<PAGE>
MORGAN STANLEY DEAN WITTER SELECT MUNICIPAL TWO WORLD TRADE CENTER,
REINVESTMENT FUND NEW YORK, NEW YORK 10048
LETTER TO THE SHAREHOLDERS DECEMBER 31, 1999
DEAR SHAREHOLDER:
Interest rates rose steadily during 1999, making it the worst year for the
fixed-income markets since 1994. The benchmark 30-year Treasury bond began the
year yielding 5.1 percent amid fears of a global recession. However, the
economic problems in Asia, Europe and Latin America abated as the year
progressed. The U.S. economy, led by consumer demand, experienced robust growth.
As a result, the fixed-income markets anticipated that the Federal Reserve Board
would change monetary policy and remove the liquidity it had provided during the
1998 international economic crises. Between June and November, the Fed raised
the federal funds rate a total of 75 basis points, from 4.75 percent to 5.50
percent. At year-end, the yield on Treasury bond was nearly 6.5 percent.
Subsequently, on February 2, 2000 the fed funds rate was raised an additional 25
basis points.
MUNICIPAL MARKET CONDITIONS
The long-term insured municipal index yield began 1999 near a record low of 5.05
percent. By the end of December, this index yield had increased almost a full
percentage point, to 5.97 percent. Because bond prices move inversely to changes
in interest rates, higher yields have caused bond prices to decline
significantly. The increase in the index yield during 1999 translated into a 13
percent price decline for a generic insured municipal bond with a 30-year
maturity.
The municipal market index outperformed U.S. Treasury bonds early last year but
later gave ground as interest rates continued to rise. The ratio of the 30-year
municipal yield to the Treasury bond yield is a measure of relative performance.
The yield ratio declined from 99 percent in January to 91 percent in May 1999
and ended the year at 92 percent. A declining ratio means municipals have
outperformed Treasuries and a rising ratio indicates underperformance by
municipals. Over the past five years, the ratio has ranged from a high of 99
percent to a low of 82 percent.
Higher interest rates reduced municipal market underwriting in 1999. New-issue
volume declined 20 percent. Refunding activity, the most interest-rate-sensitive
component of supply, was down more than 50 percent.
<PAGE>
MORGAN STANLEY DEAN WITTER SELECT MUNICIPAL REINVESTMENT FUND
LETTER TO THE SHAREHOLDERS DECEMBER 31, 1999, CONTINUED
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
30-YEAR BOND YIELDS 1994-1999
<S> <C> <C> <C>
Insured U.S. Insured Municipal Yields as a
Municipal Yields Treasury Yields Percentage of U.S. Treasury Yields
12/31/1993 5.40% 6.34% 85.17%
1/31/1994 5.40% 6.24% 86.54%
2/28/1994 5.80% 6.66% 87.09%
3/31/1994 6.40% 7.09% 90.27%
4/29/1994 6.35% 7.32% 86.75%
5/31/1994 6.25% 7.43% 84.12%
6/30/1994 6.50% 7.61% 85.41%
7/29/1994 6.25% 7.39% 84.57%
8/31/1994 6.30% 7.45% 84.56%
9/30/1994 6.55% 7.81% 83.87%
10/31/1994 6.75% 7.96% 84.80%
11/30/1994 7.00% 8.00% 87.50%
12/30/1994 6.75% 7.88% 85.66%
1/31/1995 6.40% 7.70% 83.12%
2/28/1995 6.15% 7.44% 82.66%
3/31/1995 6.15% 7.43% 82.77%
4/28/1995 6.20% 7.34% 84.47%
5/31/1995 5.80% 6.66% 87.09%
6/30/1995 6.10% 6.62% 92.15%
7/31/1995 6.10% 6.86% 88.92%
8/31/1995 6.00% 6.66% 90.09%
9/30/1995 5.95% 6.48% 91.82%
10/31/1995 5.75% 6.33% 90.84%
11/30/1995 5.50% 6.14% 89.58%
12/29/1995 5.35% 5.94% 90.07%
1/31/1996 5.40% 6.03% 89.55%
2/29/1996 5.60% 6.46% 86.69%
3/29/1996 5.85% 6.66% 87.84%
4/30/1996 5.95% 6.89% 86.36%
5/31/1996 6.05% 6.99% 86.55%
6/28/1996 5.90% 6.89% 85.63%
7/31/1996 5.85% 6.97% 83.93%
8/30/1996 5.90% 7.11% 82.98%
9/30/1996 5.70% 6.93% 82.25%
10/31/1996 5.65% 6.64% 85.09%
11/29/1996 5.50% 6.35% 86.61%
12/31/1996 5.60% 6.63% 84.46%
1/31/1997 5.70% 6.79% 83.95%
2/28/1997 5.65% 6.80% 83.09%
3/31/1997 5.90% 7.10% 83.10%
4/30/1997 5.75% 6.94% 82.85%
5/30/1997 5.65% 6.91% 81.77%
6/30/1997 5.60% 6.78% 82.60%
7/30/1997 5.30% 6.30% 84.13%
8/31/1997 5.50% 6.61% 83.21%
9/30/1997 5.40% 6.40% 84.38%
10/31/1997 5.35% 6.15% 86.99%
11/30/1997 5.30% 6.05% 87.60%
12/31/1997 5.15% 5.92% 86.99%
1/31/1998 5.15% 5.80% 88.79%
2/28/1998 5.20% 5.92% 87.84%
3/31/1998 5.25% 5.93% 88.53%
4/30/1998 5.35% 5.95% 89.92%
5/29/1998 5.20% 5.80% 89.66%
6/30/1998 5.20% 5.65% 92.04%
7/31/1998 5.18% 5.71% 90.72%
8/31/1998 5.03% 5.27% 95.45%
9/30/1998 4.95% 5.00% 99.00%
10/31/1998 5.05% 5.16% 97.87%
11/30/1998 5.00% 5.06% 98.81%
12/31/1998 5.05% 5.10% 99.02%
1/31/1999 5.00% 5.09% 98.23%
2/28/1999 5.10% 5.58% 91.40%
3/31/1999 5.15% 5.63% 91.47%
4/30/1999 5.20% 5.66% 91.87%
5/31/1999 5.30% 5.83% 90.91%
6/30/1999 5.47% 5.96% 91.78%
7/31/1999 5.55% 6.10% 90.98%
8/31/1999 5.75% 6.06% 94.88%
9/30/1999 5.85% 6.05% 96.69%
10/31/1999 6.03% 6.16% 97.89%
11/30/1999 6.00% 6.29% 95.39%
12/31/1999 5.97% 6.48% 92.10%
Source: Municipal Market Data A Division of Thomson
Financial Municipal Group and Bloomberg L.P.
</TABLE>
PERFORMANCE
The performance of Morgan Stanley Dean Witter Select Municipal Reinvestment Fund
was impacted by the higher interest-rate environment. For the 12-month period
ended December 31, 1999, the Fund returned -4.07 percent, compared to -2.06
percent for the Lehman Brothers Municipal Bond Index. The accompanying chart
compares the Fund's performance to that of the Lehman index.
PORTFOLIO STRUCTURE
The Fund's net assets of $78 million were diversified among 11 long-term sectors
and 39 credits. As interest rates have increased, the Fund's short-term
investment position, which had ranged from 1 - 3 percent in 1998, was gradually
increased to between 7 - 11 percent. Refunded bonds represented 4 percent of net
assets. Refunded issues have been refinanced and generally are as
2
<PAGE>
MORGAN STANLEY DEAN WITTER SELECT MUNICIPAL REINVESTMENT FUND
LETTER TO THE SHAREHOLDERS DECEMBER 31, 1999, CONTINUED
defensive portfolio holdings. At the end of December, the portfolio's average
maturity was 14 years. Average duration, a measure of sensitivity to
interest-rate changes, was a relatively short 7.7 years. The accompanying charts
provide current information on the portfolio's credit quality, sector
distribution and geographic diversification. Optional call provisions by year
and their respective cost (book) yields are also charted.
LOOKING AHEAD
The Federal Reserve Board raised the fed funds rate twice last summer and once
more in November. These actions confirmed its previously disclosed bias of
becoming less accommodative in the face of continued strong domestic economic
growth. It is anticipated that the central bank may raise short-term interest
rates further in 2000, again influencing long-term rates. However, we believe
municipal bonds continue to offer tax-conscious investors good long-term value
relative to Treasuries. We continue to stress credit quality and a conservative
portfolio management profile.
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,
[SIGNATURE]
CHARLES A. FIUMEFREDDO
CHAIRMAN OF THE BOARD
[SIGNATURE]
MITCHELL M. MERIN
PRESIDENT
3
<PAGE>
MORGAN STANLEY DEAN WITTER SELECT MUNICIPAL
REINVESTMENT FUND
LETTER TO THE SHAREHOLDERS DECEMBER 31,
1999, CONTINUED
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
LARGEST SECTORS AS OF DECEMBER 31, 1999
(% OF NET ASSETS)
<S> <C>
General Obligation 18%
Education 8%
Hospital 8%
IDR/PCR* 6%
Transportation 20%
Water & Sewer 15%
*Industrial Development/Pollution
Control Revenue
Portfolio structure is subject to
change.
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
CREDIT RATINGS AS OF DECEMBER 31, 1999
(% OF TOTAL LONG-TERM PORTFOLIO)
<S> <C>
Aaa or AAA 55%
Aa or AA 27%
A or A 18%
As measured by Moody's Investors Service, Inc. or Standard &
Poor's Corp.
Portfolio structure is subject to change.
</TABLE>
GEOGRAPHIC SUMMARY OF INVESTMENTS
BASED ON MARKET VALUE AS A PERCENTAGE OF NET ASSETS
DECEMBER 31, 1999
<TABLE>
<S> <C>
ALASKA....................... 5.9%
CALIFORNIA................... 8.3
COLORADO..................... 2.5
CONNECTICUT.................. 0.9
DISTRICT OF COLUMBIA......... 2.2
FLORIDA...................... 3.5
GEORGIA...................... 2.1
KANSAS....................... 2.6
KENTUCKY..................... 5.3%
MARYLAND..................... 2.5
MASSACHUSETTS................ 8.6
MICHIGAN..................... 2.7
NEW JERSEY................... 4.4
NEW YORK..................... 5.7
OHIO......................... 10.7
PENNSYLVANIA................. 2.6
PUERTO RICO.................. 2.0%
SOUTH CAROLINA............... 2.0
TENNESSEE.................... 5.9
TEXAS........................ 7.1
WASHINGTON................... 7.1
WYOMING...................... 3.8
----
TOTAL........................ 98.4%
====
</TABLE>
PORTFOLIO STRUCTURE IS SUBJECT TO CHANGE.
4
<PAGE>
MORGAN STANLEY DEAN WITTER SELECT MUNICIPAL
REINVESTMENT FUND
LETTER TO SHAREHOLDERS DECEMBER 31,
1999, CONTINUED
CALL AND COST (BOOK) YIELD STRUCTURE
DECEMBER 31, 1999
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
PERCENT CALLABLE*
<S> <C>
WEIGHTED AVERAGE
CALL PROTECTION: 6 YEARS
2000 5%
2001 9%
2002 9%
2003 6%
2004 7%
2005 10%
2006 10%
2007 7%
2008 23%
2009 6%
2010+ 8%
YEARS BONDS CALLABLE
COST (BOOK) YIELD**
WEIGHTED AVERAGE
BOOK YIELD: 6.00%
2000 7.8%
2001 5.8%
2002 6.5%
2003 6.4%
2004 5.5%
2005 5.9%
2006 7.8%
2007 5.7%
2008 5.3%
2009 5.4%
2010+ 5.1%
* % BASED ON LONG-TERM PORTFOLIO.
** COST OR "BOOK" YIELD IS THE ANNUAL
INCOME EARNED ON A PORTFOLIO
INVESTMENT BASED ON ITS ORIGINAL PURCHASE
PRICE BEFORE FUND OPERATING EXPENSES.
FOR EXAMPLE, THE FUND EARNED A BOOK YIELD
OF 5.8% ON 9% OF THE BONDS IN THE
LONG-TERM PORTFOLIO THAT ARE CALLABLE IN 2001.
PORTFOLIO STRUCUTURE IS SUBJECT TO CHANGE.
</TABLE>
5
<PAGE>
MORGAN STANLEY DEAN WITTER SELECT MUNICIPAL
REINVESTMENT FUND
FUND PERFORMANCE DECEMBER 31, 1999
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
GROWTH OF $10,000
($ IN THOUSANDS)
<S> <C> <C>
FUND LEHMAN(3)
December 1989 $10,000 $10,000
December 1990 $10,527 $10,729
December 1991 $11,794 $12,032
December 1992 $12,842 $13,093
December 1993 $14,382 $14,700
December 1994 $13,522 $13,940
December 1995 $15,683 $16,374
December 1996 $16,242 $17,100
December 1997 $17,531 $18,671
December 1998 $18,489 $19,881
December 1999 $17,736(2) $19,472
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RETURNS.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
----------------------------
PERIOD ENDED 12/31/99
---------------------
<S> <C> <C>
1 Year -4.07%(1)
5 Year 5.58%(1)
10 Year 5.90%(1)
</TABLE>
- ------------------------
(1) Figure shown assumes reinvestment of all distributions. There is no sales
charge.
(2) Closing value assuming a complete redemption on December 31, 1999.
(3) The Lehman Brothers Municipal Bond Index tracks the performance of
municipal bonds with maturities of 2 years or more and a minimum credit
rating of Baa or BBB, as measured by Moody's Investors Service, Inc. or
Standard & Poor's Corp. The Index does not include any expenses, fees, or
charges. The Index is unmanaged and should not be considered an investment.
6
<PAGE>
MORGAN STANLEY DEAN WITTER SELECT MUNICIPAL REINVESTMENT FUND
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1999
<TABLE>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ----------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
TAX-EXEMPT MUNICIPAL BONDS (88.1%)
GENERAL OBLIGATION (17.5%)
$ 4,000 North Slope Borough, Alaska, Ser 1996 B (MBIA)........................ 0.00 % 06/30/07 $ 2,686,200
2,000 Los Angeles Unified School District, California, 1997 Ser B (FGIC).... 5.00 07/01/23 1,731,680
1,000 Florida Board of Education, Capital Outlay Refg Ser 1999 B (MBIA)..... 4.50 06/01/24 785,400
1,000 Washington Suburban Sanitation District, Maryland, Gen Constr Refg
1994................................................................ 5.00 06/01/14 929,900
825 New York City, New York, 1990 Ser D................................... 6.00 08/01/07 826,081
2,000 Little Miami Local School District, Ohio, Ser 1998 (FGIC)............. 4.875 12/01/23 1,673,880
2,000 Pennsylvania, First Ser 1995 (FGIC)................................... 5.50 05/01/12 2,006,460
1,000 Shelby County, Tennessee, Refg 1995 Ser A............................. 5.625 04/01/12 1,010,120
2,000 Washington, Ser 1994 A................................................ 5.80 09/01/08 2,056,160
-----------
-------
13,705,881
15,825
-----------
-------
EDUCATIONAL FACILITIES REVENUE (7.6%)
2,000 District of Columbia, Georgetown University Ser 1993.................. 5.375 04/01/23 1,753,520
1,000 Massachusetts Health & Educational Facilities Authority, Boston
College Ser K....................................................... 5.25 06/01/18 912,870
1,500 Rutgers - The State University, New Jersey, Refg Ser R................ 6.50 05/01/13 1,579,320
2,000 New York State Dormitory Authority, State University Ser 1989 B....... 0.00 05/15/03 1,693,180
-----------
-------
5,938,890
6,500
-----------
-------
ELECTRIC REVENUE (4.4%)
2,000 South Carolina Public Service Authority, Santee Cooper 1997 Refg
Ser A (MBIA)........................................................ 5.00 01/01/29 1,644,180
3,000 Washington Public Power Supply System, Proj #2 Refg Ser 1994 A
(FGIC).............................................................. 0.00 07/01/09 1,783,440
-----------
-------
3,427,620
5,000
-----------
-------
HOSPITAL REVENUE (8.4%)
1,000 Maryland Industrial Development Financing Authority, Holy Cross Health
Refg Ser 1996....................................................... 5.50 12/01/08 1,018,430
2,000 New Jersey Health Care Facilities Financing Authority, St Barnabas
Health Refg Ser 1998 B (MBIA)....................................... 5.25 07/01/18 1,844,240
2,000 North Central Texas Health Facilities Development Corporation,
University Medical Center Ser 1997 (FSA)............................ 5.50 04/01/10 2,006,720
2,000 Washington Health Care Facilities Authority, Swedish Health Ser 1998
(AMBAC)............................................................. 5.125 11/15/22 1,693,600
-----------
-------
6,562,990
7,000
-----------
-------
INDUSTRIAL DEVELOPMENT/POLLUTION CONTROL REVENUE (5.5%)
700 Connecticut Development Authority, Bridgeport Hydraulic Co
Refg Ser 1990....................................................... 7.25 06/01/20 719,509
1,000 Michigan Strategic Fund, Ford Motor Co Refg Ser 1991 A................ 7.10 02/01/06 1,106,940
2,500 Ohio Water Development Authority, Dayton Power & Light Co
Collateralized Refg 1992 Ser A...................................... 6.40 08/15/27 2,499,775
-----------
-------
4,326,224
4,200
-----------
-------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
7
<PAGE>
MORGAN STANLEY DEAN WITTER SELECT MUNICIPAL REINVESTMENT FUND
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1999, CONTINUED
<TABLE>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ----------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
MORTGAGE REVENUE - MULTI-FAMILY (1.3%)
$ 950 Michigan Housing Development Authority, Rental 1992 Ser A............. 6.60 % 04/01/12 $ 993,092
-----------
-------
MORTGAGE REVENUE - SINGLE FAMILY (2.5%)
2,000 Alaska Housing Finance Corporation, Governmental 1995 Ser A (MBIA).... 5.875 12/01/24 1,937,640
-----------
-------
RECREATIONAL FACILITIES REVENUE (2.5%)
3,650 Metropolitan Football Stadium District, Colorado, Sales Tax
Ser 1999 A (MBIA)................................................... 0.00 01/01/11 1,969,066
-----------
-------
TRANSPORTATION FACILITIES REVENUE (19.8%)
2,000 Sacramento County, California, Airport Refg Ser 1998 B (FGIC)......... 5.00 07/01/18 1,780,380
1,500 San Francisco Bay Area Rapid Transit District, California, Sales Tax
Ser 1998 (AMBAC).................................................... 4.75 07/01/23 1,239,165
2,000 Lee County, Florida, Ser 1995 (MBIA).................................. 5.75 10/01/22 1,952,700
2,000 Kansas, Highway Refg Ser 1998......................................... 5.50 09/01/14 1,991,880
3,500 Kentucky Turnpike Authority, Resource Recovery Road 1987 Ser A BIGS... 8.50 07/01/06 4,155,654
2,775 Massachusetts Turnpike Authority, Western 1997 Ser A (MBIA)........... 5.55 01/01/17 2,759,904
2,000 Puerto Rico Highway & Transportation Authority, Ser 1998 A............ 4.75 07/01/38 1,536,860
-----------
-------
15,416,543
15,775
-----------
-------
WATER & SEWER REVENUE (14.6%)
2,000 San Francisco Public Utilities Commission, California, Water 1996
Ser A............................................................... 5.00 11/01/21 1,738,480
2,000 Fulton County, Georgia, Water & Sewerage Ser 1998 (FGIC).............. 4.75 01/01/28 1,600,120
1,500 Massachusetts Water Resource Authority, 1993 Ser C.................... 5.25 12/01/08 1,504,380
2,000 Suffolk County Industrial Development Agency, New York, Southwest
Sewer Ser 1994 (FGIC)............................................... 4.75 02/01/09 1,896,400
1,000 Columbus, Ohio, Sewerage Refg Ser 1992................................ 6.25 06/01/08 1,046,690
Metropolitan Government of Nashville & Davidson County, Tennessee,
2,000 Refg 1986........................................................... 5.50 01/01/16 1,925,900
2,000 Refg Ser 1998 A (FGIC).............................................. 4.75 01/01/22 1,646,020
-----------
-------
11,357,990
12,500
-----------
-------
REFUNDED (4.0%)
3,000 Clermont County, Ohio, Mercy Health Ser 1991 (AMBAC).................. 6.733 09/25/01+ 3,152,880
-----------
-------
76,400 TOTAL TAX-EXEMPT MUNICIPAL BONDS
- ---------- (IDENTIFIED COST $69,863,108).....................................................................
68,788,816
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
8
<PAGE>
MORGAN STANLEY DEAN WITTER SELECT MUNICIPAL REINVESTMENT FUND
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1999, CONTINUED
<TABLE>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ----------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
SHORT-TERM TAX-EXEMPT MUNICIPAL OBLIGATIONS (10.3%)
$ 1,500 Massachusetts Health & Educational Facilities Authority, Capital Asset
Ser D (MBIA) (Demand 01/03/00)...................................... 4.90*% 01/01/35 $ 1,500,000
3,500 Harris County Health Facilities Development Corporation, Texas,
Methodist Hospital Ser 1994 (Demand 01/03/00)....................... 4.80* 12/01/25 3,500,000
3,000 Lincoln County, Wyoming, Exxon Corp Ser 1984 B (Demand 01/03/00)...... 4.70* 11/01/14 3,000,000
-----------
-------
8,000 TOTAL SHORT-TERM TAX-EXEMPT MUNICIPAL OBLIGATIONS
- ---------- (IDENTIFIED COST $8,000,000)......................................................................
8,000,000
------------
</TABLE>
<TABLE>
<C> <S> <C> <C>
$84,400 TOTAL INVESTMENTS (IDENTIFIED COST $77,863,108) (a)......... 98.4% 76,788,816
-------
-------
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES.............. 1.6 1,253,803
----- ------------
NET ASSETS.................................................. 100.0% $ 78,042,619
----- ------------
----- ------------
</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
$2,033,967 and the aggregate gross unrealized depreciation is $3,108,259,
resulting in net unrealized depreciation of $1,074,292.
BOND INSURANCE:
AMBAC AMBAC Assurance Corporation.
FGIC Financial Guaranty Insurance Company.
FSA Financial Security Assurance Inc.
MBIA Municipal Bond Investors Assurance Corporation.
SEE NOTES TO FINANCIAL STATEMENTS
9
<PAGE>
MORGAN STANLEY DEAN WITTER SELECT MUNICIPAL REINVESTMENT FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $77,863,108)................................................................ $76,788,816
Cash........................................................................................... 215,258
Receivable for:
Interest................................................................................... 1,157,806
Prepaid expenses and other assets.............................................................. 16,688
-----------
TOTAL ASSETS.............................................................................. 78,178,568
-----------
LIABILITIES:
Payable for:
Shares of beneficial interest repurchased.................................................. 12,108
Investment management fee.................................................................. 33,213
Dividends to shareholders.................................................................. 25,123
Accrued expenses............................................................................... 65,505
-----------
TOTAL LIABILITIES......................................................................... 135,949
-----------
NET ASSETS................................................................................ $78,042,619
===========
COMPOSITION OF NET ASSETS:
Paid-in-capital................................................................................ $79,189,268
Net unrealized depreciation.................................................................... (1,074,292)
Accumulated net realized loss.................................................................. (72,357)
-----------
NET ASSETS................................................................................ $78,042,619
===========
NET ASSET VALUE PER SHARE,
6,935,335 SHARES OUTSTANDING (UNLIMITED SHARES AUTHORIZED OF $.01 PAR VALUE)................. $11.25
===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
10
<PAGE>
MORGAN STANLEY DEAN WITTER SELECT MUNICIPAL REINVESTMENT FUND
FINANCIAL STATEMENTS, CONTINUED
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<S> <C>
NET INVESTMENT INCOME:
INTEREST INCOME................................................................................ $ 4,712,919
-----------
EXPENSES
Investment management fee...................................................................... 433,780
Transfer agent fees and expenses............................................................... 193,564
Professional fees.............................................................................. 84,603
Shareholder reports and notices................................................................ 47,387
Registration fees.............................................................................. 37,526
Trustees' fees and expenses.................................................................... 12,775
Custodian fees................................................................................. 4,361
Other.......................................................................................... 10,789
-----------
TOTAL EXPENSES............................................................................ 824,785
Less: expense offset........................................................................... (4,351)
-----------
NET EXPENSES.............................................................................. 820,434
-----------
NET INVESTMENT INCOME..................................................................... 3,892,485
-----------
NET REALIZED AND UNREALIZED LOSS:
Net realized loss.............................................................................. (72,208)
Net change in unrealized appreciation.......................................................... (7,293,129)
-----------
NET LOSS.................................................................................. (7,365,337)
-----------
NET DECREASE................................................................................... $(3,472,852)
===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
11
<PAGE>
MORGAN STANLEY DEAN WITTER SELECT MUNICIPAL REINVESTMENT FUND
FINANCIAL STATEMENTS, CONTINUED
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
FOR THE YEAR FOR THE YEAR
ENDED ENDED
DECEMBER 31, 1999 DECEMBER 31, 1998
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income................................................. $ 3,892,485 $ 4,199,579
Net realized gain (loss).............................................. (72,208) 2,233,737
Net change in unrealized appreciation................................. (7,293,129) (1,505,075)
----------- -----------
NET INCREASE (DECREASE).......................................... (3,472,852) 4,928,241
----------- -----------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income................................................. (3,892,485) (4,199,579)
Net realized gain..................................................... (17,023) (2,257,663)
----------- -----------
TOTAL DIVIDENDS AND DISTRIBUTIONS................................ (3,909,508) (6,457,242)
----------- -----------
Net increase (decrease) from transactions in shares of beneficial
interest............................................................ (9,052,555) 1,751,054
----------- -----------
NET INCREASE (DECREASE).......................................... (16,434,915) 222,053
NET ASSETS:
Beginning of period................................................... 94,477,534 94,255,481
----------- -----------
END OF PERIOD.................................................... $78,042,619 $94,477,534
=========== ===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
12
<PAGE>
MORGAN STANLEY DEAN WITTER SELECT MUNICIPAL REINVESTMENT FUND
NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1999
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.
13
<PAGE>
MORGAN STANLEY DEAN WITTER SELECT MUNICIPAL REINVESTMENT FUND
NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1999, 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.
14
<PAGE>
MORGAN STANLEY DEAN WITTER SELECT MUNICIPAL REINVESTMENT FUND
NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1999, CONTINUED
3. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES
The cost of purchases and proceeds from sales of portfolio securities, excluding
short-term investments, for the year ended December 31, 1999 aggregated
$4,406,031 and $19,064,327, respectively.
Morgan Stanley Dean Witter Trust FSB, an affiliate of the Investment Manager, is
the Fund's transfer agent. At December 31, 1999, the Fund had transfer agent
fees and expenses payable of approximately $2,900.
4. SHARES OF BENEFICIAL INTEREST
Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR
ENDED ENDED
DECEMBER 31, 1999 DECEMBER 31, 1998
----------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ---------------- ---------- ------------
<S> <C> <C> <C> <C>
Sold................................................ 1,078,788 $ 12,738,507 1,927,460 $ 24,117,738
Reinvestment of dividends and distributions......... 306,550 3,616,076 485,655 6,019,692
---------- ---------------- ---------- ------------
1,385,338 16,354,583 2,413,115 30,137,430
Repurchased......................................... (2,150,372) (25,407,138) (2,271,402) (28,386,376)
---------- ---------------- ---------- ------------
Net increase (decrease)............................. (765,034) $ (9,052,555) 141,713 $ 1,751,054
========== ================ ========== ============
</TABLE>
5. FEDERAL INCOME TAX STATUS
At December 31, 1999, the Fund had a net capital loss carryover of approximately
$72,000 which will be available through December 31, 2007 to offset future
capital gains to the extent provided by regulations.
15
<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 YEAR ENDED DECEMBER 31,
-------------------------------------------------------------
1999 1998 1997 1996 1995
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
SELECTED PER SHARE DATA:
Net asset value, beginning of period........................ $ 12.27 $ 12.47 $ 12.14 $ 12.48 $ 11.34
------- ------- ------- ------- -------
Income (loss) from investment operations:
Net investment income.................................... 0.53 0.56 0.58 0.61 0.62
Net realized and unrealized gain (loss).................. (1.02) 0.10 0.35 (0.19) 1.16
------- ------- ------- ------- -------
Total income (loss) from investment operations.............. (0.49) 0.66 0.93 0.42 1.78
------- ------- ------- ------- -------
Less dividends and distributions from:
Net investment income.................................... (0.53) (0.56) (0.58) (0.61) (0.62)
Net realized gain........................................ 0.00 (0.30) (0.02) (0.15) (0.02)
------- ------- ------- ------- -------
Total dividends and distributions........................... (0.53) (0.86) (0.60) (0.76) (0.64)
------- ------- ------- ------- -------
Net asset value, end of period.............................. $ 11.25 $ 12.27 $ 12.47 $ 12.14 $ 12.48
======= ======= ======= ======= =======
TOTAL RETURN+............................................... (4.07)% 5.46% 7.94% 3.55% 16.00%
RATIOS TO AVERAGE NET ASSETS:
Expenses.................................................... 0.95% 0.91%(1) 0.95%(1) 0.94%(1) 0.97%
Net investment income....................................... 4.49% 4.51% 4.78% 5.01% 5.14%
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands..................... $78,043 $94,478 $94,255 $92,187 $95,231
Portfolio turnover rate..................................... 5% 31% 8% 17% 17%
</TABLE>
- ---------------------
<TABLE>
<C> <S>
+ 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%.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
16
<PAGE>
MORGAN STANLEY DEAN WITTER SELECT MUNICIPAL
REINVESTMENT FUND
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE SHAREHOLDERS AND TRUSTEES
OF MORGAN STANLEY DEAN WITTER SELECT MUNICIPAL REINVESTMENT FUND
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Morgan Stanley Dean Witter Select
Municipal Reinvestment Fund (the "Fund") at December 31, 1999, the results of
its operations for the year then ended, the changes in its net assets for each
of the two years in the period then ended and the financial highlights for each
of the five years in the period then ended, in conformity with accounting
principles generally accepted in the United States. These financial statements
and financial highlights (hereafter referred to as "financial statements") are
the responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with auditing standards
generally accepted in the United States, which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits, which included confirmation of securities at
December 31, 1999 by correspondence with the custodian, provide a reasonable
basis for the opinion expressed above.
PricewaterhouseCoopers LLP
1177 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10036
FEBRUARY 4, 2000
1999 FEDERAL TAX NOTICE (UNAUDITED)
During the year ended December 31, 1999, the Fund paid to
shareholders $0.53 per share from tax-exempt income.
17
<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
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
ANNUAL REPORT
DECEMBER 31, 1999
