<PAGE> 1
MORGAN STANLEY DEAN WITTER GOVERNMENT INCOME TRUST Two World Trade Center
LETTER TO THE SHAREHOLDERS September 30, 1999 New York, New York 10048
DEAR SHAREHOLDER:
During the twelve-month period ended September 30, 1999, the U.S. economy
continued its path of strength and vigor propelled by a rising stock market, low
unemployment, consumer confidence and increased liquidity provided by the
Federal Reserve Board. In the fall of 1998, the Fed reduced the federal-funds
rate in three steps from 5.50 percent to 4.75 percent, which diminished concerns
about liquidity arising from international banks' exposure to Asia and Russia.
Interest rates climbed steadily throughout 1999 as investors displayed renewed
confidence and appeared less risk averse. With renewed strength in the world
economy and the threat of inflation looming, the Federal Reserve raised the
federal-funds rate twice in the summer, to 5.25 percent.
Interest rates on intermediate-term U.S. Treasuries were highly volatile during
this period. Five-year Treasuries ranged in yield between 3.97 percent and 6.03
percent. On September 30, 1999, the five-year Treasury note was yielding 5.75
percent, compared to 4.22 percent one year earlier.
PERFORMANCE AND INVESTMENT STRATEGY
During the fiscal year ended September 30, 1999, Morgan Stanley Dean Witter
Government Income Trust produced a total return of 0.17 percent, based on a
change in net asset value (NAV) and reinvestment of dividends. Based on a change
in the Trust's market price on the New York Stock Exchange (NYSE) and
reinvestment of dividends, the Trust's total return for the fiscal year was
- -2.24 percent.
On September 28, 1999, the Trustees declared a monthly dividend of $0.045 per
share, payable October 22, 1999, to shareholders of record on October 8, 1999.
The dividend rate, when annualized, provides a current yield of 6.54 percent,
based on the Trust's September 30, 1999, closing NYSE market price of $8.25 per
share.
The Trust's performance was reflective of the volatile interest-rate
environment. The Trust's continued substantial holdings of mortgaged-
<PAGE> 2
MORGAN STANLEY DEAN WITTER GOVERNMENT INCOME TRUST
LETTER TO THE SHAREHOLDERS September 30, 1999, continued
backed securities mitigated a substantial amount of the volatility during the
period. Investors' preference for higher-yielding securities as well as a
continued lack of new issuance caused mortgages to outperform other government
securities.
As of September 30, 1999, the Trust had net assets in excess of $380 million,
with 61 percent invested in mortgage-backed securities issued by the Government
National Mortgage Association (GNMA), the Federal National Mortgage Association
(FNMA) and the Federal Home Loan Mortgage Corp. (FHLMC), 28 percent in U.S.
government agency obligations, 10 percent in U.S. Treasury securities and the
remaining 1 percent in cash equivalents. On September 30, 1999, the Trust's
average maturity was 7.2 years.
LOOKING AHEAD
We believe that in the months ahead, the U.S. economy is likely to grow as low
unemployment and increased productivity continue to confound tried and true
economic models. Should our economy show continued strength, along with renewed
inflation pressures, the Federal Reserve may need to continue on its path of
tighter monetary policy. Accordingly, the Trust will continue to assess market
conditions and continue to look for new opportunities as they become available.
Please remember that the Trustees have approved a procedure whereby the Trust
may, when appropriate, repurchase shares in the open market or in privately
negotiated transactions at a price not above market value or net asset value,
whichever is lower at the time of purchase. In accordance with this procedure,
1,798,400 shares of the Trust were purchased on the New York Stock Exchange over
the twelve-month period ended September 30, 1999.
We appreciate your ongoing support of Morgan Stanley Dean Witter Government
Income Trust and look forward to continuing to serve your investment objectives.
<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>
2
<PAGE> 3
MORGAN STANLEY DEAN WITTER GOVERNMENT INCOME TRUST
PORTFOLIO OF INVESTMENTS September 30, 1999
<TABLE>
<CAPTION>
PRINCIPAL DESCRIPTION
AMOUNT IN AND COUPON
THOUSANDS MATURITY DATE RATE VALUE
- -------------------------------------------------------------------------------------
<C> <S> <C> <C>
MORTGAGE-BACKED SECURITIES (60.5%)
Federal Home Loan Mortgage Corp. (4.7%)
$ 3,256 12/01/18 - 02/01/19............................. 9.50 % $ 3,454,695
8,091 07/01/09 - 08/01/20............................. 10.00 8,708,385
5,424 08/01/14 - 05/01/19............................. 10.50 5,917,209
------------
18,080,289
------------
Federal National Mortgage Assoc. (34.3%)
23,038 04/01/06 - 02/01/29............................. 6.00 22,102,375
39,256 05/01/07 - 04/01/29............................. 6.50 37,946,213
33,580 07/01/23 - 02/01/26............................. 7.00 33,054,772
19,961 02/01/22 - 07/01/29............................. 7.50 20,048,601
10,527 12/01/21 - 10/01/25............................. 8.00 10,754,404
4,805 08/01/17 - 05/01/25............................. 8.50 4,975,655
555 09/01/13 - 07/01/23............................. 9.00 581,905
1,121 06/01/18 - 01/01/21............................. 9.50 1,192,348
------------
130,656,273
------------
Government National Mortgage Assoc. (21.5%)
8,766 03/15/26 - 03/15/29............................. 6.00 8,149,476
15,448 03/20/26 - 05/20/29............................. 6.50 14,742,330
20,858 02/15/24 - 08/15/29............................. 7.00 20,473,495
11,030 12/15/22 - 09/15/29............................. 7.50 11,078,001
7,292 11/15/15 - 12/15/21............................. 8.00 7,460,491
13,963 05/15/16 - 11/15/24............................. 8.50 14,517,337
4,695 04/15/17 - 02/15/25............................. 9.00 4,923,561
467 11/15/19 - 08/15/20............................. 9.50 501,019
------------
81,845,710
------------
TOTAL MORTGAGE-BACKED SECURITIES
(Identified Cost $231,112,124)............................ 230,582,272
------------
U.S. GOVERNMENT & AGENCY OBLIGATIONS (38.6%)
1,500 Federal Farm Credit Bank
06/17/05....................................... 5.80 1,454,370
3,085 Federal Farm Credit Bank
01/10/05....................................... 5.90 3,010,744
2,000 Federal Farm Credit Corp.
09/23/04....................................... 6.30 1,988,800
1,000 Federal Farm Credit Corp.
09/24/07....................................... 6.52 992,430
14,000 Federal Home Loan Banks
02/25/04 - 07/02/12............................ 0.00 9,433,460
2,000 Federal Home Loan Banks
04/23/03....................................... 5.785 1,959,860
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
3
<PAGE> 4
MORGAN STANLEY DEAN WITTER GOVERNMENT INCOME TRUST
PORTFOLIO OF INVESTMENTS September 30, 1999, continued
<TABLE>
<CAPTION>
PRINCIPAL DESCRIPTION
AMOUNT IN AND COUPON
THOUSANDS MATURITY DATE RATE VALUE
- -------------------------------------------------------------------------------------
<C> <S> <C> <C>
$ 1,000 Federal Home Loan Banks
11/25/08....................................... 5.88 % $ 925,780
1,000 Federal Home Loan Banks
07/28/08....................................... 5.945 944,890
2,000 Federal Home Loan Banks
02/05/08....................................... 5.96 1,896,160
2,000 Federal Home Loan Banks
03/17/08....................................... 6.02 1,902,840
3,500 Federal Home Loan Banks
10/10/07....................................... 6.20 3,404,555
2,000 Federal Home Loan Banks
08/15/07....................................... 6.295 1,957,620
2,000 Federal Home Loan Mortgage Corp.
04/15/08....................................... 5.75 1,877,460
2,500 Federal National Mortgage Assoc.
02/01/04 - 08/01/04............................ 0.00 1,879,679
2,000 Federal National Mortgage Assoc.
01/26/09....................................... 5.80 1,841,920
1,000 Federal National Mortgage Assoc.
07/30/07....................................... 6.75 978,630
103,000 Resolution Funding Corp.
10/15/01 - 10/15/07............................ 0.00 69,507,110
2,000 U.S. Department of Housing and Urban Development
Series 1999A
08/01/11....................................... 6.16 1,848,100
7,500 U.S. Treasury Note
02/28/03 - 05/31/03............................ 5.50 7,424,175
4,500 U.S. Treasury Note
12/31/02 - 02/15/06............................ 5.625 4,432,350
1,000 U.S. Treasury Note
11/15/05....................................... 5.875 993,690
6,000 U.S. Treasury Note
08/15/07....................................... 6.125 6,006,360
8,500 U.S. Treasury Note
02/15/07....................................... 6.25 8,574,035
2,000 U.S. Treasury Note
08/15/05....................................... 6.50 2,047,560
5,500 U.S. Treasury Note
12/31/99....................................... 7.75 5,533,935
5,000 U.S. Treasury Strip
02/15/03....................................... 0.00 4,106,750
------------
TOTAL U.S. GOVERNMENT & AGENCY OBLIGATIONS
(Identified Cost $147,754,097)............................ 146,923,263
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
4
<PAGE> 5
MORGAN STANLEY DEAN WITTER GOVERNMENT INCOME TRUST
PORTFOLIO OF INVESTMENTS September 30, 1999, continued
<TABLE>
<CAPTION>
PRINCIPAL DESCRIPTION
AMOUNT IN AND COUPON
THOUSANDS MATURITY DATE RATE VALUE
- -------------------------------------------------------------------------------------
<C> <S> <C> <C>
SHORT-TERM INVESTMENT (0.3%)
REPURCHASE AGREEMENT
The Bank of New York due 10/01/99 (dated
09/30/99; proceeds $1,098,037) (a)
(Identified Cost $1,097,885).................... 5.00% $ 1,097,885
------------
TOTAL INVESTMENTS
(Identified Cost $379,964,106) (b).............. 99.4% 378,603,420
OTHER ASSETS IN EXCESS OF LIABILITIES........... 0.6 2,273,800
---- ------------
NET ASSETS...................................... 100.0% $380,877,220
===== ============
</TABLE>
- ---------------------
(a) Collateralized by $330,000 Federal Home Loan Mortgage Corp. 5.50% due
05/15/02 valued at $331,585; $73,305 Federal National Mortgage Assoc. 5.25%
due 01/15/03 valued at $71,911; $285,000 Federal National Mortgage Assoc.
6.03% due 05/15/03 valued at $285,739; $124,197 Federal National Mortgage
Assoc. 6.04% due 02/25/09 valued at $116,254 and $309,000 U.S. Treasury Note
5.875% due 06/30/00 valued at $314,794.
(b) The aggregate cost for federal income tax purposes approximates identified
cost. The aggregate gross unrealized appreciation is $4,331,880 and the
aggregate gross unrealized depreciation is $5,692,566, resulting in net
unrealized depreciation of $1,360,686.
SEE NOTES TO FINANCIAL STATEMENTS
5
<PAGE> 6
MORGAN STANLEY DEAN WITTER GOVERNMENT INCOME TRUST
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
September 30, 1999
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $379,964,106)............................. $378,603,420
Receivable for:
Interest................................................ 2,357,921
Principal paydowns...................................... 472,734
Prepaid expenses and other assets........................... 12,966
------------
TOTAL ASSETS............................................ 381,447,041
------------
LIABILITIES:
Payable for:
Investment management fee............................... 213,635
Shares of beneficial interest repurchased............... 210,994
Accrued expenses and other payables......................... 145,192
------------
TOTAL LIABILITIES....................................... 569,821
------------
NET ASSETS.............................................. $380,877,220
============
COMPOSITION OF NET ASSETS:
Paid-in-capital............................................. $402,205,650
Net unrealized depreciation................................. (1,360,686)
Undistributed net investment income......................... 36,917
Accumulated net realized loss............................... (20,004,661)
------------
NET ASSETS.............................................. $380,877,220
============
NET ASSET VALUE PER SHARE,
41,720,200 shares outstanding
(unlimited shares authorized of $.01 par value)............ $9.13
============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
6
<PAGE> 7
MORGAN STANLEY DEAN WITTER GOVERNMENT INCOME TRUST
FINANCIAL STATEMENTS, continued
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
For the year ended September 30, 1999
<S> <C>
NET INVESTMENT INCOME:
INTEREST INCOME............................................. $ 26,732,906
------------
EXPENSES
Investment management fee................................... 2,403,009
Transfer agent fees and expenses............................ 180,254
Custodian fees.............................................. 69,680
Professional fees........................................... 59,505
Shareholder reports and notices............................. 56,221
Registration fees........................................... 45,504
Trustees' fees and expenses................................. 18,782
Other....................................................... 14,062
------------
TOTAL EXPENSES.......................................... 2,847,017
------------
NET INVESTMENT INCOME................................... 23,885,889
------------
NET REALIZED AND UNREALIZED LOSS:
Net realized loss........................................... (32,344)
Net change in unrealized appreciation....................... (26,647,143)
------------
NET LOSS................................................ (26,679,487)
------------
NET DECREASE................................................ $ (2,793,598)
============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
7
<PAGE> 8
MORGAN STANLEY DEAN WITTER GOVERNMENT INCOME TRUST
FINANCIAL STATEMENTS, continued
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR FOR THE YEAR
ENDED ENDED
SEPTEMBER 30, 1999 SEPTEMBER 30, 1998
- ------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income............................ $ 23,885,889 $ 26,458,740
Net realized gain (loss)......................... (32,344) 18,077
Net change in unrealized appreciation............ (26,647,143) 16,040,482
------------ ------------
NET INCREASE (DECREASE)...................... (2,793,598) 42,517,299
Dividends from net investment income............. (23,798,485) (26,897,809)
Net decrease from transactions in shares of
beneficial interest............................. (15,560,813) (22,353,586)
------------ ------------
NET DECREASE................................. (42,152,896) (6,734,096)
NET ASSETS:
Beginning of period.............................. 423,030,116 429,764,212
------------ ------------
END OF PERIOD
(Including undistributed net investment
income of $36,917 and dividends in excess of
net investment income $50,012,
respectively)............................... $380,877,220 $423,030,116
============ ============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
8
<PAGE> 9
MORGAN STANLEY DEAN WITTER GOVERNMENT INCOME TRUST
NOTES TO FINANCIAL STATEMENTS September 30, 1999
1. ORGANIZATION AND ACCOUNTING POLICIES
Morgan Stanley Dean Witter Government Income Trust (the "Trust"), formerly Dean
Witter Government Income Trust, is registered under the Investment Company Act
of 1940, as amended, as a diversified, closed-end management investment company.
The Trust's primary investment objective is to provide as high a level of
current income as is consistent with prudent investment and as a secondary
objective, capital appreciation. The Trust commenced operations on February 29,
1988.
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 -- (1) portfolio securities for which
over-the-counter market quotations are readily available are valued at the
latest available bid price prior to the time of valuation; (2) when market
quotations are not readily available, including circumstances under which it is
determined by Morgan Stanley Dean Witter Advisors Inc. (the "Investment
Manager"), that sale or bid prices are not reflective of a security's market
value, portfolio securities are valued at their fair value as determined in good
faith under procedures established by and under the general supervision of the
Trustees (valuation of debt securities for which market quotations are not
readily available may be based upon current market prices of securities which
are comparable in coupon, rating and maturity or an appropriate matrix utilizing
similar factors); (3) certain portfolio securities may be valued by an outside
pricing service approved by the Trustees. The pricing service may utilize a
matrix system incorporating security quality, maturity and coupon as the
evaluation model parameters, and/or research and evaluations by its staff,
including review of broker-dealer market price quotations, if available, in
determining what it believes is the fair valuation of the securities valued by
such pricing service; and (4) 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 over the life of the respective securities. Interest
income is accrued daily.
9
<PAGE> 10
MORGAN STANLEY DEAN WITTER GOVERNMENT INCOME TRUST
NOTES TO FINANCIAL STATEMENTS September 30, 1999, continued
C. FEDERAL INCOME TAX STATUS -- It is the Trust's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its taxable income to its shareholders.
Accordingly, no federal income tax provision is required.
D. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- The Trust 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, the Trust pays the Investment
Manager a management fee, accrued weekly and payable monthly, by applying the
annual rate of 0.60% to the Trust's weekly net assets.
Under the terms of the Agreement, in addition to managing the Trust's
investments, the Investment Manager maintains certain of the Trust'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 Trust 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 Trust.
3. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES
The cost of purchases and proceeds from sales/prepayments of portfolio
securities, excluding short-term investments, for the year ended September 30,
1999 aggregated $74,230,653 and $93,900,859, respectively.
10
<PAGE> 11
MORGAN STANLEY DEAN WITTER GOVERNMENT INCOME TRUST
NOTES TO FINANCIAL STATEMENTS September 30, 1999, continued
Morgan Stanley Dean Witter Trust FSB, an affiliate of the Investment Manager, is
the Trust's transfer agent. At September 30, 1999, the Trust had transfer agent
fees and expenses payable of approximately $4,300.
The Trust has an unfunded noncontributory defined benefit pension plan covering
all independent Trustees of the Trust 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 September 30, 1999
included in Trustees' fees and expenses in the Statement of Operations amounted
to $5,840. At September 30, 1999, the Trust had an accrued pension liability of
$52,007 which is included in accrued expenses in the Statement of Assets and
Liabilities.
4. SHARES OF BENEFICIAL INTEREST
Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
CAPITAL
PAID IN
PAR VALUE EXCESS OF
SHARES OF SHARES PAR VALUE
---------- --------- ------------
<S> <C> <C> <C>
Balance, September 30, 1997................................. 46,089,300 $460,893 $444,901,836
Treasury shares purchased and retired (weighted average
discount 7.73%)*........................................... (2,570,700) (25,707) (22,327,879)
Reclassification due to permanent book/tax differences...... -- -- (5,060,996)
---------- -------- ------------
Balance, September 30, 1998................................. 43,518,600 435,186 417,512,961
Treasury shares purchased and retired (weighted average
discount 7.78%)*........................................... (1,798,400) (17,984) (15,542,829)
Reclassification due to permanent book/tax differences...... -- -- (181,684)
---------- -------- ------------
Balance, September 30, 1999................................. 41,720,200 $417,202 $401,788,448
========== ======== ============
</TABLE>
- ---------------------
* The Trustees have voted to retire the shares purchased.
5. DIVIDENDS
On September 28, 1999, the Trust declared the following dividends from net
investment income:
<TABLE>
<CAPTION>
AMOUNT RECORD PAYABLE
PER SHARE DATE DATE
- --------- ----------------- -----------------
<S> <C> <C>
$0.045 October 8, 1999 October 22, 1999
$0.045 November 5, 1999 November 19, 1999
$0.045 December 3, 1999 December 17, 1999
</TABLE>
11
<PAGE> 12
MORGAN STANLEY DEAN WITTER GOVERNMENT INCOME TRUST
NOTES TO FINANCIAL STATEMENTS September 30, 1999, continued
6. FEDERAL INCOME TAX STATUS
During the year ended September 30, 1999, the Trust utilized approximately
$9,000 of its net capital loss carryover. At September 30, 1999, the Trust had a
net capital loss carryover of approximately $19,961,000 to offset future capital
gains to the extent provided by regulations, available through September 30 of
the following years:
<TABLE>
<CAPTION>
AMOUNT IN THOUSANDS
--------------------------------------------
2002 2003 2004 2006
------- -------- -------- ----
<S> <C> <C> <C>
$8,299 $9,638 $2,019 $5
====== ====== ====== ==
</TABLE>
Capital losses incurred after October 31 ("post-October" losses) within the
taxable year are deemed to arise on the first business day of the Trust's next
taxable year. The Trust incurred and will elect to defer net capital losses of
approximately $44,000 during fiscal 1999.
As of September 30, 1999, the Trust had permanent book/tax differences primarily
attributable to an expired capital loss carryover. To reflect reclassifications
arising from these differences, paid-in-capital was charged $181,684,
accumulated undistributed net investment income was charged $475 and accumulated
net realized loss was credited $182,159.
12
<PAGE> 13
MORGAN STANLEY DEAN WITTER GOVERNMENT INCOME TRUST
FINANCIAL HIGHLIGHTS
Selected ratios and per share data for a share of beneficial interest
outstanding through each period:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED SEPTEMBER 30*
----------------------------------------------------
1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
SELECTED PER SHARE DATA:
Net asset value, beginning of period........................ $ 9.72 $ 9.32 $ 9.08 $ 9.17 $ 8.69
-------- -------- -------- -------- --------
Income (loss) from investment operations:
Net investment income...................................... 0.56 0.59 0.61 0.60 0.58
Net realized and unrealized gain (loss).................... (0.62) 0.37 0.19 (0.14) 0.43
-------- -------- -------- -------- --------
Total income (loss) from investment operations.............. (0.06) 0.96 0.80 0.46 1.01
-------- -------- -------- -------- --------
Less dividends from net investment income................... (0.56) (0.60) (0.60) (0.60) (0.60)
-------- -------- -------- -------- --------
Anti-dilutive effect of acquiring treasury shares........... 0.03 0.04 0.04 0.05 0.07
-------- -------- -------- -------- --------
Net asset value, end of period.............................. $ 9.13 $ 9.72 $ 9.32 $ 9.08 $ 9.17
======== ======== ======== ======== ========
Market value, end of period................................. $ 8.25 $ 9.00 $ 8.438 $ 8.25 $ 8.25
======== ======== ======== ======== ========
TOTAL RETURN+............................................... (2.24)% 14.26% 9.86% 7.31% 12.97%
RATIOS TO AVERAGE NET ASSETS:
Expenses.................................................... 0.71% 0.70% 0.73% 0.73% 0.71%
Net investment income....................................... 5.98% 6.27% 6.60% 6.56% 6.50%
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands..................... $380,877 $423,030 $429,764 $439,896 $475,471
Portfolio turnover rate..................................... 19% 16% 19% 21% 25%
</TABLE>
- ---------------------
* The per share amounts were computed using an average number of shares
outstanding during the period.
+ Total return is based upon the current market value on the last day of each
period reported. Dividends are assumed to be reinvested at the prices
obtained under the Trust's dividend reinvestment plan. Total return does not
reflect brokerage commissions.
SEE NOTES TO FINANCIAL STATEMENTS
13
<PAGE> 14
MORGAN STANLEY DEAN WITTER GOVERNMENT INCOME TRUST
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE SHAREHOLDERS AND TRUSTEES
OF MORGAN STANLEY DEAN WITTER GOVERNMENT INCOME TRUST
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
Government Income Trust (the "Trust"), formerly Dean Witter Government Income
Trust, at September 30, 1999, the results of its operations for the year then
ended, the changes in its net assets for each of the two years in the period
then ended and the financial highlights for each of the five years in the period
then ended, in conformity with generally accepted accounting principles. These
financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Trust'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 generally accepted auditing standards 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
September 30, 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
November 8, 1999
14
<PAGE> 15
(This Page Intentionally Left Blank)
<PAGE> 16
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
Rajesh K. Gupta
Vice President
Thomas F. Caloia
Treasurer
TRANSFER AGENT
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Morgan Stanley Dean Witter Trust FSB
Harborside Financial Center -- Plaza Two
Jersey City, New Jersey 07311
INDEPENDENT ACCOUNTANTS
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PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York 10036
INVESTMENT MANAGER
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Morgan Stanley Dean Witter Advisors Inc.
Two World Trade Center
New York, New York 10048
MORGAN STANLEY
DEAN WITTER
GOVERNMENT
INCOME TRUST
Annual Report
September 30, 1999
