<PAGE>
MORGAN STANLEY DEAN WITTER SELECT MUNICIPAL REINVESTMENT FUND
Two World Trade Center
LETTER TO THE SHAREHOLDERS June 30, 1999
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, 1999.
After last year's global economic difficulties, the financial markets have
experienced a period of global healing. The turmoil, which included the Asian
financial crisis, the Russian debt default and the near collapse of a major
hedge fund has given way to improved financial conditions. A major catalyst for
this return to stability was the liquidity provided by the Federal Reserve
Board's 75-basis-point reduction in the fed funds rate during the fourth
quarter of 1998.
The U.S. economy, led by consumer demand, continued to experience robust growth
in the first half of 1999. Higher materials prices and wage increases caused
the fixed-income markets to focus on the possibility that the Federal Reserve
would begin to take back some of the liquidity provided during last year's
financial crisis. Long-term interest rates reached 30-year lows in 1998 but
have begun to rise. In June, the central bank raised the fed funds rate 25
basis points to 5.00 percent in its first tightening move since early 1997.
MUNICIPAL MARKET CONDITIONS
Municipal securities outperformed U.S. Treasuries in the first six months of
1999. This is in contrast to last year's flight to quality rally that primarily
benefited Treasuries. As global turmoil subsided, Treasury yields increased
more than municipal yields. Since the beginning of the year, Treasury bond
yields rose 85 basis points from 5.10 to 5.95 percent. Long-term insured
municipal index yields rose only 45 basis points from 5.05 to 5.50 percent. The
ratio of long-term municipal yields to Treasury yields, a widely followed
indicator of relative performance, declined from 99 to 92 percent. A declining
ratio means municipals have outperformed Treasuries.
<PAGE>
MORGAN STANLEY DEAN WITTER SELECT MUNICIPAL REINVESTMENT FUND
LETTER TO THE SHAREHOLDERS June 30, 1999, continued
Municipal performance was also aided by a decline in underwriting. New-issue
volume declined 23 percent in the first half of 1999. Higher interest rates
caused a 47 percent decline in refunding activity.
30-YEAR BOND YIELDS 1994-1999
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 6.80 83.09%
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%
07/31/98 5.18 5.71 90.72%
08/31/98 5.03 5.27 95.45%
09/30/98 4.95 5.00 99.00%
10/31/98 5.05 5.16 97.87%
11/30/98 5.00 5.06 98.81%
12/31/98 5.05 5.10 99.02%
01/31/99 5.00 5.09 98.23%
02/28/99 5.10 5.58 91.40%
03/31/99 5.15 5.63 91.47%
04/30/99 5.20 5.66 91.87%
05/31/99 5.30 5.83 90.91%
06/30/99 5.47 5.96 91.78%
Source: Municipal Market Data - A Division of Thomson Financial Municipal Group
PERFORMANCE
The Fund's net asset value (NAV) declined from $12.27 to $11.79 per share for
the six months. Based on this change plus the reinvestment of tax-free
dividends totaling $0.27 per share and taxable short-term capital gains
distributions of $0.002 per share paid on June 30, 1999, the Fund's total
return was -1.77 percent. Over the same period, the Lehman Brothers Municipal
Bond Index and the Lipper General Municipal Debt Funds Index registered total
returns of -0.89 percent and -1.46 percent, respectively.
2
<PAGE>
MORGAN STANLEY DEAN WITTER SELECT MUNICIPAL REINVESTMENT FUND
LETTER TO THE SHAREHOLDERS June 30, 1999, continued
LARGEST LONG-TERM SECTORS AS OF JUNE 30, 1999
(% OF NET ASSETS)
TRANSPORTATION 20%
GENERAL OBLIGATION 18%
WATER & SEWER 14%
HOSPITAL 12%
EDUCATION 8%
ELECTRIC 6%
IDR/PCR* 5%
REFUNDED 5%
*INDUSTRIAL DEVELOPMENT/POLLUTION CONTROL REVENUE
PORTFOLIO STRUCTURE IS SUBJECT TO CHANGE.
CREDIT RATINGS AS OF JUNE 30, 1999
(% OF TOTAL LONG-TERM PORTFOLIO)
Aaa or AAA 55%
Aa or AA 28%
A or A 17%
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, 1999
(% OF TOTAL LONG-TERM PORTFOLIO) WEIGHTED AVERAGE
PERCENT CALLABLE CALL PROTECTION: 6 YEARS
YEARS BONDS CALLABLE
1999 2%
2000 7%
2001 3%
2002 7%
2003 9%
2004 7%
2005 10%
2006 12%
2007 6%
2008 24%
2009 8%
2010+ 5%
----
100%
PORTFOLIO STRUCTURE IS SUBJECT TO CHANGE.
3
<PAGE>
MORGAN STANLEY DEAN WITTER SELECT MUNICIPAL REINVESTMENT FUND
LETTER TO THE SHAREHOLDERS June 30, 1999, continued
PORTFOLIO STRUCTURE
Short-term investments and cash increased to 8 percent of net assets in
response to market volatility during the first half of 1999. Refunded bonds
comprised 5 percent of net assets and will be called for redemption on the
dates shown in the portfolio. Average duration, a measure of sensitivity to
interest rate changes, was 13 years at the end of June. The Fund's
average-weighted maturity was 15 years. The Fund's net assets of $86 million
were diversified among 9 long-term sectors and 43 individual credits. The
accompanying charts provide current information on the portfolio's credit
quality, sector diversification and optional redemption (call) provisions.
LOOKING AHEAD
The Federal Reserve Board raised interest rates in June, this confirmed its
previously signaled intention of becoming less accommodative in the face of
continued strong domestic economic growth. It is anticipated that the central
bank may raise the fed funds rate further in an effort to take back the
liquidity it provided in the fall of 1998. However, we believe municipal bonds
continue to offer long-term investors good value, especially in relationship to
Treasuries.
On May 1, 1999, Mitchell M. Merin was named President of the Morgan Stanley
Dean Witter Funds. Mr. Merin is the President and Chief Operating Officer of
Asset Management for Morgan Stanley Dean Witter & Co. and President, Chief
Executive Officer and Director of Morgan Stanley Dean Witter Advisors Inc., the
Fund's investment manager. He also serves as Chairman, Chief Executive Officer
and Director of the Fund's distributor and transfer agent.
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,
/s/ Charles A. Fiumefreddo /s/ Mitchell M. Merin
CHARLES A. FIUMEFREDDO MITCHELL M. MERIN
Chairman of the Board President
4
<PAGE>
MORGAN STANLEY DEAN WITTER SELECT MUNICIPAL REINVESTMENT FUND
FUND PERFORMANCE June 30, 1999
AVERAGE ANNUAL TOTAL RETURNS
- ----------------------------
1 Year 1.34(1)
5 Years 5.92(1)
10 Years 6.42(1)
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RETURNS.
- --------------------
(1) Figure shown assumes reinvestment of all distributions. There is no sales
charge.
<PAGE>
MORGAN STANLEY DEAN WITTER SELECT MUNICIPAL REINVESTMENT FUND
PORTFOLIO OF INVESTMENTS June 30, 1999 (unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ----------- ---------- ---------- -------------
<S> <C> <C> <C> <C>
TAX-EXEMPT MUNICIPAL BONDS (90.7%)
General Obligation (17.5%)
$ 4,000 North Slope Borough, Alaska, Ser 1996 B (MBIA) .............................. 0.00% 06/30/07 $ 2,692,400
2,000 Los Angeles Unified School District, California, 1997 Ser B (FGIC) .......... 5.00 07/01/23 1,890,520
1,700 Washington Suburban Sanitation District, Maryland, Gen Constr Refg 1994 5.00 06/01/14 1,671,865
1,260 New York City, New York, 1990 Ser D ......................................... 6.00 08/01/07 1,262,369
2,000 Little Miami Local School District, Ohio, Ser 1998 (FGIC) ................... 4.875 12/01/23 1,848,200
2,000 Pennsylvania, First Ser 1995 (FGIC) ......................................... 5.50 05/01/12 2,054,760
1,500 Shelby County, Tennessee, Refg 1995 Ser A ................................... 5.625 04/01/12 1,544,385
2,000 Washington, Ser 1994 A ...................................................... 5.80 09/01/08 2,099,600
------- -----------
16,460 15,064,099
------- -----------
Educational Facilities Revenue (7.7%)
2,000 District of Columbia, Georgetown University Ser 1993 ........................ 5.375 04/01/23 1,948,780
1,000 Massachusetts Health & Educational Facilities Authority, Boston College
Ser K ....................................................................... 5.25 06/01/18 974,220
1,500 Rutgers -- The State University, New Jersey, Refg Ser R ..................... 6.50 05/01/13 1,601,640
2,000 New York State Dormitory Authority, State University Ser 1989 B ............. 0.00 05/15/03 1,676,220
435 Ohio Higher Educational Facility Commission, Oberlin College Ser 1993 ....... 5.375 10/01/15 436,449
------- -----------
6,935 6,637,309
------- -----------
Electric Revenue (6.4%)
2,000 South Carolina Public Service Authority, Santee Cooper 1997 Refg Ser A
(MBIA) ...................................................................... 5.00 01/01/29 1,863,120
2,000 Intermountain Power Agency, Utah, Refg 1996 Ser D (Secondary FSA) ........... 5.00 07/01/21 1,873,280
3,000 Washington Public Power Supply System, Proj #2 Refg Ser 1994 A (FGIC) ....... 0.00 07/01/09 1,793,460
------- -----------
7,000 5,529,860
------- -----------
Hospital Revenue (11.8%)
2,000 Birmingham -- Carraway Special Care Facilities Financing Authority,
Alabama, Carraway Methodist Health Ser 1995 A (Connie Lee) .................. 6.25 08/15/09 2,161,900
2,000 Maryland Industrial Development Financing Authority, Holy Cross Health
Refg Ser 1996 ............................................................... 5.50 12/01/08 2,086,520
2,000 New Jersey Health Care Facilities Financing Authority, St Barnabas Health
Refg Ser 1998 B (MBIA) ................................................. .... 5.25 07/01/18 1,978,680
2,000 North Central Texas Health Facilities Development Corporation, University
Medical Center Ser 1996 (FSA) ............................................... 5.50 04/01/10 2,043,740
2,000 Washington Health Care Facilities Authority, Swedish Health Ser 1998
------- (AMBAC) ................................................................... 5.125 11/15/22 1,886,820
10,000 -----------
------- 10,157,660
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
6
<PAGE>
MORGAN STANLEY DEAN WITTER SELECT MUNICIPAL REINVESTMENT FUND
PORTFOLIO OF INVESTMENTS June 30, 1999 (unaudited) continued
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ----------- ------------ ---------- -------------
<S> <C> <C> <C> <C>
Industrial Development/Pollution Control Revenue (4.6%)
$ 700 Connecticut Development Authority, Bridgeport Hydraulic Co
Refg Ser 1990 ............................................................... 7.25 % 06/01/20 $ 729,519
1,000 Michigan Strategic Fund, Ford Motor Co Refg Ser 1991 A ...................... 7.10 02/01/06 1,124,840
2,000 Ohio Water Development Authority, Dayton Power & Light Co
------- Collateralized Refg 1992 Ser A ........................................... 6.40 08/15/27 2,108,860
3,700 -----------
------- 3,963,219
-----------
Mortgage Revenue -- Multi-Family (1.4%)
950 Michigan Housing Development Authority, Rental 1992 Ser A ................... 6.60 04/01/12 1,011,788
155 Pennsylvania Housing Finance Agency, Moderate Rehab Sec 8 Assisted
------- Issue B .................................................................. 9.00 08/01/01 155,482
1,105 -----------
------- 1,167,270
-----------
Mortgage Revenue -- Single Family (2.4%)
2,000 Alaska Housing Finance Corporation, Governmental 1995 Ser A (MBIA) .......... 5.875 12/01/24 2,071,700
------- -----------
Transportation Facilities Revenue (19.9%)
2,000 Sacramento County, California, Airport Refg Ser 1998 B (FGIC) ............... 5.00 07/01/18 1,917,140
1,500 San Francisco Bay Area Rapid Transit District, California, Sales Tax
Ser 1998 (AMBAC) ............................................................ 4.75 07/01/23 1,352,910
2,000 Lee County, Florida, Ser 1995 (MBIA) ........................................ 5.75 10/01/22 2,051,280
2,000 Kansas, Highway Refg Ser 1998 ............................................... 5.50 09/01/14 2,075,060
3,500 Kentucky Turnpike Authority, Resource Recovery Road 1987 Ser A BIGS ......... 8.50 07/01/06 4,279,974
2,775 Massachusetts Turnpike Authority, Western 1997 Ser A (MBIA) ................. 5.55 01/01/17 2,788,875
1,000 Ohio Turnpike Commission, Ser 1998 B (FGIC) ................................. 4.50 02/15/24 861,090
2,000 Puerto Rico Highway & Transportation Authority, Ser 1998 A .................. 4.75 07/01/38 1,765,920
------- -----------
16,775 17,092,249
------- -----------
Water & Sewer Revenue (14.0%)
2,000 San Francisco Public Utilities Commission, California, Water 1996 Ser A ..... 5.00 11/01/21 1,889,340
2,000 Fulton County, Georgia, Water & Sewerage Ser 1998 (FGIC) .................... 4.75 01/01/28 1,795,940
1,500 Massachusetts Water Resource Authority, 1993 Ser C .......................... 5.25 12/01/08 1,525,575
2,000 Suffolk County Industrial Development Agency, New York, Southwest
Sewer Ser 1994 (FGIC) ....................................................... 4.75 02/01/09 1,954,760
1,000 Columbus, Ohio, Sewerage Refg Ser 1992 ...................................... 6.25 06/01/08 1,062,260
Metropolitan Government of Nashville & Davidson County, Tennessee,
2,000 Refg 1986 ................................................................... 5.50 01/01/16 2,003,500
2,000 Refg Ser 1998 A (FGIC) ...................................................... 4.75 01/01/22 1,824,560
------- -----------
12,500 12,055,935
------- -----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
7
<PAGE>
MORGAN STANLEY DEAN WITTER SELECT MUNICIPAL REINVESTMENT FUND
PORTFOLIO OF INVESTMENTS June 30, 1999 (unaudited) continued
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ----------- ------------ ---------- -------------
<S> <C> <C> <C> <C>
Refunded (5.0%)
$ 2,000 Nebraska Public Power District, Power Supply 1993 Ser ....................... 6.125% 01/01/03+ $2,149,940
2,000 Clermont County, Ohio, Mercy Health Ser 1991 (AMBAC) ........................ 6.725 10/05/01+ 2,139,940
------- -----------
4,000 4,289,880
-------
80,475 TOTAL TAX-EXEMPT MUNICIPAL BONDS (Identified Cost $75,179,959) ............ 78,029,181
------- ----------
SHORT-TERM TAX-EXEMPT MUNICIPAL OBLIGATIONS (7.6%)
2,500 Harris County Health Facilities Development Corporation, Texas, St Luke's
Episcopal Hospital Ser 1997 A (Demand 07/01/99) ............................. 3.85% 02/15/27 2,500,000
4,000 Lincoln County, Wyoming, Exxon Corp Ser 1984 B (Demand 07/01/99) ............ 3.80* 11/01/14 4,000,000
------- ----------
6,500 TOTAL SHORT-TERM TAX-EXEMPT MUNICIPAL OBLIGATIONS (Identified Cost $6,500,000) .................... 6,500,000
------- ----------
$86,975 TOTAL INVESTMENTS (Identified Cost $81,679,959) (a) ....................... 98.3% 84,529,181
=======
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES ............................ 1.7 1,498,182
---- ----------
NET ASSETS ................................................................ 100.0% $86,027,363
===== ===========
</TABLE>
- ---------------
BIGS Bond Income Growth Security
+ 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
$3,593,151 and the aggregate gross unrealized depreciation is
$743,929, resulting in net unrealized appreciation of $2,849,222.
Bond Insurance:
- --------------
AMBAC AMBAC Assurance Corporation.
Connie Lee Connie Lee Insurance Company -- A wholly owned subsidiary of AMBAC
Assurance Corporation.
FGIC Financial Guaranty Insurance Company.
FSA Financial Security Assurance Inc.
MBIA Municipal Bond Investors Assurance Corporation.
SEE NOTES TO FINANCIAL STATEMENTS
8
<PAGE>
MORGAN STANLEY DEAN WITTER SELECT MUNICIPAL REINVESTMENT FUND
PORTFOLIO OF INVESTMENTS June 30, 1999 (unaudited) continued
GEOGRAPHIC SUMMARY OF INVESTMENTS
Based on Market Value as a Percent of Net Assets
June 30, 1999
<TABLE>
<S> <C>
Alabama .................... 2.5%
Alaska ....................... 5.5
California ................... 8.2
Connecticut .................. 0.8
District of Columbia ......... 2.3
Florida ...................... 2.4
Georgia ...................... 2.1
Kansas ..................... 2.4
Kentucky ..................... 5.0
</TABLE>
<TABLE>
<S> <C>
Maryland ..................... 4.4%
Massachusetts ................ 6.1
Michigan ..................... 2.5
Nebraska ..................... 2.5
New Jersey ................... 4.2
New York ..................... 5.7
Ohio ......................... 9.8
Pennsylvania ................. 2.6
Puerto Rico .................. 2.1
</TABLE>
<TABLE>
<S> <C>
South Carolina ............... 2.2%
Tennessee .................... 6.2
Texas ...................... 5.3
Utah ......................... 2.2
Washington ................. 6.7
Wyoming ...................... 4.6
----
Total ........................ 98.3%
====
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
9
<PAGE>
MORGAN STANLEY DEAN WITTER SELECT MUNICIPAL REINVESTMENT FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1999 (unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $81,679,959) ................ $84,529,181
Cash ............................................ 351,121
Interest receivable ............................. 1,343,507
Prepaid expenses and other assets ............... 21,299
-----------
TOTAL ASSETS .................................. 86,245,108
-----------
LIABILITIES:
Payable for:
Shares of beneficial interest
repurchased ................................ 111,167
Investment management fee ..................... 39,457
Dividends to shareholders ..................... 21,196
Accrued expenses ................................ 45,925
-----------
TOTAL LIABILITIES ............................. 217,745
-----------
NET ASSETS .................................... $86,027,363
===========
COMPOSITION OF NET ASSETS:
Paid-in-capital ................................. $83,327,065
Net unrealized appreciation ..................... 2,849,222
Accumulated net realized loss ................... (148,924)
-----------
NET ASSETS .................................... $86,027,363
===========
NET ASSET VALUE PER SHARE
7,294,555 shares outstanding (unlimited
shares authorized of $.01 par value) ......... $ 11.79
===========
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended June 30, 1999 (unaudited)
<TABLE>
<S> <C>
NET INVESTMENT INCOME:
INTEREST INCOME ............................... $ 2,434,165
-----------
EXPENSES
Investment management fee ..................... 226,775
Transfer agent fees and expenses .............. 102,349
Professional fees ............................. 33,200
Shareholder reports and notices ............... 25,620
Registration fees ............................. 18,758
Trustees' fees and expenses ................... 6,335
Custodian fees ................................ 2,328
Other ......................................... 5,994
-----------
TOTAL EXPENSES .............................. 421,359
Less: expense offset .......................... (2,323)
-----------
NET EXPENSES ................................ 419,036
-----------
NET INVESTMENT INCOME ....................... 2,015,129
-----------
NET REALIZED AND UNREALIZED LOSS:
Net realized loss ............................. (148,775)
Net change in unrealized appreciation ......... (3,369,615)
-----------
NET LOSS .................................... (3,518,390)
-----------
NET DECREASE .................................. $(1,503,261)
===========
</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, 1999 DECEMBER 31, 1998
--------------- ------------------
(unaudited)
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income ................................ $ 2,015,129 $ 4,199,579
Net realized gain (loss) ............................. (148,775) 2,233,737
Net change in unrealized appreciation ................ (3,369,615) (1,505,075)
------------ ------------
NET INCREASE (DECREASE) ............................ (1,503,261) 4,928,241
------------ ------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income ................................ (2,015,129) (4,199,579)
Net realized gain .................................... (17,023) (2,257,663)
------------ ------------
TOTAL DIVIDENDS AND DISTRIBUTIONS .................. (2,032,152) (6,457,242)
------------ ------------
Net increase (decrease) from transactions in shares of
beneficial interest ................................ (4,914,758) 1,751,054
------------ ------------
NET INCREASE (DECREASE) ............................ (8,450,171) 222,053
NET ASSETS:
Beginning of period .................................. 94,477,534 94,255,481
------------ ------------
END OF PERIOD ...................................... $ 86,027,363 $ 94,477,534
============ ============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
11
<PAGE>
MORGAN STANLEY DEAN WITTER SELECT MUNICIPAL REINVESTMENT FUND
NOTES TO FINANCIAL STATEMENTS June 30, 1999 (unaudited)
1. ORGANIZATION AND ACCOUNTING POLICIES
Morgan Stanley 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 is offered
exclusively to the holders of certain unit investment trusts as an investment
option for reinvesting distributions received on units of their trusts. 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.
12
<PAGE>
MORGAN STANLEY DEAN WITTER SELECT MUNICIPAL REINVESTMENT FUND
NOTES TO FINANCIAL STATEMENTS June 30, 1999 (unaudited) continued
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 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") 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 proceeds from sales of portfolio securities, excluding short-term
investments, for the six months ended June 30, 1999 aggregated $9,020,937.
Morgan Stanley Dean Witter Trust FSB, an affiliate of the Investment Manager,
is the Fund's transfer agent.
13
<PAGE>
MORGAN STANLEY DEAN WITTER SELECT MUNICIPAL REINVESTMENT FUND
NOTES TO FINANCIAL STATEMENTS June 30, 1999 (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, 1999 DECEMBER 31, 1998
---------------------------------- ----------------------------------
(unaudited)
SHARES AMOUNT SHARES AMOUNT
--------------- ---------------- --------------- ----------------
<S> <C> <C> <C> <C>
Sold ................................................ 494,414 $ 6,017,524 1,927,460 $ 24,117,738
Reinvestment of dividends and distributions ......... 153,609 1,861,663 485,655 6,019,692
------- ------------- --------- -------------
648,023 7,879,187 2,413,115 30,137,430
Repurchased ......................................... (1,053,837) (12,793,945) (2,271,402) (28,386,376)
---------- ------------- ---------- -------------
Net increase (decrease) ............................. (405,814) $ (4,914,758) 141,713 $ 1,751,054
========== ============= ========== =============
</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, 1999
--------------------
(unaudited)
<S> <C>
SELECTED PER SHARE DATA:
Net asset value, beginning of period .............. $ 12.27
--------
Income (loss) from investment operations:
Net investment income ............................ 0.27
Net realized and unrealized gain (loss) .......... (0.48)
--------
Total income (loss) from investment operations .... (0.21)
--------
Less dividends and distributions from:
Net investment income ............................ (0.27)
Net realized gain ................................ --
--------
Total dividends and distributions ................. (0.27)
--------
Net asset value, end of period .................... $ 11.79
========
TOTAL RETURN+ ..................................... (1.77)%(2)
RATIOS TO AVERAGE NET ASSETS:
Expenses .......................................... 0.93 %(1)(3)
Net investment income ............................. 4.44 % (3)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands ........... $86,027
Portfolio turnover rate ........................... --
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
---------------------------------------------------------------------
1998 1997 1996 1995
------------------ ------------------ ------------------ ------------
<S> <C> <C> <C> <C>
SELECTED PER SHARE DATA:
Net asset value, beginning of period .............. $ 12.47 $ 12.14 $ 12.48 $ 11.34
---------- ---------- ---------- -------
Income (loss) from investment operations:
Net investment income ............................ 0.56 0.58 0.61 0.62
Net realized and unrealized gain (loss) .......... 0.10 0.35 (0.19) 1.16
---------- ---------- ---------- -------
Total income (loss) from investment operations .... 0.66 0.93 0.42 1.78
---------- ---------- ---------- -------
Less dividends and distributions from:
Net investment income ............................ (0.56) (0.58) (0.61) (0.62)
Net realized gain ................................ (0.30) (0.02) (0.15) (0.02)
---------- ---------- ---------- --------
Total dividends and distributions ................. (0.86) (0.60) (0.76) (0.64)
---------- ---------- ---------- --------
Net asset value, end of period .................... $ 12.27 $ 12.47 $ 12.14 $ 12.48
========== ========== ========== ========
TOTAL RETURN+ ..................................... 5.46% 7.94% 3.55% 16.00%
RATIOS TO AVERAGE NET ASSETS:
Expenses .......................................... 0.91%(1) 0.95%(1) 0.94%(1) 0.97%
Net investment income ............................. 4.51% 4.78% 5.01% 5.14%
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands ........... $94,478 $94,255 $92,187 $95,231
Portfolio turnover rate ........................... 31% 8% 17% 17%
<CAPTION>
FOR THE YEAR
ENDED
DECEMBER 31,
-------------
1994
-------------
<S> <C>
SELECTED PER SHARE DATA:
Net asset value, beginning of period .............. $ 12.82
--------
Income (loss) from investment operations:
Net investment income ............................ 0.65
Net realized and unrealized gain (loss) .......... (1.40)
--------
Total income (loss) from investment operations .... (0.75)
--------
Less dividends and distributions from:
Net investment income ............................ (0.69)
Net realized gain ................................ (0.04)
--------
Total dividends and distributions ................. (0.73)
--------
Net asset value, end of period .................... $ 11.34
========
TOTAL RETURN+ ..................................... (5.98)%
RATIOS TO AVERAGE NET ASSETS:
Expenses .......................................... 0.96%
Net investment income ............................. 5.34%
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands ........... $86,405
Portfolio turnover rate ........................... 18%
</TABLE>
- -------------
+ Calculated based on the net asset value as of the last business day of
the period.
(1) Does not reflect the effect of expense offset of 0.01%.
(2) Not annualized.
(3) Annualized.
SEE NOTES TO FINANCIAL STATEMENTS
15
<PAGE>
TRUSTEES
- -------------------------
Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn
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
Mitchell M. Merin
President
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 Stanley 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. Read the
prospectus carefully before investing.
Morgan Stanley
Dean Witter
Select Municipal
Reinvestment
Fund
Semiannual Report
June 30, 1999
