<PAGE>
DEAN WITTER SELECT MUNICIPAL REINVESTMENT FUND TWO WORLD TRADE CENTER,
NEW YORK, NEW YORK 10048
LETTER TO THE SHAREHOLDERS DECEMBER 31, 1996
DEAR SHAREHOLDER:
We are pleased to present the annual report on the operations of Dean Witter
Select Municipal Reinvestment Fund for the year ended December 31, 1996.
After accelerating in the first half of 1996, domestic economic growth moderated
during the summer. Inflation remained under control despite full employment and
stronger growth in the fourth quarter. The need for a tightening move by the
Federal Reserve Board abated. Market confidence improved under these conditions
and fixed-income yields moved lower in the second half of the year.
MUNICIPAL MARKET CONDITIONS
Long insured revenue bond yields rose from 5.40 percent in February to reach
6.15 percent in April and again in mid-June. Subsequently, demand for municipal
bonds improved and followed the trend of U.S. Treasury securities to lower
rates. By the end of December, insured bond yields stood at 5.60 percent. The
yield pickup for extending maturities from 1 to 30 years was 210 basis points at
year end.
The ratio of insured revenue bond yields to 30-year U.S. Treasury yields, fell
from 92 to 84 percent during the year. A declining ratio means that municipal
bond prices outperformed U.S. Treasury prices. The ratio's average range for the
past three years has been as low (rich) as 81 and as high (cheap) as 92 percent.
The relative improvement in municipals occurred when flat-tax proposals failed
to gain public support.
<PAGE>
DEAN WITTER SELECT MUNICIPAL REINVESTMENT FUND
LETTER TO THE SHAREHOLDERS DECEMBER 31, 1996, CONTINUED
The municipal market achieved a balance between new-issue supply and maturing
securities in 1996. New-issue volume increased by 14 percent to $183 billion.
Maturities and redemptions of older issues essentially matched underwriting
volume.
PERFORMANCE
Dean Witter Select Municipal Reinvestment Fund's total return for the fiscal
year ended December 31, 1996 was 3.55 percent. The Fund's net asset value
declined from $12.48 to $12.14 per share. Tax-free dividends of $0.61 per share
and taxable long-term capital gains distributions of $0.15 per share were paid
during the period. Dividends from tax-exempt income gave the Fund a positive
total return. The trailing 30-day SEC yield and distribution yield on December
31, 1996 were 4.49 percent and 5.05 percent, respectively.
Since its inception on September 23, 1983, the Fund has provided shareholders
with an average annual total return of 8.70 percent. The accompanying chart
illustrates the performance of $10,000 investment in the Fund for the 10 years
ended December 31, 1996, versus the performance of a similar hypothetical
investment in the issues comprising the Lehman Brothers Municipal Bond Index, as
well as the performance of the Lipper Analytical Services, Inc. General
Municipal Debt Funds Index.
PORTFOLIO STRUCTURE
The Fund's net assets of $92 million were diversified among 10 long-term sectors
and 47 credits. The Fund's cash and short-term investment position was increased
to a range of 5 to 10 percent during 1996 in response to market volatility.
Portfolio sales shifted to more market-sensitive issues. The sales of discount
and current-coupon issues exceeded sales of defensive, higher-coupon bonds with
shorter calls. New purchases focused on securities with 15- to 25-year
maturities rather than the 20- to 30-year range. Modest discount or premium
bonds with shorter durations were favored.
<PAGE>
DEAN WITTER SELECT MUNICIPAL REINVESTMENT FUND
LETTER TO THE SHAREHOLDERS DECEMBER 31, 1996, CONTINUED
During the year the average maturity of the long-term portfolio moved from 18 to
14 years. The portfolio's distribution of older shorter-call issues and newer
issues with longer call dates provided an average call protection of 6 years.
Bonds with shorter than average call protection had book yields in excess of
6.50%. The book yields of bonds with longer call protection averaged less than
6%. The portfolio has continued to maintain high-quality, with over 60 percent
of its long-term holdings rated double "A" or better.
LOOKING AHEAD
With the collapse of flat-tax proposals, municipal bonds have improved relative
to the U.S. Treasury securities. Tax-free yields are currently near the "rich"
end of their average range versus Treasury yields. Under these conditions, the
Fund has accumulated an above average cash position and has moved to shorter
maturities. If municipals were to cheapen in the future, the Fund would likely
draw down some of its cash and extend maturities in seeking opportunities to
pick up income.
We appreciate your ongoing support of Dean Witter Select Municipal Reinvestment
Fund and look forward to continuing to serve your investment needs.
Very truly yours,
[SIGNATURE]
CHARLES A. FIUMEFREDDO
CHAIRMAN OF THE BOARD
<PAGE>
DEAN WITTER SELECT MUNICIPAL REINVESTMENT FUND
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1996
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- --------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
MUNICIPAL BONDS (89.5%)
GENERAL OBLIGATION (16.5%)
$ 4,000 North Slope Borough, Alaska, Ser 1996 B (MBIA)............................. 0.00 % 06/30/07 $ 2,279,040
2,000 Chicago, Illinois, Refg Ser 1995 B (FGIC).................................. 5.125 01/01/25 1,842,680
2,000 Washington Suburban Sanitation District, Maryland, Gen Constr Refg 1994.... 5.00 06/01/14 1,927,820
3,000 New York City, New York, 1990 Ser D........................................ 6.00 08/01/07 3,023,310
2,000 Pennsylvania, First Ser 1995 (FGIC)........................................ 5.50 05/01/12 2,014,940
2,000 Shelby County, Tennessee, Refg 1995 Ser A.................................. 5.625 04/01/12 2,039,540
2,000 Washington, Ser 1995 A..................................................... 5.80 09/01/08 2,084,420
- --------- -----------
17,000 15,211,750
- --------- -----------
EDUCATIONAL FACILITIES REVENUE (8.4%)
2,000 District of Columbia, Georgetown University Ser 1993....................... 5.375 04/01/23 1,878,260
2,000 Massachusetts Health & Educational Facilities Authority, Boston College Ser
K........................................................................ 5.25 06/01/18 1,891,740
1,500 Rutgers - The State University, New Jersey, Refg Ser R..................... 6.50 05/01/13 1,611,765
2,000 New York State Dormitory Authority, State University Ser 1989 B............ 0.00 05/15/03 1,402,300
1,000 Ohio Higher Educational Facility Commission, Oberlin College Ser 1993...... 5.375 10/01/15 971,730
- --------- -----------
8,500 7,755,795
- --------- -----------
ELECTRIC REVENUE (6.9%)
1,000 Gainesville, Florida, Utilities 1996 Ser A................................. 5.20 10/01/22 950,940
2,000 Nebraska Public Power District, Power Supply 1993 Ser...................... 6.125 01/01/15 2,057,880
2,000 Intermountain Power Agency, Utah, Refg 1996 Ser D.......................... 5.00 07/01/21 1,813,920
3,000 Washington Public Power Supply System, Proj #2 Refg Ser 1994 A (FGIC)...... 0.00 07/01/09 1,496,850
- --------- -----------
8,000 6,319,590
- --------- -----------
HOSPITAL REVENUE (6.8%)
2,000 Birmingham - Carraway Special Care Facilities Financing Authority, Alabama,
Carraway Methodist Health Ser 1995 A (Connie Lee)........................ 6.25 08/15/09 2,161,600
2,000 Maryland Industrial Development Financing Authority, Holy Cross Health
System Corp Refg Ser 1996................................................ 5.50 12/01/08 2,059,880
2,000 North Central Texas Health Facilities Development Corporation, University
Medical Center Ser 1997 (FSA) (WI)....................................... 5.50 04/01/10 2,014,000
- --------- -----------
6,000 6,235,480
- --------- -----------
INDUSTRIAL DEVELOPMENT/POLLUTION CONTROL REVENUE (7.9%)
700 Connecticut Development Authority, Bridgeport Hydraulic Co Refg Ser 1990... 7.25 06/01/20 752,906
1,000 Michigan Strategic Fund, Ford Motor Co Refg Ser 1991 A..................... 7.10 02/01/06 1,145,860
1,000 Claiborne County, Mississippi, Middle South Energy Inc Ser C............... 9.875 12/01/14 1,107,940
2,000 Ohio Water Development Authority, Dayton Power & Light Co Collateralized
Refg 1992 Ser A.......................................................... 6.40 08/15/27 2,105,860
1,500 Matagorda County Navigation District #1, Texas, Central Power & Light Co
Collateralized Ser 1984 A................................................ 7.50 12/15/14 1,654,035
500 Russell County Industrial Development Authority, Virginia, Appalachian
Power Co Ser G........................................................... 7.70 11/01/07 546,895
- --------- -----------
6,700 7,313,496
- --------- -----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER SELECT MUNICIPAL REINVESTMENT FUND
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1996, CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- --------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
MORTGAGE REVENUE - MULTI-FAMILY (1.4%)
$ 1,000 Michigan Housing Development Authority, Rental 1992 Ser A.................. 6.60 % 04/01/12 $ 1,033,510
290 Pennsylvania Housing Finance Agency, Moderate Rehabilitation - Section 8
Assisted Issue B......................................................... 9.00 08/01/01 294,994
- --------- -----------
1,290 1,328,504
- --------- -----------
MORTGAGE REVENUE - SINGLE FAMILY (2.2%)
2,000 Alaska Housing Finance Corporation, Governmental 1995 Ser A (MBIA)......... 5.875 12/01/24 1,993,080
- --------- -----------
PUBLIC FACILITIES REVENUE (2.3%)
1,000 Hennepin County, Minnesota, Ser 1991 COPs.................................. 6.80 05/15/17 1,083,640
1,000 Puerto Rico Infrastructure Financing Authority, Special Tax Ser 1988 A..... 7.90 07/01/07 1,072,800
- --------- -----------
2,000 2,156,440
- --------- -----------
TRANSPORTATION FACILITIES REVENUE (12.1%)
2,000 Los Angeles County Transportation Commission, California, Sales Tax
Ser 1991 B............................................................... 6.50 07/01/13 2,119,160
2,000 Lee County, Florida, Ser 1995 (MBIA)....................................... 5.75 10/01/22 2,020,560
3,500 Kentucky Turnpike Authority, Resource Recovery Road 1987 Ser A BIGS........ 0.00+ 07/01/06 4,139,905
1,000 Ohio Turnpike Commission, 1994 Ser A....................................... 5.75 02/15/24 997,200
2,000 Puerto Rico Highway & Transportation Authority, Refg Ser X................. 5.25 07/01/21 1,844,820
- --------- -----------
10,500 11,121,645
- --------- -----------
WATER & SEWER REVENUE (13.4%)
2,000 San Francisco Public Utilities Commission, California, Water 1996 Ser A.... 5.00 11/01/21 1,855,080
2,000 Boston Water & Sewer Commission, Massachusetts, 1992 Ser A................. 6.00 11/01/15 2,000,380
1,500 Massachusetts Water Resource Authority, 1993 Ser C......................... 5.25 12/01/08 1,511,835
2,000 Suffolk County Industrial Development Agency, New York, Southwest Sewer Ser
1994 (FGIC).............................................................. 4.75 02/01/09 1,890,720
Columbus, Ohio, Sewerage Refg Ser 1992
1,000 Spartanburg, South Carolina,............................................... 6.25 06/01/08 1,067,040
1,000 Water Improvement Refg Ser A 1992........................................ 6.25 06/01/12 1,044,030
1,000 Water Improvement Refg Ser A 1992........................................ 6.25 06/01/17 1,037,370
2,000 Metropolitan Government of Nashville & Davidson County, Tennessee,
Refg of 1986............................................................. 5.50 01/01/16 1,953,940
- --------- -----------
12,500 12,360,395
- --------- -----------
REFUNDED (11.6%)
2,000 Maryland Water Quality Financing Administration, 1990 Ser A................ 7.25 09/01/00++ 2,235,860
2,000 Massachusetts, 1994 Ser C (FGIC)........................................... 6.75 11/01/04++ 2,291,160
2,000 Saint Cloud, Minnesota, The Saint Cloud Hospital Ser 1990 B (AMBAC)........ 7.00 07/01/01++ 2,236,120
1,500 New York Local Government Assistance Corporation, Ser 1991 D............... 7.00 04/01/02++ 1,696,095
2,000 Clermont County, Ohio, Mercy Health Ser 1991 (AMBAC)....................... 6.733 09/01/01++ 2,218,460
- --------- -----------
9,500 10,677,695
- --------- -----------
TOTAL MUNICIPAL BONDS
(IDENTIFIED COST $77,314,804)....................................................................
83,990 82,473,870
- --------- -----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER SELECT MUNICIPAL REINVESTMENT FUND
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1996, CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- --------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
SHORT-TERM MUNICIPAL OBLIGATIONS (8.2%)
$ 1,200 Maricopa County, Arizona, Arizona Public Service Co Palo-Verde Ser 1994 A
(Demand 01/02/97)........................................................ 5.10*% 05/01/29 $ 1,200,000
2,900 Moffat County, Colorado, Pacificorp Ser 1994 (AMBAC) (Demand 01/02/97)..... 5.10* 05/01/13 2,900,000
700 Louisiana Offshore Terminal Authority, Loop Inc Ser 1992 A
(Demand 01/02/97)........................................................ 5.10* 09/01/08 700,000
2,800 Platte County, Wyoming, Tri-State Generation & Transportation Association
Ser 1984 A (Demand 01/02/97)............................................. 5.05* 07/01/14 2,800,000
- --------- -----------
TOTAL SHORT-TERM MUNICIPAL OBLIGATIONS
7,600 (IDENTIFIED COST $7,600,000).....................................................................
7,600,000
- --------- -----------
$91,590 TOTAL INVESTMENTS
(IDENTIFIED COST $84,914,804) (A)....................................................... 97.7% 90,073,870
- ---------
- ---------
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES.......................................... 2.3 2,113,400
------- -----------
NET ASSETS.............................................................................. 100.0% $92,187,270
------- -----------
------- -----------
<FN>
- ---------------------
BIGS Bond Income Growth Security.
COPs Certificates of Participation.
WI Security purchased on a when issued basis.
+ Zero coupon; will convert to 8.50% on July 1, 1997.
++ Prerefunded to call date shown.
* Current coupon of variable rate security.
(a) The aggregate cost for federal income tax purposes approximates identified
cost. The aggregate gross unrealized appreciation is $5,379,922, and the
aggregate gross unrealized depreciation is $220,856, resulting in net
unrealized appreciation of $5,159,066.
BOND INSURANCE:
AMBAC AMBAC Indemnity Corporation.
Connie Lee Connie Lee Insurance Company.
FGIC Financial Guaranty Insurance Company.
FSA Financial Security Assurance Inc.
MBIA Municipal Bond Investors Assurance Corporation.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER SELECT MUNICIPAL REINVESTMENT FUND
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1996, CONTINUED
GEOGRAPHIC SUMMARY OF INVESTMENTS
Based on Market Value as a Percent of Net Assets
DECEMBER 31, 1996
<TABLE>
<S> <C>
Alabama.......... 2.4%
Alaska........... 4.6
Arizona.......... 1.3
California....... 4.3
Colorado......... 3.1
Connecticut...... 0.8
District of
Columbia........ 2.0
Florida.......... 3.2%
Illinois......... 2.0
Kentucky......... 4.5
Louisiana........ 0.8
Maryland......... 6.8
Massachusetts.... 8.3
Michigan......... 2.4
Minnesota........ 3.6
Mississippi...... 1.2%
Nebraska......... 2.2
New Jersey....... 1.7
New York......... 8.7
Ohio............. 8.0
Pennsylvania..... 2.5
Puerto Rico...... 3.2
South Carolina... 2.3
Tennessee........ 4.3%
Texas............ 4.0
Utah............. 2.0
Virginia......... 0.6
Washington....... 3.9
Wyoming.......... 3.0
-----
Total............ 97.7%
-----
-----
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER SELECT MUNICIPAL REINVESTMENT FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $84,914,804)............................. $90,073,870
Cash........................................................ 490,699
Receivable for:
Investments sold........................................ 2,654,928
Interest................................................ 1,169,752
Shares of beneficial interest sold...................... 19,204
Prepaid expenses and other assets........................... 28,885
-----------
TOTAL ASSETS........................................... 94,437,338
-----------
LIABILITIES:
Payable for:
Investments purchased................................... 1,981,001
Shares of beneficial interest repurchased............... 85,008
Dividends and distributions............................. 77,236
Investment management fee............................... 40,201
Accrued expenses and other payables......................... 66,622
-----------
TOTAL LIABILITIES...................................... 2,250,068
-----------
NET ASSETS:
Paid-in-capital............................................. 86,857,821
Net unrealized appreciation................................. 5,159,066
Accumulated undistributed net realized gain................. 170,383
-----------
NET ASSETS............................................. $92,187,270
-----------
-----------
NET ASSET VALUE PER SHARE,
7,595,015 SHARES OUTSTANDING (UNLIMITED SHARES AUTHORIZED
OF $.01 PAR VALUE)........................................ $12.14
-----------
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER SELECT MUNICIPAL REINVESTMENT FUND
FINANCIAL STATEMENTS, CONTINUED
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<S> <C>
NET INVESTMENT INCOME:
INTEREST INCOME............................................. $ 5,525,675
-----------
EXPENSES
Investment management fee................................... 464,650
Transfer agent fees and expenses............................ 233,105
Shareholder reports and notices............................. 60,264
Professional fees........................................... 49,552
Registration fees........................................... 31,048
Trustees' fees and expenses................................. 16,338
Custodian fees.............................................. 5,886
Other....................................................... 8,580
-----------
TOTAL EXPENSES......................................... 869,423
LESS: EXPENSE OFFSET................................... (5,859)
-----------
NET EXPENSES........................................... 863,564
-----------
NET INVESTMENT INCOME.................................. 4,662,111
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain........................................... 1,184,073
Net change in unrealized appreciation....................... (2,771,254)
-----------
NET LOSS............................................... (1,587,181)
-----------
NET INCREASE................................................ $ 3,074,930
-----------
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER SELECT MUNICIPAL REINVESTMENT FUND
FINANCIAL STATEMENTS, CONTINUED
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR
ENDED ENDED
DECEMBER 31, 1996 DECEMBER 31, 1995
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income....................................... $ 4,662,111 $ 4,697,296
Net realized gain........................................... 1,184,073 179,336
Net change in unrealized appreciation/depreciation.......... (2,771,254) 8,626,901
----------------- -----------------
NET INCREASE........................................... 3,074,930 13,503,533
----------------- -----------------
DIVIDENDS AND DISTRIBUTIONS FROM:
Net investment income....................................... (4,688,098) (4,694,507)
Net realized gain........................................... (1,111,976) (134,761)
----------------- -----------------
TOTAL.................................................. (5,800,074) (4,829,268)
----------------- -----------------
Net increase (decrease) from transactions in shares of
beneficial interest....................................... (318,257) 151,008
----------------- -----------------
NET INCREASE (DECREASE)................................ (3,043,401) 8,825,273
NET ASSETS:
Beginning of period......................................... 95,230,671 86,405,398
----------------- -----------------
END OF PERIOD
(INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME OF $0 AND
$25,987, RESPECTIVELY).................................. $92,187,270 $95,230,671
----------------- -----------------
----------------- -----------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER SELECT MUNICIPAL REINVESTMENT FUND
NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1996
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. The Fund's investment objective is to provide a
high level of current income which is exempt from federal income tax, consistent
with the preservation of capital. The Fund was organized as a Massachusetts
business trust on June 1, 1983 and commenced operations on September 22, 1983.
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures. Actual results could differ from
those estimates.
The following is a summary of significant accounting policies:
A. VALUATION OF INVESTMENTS -- Portfolio securities are valued for the Fund by
an outside independent pricing service approved by the Trustees. The pricing
service has informed the Fund that in valuing the Fund's portfolio securities,
it uses both a computerized matrix of tax-exempt securities and evaluations by
its staff, in each case based on information concerning market transactions and
quotations from dealers which reflect the bid side of the market each day. The
Fund's portfolio securities are thus valued by reference to a combination of
transactions and quotations for the same or other securities believed to be
comparable in quality, coupon, maturity, type of issue, call provisions, trading
characteristics and other features deemed to be relevant. Short-term debt
securities having a maturity date of more than sixty days at time of purchase
are valued on a mark-to-market basis until sixty days prior to maturity and
thereafter at amortized cost based on their value on the 61st day. Short-term
debt securities having a maturity date of sixty days or less at the time of
purchase are valued at amortized cost.
B. ACCOUNTING FOR INVESTMENTS -- Security transactions are accounted for on the
trade date (date the order to buy or sell is executed). Realized gains and
losses on security transactions are determined by the identified cost method.
Discounts are accreted and premiums are amortized over the life of the
respective securities. Interest income is accrued daily.
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 nontaxable income to its
shareholders. Accordingly, no federal income tax provision is required.
<PAGE>
DEAN WITTER SELECT MUNICIPAL REINVESTMENT FUND
NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1996, CONTINUED
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 reclassification. Dividends and distributions which
exceed net investment income and net realized capital gains for financial
reporting purposes but not for tax purposes are reported as dividends in excess
of net investment income or distributions in excess of net realized capital
gains. To the extent they exceed net investment income and net realized capital
gains for tax purposes, they are reported as distributions of paid-in-capital.
2. INVESTMENT MANAGEMENT AGREEMENT
Pursuant to an Investment Management Agreement with Dean Witter InterCapital
Inc. (the "Investment Manager"), the Fund pays the Investment Manager a
management fee, accrued daily and payable monthly, by applying the annual rate
of 0.50% to the daily 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, at its own expense, office space, facilities, equipment,
clerical, bookkeeping and certain legal services and pays the salaries of all
personnel, including officers of the Fund who are employees of the Investment
Manager. The Investment Manager also bears the cost of telephone services, heat,
light, power and other utilities provided to the Fund.
3. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES
The cost of purchases and proceeds from sales of portfolio securities, excluding
short-term investments, for the year ended December 31, 1996 aggregated
$15,186,053 and $24,018,003, respectively.
Dean Witter Trust Company, an affiliate of the Investment Manager, is the Fund's
transfer agent. At December 31, 1996, the Fund had transfer agent fees and
expenses payable of approximately $23,000.
<PAGE>
DEAN WITTER SELECT MUNICIPAL REINVESTMENT FUND
NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1996, CONTINUED
4. SHARES OF BENEFICIAL INTEREST
Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR
ENDED ENDED
DECEMBER 31, 1996 DECEMBER 31, 1995
---------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
----------- -------------- ----------- ------------
<S> <C> <C> <C> <C>
Sold............................................................. 2,918,884 $ 35,510,031 2,857,613 $ 34,313,758
Reinvestment of dividends and distributions...................... 451,479 5,481,141 379,503 4,576,988
----------- -------------- ----------- ------------
3,370,363 40,991,172 3,237,116 38,890,746
Repurchased...................................................... (3,404,589) (41,309,429) (3,227,249) (38,739,738)
----------- -------------- ----------- ------------
Net increase (decrease).......................................... (34,226) $ (318,257) 9,867 $ 151,008
----------- -------------- ----------- ------------
----------- -------------- ----------- ------------
</TABLE>
<PAGE>
DEAN WITTER SELECT MUNICIPAL REINVESTMENT FUND
FINANCIAL HIGHLIGHTS
Selected ratios and per share data for a share of beneficial interest
outstanding throughout each period:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31
--------------------------------------------------------------------------------------------------------
1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net asset value,
beginning of
period.............. $ 12.48 $ 11.34 $ 12.82 $ 12.12 $ 11.89 $ 11.25 $ 11.41 $ 11.08 $ 10.60 $ 11.85
-------- -------- -------- -------- -------- -------- -------- -------- -------- ---------
Net investment
income.............. 0.61 0.62 0.65 0.67 0.70 0.71 0.70 0.68 0.70 0.72
Net realized and
unrealized gain
(loss).............. (0.19) 1.16 (1.40) 0.75 0.32 0.62 (0.15) 0.33 0.49 (1.15)
-------- -------- -------- -------- -------- -------- -------- -------- -------- ---------
Total from investment
operations.......... 0.42 1.78 (0.75) 1.42 1.02 1.33 0.55 1.01 1.19 (0.43)
-------- -------- -------- -------- -------- -------- -------- -------- -------- ---------
Less dividends and
distributions from:
Net investment
income............ (0.61) (0.62) (0.69) (0.67) (0.70) (0.69) (0.71) (0.68) (0.70) (0.72)
Net realized
gain.............. (0.15) (0.02) (0.04) (0.05) (0.09) -- -- -- (0.01) (0.10)
-------- -------- -------- -------- -------- -------- -------- -------- -------- ---------
Total dividends and
distributions....... (0.76) (0.64) (0.73) (0.72) (0.79) (0.69) (0.71) (0.68) (0.71) (0.82)
-------- -------- -------- -------- -------- -------- -------- -------- -------- ---------
Net asset value, end
of period........... $ 12.14 $ 12.48 $ 11.34 $ 12.82 $ 12.12 $ 11.89 $ 11.25 $ 11.41 $ 11.08 $ 10.60
-------- -------- -------- -------- -------- -------- -------- -------- -------- ---------
-------- -------- -------- -------- -------- -------- -------- -------- -------- ---------
TOTAL INVESTMENT
RETURN+.............. 3.55% 16.00% (5.98)% 11.99% 8.88% 12.04% 5.27% 9.47% 11.42% (3.53)%
RATIOS TO AVERAGE NET
ASSETS:
Expenses............. 0.94%(1) 0.97% 0.96% 1.02% 1.14% 1.20% 1.21% 1.40% 1.41% 1.36%
Net investment
income.............. 5.01% 5.14% 5.34% 5.25% 5.79% 6.06% 6.12% 5.90% 6.27% 6.37%
SUPPLEMENTAL DATA:
Net assets, end of
period, in
thousands........... $92,187 $95,231 $86,405 $96,265 $75,918 $67,903 $60,304 $52,485 $44,769 $40,938
Portfolio turnover
rate................ 17% 17% 18% 9% 13% 30% 22% 15% 13% 43%
<FN>
- ---------------------
+ Calculated based on the net asset value as of the last business day of the
period.
(1) The above ratio does not reflect the effect of expense offsets of 0.01%.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<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 (the "Fund") at December 31, 1996, 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 at December 31, 1996 by correspondence with the
custodian and brokers, provide a reasonable basis for the opinion expressed
above.
PRICE WATERHOUSE LLP
1177 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10036
FEBRUARY 7, 1997
1996 FEDERAL TAX NOTICE
During the year ended December 31, 1996, the Fund paid to the
shareholders $0.61 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 year ended December 31, 1996, the
Fund paid to shareholders $0.15 per share from long-term capital
gains.
<PAGE>
TRUSTEES
Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn
John R. Haire
Dr. Manuel H. Johnson
Michael E. Nugent
Philip J. Purcell
John L. Schroeder
OFFICERS
Charles A. Fiumefreddo
Chairman and Chief Executive Officer
Barry Fink
Vice President, Secretary and General Counsel
James F. Willison
Vice President
Joseph R. Arcieri
Vice President
Thomas F. Caloia
Treasurer
TRANSFER AGENT
Dean Witter Trust Company
Harborside Financial Center - Plaza Two
Jersey City, New Jersey 07311
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
1177 Avenue of the Americas
New York, New York 10036
INVESTMENT MANAGER
Dean Witter InterCapital Inc.
Two World Trade Center
New York, New York 10048
This report is submitted for the general information of shareholders of the
Fund. For more detailed information about the Fund, its officers and trustees,
fees, expenses and other pertinent information, please see the prospectus of
the Fund.
This report is not authorized for distribution to prospective investors in the
Fund unless preceded or accompanied by an effective prospectus.
DEAN WITTER
SELECT MUNICIPAL
REINVESTMENT
FUND
[GRAPHIC]
ANNUAL REPORT
DECEMBER 31, 1996
<PAGE>
DEAN WITTER SELECT REINVESTMENT FUND
GROWTH OF $10,000
DATE TOTAL LEHMAN IX LIPPER IX
================================================================
December 31, 1986 $10,000 $10,000 $10,000
December 31, 1987 $ 9,647 $10,151 $ 9,932
December 31, 1988 $10,749 $11,182 $11,090
December 31, 1989 $11,767 $12,389 $12,195
December 31, 1990 $12,387 $13,292 $12,926
December 31, 1991 $13,878 $14,906 $14,483
December 31, 1992 $15,110 $16,220 $15,772
December 31, 1993 $16,922 $18,212 $17,732
December 31, 1994 $15,910 $17,271 $16,661
December 31, 1995 $18,456 $20,286 $19,545
December 31, 1996 $19,111(2) $21,185 $20,190
- -----------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
1 YEAR 5 YEARS 10 YEARS
==========================================
3.55(1) 6.69(1) 6.69(1)
==========================================
=========================================================================
______ Fund ______ Lehman IX (3) ______ Lipper IX (4)
=========================================================================
- --------------------------------
Past performance is not predictive of future returns.
(1) Figure shown assumes reinvestment of all distributions. There is no sales
charge.
(2) Closing value assuming a complete redemption on December 31, 1996.
(3) The Lehman Brothers Municipal Bond Index tracks the performance of
municipal bonds with maturities of 2 years or more and a minimum credit
rating of Baa or BBB, as measured by Moody's Investors Service, Inc.
or Standard & Poor's Corp. The Index does not include any expenses,
fees, or charges. The Index is unmanaged and should not be considered an
investment.
(4) The Lipper General Municipal Debt Funds Index is an equally-weighted
performance index of the largest qualifying funds (based on net assets) in
the Lipper General Municipal Debt Funds objective. The Index, which is
adjusted for capital gains distributions and income dividends, is unmanaged
and should not be considered an investment. There are currently 30 funds
represented in this index.
<PAGE>
DEAN WITTER SELECT MUNICIPAL REINVESTMENT FUND
(The following charts below represent information which appears in graph
form in the printed report)
A pie chart reflecting the credit quality of the portfolio as rated by
Moody's or Standard & Poors Credit Ratings as of December 31, 1996.
FIVE LARGEST SECTORS PERCENT
-------------------- -------
All others 38%
General Obligation 17%
Water & Sewer 13%
Refunded 12%
Transportation 12%
Education 8%
CREDIT RATING PERCENT
------------- -------
Aaa or AAA 33%
Aa or AA 30%
A or A 29%
Baa or BBB 7%
Ba or BB 1%
A bar graph reflecting the Call Structure as of December 31, 1996, of the
total Long-Term Portfolio:
YEAR % OF TOTAL LONG TERM PORTFOLIO
---- ------------------------------
1997 5%
1998 3%
1999 6%
2000 4%
2001 9%
2002 12%
2003 12%
2004 11%
2005 10%
2006 14%
2007-2009 14%