<PAGE> 1
MORGAN STANLEY DEAN WITTER SELECT MUNICIPAL REINVESTMENT FUND
Two World Trade Center
LETTER TO THE SHAREHOLDERS June 30, 2000 New York, New York 10048
DEAR SHAREHOLDER:
The U.S. economic expansion continued during the six-month period ended June 30,
2000. Real personal consumption accelerated and unemployment reached a 30-year
low. At the same time, a surge in oil prices heightened the risk of inflation.
The Federal Reserve Board responded by further tightening monetary policy. Three
increases in the federal funds rate, totaling 100 basis points, have occurred
since February. The rate now stands at a nine-year high of 6.50 percent.
Strong economic growth and a less accommodative monetary policy caused long-term
interest rates to increase throughout 1999. This January, however, the U.S.
Treasury announced plans to use the federal budget surplus to reduce its debt.
This announcement initially precipitated a 50 to 75 basis point drop in yields
of longer-maturity Treasuries. Municipal bond yields also declined but lagged
the trend of Treasury yields. Long-term interest rates rose in April, but began
to decline in May and June as signs of an economic slowdown developed.
MUNICIPAL MARKET CONDITIONS
The long-term insured municipal index began the year at 5.97 percent. This index
reached a high of 6.19 percent in mid January but ended June at 5.84 percent.
Because bond prices move inversely to changes in interest rates, higher yields
caused bond prices to decline significantly last year and improve marginally in
the first six months of this year.
The ratio of municipal yields as a percentage of Treasury yields has
historically been used as a measure of relative value. The increase in the ratio
from 92 percent at the end of 1999 to 99 percent at the end of June may be
attributed to the magnitude of the rally in long-term Treasuries. A rising yield
ratio indicates weaker relative performance by municipals. Over the past five
years, the ratio has ranged between an average annual high of 93 percent and an
average annual low of 85 percent.
During the first six months of this year, new-issue volume was 22 percent lower
than the same period last year. Refunding activity, the most interest
<PAGE> 2
MORGAN STANLEY DEAN WITTER SELECT MUNICIPAL REINVESTMENT FUND
LETTER TO THE SHAREHOLDERS June 30, 2000, continued
rate sensitive component of new issue supply, dropped more than 70 percent and
represented less than 10 percent of total volume. Approximately 40 percent of
the underwritings were enhanced with bond insurance.
30-YEAR BOND YIELDS 1994-2000
<TABLE>
<CAPTION>
30-Year Insured U.S. Treasury Insured Municipal Yields
Municipal Yields Yields as a Percentage of U.S. Treasury Yields
---------------- ----------------- ---------------------------------------
<S> <C> <C> <C>
1994 5.40 6.34 85.17
5.40 6.24 86.54
5.80 6.66 87.09
6.40 7.09 90.27
6.35 7.32 86.75
6.25 7.43 84.12
6.50 7.61 85.41
6.25 7.39 84.57
6.30 7.45 84.56
6.55 7.81 83.87
6.75 7.96 84.80
7.00 8.00 87.50
6.75 7.88 85.66
1995 6.40 7.70 83.12
6.15 7.44 82.66
6.15 7.43 82.77
6.20 7.34 84.47
5.80 6.66 87.09
6.10 6.62 92.15
6.10 6.86 88.92
6.00 6.66 90.09
5.95 6.48 91.82
5.75 6.33 90.84
5.50 6.14 89.58
5.35 5.94 90.07
1996 5.40 6.03 89.55
5.60 6.46 86.69
5.85 6.66 87.84
5.95 6.89 86.36
6.05 6.99 86.55
5.90 6.89 85.63
5.85 6.97 83.93
5.90 7.11 82.98
5.70 6.93 82.25
5.65 6.64 85.09
5.50 6.35 86.61
5.60 6.63 84.46
1997 5.70 6.79 83.95
5.65 6.80 83.09
5.90 7.10 83.10
5.75 6.94 82.85
5.65 6.91 81.77
5.60 6.78 82.60
5.30 6.30 84.13
5.50 6.61 83.21
5.40 6.40 84.38
5.35 6.15 86.99
5.30 6.05 87.60
5.15 5.92 86.99
1998 5.15 5.80 88.79
5.20 5.92 87.84
5.25 5.93 88.53
5.35 5.95 89.92
5.20 5.80 89.66
5.20 5.65 92.04
5.18 5.71 90.72
5.03 5.27 95.45
4.95 5.00 99.00
5.05 5.16 97.87
5.00 5.06 98.81
5.05 5.10 99.02
1999 5.00 5.09 98.23
5.10 5.58 91.40
5.15 5.63 91.47
5.20 5.66 91.87
5.30 5.83 90.91
5.47 5.96 91.78
5.55 6.10 90.98
5.75 6.06 94.88
5.85 6.05 96.69
6.03 6.16 97.90
6.00 6.29 95.39
5.97 6.48 92.13
2000 6.18 6.49 95.22
6.04 6.14 98.37
5.82 5.83 99.83
5.91 5.96 99.16
5.91 6.01 98.34
5.84 5.90 98.98
</TABLE>
Source: Municipal Market Data - A Division of Thomson Financial Municipal Group
and Bloomberg L.P.
PERFORMANCE
For the six-month period ended June 30, 2000, the Morgan Stanley Dean Witter
Select Municipal Reinvestment Fund returned 4.27 percent, compared to 4.48
percent for the Lehman Brothers Municipal Bond Index.(1)
PORTFOLIO STRUCTURE
The Fund's net assets of $75 million were diversified among 11 long-term sectors
and 39 credits. During the past six months the cash and short-term investment
position ranged between 6 and
---------------------
(1) The Lehman Brothers Municipal Bond Index tracks the performance of municipal
bonds with maturities of two years or greater and a minimum credit rating of
Baa or BBB, as rated by Moody's Investors Service, Inc., or Standard &
Poor's Corporation, respectively. The index does not include any expenses,
fees or charges. The index is unmanaged and should not be considered an
investment.
2
<PAGE> 3
MORGAN STANLEY DEAN WITTER SELECT MUNICIPAL REINVESTMENT FUND
LETTER TO THE SHAREHOLDERS June 30, 2000, continued
11 percent of net assets. At the end of June, the portfolio's average maturity
was 14 years. Average duration, a measure of sensitivity to interest-rate
changes, was 7.7 years. The accompanying charts provide current information on
the portfolio's credit quality, maturity distribution and sector concentrations.
Optional call provisions and their respective cost (book) yields are also
charted by year.
LOOKING AHEAD
The Federal Reserve Board has expressed concern about consumer wealth and rising
prices. We anticipate that the central bank will continue to focus on inflation
and may increase short-term rates if it feels that the economic momentum is not
slowing sufficiently. We believe municipal bonds continue to offer tax-conscious
investors good long-term value.
We appreciate your ongoing support of Morgan Stanley Dean Witter Select
Municipal Reinvestment Fund and look forward to continuing to serve your
investment needs.
<TABLE>
<S> <C>
Very truly yours,
/s/ CHARLES A. FIUMEFREDDO /s/ MITCHELL M. MERIN
CHARLES A. FIUMEFREDDO MITCHELL M. MERIN
Chairman of the Board President
</TABLE>
3
<PAGE> 4
MORGAN STANLEY DEAN WITTER SELECT MUNICIPAL REINVESTMENT FUND
LETTER TO THE SHAREHOLDERS June 30, 2000, continued
[LONG TERM SECTORS PIE CHART]
LARGEST SECTORS AS OF JUNE 30, 2000
(% OF NET ASSETS)
<TABLE>
<S> <C>
GENERAL OBLIGATION 22%
TRANSPORTATION 19%
WATER & SEWER 14%
HOSPITAL 9%
EDUCATION 8%
IDR/PCR* 6%
ELECTRIC 5%
</TABLE>
*INDUSTRIAL DEVELOPMENT/POLLUTION CONTROL REVENUE
PORTFOLIO STRUCTURE SUBJECT TO CHANGE.
[CREDIT RATINGS PIE CHART]
<TABLE>
<CAPTION>
CREDIT RATINGS AS OF JUNE 30, 2000 (% OF TOTAL
LONG-TERM PORTFOLIO)
--------------------
<S> <C> <C>
Aaa or AAA 53%
Aa or AA 26%
A or A 21%
</TABLE>
As Measured By Moody's Investors Service, Inc.
Or Standard & Poor's Corp.
Portfolio structure is subject to change.
DISTRIBUTION BY MATURITY
(% OF NET ASSETS)
<TABLE>
<CAPTION>
WEIGHTED AVERAGE
MATURITY 14 YEARS
<S> <C>
UNDER 1 YEAR 8.7%
1-5 Years 4.4%
5-10 Years 24.9%
10-20 Years 28.1%
20-30 Years 30.3%
30+ Years 2.2%
</TABLE>
Portfolio structure subject to change.
4
<PAGE> 5
MORGAN STANLEY DEAN WITTER SELECT MUNICIPAL REINVESTMENT FUND
LETTER TO THE SHAREHOLDERS June 30, 2000, continued
CALL AND COST (BOOK) YIELD STRUCTURE
JUNE 30, 2000
<TABLE>
<CAPTION>
WEIGHTED AVERAGE
PERCENT CALLABLE* CALL PROTECTION: 6 YEARS
-----------------
<S> <C>
2000 2%
2001 7%
2002 9%
2003 7%
2004 7%
2005 10%
2006 10%
2007 7%
2008 22%
2009 7%
2010+ 12%
Years Bonds Callable
<CAPTION>
Weighted Average
Book Yield: 6.0%
COST (BOOK) YIELD **
--------------------
<S> <C>
2000 7.5%
2001 7.3%
2002 6.5%
2003 6.3%
2004 5.5%
2005 5.9%
2006 7.7%
2007 5.7%
2008 5.2%
2009 5.4%
2010+ 5.2%
</TABLE>
* % 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 7.3% on the 7%
of the bonds in the long-term portfolio that are callable in 2001.
Portfolio structure is subject to change.
5
<PAGE> 6
MORGAN STANLEY DEAN WITTER SELECT MUNICIPAL REINVESTMENT FUND
FUND PERFORMANCE June 30, 2000
<TABLE>
<S> <C>
AVERAGE ANNUAL TOTAL RETURNS
-----------------------------------
PERIOD ENDED 6/30/00
-------------------------
1 Year 1.83%(1)
5 Years 4.76%(1)
10 Years 6.18%(1)
Since Inception (9/22/83) 7.66%(1)
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RETURNS. INVESTMENT RETURN AND
PRINCIPAL VALUE WILL FLUCTUATE. WHEN YOU SELL FUND SHARES, THEY MAY BE WORTH
MORE OR LESS THAN THEIR ORIGINAL COST.
---------------------
<TABLE>
<S> <C>
(1) Figure shown assumes reinvestment of all distributions and
does not reflect the deduction of any sales charges.
</TABLE>
6
<PAGE> 7
MORGAN STANLEY DEAN WITTER SELECT MUNICIPAL REINVESTMENT FUND
PORTFOLIO OF INVESTMENTS June 30, 2000 (unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
----------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
TAX-EXEMPT MUNICIPAL BONDS (90.0%)
General Obligation (21.5%)
$ 4,000 North Slope Borough, Alaska, Ser 1996 B (MBIA).............. 0.00 % 06/30/07 $2,767,878
2,000 Los Angeles Unified School District, California, 1997 Ser B
(FGIC)..................................................... 5.00 07/01/23 1,821,800
1,000 Florida Board of Education, Capital Outlay Refg Ser 1999 B
(MBIA)..................................................... 4.50 06/01/24 821,720
1,000 Washington Suburban Sanitation District, Maryland, Gen
Constr Refg 1994........................................... 5.00 06/01/14 964,960
2,000 Massachusetts, 2000 Ser B................................... 6.00 06/01/16 2,086,440
825 New York City, New York, 1990 Ser D......................... 6.00 08/01/07 825,908
2,000 Little Miami Local School District, Ohio, Ser 1998 (FGIC)... 4.875 12/01/23 1,755,260
2,000 Pennsylvania, First Ser 1995 (FGIC)......................... 5.50 05/01/12 2,034,200
1,000 Shelby County, Tennessee, Refg 1995 Ser A................... 5.625 04/01/12 1,019,320
2,000 Washington, Ser 1994 A...................................... 5.80 09/01/08 2,059,240
------- ----------
17,825 16,156,726
------- ----------
Educational Facilities Revenue (8.0%)
2,000 District of Columbia, Georgetown University Ser 1993........ 5.375 04/01/23 1,820,380
1,000 Massachusetts Health & Educational Facilities Authority,
Boston College
Ser K...................................................... 5.25 06/01/18 953,080
1,500 Rutgers - The State University, New Jersey, Refg Ser R...... 6.50 05/01/13 1,569,630
2,000 New York State Dormitory Authority, State University Ser
1989 B..................................................... 0.00 05/15/03 1,733,320
------- ----------
6,500 6,076,410
------- ----------
Electric Revenue (4.7%)
2,000 South Carolina Public Service Authority, Santee Cooper 1997
Refg Ser A
(MBIA)..................................................... 5.00 01/01/29 1,730,920
3,000 Washington Public Power Supply System, Proj #2 Refg Ser 1994
A (FGIC)................................................... 0.00 07/01/09 1,856,910
------- ----------
5,000 3,587,830
------- ----------
Hospital Revenue (9.0%)
1,000 Maryland Industrial Development Financing Authority, Holy
Cross Health
Refg Ser 1996.............................................. 5.50 12/01/08 1,029,130
2,000 New Jersey Health Care Facilities Financing Authority, St
Barnabas Health
Refg Ser 1998 B (MBIA)..................................... 5.25 07/01/18 1,903,820
2,000 North Central Texas Health Facilities Development
Corporation, University Medical Center Ser 1997 (FSA)...... 5.50 04/01/10 2,033,140
2,000 Washington Health Care Facilities Authority, Swedish Health
Ser 1998 (AMBAC)........................................... 5.125 11/15/22 1,785,900
------- ----------
7,000 6,751,990
------- ----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
7
<PAGE> 8
MORGAN STANLEY DEAN WITTER SELECT MUNICIPAL REINVESTMENT FUND
PORTFOLIO OF INVESTMENTS June 30, 2000 (unaudited) continued
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
----------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Industrial Development/Pollution Control Revenue (5.8%)
$ 700 Connecticut Development Authority, Bridgeport Hydraulic Co
Refg Ser 1990.............................................. 7.25 % 06/01/20 $ 714,987
1,000 Michigan Strategic Fund, Ford Motor Co Refg Ser 1991 A...... 7.10 02/01/06 1,105,240
2,500 Ohio Water Development Authority, Dayton Power & Light Co
Collateralized Refg 1992 Ser A............................. 5.40 08/15/27 2,520,700
------- ----------
4,200 4,340,927
------- ----------
Mortgage Revenue - Multi-Family (1.3%)
950 Michigan Housing Development Authority, Rental 1992 Ser A... 6.60 04/01/12 979,973
------- ----------
Mortgage Revenue - Single Family (2.6%)
2,000 Alaska Housing Finance Corporation, Governmental 1995 Ser A
(MBIA)..................................................... 5.875 12/01/24 1,973,100
------- ----------
Recreational Facilities Revenue (2.7%)
3,650 Metropolitan Football Stadium District, Colorado, Sales Tax
Ser 1999 A (MBIA).......................................... 0.00 01/01/11 2,060,243
------- ----------
Transportation Facilities Revenue (18.6%)
2,000 Sacramento County, California, Airport Refg Ser 1998 B
(FGIC)..................................................... 5.00 07/01/18 1,865,000
1,500 San Francisco Bay Area Rapid Transit District, California,
Sales Tax
Ser 1998 (AMBAC)........................................... 4.75 07/01/23 1,306,485
2,000 Lee County, Florida, Ser 1995 (MBIA)........................ 5.75 10/01/22 2,009,200
2,000 Kansas, Highway Refg Ser 1998............................... 5.50 09/01/14 2,037,340
3,500 Kentucky Turnpike Authority, Resource Recovery Road 1987 Ser
A BIGS..................................................... 8.50 07/01/06 4,145,470
1,000 Massachusetts Turnpike Authority, Western 1997 Ser A
(MBIA)..................................................... 5.55 01/01/17 1,000,000
2,000 Puerto Rico Highway & Transportation Authority, Ser 1998
A.......................................................... 4.75 07/01/38 1,645,200
------- ----------
14,000 14,008,695
------- ----------
Water & Sewer Revenue (13.6%)
2,000 San Francisco Public Utilities Commission, California, Water
1996 Ser A................................................. 5.00 11/01/21 1,830,580
2,000 Fulton County, Georgia, Water & Sewerage Ser 1998 (FGIC).... 4.75 01/01/28 1,693,720
2,000 Suffolk County Industrial Development Agency, New York,
Southwest Sewer
Ser 1994 (FGIC)............................................ 4.75 02/01/09 1,938,220
1,000 Columbus, Ohio, Sewerage Refg Ser 1992...................... 6.25 06/01/08 1,041,500
Metropolitan Government of Nashville & Davidson County,
Tennessee,
2,000 Refg 1986................................................... 5.50 01/01/16 1,993,800
2,000 Refg Ser 1998 A (FGIC)...................................... 4.75 01/01/22 1,721,820
------- ----------
11,000 10,219,640
------- ----------
Refunded (2.2%)
1,500 Clermont County, Ohio, Mercy Health Ser 1991 (AMBAC)........ 9.296++ 09/25/01+ 1,631,250
------- ----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
8
<PAGE> 9
MORGAN STANLEY DEAN WITTER SELECT MUNICIPAL REINVESTMENT FUND
PORTFOLIO OF INVESTMENTS June 30, 2000 (unaudited) continued
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
----------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$73,625 TOTAL TAX-EXEMPT MUNICIPAL BONDS (Identified Cost $67,443,129).................. $67,786,784
------- ----------
SHORT-TERM TAX-EXEMPT MUNICIPAL OBLIGATIONS (8.6%)
3,100 Collier County Health Facilities Authority, Florida,
Cleveland Clinic Health Ser 1999 (Demand 07/03/00).......... 4.50*% 01/01/33 3,100,000
1,500 Harris County Health Facilities Development Corporation,
Texas, Methodist Hospital Ser 1994 (Demand 07/03/00)........ 4.55* 12/01/25 1,500,000
1,900 Lincoln County, Wyoming, Exxon Corp Ser 1984 B (Demand
07/03/00)................................................... 4.45* 11/01/14 1,900,000
------- ----------
6,500 TOTAL SHORT-TERM TAX-EXEMPT MUNICIPAL OBLIGATIONS (Identified Cost
$6,500,000).................................................................... 6,500,000
------- ----------
$80,125 TOTAL INVESTMENTS (Identified Cost $73,943,129) (a)................... 98.6% 74,286,784
=======
OTHER ASSETS IN EXCESS OF LIABILITIES................................... 1.4
1,033,910
----- ----------
NET ASSETS............................................................. 100.0%
===== $75,320,694
==========
</TABLE>
---------------------
<TABLE>
<C> <S>
BIGS Bond Income Growth Security.
+ Prerefunded to call date shown.
++ Current coupon rate for residual interest bond. This rate
resets periodically as the auction rate on the related
short-term securities fluctuates.
* 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 $2,180,287 and the aggregate gross
unrealized depreciation is $1,836,632, resulting in net
unrealized appreciation of $343,655.
Bond Insurance:
------------------------------------------------------------------------
AMBAC AMBAC Assurance Corporation.
FGIC Financial Guaranty Insurance Company.
FSA Financial Security Assurance Inc.
MBIA Municipal Bond Investors Assurance Corporation.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
9
<PAGE> 10
MORGAN STANLEY DEAN WITTER SELECT MUNICIPAL REINVESTMENT FUND
PORTFOLIO OF INVESTMENTS June 30, 2000 (unaudited) continued
Geographic Summary of Investments
Based on Market Value as a Percent of Net Assets
<TABLE>
<S> <C>
Alaska...................... 6.3
California.................. 9.1
Colorado.................... 2.7
Connecticut................. 0.9
District of Columbia........ 2.4
Florida..................... 3.8
Georgia..................... 2.2
Kansas...................... 2.7
Kentucky.................... 5.5
Maryland.................... 2.6
Massachusetts............... 5.4
Michigan.................... 2.8
New Jersey.................. 4.6
New York.................... 6.0
Ohio........................ 13.3
Pennsylvania................ 2.7
Puerto Rico................. 2.2
South Carolina.............. 2.3
Tennessee................... 6.3
Texas....................... 4.7
Washington.................. 7.6
Wyoming..................... 2.5
----
Total....................... 98.6%
====
</TABLE>
---------------------
Portfolio structure is subject to change.
10
<PAGE> 11
MORGAN STANLEY DEAN WITTER SELECT MUNICIPAL REINVESTMENT FUND
FINANCIAL STATEMENTS
<TABLE>
<S> <C>
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2000 (unaudited)
ASSETS:
Investments in securities, at value
(identified cost $73,943,129).............................. $74,286,784
Cash........................................................ 96,936
Interest receivable......................................... 1,090,936
Prepaid expenses and other assets........................... 4,060
----------
TOTAL ASSETS............................................ 75,478,716
----------
LIABILITIES:
Payable for:
Shares of beneficial interest repurchased............... 53,841
Investment management fee............................... 30,695
Dividends to shareholders............................... 19,835
Accrued expenses............................................ 53,651
----------
TOTAL LIABILITIES....................................... 158,022
----------
NET ASSETS.............................................. $75,320,694
==========
COMPOSITION OF NET ASSETS:
Paid-in-capital............................................. $75,082,453
Net unrealized appreciation................................. 343,655
Accumulated net realized loss............................... (105,414)
----------
NET ASSETS.............................................. $75,320,694
==========
NET ASSET VALUE PER SHARE,
6,571,072 shares outstanding
(unlimited shares authorized of $.01 par value)............ $11.46
===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
11
<PAGE> 12
MORGAN STANLEY DEAN WITTER SELECT MUNICIPAL REINVESTMENT FUND
FINANCIAL STATEMENTS, continued
<TABLE>
<S> <C>
STATEMENT OF OPERATIONS
For the six months ended June 30, 2000 (unaudited)
NET INVESTMENT INCOME:
INTEREST INCOME............................................. $2,160,368
----------
EXPENSES
Investment management fee................................... 189,263
Transfer agent fees and expenses............................ 85,564
Professional fees........................................... 37,718
Shareholder reports and notices............................. 22,149
Registration fees........................................... 14,948
Trustees' fees and expenses................................. 6,370
Custodian fees.............................................. 2,018
Other....................................................... 2,988
----------
TOTAL EXPENSES.......................................... 361,018
Less: expense offset........................................ (2,015)
----------
NET EXPENSES............................................ 359,003
----------
NET INVESTMENT INCOME................................... 1,801,365
----------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized loss........................................... (33,057)
Net change in unrealized depreciation....................... 1,417,947
----------
NET GAIN................................................ 1,384,890
----------
NET INCREASE................................................ $3,186,255
==========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
12
<PAGE> 13
MORGAN STANLEY DEAN WITTER SELECT MUNICIPAL REINVESTMENT FUND
FINANCIAL STATEMENTS, continued
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
FOR THE SIX
MONTHS ENDED FOR THE YEAR
JUNE 30, 2000 ENDED
DECEMBER 31, 1999
<CAPTION>
--------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income............................... $1,801,365 $ 3,892,485
Net realized loss................................... (33,057) (72,208)
Net change in unrealized
appreciation/depreciation.......................... 1,417,947 (7,293,129)
---------- -----------
NET INCREASE (DECREASE)......................... 3,186,255 (3,472,852)
---------- -----------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income............................... (1,801,365) (3,892,485)
Net realized gain................................... -- (17,023)
---------- -----------
TOTAL DIVIDENDS AND DISTRIBUTIONS............... (1,801,365) (3,909,508)
---------- -----------
Net decrease from transactions in shares of
beneficial interest................................ (4,106,815) (9,052,555)
---------- -----------
NET DECREASE.................................... (2,721,925) (16,434,915)
NET ASSETS:
Beginning of period................................. 78,042,619 94,477,534
---------- -----------
END OF PERIOD................................... $75,320,694 $78,042,619
========== ===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
13
<PAGE> 14
MORGAN STANLEY DEAN WITTER SELECT MUNICIPAL REINVESTMENT FUND
NOTES TO FINANCIAL STATEMENTS June 30, 2000 (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.
14
<PAGE> 15
MORGAN STANLEY DEAN WITTER SELECT MUNICIPAL REINVESTMENT FUND
NOTES TO FINANCIAL STATEMENTS June 30, 2000 (unaudited)
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.
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, 2000 aggregated
$3,087,230 and $4,233,468, respectively.
Morgan Stanley Dean Witter Trust FSB, an affiliate of the Investment Manager, is
the Fund's transfer agent. At June 30, 2000, the Fund had transfer agent fees
and expenses payable of approximately $2,500.
15
<PAGE> 16
MORGAN STANLEY DEAN WITTER SELECT MUNICIPAL REINVESTMENT FUND
NOTES TO FINANCIAL STATEMENTS June 30, 2000 (unaudited)
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, 2000 DECEMBER 31, 1999
---------------------- -------------------------
(unaudited)
SHARES AMOUNT SHARES AMOUNT
-------- ----------- ---------- ------------
<S> <C> <C> <C> <C>
Sold........................................................ 460,134 $ 5,200,344 1,078,788 $12,738,507
Reinvestment of dividends and distributions................. 146,105 1,651,138 306,550 3,616,076
-------- ----------- --------- -----------
606,239 6,851,482 1,385,338 16,354,583
Repurchased................................................. (970,502) (10,958,297) (2,150,372) (25,407,138)
-------- ----------- --------- -----------
Net decrease................................................ (364,263) $(4,106,815) (765,034) $(9,052,555)
======== =========== ========= ===========
</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.
16
<PAGE> 17
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 FOR THE YEAR ENDED DECEMBER 31,
MONTHS ENDED -------------------------------------------------------
JUNE 30, 2000 1999 1998 1997 1996 1995
-----------------------------------------------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C> <C> <C> <C> <C>
SELECTED PER SHARE DATA:
Net asset value, beginning of period................ $11.25 $ 12.27 $12.47 $12.14 $12.48 $11.34
------ ------- ------ ------ ------ ------
Income (loss) from investment operations:
Net investment income.............................. 0.27 0.53 0.56 0.58 0.61 0.62
Net realized and unrealized gain (loss)............ 0.21 (1.02) 0.10 0.35 (0.19) 1.16
------ ------- ------ ------ ------ ------
Total income (loss) from investment operations...... 0.48 (0.49) 0.66 0.93 0.42 1.78
------ ------- ------ ------ ------ ------
Less dividends and distributions from:
Net investment income.............................. (0.27) (0.53) (0.56) (0.58) (0.61) (0.62)
Net realized gain.................................. -- -- (0.30) (0.02) (0.15) (0.02)
------ ------- ------ ------ ------ ------
Total dividends and distributions................... (0.27) (0.53) (0.86) (0.60) (0.76) (0.64)
------ ------- ------ ------ ------ ------
Net asset value, end of period...................... $11.46 $ 11.25 $12.27 $12.47 $12.14 $12.48
====== ======= ====== ====== ====== ======
TOTAL RETURN+....................................... 4.27%(1) (4.07)% 5.46% 7.94% 3.55% 16.00%
RATIOS TO AVERAGE NET ASSETS:
Expenses............................................ 0.96%(2)(3) 0.95% 0.91%(3) 0.95%(3) 0.94%(3) 0.97%
Net investment income............................... 4.76%(2) 4.49% 4.51% 4.78% 5.01% 5.14%
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands............. $75,321 $78,043 $94,478 $94,255 $92,187 $95,231
Portfolio turnover rate............................. 5%(1) 5% 31% 8% 17% 17%
</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
17
<PAGE> 18
MORGAN STANLEY DEAN WITTER SELECT MUNICIPAL REINVESTMENT FUND
CHANGE IN INDEPENDENT ACCOUNTANTS
On July 1, 2000 PricewaterhouseCoopers LLP resigned as independent accountants
of the Fund.
The reports of PricewaterhouseCoopers LLP on the financial statements of the
Fund for the past two fiscal years contained no adverse opinion or disclaimer of
opinion and were not qualified or modified as to uncertainty, audit scope or
accounting principle.
In connection with its audits for the two most recent fiscal years and through
July 1, 2000, there have been no disagreements with PricewaterhouseCoopers LLP
on any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which disagreements if not resolved
to the satisfaction of PricewaterhouseCoopers LLP would have caused them to make
reference thereto in their report on the financial statements for such years.
The Fund, with the approval of its Board of Trustees and its Audit Committee,
engaged Deloitte & Touche LLP as its new independent accountants as of July 1,
2000.
18
<PAGE> 19
(This Page Intentionally Left Blank)
<PAGE> 20
TRUSTEES
----------------------------------
Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn
Wayne E. Hedien
James F. Higgins
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
----------------------------------
Deloitte & Touche LLP
Two World Financial Center
New York, New York 10281
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 Writter Distributors Inc, member NASD.
MORGAN STANLEY
DEAN WITTER
SELECT MUNICIPAL
REINVESTMENT
FUND
Semiannual Report
June 30, 2000
