<PAGE> 1
MORGAN STANLEY DEAN WITTER GOVERNMENT INCOME TRUST Two World Trade Center
LETTER TO THE SHAREHOLDERS September 30, 2000 New York, New York 10048
DEAR SHAREHOLDER:
During the fiscal year ended September 30, 2000, the U.S. economy continued to
exhibit strong growth with moderate inflation, though potentially inflationary
pressures loomed throughout much of the period. Attempting to reduce the
inflation threat, the Federal Reserve Board raised the federal funds rate a
total of 125 basis points, from 5.25 percent to 6.50 percent. As measured by the
two-year U.S. Treasury note, short-term interest rates rose, peaking at 6.91
percent in May. The effect of the interest-rate increases was less pronounced
for long-term Treasuries, which benefited from a federal government program of
buying back outstanding debt. The subsequent reduction in the supply of
long-term Treasuries created an inverted yield curve, meaning that
short-term Treasury yields were higher than those of longer-term Treasuries.
By May, signs of more-moderate economic growth had begun to appear. Higher
interest rates, a stagnated stock market and high energy prices all contributed
to expectations of slower economic growth. The fixed-income market rallied on
hopes that the Fed's restrictive policy might be nearing its end. On September
30, 2000, the five-year Treasury note was yielding 5.85 percent, down almost 100
basis points from its highest level of 6.81 percent.
PERFORMANCE AND PORTFOLIO STRATEGY
For the 12-month period ended September 30, 2000, Morgan Stanley Dean Witter
Government Income Trust produced a total return of 7.38 percent based on a
change in net asset value and reinvestment of distributions. Based on a change
in the Fund's market price on the New York Stock Exchange (NYSE) and
reinvestment of distributions, the Fund's total return for the period was 6.80
percent.
As of September 30, 2000, the Trust had net assets in excess of $366 million,
with 57 percent invested in mortgage-backed securities issued by the Government
National Mortgage Association (GNMA), the
<PAGE> 2
MORGAN STANLEY DEAN WITTER GOVERNMENT INCOME TRUST
LETTER TO THE SHAREHOLDERS September 30, 2000, continued
2
Federal National Mortgage Association (FNMA) and the Federal Home Loan Mortgage
Corp. (FHLMC); 31 percent in U.S. agency obligations; and 12 percent in U.S.
Treasury securities. On September 30, 2000, the Trust's average maturity was 6.9
years. Adjustments to the Trust's average maturity will be made as attractive
opportunities present themselves.
LOOKING AHEAD
We believe that economic growth will moderate, while inflation will remain at
acceptable levels. However, should growth strengthen and inflation rise, the Fed
may feel the need to raise interest rates further.
We would again like to remind shareholders 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, 1,759,101 shares of the Trust were purchased on the NYSE
over the 12-month period ended September 30, 2000.
We appreciate your ongoing support of Morgan Stanley Dean Witter Government
Income Trust 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>
<PAGE> 3
3
MORGAN STANLEY DEAN WITTER GOVERNMENT INCOME TRUST
PORTFOLIO OF INVESTMENTS September 30, 2000
<TABLE>
<CAPTION>
PRINCIPAL DESCRIPTION
AMOUNT IN AND COUPON
THOUSANDS MATURITY DATE RATE VALUE
--------------------------------------------------------------------------------------
<C> <S> <C> <C>
MORTGAGE-BACKED SECURITIES (57.1%)
Federal Home Loan Mortgage Corp. (3.6%)
$ 2,659 01/01/19 - 02/01/19.............................. 9.50 % $ 2,754,155
6,216 08/01/09 - 08/01/20.............................. 10.00 6,443,015
3,770 08/01/14 - 05/01/19.............................. 10.50 4,027,716
------------
13,224,886
------------
Federal National Mortgage Assoc. (31.6%)
19,841 05/01/06 - 02/01/29.............................. 6.00 18,999,913
34,496 05/01/07 - 04/01/29.............................. 6.50 33,291,453
30,032 10/01/13 - 08/01/29.............................. 7.00 29,412,797
17,708 01/01/22 - 08/01/29.............................. 7.50 17,663,331
10,739 12/01/21 - 03/01/30.............................. 8.00 10,876,199
4,155 08/01/17 - 06/01/25.............................. 8.50 4,252,495
494 09/01/13 - 04/01/21.............................. 9.00 509,567
1,021 06/01/18 - 01/01/21.............................. 9.50 1,060,240
------------
116,065,995
------------
Government National Mortgage Assoc. (21.9%)
8,252 3/15/26 - 03/15/29............................... 6.00 7,741,349
14,368 03/20/26 - 05/20/29.............................. 6.50 13,787,375
4,000 *................................................ 6.50 3,852,500
18,802 02/15/24 - 08/15/29.............................. 7.00 18,484,795
13,766 12/15/22 - 11/20/29.............................. 7.50 13,792,645
7,004 11/15/15 - 03/15/30.............................. 8.00 7,126,770
11,004 05/15/16 - 11/15/24.............................. 8.50 11,313,365
3,554 04/15/17 - 02/15/25.............................. 9.00 3,683,873
352 11/15/19 - 08/15/20.............................. 9.50 366,553
------------
80,149,225
------------
TOTAL MORTGAGE-BACKED SECURITIES
(Cost $211,131,126)........................................ 209,440,106
------------
U.S. GOVERNMENT & AGENCY OBLIGATIONS (42.7%)
1,500 Federal Farm Credit Bank
06/17/05......................................... 5.80 1,448,925
3,085 Federal Farm Credit Bank
01/10/05......................................... 5.90 2,999,638
2,000 Federal Farm Credit Corp.
09/23/04......................................... 6.30 1,978,140
1,000 Federal Farm Credit Corp.
09/24/07......................................... 6.52 980,370
14,000 Federal Home Loan Banks
02/25/04 - 07/02/12.............................. 0.00 9,980,080
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 4
MORGAN STANLEY DEAN WITTER GOVERNMENT INCOME TRUST
PORTFOLIO OF INVESTMENTS September 30, 2000, continued
4
<TABLE>
<CAPTION>
PRINCIPAL DESCRIPTION
AMOUNT IN AND COUPON
THOUSANDS MATURITY DATE RATE VALUE
--------------------------------------------------------------------------------------
<C> <S> <C> <C>
$ 2,000 Federal Home Loan Banks
04/23/03......................................... 5.785% $ 1,962,040
1,000 Federal Home Loan Banks
11/25/08......................................... 5.88 926,510
1,000 Federal Home Loan Banks
07/28/08......................................... 5.945 942,980
2,000 Federal Home Loan Banks
02/05/08......................................... 5.96 1,893,060
2,000 Federal Home Loan Banks
03/17/08......................................... 6.02 1,898,800
3,500 Federal Home Loan Banks
10/10/07......................................... 6.20 3,369,380
2,000 Federal Home Loan Banks
08/15/07......................................... 6.295 1,936,740
2,000 Federal Home Loan Mortgage Corp.
04/15/08......................................... 5.75 1,880,640
2,500 Federal National Mortgage Assoc.
02/01/04 - 08/01/04.............................. 0.00 1,979,777
2,000 Federal National Mortgage Assoc.
01/26/09......................................... 5.80 1,833,160
1,000 Federal National Mortgage Assoc.
07/30/07......................................... 6.75 971,480
101,000 Resolution Funding Corp.
10/15/01 - 10/15/07.............................. 0.00 72,642,320
2,000 U.S. Department of Housing and Urban Development
Series 1999A
08/01/11......................................... 6.16 1,838,520
7,500 U.S. Treasury Note
02/28/03 - 05/31/03**............................ 5.50 7,417,425
4,500 U.S. Treasury Note
12/31/02 - 02/15/06**............................ 5.625 4,452,225
1,000 U.S. Treasury Note
11/15/05......................................... 5.875 999,780
7,000 U.S. Treasury Note
08/15/09......................................... 6.00 7,037,450
6,000 U.S. Treasury Note
08/15/07**....................................... 6.125 6,064,500
8,500 U.S. Treasury Note
02/15/07......................................... 6.25 8,643,990
5,000 U.S. Treasury Note
08/15/05 - 02/15/10.............................. 6.50 5,177,400
1,000 U.S. Treasury Note
05/15/07......................................... 6.625 1,037,530
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 5
MORGAN STANLEY DEAN WITTER GOVERNMENT INCOME TRUST
PORTFOLIO OF INVESTMENTS September 30, 2000, continued
5
<TABLE>
<CAPTION>
PRINCIPAL DESCRIPTION
AMOUNT IN AND COUPON
THOUSANDS MATURITY DATE RATE VALUE
--------------------------------------------------------------------------------------
<C> <S> <C> <C>
$ 5,000 U.S. Treasury Strip
02/15/03......................................... 0.00 % $ 4,352,000
------------
TOTAL U.S. GOVERNMENT & AGENCY OBLIGATIONS
(Cost $156,844,502)........................................ 156,644,860
------------
SHORT-TERM INVESTMENT (0.7%)
REPURCHASE AGREEMENT
2,657 The Bank of New York due 10/02/00 (dated
09/29/00; proceeds $2,658,131) (a)(Cost
$2,656,747)...................................... 6.25 2,656,747
------------
TOTAL INVESTMENTS
(Cost $370,632,375) (b)............................. 100.5% 368,741,713
LIABILITIES IN EXCESS OF OTHER ASSETS............... (0.5) (1,959,122)
------ ------------
NET ASSETS.......................................... 100.0% $366,782,591
====== ============
</TABLE>
---------------------
* Securities purchased on a forward commitment with an approximate principal
amount and no definite maturity date; the actual principal amount and
maturity date will be determined upon settlement.
** Some of these securities are segregated in connection with securities
purchased on a forward commitment basis.
(a) Collateralized by $2,646,750 Federal Home Loan Mortgage Corp. 6.875% due
01/15/05 valued at $2,709,884.
(b) The aggregate cost for federal income tax purposes approximates the
aggregate cost for book purposes. The aggregate gross unrealized
appreciation is $3,695,207 and the aggregate gross unrealized depreciation
is $5,585,869, resulting in net unrealized depreciation of $1,890,662.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 6
6
MORGAN STANLEY DEAN WITTER GOVERNMENT INCOME TRUST
FINANCIAL STATEMENTS
<TABLE>
<S> <C>
STATEMENT OF ASSETS AND LIABILITIES
September 30, 2000
ASSETS:
Investments in securities, at value
(cost $370,632,375)........................................ $368,741,713
Receivable for:
Interest................................................ 2,180,968
Principal paydowns...................................... 137,077
Prepaid expenses and other assets........................... 15,250
-----------
TOTAL ASSETS............................................ 371,075,008
-----------
LIABILITIES:
Payable for:
Investments purchased................................... 3,845,264
Investment management fee............................... 216,973
Shares of beneficial interest repurchased............... 80,922
Accrued expenses............................................ 149,258
-----------
TOTAL LIABILITIES....................................... 4,292,417
-----------
NET ASSETS.............................................. $366,782,591
===========
COMPOSITION OF NET ASSETS:
Paid-in-capital............................................. $387,840,216
Net unrealized depreciation................................. (1,890,662)
Accumulated undistributed net investment income............. 894,626
Accumulated net realized loss............................... (20,061,589)
-----------
NET ASSETS.............................................. $366,782,591
===========
NET ASSET VALUE PER SHARE,
39,961,099 shares outstanding
(unlimited shares authorized of $.01 par value)............ $9.18
============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 7
7
MORGAN STANLEY DEAN WITTER GOVERNMENT INCOME TRUST
FINANCIAL STATEMENTS, continued
<TABLE>
<S> <C>
STATEMENT OF OPERATIONS
For the year ended September 30, 2000
NET INVESTMENT INCOME:
INTEREST INCOME............................................. $25,518,277
-----------
EXPENSES
Investment management fee................................... 2,212,941
Transfer agent fees and expenses............................ 132,196
Custodian fees.............................................. 82,862
Professional fees........................................... 58,289
Shareholder reports and notices............................. 58,114
Registration fees........................................... 34,650
Trustees' fees and expenses................................. 16,935
Other....................................................... 2,350
-----------
TOTAL EXPENSES.......................................... 2,598,337
-----------
NET INVESTMENT INCOME................................... 22,919,940
-----------
NET REALIZED AND UNREALIZED LOSS:
Net realized loss........................................... (75,530)
Net change in unrealized depreciation....................... (529,976)
-----------
NET LOSS................................................ (605,506)
-----------
NET INCREASE................................................ $22,314,434
===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 8
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, 2000 SEPTEMBER 30, 1999
------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income............................ $22,919,940 $23,885,889
Net realized loss................................ (75,530) (32,344)
Net change in unrealized depreciation............ (529,976) (26,647,143)
----------- -----------
NET INCREASE (DECREASE)...................... 22,314,434 (2,793,598)
Dividends from net investment income............. (22,043,328) (23,798,485)
Decrease from transactions in shares of
beneficial interest............................. (14,365,735) (15,560,813)
----------- -----------
NET DECREASE................................. (14,094,629) (42,152,896)
NET ASSETS:
Beginning of period.............................. 380,877,220 423,030,116
----------- -----------
END OF PERIOD
(Including undistributed net investment
income of $894,626 and $36,917,
respectively)................................ $366,782,591 $380,877,220
=========== ===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 9
9
MORGAN STANLEY DEAN WITTER GOVERNMENT INCOME TRUST
NOTES TO FINANCIAL STATEMENTS September 30, 2000
1. ORGANIZATION AND ACCOUNTING POLICIES
Morgan Stanley Dean Witter Government Income Trust (the "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.
<PAGE> 10
MORGAN STANLEY DEAN WITTER GOVERNMENT INCOME TRUST
NOTES TO FINANCIAL STATEMENTS September 30, 2000, continued
10
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
tax purposes 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.
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,
2000 aggregated $26,576,183 and $37,527,617, respectively.
Morgan Stanley Dean Witter Trust FSB, an affiliate of the Investment Manager, is
the Trust's transfer agent. At September 30, 2000, the Trust had transfer agent
fees and expenses payable of approximately $750.
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, 2000
included in Trustees' fees and expenses in the Statement of Operations amounted
to $5,841. At September 30, 2000,
<PAGE> 11
MORGAN STANLEY DEAN WITTER GOVERNMENT INCOME TRUST
NOTES TO FINANCIAL STATEMENTS September 30, 2000, continued
11
the Trust had an accrued pension liability of $52,858 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, 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
Treasury shares purchased and retired (weighted average
discount 9.133%)*.......................................... (1,759,101) (17,591) (14,347,843)+
---------- -------- ------------
Balance, September 30, 2000................................. 39,961,099 $399,611 $387,440,605
========== ======== ============
</TABLE>
---------------------
* The Trustees have voted to retire the shares purchased.
+ Includes reclassification due to permanent book/tax differences.
5. DIVIDENDS
On September 26, 2000, 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 6, 2000 October 20, 2000
$0.045 November 3, 2000 November 17, 2000
$0.045 December 8, 2000 December 22, 2000
</TABLE>
6. FEDERAL INCOME TAX STATUS
At September 30, 2000, the Trust had a net capital loss carryover of
approximately $19,987,000 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 2008
--------------------- -------- -------- ---- ----
<S> <C> <C> <C> <C>
$8,299 $9,638 $2,019 $5 $26
====== ====== ====== == ===
</TABLE>
<PAGE> 12
MORGAN STANLEY DEAN WITTER GOVERNMENT INCOME TRUST
NOTES TO FINANCIAL STATEMENTS September 30, 2000, continued
12
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 $74,000 during fiscal 2000.
<PAGE> 13
13
MORGAN STANLEY DEAN WITTER GOVERNMENT INCOME TRUST
FINANCIAL HIGHLIGHTS
Selected ratios and per share data for a share of beneficial interest
outstanding throughout each period:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED SEPTEMBER 30*
----------------------------------------------------
2000 1999 1998 1997 1996
<S> <C> <C> <C> <C> <C>
------------------------------------------------------------------------------------------------------------------
SELECTED PER SHARE DATA:
Net asset value, beginning of period........................ $ 9.13 $ 9.72 $ 9.32 $ 9.08 $ 9.17
-------- -------- -------- -------- --------
Income (loss) from investment operations:
Net investment income...................................... 0.54 0.56 0.59 0.61 0.60
Net realized and unrealized gain (loss).................... 0.01 (0.62) 0.37 0.19 (0.14)
-------- -------- -------- -------- --------
Total income (loss) from investment operations.............. 0.55 (0.06) 0.96 0.80 0.46
-------- -------- -------- -------- --------
Less dividends from net investment income................... (0.54) (0.56) (0.60) (0.60) (0.60)
-------- -------- -------- -------- --------
Anti-dilutive effect of acquiring treasury shares........... 0.04 0.03 0.04 0.04 0.05
-------- -------- -------- -------- --------
Net asset value, end of period.............................. $ 9.18 $ 9.13 $ 9.72 $ 9.32 $ 9.08
======== ======== ======== ======== ========
Market value, end of period................................. $ 8.25 $ 8.25 $ 9.00 $ 8.438 $ 8.25
======== ======== ======== ======== ========
TOTAL RETURN+............................................... 6.80% (2.24)% 14.26% 9.86% 7.31%
RATIOS TO AVERAGE NET ASSETS:
Expenses.................................................... 0.70% 0.71% 0.70% 0.73% 0.73%
Net investment income....................................... 6.21% 5.98% 6.27% 6.60% 6.56%
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands..................... $366,783 $380,877 $423,030 $429,764 $439,896
Portfolio turnover rate..................................... 7% 19% 16% 19% 21%
</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 and distributions 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
<PAGE> 14
14
MORGAN STANLEY DEAN WITTER GOVERNMENT INCOME TRUST
INDEPENDENT AUDITORS' REPORT
TO THE SHAREHOLDERS AND BOARD OF TRUSTEES OF
MORGAN STANLEY DEAN WITTER GOVERNMENT INCOME TRUST:
We have audited the accompanying statement of assets and liabilities of Morgan
Stanley Dean Witter Government Income Trust (the "Trust"), including the
portfolio of investments, as of September 30, 2000, and the related statements
of operations and of changes in net assets, and the financial highlights for the
year then ended. These financial statements and financial highlights are the
responsibility of the Trust's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audit. The statement of changes in net assets for the year ended September 30,
1999 and the financial highlights for each of the respective stated periods
ended September 30, 1999 were audited by other independent accountants whose
report, dated November 8, 1999, expressed an unqualified opinion on that
statement and financial highlights.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
securities owned as of September 30, 2000, by correspondence with the custodian
and brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of Morgan
Stanley Dean Witter Government Income Trust as of September 30, 2000, the
results of its operations, the changes in its net assets, and the financial
highlights for the year then ended, in conformity with accounting principles
generally accepted in the United States of America.
Deloitte & Touche LLP
New York, New York
November 8, 2000
2000 FEDERAL TAX NOTICE (unaudited)
Of the Trust's ordinary income dividends paid during the
fiscal year ended September 30, 2000, 34.91% was attributable
to qualifying Federal obligations. Please consult your tax
advisor to determine if any portion of the dividends you
received is exempt from state income tax.
<PAGE> 15
15
MORGAN STANLEY DEAN WITTER GOVERNMENT INCOME TRUST
CHANGE IN INDEPENDENT ACCOUNTANTS
On July 1, 2000 PricewaterhouseCoopers LLP resigned as independent accountants
of the Trust.
The reports of PricewaterhouseCoopers LLP on the financial statements of the
Trust 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 Trust, 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.
<PAGE> 16
MORGAN STANLEY DEAN WITTER
GOVERNMENT INCOME TRUST
Annual Report
September 30, 2000
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
Rajesh K. Gupta
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
