<PAGE> 1
DEAN WITTER SELECT MUNICIPAL REINVESTMENT FUND Two World Trade Center,
LETTER TO THE SHAREHOLDERS June 30, 1997 New York, New York 10048
DEAR SHAREHOLDER:
We are pleased to present the semiannual report on the operations of Dean Witter
Select Municipal Reinvestment Fund for the six-month period ended June 30, 1997.
A consumer-led acceleration in economic activity in late 1996 carried into the
first quarter of 1997. This contributed to a rise in interest rates between
December 1996 and April 1997. On March 25, 1997, the Federal Reserve Board
raised the federal-funds rate 25 basis points to 5.50 percent in a preemptive
move against a possible increase in the rate of inflation. The bond market
recognized that additional rate hikes by the central bank were possible, but
began to rally when short-term interest rates remained unchanged in May.
MUNICIPAL MARKET CONDITIONS
Municipal yields followed the trend of U.S. Treasury yields, but with less
volatility. Long-term insured revenue bond yields rose from 5.45 percent at the
end of November 1996 to a high of 5.85 percent in mid April 1997 before
declining to 5.50 percent in June.
<TABLE>
<CAPTION>
BOND YIELDS 1994-1997
30-Year Insured 30-Year U.S. Treasury Insured Municipal Revenue Yields
Municipal Revenue Yields Yields as a Percentage of U.S. Treasury Yields
<S> <C> <C> <C>
Dec '93 5.45 6.35 0.8586
5.29 6.24 0.8481
5.64 6.66 0.8468
6.19 7.09 0.8728
6.24 7.31 0.854
6.23 7.43 0.8387
Jun '94 6.31 7.61 0.8293
6.15 7.4 0.8314
6.17 7.45 0.828
6.42 7.82 0.8212
6.66 7.97 0.8356
6.99 8 0.8738
Dec '94 6.65 7.88 0.8438
6.42 7.7 0.834
6.12 7.44 0.8222
6.07 7.43 0.8167
6.05 7.34 0.8245
5.84 6.65 0.8784
Jun '95 6 6.62 0.9066
5.99 6.85 0.875
5.98 6.65 0.8997
5.97 6.5 0.9184
5.79 6.33 0.915
5.61 6.13 0.9151
Dec '95 5.49 5.95 0.923
5.42 6.03 0.8989
5.55 6.47 0.8577
5.89 6.67 0.8835
5.94 6.91 0.8601
5.99 6.99 0.8571
Jun '96 5.86 6.87 0.8529
5.77 6.97 0.8278
5.82 7.12 0.8176
5.71 6.92 0.8248
5.6 6.64 0.8431
5.45 6.35 0.8583
Dec '96 5.56 6.64 0.8372
5.63 6.79 0.8293
5.53 6.8 0.8129
5.83 7.1 0.8216
5.74 6.96 0.8251
5.58 6.91 0.8081
Jun '97 5.49 6.78 0.8092
Source: Bloomberg L.P.
</TABLE>
<PAGE> 2
DEAN WITTER SELECT MUNICIPAL REINVESTMENT FUND
LETTER TO THE SHAREHOLDERS June 30, 1997, continued
<TABLE>
<CAPTION>
LARGEST SECTORS AS JUNE 30, 1997
(% OF NET ASSETS)
<S> <C>
General Obligation 16%
Water & Sewer 14%
Transportation 13%
Refunded 12%
Education 9%
IDR/PCR* 8%
Electric 7%
Hospital 7%
All Others 14%
</TABLE>
* Industrial Development/Pollution Control Revenue
Portfolio structure is subject to change.
<TABLE>
<CAPTION>
CREDIT RATINGS AS OF JUNE 30, 1997
(% OF TOTAL LONG-TERM PORTFOLIO)
<C> <C>
Aaa or AAA 37%
Aa or AA 27%
A or A 27%
Baa or BBB 8%
Ba or BB 1%
</TABLE>
As measured by Moody's Investor Service, Inc., or Standard & Poor's Corp.
Portfolio structure is subject to change.
<TABLE>
<CAPTION>
CALL STRUCTURE AS OF JUNE 30, 1997 WEIGHTED AVERAGE
(% OF TOTAL LONG-TERM PORTFOLIO) CALL PROTECTION: 5.8 YEARS
PERCENT CALLABLE
YEARS BONDS CALLABLE
<S> <C>
1997 5.3%
1998 2.7%
1999 5.8%
2000 4.3%
2001 9.4%
2002 11.9%
2003 12.7%
2004 11.0%
2005 10.0%
2006 12.5%
2007+ 14.4%
</TABLE>
<PAGE> 3
DEAN WITTER SELECT MUNICIPAL REINVESTMENT FUND
LETTER TO THE SHAREHOLDERS June 30, 1997, continued
The ratio of 30-year insured revenue bond yields to 30-year U.S. Treasury yields
declined from 86 percent at the end of November 1996 to 81 percent in June 1997.
A declining ratio means that municipals have outperformed Treasuries, but have
become relatively less attractive. The annual range of the ratio averaged
between 80 percent and 92 percent over the past three years.
Relative to last year, new-issue municipal volume was ahead only two percent for
the first six months of 1997. Estimated underwriting volume of $180 billion for
the full year is expected to exceed bond maturities and redemptions of $130
billion.
PERFORMANCE
Dean Witter Select Municipal Reinvestment Fund's total return for the six-month
period ended June 30, 1997 was 2.58 percent. The Fund's net asset value was
unchanged at $12.14 per share. Tax-free dividends totaling $0.29 per share and
taxable capital gains distributions totaling $0.02 per share were paid during
the period. Tax-free dividends continued to be the major component of total
return. The Fund's net assets were nearly $90 million.
PORTFOLIO STRUCTURE
The Fund's cash and short-term investment position during the first half of 1997
increased to nine percent of net assets. Refunded bonds added another 12 percent
to the defensive position of the portfolio. Bond sales involved market-sensitive
discount and current-coupon issues. The portfolio's average maturity was 14
years. The distribution of bond call dates produced an average call protection
of 5.8 years. Investments were diversified among 11 long-term sectors and 45
credits. The portfolio has consistently maintained high quality with almost 65
percent of its long-term holdings rated double "A" or better.
LOOKING AHEAD
Since the election-year collapse of flat-tax proposals, municipal bonds have
outperformed U.S. Treasury securities. Tax-free yields are currently somewhat
less attractive in their historical relationship with Treasury yields. However,
the long-term benefits of tax-exempt income remain intact and have fostered
demand for municipal bonds.
<PAGE> 4
DEAN WITTER SELECT MUNICIPAL REINVESTMENT FUND
LETTER TO THE SHAREHOLDERS June 30, 1997, continued
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,
/s/ CHARLES A. FIUMEFREDDO
CHARLES A. FIUMEFREDDO
Chairman of the Board
<PAGE> 5
DEAN WITTER SELECT MUNICIPAL REINVESTMENT FUND
RESULTS OF SPECIAL MEETING (unaudited)
* * *
On May 21, 1997, a special meeting of the Fund's shareholders was held for the
purpose of voting on four separate matters, the results of which were as
follows:
(1) APPROVAL OF A NEW INVESTMENT MANAGEMENT AGREEMENT BETWEEN THE FUND AND
DEAN WITTER INTERCAPITAL INC. IN CONNECTION WITH THE MERGER OF
MORGAN STANLEY GROUP INC. WITH DEAN WITTER, DISCOVER & CO.:
<TABLE>
<S> <C>
For............................................................................ 4,186,714
Against........................................................................ 151,076
Abstain........................................................................ 370,491
</TABLE>
(2) ELECTION OF TRUSTEES:
<TABLE>
<S> <C>
Michael Bozic
For..................... 4,461,649
Withheld................ 246,632
Charles A. Fiumefreddo
For..................... 4,456,805
Withheld................ 251,476
Edwin J. Garn
For..................... 4,462,248
Withheld................ 246,033
John R. Haire
For..................... 4,459,418
Withheld................ 248,863
Wayne E. Hedien
For..................... 4,463,120
Withheld................ 245,161
Dr. Manuel H. Johnson
For..................... 4,463,283
Withheld................ 244,998
Michael E. Nugent
For..................... 4,464,534
Withheld................ 243,747
Philip J. Purcell
For..................... 4,465,254
Withheld................ 243,027
John L. Schroeder
For..................... 4,461,758
Withheld................ 246,523
</TABLE>
(3) APPROVAL OF A NEW INVESTMENT POLICY WITH RESPECT TO INVESTMENTS IN CERTAIN
OTHER INVESTMENT COMPANIES:
<TABLE>
<S> <C>
For............................................................................ 3,952,270
Against........................................................................ 272,174
Abstain........................................................................ 483,837
</TABLE>
(4) RATIFICATION OF PRICE WATERHOUSE LLP AS INDEPENDENT ACCOUNTANTS:
<TABLE>
<S> <C>
For........................................................................... 4,382,788
Against....................................................................... 45,750
Abstain....................................................................... 279,743
</TABLE>
<PAGE> 6
DEAN WITTER SELECT MUNICIPAL REINVESTMENT FUND
PORTFOLIO OF INVESTMENTS June 30, 1997 (unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
MUNICIPAL BONDS (90.3%)
General Obligation (14.7%)
$ 4,000 North Slope Borough, Alaska, Ser 1996 B (MBIA)........................... 0.00% 06/30/07 $ 2,380,000
1,700 Washington Suburban Sanitation District, Maryland, Gen Constr Refg
1994.................................................................... 5.00 06/01/14 1,625,115
3,000 New York City, New York, 1990 Ser D...................................... 6.00 08/01/07 3,036,660
2,000 Pennsylvania, First Ser 1995 (FGIC)...................................... 5.50 05/01/12 2,025,920
2,000 Shelby County, Tennessee, Refg 1995 Ser A................................ 5.625 04/01/12 2,044,860
2,000 Washington, Ser 1995 A................................................... 5.80 09/01/08 2,092,060
- -------- -----------
14,700 13,204,615
- -------- -----------
Educational Facilities Revenue (8.8%)
2,000 District of Columbia, Georgetown University Ser 1993..................... 5.375 04/01/23 1,904,820
2,000 Massachusetts Health & Educational Facilities Authority, Boston College
Ser K................................................................... 5.25 06/01/18 1,911,900
1,500 Rutgers - The State University, New Jersey, Refg Ser R................... 6.50 05/01/13 1,608,375
2,000 New York State Dormitory Authority, State University Ser 1989 B.......... 0.00 05/15/03 1,498,900
1,000 Ohio Higher Educational Facility Commission, Oberlin College Ser 1993.... 5.375 10/01/15 979,990
- -------- -----------
8,500 7,903,985
- -------- -----------
Electric Revenue (7.1%)
2,000 Nebraska Public Power District, Power Supply 1993 Ser.................... 6.125 01/01/15 2,058,680
3,000 Intermountain Power Agency, Utah, Refg 1996 Ser D (Secondary FSA)........ 5.00 07/01/21 2,756,520
3,000 Washington Public Power Supply System, Proj #2 Refg Ser 1994 A (FGIC).... 0.00 07/01/09 1,580,730
- -------- -----------
8,000 6,395,930
- -------- -----------
Hospital Revenue (7.0%)
2,000 Birmingham - Carraway Special Care Facilities Financing Authority,
Alabama, Carraway Methodist Health Systems Ser 1995 A (Connie Lee)...... 6.25 08/15/09 2,177,580
2,000 Maryland Industrial Development Financing Authority, Holy Cross Health
System Corp Refg Ser 1996............................................... 5.50 12/01/08 2,077,300
2,000 North Central Texas Health Facilities Development Corporation, University
Medical Center Ser 1997 (FSA)........................................... 5.50 04/01/10 2,015,320
- -------- -----------
6,000 6,270,200
- -------- -----------
Industrial Development/Pollution Control Revenue (8.1%)
700 Connecticut Development Authority, Bridgeport Hydraulic Co Refg Ser
1990.................................................................... 7.25 06/01/20 750,477
1,000 Michigan Strategic Fund, Ford Motor Co Refg Ser 1991 A................... 7.10 02/01/06 1,151,720
1,000 Claiborne County, Mississippi, Middle South Energy Inc Ser C............. 9.875 12/01/14 1,088,500
2,000 Ohio Water Development Authority, Dayton Power & Light Co Collateralized
Refg 1992 Ser A......................................................... 6.40 08/15/27 2,102,360
1,500 Matagorda County Navigation District #1, Texas, Central Power & Light Co
Collateralized Ser 1984 A............................................... 7.50 12/15/14 1,641,990
500 Russell County Industrial Development Authority, Virginia, Appalachian
Power Co Ser G.......................................................... 7.70 11/01/07 544,810
- -------- -----------
6,700 7,279,857
- -------- -----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 7
DEAN WITTER SELECT MUNICIPAL REINVESTMENT FUND
PORTFOLIO OF INVESTMENTS June 30, 1997 (unaudited) continued
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Mortgage Revenue - Multi-Family (1.5%)
$ 1,000 Michigan Housing Development Authority, Rental 1992 Ser A................ 6.60% 04/01/12 $ 1,045,380
290 Pennsylvania Housing Finance Agency, Moderate Rehabilitation - Section 8
Assisted Issue B........................................................ 9.00 08/01/01 293,843
- -------- -----------
1,290 1,339,223
- -------- -----------
Mortgage Revenue - Single Family (2.2%)
2,000 Alaska Housing Finance Corporation, Governmental 1995 Ser A (MBIA)....... 5.875 12/01/24 1,998,540
- -------- -----------
Public Facilities Revenue (2.4%)
1,000 Hennepin County, Minnesota, Ser 1991 COPs................................ 6.80 05/15/17 1,081,280
1,000 Puerto Rico Infrastructure Financing Authority, Special Tax Ser 1988 A... 7.90 07/01/07 1,056,880
- -------- -----------
2,000 2,138,160
- -------- -----------
Transportation Facilities Revenue (12.7%)
2,000 Los Angeles County Transportation Commission, California, Sales Tax Ser
1991 B.................................................................. 6.50 07/01/13 2,123,200
2,000 Lee County, Florida, Ser 1995 (MBIA)..................................... 5.75 10/01/22 2,019,860
3,500 Kentucky Turnpike Authority, Resource Recovery Road 1987 Ser A BIGS...... 0.00+ 07/01/06 4,323,025
1,000 Ohio Turnpike Commission, 1994 Ser A..................................... 5.75 02/15/24 1,003,290
2,000 Puerto Rico Highway & Transportation Authority, Refg Ser X............... 5.25 07/01/21 1,883,080
- -------- -----------
10,500 11,352,455
- -------- -----------
Water & Sewer Revenue (13.9%)
2,000 San Francisco Public Utilities Commission, California, Water 1996 Ser
A....................................................................... 5.00 11/01/21 1,864,040
2,000 Boston Water & Sewer Commission, Massachusetts, 1992 Ser A............... 6.00 11/01/15 2,000,720
1,500 Massachusetts Water Resource Authority, 1993 Ser C....................... 5.25 12/01/08 1,525,725
2,000 Suffolk County Industrial Development Agency, New York, Southwest Sewer
Ser 1994 (FGIC)......................................................... 4.75 02/01/09 1,913,920
1,000 Columbus, Ohio, Sewerage Refg Ser 1992................................... 6.25 06/01/08 1,075,010
Spartanburg, South Carolina,
1,000 Water Improvement Refg Ser A 1992....................................... 6.25 06/01/12 1,046,580
1,000 Water Improvement Refg Ser A 1992....................................... 6.25 06/01/17 1,038,230
2,000 Metropolitan Government of Nashville & Davidson County, Tennessee,
Refg of 1986............................................................ 5.50 01/01/16 1,968,080
- -------- -----------
12,500 12,432,305
- -------- -----------
Refunded (11.9%)
2,000 Maryland Water Quality Financing Administration, 1990 Ser A.............. 7.25 09/01/00++ 2,211,640
2,000 Massachusetts, 1994 Ser C (FGIC)......................................... 6.75 11/01/04++ 2,272,660
2,000 Saint Cloud, Minnesota, The Saint Cloud Hospital Ser 1990 B (AMBAC)...... 7.00 07/01/01++ 2,224,900
1,500 New York Local Government Assistance Corporation, Ser 1991 D............. 7.00 04/01/02++ 1,689,195
2,000 Clermont County, Ohio, Mercy Health Ser 1991 (AMBAC)..................... 6.733 09/01/01++ 2,211,920
- -------- -----------
9,500 10,610,315
- -------- -----------
81,690 TOTAL MUNICIPAL BONDS (Identified Cost $75,459,156)............................................. 80,925,585
- -------- -----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 8
DEAN WITTER SELECT MUNICIPAL REINVESTMENT FUND
PORTFOLIO OF INVESTMENTS June 30, 1997 (unaudited) continued
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
SHORT-TERM MUNICIPAL OBLIGATIONS (8.5%)
$ 2,000 Parish Industrial Development Board, Alabama, Alabama Power Co
Ser 1994 (Demand 07/01/97).............................................. 4.05*% 06/01/15 $ 2,000,000
2,000 East Baton Rouge Parish, Louisiana, Exxon Corp Ser 1989
(Demand 07/01/97)....................................................... 4.10* 11/01/19 2,000,000
3,600 Platte County, Wyoming, Tri-State Generation & Transportation Association
- -------- Ser 1984 A (Demand 07/01/97)............................................ 4.20* 07/01/14 3,600,000
-----------
7,600 TOTAL SHORT-TERM MUNICIPAL OBLIGATIONS (Identified Cost $7,600,000)............................. 7,600,000
- -------- -----------
$89,290 TOTAL INVESTMENTS (Identified Cost $83,059,156) (a).................................... 98.8%
======== 88,525,585
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES........................................... 1.2 1,036,696
----- -----------
NET ASSETS.............................................................................. 100.0% $89,562,281
===== ===========
</TABLE>
- ---------------------
<TABLE>
<C> <S>
BIGS Bond Income Growth Security.
COPs Certificates of Participation.
+ Zero coupon; will convert to 8.50% on July 1, 1997.
++ Prerefunded to call date shown.
* Current coupon of variable rate demand obligation.
(a) The aggregate cost for federal income tax purposes approximates identified cost. The aggregate gross
unrealized appreciation is $7,543,196 and the aggregate gross unrealized depreciation is $2,076,767,
resulting in net unrealized appreciation of $5,466,429.
<CAPTION>
Bond Insurance:
<S> <C>
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> 9
DEAN WITTER SELECT MUNICIPAL REINVESTMENT FUND
PORTFOLIO OF INVESTMENTS June 30, 1997 (unaudited) continued
GEOGRAPHIC SUMMARY OF INVESTMENTS
Based on Market Value as a Percent of Net Assets
June 30, 1997
<TABLE>
<S> <C>
Alabama.................. 4.7%
Alaska................... 4.9
California............... 4.4
Connecticut.............. 0.8
District of Columbia..... 2.1
Florida.................. 2.3
Kentucky................. 4.8
Louisiana................ 2.2
Maryland................. 6.6
Massachusetts............ 8.6
Michigan................. 2.5%
Minnesota................ 3.7
Mississippi.............. 1.2
Nebraska................. 2.3
New Jersey............... 1.8
New York................. 9.1
Ohio..................... 8.2
Pennsylvania............. 2.6
Puerto Rico.............. 3.3
South Carolina........... 2.3
Tennessee................ 4.5%
Texas.................... 4.1
Utah..................... 3.1
Virginia................. 0.6
Washington............... 4.1
Wyoming.................. 4.0
----
Total.................... 98.8%
====
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 10
DEAN WITTER SELECT MUNICIPAL REINVESTMENT FUND
FINANCIAL STATEMENTS
<TABLE>
<S> <C>
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1997 (unaudited)
ASSETS:
Investments in securities, at value
(identified cost $83,059,156)............ $88,525,585
Cash...................................... 148,530
Interest receivable....................... 1,191,220
Prepaid expenses and other assets......... 40,167
-----------
TOTAL ASSETS.......................... 89,905,502
-----------
LIABILITIES:
Payable for:
Shares of beneficial interest
repurchased.......................... 211,335
Dividends to shareholders............. 49,025
Investment management fee............. 38,250
Accrued expenses.......................... 44,611
-----------
TOTAL LIABILITIES..................... 343,221
-----------
NET ASSETS:
Paid-in-capital........................... 84,240,321
Net unrealized appreciation............... 5,466,429
Accumulated net realized loss............. (144,469)
-----------
NET ASSETS............................ $89,562,281
===========
NET ASSET VALUE PER SHARE,
7,375,956 shares outstanding
(unlimited shares authorized of $.01 par
value)................................... $12.14
STATEMENT OF OPERATIONS
For the six months ended June 30, 1997 (unaudited)
NET INVESTMENT INCOME:
INTEREST INCOME........................... $ 2,603,479
-----------
EXPENSES
Investment management fee................. 224,065
Transfer agent fees and expenses.......... 111,555
Shareholder reports and notices........... 31,042
Professional fees......................... 25,056
Registration fees......................... 16,456
Trustees' fees and expenses............... 6,763
Custodian fees............................ 2,311
Other..................................... 5,922
-----------
TOTAL EXPENSES........................ 423,170
LESS: EXPENSE OFFSET.................. (2,305)
-----------
NET EXPENSES.......................... 420,865
-----------
NET INVESTMENT INCOME................. 2,182,614
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized loss......................... (144,469)
Net change in unrealized appreciation..... 307,364
-----------
NET GAIN.............................. 162,895
-----------
NET INCREASE.............................. $ 2,345,509
===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 11
DEAN WITTER SELECT MUNICIPAL REINVESTMENT FUND
FINANCIAL STATEMENTS, continued
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
- ------------------------------------------------------------------------------------------
FOR THE SIX
MONTHS ENDED FOR THE YEAR
JUNE 30, ENDED
1997 DECEMBER 31, 1996
- ------------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income............................... $ 2,182,614 $ 4,662,111
Net realized gain (loss)............................ (144,469) 1,184,073
Net change in unrealized appreciation............... 307,364 (2,771,254)
----------- -----------
NET INCREASE.................................... 2,345,509 3,074,930
----------- -----------
DIVIDENDS AND DISTRIBUTIONS FROM:
Net investment income............................... (2,182,614) (4,688,098)
Net realized gain................................... (170,384) (1,111,976)
----------- -----------
TOTAL........................................... (2,352,998) (5,800,074)
----------- -----------
Net decrease from transactions in shares of
beneficial interest................................ (2,617,500) (318,257)
----------- -----------
NET DECREASE.................................... (2,624,989) (3,043,401)
NET ASSETS:
Beginning of period................................. 92,187,270 95,230,671
----------- -----------
END OF PERIOD................................... $89,562,281 $92,187,270
=========== ===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 12
DEAN WITTER SELECT MUNICIPAL REINVESTMENT FUND
NOTES TO FINANCIAL STATEMENTS June 30, 1997 (unaudited)
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.
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
<PAGE> 13
DEAN WITTER SELECT MUNICIPAL REINVESTMENT FUND
NOTES TO FINANCIAL STATEMENTS June 30, 1997 (unaudited) continued
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 six months ended June 30, 1997 aggregated
$2,716,470 and $4,765,297, respectively.
Dean Witter Trust Company, an affiliate of the Investment Manager, is the Fund's
transfer agent. At June 30, 1997, the Fund had transfer agent fees and expenses
payable of approximately $12,200.
<PAGE> 14
DEAN WITTER SELECT MUNICIPAL REINVESTMENT FUND
NOTES TO FINANCIAL STATEMENTS June 30, 1997 (unaudited) continued
4. SHARES OF BENEFICIAL INTEREST
Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED FOR THE YEAR
JUNE 30, 1997 ENDED
--------------------------- DECEMBER 31, 1996
(unaudited) ---------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Sold.......................................................... 864,521 $ 10,472,145 2,918,884 $ 35,510,031
Reinvestment of dividends and distributions................... 178,178 2,148,413 451,479 5,481,141
---------- ------------ ---------- ------------
1,042,699 12,620,558 3,370,363 40,991,172
Repurchased................................................... (1,261,758) (15,238,058) (3,404,589) (41,309,429)
---------- ------------ ---------- ------------
Net decrease.................................................. (219,059) $ (2,617,500) (34,226) $ (318,257)
========== ============ ========== ============
</TABLE>
<PAGE> 15
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 SIX
MONTHS ENDED FOR THE YEAR ENDED DECEMBER 31,
JUNE 30, -------------------------------
1997 1996 1995
- ---------------------------------------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period........................... $12.14 $12.48 $11.34
------ ------ ------
Net investment income.......................................... 0.29 0.61 0.62
Net realized and unrealized gain (loss)........................ 0.02 (0.19) 1.16
------ ------ ------
Total from investment operations............................... 0.31 0.42 1.78
------ ------ ------
Less dividends and distributions from:
Net investment income....................................... (0.29) (0.61) (0.62)
Net realized gain........................................... (0.02) (0.15) (0.02)
------ ------ ------
Total dividends and distributions.............................. (0.31) (0.76) (0.64)
------ ------ ------
Net asset value, end of period................................. $12.14 $12.14 $12.48
====== ====== ======
TOTAL INVESTMENT RETURN+....................................... 2.58%(1) 3.55% 16.00%
RATIOS TO AVERAGE NET ASSETS:
Expenses....................................................... 0.94%(2)(3) 0.94%(3) 0.97%
Net investment income.......................................... 4.87%(2)(3) 5.01%(3) 5.14%
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands........................ $89,562 $92,187 $95,231
Portfolio turnover rate........................................ 3%(1) 17% 17%
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
--------------------------------------------------
1994 1993 1992
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period........................... $12.82 $12.12 $11.89
------ ------ ------
Net investment income.......................................... 0.65 0.67 0.70
Net realized and unrealized gain (loss)........................ (1.40) 0.75 0.32
------ ------ ------
Total from investment operations............................... (0.75) 1.42 1.02
------ ------ ------
Less dividends and distributions from:
Net investment income....................................... (0.69) (0.67) (0.70)
Net realized gain........................................... (0.04) (0.05) (0.09)
------ ------ ------
Total dividends and distributions.............................. (0.73) (0.72) (0.79)
------ ------ ------
Net asset value, end of period................................. $11.34 $12.82 $12.12
====== ====== ======
TOTAL INVESTMENT RETURN+....................................... (5.98)% 11.99% 8.88%
RATIOS TO AVERAGE NET ASSETS:
Expenses....................................................... 0.96% 1.02% 1.14%
Net investment income.......................................... 5.34% 5.25% 5.79%
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands........................ $86,405 $96,265 $75,918
Portfolio turnover rate........................................ 18% 9% 13%
</TABLE>
- ---------------------
+ Calculated based on the net asset value as of the last business day of the
period.
(1) Not annualized.
(2) Annualized.
(3) Does not reflect the effect of expense offset of 0.01%.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 16
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
The financial statements included herein have been taken from the records of
the Fund without examination by the independent accountants and accordingly
they do not express an opinion thereon.
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
TRUST
[PHOTO]
Semiannual Report
June 30, 1997
