<PAGE>
`
MORGAN STANLEY DEAN WITTER NEW YORK TAX-FREE TWO WORLD TRADE CENTER,
INCOME 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 the 30-year 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 in 1999. Refunding activity, the most
interest-rate-sensitive component of supply, was down more than 50 percent. New
York new issue underwriting accounted for 9 percent of national market volume.
<PAGE>
MORGAN STANLEY DEAN WITTER NEW YORK TAX-FREE INCOME 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 INSURED U.S. INSURED MUNICIPAL YIELDS AS A
MUNICIPAL YIELDS TREASURY YIELDS PERCENTAGE OF U.S. TREASURY YIELDS
<S> <C> <C> <C>
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 New York Tax-Free Income Fund was
impacted by the higher interest-rate environment. For the 12-month period ended
December 31, 1999, the Fund's Class B shares returned -4.58 percent compared to
- -2.06 percent for the Lehman Brothers Municipal Bond Index. For the same period,
the Fund's Class A, C and D shares returned -4.03 percent, -4.60 percent and
- -3.87 percent, respectively. (The performance of the Fund's four share classes
varies because of differing expenses. Total return figures assume the
reinvestment of all distributions and do not reflect the deduction of any
applicable sales charges.) The accompanying chart compares the Fund's
performance to that of the Lehman index.
2
<PAGE>
MORGAN STANLEY DEAN WITTER NEW YORK TAX-FREE INCOME FUND
LETTER TO THE SHAREHOLDERS DECEMBER 31, 1999, CONTINUED
PORTFOLIO STRUCTURE
The Fund's net assets of $126 million were diversified among 12 long-term
sectors and 30 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 6 - 8 percent. At the end of December, the portfolio's average
maturity was 16 years. Average duration, a measure of sensitivity to
interest-rate changes, was 7.9 years. The accompanying charts provide current
information on the portfolio's credit quality and sector distribution. 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 New York
Tax-Free Income 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 NEW YORK TAX-FREE INCOME 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 16%
Education 12%
IDR/PCR* 12%
Mortgage 11%
Electric 9%
Transportation 8%
Water & Sewer 8%
Hospital 6%
Nursing & Health 5%
*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 32%
Aa or AA 13%
A or A 41%
Baa or BBB 10%
NR 4%
As measured by Moody's Investors Service, Inc. or Standard &
Poor's Corp.
Portfolio structure is subject to change.
</TABLE>
4
<PAGE>
MORGAN STANLEY DEAN WITTER NEW YORK TAX-FREE INCOME FUND
LETTER TO THE SHAREHOLDERS DECEMBER 31, 1999, CONTINUED
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
PERCENT CALLABLE*
WEIGHTED AVERAGE
CALL PROTECTION: 7 YEARS
<S> <C>
2000 12%
2001 2%
2002 7%
2003 2%
2004 11%
2005 4%
2006 16%
2007 0%
2008 20%
2009 7%
2010+ 19%
YEARS BONDS CALLABLE
COST (BOOK) YIELD**
WEIGHTED AVERAGE
BOOK YIELD: 6.2%
2000 7.2%
2001 8.6%
2002 6.8%
2003 7.5%
2004 5.7%
2005 6.7%
2006 6.6%
2007
2008 5.3%
2009 5.5%
2010+ 6.2%
* % 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 8.6% ON 2% OF THE BONDS IN THE
LONG-TERM PORTFOLIO THAT ARE CALLABLE IN 2001.
PORTFOLIO STRUCTURE IS SUBJECT TO CHANGE.
</TABLE>
5
<PAGE>
MORGAN STANLEY DEAN WITTER NEW YORK TAX-FREE
INCOME FUND
FUND PERFORMANCE DECEMBER 31, 1999
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
GROWTH OF $10,000 - CLASS B
($ IN THOUSANDS)
<S> <C> <C>
Fund Lehman(4)
December 31, 1989 $10,000 $10,000
December 31, 1990 $10,401 $10,729
December 31, 1991 $11,747 $12,032
December 31, 1992 $12,769 $13,093
December 31, 1993 $14,265 $14,700
December 31, 1994 $13,161 $13,940
December 31, 1995 $15,345 $16,374
December 31, 1996 $15,777 $17,100
December 31, 1997 $17,107 $18,671
December 31, 1998 $18,018 $19,881
December 31, 1999 $17,192(3) $19,472
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RETURNS. PERFORMANCE FOR CLASS
A, CLASS C, AND CLASS D SHARES WILL VARY FROM THE PERFORMANCE OF CLASS B
SHARES SHOWN ABOVE DUE TO DIFFERENCES IN SALES CHARGES AND EXPENSES.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
----------------------------------------------------------------------------------------------
CLASS B SHARES* CLASS A SHARES+
------------------------------------------- ---------------------------------------------
<S> <C> <C> <C> <C> <C>
1 year -4.58(1) -9.16(2) 1 Year -4.03%(1) -8.11%(2)
5 year 5.49(1) 5.16(2) Since Inception (7/28/97) 1.91(1) 0.10(2)
10 year 5.57(1) 5.57(2)
</TABLE>
<TABLE>
<CAPTION>
CLASS C SHARES++ CLASS D SHARES#
------------------------------------------- ---------------------------------------------
<S> <C> <C> <C> <C> <C>
1 Year -4.60%(1) -5.51%(2) 1 year -3.87(1)
Since Inception (7/28/97) 1.35(1) 1.35(2) Since Inception (7/28/97) 2.17(1)
</TABLE>
- ------------------------
(1) Figure shown assumes reinvestment of all distributions and does not reflect
the deduction of any sales charges.
(2) Figure shown assumes reinvestment of all distributions and the deduction of
the maximum applicable sales charge. See the Fund's current prospectus for
complete details on fees and sales charges.
(3) Closing value assuming a complete redemption on December 31, 1999.
(4) 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.
* The maximum CDSC for Class B is 5.0%. The CDSC declines to 0% after six
years.
+ The maximum front-end sales charge for Class A is 4.25%.
++ The maximum CDSC for Class C shares is 1% for shares redeemed within one
year of purchase.
# Class D shares have no sales charge.
6
<PAGE>
MORGAN STANLEY DEAN WITTER NEW YORK TAX-FREE INCOME FUND
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1999
<TABLE>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- -----------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
NEW YORK TAX- EXEMPT MUNICIPAL BONDS (95.5%)
GENERAL OBLIGATION (15.8%)
Monroe County,
$ 1,000 Public Improvement Refg 1996........................................ 6.00 % 03/01/13 $ 1,054,000
1,000 Public Improvement Refg 1996........................................ 6.00 03/01/15 1,039,390
New York City,
2,055 Various Purpose 1973................................................ 3.50 05/01/01 2,031,737
2,500 Various Purpose 1973................................................ 3.50 05/01/03 2,415,800
605 1997 Ser D.......................................................... 6.00 08/01/06 605,793
New York State,
2,500 Ser 1996 A Refg..................................................... 6.00 07/15/08 2,641,550
3,000 Ser 1995 B Refg..................................................... 5.70 08/15/13 3,020,400
8,000 Puerto Rico, Public Improvement Refg Ser 1987 A....................... 3.00 07/01/06 7,092,639
------------
--------
19,901,309
20,660
------------
--------
EDUCATIONAL FACILITIES REVENUE (11.6%)
New York State Dormitory Authority,
965 City University Ser 1992 U.......................................... 6.375 07/01/08 1,010,326
3,000 City University Ser 1993 A.......................................... 5.75 07/01/09 3,044,940
2,000 Ithaca College Ser 1998 (AMBAC)..................................... 5.00 07/01/21 1,727,700
1,000 New York University Ser 1998 A (MBIA)............................... 5.75 07/01/15 1,012,300
3,000 State University Ser 1989 B......................................... 0.00 05/15/05 2,275,740
2,000 State University Ser 1993 C......................................... 5.375 05/15/13 1,923,320
2,000 State University Ser 1993 A......................................... 5.25 05/15/15 1,879,280
2,000 University of Rochester, Ser 1998 A (MBIA).......................... 5.00 07/01/23 1,711,680
------------
--------
14,585,286
15,965
------------
--------
ELECTRIC REVENUE (8.7%)
4,000 Long Island Power Authority, Ser 1998 A (FSA)......................... 5.125 12/01/22 3,495,040
8,000 Puerto Rico Electric Power Authority, Power Ser O..................... 5.00 07/01/12 7,552,000
------------
--------
11,047,040
12,000
------------
--------
HOSPITAL REVENUE (6.0%)
8,295 New York State Medical Care Facilities Finance Agency, Hospital &
Nursing Home - FHA Insured Mtge 1993 Ser B.......................... 5.50 02/15/22 7,554,091
------------
--------
INDUSTRIAL DEVELOPMENT/POLLUTION CONTROL REVENUE (12.3%)
4,000 New York City Industrial Development Agency, Brooklyn Navy Yard
Cogeneration Partners LP Ser 1997 (AMT)............................. 5.75 10/01/36 3,509,520
11,000 New York State Energy Research & Development Authority, Brooklyn Union
Gas Co 1991 Ser A (AMT)............................................. 6.952 07/01/26 12,023,660
------------
--------
15,533,180
15,000
------------
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
7
<PAGE>
MORGAN STANLEY DEAN WITTER NEW YORK TAX-FREE INCOME 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 (7.5%)
New York City Housing Development Corporation,
$ 2,201 East Midtown Proj - FHA Ins Sec 223................................. 6.50 % 11/15/18 $ 2,222,592
2,226 Ruppert Proj - FHA Ins Sec 223...................................... 6.50 11/15/18 2,212,700
4,935 New York State Housing Finance Agency, Mortgage 1996 Ser A Refg
(FSA)............................................................... 6.10 11/01/15 5,002,017
------------
--------
9,437,309
9,362
------------
--------
MORTGAGE REVENUE - SINGLE FAMILY (3.8%)
4,500 New York State Mortgage Agency, Homeowner Ser 27...................... 6.90 04/01/15 4,748,040
------------
--------
NURSING & HEALTH RELATED FACILITIES REVENUE (4.7%)
New York State Medical Care Facilities Finance Agency,
2,295 Long Term Health Care 1992 Ser D (FSA).............................. 6.50 11/01/15 2,403,829
4,000 Mental Health Ser F................................................. 5.25 02/15/19 3,528,560
------------
--------
5,932,389
6,295
------------
--------
PUBLIC FACILITIES REVENUE (1.3%)
2,000 New York State Urban Development Corporation, Correctional 1998 Ser B
(AMBAC)............................................................. 4.75 01/01/28 1,610,140
------------
--------
TRANSPORTATION FACILITIES REVENUE (7.5%)
3,000 New York State Thruway Authority, Local Highway & Bridge Ser 1998 A
(MBIA).............................................................. 5.00 04/01/18 2,636,430
2,000 Triborough Bridge & Tunnel Authority, Refg Ser 1998 A (MBIA).......... 4.75 01/01/24 1,638,140
Puerto Rico Highway & Transportation Authority,
3,000 Refg Ser X.......................................................... 5.50 07/01/15 2,905,800
3,000 Ser 1998 A.......................................................... 4.75 07/01/38 2,305,290
------------
--------
9,485,660
11,000
------------
--------
WATER & SEWER REVENUE (8.0%)
New York City Municipal Water Finance Authority,
3,000 1998 Ser D.......................................................... 4.75 06/15/25 2,407,560
2,000 2000 Ser A (FGIC)................................................... 5.50 06/15/32 1,811,680
2,000 New York State Environmental Facilities Corporation, Clean Drinking
Water Ser 1998 C.................................................... 5.00 06/15/19 1,751,320
4,000 Suffolk County Industrial Development Agency, Southwest Sewer
Ser 1994 (FGIC)..................................................... 6.00 02/01/08 4,213,640
------------
--------
10,184,200
11,000
------------
--------
OTHER REVENUE (5.5%)
2,000 Municipal Assistance Corporation for the City of New York, Ser E...... 6.00 07/01/06 2,112,100
5,000 New York Local Government Assistance Corporation, Ser 1993 C.......... 5.50 04/01/17 4,837,350
------------
--------
6,949,450
7,000
------------
--------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
8
<PAGE>
MORGAN STANLEY DEAN WITTER NEW YORK TAX-FREE INCOME FUND
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1999, CONTINUED
<TABLE>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- -----------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
REFUNDED (2.8%)
$ 3,000 New York State Dormitory Authority, Suffolk County Judicial Ser 1986
(ETM)............................................................... 7.375% 07/01/16 $ 3,507,300
------------
--------
126,077 TOTAL NEW YORK TAX- EXEMPT MUNICIPAL BONDS
- ---------- (IDENTIFIED COST $118,796,777)...............................................................
120,475,394
------------
SHORT-TERM NEW YORK TAX-EXEMPT MUNICIPAL OBLIGATIONS (7.4%)
2,000 Nassau County Industrial Development Agency, Cold Spring Harbor
Laboratory Ser 1999 (Demand 01/03/00)............................... 4.75* 01/01/23 2,000,000
5,300 New York State Energy Research & Development Authority, New York State
Electric & Gas Corp Ser 1994 C (Demand 01/03/00).................... 4.65* 06/01/29 5,300,000
2,000 Port Authority of New York & New Jersey, Ser 2 (Demand 01/03/00)...... 4.90* 05/01/19 2,000,000
------------
--------
9,300 TOTAL SHORT-TERM NEW YORK TAX-EXEMPT MUNICIPAL OBLIGATIONS
- ---------- (IDENTIFIED COST $9,300,000).................................................................
9,300,000
------------
</TABLE>
<TABLE>
<C> <S> <C> <C>
$135,377 TOTAL INVESTMENTS
(IDENTIFIED COST $128,096,777) (a)......................................................... 102.9% 129,775,394
- --------
- --------
LIABILITIES IN EXCESS OF CASH AND OTHER ASSETS............................................. (2.9) (3,637,339)
----- -------------
NET ASSETS................................................................................. 100.0% $ 126,138,055
----- -------------
----- -------------
</TABLE>
- ---------------------
AMT Alternative Minimum Tax.
ETM Escrowed to maturity.
* 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
$6,005,587 and the aggregate gross unealized depreciation is
$4,326,970, resulting in net unrealized appreciation of $1,678,617.
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 NEW YORK TAX-FREE INCOME FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $128,096,777).............................................................. $129,775,394
Cash.......................................................................................... 170,799
Receivable for:
Interest.................................................................................. 1,978,813
Shares of beneficial interest sold........................................................ 2,871
Prepaid expenses and other assets............................................................. 19,021
------------
TOTAL ASSETS............................................................................. 131,946,898
------------
LIABILITIES:
Payable for:
Shares of beneficial interest repurchased................................................. 5,291,776
Dividends and distributions to shareholders............................................... 243,778
Plan of distribution fee.................................................................. 84,576
Investment management fee................................................................. 63,118
Accrued expenses.............................................................................. 125,595
------------
TOTAL LIABILITIES........................................................................ 5,808,843
------------
NET ASSETS............................................................................... $126,138,055
============
COMPOSITION OF NET ASSETS:
Paid-in-capital............................................................................... $124,531,501
Net unrealized appreciation................................................................... 1,678,617
Accumulated undistributed net investment income............................................... 16,454
Accumulated net realized loss................................................................. (88,517)
------------
NET ASSETS............................................................................... $126,138,055
============
CLASS A SHARES:
Net Assets.................................................................................... $407,702
Shares Outstanding (UNLIMITED AUTHORIZED, $.01 PAR VALUE)..................................... 37,437
NET ASSET VALUE PER SHARE................................................................ $10.89
============
MAXIMUM OFFERING PRICE PER SHARE
(NET ASSET VALUE PLUS 4.44% OF NET ASSET VALUE)........................................ $11.37
============
CLASS B SHARES:
Net Assets.................................................................................... $124,773,900
Shares Outstanding (UNLIMITED AUTHORIZED, $.01 PAR VALUE)..................................... 11,431,995
NET ASSET VALUE PER SHARE................................................................ $10.91
============
CLASS C SHARES:
Net Assets.................................................................................... $839,970
Shares Outstanding (UNLIMITED AUTHORIZED, $.01 PAR VALUE)..................................... 77,111
NET ASSET VALUE PER SHARE................................................................ $10.89
============
CLASS D SHARES:
Net Assets.................................................................................... $116,483
Shares Outstanding (UNLIMITED AUTHORIZED, $.01 PAR VALUE)..................................... 10,684
NET ASSET VALUE PER SHARE................................................................ $10.90
============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
10
<PAGE>
MORGAN STANLEY DEAN WITTER NEW YORK TAX-FREE INCOME FUND
FINANCIAL STATEMENTS, CONTINUED
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<S> <C>
NET INVESTMENT INCOME:
INTEREST INCOME............................................................................... $ 8,165,755
------------
EXPENSES
Plan of distribution fee (Class A shares)..................................................... 690
Plan of distribution fee (Class B shares)..................................................... 1,107,816
Plan of distribution fee (Class C shares)..................................................... 5,893
Investment management fee..................................................................... 820,568
Professional fees............................................................................. 88,621
Shareholder reports and notices............................................................... 68,550
Transfer agent fees and expenses.............................................................. 63,128
Trustees' fees and expenses................................................................... 18,667
Registration fees............................................................................. 11,725
Custodian fees................................................................................ 7,867
Other......................................................................................... 14,112
------------
TOTAL EXPENSES........................................................................... 2,207,637
Less: expense offset.......................................................................... (7,850)
------------
NET EXPENSES............................................................................. 2,199,787
------------
NET INVESTMENT INCOME.................................................................... 5,965,968
------------
NET REALIZED AND UNREALIZED LOSS:
Net realized loss............................................................................. (88,517)
Net change in unrealized appreciation......................................................... (12,708,366)
------------
NET LOSS................................................................................. (12,796,883)
------------
NET DECREASE.................................................................................. $ (6,830,915)
============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
11
<PAGE>
MORGAN STANLEY DEAN WITTER NEW YORK TAX-FREE INCOME 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................................................. $ 5,965,968 $ 6,578,491
Net realized gain (loss).............................................. (88,517) 5,147,298
Net change in unrealized appreciation................................. (12,708,366) (3,210,250)
------------ ------------
NET INCREASE (DECREASE).......................................... (6,830,915) 8,515,539
------------ ------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A shares.................................................... (19,141) (14,967)
Class B shares.................................................... (5,881,219) (6,537,411)
Class C shares.................................................... (31,200) (23,538)
Class D shares.................................................... (13,412) (2,575)
Net realized gain
Class A shares.................................................... (720) (12,473)
Class B shares.................................................... (247,643) (5,154,681)
Class C shares.................................................... (1,330) (23,959)
Class D shares.................................................... (146) (2,529)
------------ ------------
TOTAL DIVIDENDS AND DISTRIBUTIONS................................ (6,194,811) (11,772,133)
------------ ------------
Net decrease from transactions in shares of beneficial interest....... (24,736,170) (2,946,362)
------------ ------------
NET DECREASE..................................................... (37,761,896) (6,202,956)
NET ASSETS:
Beginning of period................................................... 163,899,951 170,102,907
------------ ------------
END OF PERIOD
(INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME OF $16,454 AND $0,
RESPECTIVELY)..................................................... $126,138,055 $163,899,951
============ ============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
12
<PAGE>
MORGAN STANLEY DEAN WITTER NEW YORK TAX-FREE INCOME FUND
NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1999
1. ORGANIZATION AND ACCOUNTING POLICIES
Morgan Stanley Dean Witter New York Tax-Free Income Fund (the "Fund") is
registered under the Investment Company Act of 1940, as amended (the "Act"), as
a diversified, open-end management investment company. The Fund's investment
objective is to provide a high level of current income which is exempt from
federal, New York State and New York City income tax, consistent with the
preservation of capital. The Fund was organized as a Massachusetts business
trust on January 17, 1985 and commenced operations on April 25, 1985. On July
28, 1997, the Fund converted to a multiple class share structure.
The Fund offers Class A shares, Class B shares, Class C shares and Class D
shares. The four classes are substantially the same except that most Class A
shares are subject to a sales charge imposed at the time of purchase and some
Class A shares, and most Class B shares and Class C shares are subject to a
contingent deferred sales charge imposed on shares redeemed within one year, six
years and one year, respectively. Class D shares are not subject to a sales
charge. Additionally, Class A shares, Class B shares and Class C shares incur
distribution expenses.
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.
The Fund amortizes premiums and accretes discounts over the life of the
respective securities. Interest income is accrued daily.
13
<PAGE>
MORGAN STANLEY DEAN WITTER NEW YORK TAX-FREE INCOME FUND
NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1999, CONTINUED
C. MULTIPLE CLASS ALLOCATIONS -- Investment income, expenses (other than
distribution fees), and realized and unrealized gains and losses are allocated
to each class of shares based upon the relative net asset value on the date such
items are recognized. Distribution fees are charged directly to the respective
class.
D. 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.
E. 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 following
annual rates to the Fund's net assets determined as of the close of each
business day: 0.55% to the portion of daily net assets not exceeding $500
million and 0.525% to the portion of daily net assets exceeding $500 million.
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. PLAN OF DISTRIBUTION
Shares of the Fund are distributed by Morgan Stanley Dean Witter Distributors
Inc. (the "Distributor"), an affiliate of the Investment Manager. The Fund has
adopted a Plan of Distribution
14
<PAGE>
MORGAN STANLEY DEAN WITTER NEW YORK TAX-FREE INCOME FUND
NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1999, CONTINUED
(the "Plan") pursuant to Rule 12b-1 under the Act. The Plan provides that the
Fund will pay the Distributor a fee which is accrued daily and paid monthly at
the following annual rates: (i) Class A -- up to 0.25% of the average daily net
assets of Class A; (ii) Class B -- 0.75% of the lesser of: (a) the average daily
aggregate gross sales of the Class B shares since the inception of the Fund (not
including reinvestment of dividend or capital gain distributions) less the
average daily aggregate net asset value of the Class B shares redeemed since the
Fund's inception upon which a contingent deferred sales charge has been imposed
or waived; or (b) the average daily net assets of Class B; and (iii) Class C --
up to 0.75% of the average daily net assets of Class C. In the case of Class A
shares, amounts paid under the Plan are paid to the Distributor for services
provided. In the case of Class B and Class C shares, amounts paid under the Plan
are paid to the Distributor for (1) services provided and the expenses borne by
it and others in the distribution of the shares of these Classes, including the
payment of commissions for sales of these Classes and incentive compensation to,
and expenses of, the Morgan Stanley Dean Witter Financial Advisors and others
who engage in or support distribution of the shares or who service shareholder
accounts, including overhead and telephone expenses; (2) printing and
distribution of prospectuses and reports used in connection with the offering of
these shares to other than current shareholders; and (3) preparation, printing
and distribution of sales literature and advertising materials. In addition, the
Distributor may utilize fees paid pursuant to the Plan, in the case of Class B
shares, to compensate Dean Witter Reynolds Inc. ("DWR"), an affiliate of the
Investment Manager and Distributor, and other selected broker-dealers for their
opportunity costs in advancing such amounts, which compensation would be in the
form of a carrying charge on any unreimbursed expenses.
In the case of Class B shares, provided that the Plan continues in effect, any
cumulative expenses incurred by the Distributor but not yet recovered may be
recovered through the payment of future distribution fees from the Fund pursuant
to the Plan and contingent deferred sales charges paid by investors upon
redemption of Class B shares. Although there is no legal obligation for the Fund
to pay expenses incurred in excess of payments made to the Distributor under the
Plan and the proceeds of contingent deferred sales charges paid by investors
upon redemption of shares, if for any reason the Plan is terminated, the
Trustees will consider at that time the manner in which to treat such expenses.
The Distributor has advised the Fund that such excess amounts, including
carrying charges, totaled $1,112,901 at December 31, 1999.
In the case of Class A shares and Class C shares, expenses incurred pursuant to
the Plan in any calendar year in excess of 0.25% or 0.75% of the average daily
net assets of Class A or Class C, respectively, will not be reimbursed by the
Fund through payments in any subsequent year, except that expenses representing
a gross sales credit to Morgan Stanley Dean Witter Financial Advisors or other
selected broker-dealer representatives may be reimbursed in the subsequent
calendar year. For the year ended December 31, 1999, the distribution fee was
accrued for Class A shares and Class C shares at the annual rate of 0.16% and
0.75%, respectively.
15
<PAGE>
MORGAN STANLEY DEAN WITTER NEW YORK TAX-FREE INCOME FUND
NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1999, CONTINUED
The Distributor has informed the Fund that for year ended December 31, 1999, it
received contingent deferred sales charges from certain redemptions of the
Fund's Class B shares and Class C shares of $276,746 and $772, respectively and
received $2,126 in front-end sales charges from sales of the Fund's Class A
shares. The respective shareholders pay such charges which are not an expense of
the Fund.
4. 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
$3,954,860 and $27,011,385, respectively.
Morgan Stanley Dean Witter Trust FSB, an affiliate of the Investment Manager and
Distributor, is the Fund's transfer agent.
The Fund has an unfunded noncontributory defined benefit pension plan covering
all independent Trustees of the Fund who will have served as independent
Trustees for at least five years at the time of retirement. Benefits under this
plan are based on years of service and compensation during the last five years
of service. Aggregate pension costs for the year ended December 31, 1999
included in Trustees' fees and expenses in the Statement of Operations amounted
to $5,892. At December 31, 1999, the Fund had an accrued pension liability of
$52,664 which is included in accrued expenses in the Statement of Assets and
Liabilities.
5. FEDERAL INCOME TAX STATUS
At December 31, 1999, the Fund had a net capital loss carryover of approximately
$75,000 which will be available through December 31, 2007 to offset future
capital gains to the extent provided by regulations.
Capital losses incurred after October 31 ("post-October" losses) within the
taxable year are deemed to arise on the first business day of the Fund's next
taxable year. The Fund incurred and will elect to defer net capital losses of
approximately $14,000 during fiscal 1999.
6. SUBSEQUENT EVENT
On January 26, 2000, the Board of Trustees of the Fund and of Morgan Stanley
Dean Witter Multi-State Municipal Series Trust -- New York Series ("New York
Series") approved a reorganization plan ("the Plan") whereby New York Series
would be merged into the Fund. The Plan is subject to the consent of New York
Series' shareholders. If approved, the assets of New York Series would be
combined with the assets of the Fund and shareholders of New York Series would
become Class D shareholders of the Fund, receiving Class D shares of the Fund
equal to the value of their holdings in New York Series.
16
<PAGE>
MORGAN STANLEY DEAN WITTER NEW YORK TAX-FREE INCOME FUND
NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1999, CONTINUED
7. 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>
CLASS A SHARES
Sold............................................................. 4,285 $ 50,710 24,896 $ 303,943
Reinvestment of dividends and distributions...................... 1,235 13,955 1,176 14,161
Redeemed......................................................... (1,122) (12,769) (794) (9,600)
---------- ------------- ---------- -----------
Net increase - Class A........................................... 4,398 51,896 25,278 308,504
---------- ------------- ---------- -----------
CLASS B SHARES
Sold............................................................. 627,835 7,314,347 1,006,690 12,318,855
Reinvestment of dividends and distributions...................... 306,084 3,506,005 615,659 7,414,619
Redeemed......................................................... (3,146,578) (35,869,267) (1,945,444) (23,713,938)
---------- ------------- ---------- -----------
Net decrease - Class B........................................... (2,212,659) (25,048,915) (323,095) (3,980,464)
---------- ------------- ---------- -----------
CLASS C SHARES
Sold............................................................. 23,520 265,569 54,107 658,172
Reinvestment of dividends and distributions...................... 2,279 26,032 3,588 43,105
Redeemed......................................................... (12,997) (146,628) (2,319) (28,264)
---------- ------------- ---------- -----------
Net increase - Class C........................................... 12,802 144,973 55,376 673,013
---------- ------------- ---------- -----------
CLASS D SHARES
Sold............................................................. 1,194,426 13,227,353 3,958 48,389
Reinvestment of dividends and distributions...................... 291 3,322 349 4,196
Redeemed......................................................... (1,190,946) (13,114,799) -- --
---------- ------------- ---------- -----------
Net increase - Class D........................................... 3,771 115,876 4,307 52,585
---------- ------------- ---------- -----------
Net decrease in Fund............................................. (2,191,688) $ (24,736,170) (238,134) $(2,946,362)
========== ============= ========== ===========
</TABLE>
17
<PAGE>
MORGAN STANLEY DEAN WITTER NEW YORK TAX-FREE INCOME FUND
FINANCIAL HIGHLIGHTS
Selected ratios and per share data for a share of beneficial interest
outstanding throughout each period:
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE YEAR FOR THE YEAR JULY 28, 1997*
ENDED ENDED THROUGH
DECEMBER 31, 1999 DECEMBER 31, 1998 DECEMBER 31, 1997
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CLASS A SHARES
SELECTED PER SHARE DATA:
Net asset value, beginning of period.................................. $11.90 $12.16 $12.02
------ ------ ------
Income (loss) from investment operations:
Net investment income.............................................. 0.53 0.55 0.24
Net realized and unrealized gain (loss)............................ (1.00) 0.13 0.14
------ ------ ------
Total income (loss) from investment operations........................ (0.47) 0.68 0.38
------ ------ ------
Less dividends and distributions from:
Net investment income.............................................. (0.52) (0.55) (0.24)
Net realized gain.................................................. (0.02) (0.39) --
------ ------ ------
Total dividends and distributions..................................... (0.54) (0.94) (0.24)
------ ------ ------
Net asset value, end of period........................................ $10.89 $11.90 $12.16
====== ====== ======
TOTAL RETURN+......................................................... (4.03)% 5.68% 3.24%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses.............................................................. 0.89%(4) 0.93%(3)(4) 0.92%(2)
Net investment income................................................. 4.58%(4) 4.50%(4) 4.78%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands............................... $408 $393 $94
Portfolio turnover rate............................................... 3% 24% 10%
</TABLE>
- ---------------------
* The date shares were first issued.
+ Does not reflect the deduction of sales charge. 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%
(4) Reflects overall fund ratios for investment income and non-class specific
expenses.
SEE NOTES TO FINANCIAL STATEMENTS
18
<PAGE>
MORGAN STANLEY DEAN WITTER NEW YORK TAX-FREE INCOME FUND
FINANCIAL HIGHLIGHTS, CONTINUED
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
------------------------------------------------------------------------
1999 1998 1997* 1996 1995
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CLASS B SHARES
SELECTED PER SHARE DATA:
Net asset value, beginning of period.......... $11.92 $12.16 $11.71 $11.96 $10.83
---------- -------- -------- -------- --------
Income (loss) from investment operations:
Net investment income...................... 0.46 0.49 0.51 0.53 0.55
Net realized and unrealized gain (loss).... (0.99) 0.15 0.45 (0.21) 1.20
---------- -------- -------- -------- --------
Total income (loss) from investment
operations................................... (0.53) 0.64 0.96 0.32 1.75
---------- -------- -------- -------- --------
Less dividends and distributions from:
Net investment income...................... (0.46) (0.49) (0.51) (0.53) (0.54)
Net realized gain.......................... (0.02) (0.39) -- (0.04) (0.08)
---------- -------- -------- -------- --------
Total dividends and distributions............. (0.48) (0.88) (0.51) (0.57) (0.62)
---------- -------- -------- -------- --------
Net asset value, end of period................ $10.91 $11.92 $12.16 $11.71 $11.96
========== ======== ======== ======== ========
TOTAL RETURN+................................. (4.58)% 5.32% 8.43% 2.82% 16.59%
RATIOS TO AVERAGE NET ASSETS:
Expenses...................................... 1.48%(2) 1.44%(1)(2) 1.43%(1) 1.40%(1) 1.42%(1)
Net investment income......................... 3.99%(2) 3.99%(2) 4.33% 4.54% 4.70%
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands....... $ 124,774 $162,659 $169,868 $192,192 $216,618
Portfolio turnover rate....................... 3% 24% 10% 16% 17%
</TABLE>
- ---------------------
* Prior to July 28, 1997, the Fund issued one class of shares. All shares of
the Fund held prior to that date have been designated Class B shares.
+ Does not reflect the deduction of sales charge. 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) Reflects overall fund ratios for investment income and non-class specific
expenses.
SEE NOTES TO FINANCIAL STATEMENTS
19
<PAGE>
MORGAN STANLEY DEAN WITTER NEW YORK TAX-FREE INCOME FUND
FINANCIAL HIGHLIGHTS, CONTINUED
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE YEAR FOR THE YEAR JULY 28, 1997*
ENDED ENDED THROUGH
DECEMBER 31, 1999 DECEMBER 31, 1998 DECEMBER 31, 1997
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CLASS C SHARES
SELECTED PER SHARE DATA:
Net asset value, beginning of period.................................. $11.90 $12.14 $12.02
------ ------ ------
Income (loss) from investment operations:
Net investment income.............................................. 0.46 0.48 0.22
Net realized and unrealized gain (loss)............................ (0.99) 0.15 0.12
------ ------ ------
Total income (loss) from investment operations........................ (0.53) 0.63 0.34
------ ------ ------
Less dividends and distributions from:
Net investment income.............................................. (0.46) (0.48) (0.22)
Net realized gain.................................................. (0.02) (0.39) --
------ ------ ------
Total dividends and distributions..................................... (0.48) (0.87) (0.22)
------ ------ ------
Net asset value, end of period........................................ $10.89 $11.90 $12.14
====== ====== ======
TOTAL RETURN+......................................................... (4.60)% 5.30% 2.83%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses.............................................................. 1.48%(4) 1.44%(3)(4) 1.40%(2)
Net investment income................................................. 3.99%(4) 3.99%(4) 4.12%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands............................... $840 $765 $108
Portfolio turnover rate............................................... 3% 24% 10%
</TABLE>
- ---------------------
* The date shares were first issued.
+ Does not reflect the deduction of sales charge. 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%
(4) Reflects overall fund ratios for investment income and non-class specific
expenses.
SEE NOTES TO FINANCIAL STATEMENTS
20
<PAGE>
MORGAN STANLEY DEAN WITTER NEW YORK TAX-FREE INCOME FUND
FINANCIAL HIGHLIGHTS, CONTINUED
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE YEAR FOR THE YEAR JULY 28, 1997*
ENDED ENDED THROUGH
DECEMBER 31, 1999 DECEMBER 31, 1998 DECEMBER 31, 1997
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CLASS D SHARES
SELECTED PER SHARE DATA:
Net asset value, beginning of period.................................. $11.91 $12.15 $12.02
------ ------ ------
Income (loss) from investment operations:
Net investment income.............................................. 0.55 0.58 0.26
Net realized and unrealized gain (loss)............................ (1.00) 0.15 0.13
------ ------ ------
Total income (loss) investment operations............................. (0.45) 0.73 0.39
------ ------ ------
Less dividends and distributions from:
Net investment income.............................................. (0.54) (0.58) (0.26)
Net realized gain.................................................. (0.02) (0.39) --
------ ------ ------
Total dividends and distributions..................................... (0.56) (0.97) (0.26)
------ ------ ------
Net asset value, end of period........................................ $10.90 $11.91 $12.15
====== ====== ======
TOTAL RETURN+......................................................... (3.87)% 6.12% 3.27%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses.............................................................. 0.73%(4) 0.69%(3)(4) 0.66%(2)
Net investment income................................................. 4.74%(4) 4.74%(4) 5.04%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands............................... $116 $82 $32
Portfolio turnover rate............................................... 3% 24% 10%
</TABLE>
- ---------------------
* The date shares were first issued.
+ 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%
(4) Reflects overall fund ratios for investment income and non-class specific
expenses.
SEE NOTES TO FINANCIAL STATEMENTS
21
<PAGE>
MORGAN STANLEY DEAN WITTER NEW YORK TAX-FREE
INCOME FUND
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE SHAREHOLDERS AND TRUSTEES
OF MORGAN STANLEY DEAN WITTER NEW YORK TAX-FREE INCOME 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 New York
Tax-Free Income 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 periods indicated, 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 7, 2000
1999 FEDERAL TAX NOTICE (UNAUDITED)
During the year ended December 31, 1999, the Fund paid the
following per share amounts from tax-exempt income: $0.52 to
Class A shareholders, $0.46 to Class B shareholders, $0.46 to
Class C shareholders and $0.54 to Class D shareholders.
For the year ended December 31, 1999, the Fund paid long-term
capital gains of $0.02 per share to Class A, B, C and D
shareholders.
22
<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
NEW YORK
TAX-FREE
INCOME FUND
[GRAPHIC]
ANNUAL REPORT
DECEMBER 31, 1999
