<PAGE>
MORGAN STANLEY DEAN WITTER SELECT MUNICIPAL REINVESTMENT FUND
LETTER TO THE SHAREHOLDERS June 30, 1998
Two World Trade Center,
New York, New York 10048
DEAR SHAREHOLDER:
We are pleased to present the semiannual report on the operations of Morgan
Stanley Dean Witter Select Municipal Reinvestment Fund for the period ended
June 30, 1998.
The deflationary impact of the Asian financial crisis has begun to temper U.S.
economic growth. Although employment conditions strengthened in the United
States and unemployment declined to its lowest level since 1970, inflation
remained subdued. This was primarily the result of improved productivity, lower
oil costs and cheaper imports.
Foreign currency turmoil strengthened the value of the U.S. dollar and created
demand for U.S. Treasury securities. Municipal bonds followed
the trend of Treasuries, with yields declining to a range not seen in over 20
years. The bond market rally was also aided by prospects of the first federal
budget surplus in more than two decades.
MUNICIPAL MARKET CONDITIONS
Long-term insured index yields stood at 5.20 percent at the end of June 1998.
Since the beginning of the year index yields have ranged from a low of 5.15
percent in January to 5.35 percent in April. Insured index yields were as high
as 5.60 percent in June 1997.
MORGAN STANLEY DEAN WITTER SELECT REINVESTMENT MUNICIPAL TRUST
DATE AAA INS TSY % RELATIONSHIP
---- ------- --- --------------
12/31/93 5.40% 6.34% 85.17%
01/31/94 5.40 6.24 86.54%
02/28/94 5.80 6.66 87.09%
03/31/94 6.40 7.09 90.27%
04/29/94 6.35 7.32 86.75%
05/31/94 6.25 7.43 84.12%
06/30/94 6.50 7.61 85.41%
07/29/94 6.25 7.39 84.57%
08/31/94 6.30 7.45 84.56%
09/30/94 6.55 7.81 83.87%
10/31/94 6.75 7.96 84.80%
11/30/94 7.00 8.00 87.50%
12/30/94 6.75 7.88 85.66%
01/31/95 6.40 7.70 83.12%
02/28/95 6.15 7.44 82.66%
03/31/95 6.15 7.43 82.77%
04/28/95 6.20 7.34 84.47%
05/31/95 5.80 6.66 87.09%
06/30/95 6.10 6.62 92.15%
07/31/95 6.10 6.86 88.92%
08/31/95 6.00 6.66 90.09%
09/29/95 5.95 6.48 91.82%
10/31/95 5.75 6.33 90.84%
11/30/95 5.50 6.14 89.58%
12/29/95 5.35 5.94 90.07%
01/31/96 5.40 6.03 89.55%
02/29/96 5.60 6.46 86.69%
03/29/96 5.85 6.66 87.84%
04/30/96 5.95 6.89 86.36%
05/31/96 6.05 6.99 86.55%
06/28/96 5.90 6.89 85.63%
07/31/96 5.85 6.97 83.93%
08/30/96 5.90 7.11 82.98%
09/30/96 5.70 6.93 82.25%
10/31/96 5.65 6.64 85.09%
11/29/96 5.50 6.35 86.61%
12/31/96 5.60 6.63 84.46%
01/31/97 5.70 6.79 83.95%
02/28/97 5.65 6.46 86.69%
03/31/97 5.90 7.10 83.10%
04/30/97 5.75 6.94 82.85%
05/30/97 5.65 6.91 81.77%
06/30/97 5.60 6.78 82.60%
07/30/97 5.30 6.30 84.13%
08/31/97 5.50 6.61 83.21%
09/30/97 5.40 6.40 84.38%
10/31/97 5.35 6.15 86.99%
11/30/97 5.30 6.05 87.60%
12/31/97 5.15 5.92 86.99%
01/31/98 5.15 5.80 88.79%
02/28/98 5.20 5.92 87.84%
03/31/98 5.25 5.93 88.53%
04/30/98 5.35 5.95 89.92%
05/29/98 5.20 5.80 89.66%
06/30/98 5.20 5.65 92.04%
<PAGE>
MORGAN STANLEY DEAN WITTER SELECT MUNICIPAL REINVESTMENT FUND
LETTER TO THE SHAREHOLDERS June 30, 1998, continued
The overall decline in interest rates led to an increase in new-issue municipal
volume. In contrast, U. S. Treasury borrowing needs have shrunk with the
decline in the budget deficit. Under these conditions the municipal rally
lagged Treasuries. The ratio of municipal yields to Treasury yields improved
from 83 percent in June 1997 to over 90 percent this June. A rising ratio means
that municipals have underperformed Treasuries and have become more attractive
on a relative basis.
For the year-to-date, total municipal volume of $141 billion is up 50 percent
from the same period last year. Half the underwritings were enhanced with bond
insurance. Refundings represented nearly one-third of total new issues.
PERFORMANCE
Morgan Stanley Dean Witter Select Municipal Reinvestment Fund produced a total
return of 2.22 percent for the six-month period ended June 30, 1998. The Fund's
net asset value moved slightly from $12.47 per share to $12.46 per share.
Tax-free dividends totaling $0.24 per share were paid during the period. Over
the same period, the Lehman Brothers Municipal Bond Index posted a total return
of 2.69 percent, while the Lipper Analytical Services, Inc. General Municipal
Debt Funds Index registered a total return of 2.45 percent. The Fund's net
assets exceeded $91 million.
PORTFOLIO STRUCTURE
During the past six months portfolio duration, a measure of sensitivity to
interest rate changes, was extended from 6.4 years to 7.2 years. This was
primarily accomplished by selling refunded bonds to purchase new issues.
Refunded bonds were reduced from 11 percent to 6 percent of net assets.
Investments were diversified among 10 long-term sectors and 46 credits.
Throughout the period, high credit quality was maintained with over 70 percent
of its long-term holdings rated double or triple "A." The average maturity of
the portfolio was 16 years. As illustrated in the accompanying chart the
distribution of call dates produced 7 years of weighted average call
protection.
LOOKING AHEAD
The economic fundamentals are in place for another year of solid economic
growth in the United States. Events in Asia have strengthened the U.S. dollar
and contributed to lower interest rates. Furthermore, the Asian financial
crisis seems likely to continue to moderate inflationary pressures and provide
a favorable environment for municipal bonds. The Federal Reserve Board remains
sensitive to the risk of an acceleration in labor costs but has maintained its
neutral stance.
2
<PAGE>
MORGAN STANLEY DEAN WITTER SELECT MUNICIPAL REINVESTMENT FUND
LETTER TO THE SHAREHOLDERS June 30, 1998, continued
LARGEST SECTORS AS OF JUNE 30, 1998
(% OF NET ASSETS)
General Obligation 15%
Hospital 9%
Education 9%
IDR/PCR* 8%
Electric 6%
Refunded 6%
All Others 11%
Transportation 21%
Water & Sewer 15%
*Industrial Development/Pollution Control Revenue.
Portfolio structure is subject to change.
CREDIT RATINGS AS OF JUNE 30, 1998
(% OF TOTAL LONG-TERM PORTFOLIO)
Aa or AA 30%
A or A 25%
Baa or BBB 1%
NR 1%
Aaa or AAA 43%
As measured by Moody's Investors Service Inc.
or Standard & Poor's Corp.
Portfolio structure is subject to change.
CALL STRUCTURE AS OF JUNE 30, 1998
(% OF TOTAL LONG-TERM PORTFOLIO)
PERCENT CALLABLE
WEIGHTED AVERAGE
CALL PROTECTION: 7 YEARS
YEARS BONDS CALLABLE
1998 2%
1999 9%
2000 2%
2001 6%
2002 7%
2003 10%
2004 8%
2005 10%
2006 11%
2007 6%
2008 17%
2009+ 12%
Portfolio structure is subject to change.
3
<PAGE>
MORGAN STANLEY DEAN WITTER SELECT MUNICIPAL REINVESTMENT FUND
LETTER TO THE SHAREHOLDERS June 30, 1998, continued
We appreciate your ongoing support of Morgan Stanley Dean Witter Select
Municipal Reinvestment Fund and look forward to continuing to serve your
investment needs.
Very truly yours,
[GRAPHIC OMITTED]
CHARLES A. FIUMEFREDDO
Chairman of the Board
4
<PAGE>
MORGAN STANLEY DEAN WITTER SELECT MUNICIPAL REINVESTMENT FUND
PORTFOLIO OF INVESTMENTS June 30, 1998 (unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ----------- ---------- ---------- -------------
<S> <C> <C> <C> <C>
TAX- EXEMPT MUNICIPAL BONDS (93.4%)
General Obligation (15.3%)
$ 4,000 North Slope Borough, Alaska, Ser 1996 B (MBIA) ............................ 0.00% 06/30/07 $ 2,649,440
1,700 Washington Suburban Sanitation District, Maryland, Gen Constr Refg 1994.... 5.00 06/01/14 1,696,226
1,260 New York City, New York, 1990 Ser D ....................................... 6.00 08/01/07 1,286,649
2,000 Little Miami Local School District, Ohio, Ser 1998 (FGIC) ................. 4.875 12/01/23 1,927,940
2,000 Pennsylvania, First Ser 1995 (FGIC)** ..................................... 5.50 05/01/12 2,104,720
2,000 Shelby County, Tennessee, Refg 1995 Ser A ................................. 5.625 04/01/12 2,112,240
2,000 Washington, Ser 1994 A** .................................................. 5.80 09/01/08 2,137,460
------- -----------
14,960 13,914,675
------- -----------
Educational Facilities Revenue (9.1%)
2,000 District of Columbia, Georgetown University Ser 1993 ...................... 5.375 04/01/23 2,022,940
2,000 Massachusetts Health & Educational Facilities Authority, Boston College
Ser K .................................................................... 5.25 06/01/18 2,002,200
1,500 Rutgers -- The State University, New Jersey, Refg Ser R ................... 6.50 05/01/13 1,633,125
2,000 New York State Dormitory Authority, State University Ser 1989 B ........... 0.00 05/15/03 1,611,480
1,000 Ohio Higher Educational Facility Commission, Oberlin College Ser 1993 ..... 5.375 10/01/15 1,019,450
------- -----------
8,500 8,289,195
------- -----------
Electric Revenue (6.2%)
2,000 South Carolina Public Service Authority, Santee Cooper 1997 Refg Ser A
(MBIA) ................................................................... 5.00 01/01/29 1,942,120
2,000 Intermountain Power Agency, Utah, Refg 1996 Ser D (Secondary FSA) ......... 5.00 07/01/21 1,941,460
3,000 Washington Public Power Supply System, Proj #2 Refg Ser 1994 A (FGIC)...... 0.00 07/01/09 1,763,070
------- -----------
7,000 5,646,650
------- -----------
Hospital Revenue (9.3%)
2,000 Birmingham -- Carraway Special Care Facilities Financing Authority,
Alabama, Carraway Methodist Health Ser 1995 A (Connie Lee) ............... 6.25 08/15/09 2,266,060
2,000 Maryland Industrial Development Financing Authority, Holy Cross Health
Refg Ser 1996 ............................................................ 5.50 12/01/08 2,152,740
2,000 North Central Texas Health Facilities Development Corporation, University
Medical Center Ser 1996 (FSA) ............................................ 5.50 04/01/10 2,114,640
2,000 Washington Health Care Facilities, Swedish Health Ser 1998 (AMBAC) ........ 5.125 11/15/22 1,952,280
------- -----------
8,000 8,485,720
------- -----------
Industrial Development/Pollution Control Revenue (8.0%)
700 Connecticut Development Authority, Bridgeport Hydraulic Co Refg Ser 1990 7.25 06/01/20 747,278
1,000 Michigan Strategic Fund, Ford Motor Co Refg Ser 1991 A .................... 7.10 02/01/06 1,169,550
1,000 Claiborne County, Mississippi, Middle South Energy Inc Ser C .............. 9.875 12/01/14 1,050,070
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
5
<PAGE>
MORGAN STANLEY DEAN WITTER SELECT MUNICIPAL REINVESTMENT FUND
PORTFOLIO OF INVESTMENTS June 30, 1998 (unaudited) continued
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ----------- ---------- ---------- -------------
<S> <C> <C> <C> <C>
$ 2,000 Ohio Water Development Authority, Dayton Power & Light Co
Collateralized Refg 1992 Ser A ............................................. 6.40% 08/15/27 $ 2,157,080
1,500 Matagorda County Navigation District #1, Texas, Central Power
& Light Co Collateralized Ser 1984 A ....................................... 7.50 12/15/14 1,611,075
500 Russell County Industrial Development Authority, Virginia, Appalachian
Power Co Ser G ............................................................. 7.70 11/01/07 542,245
------- -----------
6,700 7,277,298
------- -----------
Mortgage Revenue -- Multi-Family (1.4%)
1,000 Michigan Housing Development Authority, Rental 1992 Ser A ................... 6.60 04/01/12 1,079,530
235 Pennsylvania Housing Finance Agency, Moderate Rehabilitation -- Section 8
Assisted Issue B ........................................................... 9.00 08/01/01 236,793
------- -----------
1,235 1,316,323
------- -----------
Mortgage Revenue -- Single Family (2.3%)
2,000 Alaska Housing Finance Corporation, Governmental 1995 Ser A (MBIA) .......... 5.875 12/01/24 2,087,320
------- -----------
Transportation Facilities Revenue (20.6%)
2,000 Los Angeles County Transportation Commission, California, Sales Tax
Ser 1991 B ................................................................. 6.50 07/01/13 2,144,420
1,500 San Francisco Bay Area Rapid Transit Authority, California (AMBAC) .......... 4.75 07/01/23 1,414,155
2,000 Lee County, Florida, Ser 1995 (MBIA) ........................................ 5.75 10/01/22 2,118,980
2,000 Kansas, Highway Refg Ser 1998 ............................................... 5.50 09/01/14 2,149,040
3,500 Kentucky Turnpike Authority, Resource Recovery Road 1987 Ser A BIGS** 8.50 07/01/0 4,445,665
3,000 Massachusetts Turnpike Authority, Western 1997 Ser A (MBIA) ................. 5.55 01/01/17 3,059,820
1,000 Ohio Turnpike Commission, 1994 Ser A ........................................ 5.75 02/15/24 1,056,730
2,500 Puerto Rico Highway & Transportation Authority, Ser A ....................... 4.75 07/01/38 2,351,300
------- -----------
17,500 18,740,110
------- -----------
Water & Sewer Revenue (15.2%)
2,000 San Francisco Public Utilities Commission, California, Water 1996 Ser A ..... 5.00 11/01/21 1,954,080
2,000 Fulton County, Georgia, Water & Sewerage Ser 1998 (FGIC) (WI) ............... 4.75 01/01/28 1,876,440
1,500 Massachusetts Water Resource Authority, 1993 Ser C .......................... 5.25 12/01/08 1,583,745
2,000 Suffolk County Industrial Development Agency, New York, Southwest
Sewer Ser 1994 (FGIC) ...................................................... 4.75 02/01/09 2,012,580
1,000 Columbus, Ohio, Sewerage Refg Ser 1992 ...................................... 6.25 06/01/08 1,088,050
7,000 Pittsburgh Water & Sewer Authority, Pennsylvania, 1998 Ser B (FGIC) ......... 0.00 09/01/28 1,465,450
Metropolitan Government of Nashville & Davidson County, Tennessee,
2,000 Refg of 1986 ............................................................... 5.50 01/01/16 2,000,560
2,000 Refg Ser 1998 A (FGIC) ..................................................... 4.75 01/01/22 1,891,680
------- -----------
19,500 13,872,585
------- -----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
6
<PAGE>
MORGAN STANLEY DEAN WITTER SELECT MUNICIPAL REINVESTMENT FUND
PORTFOLIO OF INVESTMENTS June 30, 1998 (unaudited) continued
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ----------- ---------- ------------- -------------
<S> <C> <C> <C> <C>
Refunded (6.0%)
$ 1,000 Hennepin County, Minnesota, Ser 1991 COPs ............................... 6.80% 11/15/01+ $ 1,086,730
2,000 Clermont County, Ohio, Mercy Health Ser 1991 (AMBAC) .................... 6.733 09/01/01+ 2,197,640
2,000 Nebraska Public Power District, Power Supply 1993 Ser ................... 6.125 01/01/03+ 2,148,600
-------- -----------
5,000 5,432,970
-------- -----------
90,395 TOTAL TAX- EXEMPT MUNICIPAL BONDS (Identified Cost $79,176,282 ) ............................... 85,062,846
-------- -----------
SHORT-TERM TAX-EXEMPT MUNICIPAL OBLIGATIONS (6.4%)
4,000 Missouri Health & Educational Facilities Authority, Washington University
Ser D (Demand 07/01/98) ................................................ 3.80* 09/01/30 4,000,000
800 Montour County, Pennsylvania, Geisinger Health System Ser 1992 B
(Demand 07/01/98) ...................................................... 4.00* 07/01/22 800,000
1,000 Harris County Health Facilities Development Corporation, Texas, Methodist
Hospital Ser 1994 (Demand 07/01/98) .................................... 4.00* 12/01/25 1,000,000
-------- -----------
5,800 TOTAL SHORT-TERM TAX-EXEMPT MUNICIPAL OBLIGATIONS (Identified Cost $5,800,000).................. 5,800,000
-------- -----------
$ 96,195 TOTAL INVESTMENTS (Identified Cost $84,976,282 ) (a) ............................. 99.8% 90,862,846
========
OTHER ASSETS IN EXCESS OF LIABILITIES ............................................ 0.2 214,826
------- -----------
NET ASSETS ....................................................................... 100.0% $91,077,672
======= ===========
</TABLE>
- ---------------
BIGS Bond Income Growth Security.
COPs Certificates of Participation.
WI Security purchased on a "when-issued" basis.
* Current coupon of variable rate demand obligation.
** All of these securities are segregated in connection with the
purchase of "when-issued" securities.
+ Prerefunded to call date shown.
(a) The aggregate cost for federal income tax purposes approximates
identified cost. The aggregate gross unrealized appreciation is
$5,906,904 and the aggregate gross unrealized depreciation is
$20,340, resulting in net unrealized appreciation of $5,886,564.
Bond Insurance:
- ---------
AMBAC AMBAC Indemnity Corporation.
Connie Lee Connie Lee Insurance Company.
FGIC Financial Guaranty Insurance Company.
FSA Financial Security Assurance Inc.
MBIA Municipal Bond Investors Assurance Corporation.
SEE NOTES TO FINANCIAL STATEMENTS
7
<PAGE>
MORGAN STANLEY DEAN WITTER SELECT MUNICIPAL REINVESTMENT FUND
PORTFOLIO OF INVESTMENTS June 30, 1998 (unaudited) continued
GEOGRAPHIC SUMMARY OF INVESTMENTS
Based on Market Value as a Percent of Net Assets
June 30, 1998
<TABLE>
<S> <C>
Alabama .................... 2.5%
Alaska ....................... 5.2
California .................. 6.1
Connecticut .................. 0.8
District of Columbia ......... 2.2
Florida ...................... 2.3
Georgia ...................... 2.1
Kansas ....................... 2.3
Kentucky ..................... 4.9
Maryland .................... 4.2
Massachusetts ............... 7.3%
Michigan ..................... 2.5
Minnesota .................... 1.2
Mississippi ................. 1.1
Missouri ..................... 4.4
Nebraska ..................... 2.4
New Jersey .................. 1.8
New York .................... 5.4
Ohio ......................... 10.4
Pennsylvania ................. 5.1
Puerto Rico .................. 2.6%
South Carolina ............... 2.1
Tennessee .................... 6.6
Texas ...................... 5.2
Utah ......................... 2.1
Virginia .................... 0.6
Washington ................. 6.4
----
Total ....................... 99.8%
====
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
8
<PAGE>
MORGAN STANLEY DEAN WITTER SELECT MUNICIPAL REINVESTMENT FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1998 (unaudited)
<TABLE>
<S> <C>
ASSETS :
Investments in securities, at value
(identified cost $84,976,282)........................................ $ 90,862,846
Receivable for:
Interest ........................................................... 1,249,329
Investments sold ................................................... 998,998
Prepaid expenses and other assets ..................................... 39,748
------------
TOTAL ASSETS ........................................................ 93,150,921
------------
LIABILITIES:
Payable for:
Investments purchased ............................................... 1,889,348
Shares of beneficial interest repurchased ........................... 44,994
Dividends to shareholders ........................................... 44,977
Investment management fee ........................................... 40,115
Payable to bank ....................................................... 10,761
Accrued expenses ...................................................... 43,054
------------
TOTAL LIABILITIES ................................................... 2,073,249
------------
NET ASSETS .......................................................... $ 91,077,672
============
COMPOSITION OF NET ASSETS:
Paid-in-capital ....................................................... $ 83,386,424
Net unrealized appreciation ........................................... 5,886,564
Accumulated undistributed net realized gain ........................... 1,804,684
------------
NET ASSETS .......................................................... $ 91,077,672
============
NET ASSET VALUE PER SHARE,
7,307,700 shares outstanding (unlimited shares authorized of $.01 par
value) .............................................................. $12.46
======
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
9
<PAGE>
MORGAN STANLEY DEAN WITTER SELECT MUNICIPAL REINVESTMENT FUND
FINANCIAL STATEMENTS, continued
STATEMENT OF OPERATIONS
For the six months ended June 30, 1998 (unaudited)
<TABLE>
<S> <C>
NET INVESTMENT INCOME:
INTEREST INCOME ............................... $ 2,538,401
------------
EXPENSES
Investment management fee ..................... 229,848
Transfer agent fees and expenses .............. 114,517
Professional fees ............................. 24,418
Registration fees ............................. 21,456
Shareholder reports and notices ............... 20,257
Trustees' fees and expenses ................... 6,822
Custodian fees ................................ 2,577
Other ......................................... 6,187
------------
TOTAL EXPENSES .............................. 426,082
Less: expense offset .......................... (2,571)
------------
NET EXPENSES ................................ 423,511
------------
NET INVESTMENT INCOME ....................... 2,114,890
------------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain ............................. 1,804,683
Net change in unrealized appreciation ......... (1,837,348)
------------
NET LOSS .................................... (32,665)
------------
NET INCREASE .................................. $ 2,082,225
============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
10
<PAGE>
MORGAN STANLEY DEAN WITTER SELECT MUNICIPAL REINVESTMENT FUND
FINANCIAL STATEMENTS, continued
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE SIX FOR THE YEAR
MONTHS ENDED ENDED
JUNE 30, 1998 DECEMBER 31, 1997
--------------- ------------------
(unaudited)
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income ................................ $ 2,114,890 $ 4,363,935
Net realized gain .................................... 1,804,683 40,800
Net change in unrealized appreciation ................ (1,837,348) 2,564,846
------------ ------------
NET INCREASE ....................................... 2,082,225 6,969,581
------------ ------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income ................................ (2,114,890) (4,363,935)
Net realized gain .................................... (40,799) (170,383)
------------ ------------
TOTAL .............................................. (2,155,689) (4,534,318)
------------ ------------
Net decrease from transactions in shares of beneficial
interest ........................................... (3,104,345) (367,052)
------------ ------------
NET INCREASE (DECREASE) ............................ (3,177,809) 2,068,211
NET ASSETS:
Beginning of period .................................. 94,255,481 92,187,270
------------ ------------
END OF PERIOD ...................................... $ 91,077,672 $ 94,255,481
============ ============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
11
<PAGE>
MORGAN STANLEY DEAN WITTER SELECT MUNICIPAL REINVESTMENT FUND
NOTES TO FINANCIAL STATEMENTS June 30, 1998 (unaudited)
1. ORGANIZATION AND ACCOUNTING POLICIES
Morgan Stanley Dean Witter Select Municipal Reinvestment Fund (the "Fund"),
formerly Dean Witter Select Municipal Reinvestment 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.
12
<PAGE>
MORGAN STANLEY DEAN WITTER SELECT MUNICIPAL REINVESTMENT FUND
NOTES TO FINANCIAL STATEMENTS June 30, 1998 (unaudited) 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 Morgan Stanley Dean Witter
Advisors Inc. (the "Investment Manager"), formerly Dean Witter InterCapital
Inc., 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, 1998
aggregated $15,493,307 and $21,553,410, respectively.
Morgan Stanley Dean Witter Trust FSB, an affiliate of the Investment Manager,
is the Fund's transfer agent. At June 30, 1998, the Fund had transfer agent
fees and expenses payable of approximately $8,800.
13
<PAGE>
MORGAN STANLEY DEAN WITTER SELECT MUNICIPAL REINVESTMENT FUND
NOTES TO FINANCIAL STATEMENTS June 30, 1998 (unaudited) continued
4. SHARES OF BENEFICIAL INTEREST
Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
FOR THE SIX FOR THE YEAR
MONTHS ENDED ENDED
JUNE 30, 1998 DECEMBER 31, 1997
---------------------------------- ----------------------------------
(unaudited)
SHARES AMOUNT SHARES AMOUNT
--------------- ---------------- --------------- ----------------
<S> <C> <C> <C> <C>
Sold ................................................ 852,769 $ 10,631,961 2,165,786 $26,487,176
Reinvestment of dividends and distributions ......... 157,455 1,955,448 345,458 4,213,763
------- ------------ --------- -----------
1,010,224 12,587,409 2,511,244 30,700,939
Repurchased ......................................... (1,261,180) (15,691,754) (2,547,603) 31,067,991)
---------- ------------ ---------- -----------
Net decrease ........................................ (250,956) $ (3,104,345) (36,359) $ (367,052)
========== ============ ========== ===========
</TABLE>
14
<PAGE>
MORGAN STANLEY 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
JUNE 30, 1998
----------------------
(unaudited)
<S> <C>
PER SHARE OPERATING PERFORMANCE :
Net assets value, beginning of period ........... $12.47
--------
Net investment income ........................... 0.24
Net realized and unrealized gain (loss) ......... --
--------
Total from investment operations ................ 0.24
--------
Less dividends and distributions from:
Net investment income .......................... (0.24)
Net realized gain .............................. (0.01)
--------
Total dividends and distributions ............... (0.25)
--------
Net asset value, end of period .................. $12.46
========
TOTAL INVESTMENT RETURN+ ........................ 2.22%(1)
RATIOS TO AVERAGE NET ASSETS :
Expenses ........................................ 0.93%(2)(3)
Net investment income ........................... 4.60%(2)
SUPPLEMENTAL DATA :
Net assets, end of period, in thousands ......... $91,078
Portfolio turnover rate ......................... 18%(1)
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
----------------------------------------------------------------------------
1997 1996 1995 1994 1993
---------------- ---------------- ------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE :
Net assets value, beginning of period ........... $12.14 $12.48 $11.34 $12.82 $12.12
--------- --------- -------- --------- --------
Net investment income ........................... 0.58 0.61 0.62 0.65 0.67
Net realized and unrealized gain (loss) ......... 0.35 (0.19) 1.16 (1.40) 0.75
--------- --------- -------- --------- --------
Total from investment operations ................ 0.93 0.42 1.78 (0.75) 1.42
--------- --------- -------- --------- --------
Less dividends and distributions from:
Net investment income .......................... (0.58) (0.61) (0.62) (0.69) (0.67)
Net realized gain .............................. (0.02) (0.15) (0.02) (0.04) (0.05)
--------- --------- --------- --------- ---------
Total dividends and distributions ............... (0.60) (0.76) (0.64) (0.73) (0.72)
--------- --------- --------- --------- ---------
Net asset value, end of period .................. $12.47 $12.14 $12.48 $11.34 $12.82
========= ========= ========= ========= =========
TOTAL INVESTMENT RETURN+ ........................ 7.94% 3.55% 16.00% (5.98)% 11.99%
RATIOS TO AVERAGE NET ASSETS :
Expenses ........................................ 0.95%(3) 0.94%(3) 0.97% 0.96 % 1.02%
Net investment income ........................... 4.78% 5.01% 5.14% 5.34 % 5.25%
SUPPLEMENTAL DATA :
Net assets, end of period, in thousands ......... $94,255 $92,187 $95,231 $86,405 $96,265
Portfolio turnover rate ......................... 8% 17% 17% 18 % 9%
</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
15
<PAGE>
TRUSTEES
Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn
John R. Haire
Wayne E. Hedien
Dr. Manuel H. Johnson
Michael E. Nugent
Philip J. Purcell
John L. Schroeder
OFFICERS
Charles A. Fiumefreddo
Chairman and Chief Executive Officer
Barry Fink
Vice President, Secretary and General Counsel
James F. Willison
Vice President
Joseph R. Arcieri
Vice President
Thomas F. Caloia
Treasurer
TRANSFER AGENT
Morgan Stanley Dean Witter Trust FSB
Harborside Financial Center - Plaza Two
Jersey City, New Jersey 07311
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York 10036
INVESTMENT MANAGER
Morgan Stanely Dean Witter Advisors 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.
MORGAN STANLEY
DEAN WITTER
SELECT MUNICIPAL
REINVESTMENT FUND
SEMIANNUAL REPORT
JUNE 30, 1998
