declaration"), is on file in the office of the
Secretary of the Commonwealth of Massachusetts, provides that the name Dean
Witter Select Municipal Reinvestment Fund refers to the Trustees under the
Declaration collectively as Trustees, but not as individuals or personally; and
no Trustee, shareholder, officer, employee or agent of Dean Witter Select
Municipal Reinvestment Fund shall be held to any personal liability, nor shall
resort be had to their private property for the satisfaction of any obligation
or claim or otherwise, in connection with the affairs of said Dean Witter Select
Municipal Reinvestment Fund, but the Trust Estate only shall be liable.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement on the day and year first above written in New York, New York.
DEAN WITTER SELECT MUNICIPAL
REINVESTMENT FUND
By _______________________________
Attest:______________________________
DEAN WITTER INTERCAPITAL INC.
By _______________________________
Attest:______________________________
4
<PAGE>
AMENDED AND RESTATED
TRANSFER AGENCY AND SERVICE AGREEMENT
with
DEAN WITTER TRUST COMPANY
<PAGE>
TABLE OF CONTENTS
Page
----
Article 1 Terms of Appointment; Duties of DWTC . . . . . 2
Article 2 Fees and Expenses. . . . . . . . . . . . . . . 6
Article 3 Representations and Warranties of DWTC . . . . 7
Article 4 Representations and Warranties of the
Fund . . . . . . . . . . . . . . . . . . . . . 8
Article 5 Duty of Care and Indemnification . . . . . . . . 9
Article 6 Documents and Covenants of the Fund and
DWTC . . . . . . . . . . . . . . . . . . . . . 12
Article 7 Duration and Termination of Agreement. . . . . 16
Article 8 Assignment . . . . . . . . . . . . . . . . . . 16
Article 9 Affiliations . . . . . . . . . . . . . . . . . 17
Article 10 Amendment. . . . . . . . . . . . . . . . . . . 18
Article 11 Applicable Law . . . . . . . . . . . . . . . . 18
Article 12 Miscellaneous. . . . . . . . . . . . . . . . . 18
Article 13 Merger of Agreement. . . . . . . . . . . . . . 20
Article 14 Personal Liability . . . . . . . . . . . . . . 21
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<PAGE>
AMENDED AND RESTATED TRANSFER AGENCY AND SERVICE AGREEMENT
AMENDED AND RESTATED AGREEMENT made as of the 1st
day of August, 1993 by and between each of the Dean Witter
Funds listed on the signature pages hereof, each of such Funds
acting severally on its own behalf and not jointly with any of
such other Funds (each such Fund hereinafter referred to as
the "Fund"), each such Fund having its principal office and
place of business at Two World Trade Center, New York, New
York, 10048, and DEAN WITTER TRUST COMPANY, a trust company
organized under the laws of New Jersey, having its principal
office and place of business at Harborside Financial Center,
Plaza Two, Jersey City, New Jersey 07311 ("DWTC").
WHEREAS, the Fund desires to appoint DWTC as its
transfer agent, dividend disbursing agent and shareholder
servicing agent and DWTC desires to accept such appointment;
NOW THEREFORE, in consideration of the mutual
covenants herein contained, the parties hereto agree as
follows:
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<PAGE>
Article 1 TERMS OF APPOINTMENT; DUTIES OF DWTC
1.1 Subject to the terms and conditions set
forth in this Agreement, the Fund hereby employs and appoints
DWTC to act as, and DWTC agrees to act as, the transfer agent
for each series and class of shares of the Fund, whether now
or hereafter authorized or issued ("Shares"), dividend
disbursing agent and shareholder servicing agent in connection
with any accumulation, open-account or similar plans provided
to the holders of such Shares ("Shareholders") and set out in
the currently effective prospectus and statement of additional
information ("prospectus") of the Fund, including without
limitation any periodic investment plan or periodic withdrawal
program.
1.2 DWTC agrees that it will perform the fol-
lowing services:
(a) In accordance with procedures established
from time to time by agreement between the Fund and DWTC, DWTC
shall:
(i) Receive for acceptance, orders for the
purchase of Shares, and promptly deliver payment and
appropriate documentation therefor to the custodian of the
assets of the Fund (the "Custodian");
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<PAGE>
(ii) Pursuant to purchase orders, issue the
appropriate number of Shares and issue certificates therefor
or hold such Shares in book form in the appropriate
Shareholder account;
(iii) Receive for acceptance redemption
requests and redemption directions and deliver the appropriate
documentation therefor to the Custodian;
(iv) At the appropriate time as and when it
receives monies paid to it by the Custodian with respect to
any redemption, pay over or cause to be paid over in the
appropriate manner such monies as instructed by the redeeming
Shareholders;
(v) Effect transfers of Shares by the
registered owners thereof upon receipt of appropriate
instructions;
(vi) Prepare and transmit payments for divi-
dends and distributions declared by the Fund;
(vii) Calculate any sales charges payable by
a Shareholder on purchases and/or redemptions of Shares of the
Fund as such charges may be reflected in the prospectus;
(viii) Maintain records of account for and
advise the Fund and its Shareholders as to the foregoing; and
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<PAGE>
(ix) Record the issuance of Shares of the Fund
and maintain pursuant to Rule 17Ad-10(e) under the Securities
Exchange Act of 1934 ("1934 Act") a record of the total number
of Shares of the Fund which are authorized, based upon data
provided to it by the Fund, and issued and outstanding. DWTC
shall also provide to the Fund on a regular basis the total
number of Shares which are authorized, issued and outstanding
and shall notify the Fund in case any proposed issue of Shares
by the Fund would result in an overissue. In case any issue
of Shares would result in an overissue, DWTC shall refuse to
issue such Shares and shall not countersign and issue any
certificates requested for such Shares. When recording the
issuance of Shares, DWTC shall have no obligation to take
cognizance of any Blue Sky laws relating to the issue of sale
of such Shares, which functions shall be the sole
responsibility of the Fund.
(b) In addition to and not in lieu of the
services set forth in the above paragraph (a), DWTC shall: (i)
perform all of the customary services of a transfer agent,
dividend disbursing agent and, as relevant, shareholder ser-
vicing agent in connection with dividend reinvestment,
accumulation, open-account or similar plans (including without
limitation any periodic investment plan or periodic withdrawal
program), including but not limited to, maintaining all
Shareholder accounts, preparing Shareholder meeting lists,
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<PAGE>
mailing proxies, receiving and tabulating proxies, mailing
shareholder reports and prospectuses to current Shareholders,
withholding taxes on U.S. resident and non-resident alien
accounts, preparing and filing appropriate forms required with
respect to dividends and distributions by federal tax
authorities for all Shareholders, preparing and mailing
confirmation forms and statements of account to Shareholders
for all purchases and redemptions of Shares and other confirm-
able transactions in Shareholder accounts, preparing and
mailing activity statements for Shareholders and providing
Shareholder account information; (ii) open any and all bank
accounts which may be necessary or appropriate in order to
provide the foregoing services; and (iii) provide a system
which will enable the Fund to monitor the total number of
Shares sold in each State or other jurisdiction.
(c) In addition, the Fund shall (i) identify
to DWTC in writing those transactions and assets to be treated
as exempt from Blue Sky reporting for each State and (ii)
verify the establishment of transactions for each State on the
system prior to activation and thereafter monitor the daily
activity for each State. The responsibility of DWTC for the
Fund's registration status under the Blue Sky or securities
laws of any State or other jurisdiction is solely limited to
the initial establishment of transactions subject to Blue Sky
compliance by the Fund and the reporting of such transactions
-5-
<PAGE>
to the Fund as provided above and as agreed from time to time
by the Fund and DWTC.
(d) DWTC shall provide such additional
services and functions not specifically described herein as
may be mutually agreed between DWTC and the Fund. Procedures
applicable to such services may be established from time to
time by agreement between the Fund and DWTC.
Article 2 FEES AND EXPENSES
2.1 For performance by DWTC pursuant to this
Agreement, each Fund agrees to pay DWTC an annual maintenance
fee for each Shareholder account and certain transactional
fees, if applicable, as set out in the respective fee schedule
attached hereto as Schedule A. Such fees and out-of-pocket
expenses and advances identified under Section 2.2 below may
be changed from time to time subject to mutual written
agreement between the Fund and DWTC.
2.2 In addition to the fees paid under Section
2.1 above, the Fund agrees to reimburse DWTC in connection
with the services rendered by DWTC hereunder. In addition,
any other expenses incurred by DWTC at the request or with the
consent of the Fund will be reimbursed by the Fund.
2.3 The Fund agrees to pay all fees and
reimbursable expenses within a reasonable period of time
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<PAGE>
following the mailing of the respective billing notice.
Postage for mailing of dividends, proxies, Fund reports and
other mailings to all Shareholder accounts shall be advanced
to DWTC by the Fund upon request prior to the mailing date of
such materials.
Article 3 REPRESENTATIONS AND WARRANTIES OF DWTC
DWTC represents and warrants to the Fund that:
3.1 It is a trust company duly organized and
existing and in good standing under the laws of New Jersey and
it is duly qualified to carry on its business in New Jersey.
3.2 It is and will remain registered with the
U.S. Securities and Exchange Commission ("SEC") as a Transfer
Agent pursuant to the requirements of Section 17A of the 1934
Act.
3.3 It is empowered under applicable laws and
by its charter and By-Laws to enter into and perform this
Agreement.
3.4 All requisite corporate proceedings have
been taken to authorize it to enter into and perform this
Agreement.
3.5 It has and will continue to have access to
the necessary facilities, equipment and personnel to perform
its duties and obligations under this Agreement.
-7-
<PAGE>
Article 4 REPRESENTATIONS AND WARRANTIES OF THE FUND
The Fund represents and warrants to DWTC that:
4.1 It is a corporation duly organized and
existing and in good standing under the laws of Delaware or
Maryland or a trust duly organized and existing and in good
standing under the laws of Massachusetts, as the case may be.
4.2 It is empowered under applicable laws and
by its Articles of Incorporation or Declaration of Trust, as
the case may be, and under its By-Laws to enter into and
perform this Agreement.
4.3 All corporate proceedings necessary to
authorize it to enter into and perform this Agreement have
been taken.
4.4 It is an investment company registered
with the SEC under the Investment Company Act of 1940, as
amended (the "1940 Act").
4.5 A registration statement under the
Securities Act of 1933 (the "1933 Act") is currently effective
and will remain effective, and appropriate state securities
law filings have been made and will continue to be made, with
respect to all Shares of the Fund being offered for sale.
-8-
<PAGE>
Article 5 DUTY OF CARE AND INDEMNIFICATION
5.1 DWTC shall not be responsible for, and the
Fund shall indemnify and hold DWTC harmless from and against,
any and all losses, damages, costs, charges, counsel fees,
payments, expenses and liability arising out of or
attributable to:
(a) All actions of DWTC or its agents or
subcontractors required to be taken pursuant to this
Agreement, provided that such actions are taken in good faith
and without negligence or willful misconduct.
(b) The Fund's refusal or failure to comply with
the terms of this Agreement, or which arise out of the Fund's
lack of good faith, negligence or willful misconduct or which
arise out of breach of any representation or warranty of the
Fund hereunder.
(c) The reliance on or use by DWTC or its agents or
subcontractors of information, records and documents which (i)
are received by DWTC or its agents or subcontractors and
furnished to it by or on behalf of the Fund, and (ii) have
been prepared and/or maintained by the Fund or any other
person or firm on behalf of the Fund.
(d) The reliance on, or the carrying out by DWTC or
its agents or subcontractors of, any instructions or requests
-9-
<PAGE>
of the Fund.
(e) The offer or sale of Shares in violation of any
requirement under the federal securities laws or regulations
or the securities or Blue Sky laws of any State or other
jurisdiction that such Shares be registered in such State or
other jurisdiction or in violation of any stop order or other
determination or ruling by any federal agency or any State or
other jurisdiction with respect to the offer or sale of such
Shares in such State or other jurisdiction.
5.2 DWTC shall indemnify and hold the Fund
harmless from or against any and all losses, damages, costs,
charges, counsel fees, payments, expenses and liability
arising out of or attributable to any action or failure or
omission to act by DWTC as a result of the lack of good faith,
negligence or willful misconduct of DWTC, its officers,
employees or agents.
5.3 At any time, DWTC may apply to any officer
of the Fund for instructions, and may consult with legal
counsel to the Fund, with respect to any matter arising in
connection with the services to be performed by DWTC under
this Agreement, and DWTC and its agents or subcontractors
shall not be liable and shall be indemnified by the Fund for
any action taken or omitted by it in reliance upon such
instructions or upon the opinion of such counsel. DWTC, its
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<PAGE>
agents and subcontractors shall be protected and indemnified
in acting upon any paper or document furnished by or on behalf
of the Fund, reasonably believed to be genuine and to have
been signed by the proper person or persons, or upon any
instruction, information, data, records or documents provided
to DWTC or its agents or subcontractors by machine readable
input, telex, CRT data entry or other similar means authorized
by the Fund, and shall not be held to have notice of any
change of authority of any person, until receipt of written
notice thereof from the Fund. DWTC, its agents and
subcontractors shall also be protected and indemnified in
recognizing stock certificates which are reasonably believed
to bear the proper manual or facsimile signature of the
officers of the Fund, and the proper countersignature of any
former transfer agent or registrar, or of a co-transfer agent
or co-registrar.
5.4 In the event either party is unable to
perform its obligations under the terms of this Agreement
because of acts of God, strikes, equipment or transmission
failure or damage reasonably beyond its control, or other
causes reasonably beyond its control, such party shall not be
liable for damages to the other for any damages resulting from
such failure to perform or otherwise from such causes.
-11-
<PAGE>
5.5 Neither party to this Agreement shall be
liable to the other party for consequential damages under any
provision of this Agreement or for any act or failure to act
hereunder.
5.6 In order that the indemnification
provisions contained in this Article 5 shall apply, upon the
assertion of a claim for which either party may be required to
indemnify the other, the party seeking indemnification shall
promptly notify the other party of such assertion, and shall
keep the other party advised with respect to all developments
concerning such claim. The party who may be required to
indemnify shall have the option to participate with the party
seeking indemnification in the defense of such claim. The
party seeking indemnification shall in no case confess any
claim or make any compromise in any case in which the other
party may be required to indemnify it except with the other
party's prior written consent.
Article 6 DOCUMENTS AND COVENANTS OF THE FUND AND DWTC
6.1 The Fund shall promptly furnish to DWTC
the following:
(a) If a corporation:
(i) A certified copy of the resolution of the Board
of Directors of the Fund authorizing the appointment of DWTC
and the execution and delivery of this Agreement;
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<PAGE>
(ii) A certified copy of the Articles of
Incorporation and By-Laws of the Fund and all amendments
thereto;
(iii) Certified copies of each vote of the Board
of Directors designating persons authorized to give
instructions on behalf of the Fund and signature cards bearing
the signature of any officer of the Fund or any other person
authorized to sign written instructions on behalf of the Fund;
(iv) A specimen of the certificate for Shares of the
Fund in the form approved by the Board of Directors, with a
certificate of the Secretary of the Fund as to such approval;
(b) If a business trust:
(i) A certified copy of the resolution of the Board
of Trustees of the Fund authorizing the appointment of DWTC
and the execution and delivery of this Agreement;
(ii) A certified copy of the Declaration of Trust
and By-laws of the Fund and all amendments thereto;
(iii) Certified copies of each vote of the Board
of Trustees designating persons authorized to give
instructions on behalf of the Fund and signature cards bearing
the signature of any officer of the Fund or any other person
authorized to sign written instructions on behalf of the Fund;
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<PAGE>
(iv) A specimen of the certificate for Shares of the
Fund in the form approved by the Board of Trustees, with a
certificate of the Secretary of the Fund as to such approval;
(c) The current registration statements and any
amendments and supplements thereto filed with the SEC pursuant
to the requirements of the 1933 Act or the 1940 Act;
(d) All account application forms or other
documents relating to Shareholder accounts and/or relating to
any plan, program or service offered or to be offered by the
Fund; and
(e) Such other certificates, documents or opinions
as DWTC deems to be appropriate or necessary for the proper
performance of its duties.
6.2 DWTC hereby agrees to establish and
maintain facilities and procedures reasonably acceptable to
the Fund for safekeeping of Share certificates, check forms
and facsimile signature imprinting devices, if any; and for
the preparation or use, and for keeping account of, such
certificates, forms and devices.
6.3 DWTC shall prepare and keep records
relating to the services to be performed hereunder, in the
form and manner as it may deem advisable and as required by
applicable laws and regulations. To the extent required by
-14-
<PAGE>
Section 31 of the 1940 Act, and the rules and regulations
thereunder, DWTC agrees that all such records prepared or
maintained by DWTC relating to the services performed by DWTC
hereunder are the property of the Fund and will be preserved,
maintained and made available in accordance with such Section
31 of the 1940 Act, and the rules and regulations thereunder,
and will be surrendered promptly to the Fund on and in
accordance with its request.
6.4 DWTC and the Fund agree that all books,
records, information and data pertaining to the business of
the other party which are exchanged or received pursuant to
the negotiation or the carrying out of this Agreement shall
remain confidential and shall not be voluntarily disclosed to
any other person except as may be required by law or with the
prior consent of DWTC and the Fund.
6.5 In case of any request or demands for the
inspection of the Shareholder records of the Fund, DWTC will
endeavor to notify the Fund and to secure instructions from an
authorized officer of the Fund as to such inspection. DWTC
reserves the right, however, to exhibit the Shareholder
records to any person whenever it is advised by its counsel
that it may be held liable for the failure to exhibit the
Shareholder records to such person.
-15-
<PAGE>
Article 7 DURATION AND TERMINATION OF AGREEMENT
7.1 This Agreement shall remain in full force
and effect until July 31, 1996 and from year-to-year
thereafter unless terminated by either party as provided in
Section 7.2 hereof.
7.2 This Agreement may be terminated by the
Fund on 60 days written notice, and by DWTC on 90 days written
notice, to the other party without payment of any penalty.
7.3 Should the Fund exercise its right to
terminate, all out-of-pocket expenses associated with the
movement of records and other materials will be borne by the
Fund. Additionally, DWTC reserves the right to charge for any
other reasonable fees and expenses associated with such
termination.
Article 8 ASSIGNMENT
8.1 Except as provided in Section 8.3 below,
neither this Agreement nor any rights or obligations hereunder
may be assigned by either party without the written consent of
the other party.
8.2 This Agreement shall inure to the benefit
of and be binding upon the parties and their respective
permitted successors and assigns.
-16-
<PAGE>
8.3 DWTC may, in its sole discretion and
without further consent by the Fund, subcontract, in whole or
in part, for the performance of its obligations and duties
hereunder with any person or entity including but not limited
to companies which are affiliated with DWTC; PROVIDED,
HOWEVER, that such person or entity has and maintains the
qualifications, if any, required to perform such obligations
and duties, and that DWTC shall be as fully responsible to the
Fund for the acts and omissions of any agent or subcontractor
as it is for its own acts or omissions under this Agreement.
Article 9 AFFILIATIONS
9.1 DWTC may now or hereafter, without the
consent of or notice to the Fund, function as transfer agent
and/or shareholder servicing agent for any other investment
company registered with the SEC under the 1940 Act and for any
other issuer, including without limitation any investment
company whose adviser, administrator, sponsor or principal
underwriter is or may become affiliated with Dean Witter,
Discover & Co. or any of its direct or indirect subsidiaries
or affiliates.
9.2 It is understood and agreed that the
Directors or Trustees (as the case may be), officers,
employees, agents and shareholders of the Fund, and the
directors, officers, employees, agents and shareholders of the
-17-
<PAGE>
Fund's investment adviser and/or distributor, are or may be
interested in DWTC as directors, officers, employees, agents
and shareholders or otherwise, and that the directors,
officers, employees, agents and shareholders of DWTC may be
interested in the Fund as Directors or Trustees (as the case
may be), officers, employees, agents and shareholders or
otherwise, or in the investment adviser and/or distributor as
directors, officers, employees, agents, shareholders or
otherwise.
Article 10 AMENDMENT
10.1 This Agreement may be amended or modified
by a written agreement executed by both parties and authorized
or approved by a resolution of the Board of Directors or the
Board of Trustees (as the case may be) of the Fund.
Article 11 APPLICABLE LAW
11.1 This Agreement shall be construed and the
provisions thereof interpreted under and in accordance with
the laws of the State of New York.
Article 12 MISCELLANEOUS
12.1 In the event that one or more additional
investment companies managed or administered by Dean Witter
InterCapital Inc. or any of its affiliates ("Additional
Funds") desires to retain DWTC to act as transfer agent,
dividend disbursing agent and/or shareholder servicing agent,
-18-
<PAGE>
and DWTC desires to render such services, such services shall
be provided pursuant to a letter agreement, substantially in
the form of Exhibit A hereto, between DWTC and each Additional
Fund.
12.2 In the event of an alleged loss or
destruction of any Share certificate, no new certificate shall
be issued in lieu thereof, unless there shall first be
furnished to DWTC an affidavit of loss or non-receipt by the
holder of Shares with respect to which a certificate has been
lost or destroyed, supported by an appropriate bond
satisfactory to DWTC and the Fund issued by a surety company
satisfactory to DWTC, except that DWTC may accept an affidavit
of loss and indemnity agreement executed by the registered
holder (or legal representative) without surety in such form
as DWTC deems appropriate indemnifying DWTC and the Fund for
the issuance of a replacement certificate, in cases where the
alleged loss is in the amount of $1000 or less.
12.3 In the event that any check or other order for
payment of money on the account of any Shareholder or new
investor is returned unpaid for any reason, DWTC will (a) give
prompt notification to the Fund's distributor ("Distributor")
(or to the Fund if the Fund acts as its own distributor) of
such non-payment; and (b) take such other action, including
imposition of a reasonable processing or handling fee, as DWTC
-19-
<PAGE>
may, in its sole discretion, deem appropriate or as the Fund
and, if applicable, the Distributor may instruct DWTC.
12.4 Any notice or other instrument authorized or
required by this Agreement to be given in writing to the Fund
or to DWTC shall be sufficiently given if addressed to that
party and received by it at its office set forth below or at
such other place as it may from time to time designate in
writing.
To the Fund:
[Name of Fund]
Two World Trade Center
New York, New York 10048
Attention: General Counsel
To DWTC:
Dean Witter Trust Company
Harborside Financial Center
Plaza Two
Jersey City, New Jersey 07311
Attention: President
Article 13 MERGER OF AGREEMENT
13.1 This Agreement constitutes the entire
agreement between the parties hereto and supersedes any prior
agreement with respect to the subject matter hereof whether
oral or written.
-20-
<PAGE>
Article 14 PERSONAL LIABILITY
14.1 In the case of a Fund organized as a
Massachusetts business trust, a copy of the Declaration of
Trust of the Fund is on file with the Secretary of The
Commonwealth of Massachusetts, and notice is hereby given that
this instrument is executed on behalf of the Board of Trustees
of the Fund as Trustees and not individually and that the
obligations of this instrument are not binding upon any of the
Trustees or shareholders individually but are binding only
upon the assets and property of the Fund; provided, however,
that the Declaration of Trust of the Fund provides that the
assets of a particular Series of the Fund shall under no
circumstances be charged with liabilities attributable to any
other Series of the Fund and that all persons extending credit
to, or contracting with or having any claim against, a
particular Series of the Fund shall look only to the assets of
that particular Series for payment of such credit, contract or
claim.
-21-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused
this Amended and Restated Agreement to be executed in their
names and on their behalf by and through their duly authorized
officers, as of the day and year first above written.
(1) Dean Witter Liquid Asset Fund Inc.
(2) Dean Witter Tax-Free Daily Income Trust
(3) Dean Witter California Tax-Free Daily Income Trust
(4) Dean Witter Retirement Series
(5) Dean Witter Dividend Growth Securities Inc.
(6) Dean Witter Natural Resource Development Securities Inc.
(7) Dean Witter World Wide Investment Trust
(8) Dean Witter Capital Growth Securities
(9) Dean Witter Convertible Securities Trust
(10) Active Assets Tax-Free Trust
(11) Active Assets Money Trust
(12) Active Assets California Tax-Free Trust
(13) Active Assets Government Securities Trust
(14) Dean Witter Equity Income Trust
(15) Dean Witter Federal Securities Trust
(16) Dean Witter U.S. Government Securities Trust
(17) Dean Witter High Yield Securities Inc.
(18) Dean Witter New York Tax-Free Income Fund
(19) Dean Witter Tax-Exempt Securities Trust
(20) Dean Witter California Tax-Free Income Fund
(21) Dean Witter Managed Assets Trust
(22) Dean Witter Limited Term Municipal Trust
(23) Dean Witter World Wide Income Trust
(24) Dean Witter Utilities Fund
(25) Dean Witter Strategist Fund
(26) Dean Witter New York Municipal Money Market Trust
(27) Dean Witter Intermediate Income Securities
(28) Prime Income Trust
(29) Dean Witter European Growth Fund Inc.
(30) Dean Witter Developing Growth Securities Trust
(31) Dean Witter Precious Metals and Minerals Trust
(32) Dean Witter Pacific Growth Fund Inc.
(33) Dean Witter Multi-State Municipal Series Trust
(34) Dean Witter Premier Income Trust
(35) Dean Witter Short-Term U.S. Treasury Trust
(36) Dean Witter Diversified Income Trust
(37) Dean Witter Health Sciences Trust
(38) Dean Witter Global Dividend Growth Securities
(39) Dean Witter American Value Fund
-22-
<PAGE>
(40) Dean Witter U.S. Government Money Market Trust
(41) Dean Witter Global Short-Term Income Fund Inc.
(42) Dean Witter Value-Added Market Series
(43) Dean Witter Select Municipal Reinvestment Fund
(44) Dean Witter Variable Investment Series
By:/s/ Sheldon Curtis
------------------------------------
Sheldon Curtis
Vice President and General Counsel
ATTEST:
/s/ Barry Fink
---------------------------
Barry Fink
Assistant Secretary
DEAN WITTER TRUST COMPANY
By:/s/ Charles A. Fiumefreddo
------------------------------------
Charles A. Fiumefreddo
Chairman
ATTEST:
/s/ David A. Hughey
------------------------
David A. Hughey
Executive Vice President
-23-
<PAGE>
Dean Witter Trust Company
Harborside Financial Center
Plaza Two
Jersey City, NJ 07311
Gentlemen:
The undersigned, (THE FUND NAME) a (Massachusetts
business trust/Maryland corporation) (the "Fund"), desires to
employ and appoint Dean Witter Trust Company ("DWTC") to act
as transfer agent for each series and class of shares of the
Fund, whether now or hereafter authorized or issued
("Shares"), dividend disbursing agent and shareholder
servicing agent, registrar and agent in connection with any
accumulation, open-account or similar plan provided to the
holders of Shares, including without limitation any periodic
investment plan or periodic withdrawal plan.
The Fund hereby agrees that, in consideration for
the payment by the Fund to DWTC of fees as set out in the fee
schedule attached hereto as Schedule A, DWTC shall provide
such services to the Fund pursuant to the terms and conditions
set forth in the Transfer Agency and Service Agreement annexed
hereto, as if the Fund was a signatory thereto.
-24
<PAGE>
Please indicate DWTC's acceptance of employment and
appointment by the Fund in the capacities set forth above by
so indicating in the space provided below.
Very truly yours,
(NAME OF THE FUND)
By:
----------------------------------
Sheldon Curtis
Vice President and General Counsel
ACCEPTED AND AGREED TO:
DEAN WITTER TRUST COMPANY
By:
-----------------------
Its:
----------------------
Date:
---------------------
-25-
<PAGE>
SCHEDULE A
Fund: Dean Witter Select Municipal Reinvestment Fund
Fees: (1) Annual maintenance fee of $11.50 per
shareholder account, payable monthly.
(2) A fee equal to 1/12 of the fee set forth
in (1) above, for providing Forms 1099 for
accounts closed during the year, payable
following the end of the calendar year.
(3) Out-of-pocket expenses in accordance with
Section 2.2 of the Agreement.
(4) Fees for additional services not set
forth in this Agreement shall be as negotiated
between the parties.
<PAGE>
SERVICES AGREEMENT
AGREEMENT made as of the 31st day of December, 1993 by and between Dean
Witter InterCapital Inc., a Delaware corporation (herein referred to as
"InterCapital"), and Dean Witter Services Company Inc., a New Jersey corporation
(herein referred to as "DWS").
WHEREAS, InterCapital has entered into separate agreements (each such
agreement being herein referred to as an "Investment Management Agreement") with
certain investment companies as set forth on Schedule A (each such investment
company being herein referred to as a "Fund" and, collectively, as the "Funds")
pursuant to which InterCapital is to perform, or supervise the performance of,
among other services, administrative services for the Funds (and, in the case of
Funds with multiple portfolios, the Series or Portfolios of the Funds (such
Series and Portfolio being herein individually referred to as "a Series" and,
collectively, as "the Series"));
WHEREAS, InterCapital desires to retain DWS to perform the administrative
services as described below; and
WHEREAS, DWS desires to be retained by InterCapital to perform such
administrative services:
Now, therefore, in consideration of the mutual covenants and agreements of
the parties hereto as herein set forth, the parties covenant and agree as
follows:
1. DWS agrees to provide administrative services to each Fund as
hereinafter set forth. Without limiting the generality of the foregoing, DWS
shall (i) administer the Fund's business affairs and supervise the overall
day-to-day operations of the Fund (other than rendering investment advice); (ii)
provide the Fund with full administrative services, including the maintenance of
certain books and records, such as journals, ledger accounts and other records
required under the Investment Company Act of 1940, as amended (the"Act"), the
notification to the Fund and InterCapital of available funds for investment, the
reconciliation of account information and balances among the Fund's custodian,
transfer agent and dividend disbursing agent and InterCapital, and the
calculation of the net asset value of the Fund's shares; (iii) provide the Fund
with the services of persons competent to perform such supervisory,
administrative and clerical functions as are necessary to provide effective
operation of the Fund; (iv) oversee the performance of administrative and
professional services rendered to the Fund by others, including its custodian,
transfer agent and dividend disbursing agent, as well as accounting, auditing
and other services; (v) provide the Fund with adequate general office space and
facilities; (vi) assist in the preparation and the printing of the periodic
updating of the Fund's registration statement and prospectus (and, in the case
of an open-end Fund, the statement of additional information), tax returns,
proxy statements, and reports to its shareholders and the Securities and
Exchange Commission; and (vii) monitor the compliance of the Fund's investment
policies and restrictions.
In the event that InterCapital enters into an Investment Management
Agreement with another investment company, and wishes to retain DWS to perform
administrative services hereunder, it shall notify DWS in writing. If DWS is
willing to render such services, it shall notify InterCapital in writing,
whereupon such other Fund shall become a Fund as defined herein.
2. DWS shall, at its own expense, maintain such staff and employ or retain
such personnel and consult with such other persons as it shall from time to time
determine to be necessary or useful to the performance of its obligations under
this Agreement. Without limiting the generality of the foregoing, the staff and
personnel of DWS shall be deemed to include officers of DWS and persons employed
or otherwise retained by DWS (including officers and employees of InterCapital,
with the consent of InterCapital) to furnish services, statistical and other
factual data, information with respect to technical and scientific developments,
and such other information, advice and assistance as DWS may desire. DWS shall
maintain each Fund's records and books of account (other than those maintained
by the Fund's transfer agent, registrar, custodian and other agencies). All such
books and records so maintained shall be the property of the Fund and, upon
request therefor, DWS shall surrender to InterCapital or to the Fund such of the
books and records so requested.
3. InterCapital will, from time to time, furnish or otherwise make
available to DWS such financial reports, proxy statements and other information
relating to the business and affairs of the Fund as DWS may
1
<PAGE>
reasonably require in order to discharge its duties and obligations to the Fund
under this Agreement or to comply with any applicable law and regulation or
request of the Board of Directors/Trustees of the Fund.
4. For the services to be rendered, the facilities furnished, and the
expenses assumed by DWS, InterCapital shall pay to DWS monthly compensation
calculated daily (in the case of an open-end Fund) or weekly (in the case of
a closed-end Fund) by applying the annual rate or rates set forth on Schedule B
to the net assets of each Fund. Except as hereinafter set forth, (i) in the
case of an open-end Fund, compensation under this Agreement shall be calculated
by applying 1/365th of the annual rate or rates to the Fund's or the Series'
daily net assets determined as of the close of business on that day or the last
previous business day and (ii) in the case of a closed-end Fund, compensation
under this Agreement shall be calculated by applying the annual rate or rates
to the Fund's average weekly net assets determined as of the close of the last
business day of each week. If this Agreement becomes effective subsequent to
the first day of a month or shall terminate before the last day of a month,
compensation for that part of the month this Agreement is in effect shall be
prorated in a manner consistent with the calculation of the fees as set forth
on Schedule B. Subject to the provisions of paragraph 5 hereof, payment of DWS'
compensation for the preceding month shall be made as promptly as possible
after completion of the computations contemplated by paragraph 5 hereof.
5. In the event the operating expenses of any open-end Fund and/or any
Series thereof, or of InterCapital Income Securities Inc., including amounts
payable to InterCapital pursuant to the Investment Management Agreement, for any
fiscal year ending on a date on which this Agreement is in effect, exceed the
expense limitations applicable to the Fund and/or any Series thereof imposed by
state securities laws or regulations thereunder, as such limitations may be
raised or lowered from time to time, or, in the case of InterCapital Income
Securities Inc. or Dean Witter Variable Investment Series or any Series thereof,
the expense limitation specified in the Fund's Investment Management Agreement,
the fee payable hereunder shall be reduced on a pro rata basis in the same
proportion as the fee payable by the Fund under the Investment Management
Agreement is reduced.
6. DWS shall bear the cost of rendering the administrative services to be
performed by it under this Agreement, and shall, at its own expense, pay the
compensation of the officers and employees, if any, of the Fund employed by DWS,
and such clerical help and bookkeeping services as DWS shall reasonably require
in performing its duties hereunder.
7. DWS will use its best efforts in the performance of administrative
activitives on behalf of each Fund, but in the absence of willful misfeasance,
bad faith, gross negligence or reckless disregard of its obligations hereunder,
DWS shall not be liable to the Fund or any of its investors for any error of
judgment or mistake of law or for any act or omission by DWS or for any losses
sustained by the Fund or its investors. It is understood that, subject to the
terms and conditions of the Investment Management Agreement between each Fund
and InterCapital, InterCapital shall retain ultimate responsibility for all
services to be performed hereunder by DWS. DWS shall indemnify InterCapital and
hold it harmless from any liability that InterCapital may incur arising out of
any act or failure to act by DWS in carrying out its responsibilities hereunder.
8. It is understood that any of the shareholders, Directors/Trustees,
officers and employees of the Fund may be a shareholder, director, officer or
employee of, or be otherwise interested in, DWS, and in any person controlling,
controlled by or under common control with DWS, and that DWS and any person
controlling, controlled by or under common control with DWS may have an interest
in the Fund. It is also understood that DWS and any affiliated persons thereof
or any persons controlling, controlled by or under common control with DWS have
and may have advisory, management, administration service or other contracts
with other organizations and persons, and may have other interests and
businesses, and further may purchase, sell or trade any securities or
commodities for their own accounts or for the account of others for whom they
may be acting.
9. This Agreement shall continue until April 30, 1994, and thereafter shall
continue automatically for successive periods of one year unless terminated by
either party by written notice delivered to the other party within 30 days of
the expiration of the then-existing period. Notwithstanding the foregoing, this
Agreement may be terminated at any time, by either party on 30 days' written
notice delivered to the other party. In the
2
<PAGE>
event that the Investment Management Agreement between any Fund and InterCapital
is terminated, this Agreement will automatically terminate with respect to such
Fund.
10. This Agreement may be amended or modified by the parties in any manner
by mutual written agreement executed by each of the parties hereto.
11. This Agreement shall be construed and interpreted in accordance with
the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written in New York, New York.
DEAN WITTER INTERCAPITAL INC.
By: ____________________________
Attest:
__________________________
DEAN WITTER SERVICES COMPANY INC.
By: _____________________________
Attest:
__________________________
3
<PAGE>
SCHEDULE A
DEAN WITTER FUNDS
at December 31, 1993
Open-End Funds
1. Active Assets California Tax-Free Trust
2. Active Assets Government Securities Trust
3. Active Assets Money Trust
4. Active Assets Tax-Free Trust
5. Dean Witter American Value Fund
6. Dean Witter California Tax-Free Daily Income Trust
7. Dean Witter California Tax-Free Income Fund
8. Dean Witter Capital Growth Securities
9. Dean Witter Convertible Securities Trust
10. Dean Witter Developing Growth Securities Trust
11. Dean Witter Diversified Income Trust
12. Dean Witter Dividend Growth Securities Inc.
13. Dean Witter Equity Income Trust
14. Dean Witter European Growth Fund Inc.
15. Dean Witter Federal Securities Trust
16. Dean Witter Global Dividend Growth Securities
17. Dean Witter Global Short-Term Income Fund Inc.
18. Dean Witter Health Sciences Trust
19. Dean Witter High Yield Securities Inc.
20. Dean Witter Intermediate Income Securities
21. Dean Witter Limited Term Municipal Trust
22. Dean Witter Liquid Asset Fund Inc.
23. Dean Witter Managed Assets Trust
24. Dean Witter Multi-State Municipal Series Trust
25. Dean Witter Natural Resource Development Securities Inc.
26. Dean Witter New York Municipal Money Market Trust
27. Dean Witter New York Tax-Free Income Fund
28. Dean Witter Pacific Growth Fund Inc.
29. Dean Witter Precious Metals and Minerals Trust
30. Dean Witter Premier Income Trust
31. Dean Witter Retirement Series
32. Dean Witter Select Municipal Reinvestment Fund
33. Dean Witter Short-Term U.S. Treasury Trust
34. Dean Witter Strategist Fund
35. Dean Witter Tax-Exempt Securities Trust
36. Dean Witter Tax-Free Daily Income Trust
37. Dean Witter U.S. Government Money Market Trust
38. Dean Witter U.S. Government Securities Trust
39. Dean Witter Utilities Fund
40. Dean Witter Value-Added Market Series
41. Dean Witter Variable Investment Series
42. Dean Witter World Wide Income Trust
43. Dean Witter World Wide Investment Trust
Closed-End Funds
44. High Income Advantage Trust
45. High Income Advantage Trust II
46. High Income Advantage Trust III
47. InterCapital Income Securities Inc.
48. Dean Witter Government Income Trust
49. InterCapital Insured Municipal Bond Trust
50. InterCapital Insured Municipal Trust
51. InterCapital Insured Municipal Income Trust
52. InterCapital California Insured Municipal Income Trust
53. InterCapital Quality Municipal Investment Trust
54. InterCapital Quality Municipal Income Trust
55. InterCapital Quality Municipal Securities
56. InterCapital California Quality Municipal Securities
57. InterCapital New York Quality Municipal Securities
4
<PAGE>
DEAN WITTER SERVICES COMPANY
SCHEDULE OF ADMINISTRATIVE FEES - JANUARY 1, 1994
Monthly compensation calculated daily by applying the following annual rates to
a fund's net assets:
Dean Witter Select Municipal Reinvestment Fund 0.050 of 1% to the net assets.
5
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
----------------------------------
We hereby consent to the use in the Statement of Additional Information
constituting part of this Post-Effective Amendment No. 11 to the Registration
Statement on Form N-1A (the "Registration Statement") of our report dated
January 31, 1994 relating to the financial statements and financial highlights
of Dean Witter Select Municipal Reinvestment Fund, which appears in such
Statement of Additional Information, and to the incorporation by reference of
our report into the Prospectus which constitutes part of the Registration
Statement. We also consent to the references to us under the headings
"Financial Highlights" in the Prospectus and "Independent Accountants" and
"Experts" in the Statement of Additional Information.
PRICE WATERHOUSE
1177 Avenue of the Americas
New York, New York
February 8, 1994
<PAGE>
SCHEDULE FOR COMPUTATIONS OF PERFORMANCE QUOTATIONS
DEAN WITTER SELECT MUNI REINVESTMENT FUND
(A) AVERAGE ANNUAL TOTAL RETURNS
(B) TOTAL RETURN
_ _
| ______________________ |
FORMULA: | | |
| /\ n | EV |
t = | \ | ----------------------- | - 1
| \ | P |
| \| |
|_ __|
EV
TR = ---------- - 1
P
t = AVERAGE ANNUAL TOTAL RETURN
n = NUMBER OF YEARS
EV = ENDING VALUE
P = INITIAL INVESTMENT
TR = TOTAL RETURN
<TABLE>
<CAPTION>
(B) (A)
$1,000 EV AS OF TOTAL NUMBER OF AVERAGE ANNUAL
INVESTED - P 31-Dec-93 RETURN - TR YEARS - n COMPOUND RETURN - t
- -------------- ----------- -------------- -------------- ---------------------------------
<S> <C> <C> <C> <C>
31-Dec-92 $1,119.90 11.99% 1 11.99%
31-Dec-88 $1,574.40 57.44% 5 9.50%
31-Dec-83 $2,644.80 164.48% 10.00 10.21%
</TABLE>
(E) GROWTH OF $10,000
(F) GROWTH OF $50,000
(G) GROWTH OF $100,000
FORMULA: G= (TR+1)*P
G= GROWTH OF INITIAL INVESTMENT
P= INITIAL INVESTMENT
TR= TOTAL RETURN SINCE INCEPTION
<TABLE>
<CAPTION>
$10,000 TOTAL GROWTH OF GROWTH OF GROWTH OF
INVESTED - P RETURN - TR $10,000 INVESTMENT - G $50,000 INVESTMENT $100,000 INVESTMENT - G
- --------------- -------------- ---------------------------------------- -----------------
<S> <C> <C> <C> <C>
22-Sep-83 168.06 $26,806 $134,030 $268,060
</TABLE>
<PAGE>
SCHEDULE OF COMPUTATION OF YIELD QUOTATION
SELECT MUNICIPAL REINVESTMENT FUND
FOR THE 30-DAY PERIOD ENDED DECEMBER 31, 1993
6
YIELD = 2{[((a-b)/cd)+1]-1}
Where: a = Dividends and interest earned during the period
b = Expenses accrued for the period
c = The average daily number of shares outstanding
during the period that were entitled to receive
dividends
d = The maximum offering price per share on the last
day of the period.
6
YIELD = 2{[((408,880-78061)/7,474,386*12.78+1]-1}
4.19%
TAX EQUIVALENT YIELD
TAX EQUIVALENT YIELD = SEC Yield - (1 - stated tax rate)
= 4.19% / (1-.3600)
6.55%
