AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 17, 1994
REGISTRATION NO.: 33-37562
811-6208
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933 [X]
PRE-EFFECTIVE AMENDMENT NO. 1 [ ]
Post-EFFECTIVE AMENDMENT NO. 5 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940 [X]
AMENDMENT NO. 6 [X]
------------
DEAN WITTER MULTI-STATE MUNICIPAL SERIES TRUST
(A MASSACHUSETTS BUSINESS TRUST)
(EXACT NAME OF REGISTRANT AS SPECIFIED IN Charter)
TWO WORLD TRADE CENTER
NEW YORK, NEW YORK 10048
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (212) 392-1600
SHELDON CURTIS, ESQ.
TWO WORLD TRADE CENTER
NEW YORK, NEW YORK 10048
(NAME AND ADDRESS OF AGENT FOR SERVICE)
-----------
APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING:
As soon as practicable after this Post-Effective Amendment becomes effective.
IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE (CHECK APPROPRIATE BOX)
X immediately upon filing pursuant to paragraph (b)
_____ on (date) pursuant to paragraph (b)
_____ 60 days after filing pursuant to paragraph (a)
_____ on (date) pursuant to paragraph (a) of rule 485.
-----------
THE REGISTRANT HAS REGISTERED AN INDEFINITE NUMBER OF ITS SHARES UNDER THE
SECURITIES ACT OF 1933 PURSUANT TO SECTION (A)(1) OF RULE 24F-2 OF THE
INVESTMENT COMPANY ACT OF 1940. PURSUANT TO SECTION (B)(2) OF RULE 24F-2, THE
REGISTRANT FILED A RULE 24F-2 NOTICE FOR ITS FISCAL YEAR ENDED NOVEMBER 30,
1993 WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 12, 1994.
AMENDING THE PROSPECTUS AND UPDATING FINANCIAL STATEMENTS
===============================================================================
<PAGE>
DEAN WITTER MULTI-STATE MUNICIPAL SERIES TRUST
CROSS-REFERENCE SHEET
FORM N-1A
PART A
ITEM CAPTION PROSPECTUS
- ---- ------------------
1. ............ Cover Page
2. ............ Summary of Fund Expenses; Prospectus Summary
3. ............ Financial Highlights; Performance Information
4. ............ Investment Objective and Policies; The Fund and its
Management; Cover Page; Investment Restrictions;
Prospectus Summary
5. ............ The Fund and Its Management; Back Cover;
Investment Objective and Policies
6. ............ Dividends, Distributions and Taxes; Additional
Information
7. ............ Purchase of Fund Shares; Shareholder Services
8. ............ Redemptions and Repurchases; Shareholder Services
9. ............ Not Applicable
PART B
ITEM STATEMENT OF ADDITIONAL INFORMATION
- ---- -----------------------------------
10. ............ Cover Page
11. ............ Table of Contents
12. ............ The Fund and Its Management
13. ............ Investment Practices and Policies; Investment
Restrictions; Portfolio Transactions and Brokerage
14. ............ The Fund and Its Management; Trustees and
Officers
15. ............ Trustees and Officers
16. ............ The Fund and Its Management; Purchase of Fund Shares;
Custodian and Transfer Agent;
Independent Accountants
17. ............ Portfolio Transactions and Brokerage
18. ............ Description of Shares; Validity of Shares of Beneficial
Interest
19. ............ Repurchase of Fund Shares; Redemptions and
Repurchases; Statement of Assets and Liabilities;
Shareholder Services
20. ............ Dividends, Distributions and Taxes
21. ............ Not applicable
22. ............ Dividends, Distributions and Taxes
23. ............ Performance Information
PART C
Information required to be included in Part C is set forth
under the appropriate item, so numbered, in Part C of this Registration
Statement.
<PAGE>
PROSPECTUS
FEBRUARY 17, 1994
Dean Witter Multi-State Municipal Series Trust (the "Fund") is an open-
end non-diversified management investment company currently consisting of ten
separate series: the Arizona Series, the California Series, the Florida Series,
the Massachusetts Series, the Michigan Series, the Minnesota Series, the New
Jersey Series, the New York Series, the Ohio Series and the Pennsylvania Series
(the "State Series"). The investment objective of the State Series is to
provide a high level of current income exempt from both federal and the
designated State income taxes consistent with the preservation of capital. Each
Series ("Series") seeks to achieve its investment objective by investing
principally in investment grade tax-exempt securities of municipal issuers in
the designated state. (See "Investment Objective and Policies.")
The Fund, on behalf of each Series, is authorized to reimburse Dean
Witter Distributors Inc. ("DWD") for specific expenses incurred in promoting
the distribution of the Fund's shares pursuant to a Plan of Distribution
pursuant to Rule 12b-1 under the Investment Company Act of 1940 (the "Act").
Reimbursement may in no event exceed an amount equal to payments at the annual
rate of 0.15% of the average daily net assets of each Series.
This Prospectus sets forth concisely the information you should know
before investing in the Fund. It should be read and retained for future
reference. Additional information about the Fund is contained in the Statement
of Additional Information, dated February 17, 1994, which has been filed with
the Securities and Exchange Commission, and which is available at no charge
upon request of the Fund at the address or telephone number listed below. The
Statement of Additional Information is incorporated herein by reference.
DEAN WITTER MULTI-STATE MUNICIPAL
SERIES TRUST
TWO WORLD TRADE CENTER
NEW YORK, NEW YORK 10048
(212) 392-2550
(800) 526-3143
TABLE OF CONTENTS
Prospectus Summary/ 2
Summary of Fund Expenses/ 3
Financial Highlights/ 4
The Fund and its Management/ 8
Investment Objective and Policies/ 9
Investment Restrictions/ 14
Purchase of Fund Shares/ 14
Shareholder Services/ 16
Redemptions and Repurchases/ 18
Dividends, Distributions and Taxes/ 19
Performance Information/ 26
Additional Information/ 27
Appendix/ 28
Shares of the Fund are not deposits or obligations of, or guaranteed or
endorsed by, any bank, and the Shares are not federally insured by the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other agency.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
Dean Witter Distributors Inc.
Distributor
<PAGE>
PROSPECTUS SUMMARY
===============================================================================
The
Fund The Fund is organized as a Trust, commonly known as a
Massachusetts business trust, and is an open-end, non-
diversified management investment company currently consisting
of ten separate series: the Arizona Series, the California
Series, the Florida Series, the Massachusetts Series, the
Michigan Series, the Minnesota Series, the New Jersey Series,
the New York Series, the Ohio Series and the Pennsylvania
Series. Each Series invests principally in investment grade,
tax-exempt securities of the designated State.
- -------------------------------------------------------------------------------
Shares Shares of beneficial interest with $0.01 par value (see page
Offered 27).
- -------------------------------------------------------------------------------
Offering
Price The price of the shares offered by this prospectus varies with the
changes in the value of the Fund's investments. The offering
price, determined once daily as of 4:00 p.m., New York time, on
each day that the New York Stock Exchange is open, is equal to
the net asset value plus a sales charge of 4.0% of the offering
price, scaled down on purchases of $25,000 or over (see page
14).
- -------------------------------------------------------------------------------
Minimum
Purchase Minimum initial investment, $1,000. Minimum subsequent
investment, $100 (see page 14)
- -------------------------------------------------------------------------------
Investment
Objective The investment objective of each Series is to provide a high
level of current income exempt from both federal and the
designated state income taxes consistent with preservation of
capital.
- -------------------------------------------------------------------------------
Investment
Manager Dean Witter InterCapital Inc., ("InterCapital"), the Investment
Manager of the Fund, and its wholly-owned subsidiary, Dean
Witter Services Company Inc., serve in various investment
management, advisory, management and administrative capacities
to seventy-nine investment companies and other portfolios with
assets of approximately $71.2 billion at December 31, 1993 (see
page 8).
- -------------------------------------------------------------------------------
Management
Fee The Investment Manager receives a monthly fee at the annual rate
of 0.35% of daily net assets of each Series (see page 8).
- -------------------------------------------------------------------------------
Dividends and
Capital Gains
Distributions Income dividends are declared daily and paid monthly; capital
gains distributions, if any, may be distributed annually or
retained for reinvestment by the Fund. Dividends and
distributions are automatically reinvested in additional shares
at net asset value (without sales charge), unless the
shareholder elects to receive cash (see pages 16 and 19).
- -------------------------------------------------------------------------------
Plan of
Distribution The Fund is authorized to reimburse Dean Witter Distributors
Inc. (the "Distributor") for specific expenses incurred in
promoting the distribution of the Fund's shares pursuant to a
Plan of Distribution pursuant to Rule 12b-1 under the Investment
Company Act of 1940. Reimbursement may in no event exceed an
amount equal to payments at the annual rate of 0.15 of 1% of
average daily net assets of each Series of the Fund (see page
16).
- -------------------------------------------------------------------------------
Sales Charge 4.0% of offering price (4.17% of amount invested); reduced
charges on purchases of $25,000 or more (see pages 14-16).
- -------------------------------------------------------------------------------
Redemption Shares are redeemable by the shareholder at net asset value. An
account may be involuntarily redeemed if shares owned have a net
asset value of less than $100 (see page 19).
- -------------------------------------------------------------------------------
Risks and Other
Considerations
The value of each Series' portfolio securities, and therefore
the net asset value per share of each Series, may increase or
decrease due to various factors, principally changes in
prevailing interest rates and the ability of the issuers of the
portfolio securities of each Series to pay interest and
principal on such obligations. Additionally, because the Fund is
a non-diversified investment company, a relatively high
percentage of the assets of each Series may be invested in a
limited number of issuers within a single state, thereby causing
a greater fluctuation of the net asset value of each Series as a
result of changes in the financial condition or in the market's
assessment of the various issuers. Each Series, to the extent
permitted by applicable state law, also may invest in futures
and options which may be considered speculative in nature and
involve greater risks than those customarily assumed by certain
<PAGE>
other investment companies which do not invest in such
instruments. Since each Series concentrates its investments in
tax-exempt securities of a particular State, each Series is
affected by any political, economic or regulatory developments
affecting the ability of the issuers of that particular State to
pay interest or repay principal.During periods of significant
economic slowdowns, the securities of any particular State will
be subject to a greater degree of credit risk in which the
ratings of such securities have been or may be downgraded or
placed on a credit watch, thereby affecting their market value.
Investors should refer to the Appendix for specific information
regarding the economic situation of their particular State. (See
pages 9-13 and the Appendix on page 28). Certain of the tax-
exempt securities in which each Series may invest without limit
may subject certain investors to the federal, and any applicable
state, alternative minimum tax. (see page 9).
- -------------------------------------------------------------------------------
The above is qualified in its entirety by the detailed information appearing
elsewhere in this Prospectus and in the Statement of Additional Information.
2
<PAGE>
<TABLE>
SUMMARY OF FUND EXPENSES
===================================================================================================================================
The following table illustrates all expenses and fees that a shareholder of the Fund will incur. The expenses and fees set
forth in the table are for the year ended November 30, 1993, except as otherwise noted.
<CAPTION>
Shareholder Transaction Expenses (for each Series)
- --------------------------------------------------
<S> <C>
Maximum Sales Charge Imposed on Purchases....................... 4.0%
Maximum Sales Charge Imposed on Reinvested Dividends............ None
Deferred Sales Charge........................................... None
Redemption Fees................................................. None
Exchange Fee.................................................... None
<CAPTION>
Annual Operating Expenses (as a Percentage of Average Net Assets) *
- -------------------------------------------------------------------
Arizona California Florida Massachusetts Michigan Minnesota New Jersey New York Ohio Pennsylvania
Series Series Series Series Series Series Series Series Series Series
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Management Fees*
(after fee waiver)..... .1875% .2379% .2052% .0165% .0488% .0 % .1585% .0218% .0681% .1606%
12b-1 Fees**........... .1401 .1457 .1477 .1474 .1460 .1449 .1482 .1470 .1476 .1486
Other Expenses*
(after expense
assumption)........... .1492 .0922 .1249 .3143 .2824 .3353 .1719 .3093 .2623 .1684
Total Series Operating
Expenses*............. .4768% .4758% .4778% .4782% .4772% .4802% .4786% .4781% .4780% .4776%
- ----------
<FN>
**The 12b-1 fee is characterized as a service fee within the meaning of National Association of Securities Dealers, Inc. ("NASD")
guidelines.
</TABLE>
Example
-------
You would pay the following expenses on a $1,000 investment, assuming
(1) 5% annual return and (2) redemption at the end of each time period:
<TABLE>
<CAPTION>
Arizona California Florida Massachusetts Michigan Minnesota New Jersey New York Ohio Pennsylvania
Series Series Series Series Series Series Series Series Series Series
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 year ............. $45 $45 $45 $45 $45 $45 $45 $45 $45 $45
3 years ............ 55 55 55 55 55 55 55 55 55 55
5 years ............ 66 66 66 66 66 66 66 66 66 66
10 years ............ 98 97 98 98 98 98 98 98 98 98
</TABLE>
*The annual Operating Expenses are based upon the actual expenses incurred by
the Fund during the fiscal year ended November 30, 1993. The Investment Manager
continued to waive management fees and assume expenses to the extent they
exceeded 0.50% of the daily net assets with respect to each Series of the Fund
until January 1, 1994. In addition, the Investment Manager has agreed to waive
management fees and assume expenses to the extent that they exceed 0.50% of the
daily net assets with respect to the Massachusetts Series, Michigan Series,
Minnesota Series, New York Series and Ohio Series for the period from January
1, 1994 through June 30, 1994.
Total operating expenses for each Series for the fiscal year of the Fund
ended November 30, 1993, assuming no waiver of the management fees and no
assumption of other expenses for the entire year, would have been:
<TABLE>
<CAPTION>
Arizona California Florida Massachusetts Michigan Minnesota New Jersey New York Ohio Pennsylvania
Series Series Series Series Series Series Series Series Series Series
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Management Fees..... .3500% .3500% .3500% .3500% .3500% .3500% .3500% .3500% .3500% .3500%
12b-1 Fees........... .1401 .1457 .1477 .1474 .1460 .1449 .1482 .1470 .1476 .1486
Other Expenses....... .1628 .1006 .1363 .3429 .3081 .5490 .1876 .3822 .2861 .1837
Total Series
Operating
Expenses*.......... .6529% .5963% .6340% .8403% .8041% 1.0439% .6858% .8792% .7837% .6823%
</TABLE>
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF FUTURE
EXPENSES OR PERFORMANCE. ACTUAL EXPENSES OF THE FUND MAY BE GREATER OR LESS
THAN THOSE SHOWN.
The purpose of this table is to assist the investor in understanding the
various costs and expenses that an investor in the Fund will bear directly or
indirectly. For a more complete description of these costs and expenses, see
"The Fund and its Management" and "Purchase of Fund Shares" in this Prospectus.
Long-term shareholders of the Fund may pay more in sales charges and
distribution fees than the economic equivalent of the maximum front-end sales
charges permitted by the NASD.
3
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS
===================================================================================================================================
The following ratios and per share data for a share of beneficial interest outstanding throughout each period ended November 30
for each Series have been audited by Price Waterhouse, independent accountants. This data should be read in conjunction with the
financial statements, notes thereto, and the unqualified report of independent accountants which are contained in the Statement of
Additional Information. Further information about the performance of the Fund is contained in the Fund's Annual Report to
Shareholders, which may be obtained without charge upon request to the Fund.
<CAPTION>
Arizona Series California Series
------------------------------------ --------------------------------------
1993 1992 1991** 1993 1992 1991*
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period.. $10.18 $ 9.77 $ 9.60 $10.32 $ 9.99 $ 9.60
------ ------ ------ ------ ------ ------
Investment income--net................ 0.58 0.64 0.36 0.61 0.67 0.60
Realized and unrealized gain on
investments.......................... 0.56 0.41 0.17 0.68 0.34 0.39
------ ------ ------ ------ ------ ------
Total from investment operations....... 1.14 1.05 0.53 1.29 1.01 0.99
------ ------ ------ ------ ------ ------
Less dividends and distributions:
Dividends from net investment
income.............................. (0.58) (0.64) (0.36) (0.61) (0.67) (0.60)
Distributions from net realized gain
on investments...................... (0.02) -0- -0- -0- (0.01) -0-
------ ------ ------ ------ ------ ------
Total dividends and distributions.... (0.60) (0.64) (0.36) (0.61) (0.68) (0.60)
------ ------ ------ ------ ------ ------
Net asset value, end of period....... $10.72 $10.18 $ 9.77 $11.00 $10.32 $ 9.99
====== ====== ====== ====== ====== ======
TOTAL INVESTMENT RETURN +.............. 11.42% 11.08% 5.66%(1) 12.77% 10.23% 10.29%(1)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands)........................ $59,877 $38,812 $20,733 $139,308 $95,604 $41,568
Ratios to average net assets: (3)
Total expenses....................... 0.48% 0.15% 0.15%(2) 0.48% 0.15% 0.15%(2)
Investment income--net............... 5.40% 6.33% 6.32%(2) 5.57% 6.36% 6.53%(2)
Portfolio turnover rate................ 5% 15% 8% 11% 5% 24%
- ----------
<FN>
* January 15, 1991 (commencement of operations) through November 30, 1991.
** April 30, 1991 (commencement of operations) through November 30, 1991.
+ Does not reflect the deduction of sales load.
(1) Not annualized.
(2) Annualized.
(3) If the Fund had borne all its expenses that were assumed or waived by the Investment Manager, the above ratios to average
net assets, after application of the Fund's expense limitation, would have been:
Total expenses........................... 0.65% 0.74% 1.43%(2) 0.60% 0.67% 0.97%(2)
Investment income--net................... 5.22% 5.74% 5.04%(2) 5.45% 5.84% 5.71%(2)
</TABLE>
4
<PAGE>
<TABLE>
===================================================================================================================================
<CAPTION>
Florida Series Massachusetts Series Michigan Series
------------------------------------- ------------------------------------- -----------------------------------
1993 1992 1991* 1993 1992 1991* 1993 1992 1991*
------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$10.29 $ 9.88 $ 9.60 $10.36 $ 9.98 $ 9.60 $10.41 $ 9.96 $ 9.60
------ ------ ------ ------ ------ ------ ------ ------ ------
0.59 0.64 0.55 0.60 0.66 0.54 0.61 0.65 0.54
0.64 0.41 0.28 0.72 0.42 0.38 0.64 0.46 0.36
------ ------ ------ ------ ------ ------ ------ ------ ------
1.23 1.05 0.83 1.32 1.08 0.92 1.25 1.11 0.90
------ ------ ------ ------ ------ ------ ------ ------ ------
(0.59) (0.64) (0.55) (0.60) (0.66) (0.54) (0.61) (0.65) (0.54)
-0- -0- -0- -0- (0.04) -0- -0- (0.01) -0-
------ ------ ------ ------ ------ ------ ------ ------ ------
(0.59) (0.64) (0.55) (0.60) (0.70) (0.54) (0.61) (0.66) (0.54)
------ ------ ------ ------ ------ ------ ------ ------ ------
$10.93 $10.29 $ 9.88 $11.08 $10.36 $ 9.98 $11.05 $10.41 $ 9.96
====== ====== ====== ====== ====== ====== ====== ====== ======
12.20% 10.92% 8.84%(1) 13.06% 11.19% 9.87%(1) 12.28% 11.78% 9.54%(1)
$84,494 $51,560 $17,719 $18,344 $10,113 $3,205 $22,083 $13,809 $6,630
0.48% 0.15% 0.15%(2) 0.48% 0.14% 0.15%(2) 0.48% 0.14% 0.15%(2)
5.39% 6.19% 6.45%(2) 5.47% 6.26% 6.50%(2) 5.53% 6.28% 6.54%(2)
3% 6% 10% 12% 10% 40% 15% 9% 46%
0.63% 0.73% 1.27%(2) 0.84% 1.25% 2.57%(2) 0.80% 1.01% 1.73%(2)
5.23% 5.62% 5.33%(2) 5.10% 5.16% 4.08%(2) 5.20% 5.42% 4.96%(2)
5
</TABLE>
<PAGE>
<TABLE>
DEAN WITTER MULTI-STATE MUNICIPAL SERIES TRUST
FINANCIAL HIGHLIGHTS (continued)
===================================================================================================================================
Selected data and ratios for a share of beneficial interest outstanding throughout each period for their respective years ended
November 30:
<CAPTION>
Minnesota Series New Jersey Series
----------------------------------- --------------------------------------
1993 1992 1991* 1993 1992 1991*
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period... $10.11 $ 9.79 $ 9.60 $ 10.35 $ 9.95 $ 9.60
------ ------ ------ ------- ------- -------
Investment income--net................. 0.58 0.63 0.51 0.60 0.66 0.55
Realized and unrealized gain on
investments........................... 0.67 0.32 0.19 0.62 0.44 0.35
------ ------ ------ ------- ------- -------
Total from investment operations........ 1.25 0.95 0.70 1.22 1.10 0.90
------ ------ ------ ------- ------- -------
Less dividends and distributions:
Dividends from net investment income... (0.58) (0.63) (0.51) (0.60) (0.66) (0.55)
Distributions from net realized gain on
investments........................... -0- -0- -0- (0.03) (0.04) -0-
------ ------ ------ ------- ------- -------
Total dividends and distributions...... (0.58) (0.63) (0.51) (0.63) (0.70) (0.55)
------ ------ ------ ------- ------- -------
Net asset value, end of period......... $10.78 $10.11 $ 9.79 $ 10.94 $ 10.35 $ 9.95
====== ====== ====== ======= ======= =======
TOTAL INVESTMENT RETURN +............... 12.64% 9.91% 7.42%(1) 12.03% 11.34% 9.59%(1)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands)......................... $11,538 $6,420 $3,131 $54,499 $32,123 $15,812
Ratios to average net assets: (3)
Total expenses......................... 0.48% 0.14% 0.15%(2) 0.48% 0.15% 0.15%(2)
Investment income--net................. 5.39% 6.16% 6.04%(2) 5.41% 6.36% 6.43%(2)
Portfolio turnover rate................. 8% 23% 4% 7% 19% 36%
- ----------
<FN>
* January 15, 1991 (commencement of operations) through November 30, 1991.
+ Does not reflect the deduction of sales load.
(1) Not annualized.
(2) Annualized.
(3) If the Fund had borne all its expenses that were assumed or waived by the Investment Manager, the above ratios to average
net assets, after application of the Fund's expense limitation, would have been:
Total expenses........................... 1.04% 1.46% 2.65%(2) 0.69% 0.79% 1.21%(2)
Investment income--net................... 4.83% 4.85% 2.87%(2) 5.20% 5.71% 5.36%(2)
6
</TABLE>
<PAGE>
<TABLE>
===================================================================================================================================
<CAPTION>
New York Series Ohio Series Pennsylvania Series
----------------------------------- ------------------------------------ -----------------------------------
1993 1992 1991* 1993 1992 1991* 1993 1992 1991*
------- ------ ------ ------- ------- ------ ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 10.34 $10.06 $ 9.60 $ 10.25 $ 9.85 $ 9.60 $ 10.34 $ 9.90 $ 9.60
------- ------ ------ ------- ------- ------ ------- ------- -------
0.62 0.68 0.54 0.60 0.66 0.53 0.61 0.66 0.53
0.69 0.34 0.46 0.72 0.41 0.25 0.67 0.44 0.30
------- ------ ------ ------- ------- ------ ------- ------- -------
1.31 1.02 1.00 1.32 1.07 0.78 1.28 1.10 0.83
------- ------ ------ ------- ------- ------ ------- ------- -------
(0.62) (0.68) (0.54) (0.60) (0.66) (0.53) (0.61) (0.66) (0.53)
-0- (0.06) -0- -0- (0.01) -0- -0- -0- -0-
------- ------ ------ ------- ------- ------ ------- ------- -------
(0.62) (0.74) (0.54) (0.60) (0.67) (0.53) (0.61) (0.66) (0.53)
------- ------ ------ ------- ------- ------ ------- ------- -------
$ 11.03 $10.34 $10.06 $ 10.97 $ 10.25 $ 9.85 $ 11.01 $ 10.34 $ 9.90
======= ====== ====== ======= ======= ====== ======= ======= =======
12.91% 10.35% 10.73%(1) 13.19% 11.12% 8.35%(1) 12.64% 11.47% 8.77%(1)
$15,955 $9,604 $3,976 $24,849 $13,686 $6,267 $53,378 $31,509 $12,147
0.48% 0.15% 0.15%(2) 0.48% 0.15% 0.15%(2) 0.48% 0.15% 0.15%(2)
5.61% 6.45% 6.44%(2) 5.45% 6.41% 6.38%(2) 5.54% 6.31% 6.46%(2)
11% 21% 51% 20% 23% 22% 5% 3% 12%
0.88% 1.23% 2.22%(2) 0.78% 1.01% 2.04%(2) 0.68% 0.81% 1.54%(2)
5.21% 5.37% 4.37%(2) 5.14% 5.56% 4.48%(2) 5.33% 5.65% 5.07%(2)
7
</TABLE>
<PAGE>
THE FUND AND ITS MANAGEMENT
===============================================================================
Dean Witter Multi-State Municipal Series Trust (the "Fund") is an open-end,
non-diversified management investment company consisting of ten separate
series: the Arizona Series, the California Series, the Florida Series, the
Massachusetts Series, the Michigan Series, the Minnesota Series, the New Jersey
Series, the New York Series, the Ohio Series and the Pennsylvania Series. The
Fund is a trust of the type commonly known as a "Massachusetts business trust"
and was organized under the laws of Massachusetts on October 29, 1990.
Dean Witter InterCapital Inc. ("InterCapital" or the "Investment Manager"),
whose address is Two World Trade Center, New York, New York 10048, is the
Fund's Investment Manager. The Investment Manager, which was incorporated in
July, 1992, is a wholly-owned subsidiary of Dean Witter, Discover & Co.
("DWDC"), a balanced financial services organization providing a broad range of
nationally marketed credit and investment products.
InterCapital and its wholly-owned subsidiary, Dean Witter Services Company
Inc., serve in various investment management, advisory, management and
administrative capacities to seventy-nine investment companies, twenty-seven of
which are listed on the New York Stock Exchange, with combined assets of
approximately $69.2 at December 31, 1993. The Investment Manager also manages
and advises portfolios of pension plans, other institutions and individuals
which aggregated approximately $2.0 billion at such date.
The Fund has retained the Investment Manager to provide administrative
services, manage its business affairs and manage the investment of the Fund's
assets, including the placing of orders for the purchase and sale of portfolio
securities. InterCapital has retained Dean Witter Services Company Inc. to
perform the aforementioned administrative services for the Fund. The Fund's
Trustees review the various services provided by the Investment Manager to
ensure that the Fund's general investment policies and programs are being
properly carried out and that administrative services are being provided to the
Fund in a satisfactory manner.
As full compensation for the services and facilities furnished to the Fund
and for expenses of the Fund assumed by the Investment Manager, each Series of
the Fund pays the Investment Manager monthly compensation calculated daily by
applying the annual rate of 0.35% to the net assets of each Series. The
Investment Manager assumed all expenses (except for the 12b-1 and brokerage
fees) and waived the management fees with respect to each Series of the Fund
for the period November 30, 1992 to January 1, 1993; the Investment Manager
continued to waive management fees and assume expenses with respect to each
Series of the Fund to the extent they exceeded 0.50% of the daily net assets
from January 1, 1993 to January 1, 1994. For the fiscal year ended November 30,
1993, the Arizona Series, California Series, Florida Series, Massachusetts
Series, Michigan Series, Minnesota Series, New Jersey Series, New York Series,
Ohio Series and Pennsylvania Series accrued total compensation to the
Investment Manager of 0.18%, 0.23%, 0.20%, 0.01%, 0.04%, 0.0%, 0.15%, 0.20%,
0.06% and 0.16% respectively of average daily net assets. The total expenses of
each respective Series amounted to 0.47% of the average daily net assets of
each Series (0.48% for the Minnesota Series).
The Fund's expenses include: the fee of the Investment Manager; the fee
pursuant to the Plan of Distribution (see "Purchase of Fund Shares"); taxes;
certain legal, transfer agent, custodian and auditing fees; and printing and
other expenses relating to the Fund's operations which are not expressly
assumed by the Investment Manager under its Management Agreement with the Fund.
The Investment Manager has undertaken to waive management fees and assume any
expenses exceeding 0.50% of the daily net assets, with respect to the
Massachusetts Series, Michigan Series, Minnesota Series, New York Series and
Ohio Series, until June 30, 1994.
8
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
===============================================================================
The investment objective of the State Series is to provide a high level of
current income exempt from both federal and the designated State income taxes
consistent with preservation of capital. It is a fundamental policy that under
normal conditions each Series will invest at least 80% of its total assets in
securities, the interest on which is exempt from federal income taxes and the
income taxes of the designated State. This policy and the investment objective
may not be changed with respect to any Series without the approval of the
holders of a majority of the shares of that Series. There is no assurance that
the investment objective of any Series will be achieved.
Each Series seeks to achieve its investment objective by investing
principally in tax-exempt, investment grade securities of municipal issuers in
that designated State as well as any debt obligations (such as debt obligations
of governmental entities and territories such as Puerto Rico, Guam and the
Virgin Islands) that generate interest income which is exempt from federal
income taxes and the income taxes of the designated State. Tax-exempt
securities primarily consist of Municipal Bonds, Municipal Notes and Municipal
Commercial Paper. Each Series may only invest in (a) Municipal Bonds which are
rated at the time of purchase within the four highest grades by either Moody's
Investors Service Inc. ("Moody's") or Standard & Poor's Corporation ("S&P");
(b) Municipal Notes which at the time of purchase are rated in the two highest
grades by either Moody's or S&P, or, if not rated, have outstanding one or more
issues of Municipal Bonds rated as set forth in clause (a) above; (c) Municipal
Commercial Paper which at the time of purchase is rated P-1 by Moody's or A-1
by S&P; and (d) unrated securities which at the time of purchase are judged by
the Investment Manager to be of comparable quality to the securities described
in this paragraph. A description of the ratings referred to above is contained
in the Appendix to the Statement of Additional Information. Certain of the tax-
exempt securities in which each Series may invest without limit may subject
certain investors to the federal alternative minimum tax or any applicable
state alternative minimum tax and, there- fore, a substantial portion of the
income produced by each Series may be taxable to such investors under any
federal or any applicable state alternative minimum tax. The State Series,
therefore, may not be a suitable investment for investors who are subject to
the alternative minimum tax. The suitability of the State Series for these
investors will depend upon a comparison of the after-tax yield likely to be
provided from each designated Series to comparable tax-exempt investments not
subject to such tax and also to comparable fully taxable investments in light
of each investor's tax position. See "Dividends, Distributions and Taxes."
Up to 20% of the total assets of each Series may be invested in taxable money
market instruments, tax-exempt securities of other states and municipalities
and options and futures. With respect to tax-exempt securities of other states,
only investment grade securities which satisfy the standards enumerated above
for Municipal Bonds, Notes and Paper, will be purchased. (This investment
percentage is subject to applicable state laws and may be limited further by
specific requirements of certain states. It is the intention of each Series to
meet the applicable requirements of its respective State. See "Dividends,
Distributions and Taxes--State Taxation"). However, each Series may invest more
than 20% of its total assets in taxable money market instruments and the tax-
exempt securities of other states and municipalities in order to maintain a
temporary "defensive" position, when, in the opinion of the Investment Manager,
prevailing market or financial conditions (including unavailability of
securities of requisite quality) so warrant. (The types of investments in which
each Series may invest when maintaining a temporary "defensive" position may be
limited by applicable State requirements). With respect to the purchase of tax-
exempt securities of other states for defensive purposes, only the highest
grade Municipal Bonds, Notes and Paper, will be purchased. The types of taxable
money market instruments in which the State Series may invest are limited to
the following short-term fixed income securities (maturing in one year or less
from the time of purchase): (i) obligations of the United States Government,
its agencies, instrumentalities or authorities; (ii) commercial paper
9
<PAGE>
rated P-1 by Moody's or A-1 by S&P; (iii) certificates of deposit of domestic
banks with assets of $1 billion or more; and (iv) repurchase agreements with
respect to any of the securities in which each Series may invest.
Municipal Bonds and Municipal Notes are debt obligations of a state, and its
agencies and municipalities which generally have maturities, at the time of
their issuance, of either one year or more (Bonds) or from six months to three
years (Notes). Municipal Commercial Paper refers to short-term obligations of
municipalities which may be issued at a discount and are sometimes referred to
as Short-Term Discount Notes. Any Municipal Bond or Municipal Note which
depends directly or indirectly on the credit of the Federal Government, its
agencies or instrumentalities shall be considered to have a Moody's rating of
Aaa. An obligation shall be considered a Municipal Bond, Municipal Note or
Municipal Commercial Paper only if, in the opinion of bond counsel to the
issuer at the time of issuance, the interest payable therefrom is exempt from
both regular federal income tax and the regular personal income tax of a
designated State.
The foregoing percentage and rating limitations apply at the time of
acquisition of a security based on the last previous determination of the net
asset value of each respective Series. Any subsequent change in any rating by a
rating service or change in percentages resulting from market fluctuations or
other changes in total assets of a Series will not require elimination of any
security from the portfolio of such Series. Therefore, each Series may hold
securities which have been downgraded to ratings of Ba or BB or lower by
Moody's or S&P. However such investments may not exceed 5% of the total assets
of any Series. Any investments which exceed this limitation will be eliminated
from the portfolio within a reasonable period of time (such time as the
Investment Manager determines that it is practicable to sell the investment
without undue market or tax consequences to a Series). Municipal Obligations
rated below investment grade by Moody's or S&P are considered to be speculative
investments, some of which may not be currently paying any interest and may
have extremely poor prospects of ever attaining any real investment standing.
Investments in Municipal Bonds rated either BBB by S&P or Baa by Moody's
(investment grade bonds--the lowest rated permissible investments by the Fund)
have speculative characteristics and, therefore, changes in economic conditions
or other circumstances are more likely to weaken their capacity to make
principal and interest payments than would be the case with investments in
securities with higher credit ratings.
The ratings assigned by Moody's and S&P represent their opinions as to the
quality of the securities which they undertake to rate (see the Appendix to the
Statement of Additional Information). It should be emphasized, however, that
the ratings are general and not absolute standards of quality.
There are no restrictions on the maturities of most of the tax-exempt
securities that may be purchased by each Series and therefore the average
portfolio maturity of each Series is not subject to any limit. As a general
matter, the longer the average portfolio maturity, the greater will be the
impact of fluctuations in interest rates on the values of the portfolio
securities of each Series and the respective net asset value per share of that
Series.
The Fund is classified as a non-diversified investment company under the
Investment Company Act of 1940 ("the Act") and as such is not limited by the
Act in the proportion of its assets that it may invest in the obligations of a
single issuer. However, each Series of the Fund intends to conduct its
operations so as to qualify as a "regulated investment company" under
Subchapter M of the Internal Revenue Code (the "Code"). See "Dividends,
Distributions and Taxes." In order to qualify, among other requirements, each
Series will limit its investments so that at the close of each quarter of the
taxable year, (i) not more than 25% of the market value of the total assets of
such Series will be invested in the securities of a single issuer, within a
single State, and (ii) with respect to 50% of the market value of its total
assets not more than 5% of the value of its total assets will be invested in
the securities of a single issuer within a single State, and each Series will
not own more than 10% of the outstanding voting securities of a single issuer.
(Since the types of securities ordinarily purchased by each Series are
nonvoting
10
<PAGE>
securities, there is generally no limit on the percentage of an issuer's
obligations that a Series may own). To the extent that these requirements
permit a relatively high percentage of each Series' assets to be invested in
the obligations of a limited number of issuers within a single State, the value
of the portfolio securities of each Series will be more susceptible to any
single economic, political or regulatory occurrence than the portfolio
securities of a diversified investment company. Additionally, each Series' net
asset value will fluctuate to a greater extent than that of a diversified
investment company as a result of changes in the financial condition or in the
market's assessment of the various issuers. The tax limitations described in
this paragraph are not fundamental policies and may be revised to the extent
applicable Federal income tax requirements are revised.
The Fund, on behalf of each Series, may invest more than 25% of the total
assets of each Series in Municipal Obligations known as private activity bonds.
Such Obligations include health facility obligations, housing obligations,
industrial revenue obligations (including pollution control obligations),
electric utility obligations and water and sewer obligations, provided that the
percentage of the total assets of any Series in private activity bonds in any
one category does not exceed 25% of the total assets of that Series. The
ability of issuers of such obligations to make timely payments of principal and
interest will be affected by events and conditions affecting these projects
such as cyclicality of revenues and earnings, regulatory and environmental
restrictions and economic downturns, which may result generally in a lowered
need for such facilities and a lowered ability of such users to pay for the use
of such facilities.
The two principal classifications of Municipal Obligations are "general
obligation" and "revenue" bonds, notes or commercial paper. General obligation
bonds, notes or commercial paper are secured by the issuer's pledge of its
faith, credit and taxing power for the payment of principal and interest.
Issuers of general obligation bonds, notes or commercial paper include a state,
its counties, cities, towns and other governmental units. Revenue bonds, notes
or commercial paper are payable from the revenues derived from a particular
facility or class of facilities or, insome cases, from specific revenue
sources. Revenue bonds, notes or commercial paper are issued for a wide variety
of purposes, including the financing of electric, gas, water and sewer systems
and other public utilities; industrial development and pollution control
facilities; single and multi-family housing units; public buildings and
facilities; air and marine ports, transportation facilities such as toll roads,
bridges and tunnels; and health and educational facilities such as hospitals
and dormitories. They rely primarily on user fees to pay debt service, although
the principal revenue source is often supplemented by additional security
features which are intended to enhance the creditworthiness of the issuer's
obligations.
Included within the revenue bonds category are participations in lease
obligations or installment purchase contracts (hereinafter collectively called
"lease obligations") of municipalities. State and local agencies or authorities
issue lease obligations to acquire equipment and facilities.
Lease obligations may have risks not normally associated with general
obligation or other revenue bonds. Leases, and installment purchase or
conditional sale contracts (which may provide for title to the leased asset to
pass eventually to the issuer), have developed as a means for governmental
issuers to acquire property and equipment without the necessity of complying
with the constitutional and statutory requirements generally applicable for the
issuance of debt. Certain lease obligations contain "non-appropriation" clauses
that provide that the governmental issuer has no obligation to make future
payments under the lease or contract unless money is appropriated for such
purpose by the appropriate legislative body on an annual or other periodic
basis. Consequently, continued lease payments on those lease obligations
containing "non-appropriation" clauses are dependent on future legislative
actions. If such legislative actions do not occur, the holders of the lease
obligation may experience difficulty in exercising their rights, including
disposition of the property.
In addition, lease obligations represent a relatively new type of financing
that has not yet developed the
11
<PAGE>
depth of marketability associated with more conventional municipal obligations,
and, as a result, certain of such lease obligations may be considered illiquid
securities. To determine whether or not the Fund will consider such securities
to be illiquid (the Fund may not invest more than ten percent of its net assets
in illiquid securities), the Trustees of the Fund have established guidelines
to be utilized by the Fund in determining the liquidity of a lease obligation.
The factors to be considered in making the determination include: 1) the
frequency of trades and quoted prices for the obligation; 2) the number of
dealers willing to purchase or sell the security and the number of other
potential purchasers; 3) the willingness of dealers to undertake to make a
market in the security; and 4) the nature of the marketplace trades, including,
the time needed to dispose of the security, the method of soliciting offers,
and the mechanics of the transfer.
Since each Series concentrates its investments in Municipal Obligations
of a particular State and its authorities and municipalities, each Series is
affected by any political, economic or regulatory developments affecting the
ability of issuers in that particular State to make timely payments of interest
and principal. For a more detailed discussion of the risks associated with
investments in a particular State, see the Appendix at the back of this
Prospectus.
Variable Rate Obligations. The interest rates payable on certain
Municipal Bonds and Municipal Notes are not fixed and may fluctuate based upon
changes in market rates. Municipal obligations of this type are called
"variable rate" obligations. The interest rate payable on a variable rate
obligation is adjusted either at predesigned periodic intervals or whenever
there is a change in the market rate of interest on which the interest rate
payable is based.
When-Issued and Delayed Delivery Securities. Each Series may purchase
tax-exempt securities on a when-issued or delayed delivery basis; i.e., the
price is fixed at the time of commitment but delivery and payment can take
place a month or more after the date of the transaction. These securities are
subject to market fluctuation and no interest accrues to the purchaser prior to
settlement. At the time any Series makes the commitment to purchase such
securities, it will record
the transaction and thereafter reflect the value each day of such security in
determining its net asset value.
HEDGING ACTIVITIES
Subject to applicable state law, the Fund, on behalf of each Series
except the New Jersey Series, may enter into financial futures contracts,
options on such futures and municipal bond index futures contracts for hedging
purposes.
Financial Futures Contracts and Options on Futures. With respect to
each applicable Series, the Fund may invest in financial futures contracts and
related options thereon. Each Series may sell a financial futures contract or
purchase a put option on such futures contract, if the Investment Manager
anticipates interest rates to rise, as a hedge against a decrease in the value
of a particular Series' portfolio securities. If the Investment Manager
anticipates that interest rates will decline, a Series may purchase a financial
futures contract or a call option thereon to protect against an increase in the
price of the securities that Series intends to purchase. These futures
contracts and related options thereon will be used only as a hedge against
anticipated interest rate changes.
Unlike a financial futures contract, which requires the parties to buy
and sell a security on a set date, an option on such a futures contract
entitles its holder to decide on or before a future date whether to enter into
such a contract (a long position in the case of a call option and a short
position in the case of a put option). If the holder decides not to enter into
the contract, the premium paid for the option on the contract is lost. Since
the value of the option is fixed at the point of sale, there are no daily
payments of cash to reflect the change in the value of the underlying contract
as there is by a purchaser or seller of a futures contract. The value of the
option does change and is reflected in the net asset value of the Series for
which it was purchased.
A risk in employing futures contracts to protect against the price
volatility of portfolio securities is that the prices of securities subject to
such futures contracts may correlate imperfectly with the behavior of the cash
prices of each Series' portfolio securities. The risk of imperfect correlation
will be increased by the
12
<PAGE>
fact that the financial futures contracts in which a Series may invest are on
taxable securities rather than tax-exempt securities, and there is no guarantee
that the prices of taxable securities will move in a similar manner to the
prices of tax-exempt securities.
Another risk is that the Investment Manager could be incorrect in its
expectations as to the direction or extent of various interest rate movements
or the time span within which the movements take place. For example, if the
Fund, on behalf of any Series, sold financial futures contracts for the sale of
securities in anticipation of an increase in interest rates, and then interest
rates went down instead, causing bond prices to rise, that Series would lose
money on the sale.
In addition to the risks that apply to all options transactions (see the
Statement of Additional Information for a description of the characteristics
of, and the risks of investing in, options on debt securities), there are
several special risks relating to options on futures. In particular, the
ability to establish and close out positions on such options will be subject to
the development and maintenance of a liquid secondary market. It is not certain
that this market will develop or be maintained.
Municipal Bond Index Futures. Each applicable Series may utilize municipal
bond index futures contracts for hedging purposes. The strategies in employing
such contracts will be similar to that discussed above with respect to
financial futures and options thereon. A municipal bond index is a method of
reflecting in a single number the market value of many different municipal
bonds and is designed to be representative of the municipal bond market
generally. The index fluctuates in response to changes in the market values of
the bonds included within the index. Unlike futures contracts on particular
financial instruments, transactions in futures on a municipal bond index will
be settled in cash, if held until the close of trading in the contract.
However, like any other futures contract, a position in the contract may be
closed out by a purchase or sale of an offsetting contract for the same
delivery month prior to expiration of the contract.
No Series may enter into futures contracts or related options thereon if
immediately thereafter the amount committed to margin plus the amount paid
foroption premiums exceeds 5% of the value of that Series' total assets. The
Fund, on behalf of any Series, may not purchase or sell futures contracts or
related options if immediately thereafter more than one-third of the net assets
of that Series would be hedged.
Options . The Fund on behalf of any applicable Series, may purchase or sell
(write) options on debt securities as a means of achieving additional return or
hedging the value of a Series of the Fund's portfolio. The Fund, on behalf of a
Series, would only buy options listed on national securities exchanges. The
Fund, will not purchase options on behalf of any Series if, as a result, the
aggregate cost of all outstanding options exceeds 10% of the Fund's total
assets.
PORTFOLIO MANAGEMENT
The portfolio of each Series is managed by the Investment Manager with a view
to achieving its investment objective. The Fund is managed within
InterCapital's Municipal Fixed Income Group, which manages 36 tax-exempt
municipal funds and fund portfolios, with approximately $12 billion in assets
as of December 31, 1993. James F. Willison, Senior Vice President of
InterCapital and Manager of InterCapital's Municipal Fixed Income Group, has
been the primary portfolio manager of the Fund since its inception and has been
a portfolio manager at InterCapital for over five years. Securities are
purchased and sold principally in response to the Investment Man- ager's
current evaluation of an issuer's ability to meet its debt obligations in the
future, and the Investment Manager's current assessment of future changes in
the levels of interest rates on tax-exempt securities of varying maturities.
There are a number of state tax restrictions which limit the ability of the
Investment Manager to trade the portfolio securities of a particular Series and
which affect the composition of the portfolio of such Series. It is the policy
of the Investment Manager to adhere to any restrictions affecting a particular
Series. See "Dividends, Distributions and Taxes-- State Taxation."
Securities purchased by each Series are, generally, sold by dealers acting as
principal for their own accounts. (Pursuant to an order issued by the
Securities and Exchange Commission, the Fund may effect principal transactions
in certain taxable money
13
<PAGE>
market instruments with Dean Witter Reynolds Inc. ("DWR"), a broker-dealer
affiliate of the Investment Manager. In addition, the Fund may incur brokerage
commissions on transactions conducted through DWR. Brokerage commissions are
not normally charged on purchases and sales of municipal obligations, but such
transactions may involve transaction costs in the form of spreads between bid
and asked prices. It is anticipated that the annual portfolio turnover rate of
each Series will not exceed 100%.
INVESTMENT RESTRICTIONS
===============================================================================
The investment restrictions listed below are among the restrictions which
have been adopted by the Fund, on behalf of each Series, as fundamental
policies. Under the Act, a fundamental policy may not be changed without the
vote of a majority of the outstanding voting securities of each Series, as
defined in the Act.
For purposes of the investment policies and restrictions of the Fund: (a) an
"issuer" of a security is the entity whose assets and revenues are committed to
the payment of interest and principal on that particular security, provided
that the guarantee of a security will be considered a separate security; (b) a
"taxable security" is any security the interest on which is subject to regular
federal income tax; and (c) all percentage limitations apply immediately after
a purchase or initial investment, and any subsequent change in any applicable
percentage resulting from market fluctuations or other changes in total assets
does not require elimination of any security from the portfolio.
Each Series may not:
1. Make loans of money or securities, except: (a) by the purchase of debt
obligations in which each Series may invest consistent with its investment
objective and policies; (b) by investment in repurchase agreements; and (c) by
lending its portfolio securities.
2. Invest 25% or more of the value of its total assets in securities of
issuers in any one industry. This restriction does not apply to obligations
issued or guaranteed by the United States Government, its agencies or
instrumentalities or to municipal obligations, including those issued by the
designated State of each Series or its political subdivisions.
PURCHASE OF FUND SHARES
===============================================================================
The Fund offers its shares for sale to the public on a continuous basis.
Pursuant to a Distribution Agreement between the Fund and Dean Witter
Distributors Inc. (the "Distributor") an affiliate of the Investment Manager,
shares of each Series of the Fund are distributed by the Distributor and
offered by DWR and other dealers who have entered into selected dealer
agreements with the Distributor ("Selected Broker-Dealers"). The principal
executive office of the Distributor is located at Two World Trade Center, New
York, New York 10048.
The minimum initial purchase is $1,000. Minimum subsequent purchases of $100
or more may be made by sending a check, payable to Dean Witter Multi-State
Municipal Series Trust, (name of Series), directly to Dean Witter Trust Company
(the "Transfer Agent") at P.O. Box 1040, Jersey City, NJ 07303 or by contacting
an account executive of DWR or other Selected Broker-Dealer.
In the case of investments pursuant to systematic payroll deduction plans,
the Fund, in its discretion, may accept investments without regard to any
minimum amounts which would otherwise be required if the Fund has reason to
believe that additional investments will increase the investment in all
accounts under such plans to at least $1,000. Certificates for shares of each
Series purchased will not be issued unless a request is made by the shareholder
in writing to the Transfer Agent. The offering price for each Series will be
the net asset value per share of that Series next determined following receipt
of an order (see "Determination of Net Asset Value" below), plus a sales charge
(expressed as a percentage of the offering price) on a single transaction as
shown in the following table:
14
<PAGE>
SALES CHARGE
------------
PERCENTAGE APPROXIMATE
OF PERCENTAGE OF
AMOUNT OF PUBLIC AMOUNT
SINGLE TRANSACTION OFFERING PRICE INVESTED
------------------ -------------- -------------
Less than $25,000................... 4.00% 4.17%
$25,000 but less than $50,000....... 3.50 3.63
$50,000 but less than $100,000...... 3.25 3.36
$100,000 but less than $250,000..... 2.75 2.83
$250,000 but less than $500,000..... 2.50 2.56
$500,000 but less than $1,000,000... 1.75 1.78
$1,000,000 and over................. 0.50 0.50
The above schedule of sales charges is applicable to purchases in a single
transaction by, among others: (a) an individual; (b) an individual, his or her
spouse and their children under the age of 21 purchasing shares for his or her
own accounts; (c) a trustee or other fiduciary purchasing shares for a single
trust estate or a single fiduciary account; (d) a pension, profit-sharing or
other employee benefit plan qualified or non-qualified under Section 401 of the
Internal Revenue Code, as amended (the "Code"); (e) tax-exempt organizations
enumerated in Section 501(c)(3) or (13) of the Code; (f) employee benefit plans
qualified under Section 401 of the Code of a single employer or of employers
who are "affiliated persons" of each other within the meaning of Section
2(a)(3)(c) of the Act; or (g) any other organized group of persons, whether
incorporated or not, provided the organization has been in existence for at
least six months and has some purpose other than the purchase of redeemable
securities of a registered investment company at a discount. Shares of each
Series of the Fund may be sold at their net asset value per share, without the
imposition of a sales charge, to employee benefit plans established by DWR and
SPS Transaction Services, Inc. (an affiliate of DWR) for their employees as
qualified under Section 401 (K) of the Internal Revenue Code.
Shares of each Series of the Fund are sold through the Distributor on a
normal five business day settlement basis; that is, payment is due on the fifth
business day (settlement date) after the order is placed with the Distributor.
Shares of each Series purchased through the Distributor are entitled to
dividends beginning on the next business day following settlement date. Since
DWR and other Selected Broker-Dealers forward investors' funds on settlement
date, they will benefit from the temporary use of the funds if paymentis made
prior thereto. Shares purchased through the Transfer Agent are entitled to
dividends beginning on the next business day following receipt of an order. As
noted above, orders placed directly with the Transfer Agent must be accompanied
by payment. Investors will be entitled to receive capital gains distributions
if their order is received by close of business on the day prior to the record
date for such distributions. The Fund and/or the Distributor reserve the right
to reject any purchase order.
REDUCED SALES CHARGES
Combined Purchase Privilege. Investors may have the benefit of reduced sales
charges in accordance with the above schedule by combining purchases of shares
of a Series of the Fund in single transactions with the purchase of shares of
another Series of the Fund. The sales charge payable on the purchase of shares
of a Series of the Fund and any other Series will be at the respective rate
applicable to the total amount of the combined concurrent purchases.
Right of Accumulation. The above persons and entities may also benefit from
a reduction of the sales charges in accordance with the above schedule if the
cumulative net asset value of shares of a Series purchased in a single
transaction, together with shares previously purchased (including shares of
another Series) which are held at the time of such transaction, amounts to
$25,000 or more.
The Distributor must be notified by the shareholder at the time a purchase
order is placed that the purchase qualifies for the reduced charge under the
Right of Accumulation. Similar notification must be made in writing by the
shareholder when such an order is placed by mail. The reduced sales charge will
not be granted if: (a) such notification is not furnished at the time of the
order; or (b) a review of the records of the Distributor or the Transfer Agent
fails to confirm the investor's represented holdings.
Letter of Intent. The foregoing schedule of reduced sales charges will also
be available to investors who enter into a written Letter of Intent providing
for the purchase, within a thirteen-month period, of shares of any Series of
the Fund from the Distributor. The cost of
15
<PAGE>
shares of any Series of the Fund which were previously purchased at a price
including a front-end sales charge during the 90-day period prior to the date
of receipt by the Distributor of the Letter of Intent, which are still owned by
the shareholder, may also be included in determining the applicable reduction.
For further information concerning purchases of the Fund's shares, contact
the Distributor or consult the Statement of Additional Information.
PLAN OF DISTRIBUTION
The Fund has entered into a Plan of Distribution pursuant to Rule 12b-1 under
the Act, whereby the expenses of certain activities and services by DWR and
others who engage in or support distributions of Fund Shares or who service
shareholder accounts, including overhead and telephone expenses incurred in
connection with the distribution of the Fund's shares, are reimbursed.
Reimbursements for these expenses will be made in monthly payments by the Fund
to the Distributor, which will in no event exceed an amount equal to a payment
at the annual rate of 0.15 of 1% of the average daily net assets of each Series
of the Fund. Expenses incurred by the Distributor pursuant to the Plan in any
fiscal year will not be reimbursed by the Fund through payments accrued in any
subsequent fiscal year. No interest or other financing charges will be incurred
on any distribution expense incurred by the Distributor under the Plan or on
any unreimbursed expenses due to the Distributor pursuant to the Plan. The fee
payable pursuant to the Plan, equal to 0.15% of the Fund's average daily net
assets, is characterized as a service fee within the meaning of NASD
guidelines. The Arizona Series, California Series, Florida Series,
Massachusetts Series, Michigan Series, Minnesota Series, New Jersey Series, New
York Series, Ohio Series and Pennsylvania Series accrued a total of $70,686,
$174,478, $105,940, $21,891, $27,507, $12,828, $67,391, $19,811, $28,529 and
$64,199, respectively under the Plan for the fiscal year ended November 30,
1993. This accrual is an amount equal to 0.15% of the daily net assets of each
respective Series of the Fund (0.14% of the daily net assets of the Arizona
Series and the Minnesota Series).
DETERMINATION OF NET ASSET VALUE
The net asset value per share of each Series of the Fund is determined
once daily at 4:00 p.m., New York time on each day that the New York Stock
Exchange is open by taking the value of all assets of each Series of the Fund,
subtracting all of their respective liabilities, dividing by the number of
shares of the respective Series outstanding and adjusting to the nearest cent.
The net asset value per share of each Series will not be determined on Good
Friday and on such other federal and non-federal holidays as are observed by
the New York Stock Exchange.
Portfolio securities (other than short-term taxable debt securities, futures
and options) are valued for the Fund by an outside independent pricing service
approved by the Fund's Trustees. The service utilizes a computerized grid
matrix of tax-exempt securities and evaluations by its staff in determining
what it believes is the fair value of the Fund's portfolio securities. The
Board believes that timely and reliable market quotations are generally not
readily available to the Fund for purposes of valuing tax-exempt securities and
that the valuations supplied by the pricing service are more likely to
approximate the fair value of such securities.
Short-term taxable debt securities with remaining maturities of sixty days or
less at the time of purchase are valued at amortized cost, unless the Trustees
determine such does not reflect the securities' fair value, in which case these
securities will be valued at their fair value as determined by the Trustees.
SHAREHOLDER SERVICES
===============================================================================
Automatic Investment of Dividends and Distributions. All income dividends
and capital gains distributions are automatically paid in full and fractional
shares of each respective Series of the Fund, (or if specified by the
Shareholder, any other Series of the Fund or any other open-end investment
company for which InterCapital serves as Investment Manager (collectively with
the Fund, the "Dean Witter Funds")), unless the shareholder requests they be
paid in cash. Each purchase of shares of each Series of the Fund is made
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upon the condition that the Transfer Agent is thereby automatically appointed
as agent of the investor to receive all dividends and capital gains
distributions on shares owned by the investor. Such dividends and distributions
will be paid in shares of each respective Series of the Fund at net asset value
per share (or in cash if the shareholder so requests) on the monthly payment
date, which will be no later than the last business day of the month for which
the dividend or distribution is payable. Processing of dividend checks begins
immediately following the monthly payment date. Shareholders who have requested
to receive dividends in cash will normally receive their monthly dividend check
during the first ten days of the following month.
EasyInvest(TM) . Shareholders may subscribe to EasyInvest, an automatic
purchase plan which provides for any amount from $100 to $5,000 to be
transferred automatically from a checking or savings account, on a semi-
monthly, monthly or quarterly basis, to the Transfer Agent for investment in
shares of the Fund.
Systematic Withdrawal Plan. A withdrawal plan is available for shareholders
who own or purchase shares of any Series of the Fund having a minimum value of
$10,000 based upon the then current offering price. The plan provides for
monthly or quarterly (March, June, September and December) checks in any dollar
amount, not less than $25, or in any whole percentage of the account balance,
on an annualized basis.
Shareholders should contact their DWR or other Selected Broker-Dealer account
executive or the Transfer Agent for further information about any of the above
services.
EXCHANGE PRIVILEGE
The Fund makes available to its shareholders an "Exchange Privilege" allowing
the exchange of shares of a Series of the Fund for shares of any other Series
of the Fund, shares of other Dean Witter Funds sold with a front-end (at time
of purchase) sales charge ("FESC Funds"), for shares of Dean Witter Funds sold
with a contingent deferred sales charge ("CDSC Funds"), and for shares of Dean
Witter Short-Term U.S. Treasury Trust, Dean Witter Limited Term Municipal
Trust, Dean Witter Short-Term Bond Fund and five Dean Witter Funds which are
money market funds (the foregoing eight non-FESC and non-CDSC funds are
hereinafter referred to as the "Exchange Funds"). Exchanges may be made after
the shares of a Series of the Fund acquired by purchase (not by exchange or
dividend reinvestment) have been held for thirty days. There is no waiting
period for exchanges of shares acquired by exchange or dividend reinvestment.
However, shares of CDSC funds, including shares acquired in exchange for shares
of FESC funds, may not be exchanged for shares of FESC funds. Thus,
shareholders who exchange their Fund shares for shares of CDSC funds may
subsequently exchange those shares for shares of other CDSC funds or Exchange
Funds but may not reacquire FESC fund shares by exchange.
An exchange to another FESC fund or to a CDSC fund or to an Exchange Fund is
on the basis of the next calculated net asset value per share of each fund
after the exchange order is received. When exchanging into a money market fund
from a Series of the Fund, shares of the Series are redeemed out of the Fund at
their next calculated net asset value and the proceeds of the redemption are
used to purchase shares of the money market fund at their net asset value
determined the following business day. Subsequent exchanges between any of the
Exchange Funds, FESC and CDSC funds can be effected on the same basis (except
that CDSC fund shares may not be exchanged for shares of FESC funds). Shares of
a CDSC fund acquired in exchange for shares of an FESC fund (or in exchange for
shares of other Dean Witter Funds for which shares of an FESC fund have been
exchanged) are not subject to any contingent deferred sales charge upon their
redemption.
Purchases and exchanges should be made for investment purposes only. A
pattern of frequent exchanges may be deemed by the Investment Manager to be
abusive and contrary to the best interests of a Series' other shareholders and,
at the Investment Manager's discretion, may be limited by the Fund's refusal to
accept additional purchases and/or exchanges from the investor. Although the
Fund does not have any specific definition of what constitutes a pattern of
frequent exchanges, and will consider all relevant factors
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in determining whether a particular situation is abusive and contrary to the
best interests of a Series and its other shareholders, investors should be
aware that the Fund and each of the other Dean Witter Funds may in their
discretion limit or otherwise restrict the number of times this Exchange
Privilege may be exercised by any investor. Any such restriction will be made
by the Fund on a prospective basis only, upon notice to the shareholder not
later than ten days following such shareholder's most recent exchange.
Also, the Exchange Privilege may be terminated or revised at any time by the
Fund and/or any of such Dean Witter Funds for which shares of a Series of the
Fund have been exchanged, upon such notice as may be required by applicable
regulatory agencies. Shareholders maintaining margin accounts with DWR or
another Selected Broker-Dealer are referred to their account executive
regarding restrictions on exchange of shares of any Series of the Fund pledged
in their margin account.
If DWR or another Selected Broker-Dealer is the current dealer of record and
its account numbers are part of the account information, shareholders may
initiate an exchange of shares of a Series of the Fund for shares of any other
Series of the Fund or for Shares of any of the Dean Witter Funds (for which the
Exchange Privilege is available) pursuant to this Exchange Privilege by
contacting their account executive (no Exchange Privilege Authorization Form is
required). Other shareholders (and those shareholders who are clients of DWR or
another Selected Broker-Dealer but who wish to make exchanges directly by
writing or telephoning the Transfer Agent) must complete and for- ward to the
Transfer Agent an Exchange Privilege Authorization Form, copies of which may be
obtained from the Transfer Agent, to initiate an exchange. If the Authorization
Form is used, exchanges may be made in writing or by contacting the Transfer
Agent at (800) 526-3143 (toll free). The Fund will employ reasonable procedures
to confirm that exchange instructions communicated over the telephone are
genuine. Such procedures may include requiring various forms of personal
identification such as name, mailing address, social security or other tax
identification number and DWR or other Selected Broker-Dealer account number
(if any). Telephone instructions may also be recorded. If such procedures are
not employed, the Fund may be liable for any losses due to unauthorized or
fraudulent instructions. Telephone exchange instructions will be accepted if
received by the Transfer Agent between 9:00 a.m. and 4:00 p.m. New York time,
on any day the New York Stock Exchange is open. Any shareholder wishing to make
an exchange who has previously filed an Exchange Privilege Authorization Form
and who is unable to reach the Fund by telephone should contact his or her DWR
or other Selected Broker-Dealer account executive, if appropriate, or make a
written exchange request. Shareholders are advised that during periods of
drastic economic or market changes, it is possible that the telephone exchange
procedures may be difficult to implement, although this has not been the case
with the Dean Witter Funds in the past.
For further information regarding the Exchange Privilege, shareholders should
contact their DWR or other Selected Broker-Dealer account executive or the
Transfer Agent.
REDEMPTIONS AND REPURCHASES
===============================================================================
Redemption. Shares of each Series of the Fund can be redeemed for cash at
any time at their respective current net asset value per share (without any
redemption or other charge). If shares are held in a shareholder's account
without a share certificate, a written request for redemption is required. If
certificates are held by the shareholder(s), the shares may be redeemed by
surrendering the certificate(s) with a written request for redemption along
with any additional information required by the Transfer Agent.
Repurchase. DWR and other Selected Broker-Dealers are authorized to
repurchase shares represented by a share certificate which is delivered to any
of their offices. Shares held in a shareholder's account without a share
certificate may also be repurchased by DWR and other Selected Broker-Dealers
upon the telephonic request of the shareholder. The repurchase price is the net
asset value next determined (see "Purchase of Fund Shares--Determination of Net
Asset Value") after such repurchase order is received.
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<PAGE>
Repurchase orders received by DWR and other Selected Broker-Dealers by 4:00
p.m., New York time, on any business day will be priced at the net asset value
per share that is based on that day's close. Selected Broker-Dealers may charge
for their services in connection with the repurchase, but the Fund, DWR and the
Distributor do not charge a fee. Payment for shares repurchased may be made by
the Fund to DWR and other Selected Broker-Dealers for the account of the
shareholder. The offer by DWR and other Selected Broker-Dealers to repurchase
shares from dealers or shareholders may be suspended by them at any time. In
that event, shareholders may redeem their shares through the Fund's Transfer
Agent as set forth above under "Redemption."
Payment for Shares Redeemed or Repurchased. Payment for shares presented for
repurchase or redemption will be made by check within seven days after receipt
by the Transfer Agent of the certificate and/or written request in good order.
Such payment may be postponed or the right of redemption suspended at times
when normal trading is not taking place on the New York Stock Exchange. If the
shares to be redeemed have recently been purchased by check, payment of the
redemption proceeds may be delayed for the minimum time needed to verify that
the check used for investment has been honored (not more than fifteen days from
the time of receipt of the check by the Transfer Agent). Shareholders maintain-
ing margin accounts with DWR or another Selected Broker-Dealer are referred to
their account executive regarding restrictions on redemption of shares of the
Fund pledged in the margin account.
Reinstatement Privilege. A shareholder who has had his or her shares
redeemed or repurchased and has not previously exercised this reinstatement
privilege may, within thirty days after the date of the redemption or
repurchase, reinstate any portion or all of the proceeds of such redemption or
repurchase in shares of the Fund at the net asset value (without a sales
charge) next determined after a reinstatement request, together with the
proceeds, is received by the Transfer Agent.
Involuntary Redemption. The Fund reserves the right to redeem, on sixty
days' notice and at net asset value, the shares of any shareholder whose shares
have a value of less than $100 as a result of redemptions or repurchases, or
such lesser amount as may be fixed by the Trustees. However, before the Fund
redeems such shares and sends the proceeds to the shareholder, it will notify
the shareholder that the value of the shares is less than $100 and allow the
shareholder sixty days in which to make an additional investment in an amount
which will increase the value of his or her account to $100 or more before the
redemption is processed.
DIVIDENDS, DISTRIBUTIONS AND TAXES
===============================================================================
Dividends and Distributions. The Fund declares, on behalf of each Series,
dividends from net investment income on each day the New York Stock Exchange is
open for business (see "Purchase of Fund Shares"). Such dividends are payable
monthly. Each Series intends to distribute substantially all of its net
investment income on an annual basis.
Each Series of the Fund will distribute at least once each year all net
short-term capital gains, if there are any, after utilization of any capital
loss carryovers. Each Series may, however, determine either to distrib- ute or
to retain all or part of any net long-term capital gains in any year for
reinvestment. All dividends and capital gains distributions will be paid in
additional Series' shares (without sales charge) and automatically credited to
the shareholder's account without issuance of a share certificate unless the
shareholder requests in writing that all dividends and distributions be paid in
cash. (See "Shareholder Services--Automatic Investment of Dividends and
Distributions.") Taxable capital gains may be generated by transactions in
options and futures contracts engaged in by any Series of the Fund. Any
dividends or distributions declared in the last quarter of any calendar year
which are paid in the
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<PAGE>
following year prior to February 1, will be deemed received by shareholders of
record in the prior quarter in the prior year.
Taxes. Because each Series of the Fund intends to distribute substantially
all of its net investment income and capital gains to shareholders and intends
to otherwise remain qualified as a regulated investment company under
Subchapter M of the Internal Revenue Code as amended (the "Code"), it is not
expected that any Series will be required to pay any federal income tax (if any
Series does retain any net long-term capital gains it will pay federal income
tax thereon, and shareholders will be required to include such undistributed
gains in their taxable income and will be able to claim their share of the tax
paid by that Series as a credit against their individual federal income tax).
The Code may subject interest received on certain otherwise tax-exempt
securities to an alternative minimum tax. This alternative minimum tax may be
incurred due to interest received on "private activity bonds" (in general,
bonds that benefit non-government entities) issued after August 7, 1986 which,
although tax-exempt, are used for purposes other than those generally performed
by governmental units (e.g., bonds used for commercial or housing purposes).
Income received on such bonds is classified as a "tax preference item", under
the alternative minimum tax, for both individual and corporate investors. A
portion of each Series' investments may be made in such "private activity
bonds," with the result that a portion of the exempt-interest dividends paid by
each Series will be an item of tax preference to shareholders of that Series
subject to the alternative minimum tax. In addition, certain corporations which
are subject to the alternative minimum tax may have to include a portion of
exempt-interest dividends in calculating their alternative minimum taxable
income in situations where the "adjusted current earnings" of the corporation
exceeds its alternative minimum taxable income.
Under the Revenue Reconciliation Act of 1993, all or a portion of the Fund's
gain from the sale or redemption of tax-exempt obligations purchased at a
market discount after April 30, 1993 will be treated as ordinary income rather
than capital gain. This rule may increase the amount of ordinary income
dividends received by shareholders.
After the end of the calendar year, shareholders will be sent full
information on their dividends and any capital gains distributions including
information indicating the percentage of the dividend distributions for such
fiscal year which constitutes exempt-interest dividends and the percentage, if
any, that is taxable, and the percentage, if any, of the exempt-interest
dividends which constitutes an item of tax preference.
Shareholders who are required to pay taxes on their income will normally be
subject to federal and state income tax on dividends paid from interest income
derived from taxable securities and on distributions of net capital gains they
receive from the Fund. For federal income tax purposes, distributions of long-
term capital gains, if any, are taxable to shareholders as long-term capital
gains, regardless of how long a shareholder has held shares of any Series of
the Fund and regardless of whether the distribution is received in additional
shares or in cash. If a shareholder receives a distribution that is taxed as a
long-term capital gain on shares held for six months or less and sells those
shares at a loss, the loss will be treated as a long-term capital loss to the
extent of the capital gains distribution. To avoid being subject to a 31%
federal backup withholding tax on taxable dividends and capital gains
distributions and the proceeds of redemptions and repurchases, shareholders'
taxpayer identification numbers must be furnished and certified as to accuracy.
The foregoing relates primarily to federal income taxation as in effect as of
the date of this Prospectus. Distributions from investment income and capital
gains, including exempt-interest dividends, may be subject to state taxes in
states other than the state of each designated Series, and also to local taxes.
Shareholders should consult their tax advisors as to the applicability of the
above to their own tax situation and as to the tax consequences to them of an
investment in any Series of the Fund.
STATE TAXATION. The following general considerations are relevant to
investors in each Series of the Fund indicated below. Shareholders of each
designated Series should consult their tax advisers about other state and local
tax consequences of their investments in such Series.
Arizona. Under a ruling issued by the Arizona Department of Revenue in
1984, distributions from the Arizona Series that are received by shareholders
that are Arizona taxpayers will not be subject to Arizona income tax to the
extent that those distributions are attributable to interest on tax-exempt
obligations of the State of Arizona or interest on obligations of the United
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<PAGE>
States. Distributions from the Arizona Series attributable to obligations of
the governments of Puerto Rico, the Virgin Islands and Guam should also be
excludible from Arizona income tax. Other distributions from the Arizona
Series, including those related to short-term and long-term capital gains,
generally will be taxable under Arizona law when received by Arizona taxpayers.
Interest on indebtedness incurred (directly or indirectly) by a shareholder to
purchase or carry shares of the Arizona Series should not be deductible for
Arizona income tax purposes to the extent that the Arizona Series holds tax-
exempt obligations of the State of Arizona, obligations of the United States,
and obligations of Puerto Rico, the Virgin Islands and Guam.
The foregoing discussion assumes that in each taxable year the Arizona Series
qualifies and elects to be taxed as a regulated investment company for federal
income tax purposes. In addition, the following discussion assumes that in each
taxable year the Arizona Series qualifies to pay exempt-interest dividends by
complying with the requirement of the Code that at least 50% of its assets at
the close of each quarter of its taxable year is invested in state, municipal
or other obligations, the interest on which is excluded from gross income for
federal income tax purposes pursuant to section 103(a) of the Code.
California . In any year in which the Fund qualifies as a regulated
investment company under the Internal Revenue Code and is exempt from federal
income tax, (i) the California Series will also be exempt from the California
corporate income and franchise taxes to the extent it distributes its income
and (ii), provided 50% or more of the value of the total assets of the
California Series at the close of each quarter of its taxable year consists of
obligations the interest on which (when held by an individual) is exempt from
personal income taxation under California law. The California Series will be
qualified under California law to pay "exempt-interest" dividends which will be
exempt from the California personal income tax.
The portion of dividends constituting exempt-interest dividends is that
portion derived from interest on obligations which pay interest excludable from
California personal income under California law. The totalamount of California
exempt-interest dividends paid by the California Series to all of its
shareholders with respect to any taxable year cannot exceed the amount of
interest received by the California Series during such year on such obligations
less any expenses and expenditures (including dividends paid to corporate
shareholders) deemed to have been paid from such interest. Any dividends paid
to corporate shareholders subject to the California franchise or corporate
income tax will be taxed as ordinary dividends to such shareholders.
Individual shareholders of the California Series who reside in California
will not be subject to California personal income tax on distributions received
from the California Series to the extent such distributions are attributable to
interest received by the California Series during its taxable year on
obligations, the interest on which (when held by an individual) is exempt from
taxation under California law.
Because, unlike federal law, California law does not impose personal income
tax on an individual's Social Security benefits, the receipt of California
exempt-interest dividends will have no effect on an individual's California
personal income tax.
Individual shareholders will normally be subject to federal and California
personal income tax on dividends paid from interest income derived from taxable
securities and distributions of net capital gains. In addition, distributions
other than exempt-interest dividends to such shareholders are includable in
income subject to the California alternative minimum tax. For federal income
tax and California personal income tax purposes, distributions of long-term
capital gains, if any, are taxable to shareholders as long-term capital gains,
regardless of how long a shareholder has held shares of the California Series
and regardless of whether the distribution is received in additional shares or
in cash. In addition, unlike federal law, the shareholders of the California
Series will not be subject to tax, or receive a credit for tax paid by the
California Series, on undistributed capital gains, if any.
Interest on indebtedness incurred by shareholders or related parties to
purchase or carry shares of an investment company paying exempt-interest
dividends, such as the California Series, generally will not
21
<PAGE>
be deductible by the investor for federal or state personal income tax
purposes. In addition, as a result of California's incorporation of certain
provisions of the Code, a loss realized by a shareholder upon the sale of
shares held for six months or less may be disallowed to the extent of any
exempt-interest dividends received with respect to such shares. Moreover, any
loss realized upon the redemption of shares within six months from the date of
purchase of such shares and following receipt of a long-term capital gains
distribution will be treated as long-term capital loss to the extent of such
long-term capital gains distribution. Finally, any loss realized upon the
redemption of shares within 30 days before or after the acquisition of other
shares of the Trust may be disallowed under the "wash sale" rules.
Distributions from investment income and long-term and short-term capital
gains will not be excludable from taxable income in determining the California
corporate franchise tax for corporate shareholders. Such distributions may also
be includable in income subject to the alternative minimum tax. In addition,
distributions from investment income and long-term and short-term capital gains
may be subject to state taxes in states other than California, and to local
taxes.
Florida. Florida does not presently impose an income tax on individuals and
thus individual shareholders of the Florida Series will not be subject to any
Florida state income tax on distributions received from the Florida Series.
Florida does impose a tax on intangible personal property, but shareholders of
the Florida Series will not be required to include the value of their shares in
their taxable intangible personal property if, as is anticipated, all of the
Florida Series' investments on the annual assessment date are Florida tax-
exempt securities.
Massachusetts . Under existing Massachusetts law, provided the Massachusetts
Series qualifies as a "regulated investment company" under the Code, the
Massachusetts Series will not be subject to Massachusetts income or excise
taxation. Shareholders of the Massachusetts Series that are individuals,
estates or trusts and are subject to the Massachusetts personal income tax will
not be subject to such tax on distributions of the Massachusetts Series that
qualify as "exempt-interest dividends" under Section 852(b)(5) ofthe Code and
are attributable to interest received by the Massachusetts Series on
obligations issued by The Commonwealth of Massachusetts and its municipalities,
political subdivisions and governmental agencies and instrumentalities, or by
Puerto Rico, the U.S. Virgin Islands or Guam, which pay interest excludable
from gross income under the Code and exempt from Massachusetts personal income
taxation. Other distributions to such shareholders will generally be included
in income subject to the Massachusetts personal income tax, except for (1)
distributions, if any, attributable to interest received by the Massachusetts
Series on direct obligations of the United States and (2) distributions, if
any, attributable to gain realized by the Massachusetts Series on the sale of
certain Massachusetts obligations issued pursuant to Massachusetts statutes
that specifically exempt such gain from Massachusetts taxation. Dividends from
the Massachusetts Series that qualify as capital gain dividends under Section
852(b)(3)(C) of the Code, other than such dividends described in the second
clause of the preceding sentence, will be treated as long-term capital gains
for Massachusetts personal income tax purposes.
In determining the Massachusetts excise tax on corporations subject to
Massachusetts taxation, distributions from the Massachusetts Series, whether
attributable to taxable or tax-exempt income or gain realized by the
Massachusetts Series, will not be excluded from a corporate shareholder's net
income and, in the case of a shareholder that is an intangible property
corporation, shares of the Massachusetts Series will not be excluded from net
worth.
Michigan. Under existing Michigan law, to the extent that the distributions
from the Michigan Series qualify as "exempt-interest dividends" of a regulated
investment company under Section 852(b)(5) of the Code which are attributable
to interest on tax-exempt obligations of the State of Michigan, its political
or governmental subdivisions, or its governmental agencies or instrumentalities
("Michigan Obligations"), or obligations of the United States or its agencies
or possessions that are exempt from state taxation, such distributions will
also not be subject to Michigan income tax or Michigan single business tax.
Under existing Michigan law, an owner of a share of an investment
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<PAGE>
company (such as the Michigan Series) will be considered the owner of a pro
rata share of the assets of the investment company. As such, yield from such
shares, for intangibles tax purposes, will not include the interest or
dividends received from Michigan Obligations or obligations of the United
States or its agencies or possessions. In addition, Michigan Series shares
owned by certain financial institutions or by certain other persons subject to
the Michigan single business tax are exempt from the Michigan intangibles tax.
To the extent that distributions of the Michigan Series are derived from
other income, including long- or short-term capital gains, the distributions
will not be exempt from Michigan income tax or Michigan single business tax.
Certain Michigan cities have adopted Michigan's uniform city income tax
ordinance, which under the Michigan city income tax act is the only income tax
ordinance that may be adopted by cities in Michigan. To the extent the
distributions on the Michigan Series are not subject to Michigan income tax,
they are not subject to any Michigan city's income tax.
Minnesota. Under existing Minnesota law, provided the Minnesota Series
qualifies as a "regulated investment company" under the Code, individual
shareholders of the Minnesota Series resident in Minnesota who are subject to
the regular Minnesota personal income tax will not be subject to such regular
Minnesota tax on Minnesota Series dividends to the extent that such
distributions qualify as exempt-interest dividends of a regulated investment
company under Section 852(b)(5) of the Code which are derived from interest on
tax-exempt obligations of the State of Minnesota, or its political or
governmental subdivisions, municipalities, governmental agencies or
instrumentalities. The foregoing will apply, however, only if the portion of
the exempt-interest dividends from such Minnesota sources that is paid to all
shareholders represents 95% or more of the exempt-interest dividends that are
paid by the Minnesota Series. If the 95% test is not met, all exempt-interest
dividends that are paid by the Minnesota Series will be subject to the regular
Minnesota personal income tax. Even if the 95% test is met, to the extent that
exempt-interest dividends that are paid by the Minnesota Series are notderived
from the Minnesota sources described in the first sentence of this paragraph,
such dividends will be subject to the regular Minnesota personal income tax.
Other distributions of the Minnesota Series, including distributions from net
short-term and long-term capital gains, are generally not exempt from the
regular Minnesota personal income tax.
Minnesota presently imposes an alternative minimum tax on resident
individuals that is based, in part, on their federal alternative minimum
taxable income, which includes federal tax preference items. The Code provides
that interest on specified private activity bonds is a federal tax preference
item, and that an exempt-interest dividend of a regulated investment company
constitutes a federal tax preference item to the extent of its proportionate
share of the interest on such private activity bonds. Accordingly, individual
share- holders of the Minnesota Series resident in Minnesota may be subject to
the Minnesota alternative minimum tax as a result of the receipt of exempt-
interest dividends that are attributable to such private activity bond
interest, even though they are also derived from the Minnesota sources
described in the paragraph above. In addition, the entire portion of exempt-
interest dividends that is derived from sources other than the Minnesota
sources described in the paragraph above is subject to the Minnesota
alternative minimum tax. Further, should the 95% test that is described in the
paragraph above fail to be met, all of the exempt-interest dividends that are
paid by the Minnesota Series, including all of those that are derived from the
Minnesota sources described in the paragraph above, will be subject to the
Minnesota alternative minimum tax.
Subject to certain limitations that are set forth in recently adopted
Minnesota rules, Minnesota Series dividends, if any, that are derived from
interest on certain United States obligations are not subject to the regular
Minnesota personal income tax or the Minnesota alternative minimum tax, in the
case of individual shareholders of the Minnesota Series who are resident in
Minnesota.
Minnesota Series distributions, including exempt-interest dividends, are not
excluded in determining the
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Minnesota franchise tax on corporations that is measured by taxable income and
alternative minimum taxable income. Minnesota Series distributions may also be
taken into account in certain cases in determining the minimum fee that is
imposed on corporations, S corporations and partnerships.
Interest on indebtedness incurred or continued by a shareholder of the
Minnesota Series to purchase or carry shares of the Minnesota Series will
generally not be deductible for regular Minnesota personal income tax purposes
or Minnesota alternative minimum tax purposes, in the case of individual
shareholders of the Minnesota Series who are resident in Minnesota.
Shares of the Minnesota Series will not be subject to the Minnesota personal
property tax.
New Jersey. Under existing New Jersey law, as long as the New Jersey Series
qualifies as a "qualified investment fund," shareholders of the New Jersey
Series will not be required to include in their New Jersey gross income
distributions from the New Jersey investment fund to the extent that such
distributions are attributable to interest or gain from obligations (1) issued
by or on behalf of New Jersey or any county, municipality, school or other
district, agency, authority, commission, instrumentality, public corporation,
body corporate and politic or political subdivision of New Jersey, or (2)
statutorily free from New Jersey or local taxation under other acts of New
Jersey or under the laws of the United States.
A "qualified investment fund" is any investment company or trust registered
with the Securities Exchange Commission, or any series of such investment
company or trust, which, for the calendar year in which the distribution is
paid, (a) has no investments other than interest-bearing obligations,
obligations issued at a discount, and cash and cash items, including
receivables; and (b) has not less than 80% of the aggregate principal amount of
all its investments, excluding cash and cash items (including receivables), in
obligations of the types described in the preceding paragraph.
The foregoing exclusion applies only to shareholders who are individuals,
estates, and trusts, subject to the New Jersey gross income tax. That tax does
not apply to corporations, and while certain qualifying distributions are
exempt from corporation income tax, alldistributions will be reflected in the
net income tax base for purposes of computing the corporation business tax.
Gains resulting from the redemption or sale of shares of the New Jersey Series
will also be exempt from the New Jersey gross income tax.
At this time, the New Jersey Division of Taxation has taken the position that
financial futures contracts, options on futures contracts and municipal bond
index futures contracts do not constitute interest-bearing obligations,
obligations issued at a discount, or cash and cash items, including
receivables. Accordingly, the inclusion of such investments would cause all
distributions from the New Jersey Series for the taxable year to become
taxable. The Fund reserves the right to make such investments on behalf of the
New Jersey Series at such time as permitted under New Jersey law.
The regulations require that 80% of the aggregate principal amount of all
investments, excluding cash and cash items, must be in tax-exempt obligations
free from federal and New Jersey income taxes at the end of each quarter of the
taxable year. Failure to meet the New Jersey 80% aggregate principal amount
test, even if necessary to maintain a "defensive" position would cause all
distributions from the New Jersey Series for the taxable year to become
taxable.
The New Jersey Series will notify shareholders by February 15 of each
calendar year as to the portion of its distributions for the preceding calendar
year that is exempt from federal income and New Jersey income taxes.
New York . Under existing New York law, individual shareholders who are New
York residents will not incur any federal, New York State or New York City
income tax on the amount of exempt-interest dividends received by them from the
Series which represents a distribution of income from New York tax-exempt
securities whether taken in cash or reinvested in additional shares. Exempt-
interest dividends are included, however, in determining what portion, if any,
of a person's Social Security benefits are subject to federal income tax.
Interest on indebtedness incurred or continued to purchase or carry shares of
an investment company paying exempt-interest dividends, such as the Fund,
24
<PAGE>
may not be deductible by the investor for State or City personal income tax
purposes.
Shareholders will normally be subject to federal, New York State or New York
City income tax on dividends paid from interest income derived from taxable
securities and on distributions of net capital gains. For federal and New York
State or New York City income tax purposes, distributions of net long-term
capital gains, if any, are taxable to shareholders as long-term capital gains,
regardless of how long the shareholder has held the Fund shares and regardless
of whether the distribution is received in additional shares or in cash.
Distributions from investment income and capital gains, including exempt-
interest dividends, may be subject to New York franchise taxes if received by a
corporation doing business in New York, to state taxes in states other then New
York and to local taxes.
Ohio . Under existing Ohio law, provided the Ohio Series qualifies as a
"regulated investment company" under the Code, the Ohio Series will not be
subject to the Ohio personal income tax, the Ohio corporation franchise tax, or
the Ohio dealer in intangibles tax or to income taxes imposed by municipalities
and other political subdivisions in Ohio. Individual shareholders of the Ohio
Series who are subject to the Ohio personal income taxes will not be subject to
such taxes on distributions with respect to shares of the Ohio Series to the
extent that such distributions are directly attributable to interest on
obligations issued by the State of Ohio, its counties and municipalities,
authorities, instrumentalities or other political subdivisions ("Ohio
Obligations"). Corporate shareholders of the Ohio Series that are subject to
the Ohio corporation franchise tax computed on the net income basis will not be
subject to such tax on distributions with respect to shares of the Ohio Series
to the extent that such distributions either (a) are attributable to interest
on Ohio obligations, or (b) represent "exempt-interest dividends". Shares of
the Ohio Series will be included in a corporate shareholder's tax base for
purposes of computing the Ohio corporation franchise tax on the net worth
basis. Distributions with respect to the Ohio Series that are attributable to
interest on obligations of the United States or its territories or possessions,
or of any authority, commission or instrumentality of the United States that is
exempt from state income taxes under the laws of the United States, will not
be subject to the Ohio personal income tax, the Ohio corporation franchise tax
(to the extent computed on the net income basis), or to taxes imposed by
municipalities and other political subdivisions in Ohio.
Capital gains distributed by the Ohio Series attributable to profit made on
the sale, exchange or other disposition by the Ohio Series of Ohio Obligations
will not be subject to the Ohio personal income tax, the Ohio corporation
franchise tax (to the extent computed on the net income basis), or to taxes
imposed by municipalities and other political subdivisions in Ohio.
Interest on indebtedness incurred (directly or indirectly) by a shareholder
of the Ohio Series to purchase or carry shares of the Ohio Series will not be
deductible for Ohio personal income tax purposes.
Pennsylvania. Individual shareholders of the Pennsylvania Series resident in
the Commonwealth of Pennsylvania ("Commonwealth"/"Pennsylvania") will not be
subject to Pennsylvania personal income tax on distributions received from the
Pennsylvania Series to the extent such distributions are attributable to
interest on tax-exempt obligations of the Commonwealth, its agencies,
authorities and political subdivisions or obligations of the United States or
of the Governments of Puerto Rico, The Virgin Islands and Guam. Other
distributions from the Pennsylvania Series, including capital gains generally
and interest on securities not described in the preceding sentence, generally
will not be exempt from Pennsylvania Personal Income Tax.
Other than the School District of Philadelphia, political subdivisions of the
Commonwealth have not been authorized to impose an unearned income tax upon
resident individuals. Individual shareholders who reside in the Philadelphia
School District will not be subject to the School District Unearned Income Tax
on (i) distributions received from the Pennsylvania Series to the extent that
such distributions are exempt from Pennsylvania Personal Income Tax, or (ii)
distributions of capital gains income by the Pennsylvania Series.
Corporate shareholders who are subject to the Pennsylvania Corporate Net
Income Tax will not be subject to that tax on distributions by the Pennsylvania
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<PAGE>
Series that qualify as "exempt-interest dividends" under Section 852(b)(5) of
the U.S. Internal Revenue Code or are attributable to interest on obligations
of the United States or agencies or instrumentalities thereof. For Capital
Stock/Foreign Franchise Tax purposes, corporate shareholders must normally
reflect their investment in the Pennsylvania Series and the dividends received
thereon in the determination of the taxable value of their capital stock.
The Pennsylvania Series will not be subject to Corporate Net Income Tax or
other corporate taxation in Pennsylvania.
All Pennsylvania counties, the City of Pittsburgh, and the School District of
Pittsburgh are authorized to impose a tax on intangible personal property of
their residents, and most do so. Shares in the Pennsylvania Series constitute
intangible personal property. However, shares in the Pennsylvania Series will
not be subject to intangible personal property taxation in any Pennsylvania
county, the City of Pittsburgh, or the School District of Pittsburgh to the
extent that the intangible personal property owned in the portfolio of the
Pennsylvania Series would not be subject to such taxation if owned directly by
a resident of Pennsylvania. The Pennsylvania Series will invest predominantly
in obligations of the Commonwealth, its agencies, authorities and political
subdivisions, or obligations of the United States or the Governments of Puerto
Rico, the Virgin Islands or Guam, which obligations are not subject to
intangible personal property taxation in Pennsylvania. Only the fraction, if
any, of the value of the Pennsylvania Series' portfolio not invested in
securities described in the preceding sentence would be subject to any
applicable intangible personal property tax.
PERFORMANCE INFORMATION
===============================================================================
From time to time each Series of the Fund may quote its "yield" and/or its
"total return" in advertisements and sales literature. Both the yield and the
total return of each Series of the Fund are based on historical earnings and
are not intended to indicate future performance. The yield of each Series of
the Fund is computed by dividing the net investment income of that Series over
a 30-day period by an average value (using the average number of shares
entitled to receive dividends and the net asset value per share at the end of
the period), all in accordance with applicable regulatory requirements. Such
amount is compounded for six months and then annualized for a twelve-month
period to derive the yield of that Series. Each Series may also quote its tax-
equivalent yield, which is calculated by determining the pre-tax yield which,
after being taxed at a stated rate, would be equivalent to the yield determined
as described above.
The "average annual total return" of each Series of the Fund refers to a
figure reflecting the average annualized percentage increase (or decrease) in
the value of an initial investment in a Series of the Fund of $1,000 over the
life of such Series of the Fund. Average annual total return reflects all
income earned by such Series, any appreciation or depreciation of the assets of
such Series, all expenses incurred by such Series and all sales charges
incurred by shareholders redeeming shares, for the the stated periods. It also
assumes reinvestment of all dividends and distributions paid by such Series.
In addition to the foregoing, each Series of the Fund may advertise its total
return over different periods of time by means of aggregate, average, year-by-
year or other types of total return figures. Such calculations may or may not
reflect the imposition of the front-end sales charge which, if reflected, would
reduce the performance quoted. Each Series may also advertise the growth of
hypothetical investments of $10,000, $50,000 and $100,000 in shares of that
Series by adding 1 to that Series' aggregate total return to date and
multiplying by $9,600, $48,375 and $97,250 ($10,000, $50,000 and $100,000
adjusted for 4.00%, 3.25% and 2.75% sales charges, respectively). Each Series
of the Fund from time to time may also advertise its performance relative to
certain performance rankings and indexes compiled by independent organizations
(such as Lipper Analytical Services Inc.)
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ADDITIONAL INFORMATION
===============================================================================
Voting Rights. All shares of beneficial interest of a Series of the Fund
are of $0.01 par value and are equal as to earnings, assets and voting
privileges with respect to such Series.
The Fund is not required to hold Annual Meetings of Shareholders and in
ordinary circumstances the Fund does not intend to hold such meetings. The
Trustees may call Special Meetings of Shareholders for action by shareholder
vote as may be required by the Act or the Declaration of Trust. Under certain
circumstances the Trustees may be removed by action of the Trustees.
Presently, there are ten Series of the Fund. The Declaration of Trust permits
the Trustees to authorize the creation of additional series shares (the
proceeds of which would be invested in separate, independently managed
portfolios) and additional classes of shares within any series (which would be
used to distinguish among the rights of different categories of shareholders,
as might be required by future regulations or other unforeseen circumstances).
Under Massachusetts law, shareholders of a business trust may, under certain
circumstances, be held personally liable as partners for the obligations of the
Fund. However, the Declaration of Trust contains an express disclaimer of
shareholder liability for acts or obligations of the Fund and requires that
notice of such disclaimer be given in each instrument entered into or executed
by the Fund and provides for indemnification out of the Fund's property for any
shareholder held personally liable for the obligations of the Fund. Thus, the
risk of a shareholder incurring financial loss on account of shareholder
liability is limited to circumstances in which the Fund itself would be unable
to meet its obligations. Given the above limitations on shareholder personal
liability and the nature of the Fund's assets and operations, the possibility
of the Fund being unable to meet its obligations is remote and, in the opinion
of Massachusetts counsel to the Fund, the risk to Fund shareholders of personal
liability is remote.
Shareholder Inquiries. All inquiries regarding the Fund should be directed to
the Fund at the telephone numbers or address set forth on the front cover of
this Prospectus.
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APPENDIX
SPECIAL INVESTMENT CONSIDERATIONS OF EACH STATE SERIES
===============================================================================
ARIZONA SERIES
The Arizona Series will invest principally in securities of political
subdivisions and other issuers of the State of Arizona the interest on which is
exempt from federal and Arizona income taxes. As a result, the ability of such
Arizona issuers to meet their obligations with respect to such securities
generally will be influenced by the political, economic and regulatory
developments affecting the state of Arizona and the particular revenue streams
supporting such issuers' obligations. If any of such political subdivisions are
unable to meet their financial obligations, the income derived by the Arizona
Series, the ability to preserve or realize appreciation of the Arizona Series'
capital, and the liquidity of the Arizona Series could be adversely affected.
The following summary respecting the State of Arizona is only general in nature
and does not purport to be a description of the investment considerations and
factors which may have an effect on the obligations of a particular issuer in
which the Arizona Series may invest.
Arizona's population increased by approximately 35% during the 10-year period
from 1980 to 1990, ranking Arizona as the third fastest growing state in the
country for the period. The rate of growth, however, has slowed substantially
in recent years, although it remains above the national average. This growth in
population will require corresponding increases in revenues of Arizona issuers
to meet increased demands for infrastructure development and various services,
and the performance of the State's economy will be critical to providing such
increased revenues.
The State's principal economic sectors include services, manufacturing
dominated by electrical, transportation and military equipment, government,
tourism and the military. State unemployment rates have remained generally
comparable to the national average in recent years. Arizona's economy appears
to have begun to recover from the difficulties caused in the late eighties by
the severe drop in real estate values and the lack of stability of Arizona-
based financial institutions which caused many of such institutions to be
placed under control of the Resolution Trust Corporation. Arizona's economy is
beginning to expand at a moderate but consistent rate. Restrictive government
spending, weak export markets, resizing of the defense industry and layoffs in
the private sector are expected to continue to restrain the pace of expansion.
Arizona is required by law to maintain a balanced budget. To achieve this
objective, the State has, in the past, utilized a combination of spending
reductions and tax increases. Arizona's budget was balanced for the two fiscal
years ended June 30, 1992 and 1993. The Arizona legislature has enacted a
budget for the fiscal year ending June 30, 1994 which purports to end the
fiscal year with a significant surplus and Governor Fife Symington has proposed
a $100 million tax relief package effective for the 1994 tax year. However, the
condition of the national economy will continue to be a significant factor
influencing Arizona's budget during the upcoming fiscal year.
For additional information relating to State imposed restrictions on
indebtedness of certain Arizona issuers, see the Statement of Additional
Information.
CALIFORNIA SERIES
Because the California Series will concentrate its investments in California
tax-exempt securities, it will be affected by any political, economic or
regulatory developments affecting the ability of California issuers to pay in-
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<PAGE>
terest or repay principal. Various developments regarding the California
Constitution and State statutes which limit the taxing and spending authority
of California governmental entities may impair the ability of California
issuers to maintain debt service on their obligations. The following
information constitutes only a brief summary and is not intended as a complete
description. See the Statement of Additional Information for a more detailed
discussion.
California is the most populous state in the nation with a total
population at the 1990 census of 29,976,000. Growth has been incessant since
World War II, with population gains in each decade since 1950 of between 18%
and 49%. During the last decade, population rose 20%. The State now comprises
12% of the nation's population and 13.3% of its total personal income. Its
economy is broad and diversified with major concentrations in high technology
research and manufacturing, aerospace and defense-related manufacturing, trade,
real estate, and financial services. After experiencing strong growth
throughout much of the 1980s, the State is now being adversely affected by both
the national recession and the cutbacks in aerospace and defense spending which
have had a severe impact on the economy in Southern California. This recession
has been the deepest and longest-lasting in the post World War II era. In the
past three years, California has lost nearly six percent of its job base.
These economic difficulties have exacerbated the structural budget
imbalance which has been evident since fiscal year 1985-1986. Since that time,
budget shortfalls have become increasingly more difficult to solve and the
State has recorded General Fund operating deficits in four of the past five
fiscal years. Many of these problems have been attributable to the fact that
the great population influx has produced increased demand for education and
social services at a far greater pace than the growth in the State's tax
revenues. Despite substantial tax increases, expenditure reductions and the
shift of some expenditure responsibilities to local government, the budget
condition remains problematic.
In July 1991, California increased taxes by adding two new marginal tax
rates, at 10% and 11%, effective for tax years 1991 through 1995. After 1995,
the maximum personal income tax rate is scheduled to return to 9.3%, and the
alternative minimum tax rate is scheduled to drop from 8.5% to 7%. In addition,
legislation in July 1991 raised the sales tax by 1.25%. 0.5% was a permanent
addition to counties, but with the money earmarked to trust funds to pay for
health and welfare programs whose administration was transferred to counties.
This tax increase will be cancelled if a court rules that such transfer and tax
increase violate any constitutional requirements. 0.5% of the State tax rate
was scheduled to expire on June 30, 1993, but was extended for six months for
the benefit of counties and cities. On November 2, 1993, voters made this half-
percent levy a permanent source of funding for local government.
The State's General Fund revenues for the 1992-93 fiscal year totalled
nearly $2.5 billion less than the $43.4 billion that Governor Wilson has
projected. It is anticipated that revenues and transfers in the 1993-94 fiscal
year will be lower than those in 1992-93 fiscal year. This represents the
second consecutive year of actual decline.
On June 30, 1993, the Governor signed into law a $52.1 billion budget
which, among other things, (a) shifts $2.6 billion of property taxes from
cities, counties, special districts and redevelopment agencies to schools and
community college districts, (b) reduces higher education and community college
funding, forcing higher student fees, and (c) reduces welfare grants and aid to
the aged, blind, and disabled. In addition, related legislation (a) suspends
the renters' tax credit for two years and (b) allows counties to reduce general
assistance welfare payments by as much as 27%. The stability of the budget
would be jeopardized if the property tax transfer were invalidated by the
courts in current and future cases between the State and its counties.
The current budget includes General Fund spending of $38.5 billion,
down $2.6 billion, or 6.3%, from the amount budgeted for the 1992-1993 fiscal
year. The Commission Staff estimates that the two-year budget plan adopted last
June is out of balance by at least $3.8 billion, due to continued economic
weakness and cost overruns in key State programs. The shortfall could grow to
$5.6 billion if a recent Superior Court decision, California Teachers
Association v. Gould, is upheld on appeal and the $1.8 billion in "off-book"
loans to schools are reclassified
29
<PAGE>
as "on-book" General Fund appropriations. Furthermore, the Commission Staff
cautions that the shortfall could grow by an additional several billion dollars
if the economy falters or if the State loses other key cases pending before the
courts.
Because of the State of California's continuing budget problems, the State's
General Obligation bonds were downgraded in 1992 by Moody's from Aa1 to Aa and
by Standard & Poor's from AA to A+.
The effect of these various constitutional and statutory amendments and
budget developments upon the ability of California issuers to pay interest and
principal on their obligations remains unclear and in any event may depend upon
whether a particular California tax-exempt security is a general or limited
obligation bond and on the type of security provided for the bond. It is
possible that other measures affecting the taxing or spending authority of
California or its political subdivisions may be approved or enacted in the
future.
For a more detailed discussion of the State of California economic factors,
see the Statement of Additional Information.
FLORIDA SERIES
Under current law, the State of Florida is required to maintain a balanced
budget such that current expenses are met from current revenues. Florida does
not currently impose an individual income tax, however, it does impose taxes on
corporate income which is allocable to the State. In addition, Florida imposes
an ad valorem tax on intangible personal property as well as sales and use tax.
These taxes are a major source of funds to meet State expenses, including
repayment of, and interest on, obligations backed solely by the full faith and
credit of the State, without recourse to any specific project.
Florida has experienced substantial populuation increases as a result of
migration to Florida from other areas of the United States and from foreign
countries. This population growth is expected to continue and it is anticipated
that corresponding increases in state revenues will be necessary during the
next decade to meet increased burdens on the various public and social services
provided by the State.
Florida's ability to meet these increasing expenses will be dependent in part
upon the State's ability to foster business and economic growth. During the
past decade, Florida has experienced significant increases in the technology-
based and other light industries and in the service sector. This growth has
diversified the State's overall economy, which at one time was dominated by the
citrus and tourism industries. The State's economic and business growth could
be restricted, however, by the natural limitations of environmental resources
and the State's ability to finance adequate public facilities such as roads and
schools.
MASSACHUSETTS SERIES
Between 1982 and 1988 The Commonwealth of Massachusetts had a strong economy
which was evidenced by low unemployment and high personal income growth as
compared to national trends. Since such time, the Commonwealth experienced a
significant economic slowdown from 1988 through 1992, with particular
deterioration recently in the construction, real estate, insurance, financial
and manufacturing sectors, including certain high technology areas. Economic
activity has since improved and led to improvements in the housing industry and
employment rates. Unemployment had risen to 8.5% in 1992, as compared to a
national average of 7.4%; but in the last quarter of 1993 decreased to 6.6% as
compared to the national rate of 6.4%.
The recent economic growth has resulted in the growth of state tax revenues
in 1993 and expected growth in 1994. The Commonwealth had a budgetary deficit
for fiscal year 1989 and 1990 of $466.4 million and $1,362.7 billion
respectively. Deficits were avoided in fiscal 1991 and 1992, and a surplus was
achieved in 1993 and expected in 1994. In 1992, Standard & Poor's and Moody's
raised their ratings of the Commonwealth's general obligation
30
<PAGE>
bonds from BBB and Baa1, respectively, to A and A, respectively and Standard &
Poor's further raised such ratings to A+ in 1993. From time to time, the rating
agencies may further change their ratings in response to budgetary matters or
other economic indicators. Growth of tax revenues in the Commonwealth is
limited by law. Effective July 1, 1990, limitations were placed on the amount
of direct bonds the Commonwealth could have outstanding in a fiscal year, and
the amount of the total appropriation in any fiscal year that may be expended
for debt service on general obligation debt of the Commonwealth (other than
certain debt incurred to pay the fiscal 1990 deficit and certain Medicaid
reimbursement payments for prior fiscal years) was limited to ten percent.
Moreover, Massachusetts local governmental entities are subject to certain
limitations on their taxing power that could affect their ability or the
ability of the Commonwealth to meet their respective financial obligations.
If either Massachusetts or any of its local governmental entities is unable
to meet its financial obligations, the income derived by the Massachusetts
Series, the Series' net asset value, the Series' ability to preserve or realize
capital appreciation or the Series' liquidity could be adversely affected.
For a more detailed discussion of the Commonwealth of Massachusetts economic
factors, see the Statement of Additional Information.
MICHIGAN SERIES
The information set forth below is derived from official statements prepared
in connection with the issuance of obligations of the State of Michigan and
other sources that are generally available to investors. The information is
provided as general information intended to give a recent historical
description and is not intended to indicate further or continuing trends in the
financial or other positions of the State of Michigan. Such information
constitutes only a brief summary, relates primarily to the State of Michigan,
does not purport to include details relating to all potential issuers within
the State of Michigan whose securities may be purchased by the Michigan Series
and does not purport to be a complete description.
The principal sectors of Michigan's economy are manufacturing of durable
goods (including automobiles and components and office equipment), tourism and
agriculture. Employment of Michigan's work force in durable goods manufacturing
has dropped from 33% in 1960 to 17.3% in 1991. However, manufacturing
(including auto-related manufacturing) continues to be an important part of
Michigan's economy and announced and contemplated layoffs and plant closings in
the automobile industry are expected to adversely affect tax revenue of the
State and its political subdivisions. The State reports its financial condition
using generally accepted accounting principles and, beginning with Fiscal Year
1986-87, Michigan has received an unqualified opinion from its auditors on its
financial statements. Michigan's Fiscal Year begins on October 1 and ends on
September 30 of the following year.
Michigan ended Fiscal Years 1986-87, 1987-88 and 1988-89 with surpluses of
$11.0 million, $21.5 million and $61.1 million, respectively. In Fiscal Years
1989-90 and 1990-91, Michigan had negative General Fund balances of $310.3
million and $169.4 million, respectively. As required by the Michigan
Constitution, each of those deficits were included in the succeeding year's
budget. As of December 4, 1992, the State of Michigan estimated that Fiscal
Year 1991-92 ended with a zero balance in its General Fund. For Fiscal Year
1990-91, Michigan utilized $230 million from its Budget and Economic
Stabilization Fund (BSF) to reduce the negative General Fund balance in that
year. The unreserved balance for the BSF as of the end of Fiscal Year 1990-91
was $182.2 million. The State of Michigan, as of December 4, 1992, estimated
that for Fiscal Year 1991-92 it utilized $150 million from its BSF to end that
year with a zero balance in its General Fund. In July 1992, the Michigan
legislature adopted the budget for Fiscal Year 1992-93. As of October 20, 1992,
the State of Michigan estimated that Fiscal Year 1992-93 would end with a
deficit of up to approximately $35.4 million in its General Fund in the absence
of any further action. As of January 27, 1993, general obligation bonds of the
State of Michigan were rated "AA" by Standard & Poor's Corporation, "A1" by
Moody's Investors Service and "AA" by Fitch Investor Service.
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<PAGE>
To the extent that the portfolio of the Michigan Series is comprised of
revenue obligations of the State of Michigan or revenue or general obligations
of local governments or state or local authorities, rather than general
obligations of the State of Michigan, itself, ratings on such components of the
Michigan Series will be different from those given to the general obligations
of the State of Michigan and their value may be independently affected by
economic factors not directly impacting the State.
For a more detailed discussion of the State of Michigan economic factors, see
the Statement of Additional Information.
MINNESOTA SERIES
The information set forth below is derived from official statements prepared
in connection with the issuance of obligations of the State of Minnesota and
other sources that are generally available to investors. The information is
provided as general information intended to give a recent historical
description and is not intended to indicate further or continuing trends in the
financial or other positions of the State of Minnesota. Such information
constitutes only a brief summary, relates primarily to the State of Minnesota,
does not purport to include details relating to all potential issuers within
the State of Minnesota whose securities may be purchased by the Minnesota
Series, and does not purport to be a complete description.
The State of Minnesota has experienced certain budgeting and financial
problems since 1980.
The State Accounting General Fund balance at June 30, 1987, was positive
$168.5 million. The Commissioner of Finance, in his November 1986 reforecast,
estimated an Accounting General Fund balance at June 30, 1989, of negative $800
million. The Legislature in May 1987 enacted measures expected to yield
approximately $700 million in additional revenues for the 1987-1989 biennium by
broadening the bases of corporate income and sales taxes and raising the rate
of the cigarette excise tax to 38 cents a pack from 23 cents. The corporate tax
rate was lowered to 9.5% from 12%, and a minimum tax was imposed.
Accounting General Fund appropriations for the 1987-1989 biennium were $11.35
billion, an increase of 9.4%. A $250 million budget reserve also was approved.
The 1988 Legislature increased 1987-1989 expenditures a total of $223.8
million. Of that amount, $71.6 million was appropriated for highways/transit
and $62.1 million for education. Taxes were reduced a total of $108.1 million
for the remainder of the biennium, $53.8 million of that in the form of
increases in the individual income tax rent credit and property tax refunds.
The Legislature increased 1987-1989 revenues a total of $125.5 million. Of
that, $74.9 million was from federal tax conformity and compliance.
The Accounting General Fund balance, at June 30, 1989, was positive $360
million.
The 1989 Legislature authorized $13.35 billion in spending for the 1989-1991
biennium, a 16.2% increase over the previous biennium, after excluding
intergovernmental fund transfers. In addition, the Legislature approved a $550
million budget reserve.
The 1989 Legislature passed an omnibus tax bill that included $272 million in
property tax relief and a $72 million increase in tax revenues. The Governor
vetoed the omnibus tax bill, demanding that a larger share of property tax
relief go to business and that the state-subsidized property tax system be
reformed. At a special session in the fall of 1989, a bill was enacted that
included $267 million in property tax relief and a $79 million increase in tax
revenues.
The Commissioner of Finance, in his November 1989 forecast, estimated the
Accounting General Fund balance at June 30, 1991, at negative $161 million. The
Commissioner forecast an $89 million decline in revenues, a $60 million
increase in human services expenditures and a net $29 million decrease due to
other fiscal changes.
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<PAGE>
The 1990 Legislature enacted budget changes that resulted in a $127
million net savings for the 1989-1991 biennium. A total of $178 million in
spending reductions were enacted, and increased fees and other revenue changes
accounted for a $12 million gain. New spending totaling $63 million was
approved.
A November 1990 forecast estimated a $197 million shorfall for the
biennium ending June 30, 1991, and a $1.2 billion shortfall for the biennium
ending June 30, 1993 due to spending pressures and reduced revenues. A March
1991 forecast reduced the estimated shortfall for the biennium ending June 30,
1993, to $1.1 billion.
In January 1991 the Legislature made $197 million in spending
reductions for the biennium ended June 30, 1991. The State Accounting General
Fund balance at June 30, 1991, was $31 million.
The 1991 Legislature authorized $13.886 billion in spending for the
1991-1993 biennium. Giving effect to inclusion in the Accounting General Fund
of $70 million in dedicated revenues previously budgeted in other funds and
dedication of 1.5 percent of existing sales tax as well as a new .5 percent
local option sales tax to a Local Government Trust Fund, the total increase in
authorized spending was 9.2 percent.
Tax law changes enacted by the 1991 Legislature were expected to yield
$590 million in additional revenues for the 1991-1993 biennium. Federal
conformity on individual and corporate income taxes was expected to raise $82
million; changes in top individual income tax rates and elimination of some
deductions and exemptions were expected to yield an additional $89 million;
extension of the sales tax to kennel services, telephone paging services and
some business-to-business phone services $38 million; a 5 cents a pack
cigarette tax increase to 43 cents $37.2 million; and the .5 percent sales tax
increase $370 million.
After the Legislature adjourned in May 1991, the Commissioner of
Finance estimated that at June 30, 1993, the State would have a $400 million
budget reserve, the amount approved by the 1991 Legislature, and a $103.2
million Accounting General Fund balance.
In February 1992 the Commissioner of Finance estimated the Accounting
General Fund balance at June 30, 1993, at negative $569 million. The balance at
June 30, 1995, was projected at negative $1.75 billion.
The 1992 Legislature reduced expenditures by $262 million for the
biennium ending June 30, 1993, enacted revenue measures expected to increase
revenue by $149 million, and reduced the budget reserve by $160 million to $240
million.
Of the $262 million in spending reductions, $183 million was a one-time
reduction for K-12 education aids, reflecting a change in the way schools
account for property tax collections. The change requires schools to recognize
100% of the school portion of property tax collections as revenue in the fiscal
year in which they receive them, thereby permitting a one-time reduction in
state education aids. Reductions to post-secondary education, state agencies,
the Legislature, and constitutional officers accounted for $94 million in
budget savings. New spending for crime prevention, corrections, and additional
debt service added $15 million to expenditures.
Included in new revenue raising measures of $149 million was the
extension of a broad-based health care provider tax which was expected to
generate $51 million of additional revenue, removal of the sales tax exemption
for most purchases by cities, counties, towns and townships which was expected
to generate $67 million of additional revenue, and federal tax conformity which
was expected to generate $21 million of additional revenue. The provider tax
changes restructured the State's current provider surcharge program to bring it
into compliance with federal law and Health Care Financing Administration
regulations. Other changes accounted for a $10 million increase in revenues.
After the Legislature adjourned in April 1992, the Commissioner of
Finance estimated the Accounting General Fund balance at June 30, 1993, at $2.4
million, and projected the balance at June 30, 1995, at negative $837 million.
A November 1992 forecast estimated the balance at June 30, 1993, at positive
$217 million and projected the balance at June 30, 1995, at negative $769
million.
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A March 1993 forecast projected an Accounting General Fund balance at
June 30, 1995, at negative $163 million out of a budget for the biennium of
approximately $16.7 billion, and estimated a balance at June 30, 1997, at
negative $1.6 billion out of a budget of approximately $18.7 billion.
The 1993 Legislature authorized $16.519 billion in spending for the
1993-1995 biennium, an increase of 13.0 percent from 1991-1993 expenditures.
Resources for the 1993-1995 biennium were projected to be $16.895 billion,
including $657 million carried forward from the previous biennium. The $16.238
billion in projected non-dedicated and dedicated revenues was 10.3 percent
greater than in the previous biennium and included $175 million from revenue
measures enacted by the 1993 Legislature. The Legislature increased the health
care provider tax to raise $79 million, transferred $39 million into the
Accounting General Fund and improved collection of accounts receivable to
generate $41 million.
After the Legislature adjourned in May 1993, the Commissioner of
Finance estimated that at June 30, 1995, the Accounting General Fund balance
would be $16 million and the budget reserve, as approved by the 1993
Legislature, would be $360 million. The Accounting General Fund balance at June
30, 1993, was $463 million.
The Commissioner of Finance, in a November 1993 forecast, estimated the
Accounting General Fund balance at June 30, 1995, at $430 million, due to
projected increases in revenues and reductions in expenditures, and the balance
at June 30, 1997, at $389 million. The Commissioner recommended that the budget
reserve be increased to $500 million. He estimated that if current laws and
policies continue unchanged, revenue will grow 7.7 percent and expenditures 6.0
percent in the 1995-1997 biennium.
The State of Minnesota has no obligation to pay any bonds of its
political or governmental subdivisons, municipalities, governmental agencies,
or instrumentalities. The creditworthiness of local general obligation bonds is
dependent upon the financial condition of the local government issuer, and the
creditworthiness of revenue bonds is dependent upon the availability of
particular designated revenue sources or the financial conditions of the
underlying obligors. Although most of the bonds owned by the Minnesota Series
are expected to be obligations other than general obligations of the State of
Minnesota itself, there can be no assurance that the same factors that
adversely affect the economy of the State generally will not also affect
adversely the market value or marketability of such other obligations, or the
ability of the obligors to pay the principal of or interest on such
obligations.
At the local level, growth in the property tax base of many communities
is being slowed by an overcapacity in certain segments of the commercial real
estate market. In addition, local finances are affected by the amount of State
aid that is made available. Further, various of the issuers within the State of
Minnesota, as well as the State of Minnesota itself, whose securities may be
purchased by the Minnesota Series, may now or in the future be subject to
lawsuits involving material amounts. It is impossible to predict the outcome of
these lawsuits. Any losses with respect to these lawsuits may have an adverse
impact on the ability of these issuers to meet their obligations.
The State's bond ratings in October 1993 were Aa and AA+. Economic
difficulties and the resultant impact on State and local government finances
may adversely affect the market value of obligations in the portfolio of the
Minnesota Series or the ability of respective obligors to make timely payment
of the principal and interest on such obligations.
NEW JERSEY SERIES
The economic base of New Jersey is diversified, consisting of a variety
of manufacturing, construction and service industries, supplemented by rural
areas with selective commercial agriculture. After enjoying an extraordinary
boom during the mid-1980s, New Jersey along with the rest of the Northeast
slipped into a slowdown well before the onset of the national recession which
officially began in July 1990 (according to the National Bureau of Economic
Research).
By the beginning of the national recession, construction activity had
already been declining in New Jersey for nearly two years. As the rapid
acceleration of real estate prices forced many would-be homeowners out of the
market and high non-residential vacancy rates reduced new commitments for
offices and commercial facilities, construction employment began to decline;
also growth had tapered off partly because of a leveling off of industrial
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demand nationally. The onset of recession caused an acceleration of New
Jersey's job losses in construction and manufacturing, as well as an employment
downturn in such previously growing sectors as wholesale trade, retail trade,
finance, utilities and trucking and warehousing.
Reflecting the downturn, the rate of unemployment in the State rose
from a low of 3.6 percent during the first quarter of 1989 to an estimated 6.7
percent in August 1991, according to figures from the U.S. Bureau of Labor
Statistics and the New Jersey Department of Labor. In 1992, the State's
unemployment rate moved ahead of the nation's for the first time in a decade to
an annual average of 8.4% versus 7.4% in the nation.
Just as New Jersey was hurt by the national recession, the State should
benefit by national recovery as rising consumer and business spending generate
increased factory orders, building activity and a flow of commerce without
regard to state lines. Total construction contracts awarded in New Jersey have
turned around, rising by 5.0% in the January-to-May 1993 period compared with
the same time period in 1992. By far, the largest boost came from residential
construction awards which increased robustly by 44.0% in the first five months
of the year compared with the same period in 1992. Similarly, building permit
data available through April reveal that planned new housing units were 23%
ahead of last year and double their pace of early 1991. These large percentage
increases are, of course, measured from a very low base. In addition,
nonresidential building construction awards have turned around, posting a 6.0%
gain, albeit once again from a very low base. Nonbuilding construction awards
have been at high levels since 1991 due to substantial outlays for roads,
bridges and other infrastructure projects. Although nonbuilding construction
awards declined in the first five months of 1993 compared with the same period
in 1992, this was due to an unusually large amount of contracts in May 1992 and
as stated earlier, spending on infrastructure projects remains strong.
In the labor market there are signs of recovery. Due to a reduced
layoff rate and the reappearance of job opportunities in some parts of the
economy, unemployment in the State has been receding since July 1992, when it
peaked at 9.6% according to U.S. Bureau of Labor Statistics estimates.
Prospects for New Jersey appear to be favorable, although a return to
the pace of the 1980s is highly unlikely. Although growth is likely to be
slower than in the nation, the locational advantages that have served New
Jersey well for many years will still be there. Structural changes that have
been going on for years can be expected to continue, with job creation
concentrated most heavily in the service sectors.
General obligation bonds of the State are the primary method for State
financing of capital projects. These bonds are backed by the full faith and
credit of the State. State tax revenues and certain other fees are pledged to
meet the principal and interest payments required to fully pay the debt to the
extent that other moneys are not available therefor. No general obligation debt
can be issued by the State without prior voter approval, except that, pursuant
to a constitutional amendment, no voter approval is required for any law
authorizing the creation of a debt for the purpose of refinancing all or a
portion of the outstanding debt of the State, so long as such law requires that
the refinancing provided debt service savings. The State Constitution also
provides that no voter approval is required for debt issued for purposes of
war, to repel invasion, to suppress insurrection or to meet an emergency caused
by disaster or act of God. Capital construction can also be funded by
appropriation of current revenues on a pay-as-you-go basis. All appropriations
for capital projects and all proposals for State bond authorizations are
subject to the review and recommendation of the New Jersey Commission on
Capital Budgeting and Planning. This permanent commission was established in
November 1975 and was charged with the preparation of the State Capital
Improvement Plan, which contains proposals for state spending for capital
projects.
Other State-related obligations include those issued by the New Jersey
Building Authority, which is empowered to construct facilities for leasing to
the State. The rental for such buildings is equal to the debt service relating
thereto plus payments in lieu of real estate taxes. Legislation provides for
future appropriations for State aid to local school districts equal to debt
service on a maximum principal amount of $280,000,000 of bonds issued by such
local school districts for construction and renovation of school facilities and
for State aid to counties equal to debt service on up to $80,000,000 of bonds
issued by counties for construction of county college facilities. The State
Legislature is not legally bound to make such future appropriations, but has
done so to date on all outstanding obligations issued under such legislation.
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The authorizing legislation for various State entities provides for specific
budgetry procedures with respect to certain obligations issued by such
entities. Pursuant to such legislation, a designated official is required to
certify any deficiency in a debt service reserve fund maintained to meet
payments of principal and interest on the obligations, and a State
appropriation in the amount of the deficiency is to be made. However, the State
Legislature is not legally bound to make such an appropriation. Bonds issued
pursuant to authorizing legislation of this type are sometimes referred to as
"moral obligation" bonds. There is no statutory limitation on the amount of
moral obligation bonds which may be issued by eligible State entities.
Currently, there are three such entities (the New Jersey Housing and Mortgage
Finance Agency ("Agency"), the South Jersey Port Corporation ("Corporation"),
and the Higher Education Assistance Authority) available for State
appropriations to meet moral obligations. The Agency has not had a deficiency
in a debt service reserve which required the State to appropriate funds. It is
anticipated that the Agency's revenues will continue to be sufficient to cover
debt service on its bonds. The State provides the Corporation with funds to
cover all debt service and property tax requirements, when earned revenues are
anticipated to be insufficient to cover these obligations. In the past, the
State has had to appropriate funds to cover deficiencies in the Corporation's
debt service reserve fund as well as deficiencies in tax payments. For calendar
years 1985 through 1988, anticipated revenues were sufficient to cover debt
service, but were insufficient to cover all property tax requirements and an
appropriation of $1,647,216 for each year was required and was subsequently
received. For the calendar year 1989 anticipated revenues were insufficient to
cover property tax requirements and an appropriation of $1,745,917 was
required. In addition to the property tax shortfall for calendar year 1989,
revenues for calendar year 1989 were insufficient to cover debt service and an
appropriation of $1,281,793.58 was required. For calendar year 1990 anticipated
revenues were insufficient to cover property tax and debt service requirements
and appropriations of $1,850,000 and $2,362,850.67, respectively, were
required.
There are numerous other State-created entities with outstanding debt. This
debt is supported by revenues derived from or assets of the various projects
financed by such entities.
The Local Budget Law imposes specific budgetary procedures upon counties and
municipalities, subject to review by the Director of the Division of Local
Government Services. State law also regulates the issuance of debt by counties
and municipalities by limiting the amount of tax anticipation notes that may be
issued and requiring their repayment within three months of the end of the
fiscal year in which they are issued. The Local Bond Law governs the issuance
of bonds and notes and bars the issuance of bonds for the payment of current
expenses or to pay outstanding obligations, except where permitted by the Local
Finance Board. State law also authorizes State officials to supervise fiscal
administration in any municipality facing financial difficulties.
General obligations of the State are currently rated "AA+" and "Aaa" by S&P
and Moody's, respectively. There can be no assurance that the economic
conditions on which these ratings are based will continue or that particular
bond issues may not be adversely affected by changes in economic, political or
other conditions.
NEW YORK SERIES
Since the New York Series concentrates its investments in New York tax-exempt
securities, the Fund is affected by any political, economic or regulatory
developments affecting the ability of New York tax-exempt issuers to pay
interest or repay principal. Investors should be aware that certain issuers of
New York tax-exempt securities have experienced serious financial difficulties
in recent years. A reoccurrence of these difficulties may impair the ability of
certain New York issuers to maintain debt service on their obligations.
The fiscal stability of New York State (the "State") is related to the fiscal
stability of the State's municipalities, its Agencies and Authorities (which
generally finance, construct and operate revenue-producing public benefit
facilities). This is due in part to the fact that Agencies, Authorities and
local governments in financial trouble often seek State financial assistance.
The experience has been that if New York City (the "City") or any of the
Agencies or Authorities suffers serious financial difficulty, both the ability
of the State, the City, the State's political subdivisions,
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the Agencies and the Authorities to obtain financing in the public credit
markets and the market price of outstanding New York tax-exempt securities are
adversely affected.
Over the long term, the State and City face serious potential economic
problems. The City accounts for approximately 41% of the State's population and
personal income, and the City's financial health affects the State in numerous
ways. The State has historically been one of the wealthiest states in the
nation. For decades, however, the State has grown more slowly than the nation
as a whole, gradually eroding its relative economic affluence. The causes of
this relative decline are varied and complex, in many cases involving national
and international developments beyond the State's control. Statewide, urban
centers have experienced significant changes involving migration of the more
affluent to the suburbs and an influx of generally less affluent residents.
Regionally, the older Northeast cities have suffered because of the relative
success that the South and the West have had in attracting people and business.
The City has also had to face greater competition as other major Cities have
developed financial and business capabilities which make them less dependent on
the specialized services traditionally available almost exclusively in the
City.
The State has for many years had a very high State and local tax burden
relative to other states. The existence of this tax burden limits the State's
ability to impose higher taxes in the event of future financial difficulties.
The State and its localities have used these taxes to develop and maintain
their transportation network, public schools and colleges, public health
systems, other social services and recreational facilities. Despite these
benefits, the burden of State and local taxation, in combination with the many
other causes of regional economic dislocation, has contributed to the decisions
of some business and individuals to relocate outside, or not to locate within,
the State. Certain manufacturing facilities have re-located to other states.
This trend has been partially offset by the location of some manufacturing
facilities in the State and by the expansion of existing facilities in the
State. While no sustained rever- sal of the State's relative economic position
has been projected, the actions taken to date, in combination with many other
causes of regional economic changes, have slowed this trend. Further reduction
in Federal spending could materially and adversely affect the financial
condition and budget projections of the State's localities.
On January 6, 1992, Moody's lowered to Baa-1 from A its ratings on
about $14.2 billion of New York State appropriations backed debt. Moody's also
announced that it had put New York State general obligation debt rated A under
review for possible downgrade in the coming months. On November 16, 1992,
Moody's reconfirmed its A rating on the State's general long-term indebtedness.
On January 13, 1992, S&P lowered its rating on New York State's general
obligation bonds from A to A-. On November 12, 1992, S&P continued its January
rating and reiterated its negative rating outlook assessment on the State's
general obligation debt.
For a more detailed discussion of New York economic factors, see the
Statement of Additional Information.
The summary information furnished above and in the Statement of
Additional Information is based on official statements prepared by the State of
New York and the City of New York and their authorities in connection with
their borrowings and contains such information as the Fund deems relevant in
considering an investment in the Fund. It does not purport to be a complete
description of the considerations contained therein.
OHIO SERIES
Although manufacturing (including motor vehicles and equipment, steel,
rubber products and household appliances) in Ohio remains an important part of
the State's economy, the greatest growth in employment in Ohio in recent years,
consistent with national trend, has been in the non-manufacturing area. Ohio
ranked fourth in the nation in 1990 personal income derived from manufacturing.
That income was 20.9% of total Ohio personal income, compared to 17.6% of that
total being from "services". As a result, economic activity in Ohio, as in many
other industrially developed states, tends to be more cyclical than in some
other states and in the nation as a whole. Agriculture also is an important
segment of the economy in the State. With 15.7 million acres (of a total land
area of
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26.4 million acres) in farm land and an estimated 78,000 individual farms, it
is by many measures Ohio's leading industry, contributing nearly $4.1 billion
to the state's economy each year. This represents 12% of the total output, 15%
of the total employment (approximately 750,000 jobs) and 10% of the value added
products produced in the state. Farm income alone amounts to just over $4
billion. In 1992, Ohio exported over $1 billion in farm products (primarly
soybeans and related soy products, and feed grains). The State has instituted
several programs to provide financial assistance to farmers.
Ohio continues as a major "headquarters" state. Of the top 500
individual corporations (based on 1992 sales as reported in 1993 by Fortune
magazine), 33 had headquarters in Ohio, placing Ohio tied for fourth as a
"headquarters" state for industrial corporations and of the top 500 service
corporations, 24 had headquarters in Ohio, placing Ohio sixth as a
"headquarters" state for service corporations.
Payroll employment in Ohio, in the diversifying employment base, showed
a steady upward trend until 1979, then decreased until 1982. It has reached an
all-time high in the summer of 1992 after a slight decrease early in 1991 and
has since decreased slightly. Growth in recent years has been concentrated
among non-manufacturing industries, with manufacturing employment tapering off
since its 1969 peak. Non-manufacturing industries now employ more than three-
fourths of all payroll workers (non-agricultural) in Ohio.
Consistent with the consitutional provision that no appropriation may
be made for a period longer than two years, the State operates on the basis of
a fiscal biennium for its appropriations and expenditures. Under current law
that biennium for operating purposes runs from July 1 in an odd-numbered year
to June 30 in the next odd-numbered year; for example, the current fiscal
biennium began July 1, 1993 and ends June 30, 1995.
The Constitution imposes a duty on the General Assembly to "provide for
raising revenue, sufficient to defray the expenses of the state, for each year,
and also a sufficient sum to pay the principal and interest as they become due
on the state debt." The State is effectively precluded by law from ending a
Fiscal Year or a biennium in a "deficit" position. State borrowing to meet
casual deficits or failures in revenues or to meet expenses not otherwise
provided for is limited by the Constitution to $750,000.
Most State operations are financed through the general revenue fund
(GRF), with personal income and sales-use taxes being the major GRF sources.
The Revised Code provides that if the Governor ascertains that the
available revenue receipts and balances for the GRF or other funds for the then
current Fiscal Year will in all probability be less than the appropriations for
the year, he shall issue such orders to State agencies as will prevent their
expenditures and incurred obligations from exceeding those revenue receipts and
balances. The Governor implemented this directive in some prior years,
including Fiscal Years 1992 and 1993. The major categories of the State revenue
sources, including taxes and excises, and the amounts received from those
categories. There is no present constitutional limit on the rates of those
State-levied taxes and excises, except for taxes on intangible property. At
present the State itself does not levy any ad valorem taxes on real or tangible
personal property. Those taxes are levied by political subdivisions and local
taxing districts.
The GRF ending (June 30) fund balance is reduced during less favorable
national economic periods and then increases during more favorable economic
periods. For example, following the 1974-75 nationwide recession the 1977 GRF
ending fund balance was $21,600,000. The balance (without assistance from any
significant tax rate increases) was $245,700,000 in 1979, and then, paralleling
the national economic situation, was at the significantly lower amount of
$200,000 in 1981. Aided by tax increases and other actions, the 1983 GRF ending
fund balance was $43,600,000. Recent biennium GRF ending fund balances were
$226,300,000 in 1987, $475,100,000 in 1989, $135,365,000 in 1991 and
$111,013,000 in 1993.
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The GRF appropriations bill for the 1994-1995 biennium was passed on
June 30, 1993, and promtly signed, with selective vetoes, by the Governor. The
act provides for total GRF biennial expenditures of approximately $30.7
billion, an increase over those for the 1992-93 fiscal biennium. Authorized
expenditures in Fiscal Year 1994 are 9.2% higher than in Fiscal Year 1993 and
for Fiscal Year 1995 are 6.6% higher than in Fiscal Year 1994. The following
are examples of higher authorized GRF biennial expenditures in major programs:
mental health and mental retardation 8.5%; primary and secondary education
4.1%; human service 15.8%; justice and corrections 31.8%; and higher educations
13.2%.
Necessary GRF debt service and lease-rental appropriations for the
entire biennium were requested in the Governor's budget proposal and
incorporated in the related appropriations bill as introduced, and in the
bill's versions as passed by the House and the Senate and in the act as passed
and signed. The same is true for the separate Department of Transportation and
Bureau of Workers' Compensation appropriations acts, containing lease-rental
appropriations for certain OBA-financed DOT and BWC projects.
Although revenue obligations of the State or its political subdivisions
may be payable from a specific project or source, including lease rentals,
there can be no assurance that, as in any state, future economic difficulties
and the resulting impact on State and local government finances will not
adversely affect the market value of the Bonds in the portfolio of the Ohio
Series or the ability of the respective obligors to make timely payments of
principal and interest on such Bonds.
PENNSYLVANIA SERIES
Presented below and in the Statement of Additional Information is
information concerning the Commonwealth of Pennsylvania (the "Commonwealth")
and certain issuers within the Commonwealth. Such information is based
principally on information drawn from recent official statements relating to
securities offerings by the Commonwealth and does not purport to be a complete
description of such issuers or factors that could adversely affect them. The
Investment Manager has not independently verified such information; however, it
has no reason to believe that such information is not correct in all material
respects. This information does not cover all municipal issuers within the
Commonwealth whose securities may be purchased by the Fund.
Investment Securities
The Pennsylvania Series will invest principally in Commonwealth and
Commonwealth-related obligations and obligations of local government units in
the Commonwealth and obligations of related authorities. Some additional
information regarding such issuers is set forth in the Statement of Additional
Information. The market value and marketability of the obligations of the
Commonwealth and, though generally to a lesser extent, the Commonwealth-related
obligations and the local governmental unit and related authority obligations
generally will be affected by economic conditions affecting the Commonwealth
and litigation matters which may adversely affect the Commonwealth. The market
value and marketability of obligations of issuers other than the Commonwealth
may also be affected by more localized economic changes, changes affecting the
particular revenue stream supporting such obligations and related litigation
matters.
The City of Philadelphia has been experiencing financial difficulties
recently, as a result of which Moody's and S&P lowered their ratings of City of
Philadelphia general obligations below investment grade. City of Philadelphia
general obligations will not be purchased as an investment security for the
Pennsylvania Series until the ratings of such obligations meet the criteria for
the Pennsylvania Series.
General Socio-Economic and Economic Information Regarding the Commonwealth
The Commonwealth is the fifth most populous state (ranking behind
California, New York, Texas and Florida) with a population of approximately
11.9 million for the last ten years. The Commonwealth is the headquarters for
64 major corporations and the home for more than 268,600 businesses. It has
been historically identified as a heavy
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industry state although that reputation has changed recently as the industrial
composition of the Commonwealth diversified when the coal, steel and railroad
industries began to decline. The major new sources of growth in the
Commonwealth are in the service sector, including trade, medical and health
services, education and financial institutions. Manufacturing employment has
fallen from 23.0% of non-agricultural employment in 1985 to 18.7% in 1992,
while service sector employment has increased from 24.6% of non-agricultural
employment in 1985 to 29.3% in 1992. From 1983 to 1990, the Commonwealth's
annual average unemployment rate dropped from 11.8% to 5.4% (below the national
average for each of the years from 1986). In 1991 and 1992, the average annual
unemployment rates for the Commonwealth were 6.9% and 7.5% respectively,
compared to rates of 6.7% and 7.4% for the United States for such years.
The Commonwealth utilizes the fund method of accounting. For purposes
of governmental accounting, a "fund" is defined as an independent fiscal and
accounting entity with a self-balancing set of accounts, for the purpose of
carrying on specific activities or attaining certain objectives in accordance
with the fund's special regulations, restrictions or limitations. In the
Commonwealth, funds are established by legislative enactment or in certain
cases by administrative action.
The General Fund, the Commonwealth's largest fund, receives all tax
revenues, non-tax revenues and federal grants and entitlements that are not
specified by law to be deposited elsewhere. The majority of the Commonwealth's
operating and administrative expenses are payable from the General Fund. Debt
service on all Commonwealth obligations, except those issued for highway
purposes or for the benefit of other special revenue funds, is payable from the
General Fund.
Revenues in the General Fund include all tax receipts, license and fee
payments, fines, penalties, interest and other revenues of the Commonwealth not
specified to be deposited elsewhere or not restricted to a specific program or
expenditure and federal revenues. Taxes levied by the Commonwealth are the most
significant source of revenues in the General Fund constituting over 98 percent
of such revenues in fiscal 1993. The major tax sources for the General Fund are
the sales tax, which accounted for $4.8 billion or 33.6% of tax revenues in
fiscal 1993, the personal income tax, which accounted for $4.8 billion or 33.3%
of tax revenues, and the corporate taxes which accounted for $2.3 billion or
16.2% of tax revenues. Federal revenues are those federal receipts which pay or
reimburse the Commonwealth for funds disbursed for federally assisted programs.
The primary expenditures of the General Fund are for education (41% of
total General Fund expenditures in fiscal 1992) and public health and welfare
(38%).
The Constitution and laws of the Commonwealth require all payments from
the General Fund, with the exception of refunds of taxes, licenses, fees and
other charges, to be made only by duly enacted appropriations. Amounts
appropriated from the General Fund may not exceed its actual and estimated
revenues for the fiscal year plus any surplus available. Appropriations are
generally made for one fiscal year and are returned to the unappropriated
surplus of the fund (a lapse) if not spent or encumbered by the end of the
fiscal year. The Commonwealth's fiscal year begins July 1 and ends June 30.
(Fiscal 1992 refers to the fiscal year ending June 30, 1992.)
The five-year period from fiscal 1988 through 1992 was a period of
slowing revenue growth and accelerating expenditure increases as the economy
slowed and the national recession brought a halt to economic growth. Tax
revenues during the five-year period, led by a 29.2 percent increase in fiscal
1992 due to a $2.7 billion increase from enacted rate increases and base
changes, grew at a compounded annual growth rate of 9.3 percent. The effect of
the economic recession on tax revenue growth is evident in a 2.7 precent
increase in fiscal 1990 and a 0.5 percent decline in fiscal 1991. Low growth of
tax revenues led to the development of other sources of revenues such as
transfers from other state funds. The higher amounts of operating transfers in
fiscal 1989, 1990 and 1991 are the result of higher transfers form other funds
such as the State Workmen's Insurance Fund to the General Fund to support
current expenses.
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Expenditures for the five-year period increased at the compounded
annual growth rate of 13.6 percent, led by public health and welfare costs
through the medical assistance and cash assistance programs and the corrections
program. Public health and welfare costs were rising from growing caseloads,
expanding client utilization and cost increases. Correction program costs were
increasing from rapid population increases and the development of new
facilities.
The Constitution requires tax and fee revenues relating to motor fuels
and vehicles to be used for highway purposes, and the tax revenues relating to
aviation fuels to be used for aviation purposes. Accordingly, all such
revenues, except the revenues from one-half cent per gallon of the liquid fuels
tax which are deposited in the Liquid Fuels Tax Fund for distribution to local
municipalities, are placed in the Motor License Fund, as are most federal aid
revenues designated for transportation programs. Operating and administrative
costs for the Department of Transportation and other Commonwealth departments
conducting transportation related programs, including the highway patrol
activities of the Pennsylvania State Police, are also paid from the Motor
License Fund. Debt service on bonds issued by the Commonwealth for highway
purposes is payable from the Motor License Fund.
Other special revenue funds have been established by law to receive
specified revenues that are appropriated to specific departments, boards and/or
commissions for payment of their operating and administrative costs. Such funds
include the Game, Fish, Boating, Banking Department, Milk Marketing, State Farm
Products Show, State Racing and State Lottery Funds. Some of these special
revenue funds are required to transfer excess revenues to the General Fund and
some receive funding, in addition to their specified revenues, through
appropriations from the General Fund. The Fish and Boating Funds annually pay
debt service on Commonwealth bonds issued for projects constructed for the
benefit of these funds.
In 1986, the General Assembly created the Tax Stabilization Reserve
Fund and the Sunny Day Fund and provided for their initial funding from General
Fund appropriations. Income for both of these funds comes from annual
appropriations of money from other Commonwealth funds and investment earnings.
The Tax Stabilization Reserve Fund is to be used for emergencies threatening
the health, safety or welfare of citizens or to offset unanticipated revenue
shortfalls due to economic downturns. The Sunny Day Fund is available to
attract new business enterprises to the Commonwealth. Assets of each fund may
be used upon recommendation by the Governor and an approving vote by two-thirds
of the members of each house of the General Assembly.
The State Lottery Fund is a special revenue fund for the receipt of
lottery ticket sales and lottery licenses and fees. Its revenues, after payment
of prizes, are dedicated to paying the operational and administrative costs of
the lottery and the costs of programs benefiting the elderly in Pennsylvania.
The Commonwealth maintains trust and agency funds which are used to
administer funds received pursuant to a specific bequest or as an agent for
other governmental units or individuals.
Enterprise funds are maintained for departments or programs operated
like private enterprises. The largest of these funds is the State Stores Fund
which is used for the receipts and disbursements of the Commonwealth's liquor
store system. Sale and distribution of all liquor within Pennsylvania is a
government enterprise.
For a more detailed discussion of certain Commonwealth of Pennsylvania
economic factors, see the Statement of Additional Information.
41
<PAGE>
THE DEAN WITTER FAMILY OF FUNDS
MONEY MARKET FUNDS
Dean Witter/Sears Liquid Asset Fund Inc.
Dean Witter/Sears Tax-Free Daily Income Trust
Dean Witter/Sears U.S. Government Money Market Trust
Dean Witter/Sears California Tax-Free Daily Income Trust
Dean Witter/Sears New York Municipal Money Market Trust
EQUITY FUNDS
Dean Witter American Value Fund
Dean Witter Natural Resource Development Securities Inc.
Dean Witter Dividend Growth Securities Inc.
Dean Witter Developing Growth Securities Trust
Dean Witter World Wide Investment Trust
Dean Witter Equity Income Trust
Dean Witter Value-Added Market Series
Dean Witter Utilities Fund
Dean Witter Capital Growth Securities
Dean Witter European Growth Fund Inc.
Dean Witter Pacific Growth Fund Inc.
Dean Witter Precious Metals and Minerals Trust
Dean Witter Health Sciences Trust
Dean Witter Global Dividend Growth Securities
FIXED-INCOME FUNDS
Dean Witter High Yield Securities Inc.
Dean Witter Tax-Exempt Securities Trust
Dean Witter U.S. Government Securities Trust
Dean Witter Federal Securities Trust
Dean Witter Convertible Securities Trust
Dean Witter California Tax-Free Income Fund
Dean Witter New York Tax-Free Income Fund
Dean Witter World Wide Income Trust
Dean Witter Intermediate Income Securities
Dean Witter Global Short-Term Income Fund Inc.
Dean Witter Multi-State Municipal Series Trust
Dean Witter Premier Income Trust
Dean Witter Short-Term U.S. Treasury Trust
Dean Witter Diversified Income Trust
Dean Witter Limited Term Municipal Trust
Dean Witter Short-Term Bond Fund
DEAN WITTER RETIREMENT SERIES
Liquid Asset Series
U.S. Government Money Market Series
U.S. Government Securities Series
Intermediate Income Securities Series
American Value Series
Capital Growth Series
Dividend Growth Series
Strategist Series
Utilities Series
Valued-Added Market Series
Global Equity Series
ASSET ALLOCATION FUNDS
Dean Witter Managed Assets Trust
Dean Witter Strategist Fund
ACTIVE ASSETS ACCOUNT PROGRAM
Active Assets Money Trust
Active Assets Tax-Free Trust
Active Assets California Tax-Free Trust
Active Assets Government Securities Trust
<PAGE>
Dean Witter Multi-State Municipal Series Trust
Two World Trade Center
New York, New York 10048
TRUSTEES
Jack F. Bennett
Charles A. Fiumefreddo
Edwin J. Garn
John R. Haire
Dr. John E. Jeuck
Dr. Manuel H. Johnson
Paul Kolton
Michael E. Nugent
Albert T. Sommers
Edward R. Telling
OFFICERS
Charles A. Fiumefreddo
Chairman and Chief Executive Officer
Sheldon Curtis
Vice President, Secretary and General Counsel
James F. Willison
Vice President
Thomas F. Caloia
Treasurer
CUSTODIAN
The Bank of New York
110 Washington Street
New York, New York 10286
TRANSFER AGENT AND
DIVIDEND DISBURSING AGENT
Dean Witter Trust Company
Harborside Financial Center
Plaza Two
Jersey City, New Jersey 07311
INDEPENDENT ACCOUNTANTS
Price Waterhouse
1177 Avenue of the Americas
New York, New York 10036
INVESTMENT MANAGER
Dean Witter InterCapital Inc.
DEAN WITTER
MULTI-STATE
MUNICIPAL
SERIES TRUST
PROSPECTUS
FEBRUARY 17, 1994
<PAGE>
DEAN WITTER
MULTI-STATE
MUNICIPAL SERIES TRUST
STATEMENT OF ADDITIONAL INFORMATION (LOGO)
FEBRUARY 17, 1994
===============================================================================
Dean Witter Multi-State Municipal Series Trust (the "Fund") is an open-end,
non-diversified management investment company currently consisting of ten
separate series: the Arizona Series, the California Series, the Florida Series,
the Massachusetts Series, the Michigan Series, the Minnesota Series, the New
Jersey Series, the New York Series, the Ohio Series and the Pennsylvania Series
(the "State Series"). The investment objective of each Series is to provide a
high level of current income exempt from both federal and the designated State
income taxes consistent with the preservation of capital. Each Series seeks to
achieve its investment objective by investing principally in investment grade
tax-exempt securities of municipal issuers in the designated State. See
"Investment Practices and Policies."
A Prospectus for the Fund dated February 17, 1994, which provides the basic
information you should know before investing in the Fund, may be obtained
without charge from the Fund at the address or telephone number listed below or
from the Fund's Distributor, Dean Witter Distributors Inc., or from Dean Witter
Reynolds Inc. at any of its branch offices. This Statement of Additional
Information is not a Prospectus. It contains information in addition to and
more detailed than that set forth in the Prospectus. It is intended to provide
additional information regarding the activities and operations of the Fund, and
should be read in conjunction with the Prospectus.
Dean Witter
Multi-State Municipal Series Trust
Two World Trade Center
New York, New York 10048
(212) 392-2550
<PAGE>
TABLE OF CONTENTS
===============================================================================
The Fund and its Management................... 3
Trustees and Officers......................... 6
Investment Practices and Policies............. 8
Investment Restrictions....................... 30
Portfolio Transactions and Brokerage.......... 31
Purchase of Fund Shares....................... 32
Shareholder Services.......................... 36
Redemptions and Repurchases................... 39
Dividends, Distributions and Taxes............ 39
Performance Information....................... 42
Shares of the Fund............................ 44
Custodian and Transfer Agent.................. 44
Independent Accountants....................... 44
Reports to Shareholders....................... 45
Validity of Shares of Beneficial Interest..... 45
Legal Counsel................................. 45
Experts....................................... 45
Registration Statement........................ 45
Appendix...................................... 46
Financial Statements--November 30, 1993....... 50
2
<PAGE>
THE FUND AND ITS MANAGEMENT
===============================================================================
THE FUND
The Fund is a trust of the type commonly known as a "Massachusetts
business trust" and was -organized under the laws of the Commonwealth of
Massachusetts on October 29, 1990.
THE INVESTMENT MANAGER
Dean Witter InterCapital Inc. (the "Investment Manager" or
"InterCapital"), whose address is Two World Trade Center, New York, New York
10048, is the Fund's Investment Manager. InterCapital is a wholly-owned
subsidiary of Dean Witter, Discover & Co. ("DWDC"), a Delaware corporation. In
an internal reorganization which took place in January, 1993, InterCapital
assumed the investment advisory, administrative and management activities
previously performed by the InterCapital Division of Dean Witter Reynolds Inc.
("DWR"), a broker-dealer affiliate of InterCapital. (As hereinafter used in
this Statement of Additional Information, the terms "InterCapital" and
"Investment Manager" refer to DWR's InterCapital Division prior to the internal
reorganization and to Dean Witter InterCapital Inc. thereafter. The daily
management of the Fund is conducted by or under the direction of officers of
the Fund and of the Investment Manager, subject to review of investments by the
Fund's Trustees. In addition, Trustees of the Fund provide guidance on economic
factors and interest rate trends. Information as to these Trustees and Officers
is contained under the caption "Trustees and Officers".
The Investment Manager is also the investment manager of the following
management investment companies: Active Assets Money Trust, Active Assets Tax-
Free Trust, Active Assets California Tax-Free Trust, Active Assets Government
Securities Trust, Dean Witter Liquid Asset Fund Inc., InterCapital Income
Securities Inc., Dean Witter High Yield Securities Inc., Dean Witter Tax-Free
Daily Income Trust, Dean Witter Developing Growth Securities Trust, Dean Witter
Tax-Exempt Securities Trust, Dean Witter Natural Resource Development
Securities Inc., Dean Witter Dividend Growth Securities Inc., Dean Witter
American Value Fund, Dean Witter U.S. Government Money Market Trust, Dean
Witter Variable Investment Series, Dean Witter World Wide Investment Trust,
Dean Witter Select Municipal Reinvestment Fund, Dean Witter U.S. Government
Securities Trust, Dean Witter California Tax-Free Income Fund, Dean Witter
Equity Income Trust, Dean Witter New York Tax-Free Income Fund, Dean Witter
Convertible Securities Trust, Dean Witter Federal Securities Trust, Dean Witter
Value-Added Market Series, High Income Advantage Trust, High Income Advantage
Trust II, High Income Advantage Trust III, Dean Witter Government Income Trust,
InterCapital Insured Municipal Bond Trust, InterCapital Quality Municipal
Investment Trust, Dean Witter Utilities Fund, Dean Witter Strategist Fund, Dean
Witter Managed Assets Trust, Dean Witter California Tax-Free Daily Income
Trust, Dean Witter World Wide Income Trust, Dean Witter Intermediate Income
Securities, Dean Witter Capital Growth Securities, Dean Witter European Growth
Fund Inc., Dean Witter Precious Metals and Minerals Trust, Dean Witter New York
Municipal Money Market Trust, Dean Witter Global Short-Term Income Fund Inc.,
Dean Witter Pacific Growth Fund Inc., Dean Witter Premier Income Trust, Dean
Witter Short-Term U.S. Treasury Trust, InterCapital Insured Municipal Trust,
InterCapital Quality Municipal Income Trust, InterCapital Insured Municipal
Income Trust, InterCapital California Insured Municipal Income Trust, Dean
Witter Diversified Income Trust, Dean Witter Health Sciences Trust, Dean Witter
Retirement Series, InterCapital Quality Municipal Securities, InterCapital
California Quality Municipal Securities, InterCapital New York Quality
Municipal Securities, Dean Witter Global Dividend Growth Securities, Dean
Witter Limited Term Municipal Trust, Dean Witter Short-Term Bond Fund,
Municipal Income Trust, Municipal Income Trust II, Municipal Income Trust III,
Municipal Income Opportunities Trust, Municipal Income Opportunities Trust II,
Municipal Income Opportunities Trust III, Prime Income Trust and Municipal
Premium Income Trust. The foregoing investment companies, together with the
Fund, are collectively referred to as the Dean Witter Funds. In addition, Dean
Witter Services Company Inc. ("DWSC"), a wholly-owned subsidiary of
InterCapital, serves as manager for the following companies for which TCW Funds
Management, Inc. is the investment adviser: TCW/DW Core Equity Trust, TCW/DW
North American Government Income Trust, TCW/DW Latin American Growth Fund,
TCW/DW Income and Growth Fund, TCW/DW Small Cap Growth Fund, TCW/DW Balance
Fund, TCW/DW Term Trust 2000, TCW/DW Term Trust 2002 and TCW/DW Term Trust 2003
(the "TCW/DW Funds"). InterCapital also serves as: (i) sub-adviser to
3
<PAGE>
Templeton Global Opportunities Trust, an open-end investment company; (ii)
administrator of The BlackRock Strategic Term Trust Inc., a closed-end
investment company; and (iii) sub-administrator of MassMutual Participation
Investors and Templeton Global Governments Income Trust, closed-end investment
companies.
The Investment Manager also serves as an investment adviser for Dean
Witter World Wide Investment Fund, an investment company organized under the
laws of Luxembourg, shares of which company may not be offered in the United
States or purchased by American citizens outside of the United States.
Pursuant to an Investment Management Agreement (the "Agreement") with
the Investment Manager, the Fund has retained the Investment Manager to manage
the investment of the Fund's assets, including the placing of orders for the
purchase and sale of portfolio securities. The Investment Manager obtains and
evaluates such information and advice relating to the economy, securities
markets, and specific securities as it considers necessary or useful to
continuously manage the assets of the Fund in a manner consistent with its
investment objective.
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, such office space, facilities,
equipment, clerical help and bookkeeping and certain legal services as the Fund
may reasonably require in the conduct of its business, including the
preparation of prospectuses, statements of additional information, proxy
statements and reports required to be filed with federal and state securities
commissions (except insofar as the participation or assistance of independent
accountants and attorneys is, in the opinion of the Investment Manager,
necessary or desirable). In addition, the Investment Manager 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
service, heat, light, power and other utilities provided to the Fund.
Each Series pays all expenses incurred in its operation and a portion
of the Fund's general administration expenses allocated on the basis of asset
size of the respective Series. Expenses not expressly assumed by the Investment
Manager under the Agreement or by the distributor of the Fund's shares, Dean
Witter Distributors Inc. ("Distributors" or the "Distributor") (see "Purchase
of Fund Shares"), will be paid by the Fund or each respective Series depending
upon the nature of the expense. The expenses borne directly by each Series
include, but are not limited to: expenses of the Plan of Distribution pursuant
to Rule 12b-1 (see "Purchase of Fund Shares"); charges and expenses of any
registrar; custodian, stock transfer and dividend disbursing agent; brokerage
commissions; taxes; engraving and printing of share certificates; registration
costs of the Series and its shares under federal and state securities laws; the
cost and expense of printing, including typesetting, and distributing
Prospectuses and Statements of Additional Information of the Series and
supplements thereto to the Series' shareholders; all expenses of shareholders'
and trustees' meetings and of preparing, printing and mailing of proxy
statements and reports to shareholders; fees and travel expenses of trustees or
members of any advisory board or committee who are not employees of the
Investment Manager or any corporate affiliate of the Investment Manager; all
expenses incident to any dividend, withdrawal or redemption options; charges
and expenses of any outside service used for pricing of the Fund's shares; fees
and expenses of legal counsel, including counsel to the trustees who are not
interested persons of the Fund or of the Investment Manager (not including
compensation or expenses of attorneys who are employees of the Investment
Manager) and independent accountants; membership dues of industry associations;
interest on Series' borrowings; postage; insurance premiums on property or
personnel (including officers and trustees) of the Fund which inure to its
benefit; extraordinary expenses including, but not limited to, legal claims and
liabilities and litigation costs and any indemnification relating thereto
(depending upon the nature of the legal claim, liability or lawsuit, the costs
of litigation, payment of legal claims or liabilities or indemnification
relating thereto may be directly applicable to a particular Series or may be
proportionately allocated on the basis of the size of each Series. The Trustees
have determined that this is an appropriate method of allocation of such
expenses); and all other costs of the Fund's operations properly payable by the
Fund and allocable on the basis of size of the respective Series.
As full compensation for the services and facilities furnished to the
Fund and expenses of the Fund assumed by the Investment Manager, each Series of
the Fund pays the Investment Manager monthly compensation calculated daily by
applying the annual rate of 0.35% to the daily net assets of that Series.
4
<PAGE>
During the fiscal years ended November 30, 1991 and 1992, the Investment
Manager had undertaken to assume all expenses (except the 12b-1 fee and
brokerage fees) with respect to each Series of the Fund. During the fiscal year
ended November 30, 1993, the Investment Manager continued to waive management
fees and assume expenses, with respect to each Series of the Fund, to the
extent they exceeded 0.50% of the daily net assets of each respective Series.
During the fiscal year ended November 30, 1993, the Arizona Series, California
Series, Florida Series, Massachusetts Series, Michigan Series, Minnesota
Series, New Jersey Series, New York Series, Ohio Series and Pennsylvania Series
accrued to the Investment Manager under the Agreement total compensation in the
amounts of $94,559, $284,875, $147,221, $2,458, $9,191, $0, $72,074, $2,933,
$13,156 and $69,372, respectively.
Pursuant to the Agreement, total operating expenses of each Series of
the Fund are subject to applicable limitations under rules and regulations of
states where a particular Series is authorized to sell its shares. Therefore,
operating expenses of a particular Series are effectively subject to such
limitations as the same may be amended from time to time. Presently, the most
restrictive limitation, applicable only to shares of any Series of the Fund
registered to be sold in California, is as follows: If, in any fiscal year, the
total operating expenses of a fund or series, exclusive of taxes, interest,
brokerage fees, distribution fees and extraordinary expenses (to the extent
permitted by applicable state securities laws and regulations), exceed 2 1/2%
of the first $30,000,000 of average daily net assets, 2% of the next
$70,000,000 and 1 1/2% of any excess over $100,000,000, the Investment Manager
will reimburse such fund or series for the amount of such excess. Such amount,
if any, will be calculated daily and credited on a monthly basis. During the
fiscal years ended November 30, 1991, 1992 and 1993 the expenses of each Series
of the Fund did not exceed the expense limitation.
The Investment Manager has paid the organizational expenses of the Fund
incurred prior to the offering of the Fund's shares. The Fund agreed to bear
and reimburse the Investment Manager for such expenses, in an amount of up to a
maximum of $150,000. The Fund has deferred and is amortizing the reimbursed
expenses on the straight line method over a period not to exceed five years
from the date of commencement of the Fund's operations.
The Agreement provides that in the absence of willful misfeasance, bad
faith, gross negligence or reckless disregard of its obligations thereunder,
the Investment Manager is not liable to the Fund or any of its investors for
any act or omission by the Investment Manager or for any losses sustained by
the Fund or its investors. The Agreement in no way restricts the Investment
Manager from acting as investment manager or adviser to others.
The Agreement was initially approved by the Board of Trustees on
October 30, 1992 and by the shareholders of each Series of the Fund at a
Special Meeting of Shareholders on January 12, 1993. The Agreement is
substantially identical to a prior investment management agreement which was
initially approved by the Trustees on December 11, 1990 (April 16, 1991 for the
Arizona Series), by DWR as the then sole shareholder on December 26, 1990
(April 17, 1991 for the Arizona Series) and by the Shareholders of each Series
of the Fund at a Special Meeting of Shareholders held on June 24, 1992. The
Agreement took effect on June 30, 1993 upon the spin-off by Sears, Roebuck &
Co. of its remaining shares of DWDC.
The Agreement may be terminated with respect to any Series, at any
time, without penalty, on thirty days' notice by the Trustees of the Fund, by
the holders of a majority of the outstanding shares of that Series, as defined
in the Investment Company Act of 1940, as amended (the "Act"), or by the
Investment Manager. The Agreement will automatically terminate in the event of
its assignment (as defined in the Act).
Under its terms, the Agreement will continue in effect until April 30,
1994, and will continue from year to year thereafter with respect to each
Series, provided continuance of the Agreement is approved at least annually by
the vote of the holders of a majority of the outstanding shares of that Series,
as defined in the Act, or by the Trustees of the Fund; provided that in either
event such continuance is approved annually by the vote of a majority of the
Trustees of the Fund who are not parties to the Agreement or "interested
persons" (as defined in the Act) of any such party (the "Independent
Trustees"), which vote must be cast in person at a meeting called for the
purpose of voting on such approval.
5
<PAGE>
Effective December 31, 1993, pursuant to a Services Agreement between
InterCapital and DWSC, DWSC began to provide the administrative services to the
Fund which were previously performed directly by InterCapital. The foregoing
internal reorganization did not result in any change in the nature or scope of
the administrative services being provided to the Fund or any of the fees being
paid by the Fund for the overall services being performed under the terms of
the existing Management Agreement.
The Fund has acknowledged that the name "Dean Witter" is a property
right of DWR. The Fund has agreed that DWR or its parent company may use, or at
any time permit others to use, the name "Dean Witter". The Fund has also agreed
that in the event the Agreement is terminated, or if the affiliation between
InterCapital and its parent is terminated, the Fund will eliminate the name
"Dean Witter" from its name if DWR or its parent company shall so request.
TRUSTEES AND OFFICERS
===============================================================================
The Trustees and Executive Officers of the Fund, their principal business
occupations during the last five years and their affiliations, if any, with
InterCapital and with the Dean Witter Funds and the TCW/DW Funds are shown
below.
NAME, POSITION WITH FUND
AND ADDRESS PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS
- ------------------------ --------------------------------------------
Jack F. Bennett
Trustee
141 Taconic Road
Greenwich, Connecticut
Retired; Director or Trustee of the Dean Witter Funds; formerly
Senior Vice President and Director of Exxon Corporation (1975-January, 1989)
and Under Secretary of the U.S. Treasury for Monetary Affairs (1974-1975);
director of Philips Electronics N.V., Tandem Computers Inc. and Massachusetts
Mutual Life Insurance Co.; director or trustee of various not-for-profit and
business organizations.
Charles A. Fiumefreddo*
Chairman of the Board, President,
Chief Executive Officer and Trustee
Two World Trade Center
New York, New York
Chairman, Chief Executive Officer and Director of InterCapital,
Distributors and DWSC; Executive Vice President and Director of DWR; Chairman,
Director or Trustee, President and Chief Executive Officer of the Dean Witter
Funds; Chairman, Chief Executive Officers and Trustee of the TCW/DW Funds;
Chairman and Director of Dean Witter Trust Company ("DWTC") (since October,
1989); Director and/or officer of various DWDC subsidiaries; formerly Executive
Vice President and Director of DWDC (until February 1993).
Edwin J. Garn
Trustee
2000 Eagle Gate Tower
Salt Lake City, Utah
Director or Trustee of the Dean Witter Funds; formerly United
States Senator (R-Utah) (1974-1992) and Chairman, Senate Banking Committee
(1980-1986); formerly Mayor of Salt Lake City, Utah (1971-1974); formerly
Astronaut, Space Shuttle Discovery (April 12-19, 1985); Vice Chairman, Huntsman
Chemical Corporation (since January, 1993); Member of the board of various
civic and charitable organizations.
John R. Haire
Trustee
439 East 51st Street
New York, New York
Chairman of the Audit Committee and Chairman of the Committee
of the Independent Directors or Trustees and Director or Trustee of the Dean
Witter Funds; Trustee of the TCW/DW Funds; formerly President, Council for Aid
to Education (1978-October, 1989), Chairman and Chief Executive Officer of
Anchor Corporation, an Investment Adviser (1964-1978); Director of Washington
National Corporation (insurance) and Bowne & Co., Inc. (printing).
Dr. John E. Jeuck
Trustee
70 East Cedar Street
Chicago, Illinois
Retired; Director or Trustee of the Dean Witter Funds; formerly
Robert Law professor of Business Administration, Graduate School of Business,
University of Chicago (until July 1989); Business consultant.
6
<PAGE>
NAME, POSITION WITH FUND
AND ADDRESS PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS
- ------------------------ --------------------------------------------
Dr. Manuel H. Johnson
Trustee
7521 Old Dominion Drive
MacLean, Virginia
Senior Partner, Johnson Smick International, Inc., a consulting
firm; Koch Professor of International Economics and Director of the Center for
Global Market Studies at George Mason University (since September, 1990); Co-
Chairman and a founder of the Group of Seven Council (G7C), an international
economic commission (since September, 1990); Director or Trustee of the Dean
Witter Funds; Trustee of the TCW/DW Funds; Director of Greenwich Capital
Markets Inc. (broker-dealer); formerly Vice Chairman of the Board of Governors
of the Federal Reserve System (February, 1986-August, 1990) and Assistant
Secretary of the U.S. Treasury (1982-1986).
Paul Kolton
Trustee
9 Hunting Ridge Road
Stamford, Connecticut
Director or Trustee of the Dean Witter Funds; Chairman of the
Audit Committee and the Committee of the Independent Trustees and Trustee of
the TCW/DW Funds; formerly Chairman of the Financial Accounting Standards
Advisory Council and Chairman and Chief Executive Officer of the American Stock
Exchange; Director of UCC Investors Holding Inc. (Uniroyal Chemical Company,
Inc.); director or trustee of various not-for profit organizations.
Michael E. Nugent
Trustee
237 Park Avenue
New York, New York
General Partner, Triumph Capital, L.P., a private investment
partnership (since April, 1988); Director or Trustee of the Dean Witter Funds;
Trustee of the TCW/DW Funds; formerly Vice President, Bankers Trust Company and
BT Capital Corporation (September, 1984-March, 1988); Director of various
business organizations.
Albert T. Sommers
Trustee
845 Third Avenue
New York, New York
Senior Fellow and Economic Counselor (formerly Senior Vice
President and Chief Economist) of the Conference Board, a nonprofit business
research organization; President, Albert T. Sommers, Inc., an economic
consulting firm; Director or Trustee of the Dean Witter Funds; formerly
Chairman, Price Advisory Committee of the Council on Wage and Price Stability
(December, 1979-December, 1980); Economic Adviser, The Ford Foundation;
Director of Grow Group, Inc. (chemicals), MSI, Inc. (medical services) and
Westbridge Capital Inc. (insurance).
Edward R. Telling*
Trustee
Sears Tower
Chicago, Illinois
Retired; Director or Trustee of the Dean Witter Funds; formerly
Chairman of the Board of Directors and Chief Executive Officer (until December
31, 1985) and President (from January, 1981-March, 1982 and from February,
1984-August, 1984) of Sears, Roebuck and Co; formerly Director of Sears,
Roebuck & Co.
Sheldon Curtis
Vice President, Secretary
and General Counsel
Two World Trade Center
New York, New York
Senior Vice President, Secretary and General Counsel of
InterCapital and DWSC; Assistant Secretary of DWDC and DWR; Senior Vice
President, Assistant Secretary and Assistant General Counsel of Distributors;
Senior Vice President and Secretary of DWTC (since October, 1989); and Vice
President, Secretary and General Counsel of the Dean Witter Funds and the
TCW/DW Funds.
James F. Willison
Vice President
Two World Trade Center
New York, New York
Senior Vice President of InterCapital; Vice President of
various Dean Witter Funds.
Thomas F. Caloia
Treasurer
Two World Trade Center
New York, New York
<PAGE>
First Vice President (since May, 1991) and Assistant Treasurer
(since January, 1993) of InterCapital and Treasurer of the Dean Witter Funds
and the TCW/DW Funds; previously Vice President of InterCapital.
- ----------
* Denotes Trustees who are "interested persons" of the Fund, as defined in the
Act.
7
<PAGE>
In addition, Robert M. Scanlan, President of InterCapital, David A.
Hughey and Edmund C. Puckhaber, Executive Vice Presidents of InterCapital and
Jonathan R. Page, Senior Vice President of InterCapital, are Vice Presidents of
the Fund and Barry Fink, First Vice President and Assistant General Counsel of
InterCapital, and Marilyn K. Cranney, Lawrence S. Lafer, Lou Anne D. McInnis
and Ruth Rossi, Vice Presidents and Assistant General Counsels of InterCapital,
are Assistant Secretaries of the Fund.
The Fund pays each Trustee who is not an employee or retired employee
of the Investment Manager or an affiliated company an annual fee of $1,200 plus
$50 for each meeting of the Trustees, the Audit Committee or of the Committee
of the Independent Trustees attended by the Trustee (the Fund pays the Chairman
of the Audit Committee an additional annual fee of $1,000 and pays the Chairman
of the Committee of the Independent Trustees an additional annual fee of
$2,400, in each case inclusive of the Committee meeting fees). The Fund also
reimburses such Trustees for travel and other out-of-pocket expenses incurred
by them in connection with attending such meetings. Trustees and officers of
the Fund who are or have been employed by the Investment Manager or an
affiliated company receive no compensation or expense reimbursement from the
Fund. The Fund has adopted a retirement program under which an Independent
Trustee who retires after a minimum required period of service would be
entitled to retirement payments upon reaching the eligible retirement age
(normally, after attaining age 72) based upon length of service and computed as
a percentage of one-fifth of the total compensation earned by such Trustee for
service to the Fund in the five-year period prior to the date of the Trustee's
retirement. No Independent Trustee has retired since the adoption of the
program and no payments by the Fund have been made under the program to any
Trustee. For the fiscal year ended November 30, 1993 the Fund accrued an
aggregate total of $19,765 for Trustee's fees and expenses with respect to each
Series of the Fund. As of the date of this Statement of Additional Information
the aggregate shares of beneficial interest of the Fund owned by the Fund's
officers and trustees as a group was less than 1 percent of the Fund's shares
outstanding.
INVESTMENT PRACTICES AND POLICIES
===============================================================================
PORTFOLIO SECURITIES
Taxable Securities. As discussed in the Prospectus, each Series of the
Fund may invest up to 20% of its total assets in taxable money market
instruments, tax-exempt securities of other states and municipalities and
futures and options. (This investment percentage is subject to applicable state
laws and may be limited further by specific requirements of certain states. It
is the intention of each Series to meet the applicable requirements of the
respective States. See "Dividends, Distributions and Taxes--State Taxation" in
the Prospectus.) Investments in taxable money market instruments would
generally be made under any one of the following circumstances: (a) pending
investment of proceeds of the sale of each Series' shares or of portfolio
securities, (b) pending settlement of purchases of portfolio securities and (c)
to maintain liquidity for the purpose of meeting anticipated redemptions. Only
those tax-exempt securities of other states which satisfy the standards
established for the tax-exempt securities of the State Series may be purchased
by each Series.
In addition, each Series may temporarily invest more than 20% of its
total assets in tax-exempt securities of other states and municipalities and
taxable money market instruments, in order to maintain a temporary "defensive"
posture when, in the opinion of the Investment Manager, it is advisable to do
so because of market conditions (the types of investments in which each Series
may invest when maintaining a temporary "defensive" position may be limited by
applicable State requirements). The types of taxable money market instruments
in which each Series may invest are limited to the following short-term fixed-
income securities (maturing in one year or less from the time of purchase): (i)
obligations of - the United States Government, its agencies, instrumentalities
or authorities; (ii) commercial paper rated P-1 by Moody's Investors Service,
Inc. ("Moody's") or A-1 by Standard & Poor's Corporation ("S&P"); (iii)
certificates of deposit of domestic banks with assets of $1 billion or more;
and (iv) repurchase agreements with respect to portfolio securities.
Tax-Exempt Securities. As discussed in the Prospectus, under normal
conditions, at least 80% of the total assets of each Series will be invested in
securities, the interest on which is exempt from federal income taxes and the
income taxes of the designated State. The tax-exempt securities in which each
Series will invest include Municipal Bonds, Municipal Notes and Municipal
Commercial Paper. In regard to the Moody's and S&P ratings discussed in the
Prospectus, it should be noted that the ratings represent the organizations'
opinions as to the quality of the securities which they undertake to rate and
that the ratings are general and not absolute standards of quality. For a
description of Municipal Bond,
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Municipal Note and Municipal Commercial Paper ratings by Moody's and S&P, see
the Appendix to this Statement of Additional Information.
The percentage and rating policies in the Prospectus apply at the time of
acquisition of a security based upon the last previous determination of the
Fund's net asset value; any subsequent change in any ratings by a rating
service or change in percentages resulting from market fluctuations or other
changes in the amount of total assets will not require elimination of any
security from the Fund's portfolio until such time as the Investment Manager
determines that it is practicable to sell the security without undue market or
tax consequences to the Fund. Therefore, the Fund may hold securities which
have been downgraded to ratings of Ba or BB or lower by Moody's or S&P. Such
securities are considered to be speculative investments.
Although certain quality standards are applicable at the time of purchase,
the Fund does not have any minimum quality rating standard for its downgraded
investments. As such, the Fund may continue to hold securities rated as low as
Caa, Ca or C by Moody's or CCC, CC, C or CI by S&P. However, such investments
may not exceed more than 5% of the total assets of any Series. Bonds rated Caa
or Ca by Moody's may already be in default on payment of interest or principal,
while bonds rated C by Moody's, their lowest bond rating, can be regarded as
having extremely poor prospects of ever attaining any real investment standing.
Bonds rated CI by S&P, their lowest Bond rating, are no longer making interest
payments.
The payment of principal and interest by issuers of certain Municipal
Obligations purchased by each Series may be guaranteed by letters of credit or
other credit facilities offered by banks or other financial institutions. Such
guarantees will be considered in determining whether a Municipal Obligation
meets the investment quality requirements of each Series. In addition, some
issues may contain provisions which permit the Fund, on behalf of a Series, to
demand from the issuer repayment of principal at some specified period(s) prior
to maturity.
Municipal Bonds. Municipal Bonds, as referred to in the Prospectus, are
debt obligations of a state, its cities, municipalities and municipal agencies
(all of which are generally referred to as "municipalities") which generally
have a maturity at the time of issue of one year or more, and the interest from
which is, in the opinion of bond counsel to the issuer at time of original
issuance, exempt from regular federal income tax. In addition to these
requirements, the interest from Municipal Bonds of the designated State of each
Series must be, in the opinion of bond counsel to the issuer at time of
original issuance, exempt from the regular personal income tax of that State.
These obligations are issued to raise funds for various public purposes, such
as construction of a wide range of public facilities, to refund outstanding
obligations and to obtain funds for general operating expenses or to loan to
other public institutions and facilities. In addition, certain types of
industrial development bonds and pollution control bonds are issued by or on
behalf of public authorities to provide funding for various privately operated
facilities.
Municipal Notes. Municipal Notes are short-term obligations of
municipalities, generally with a maturity at the time of issuance ranging from
six months to three years, the interest from which is, in the opinion of bond
counsel to the issuer at time of original issuance, exempt from regular federal
income tax. In addition to those requirements, the interest from Municipal
Notes of the designated State of each Series must be, in the opinion of bond
counsel to the issuer at time of original issuance, exempt from the regular
personal income tax of that State. The principal types of Municipal Notes
include tax anticipation notes, bond anticipation notes, revenue anticipation
notes and project notes, although there are other types of Municipal Notes, in
which each Series may invest. Notes sold in anticipation of collection of
taxes, a bond sale or receipt of other revenues are usually general obligations
of the issuing municipality or agency. Project Notes are issued by local
agencies and are guaranteed by the United States Department of Housing and
Urban Development. Such notes are secured by the full faith and credit of the
United States Government.
Municipal Commercial Paper. Municipal Commercial Paper refers to short-
term obligations of municipalities the interest from which is, in the opinion
of bond counsel to the issuer at time of original issuance, exempt from regular
federal income tax. In addition to those requirements, the interest from the
Municipal Commercial Paper of the designated State of each Series must be, in
the opinion of bond counsel to the issuer at time of original issuance, exempt
from the regular personal income tax of that
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State. Municipal Commercial Paper may be issued at a discount and is sometimes
referred to as Short-Term Discount Notes. Municipal Commercial Paper is likely
to be used to meet seasonal working capital needs of a municipality or interim
construction financing and to be paid from general revenues of the municipality
or refinanced with long-term debt. In most cases Municipal Commercial Paper is
backed by letters of credit, lending agreements, note repurchase agreements or
other credit facility agreements offered by banks or other institutions.
The two principal classifications of Municipal Bonds, Notes and
Commercial Paper are "general obligation" and "revenue" bonds, notes or
commercial paper. General obligation bonds, notes or commercial paper are
secured by the issuer's pledge of its faith, credit and taxing power for the
payment of principal and interest. Issuers of general obligation bonds, notes
or commercial paper include a state, its counties, cities, towns and other
governmental units. Revenue bonds, notes or commercial paper are payable from
the revenues derived from a particular facility or class of facilities or, in
some cases, from specific revenue sources. Revenue bonds, notes or commercial
paper are issued for a wide variety of purposes, including the financing of
electric, gas, water and sewer systems and other public utilities; industrial
development and pollution control facilities; single and multi-family housing
units; public buildings and facilities; air and marine ports; transportation
facilities such as toll roads, bridges and tunnels; and health and educational
facilities such as hospitals and dormitories. They rely primarily on user fees
to pay debt service, although the principal revenue source is often
supplemented by additional security features which are intended to enhance the
credit worthiness of the issuer's obligations. In some cases, particularly
revenue bonds issued to finance housing and public buildings, a direct or
implied "moral -obligation" of a governmental unit may be pledged to the
payment of debt service. In other cases, a special tax or other charge may
augment user fees.
Issuers of Municipal Obligations are subject to the provisions of
bankruptcy, insolvency and other laws affecting the rights and remedies of
creditors, such as the Federal Bankruptcy Act, and laws, if any, which may be
enacted by Congress or any state extending the time for payment of principal or
interest, or both, or imposing other constraints upon enforcement of such
obligations or upon municipalities to levy taxes. There is also the possibility
that as a result of litigation or other conditions the power or ability of any
one or more issuers to pay, when due, principal of and interest on its, or
their, Municipal Bonds, Municipal Notes and Municipal Commercial Paper may be
materially affected.
SPECIAL INVESTMENT CONSIDERATIONS
Because of the special nature of securities which are rated below
investment grade by national credit rating agencies ("lower-rated securities"),
the Investment Manager must take into account certain special considerations in
assessing the risks associated with such investments. For example, as the
lower-rated securities market is relatively new, its growth has paralleled a
long economic expansion and it has not weathered a recession in its present
size and form. Therefore, an economic downturn or increase in interest rates is
likely to have a negative effect on this market and on the value of the lower-
rated securities held by each Series of the Fund, as well as on the ability of
the securities' issuers to repay principal and interest on their borrowings.
The prices of lower-rated securities have been found to be less
sensitive to changes in prevailing interest rates than higher-rated
investments, but are likely to be more sensitive to adverse economic changes or
individual corporate developments. During an economic downturn or substantial
period of rising interest rates, highly leveraged issuers may experience
financial stress which would adversely -affect their ability to service their
principal and interest payment obligations, to meet their projected business
goals or to obtain additional financing. If the issuer of a fixed-income
security owned by any Series defaults, the Series may incur additional expenses
to seek recovery. In addition, periods of economic uncertainty and change can
be expected to result in an increased volatility of market prices of lower
rated securities and a concomitant volatility in the net asset value per share
of a particular Series of the Fund. Moreover, the market prices of certain of
the portfolio securities of each Series which are structured as zero coupon
securities are affected to a greater extent by interest rate changes and
thereby tend to be more volatile than securities which pay interest
periodically and in cash (see "Dividends, Distributions and Taxes" for a
discussion of the tax ramifications of investment in such securities).
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<PAGE>
The secondary market for lower-rated securities may be less liquid than
the markets for higher quality securities and, as such, may have an adverse
effect on the market prices of certain securities. The limited liquidity of the
market may also adversely affect the ability of the Fund's Trustees to arrive
at a fair value for certain lower-rated securities at certain times and could
make it difficult for a Series to sell certain securities.
New laws and proposed new laws may have a potentially negative impact
on the market for lower-rated securities. For example, recent legislation
requires federally-insured savings and loan associations to divest their
investments in lower-rated securities. This legislation and other proposed
legislation may have an adverse effect upon the value of lower-rated securities
and a concomitant negative impact upon the net asset value per share of a
Series of the Fund.
Variable Rate Obligations. As stated in the Prospectus, each Series
of the Fund may invest in obligations of the type called "variable rate
obligations". The interest rate payable on a variable rate obligation is
adjusted either at predesignated periodic intervals or whenever there is a
change in the market rate of interest on which the interest rate payable is
based. Other features may include the right whereby the Fund may demand
prepayment of the principal amount of the obligation prior to its stated
maturity (a "demand feature") and the right of the issuer to prepay the
principal amount prior to maturity. The principal benefit of a variable rate
obligation is that the interest rate adjustment minimizes changes in the market
value of the obligation. The principal benefit to each Series of the Fund of
purchasing obligations with a demand feature is that liquidity, and the ability
of each Series of the Fund to obtain repayment of the full principal amount of
the obligation prior to maturity, is enhanced.
Lending of Portfolio Securities. The Fund, on behalf of any Series,
may lend portfolio securities to brokers, dealers and financial institutions
provided that cash equal to at least 100%, of the market value of the
securities loaned is deposited by the borrower with the Fund and is maintained
each business day in a segregated account pursuant to applicable regulations.
The collateral value of the loaned securities will be marked-to-market daily.
While such securities are on loan, the borrower will pay the Series any income
accruing thereon, and the Fund may invest on behalf of the Series, the cash
collateral in portfolio securities, thereby earning additional income. The Fund
will not lend the portfolio securities of any Series if such loans are not
permitted by the laws or regulations of any state in which its shares are
qualified for sale and will not lend more than 25% of the value of the total
assets of any Series. Loans will be subject to termination by the Fund on
behalf of any Series, in the normal settlement time, currently five business
days after notice, or by the borrower on one day's notice. Borrowed securities
must be returned when the loan is terminated. Any gain or loss in the market
price of the borrowed securities which occurs during the term of the loan
inures to the Series and its shareholders. The Fund may pay reasonable finders,
borrowers, administrative, and custodial fees in connection with a loan. The
creditworthiness of firms to which the Fund lends its portfolio securities will
be monitored on an ongoing basis. During the fiscal year ended November 30,
1993, the Fund did not lend any portfolio securities of any Series.
When-Issued and Delayed Delivery Securities. As stated in the
Prospectus, the Fund may, on behalf of any Series, purchase tax-exempt
securities on a when-issued or delayed delivery basis. When such transactions
are negotiated, the price is fixed at the time of the commitment, but delivery
and payment can take place a month or more after the date of the commitment.
While the Fund will only purchase securities on a when-issued or delayed
delivery basis with the intention of acquiring the securities, the Fund may
sell the securities before the settlement date, if it is deemed advisable. The
securities so purchased or sold are subject to market fluctuation and no
interest accrues to the purchaser during this period. At the time the Fund
makes the commitment to purchase a Municipal Obligation on a when-issued or
delayed delivery basis, it will record the transaction and thereafter reflect
the value, each day, of the Municipal Obligation in determining its net asset
value. The Fund, on behalf of each Series, will also establish a segregated
account with its custodian bank in which it will maintain cash or cash
equivalents or other high quality Municipal Obligations equal in value to
commitments for such when-issued or delayed delivery securities. The Investment
Manager does not believe that the net asset value or income of any Series will
be adversely affected by the purchase of Municipal Obligations on a when-issued
or delayed delivery basis.
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<PAGE>
Repurchase Agreements. When cash may be available for only a few days, it
may be invested by the Fund, on behalf of any Series, in repurchase agreements
until such time as it may otherwise be invested or used for payments of
obligations of the Fund. These agreements, which may be viewed as a -type of
secured lending by the Fund, typically involve the acquisition by the Fund, on
behalf of a Series, of debt securities from a selling financial institution
such as a bank, savings and loan association or broker-dealer. The agreement
provides that the Fund will, on behalf of a Series, sell back to the
institution, and that the institution will repurchase, the underlying security
("collateral"), which is held by the Fund's Custodian at a specified price and
at a fixed time in the future which is usually not more than seven days from
the date of purchase. The Fund, on behalf of that Series, will receive interest
from the institution until the time when the repurchase is to occur. Although
such date is deemed by the Fund to be the maturity date of a repurchase
agreement, the maturities of securities subject to repurchase agreements are
not subject to any limits and may exceed one year. While repurchase agreements
involve certain risks not associated with direct investments in debt
securities, the Fund follows procedures designed to minimize such risks. These
procedures include effecting repurchase transactions only with large well-
capitalized and well-established financial institutions, whose financial
condition will be continually monitored. In addition, the value of the
collateral underlying the repurchase agreement will always be at least equal to
the repurchase price, including any accrued interest earned on the repurchase
agreement. In the event of a default or bankruptcy by a selling financial
institution, the Fund, on behalf of a Series, will seek to liquidate such
collateral. However, the exercising of the Fund's right to liquidate such
collateral could involve certain costs or delays and, to the extent that
proceeds from any sale upon a default of the obligation to repurchase were less
than the repurchase price, a particular Series could suffer a loss. It is the
current policy of each Series of the Fund not to invest in repurchase
agreements that do not mature within seven days if any such investment,
together with any other illiquid assets held by a particular Series, amounts to
more than 10% of the total assets of that Series. During the fiscal year ended
November 30, 1993, the Fund did not enter into any repurchase agreements with
respect to any Series.
HEDGING ACTIVITIES
The Fund, on behalf of each Series except the New Jersey Series, may enter
into financial futures contracts, options on such futures and municipal bond
index futures contracts for hedging purposes.
FUTURES CONTRACT AND OPTIONS ON FUTURES
As discussed in the Prospectus, the Fund, on behalf of any applicable Series,
may invest in financial futures contracts ("futures contracts") and related
options thereon. These futures contracts and related options thereon will be
used only as a hedge against anticipated interest rate changes. A futures
contract sales creates an obligation by the Fund, as seller, on behalf of a
Series, to deliver the specific type of instrument called for in the contract
at a specified future time for a specified price. A futures contract purchase
would create an obligation by the Fund, as purchaser, on behalf of that Series,
to take delivery of the specific type of financial instrument at a specified
future time at a specified price. The specific securities delivered or taken,
respectively, at settlement date, would not be determined until or near that
date. The determination would be in accordance with the rules of the exchange
on which the futures contract sale or purchase was effected.
Although the terms of futures contracts specify actual delivery or receipt of
securities, in most instances the contracts are closed out before the
settlement date without the making or taking of delivery of the securities.
Closing out of a futures contract is usually effected by entering into an
offsetting transaction. An offsetting transaction for a futures contract sale
is effected by the Fund, on behalf of a Series, entering into a futures
contract purchase for the same aggregate amount of the specific type of
financial instrument at the same delivery date. If the price in the sale
exceeds the price in the offsetting purchase, the Fund is immediately paid the
difference and thus, on behalf of that Series, realizes a gain. If the
offsetting purchase price exceeds the sale price, the Fund pays the difference
and, on behalf of that Series, realizes the loss. Similarly, the closing out of
a futures contract purchase is effected, on behalf of a Series, by the Fund
entering into a futures contract sale. If the offsetting sale price exceeds the
purchase price, the Fund, on behalf of that Series, realizes a gain, and if the
offsetting sale price is less than the purchase price, the Fund, on behalf of
that Series, realizes a loss.
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<PAGE>
Unlike a futures contract which requires the parties to buy and sell a
security on a set date, an option on a futures contract entitles its holder to
decide on or before a future date whether to enter into such a contract. If the
holder decides not to enter into the contract, the premium paid for the option
is lost. Since the value of the option is fixed at the point of sale, there are
no daily payments of cash to reflect the change in the value of the underlying
contract, as discussed below for futures contracts. The value of the option
changes and is reflected in the net asset value of the particular Series
holding the option.
The Fund, on behalf of each applicable Series, is required to maintain
margin deposits with brokerage firms through which it effects futures contracts
and options thereon. The initial margin requirements vary according to the type
of the underlying security. In addition, due to current industry practice daily
variations in gains and losses on open contracts are required to be reflected
in cash in the form of variation margin payments. The Fund, on behalf of any
Series, may be required to make additional margin payments during the term of
the contract.
Currently, futures contracts can be purchased on debt securities such
as U.S. Treasury Bills and Bonds, U.S. Treasury Notes with maturities between 6
1/2 and 10 years, Certificates of the Government National Mortgage Association
and Bank Certificates of Deposit. The Fund may invest in interest rate futures
contracts covering these types of financial instruments as well as in new types
of contracts that become available in the future.
Financial futures contracts are traded in an auction environment on the
floors of several Exchanges--principally, the Chicago Board of Trade, the
Chicago Mercantile Exchange and the New York Futures Exchange. Each Exchange
guarantees performance under contract provisions through a -clearing
corporation, a nonprofit organization managed by the Exchange membership which
is also responsible for handling daily accounting of deposits or withdrawals of
margin.
A risk in employing futures contracts to protect against the price
volatility of portfolio securities is that the prices of securities subject to
futures contracts may correlate imperfectly with the behavior of the cash
prices of each Series' portfolio securities. The correlation may be distorted
by the fact that the futures market is dominated by short-term traders seeking
to profit from the difference between a contract or security price objective
and their cost of borrowed funds. This would reduce their value for hedging
purposes over a short time period. The correlation may be further distorted
since the futures contracts that are being used to hedge are not based on
municipal obligations.
Another risk is that the Fund's manager could be incorrect in its
expectations as to the direction or extent of various interest rate movements
or the time span within which the movements take place. For example, if the
Fund, on behalf of a Series, sold futures contracts for the sale of securities
in anticipation of an increase in interest rates, and then interest rates went
down instead, causing bond prices to rise, that Series would lose money on the
sale.
Put and call options on financial futures have similar characteristics
as Exchange-traded options. See below for a further description of options.
In addition to the risks associated in investing in options on
securities, there are particular risks associated with investing in options on
futures. In particular, the ability to establish and close out positions on
such options will be subject to the development and maintenance of a liquid
secondary market. It is not certain that this market will develop.
In order to assure that the Fund is utilizing futures transactions for
hedging purposes only, a substantial majority (i.e., approximately 75%) of all
anticipatory hedge transactions of each Series (transactions in which the Fund,
on behalf of a Series, does not own at the time of the transaction, but expects
to acquire, the securities underlying the relevant futures contract) involving
the purchase of futures contracts or call options thereon will be completed by
the purchase of securities which are the subject of the hedge.
The Fund, on behalf of any applicable Series, may not enter into
futures contracts or related options thereon if immediately thereafter the
amount committed to margin of all the Series' futures contracts plus the amount
paid for option premiums exceeds 5% of the value of the Fund's total assets. In
instances involving the purchase of futures contracts by the Fund, on behalf of
a Series, the market value of the
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<PAGE>
futures contract will be deposited in a segregated account containing cash and
cash equivalents to collateralize the position and thereby ensure that the use
of such futures is unleveraged. The Fund, on behalf of any Series, may not
purchase or sell futures contracts or related options thereon if immediately
thereafter more than one-third of the Series' net assets would be hedged.
Municipal Bond Index Futures. The Fund, on behalf of any applicable
Series, may utilize municipal bond index futures contracts for hedging
purposes. The Fund's strategies in employing such contracts will be similar to
that discussed above with respect to financial futures and options thereon. A
municipal bond index is a method of reflecting in a single number the market
value of many different municipal bonds and is designed to be representative of
the municipal bond market generally. The index fluctuates in response to
changes in the market values of the bonds included within the index. Unlike
futures contracts on particular financial instruments, transactions in futures
on a municipal bond index will be settled in cash if held until the close of
trading in the contract. However, like any other futures contract, a position
in the contract may be closed out by purchase or sale of an offsetting contract
for the same delivery month prior to expiration of the contract. Because
trading in municipal bond index futures contracts commenced only recently, the
Fund's ability to utilize such contracts on behalf of a Series will be
dependent upon the development and maintenance of a liquid secondary market for
such contracts.
Options. The Fund, on behalf of any applicable Series, may purchase or
sell (write) options on debt securities as a means of achieving additional
return or hedging the value of a Series of the Fund's portfolio. The Fund, on
behalf of a Series, would only buy options listed on national securities
exchanges. The Fund, will not purchase options on behalf of any Series if, as a
result, the aggregate cost of all outstanding options exceeds 10% of the Fund's
total assets.
-
A call option is a contract that gives the holder of the option the right to
buy from the writer of the call option, in return for a premium, the security
underlying the option at a specified exercise price at any time during the term
of the option. The writer of the call option has the obligation upon exercise
of the option to deliver the underlying security upon payment of the exercise
price during the option period. A put option is a contract that gives the
holder of the option the right to sell to the writer, in return for a premium,
the underlying security at a specified price during the term of the option. The
writer of the put has the obligation to buy the underlying security upon
exercise, at the exercise price during the option period.
The Fund, on behalf of any applicable Series, will only write covered call
or covered put options. The Fund may not write covered options on behalf of a
Series in an amount exceeding 20% of the value of the total assets of that
Series. A call option is "covered" if the Fund, on behalf of a Series, owns the
underlying security subject to the option or has an absolute and immediate
right to acquire that security or futures contract without additional cash
consideration (or for additional cash consideration held in a segregated
account by its custodian) upon conversion or exchange of other securities held
in its portfolio. A call option is also covered if the Fund, on behalf of a
Series, holds a call on the same security or futures contract as the call
written where the exercise price of the call held is (i) equal to or less than
the exercise price of the call written or (ii) greater than the exercise price
of the call written if the difference is maintained by the Fund, on behalf of a
Series, in cash, Treasury bills or other high grade short-term debt obligations
in a segregated account with its custodian. A put option is "covered" if the
Fund, on behalf of a Series, maintains cash, Treasury bills or other high grade
short-term obligations with a value equal to the exercise price in a segregated
account with its custodian, or else holds a put on the same security or futures
contract as the put written where the exercise price of the put held is equal
to or greater than the exercise price of the put written.
If the Fund has written an option on behalf of a Series, it may terminate
its obligation by effecting a closing purchase transaction. This is
accomplished by purchasing an option of the same series as the option
previously written. However, once the Fund has been assigned an exercise
notice, the Fund, on behalf of that Series, will be unable to effect a closing
purchase transaction. Similarly, if the Fund, on behalf of a Series, is the
holder of an option it may liquidate its position by effecting a closing sale
transaction. This is accomplished by selling an option of the same series as
the option previously purchased. There can be no assurance that either a
closing purchase or sale transaction on behalf of any Series can be effected
when the Fund so desires.
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<PAGE>
A Series, will realize a profit from a closing transaction if the price of
the transaction is less than the premium received from writing the option or is
more than the premium paid to purchase the option; a Series, will realize a
loss from a closing transaction if the price of the transaction is more than
the premium received from writing the option or is less than the premium paid
to purchase the option. Since call option prices generally reflect increases in
the price of the underlying security, any loss resulting from the repurchase of
a call option may also be wholly or partially offset by unrealized appreciation
of the underlying security. Other principal factors affecting the market value
of a put or a call option include supply and demand, interest rates, the
current market price and price volatility of the underlying security and the
time remaining until the expiration date.
An option position may be closed out only on an exchange which provides
a secondary market for an option of the same series. Although the Fund will
generally purchase or write, on behalf of a Series, only those options for
which there appears to be an active secondary market, there is no assurance
that a liquid secondary market on an exchange will exist for any particular
option. In such event it might not be possible to effect closing transactions
in particular options, so that the Fund, on behalf of that Series, would have
to exercise its options in order to realize any profit and would incur
brokerage commissions upon the exercise of call options and upon the subsequent
disposition of underlying securities for the exercise of put options. If the
Fund as a covered call option writer is unable to effect a closing purchase
transaction in a secondary market, it will not be able to sell the underlying
security until the option expires or it delivers the underlying security upon
exercise.
PORTFOLIO MANAGEMENT
Each Series of the Fund may engage in short-term trading consistent with its
investment objective. Securities may be sold in anticipation of a market
decline (a rise in interest rates) or purchased in -anticipation of a market
rise (a decline in interest rates). In addition, a security may be sold and
another security of comparable quality purchased at approximately the same time
to take advantage of what the Investment Manager believes to be a temporary
disparity in the normal yield relationship between the two securities. These
yield disparities may occur for reasons not directly related to the investment
quality of particular issues or the general movement of interest rates, such as
changes in the overall demand for, or supply of, various types of tax-exempt
securities.
In general, purchases and sales may also be made to restructure the
portfolio in terms of average maturity, quality, coupon yield, or
diversification for any one or more of the following purposes: (a) to increase
income, (b) to improve portfolio quality, (c) to minimize capital depreciation,
(d) to realize gains or losses, or for such other reasons as the Investment
Manager deems relevant in light of economic and market conditions.
The Fund does not generally intend to invest more than 25% of the total
assets of any Series in securities of any one governmental unit. Subject to
investment restriction number 2 in the Prospectus, the Fund may invest more
than 25% of the total assets of any Series in private activity bonds (a certain
type of tax-exempt Municipal Obligation).
Each Series of the Fund may invest up to 10% of its total assets in
obligations customarily sold to institutional investors in private transactions
with the issuers thereof and other securities which may be deemed to be
illiquid. Due to the limited market for certain of these securities, a Series
may be unable to dispose of such securities promptly at reasonable prices. It
is the current intention of each Series not to invest in such obligations.
SPECIAL INVESTMENT CONSIDERATIONS RELATING TO ARIZONA OBLIGATIONS
Arizona's constitution limits the amount of debt payable from general tax
revenues that may be contracted by the State to $350,000. However, certain
other issuers have the statutory power to issue obligations payable from other
sources of revenue which affect the whole or large portions of the State. For
example, the Transportation Board of the State of Arizona Department of
Transportation may issue obligations for highways which are paid from revenues
generated from, among other sources, gasoline taxes.
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Arizona's constitution also restricts debt payable from general tax revenues
of certain other issuers of the State. Most importantly, no county, city, town,
school district, or other municipal corporation of the State may for any
purpose become indebted in any manner in an amount exceeding 6% of the taxable
property in such county, city, town, school district, or other municipal
corporation without the assent of a majority of the qualified electors thereof
voting at an election provided by law to be held for that purpose; provided,
however, that (i) under no circumstances may any county or school district of
the State become indebted in an amount exceeding 15% (or 30% in the case of a
unified school district) of such taxable property and (ii) any incorporated
city or town of the State with such assent may be allowed to become indebted in
up to a 20% additional amount for (a) supplying such city or town with water,
artificial light, or sewers when the works for supplying such water, light, or
sewers are or shall be owned and controlled by the municipality and (b) the
acquisition and development by such city or town of land or interests therein
for open space preserves, parks, playgrounds and recreational facilities.
Annual property tax levies for the payment of such debt, which pursuant to
applicable statutes may only be issued for limited purposes, are unlimited as
to rate or amount. Other obligations may be issued by counties, cities, towns,
school districts and other municipal corporations, sometimes without an
election. Such obligations are payable from, among other revenue sources,
project revenues, special assessments, annual budget appropriations and excise,
transaction privilege and use taxes.
Irrigation, power, electrical, agricultural improvement, drainage,
flood control and tax levying public improvement districts are exempt
specifically from the above-noted restrictions of the constitution and may
issue obligations for limited purposes, payable from a variety of revenue
sources. For example, Salt River Project Agricultural & Improvement District,
an agricultural improvement district that operates the Salt River Project (a
federal reclamation project and an electric system which generates, purchases,
and distributes electric power to residential, commercial, industrial, and
agricultural power users in a 2,900 square-mile service area around Phoenix),
may issue obligations payable from a number of sources.
SPECIAL INVESTMENT CONSIDERATIONS RELATING TO CALIFORNIA MUNICIPAL OBLIGATIONS
The California Series will be affected by any political, economic or
regulatory developments affecting the ability of California issuers to pay
interest or repay principal. Various developments regarding the California
Constitution and State statutes which limit the taxing and spending authority
of California governmental entities may impair the ability of California
issuers to maintain debt service on their obligations.
In 1978, Proposition 13, an amendment to the California Constitution,
was approved, limiting real property valuation for property tax purposes and
the power of local governments to increase real property tax revenues and
revenues from other sources. Legislation adopted after Proposition 13 provided
for assistance to local governments, including the redistribution of the then-
existing surplus in the General Fund, reallocation of revenues to local
governments, and assumption by the State of certain local government
obligations. However, more recent legislation reduced such state assistance.
There can be no assurance that any particular level of State aid to local
governments will be maintained in future years. In Wordlinger v. Hahn, the
United States Supreme Court upheld certain provisions of Proposition 13 against
claims that it violated the equal protection clause of the Constitution.
In 1979, an amendment was passed adding Article XIIIB to the State
Constitution. As amended in 1990, Article XIIIB imposes an "appropriations
limit" on the spending authority of state and local government entities. In
general, the appropriations limit is based on certain 1978-1979 expenditures,
adjusted annually to reflect changes in the cost of living, population and
certain services provided by State and local government entities.
"Appropriations limit" does not include appropriations for qualified capital
outlay projects, certain increases in transportation-related taxes, and certain
emergency appropriations.
If a government entity raises revenues beyond its "appropriations
limit" in any year, a portion of the excess which cannot be appropriated within
the following year's limit must be returned to the entity's taxpayers within
two subsequent fiscal years, generally by a tax credit, refund or temporary
suspension of tax rates or fee schedules. "Debt service" is excluded from these
limitations, and is defined as "appropriations required to pay the cost of
interest and redemption charges, including the funding of any reserve or
sinking fund required in connection therewith, on indebtedness existing or
legally authorized
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as of January 1, 1979 or on bonded indebtedness thereafter approved (by the
voters)." In addition, Article XIIIB requires the State Legislature to
establish a prudent State reserve, and to require the transfer of 50% of excess
revenue to the State School Fund; any amounts allocated to the State School
Fund will increase the appropriations limit.
In June 1982, the voters of California passed two initiative measures
to repeal the California gift and inheritance tax laws and to enact, in lieu
thereof, California death taxes. California voters also passed an initiative
measure to increase, for taxable years commencing on or after January 1, 1982,
the amount by account for the effects of inflation. Decreases in State and
local revenues in future fiscal years as consequence of these initiatives may
result in reductions in allocations of state revenues to California issuers or
in the ability of California issuers to pay their obligations.
In 1986, California voters approved an initiative statute known as
Proposition 62. This initiative (i) requires that any tax for general
governmental purposes imposed by local governments be approved by resolution or
ordinance adopted by a two-thirds vote of the governmental entity's legislative
body and by a majority vote of the electorate of the governmental entity, (ii)
requires that any special tax (defined as tax levied for other than general
governmental purposes) imposed by a local governmental entity be approved by a
two-thirds vote of the voters within that jurisdiction, (iii) restricts the use
of revenues from a special tax to the purposes or for the service for which the
special tax was imposed, (iv) prohibits the imposition of ad valorem taxes on
real property by local governmental entities except as permitted by the
Proposition 13 amendment, (v) prohibits the imposition of transaction taxes and
sales taxes on the sale of real property by local governments, (vi) requires
that any tax imposed by a local government on or after August 1, 1985, be
ratified by a majority vote of the electorate within two years of the adoption
of the initiative or be terminated by November 15, 1989, (vii) requires that,
in the event a local government fails to comply with the provisions of this
measure, a reduction of the amount of property tax revenue allocated to such
local government occurs in an amount equal to the revenues received by such
entity attributable to the tax levied in violation of the initiative, and
(viii) permits these provisions to be amended exclusively by the voters of the
State of California.
In September 1988, the California Court of Appeals in City of
Westminster v. County of Orange held that Proposition 62 is unconstitutional to
the extent that it requires a general tax by a general city law, enacted on or
after August 1, 1985, and prior to the effective date of Proposition 62, to be
subject to approval by a majority of voters. The Court held that the California
Constitution prohibits the imposition of a requirement that local tax measures
be submitted to the electorate by either referendum or initiative. It is not
possible to predict the impact of this decision on charter cities, on special
taxes or on new taxes imposed after the effective date of Proposition 62.
In 1988, State voters approved Proposition 87, which amended Article
XVI of the State Constitution to authorize the State Legislature to prohibit
redevelopment agencies from receiving any property tax revenues raised by
increased property taxes to repay bonded indebtedness of local government which
is not approved by voters on or before January 1, 1989. It is not possible to
predict whether the State Legislature will enact such a prohibition, nor is it
possible to predict the impact of Proposition 87 on redevelopment agencies and
their ability to make payments on outstanding debt obligations.
In November 1988, California voters approved Proposition 98. This
initiative requires that revenues in excess of amounts permitted to be spent
and which would otherwise be returned by revision of tax rates or fee
schedules, be transferred and allocated (up to a maximum of 40%) to the State
School Fund and be expended solely for purposes of instructional improvement
and accountability. No such transfer or allocation of funds will be required if
certain designated state officials determine that annual student expenditures
and class size meet certain criteria as set forth in Proposition 98. Any funds
allocated to the State School Fund shall cause the appropriation limits to be
annually increased for any such allocation made in the prior year. Proposition
98 also requires the State of California to provide a minimum level of funding
for public schools and community colleges. The initiative permits the enactment
of legislation, by a two-thirds vote, to suspend the minimum funding
requirement for one year.
On November 3, 1992, voters approved an initiative statute, Proposition
163, which exempts certain food products, including candy and other snack
foods, from California's sales tax. The sales tax had been broadened to include
those items as part of the 1991-92 budget legislation. The State Legislative
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Analyst estimates a resultant revenue reduction of $200 million for the
remainder of the 1992-93 fiscal year and $300-330 million per year thereafter.
Three court cases may further upset California's budgetary balance: one
concerning the medically indigent and Medi-Cal funding, a second concerning
employee pensions, and a third on California's unitary method of taxing
multinational companies. In Kinlaw v. State of California , the State faced
possible retroactive reimbursement to counties of $2-$3 billion for Medi-Cal
costs for medically indigent adults. The ruling could have added annual
operating costs of $600-$700 million and would have precluded the State-county
realignment of responsibilities. On August 30, 1991, the California Supreme
Court overturned the case on procedural grounds; however, a case of similar
scope regarding employee pensions, San Bernardino County v. State of California
, is pending in the Court of Appeals that raises the same substantial
questions. The California Supreme Court in Barclay's Bank International, Ltd.
upheld California's unitary method of taxing multinational companies. The
United States Supreme Court has granted Certiorari in Barclay's and the related
case, Colgate-Palmolive . An adverse holding could cost California $4 billion
in refunds and lost revenue, according to Brad Sherman, Chairman of the
California State Board of Equalization.
The State's General Fund revenues for the 1992-93 fiscal year totalled
nearly $2.5 billion less than the $43.4 billion that Governor Wilson had
projected. It is anticipated that revenues and transfers in the 1993-94 fiscal
year will be lower than those in 1992-93 fiscal year. This represents the
second consecutive year of actual decline.
On June 30, 1993, the Governor signed into law a $52.1 billion budget which,
among other things, (a) shifts $2.6 billion of property taxes from cities,
counties, special districts and redevelopment agencies to schools and community
college districts, (b) reduces higher education and community college funding,
forcing higher student fees, and (c) reduces welfare grants and aid to the
aged, blind, and disabled. In addition, related legislation (a) suspends the
renters' tax credit for two years and (b) allows counties to reduce general
assistance welfare payments by as much as 27%. The stability of the budget
would be jeopardized if the property tax transfer were invalidated by the
courts in current and future cases between the State and its counties.
The current budget includes General Fund spending of $38.5 billion, down
$2.6 billion, or 6.3%, from the amount budgeted for the 1992-1993 fiscal year.
The Commission Staff estimates that the two-year budget plan adopted last June
is out of balance by at least $3.8 billion, due to continued economic weakness
and cost overruns in key State programs. The shortfall could grow to $5.6
billion if a recent Superior Court decision, California Teachers Association v.
Gould , is upheld on appeal and the $1.8 billion in "off-book" loans to schools
are reclassified as "on-book" General Fund appropriations. Furthermore, the
Commission Staff cautions that the shortfall could grow by an additional
several billion dollars if the economy falters or if the State loses other key
cases pending before the courts.
Because of the State of California's continuing budget problems, the State
General Obligation bonds were downgraded in 1992 by Moody's from Aa1 to Aa and
by Standard & Poor's from AA to A+.
The effect of these various constitutional and statutory amendments and
budget developments upon the ability of California issuers to pay interest and
principal on their obligations remains unclear and in any event may depend upon
whether a particular California tax-exempt security is a general or limited
obligation bond and on the type of security provided for the bond. It is
possible that other measures affecting the taxing or spending authority of
California or its political subdivisions may be approved or enacted in the
future.
SPECIAL INVESTMENT CONSIDERATIONS RELATING TO MASSACHUSETTS MUNICIPAL
OBLIGATIONS
Between 1982 and 1988 The Commonwealth of Massachuetts had a strong economy
which was evidenced by low unemployment and high personal income growth as
compared to national trends. Eco-
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nomic growth in the Commonwealth slowed from 1988 to 1992, however, as the
Commonwealth experienced a significant economic slowdown, with particular
deterioration recently in the construction, real estate, financial, insurance
and manufacturing sectors, including certain high technology areas. Economic
activity has improved in 1993 and early 1994 particularly in housing sales and
related businesses. Unemployment (which rose to approximately 8.5% at the end
of 1992) fell to 6.6% at the end of 1993 as compared to the national averages
of 7.4% at the end of 1992 and 6.4% at the end of 1993.
Growth of state tax revenues in the Commonwealth slowed considerably in
fiscal 1988, fiscal 1989 and fiscal 1990, while expenditures for state programs
and services increased. Fiscal 1989 and 1990 ended with budgetary deficits of
$466.4 million and $1.296 billion respectively. The Commonwealth achieved
balanced budgets for both fiscal 1991 and 1992, though a change in accounting
treatment may cause the reporting of a funding shortfall. In 1991, Standard &
Poor's and Moody's lowered their ratings of the Commonwealth's general
obligation bonds from AA and Aa, respectively, to BBB and Baa, respectively but
in 1992 each raised such ratings to A and in 1993, Standard & Poor's further
increased such rating to A+. From time to time, the rating agencies may further
change their ratings.
The Commonwealth's fiscal 1991 budget achieved a small surplus principally
as a result of a one time reimbursement claim for Federal funds available under
Medicaid reimbursement programs. In fiscal 1992 and 1993, budget surpluses were
achieved through appropriation and spending reductions and a significant
increase in revenues attributable to tax increases and enhanced revenue
collections. Fiscal 1993 tax revenues are forecasted to further increase
approximately 9%; however, the Commonwealth's ability to avoid a significant
budget deficit for such year, or thereafter, is uncertain.
Growth of tax revenues in the Commonwealth is limited by law. In addition,
effective July 1, 1990, limitations were placed on the amount of direct bonds
(other than Fiscal Recovery Bonds and certain other limited exceptions) the
Commonwealth may have outstanding in a fiscal year, and the amount of the total
appropriation in any fiscal year that may be expended for payment of principal
of and interest on general obligation debt (other than Fiscal Recovery Bonds)
of the Commonwealth was limited to -10 percent of such appropriation.
Furthermore, certain of the Commonwealth's cities and towns have at times
experienced serious financial difficulties which have adversely affected their
credit standing. The recurrence of such financial difficulties, or financial
difficulties of the Commonwealth, could adversely effect the market values and
marketability of, or result in default in payment on, outstanding obligations
issued by the Commonwealth or its public authorities or municipalities. In
addition, the Massachusetts statutes which limit the taxing authority of the
Commonwealth or certain Massachusetts governmental entities may impair the
ability of issuers of some Massachusetts obligations to pay debt service on
their obligations.
In Massachusetts the tax on personal property and real estate is virtually
the only source of tax revenues available to cities and towns to meet local
costs. "Proposition 2 1/2," an initiative petition adopted by the voters of the
Commonwealth of Massachusetts on November 4, 1980, limits the power of
Massachusetts cities and towns and certain tax-supported districts and public
agencies to raise revenue from property taxes to support their operations,
including the payment of certain debt service. Proposition 2 1/2 required many
cities and towns to reduce their property tax levels to a stated percentage of
the full and fair cash value of their taxable real estate and personal property
and limited the amount by which the total property taxes assessed by a city or
town might increase from year to year.
To offset shortfalls experienced by local governments as a result of the
implementation of Proposition 2 1/2, the state government increased direct
local aid form the 1981 level of $1.632 billion to the fiscal 1989 level of
$2.9 billion; however, direct local aid has dropped in fiscal 1991 and 1992 to
approximately $2.6 billion and $2.3 billion, respectively, and $2.9 billion in
fiscal 1990. Fiscal 1993 direct aid increased to $2.5 billion and is estimated
to further increase to $2.7 billion in fiscal 1994.
No assurance can be given that amounts appropriated for local aid in
the fiscal 1994 budget or subsequent budgets will be funded or paid when due.
The Commonwealth's fiscal circumstances have led to delays in the distribution
of Local Aid in prior last two fiscal years.
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SPECIAL INVESTMENT CONSIDERATIONS RELATING TO MICHIGAN OBLIGATIONS
The information set forth below is derived from official statements
prepared in connection with the issuance of obligations of the State of
Michigan and other sources that are generally available to inves- - -tors. The
information is provided as general information intended to give a recent
historical description and is not intended to indicate further or continuing
trends in the financial or other positions of the State of Michigan. Such
information constitutes only a brief summary, relates primarily to the State of
Michigan, does not purport to include details relating to all potential issuers
within the State of Michigan whose securities may be purchased by the Michigan
Series and does not purport to be a complete description.
Economy. The principal sectors of Michigan's economy are manufacturing of
durable goods (including automobile and office equipment manufacturing),
tourism and agriculture. As reflected in historical employment figures,
Michigan's economy has lessened its dependence upon durable goods
manufacturing. In 1960, employment in such industry accounted for 33% of
Michigan's workforce. This figure fell to 17.3% by 1991. However, manufacturing
(including auto-related manufacturing) continues to be an important part of
Michigan's economy. These industries are highly cyclical and are expected to
operate at substantially less than full capacity in 1993. This factor adversely
affects the revenue streams of Michigan and its political subdivisions because
it adversely impacts tax sources, particularly sales taxes, income taxes and
single business taxes. Income per capita in Michigan exceeds, slightly, the
national average. Recently, as well as historically, the average monthly
unemployment rate in Michigan has been higher than the average figures for the
United States.
Budget. The budget of Michigan is a complete financial plan and
encompasses the revenues and expenditures, both operating and capital outlay,
of the General Fund and special revenue funds. The budget is prepared on a
basis consistent with generally accepted accounting principles (GAAP).
Michigan's Fiscal Year begins on October 1 and ends September 30 of the
following year. Under Michigan law, the executive budget recommendations for
any fund may not exceed the estimated revenue thereof, and an itemized
statement of estimated revenues in each operating fund must be contained in an
appropriation bill as passed by the Legislature, the total of which may not be
less than the total of all appropriations made from the fund for that fiscal
year. The Michigan Constitution provides that proposed expenditures from and
revenues of any fund must be in balance and that any prior year's surplus or
deficit in any fund must be included in the succeeding year's budget for that
fund.
Michigan's Constitution limits the amount of total state revenues that
may be raised from taxes and other sources. State revenues (excluding federal
aid and revenues used for payment of principal of and interest on general
obligation bonds) in any fiscal year are limited to a specified percentage of
Michigan personal income in the prior calendar year or average of the prior
three calendar years, whichever is greater. The percentage is based upon the
ratio of the 1978-79 fiscal year revenues to total 1977 Michigan personal
income (the total income received by persons in Michigan from all sources as
defined and officially reported by the United States Department of Commerce).
If revenues in any fiscal year exceed the revenue limitation by one percent,
the entire amount exceeding the limitation must be rebated in the following
fiscal year's personal income tax or single business tax. Annual excesses of
less than one percent may be transferred into Michigan's Budget and Economic
Stabilization Fund ("BSF"). Michigan may raise taxes in excess of the limit in
emergency situations.
Michigan finances its operations through its General Fund and special
revenue funds. The General Fund receives revenues that are not specifically
required to be included in the special revenue funds. General Fund revenues are
obtained approximately 63 percent from the payment of state taxes and 37
percent from federal and non-tax revenue sources. The majority of the revenues
from state taxes are from the personal income tax, single business tax, use
tax, and sales tax. In addition Michigan levies various other taxes.
Approximately one-half of the General Fund expenditures are made by Michigan's
Department of Education and Department of Social Services. The Department of
Education provides general supervision over all public education in Michigan,
including general, adult and special education. The Department of Social
Service administers economic, social and medical programs in Michigan,
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including Medicare, Medicaid and Aid to Families with Dependent Children. Other
significant expenditures from the General Fund provide funds for law
enforcement, general state government, debt service and capital outlays.
Michigan ended fiscal years 1986-87, 1987-88 and 1988-89 with surpluses of
$11.0 million, $21.5 million and $61.1 million, respectively. In Fiscal Years
1989-90 and 1990-91, Michigan had negative General Fund balances of $310.3
million and $169.4 million, respectively. As required by the Michigan
Constitution, each of those deficits were included in the succeeding year's
budget. As of December 4, 1992, the State of Michigan estimated that Fiscal
Year 1991-92 ended with a zero balance in its General Fund. For Fiscal Year
1990-91, Michigan utilized $230 million from its BSF to reduce the negative
General Fund balance in that year. The unreserved balance for the BSF as of the
end of Fiscal Year 1990-1991 was $182.2 million. The State of Michigan, as of
December 4, 1992, estimated that for Fiscal Year 1991-92 it utilized $150
million from its BSF to end that year with a zero balance in its General Fund.
In July 1992, the Michigan legislature adopted the budget for Fiscal Year 1992-
93. As of October 20, 1992, the State of Michigan estimated that Fiscal Year
1992-93 would end with a deficit of up to approximately -$35.4 million in its
General Fund in the absence of any further action. However, the Michigan
Constitution requires that the Governor, with the approval of the appropriating
committees of the Michigan House and Senate, reduce expenditures whenever it
appears that actual revenues will be less than the originally projected
revenues upon which the budget was based.
Michigan has adopted a balanced budget for the 1991-92 fiscal year.
Debt. The Michigan Constitution limits Michigan general obligation debt to
(i) short-term debt for State operating purposes which must be repaid in the
same fiscal year in which it is issued and which cannot exceed 15% of the
undedicated revenues received by Michigan during the preceding fiscal year,
(ii) short and long term debt unlimited in amount for the purpose of making
loans to school districts and (iii) long term debt for voter-approved purposes.
Michigan has issued and has outstanding general obligation full faith and
credit bonds for water resources, environmental protection program, recreation
program and college savings program purposes, which as of September 30, 1992
totalled approximately $392 million. In November 1988 Michigan's voters
approved the issuance of $800 million of general obligation bonds for
environmental protection and recreational purposes; of this amount
approximately $500 million remains to be issued. As of January 27, 1993,
Michigan expected to issue in early 1993 general obligation notes that would
not mature on or before September 30, 1993 in an amount not then determined.
There are also various state authorities and special purpose agencies
created by Michigan which issue bonds secured by specific revenues. Such debt
is not a general obligation of Michigan.
Ratings. As of January 27, 1993, Michigan's general obligation bonds were
rated "A1" by Moody's Investors Service, "AA" by Standard & Poor's Corporation
and "AA" by Fitch Investors Service. To the extent that the portfolio of the
Michigan Series is comprised of revenue obligations of the state or revenue or
general obligations of local governments or state or local authorities, rather
than general obligations of the State of Michigan, itself, ratings on such
components of the Michigan Series will be different from those given to the
State of Michigan and their value may be independently affected by economic
matters not directly impacting the State.
Litigation. Michigan is a party to various legal proceedings seeking
damages or injunctive or other relief. In addition to routine litigation,
certain of these proceedings could, if unfavorably resolved from the point of
view of Michigan, substantially affect state programs or finances. These
lawsuits involve programs generally in the areas of corrections, highway
maintenance, social services, tax collection, commerce and budgetary reductions
to school districts and governmental units and court funding.
On February 5, 1991, the Michigan Court of Appeals released a decision in
Caterpillar, Incorporated v State of Michigan, Department of Treasury , 188
Mich App 621 (1991), striking down certain of the capital acquisition deduction
("CAD") provisions of the Michigan Single Business Tax Act (the "SBTA"). Due in
part to that decision, the collection of SBTA revenues for the General Fund in
Fiscal Year 1990-91
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declined by approximately $222 million (15%) from the previous fiscal year. In
response, the Michigan legislature enacted Act 77, Public Acts of 1991 ("Act
77") which amended the SBTA and, in particular, its provisions with respect to
the CAD. Act 77 is intended to make up for the SBTA collection losses resulting
from the Caterpillar decision but otherwise to be revenue neutral. Due in part
to Act 77, the collection of SBTA revenues for the General Fund in Fiscal Year
1991-92 was expected, as of December 4, 1992, to have increased by
approximately $148 million (12%) from the previous fiscal year. Lawsuits
challenging the constitutionality of Act 77 have been filed. On July 31, 1992,
the Michigan Supreme court reversed the Michigan Court of Appeals decision and
upheld the constitutionality of the CAD provisions of the SBTA in effect prior
to their amendment by Act 77. On November 30, 1992, the United States Supreme
Court refused to review the decision of the Michigan Supreme Court.
Property Tax Initiatives. At the present time the State of Michigan
does not levy any ad valorem taxes on real or tangible personal property. In
addition, the Michigan Constitution limits the extent to which municipalities
or political subdivisions may levy taxes upon real and personal property
through a process that regulates assessments. In April 1991, the Michigan
legislature adopted legislation which, in general, will freeze 1992 real
property tax assessment at 1991 assessment levels. Commencing in 1993, real
property tax assessments are no longer so limited.
Although tax reform proposals were defeated at the November 3, 1992
election, other proposals for property tax reform are being considered by the
Legislature or discussed in general. Some of those proposals would reduce the
assessed value of property for purposes of ad valorem real and personal
property taxation, or the amount of taxes which could be collected, or both.
Some of the proposals, if adopted, could adversely affect either the amount of
ad valorem tax revenues to be received by local units or government or the
timing of such receipt. The ultimate nature, extent and impact of any property
tax reform measures cannot be predicted.
SPECIAL INVESTMENT CONSIDERATIONS RELATING TO NEW YORK MUNICIPAL OBLIGATIONS
During the mid-1970's, New York State (the "State"), some of its
agencies, instrumentalities and public benefit corporations (the
"Authorities"), and certain of its municipalities faced serious financial
difficulties. To address many of these financial problems, the State developed
various programs, many of which were successful in ameliorating the financial
crisis. Any further financial problems experienced by these Authorities or
municipalities could have a direct adverse effect on the New York Municipal
Obligations in which the Trust invests.
NEW YORK CITY
General. More than any other municipality, the fiscal health of New
York City (the "City") has a significant effect on the fiscal health of the
State. Over the past three years, the rate of economic growth in the City has
slowed substantially. During the 1990 and 1991 fiscal years, the City
experienced significant shortfalls in almost all of its major tax sources and
increases in services costs. Beginning in 1992, the improvement in the national
economy helped stabilize conditions in the City. The City now projects, and its
current four-year financial plan assumes, that the City's economy will continue
to improve during calendar year 1993 and that a modest employment recovery will
begin during the second half of the 1993 calendar year.
For each of the 1981 through 1992 fiscal years, the City achieved
balanced operating results as reported in accordance with generally accepted
accounting principles ("GAAP") and the City's 1993 fiscal year results are
projected to be balanced in accordance with GAAP. The City was required to
close substantial budget gaps in its 1990, 1991 and 1992 fiscal years in order
to maintain balanced operating results. In order to achieve a balanced budget
for the 1992 fiscal year, the City implemented various actions, including tax
increases, proposed service reductions and proposed productivity savings.
1994-1997 New York City Financial Plan. The Mayor is responsible for
preparing the City's four-year financial plan. The City Council adopted a
budget for the City's 1994 fiscal year on June 14, 1993. On July 2, 1993 the
Mayor announced additional expenditure reductions in the amount of
approximately $131 million for the City's 1994 fiscal year beyond those
incorporated in the adopted budget. Based on the adopted budget and the
additional reductions, the City has prepared a proposed financial plan for the
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1994 through 1997 fiscal years (the "1994-1997 Financial Plan", "Financial
Plan" or "City Plan"), and is in the process of preparing a more detailed
financial plan, which will conform to the Financial Plan and which the City
expects to submit to the Control Board during the first week of August, 1993.
The 1994-1997 Financial Plan projects revenues and expenditures for the 1994
fiscal year balanced in accordance with GAAP.
The City Plan sets forth actions to close a projected gap of
approximately $2.0 billion in the 1994 fiscal year. The gap-closing actions for
the 1994 fiscal year include agency actions, including productivity savings and
savings from restructuring the delivery of City services; service reductions;
the sale of delinquent real property tax receivables; discretionary transfers
from the 1993 fiscal year; reduced debt ser- vice costs, resulting from
refinancings and other actions; proposed increased Federal assistance; a
proposed continuation of the personal income tax surcharge; proposed increased
State aid; and various revenue actions.
The City Plan also sets forth projections for the 1995 through 1997
fiscal years and outlines a proposed gap-closing program to close projected
budget gaps of $1.3 billion, $1.8 billion and $2.0 billion for the 1995 through
1997 years, respectively. These projections take into account expected
increases in Federal and State assistance. Various actions proposed in the City
Plan, including the proposed continuation of the personal income tax surcharge
and the proposed increase in State aid, are subject to approval by the Governor
and the State Legislature, and the proposed increase in Federal aid is subject
to approval by Congress and the President. The State Legislature has failed to
approve the similar proposals for State assistance in previous sessions,
thereby increasing the uncertainty as to the receipt of the State assistance
included in the City Plan. If these actions cannot be implemented, the City
will be required to take other actions to decrease expenditures or increase
revenues to maintain a balanced financial plan.
The City Plan reflects certain cost and expenditure increases
including increases in salaries and benefits paid to City employees pursuant to
certain collective bargaining agreements and the costs associated with various
lawsuits in which the City has been named as a defendant. While the ultimate
outcome and fiscal impact, if any, of the proceedings and claims are not
currently predictable, adverse determination in certain of them might have a
material adverse effect upon the City's ability to carry out the City Plan.
Ratings
As of August 12, 1993, Moody's rated the City's general obligation
bonds Baa1 and S&P rated such bonds A-. Such ratings reflect only the views of
Moody's and S&P, from which an explanation of the significance of such ratings
may be obtained. There is no assurance that such ratings will continue for any
given period of time or that they will be revised downward or withdrawn
entirely. Any such downward revision or withdrawal could have an adverse effect
on the market prices of bonds.
Outstanding Indebtedness
As of June 30, 1993, the City and the Municipal Assistance Corporation
for the City of New York had, respectively, $19.624 billion and $4.470 billion
of outstanding net long-term debt.
The City depends on the State for State aid both to enable the City to
balance its budget and to meet its cash requirements. If the State experiences
revenue shortfalls or spending increases beyond its projections during its 1994
fiscal year or subsequent years, such developments could result in reductions
in anticipated State aid to the City. In addition, there can be no assurance
that State budgets in future fiscal years will be adopted by the April 1
statutory deadline and that there will not be adverse effects on the City's
cash flow and additional City expenditures as a result of such delays.
The City's projections set forth in the City Plan are based on various
assumptions and contingencies which are uncertain and which may not
materialize. Changes in major assumptions could significantly affect the City's
ability to balance its budget as required by State law and to meet its annual
cash flow and financing requirements. Such assumptions and contingencies
include the timing of any regional and local economic recovery, the impact on
real estate tax revenues of the current downturn in the real
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estate market, the absence of wage increases for City employees in excess of
the increases assumed in the City Plan, employment growth, provision of State
and Federal aid and mandate relief, State legislative approval of future State
budgets, adoption of City budgets by the New York City Council, and approval by
the Governor or the State Legislature of various other actions proposed in the
City Plan.
Implementation of the City Plan is also dependent upon the City's
ability to market its securities successfully in the public credit markets. The
City's financing program for fiscal years 1994 through 1997 contemplates the
issuance of $10.8 billion of general obligation bonds primarily to reconstruct
and rehabilitate the City's infrastructure and physical assets and to make
capital investments. In addition, the - -City issues revenue and tax
anticipation notes to finance its seasonal working capital requirements. The
success of projected public sales of City bonds and notes will be subject to
prevailing market conditions, and no assurance can be given that such sales
will be completed. If the City were unable to sell its general obligation bonds
and notes, it would be prevented from meeting its planned operating and capital
expenditures.
The City Comptroller and other agencies and public officials have
issued reports and made public statements which, among other things, state that
projected revenues may be less and future expenditures may be greater than
forecast in the City Plan. In addition, the Control Board staff and others have
questioned whether the City has the capacity to generate sufficient revenues in
the future to meet the costs of its expenditure increases and to provide
necessary services. It is reasonable to expect that such reports and statements
will continue to be issued and to engender public comment.
Litigation. The City is a defendant in a significant number of
lawsuits. Such litigation includes, but is not limited to, routine litigation
incidental to the performance of its governmental and other functions, actions
commenced and claims asserted against the City arising out of alleged
constitutional violations, alleged torts, alleged breaches of contracts and
other violations of law and condemnation proceedings and other tax and
miscellaneous actions. While the ultimate outcome and fiscal impact, if any, on
the proceedings and claims are not currently predictable, adverse determination
in certain of them might have a material adverse effect upon the City's ability
to carry out the City Plan. As of June 30, 1992, the City estimated its
potential future liability on account of all outstanding claims to be
approximately $2.3 billion.
NEW YORK STATE
Recent Developments. The State has faced serious financial
difficulties in recent years. The effect of the national recession has been
more severe in the State than in other parts of the nation, and the 1993-94 New
York State Financial Plan (the "State Plan") is based on an economic projection
that the State will perform more poorly than the nation as a whole. Although
real gross domestic product grew modestly during calendar year 1992 and is
expected to show increased growth in calendar year 1993, preliminary data
indicate that the State's economy, as measured by employment, began to grow
during the first part of calendar year 1993. Many uncertainties exist in
forecasts of both the national and State economies, including consumer
attitudes toward spending, Federal financial and monetary policies, the
availability of credit and the condition of the world economy, which could have
an adverse effect on the State. There can be no assurance that the State
economy will not experience worse-than-predicted results in the 1993-94 fiscal
year, with corresponding material and adverse effects on the State's
projections of receipts and disbursements.
1993-94 Fiscal Year. The State completed its 1993 fiscal year with a
cash-basis positive balance of $671 million in the State's General Fund (the
major operating fund of the State). The State's 1994 fiscal year budget, as
enacted, projects a balanced General Fund.
The State Plan projects General Fund receipts and transfers from other
funds at $32.367 billion and disbursements and transfers to other funds at
$32.300 billion. Excess receipts of $67 million will be used for a required
repayment to the State's Tax Stabilization Reserve Fund. In comparison to the
recommended 1993-94 Executive Budget, released by the Governor in early 1993,
the 1993-94 State budget, as enacted, reflects increases in both receipts and
disbursements in the General Fund of $811 million. The $811 million increase in
projected receipts reflects many factors and assumptions, including (i)
improving economic conditions and higher-than-expected tax collections, (ii)
improved 1992-93 results,
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(iii) additional payments from the Federal government to reimburse the State
for the cost of providing indigent medical care, (iv) the payment of additional
personal income tax refunds in the 1992-93 fiscal year which would otherwise
have been paid in fiscal year 1993-94; offset by revenue-raising
recommendations in the Executive Budget that were not enacted and thus are not
included in the State Plan. The $811 million increase in projected
disbursements reflects (i) an increase in projected school-aid payments, (ii)
an increase in projected payments for Medicaid assistance and other social
service programs, (iii) additional spending on the judiciary and criminal
justice, (iv) a net increase in projected disbursements for all other programs
and purposes, and (v) establishment of a new contingency reserve.
There can be no assurance that the State will not face substantial
potential budget gaps resulting from a significant disparity between tax
revenues projected from a lower recurring receipts base and the spending
required to maintain State programs at current levels. To address any potential
budgetary imbalance, the State may need to take significant actions to align
recurring receipts and disbursements in future fiscal years.
New York Local Government Assistance Corporation. In 1990, as part of
a state fiscal reform program, legislation was enacted creating the New York
Loan Government Assistance Corporation ("LGAC"), a public benefit corporation
empowered to issue long-term obligations to fund certain payments to local
governments traditionally funded through the State's annual seasonal borrowing.
The legislation empowered LGAC to issue bonds and notes in an amount not in
excess of $4.7 billion (exclusive of certain refunding bonds) plus certain
other amounts. Over a period of years, the issuance of those long-term
obligations, which will be amortized over no more than 30 years, is expected to
result in eliminating the need for continuing short-term seasonal borrowing for
those purposes. The legislation also imposed a cap on the annual seasonal
borrowing of the State at $4.7 billion, less net proceeds of bonds issued by
LGAC, except in cases where the Governor and the legislative leaders have
certified both the need for additional borrowing and provided a schedule for
reducing it to the cap. If borrowing above the cap is thus permitted in any
fiscal year, it is required by law to be reduced to the cap by the fourth
fiscal year after the limit was first exceeded. As of July 1, 1993, LGAC had
issued its bonds to provide net proceeds of approximately $3.680 billion. LGAC
has been authorized to issue its bonds to provide net proceeds of up to an
additional $703 million during the State's 1993-94 fiscal year.
Composition of State Cash Receipts and Disbursements. Substantially
all State non-pension financial operations are accounted for in the State's
governmental funds group. Governmental funds include the General Fund, which
receives all income not required by law to be deposited in another fund and
which for the State's 1993-94 fiscal year comprises approximately 52% of total
projected governmental fund receipts; Special Revenue Funds, which receive the
preponderance of moneys received by the State from the Federal government and
other income the use of which is legally restricted to certain purposes and
which comprised approximately 39% of total projected governmental funds
receipts in the 1993-94 fiscal year; Capital Projects Funds, used to finance
the acquisition and construction of major capital facilities by the State and
to aid in certain of such projects conducted by local governments or public
authorities; and Debt Service Funds, which are used for the accumulation of
moneys for the payment of principal of and interest on long-term debt and to
meet lease-purchase and other contractual-obligation commitments. Receipts in
Capital Projects and Debt Service Funds comprise an aggregate of approximately
9% of total projected governmental funds receipts in the 1993-94 fiscal year.
A legislative change implemented in August 1990 affects the way in
which a portion of the State's sales and use tax collections are recorded as
receipts in the General Fund. Pursuant to the legislation creating LGAC, the
Comptroller is required to credit the equivalent of one percentage point of the
four percent sales and use tax collections to the Local Government Assistance
Tax Fund (the "Tax Fund"), which is a Debt Service Fund, for purposes of making
payments to LGAC to provide for the payment of debt service on its bonds and
notes. To the extent that these moneys are not necessary for payment to LGAC,
they are transferred from the Tax Fund to the General Fund and are reported in
the General Fund as a transfer from other funds, rather than as sales and use
tax receipts. During the State's 1991-92 and 1992-93 fiscal years $1.435
billion and $1.504 billion, respectively, in sales and use tax receipts were
credited to the Tax Fund, and $1.527 billion is estimated to be credited to the
Tax Fund during the State's 1993-94 fiscal year. For the 1991-92 fiscal year,
the amount transferred to the General Fund from the Tax Fund was $1.316
billion, after providing for the payment of $119 million to LGAC for the
purpose of
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meeting debt service on its bonds and its other cash requirements. For the
1992-93 fiscal year, $1.280 billion was transferred to the General Fund from
the Tax Fund after providing for payment of $224 million to LGAC for debt
service and other cash requirements, while $1.260 billion is estimated to be
transferred in 1993-94, after payment of $267 million to LGAC for debt service
and other cash requirements.
The enacted 1993-94 Executive Budget includes several changes in the
manner in which General Fund tax receipts are recorded. Receipts from user
taxes and fees are reduced by approximately $377 million to reflect receipts
that are dedicated for highway and bridge capital purposes, which are to be
deposited in the Capital Projects Funds. Also, business taxes are reduced by
approximately $180 million to reflect tax receipts that are dedicated for
transportation purposes and which will be deposited in the Special Revenue and
Capital Project Funds.
Authorities. The fiscal stability of the State is related to the
fiscal stability of its Authorities, which generally have responsibility for
financing, constructing and operating revenue-producing public benefit
facilities. Authorities are not subject to the constitutional restrictions on
the incurrence of debt which apply to the State itself, and may issue bonds and
notes within the amounts of, and as otherwise restricted by, their legislative
authorization. As of September 30, 1992, the latest data available, there were
18 Authorities that had outstanding debt of $100 million or more. The aggregate
outstanding debt, including refunding bonds, of these 18 Authorities was $62.2
billion as of September 30, 1992, of which approximately $8.2 billion was moral
obligation debt and approximately $17.1 billion was financed under lease-
purchase or contractual-obligation financing arrangements.
Authorities are generally supported by revenues generated by the
projects financed or operated, such as fares, user fees on bridges, highway
tolls and rentals for dormitory rooms and housing. In recent years, however,
the State has provided financial assistance through appropriations, in some
cases of a recurring nature, to certain of the 18 Authorities for operating and
other expenses and, in fulfillment of its commitments on moral obligation
indebtedness or otherwise, for debt service. This operating assistance is
expected to continue to be required in future years.
The State's experience has been that if an Authority suffers serious
financial difficulties, both the ability of the State and the Authorities to
obtain financing in the public credit markets and the market price of the
State's outstanding bonds and notes may be adversely affected. The New York
State Housing Finance Agency ("HFA") and the New York State Urban Development
Corporation ("UDC") have in the past required substantial amounts of assistance
from the State to meet debt service costs or to pay operating expenses. Further
assistance, possibly in increasing amounts, may be required for these, or
other, Authorities in the future. In addition, certain statutory arrangements
provide for State local assistance payments otherwise payable to localities to
be made under certain circumstances to certain Authorities. The State has no
obligation to provide additional assistance to localities whose local
assistance payments have been paid to Authorities under these arrangements.
However, in the event that such local assistance payments are so diverted, the
affected localities could seek additional State funds.
Ratings . On June 6, 1990, Moody's changed its ratings on all the
State's outstanding general obligation bonds from A1 to A. On March 26, 1990,
Standard & Poor's changed its ratings of all of the State's outstanding general
obligation bonds from AA- to A. On January 13, 1992, Standard & Poor's changed
its ratings of all of the State's outstanding general obligation bonds from A
to A-. Ratings reflect only the respective views of such organizations, and an
explanation of the significance of such ratings must be obtained from the
rating agency furnishing the same. There is no assurance that a particular
rating will continue for any given period of time or that any such rating will
not be revised downward or withdrawn entirely if, in the judgment of the agency
originally establishing the rating, circumstances so warrant. A downward
revision or withdrawal of such ratings, or either of them, may have an effect
on the market price of the State Municipal Securities in which the New York
Fund invests.
General Oligation Debt. As of March 31, 1993, the State had
approximately $5.132 billion in general obligation bonds, excluding refunding
bonds, and $294 million in bond anticipation notes outstanding. On May 4, 1993,
the State issued $850 million in tax and revenue anticipation notes which will
mature on December 31, 1993. Principal and interest due on general obligation
bonds and interest due on bond anticipation notes and on tax and revenue
anticipation notes were $890.0 million and $818.8 million for the 1991-92 and
1992-93 fiscal years, respectively, and are estimated to be $789.1 million for
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the State's 1993-94 fiscal year, not including interest on refunding bonds,
issued in July 1992, to the extent that such interest is to be paid from
escrowed funds.
Litigation. The State is a defendant in numerous legal proceedings
pertaining to matters incidental to the performance of routine governmental
operations. Such litigation includes, but is not limited to, claims asserted
against the State arising from alleged torts, alleged breaches of contracts,
condemnation proceedings and other alleged violations of State and Federal
laws.
Included in the State's outstanding litigation are a number of cases
challenging the constitutionality or the adequacy and effectiveness of a
variety of significant social welfare programs primarily involving the State's
mental hygiene programs. Adverse judgments in these matters generally could
result in injunctive relief coupled with prospective changes in patient care
which could require substantial increased financing of the litigated programs
in the future. Because of the prospective nature of these matters, no provision
for this potential exposure has been made in the State's audited financial
statements for the 1991-92 fiscal year.
As a result of the United States Supreme Court decision in the case of
State of Delaware v. State of New York , the State may be required to make
certain significant payments during the 1993-94 fiscal year or thereafter.
Adverse developments in any of these proceedings or the initiation of
new proceedings could affect the ability of the State to maintain a balanced
State Plan. In its audited financial statements for the 1991-92 fiscal year,
the State reported its estimated liability for awarded and anticipated
unfavorable judgments as $489 million.
Other Localities. Certain localities in addition to the City could
have financial problems leading to requests for additional State assistance
during the State's 1993-94 fiscal year and thereafter. The potential impact on
the State of such actions by localities is not included in the projections of
the State receipts and disbursements in the State's 1993-94 fiscal year.
Fiscal difficulties experienced by the City of Yonkers ("Yonkers")
resulted in the creation of the Financial Control Board for the City of Yonkers
(the "Yonkers Board") by the State in 1984. The Yonkers Board is charged with
oversight of the fiscal affairs of Yonkers. Future actions taken by the
Governor -or the State Legislature to assist Yonkers could result in allocation
of State resources in amounts that cannot yet be determined.
SPECIAL INVESTMENT CONSIDERATIONS RELATING TO PENNSYLVANIA MUNICIPAL
OBLIGATIONS
The Prospectus sets forth certain general socio-economic and economic
information regarding the Commonwealth. The following information, which is
based principally on information drawn from recent Official Statements relating
to securities offerings by the Commonwealth, provides additional information
regarding the nature of investment securities that may be purchased.
STATE AND CERTAIN STATE-RELATED OBLIGATIONS
The Constitutional provisions pertaining to Commonwealth debt permit
the issuance of the following types of debt: (i) debt to suppress insurrection
or rehabilitate areas affected by disaster, (ii) electorate approved debt,
(iii) debt for capital projects, subject to an aggregate debt limit of 1.75
times the annual average tax revenues of the preceding five fiscal years, and
(iv) tax anticipation note debt payable in the fiscal year of issuance. All
debt except tax anticipation note debt must be amortized in substantial and
regular amounts.
The Commonwealth may incur debt to fund capital projects for community
colleges, highways, public improvements, transportation assistance, flood
control, redevelopment assistance, site development and the Pennsylvania
Industrial Development Authority. Before a project may be funded, it must be
itemized in a capital budget bill adopted by the General Assembly. An annual
capital budget bill states the maximum amount of debt for capital projects that
may be incurred during the current fiscal year for projects authorized in the
current or previous years' capital budget bills. Capital projects debt is
subject to
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a Constitutional limit on debt. Once capital projects debt has been authorized
by the necessary legislation, issuance authority rests with two of the Issuing
Officials (the Governor, the Auditor General and the State Treasurer), one of
whom must be the Governor.
The issuance of electorate approved debt is subject to the enactment of
legislation which places on the ballot the question of whether debt shall be
incurred. Such legislation must state the purposes for -which the debt is to be
authorized and, as a matter of practice, includes a maximum amount of funds to
be borrowed. Upon electorate approval and enactment of legislation implementing
the proposed debt-funded program, bonds may be issued. All such authorizing
legislation to date has given issuance authority to two of the Issuing
Officials, one of whom must be the Governor.
Outstanding general obligation debt totaled $5,039 million (of which
$3,644 million was for non-highway purposes) at June 30, 1993, an increase of
$163.7 million (but an increase of $253.2 million for non-highway purposes)
from June 30, 1992. Over the 10-year period ending June 30, 1993, total
outstanding general obligation debt increased at an annual rate below 1.2
percent. Within the most recent 5-year period, outstanding general obligation
debt has grown at an annual rate of 1.4 percent.
Certain state-created agencies have statutory authorization to incur
debt for which state appropriations to pay debt service thereon is not
required. The debt of these agencies is supported by assets of, or revenues
derived from the various projects financed and is not an obligation of the
Commonwealth. Some of these agencies, however, are indirectly dependent on
Commonwealth appropriations. These agencies, their purposes and their
outstanding debt are as follows:
Delaware River Joint Toll Bridge Commission ("DRJTBC"): The DRJTBC, a
public corporation of the Commonwealth and New Jersey, owns and operates
bridges across the Delaware River. Debt service on bonds is paid from tolls and
other revenues of the Commission. The DRJTBC had $58.4 million in bonds
outstanding as of June 30, 1993.
Delaware River Port Authority ("DRPA"): The DRPA, a public corporation
of the Commonwealth and New Jersey, operates several toll bridges over the
Delaware River and promotes the use of the Philadelphia-Camden port. Debt
service on bonds is paid from toll revenues and other revenues pledged by DRPA
to repayment of bonds. The DRPA had $239.2 million in revenue bond debt
outstanding on June 30, 1993.
Pennsylvania Economic Development Financing Authority ("PEDFA"): The
PEDFA was created in 1987 to offer pooled bond issues for both taxable and tax-
exempt bonds on behalf of local industrial and -commercial development
authorities for economic development projects. Bonds may be secured by loan
repayments and all other revenues of the PEDFA. The PEDFA had $336.3 million of
debt outstanding as of June 30, 1993.
Pennsylvania Energy Development Authority ("PEDA"): The PEDA was
created in 1982 to finance energy research projects, demonstration projects
promoting the production or conservation of energy and the promotion,
utilization and transportation of Pennsylvania energy resources. The
authority's funding is from appropriations and project revenues. Debt service
on bonds is paid from project revenues and other revenues pledged by PEDA to
repayment of bonds. The PEDA had $165.0 million in bonds outstanding as of June
30, 1993.
Pennsylvania Higher Education Assistance Agency ("PHEAA"): The PHEAA
makes or guarantees student loans to students or parents, or to lending
institutions or postsecondary institutions. Debt service on the bonds is paid
by loan interest and repayments and other agency revenues. The PHEAA had
$1,158.8 million in bonds outstanding as of June 30, 1993.
Pennsylvania Higher Education Facilities Authority ("PHEFA"): The PHEFA
is a public corporation of the Commonwealth established to finance college
facilities. As of June 30, 1993, the PHEFA had $1,795.5 million in revenue
bonds and notes outstanding payable from the lease rentals or loan repayments
of the projects financed. Some of the lessees or borrowers, although private
institutions, receive grants and subsidies from the Commonwealth.
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Pennsylvania Industrial Development Authority ("PIDA"): The PIDA is a
public corporation of the Commonwealth established for the purpose of financing
economic development. The PIDA had $266.3 million in revenue bond debt
outstanding on June 30, 1993, to which all of its revenues are pledged.
Pennsylvania Turnpike Commission ("PTC"): The PTC operates the
Pennsylvania Turnpike System ("System"). Its outstanding indebtedness, $1,162.0
million as of June 30, 1993, is payable from the net revenues of the System,
primarily toll revenues and rentals from leases and concessions.
Pennsylvania Infrastructure Investment Authority ("PIIA"): The PIIA was
created in 1988 to provide low interest rate loans and grants for the purpose
of constructing new and improving existing water supply and sewage disposal
systems to protect the health and safety of the citizens of the Commonwealth
and to promote economic development within the Commonwealth. Loans and grants
are available to local governments and, in certain circumstances, to private
companies. The PIIA bonds are secured by principal repayments and interest
payments on PIIA loans. The PIIA had $142.5 million revenue bonds outstanding
as of June 30, 1993.
State Public School Building Authority ("SPSBA"): The SPSBA finances
public school projects. Bonds issued by the SPSBA are supported by the lease
rental payments or loan repayments made to the SPSBA by local school districts
and the sponsors of community colleges. A portion of the funds appropriated
annually by the Commonwealth as aid to local school districts may be used by
them to pay such lease rental payments or loan repayments. The SPSBA had $304.6
million of revenue bonds outstanding on June 30, 1993.
"MORAL OBLIGATIONS"
Pennsylvania Housing Finance Agency ("PHFA"): The PHFA is a state-
created agency which provides financing for housing for lower and moderate
income families in the Commonwealth. The bonds, but not the notes, of the PHFA
are partially secured by a capital reserve fund required to be maintained by
the PHFA in an amount equal to the maximum annual debt service on its
outstanding bonds in any succeeding calendar year. The statute creating PHFA
provides that if there is a potential deficiency in the capital reserve fund or
if funds are necessary to avoid default on interest, principal or sinking fund
payments on bonds or notes of PHFA, the Governor, upon notification from the
PHFA, shall place in the budget of the Commonwealth for the next succeeding
year an amount sufficient to make up any such deficiency or to avoid any such
default. The budget as finally adopted by the General Assembly may or may not
include the amount so placed therein by the Governor. PHFA is not permitted to
borrow additional funds so long as any deficiency exists in the capital reserve
fund. As of June 30, 1993, PHFA had $2,079.5 million of revenue bonds and $9.5
million of notes outstanding.
The Hospitals and Higher Education Facilities Authority of Philadelphia
(the "Hospitals Authority"): The Hospitals Authority is a municipal authority
organized by the City of Philadelphia (the "City") to, inter alia , acquire and
prepare various sites for use as intermediate care facilities for the mentally
retarded. On -August 26, 1986, the Hospitals Authority issued $20.4 million of
bonds (the "Hospitals Authority Bonds") for such facilities for the City. The
Hospitals Authority Bonds are secured by leases with the City payable only from
project revenues and a debt service reserve fund. The Commonwealth's Department
of Public Welfare ("DPW") has agreed with the Hospitals Authority to request in
DPW's annual budget submission -to the Governor, an amount of funds sufficient
to alleviate any deficiency that may arise in the debt service reserve fund for
the Hospitals Authority Bonds. The budget as finally adopted may or may not
include the amount requested. If funds are paid to the Hospitals Authority, DPW
will obtain certain rights in the property financed with the Hospitals
Authority Bonds in return for such payment.
In response to a delay in the availability of billable beds and the
revenues from these beds to pay debt service on the Hospitals Authority Bonds,
PHFA agreed in June 1989 to provide a $2.2 million low-interest loan to the
Hospitals Authority. The loan enabled the Hospitals Authority to make all debt
service payments on the Hospitals Authority Bonds during 1990. Enough beds were
completed in 1991 to provide sufficient revenues to the Hospitals Authority to
meet its debt service payments and to begin repaying the loan from PHFA.
According to the Hospitals Authority, as of June 30, 1993, $1.86 million of the
loan principal was outstanding. DPW has agreed that the additional costs
arising from the PHFA loan will be reimbursed as necessary and reasonable costs
of the project.
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LOCAL GOVERNMENTAL UNIT AND RELATED AUTHORITY OBLIGATIONS
Various state statutes authorize local units of government (counties,
cities, school districts and the like) to issue general obligations and revenue
obligations, subject to compliance with the requirements of such statutes. In
addition, various statutes permit local government units to organize
authorities having the power to issue obligations which are not subject to debt
limits that may be applicable to the organizing governmental unit and which are
payable from assets of or revenues derived from projects financed by such
authorities. Such authorities include parking authorities, industrial
development authorities, redevelopment authorities, transportation authorities,
water and sewer authorities, and authorities to -undertake projects for
institutions of higher education and health care. Such obligations may
generally be affected by adverse changes in the economy of the area in which
such local government units or projects financed by them or by authorities
created by them are located, by changes in applicable federal, state or local
law or regulation, or by changes in levels of federal, state or local
appropriations, grants or subsidies to the extent such appropriations, grants
or subsidies directly or indirectly affect revenues of such issuers.
INVESTMENT RESTRICTIONS
===============================================================================
In addition to the investment restrictions enumerated in the
Prospectus, the investment restrictions listed below have been adopted by the
Fund, on behalf of each Series, as fundamental policies, which may not be
changed without the vote of a majority of the outstanding voting securities of
each Series, as defined in the Act. Such a majority is defined as the lesser of
(a) 67% of the shares of that Series present -at a meeting of shareholders, if
the holders of more than 50% of the outstanding shares of that Series are
present or represented by proxy or (b) more than 50% of the outstanding shares
of that Series. For purposes of the following restrictions and those recited in
the Prospectus: (a) an "issuer" of a security is the entity whose assets and
revenues are committed to the payment of interest and principal on that
particular security, provided that the securities guaranteed by separate
entities will be considered a separate security; (b) a "taxable security" is
any security the interest on which is subject to regular federal income tax;
and (c) all percentage limitations apply immediately after a purchase or
initial investment, and any subsequent change in any applicable percentage
resulting from market fluctuations or other changes in total or net assets does
not require elimination of any security from the portfolio.
The Fund, on behalf of any Series, may not:
1. Invest in common stock.
2. Invest in securities of any issuer if, to the knowledge of the
Fund, any officer or trustee of the Fund or any officer or director of the
Investment Manager owns more than 1/2 of 1% of the -outstanding securities of
such issuer, and such officers, trustees and directors who own more than 1/2 of
1% own in the aggregate more than 5% of the outstanding securities of such
issuer.
3. Purchase or sell real estate or interests therein (including
limited Partnership interests), although it may purchase securities secured by
real estate or interests therein.
4. Purchase or sell commodities except that the Fund, on behalf of
each Series, may purchase financial futures contracts and related options in
accordance with procedures adopted by the Trustees described in its Prospectus
and Statement of Additional Information.
5. Purchase oil, gas or other mineral leases, rights or royalty
contracts, or exploration or development programs.
6. Write, purchase or sell puts, calls, or combinations thereof except
options on futures contracts or options on debt securities.
7. Purchase securities of other investment companies, except in
connection with a merger, consolidation, reorganization or acquisition of
assets.
8. Borrow money, except that the Fund, on behalf of any Series, may
borrow from a bank for temporary or emergency purposes in amounts up to 5%
(taken at the lower of cost or current value) of the value of the total assets
of the Series (including the amount borrowed) less its liabilities (not
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including any borrowings but including the fair market value at the time of
computation of any senior securities then outstanding).
9. Pledge its assets or assign or otherwise encumber them except to
secure permitted borrowings. (For the purpose of this restriction, collateral
arrangements with respect to the writing of options and collateral arrangements
with respect to initial margin for futures are not deemed to be pledges of
assets and neither such arrangements nor the purchase or sale of futures are
deemed to be the issuance of a senior security as set forth in restriction 10.)
10. Issue senior securities as defined in the Act except insofar as the
Fund, on behalf of any Series, may be deemed to have issued a senior security
by reason of: (a) entering into any repurchase agreement; (b) purchasing any
securities on a when-issued or delayed delivery basis; or (c) borrowing money
in accordance with restrictions described above.
11. Make loans of money or securities, except: (a) by the purchase of
debt obligations in which the Fund may invest consistent with its investment
objective and policies; (b) by investment in repurchase agreements; and (c) by
lending its portfolio securities.
12. Make short sales of securities.
13. Purchase securities on margin, except for such short-term loans as
are necessary for the clearance of purchases of portfolio securities. The
deposit or payment by the Fund, on behalf of any Series, of initial or
variation margin in connection with futures contracts or related options
thereon is not considered the purchase of a security on margin.
14. Engage in the underwriting of securities, except insofar as the
Fund, on behalf of any Series, may be deemed an underwriter under the
Securities Act of 1933 in disposing of a portfolio security.
15. Invest for the purpose of exercising control or management of any
other issuer.
PORTFOLIO TRANSACTIONS AND BROKERAGE
===============================================================================
The Investment Manager is responsible for decisions to buy and sell
securities and commodities for each Series of the Fund, the selection of
brokers and dealers to effect the transactions, and the negotiation of
brokerage commissions, if any. The Fund expects that the primary market for the
securities in which it intends to invest will generally be the over-the-counter
market. Securities are generally traded in the over-the-counter market on a
"net" basis with dealers acting as principal for their own accounts without
charging a stated commission, although the price of the security usually
includes a profit to the -dealer. Options and futures transactions will usually
be effected through a broker and a commission will be charged. The Fund also
expects that securities for each Series will be purchased at times in
underwritten offerings where the price includes a fixed amount of compensation,
generally referred to as the underwriter's concession or discount. On occasion,
the Fund, on behalf of each Series, may also purchase certain money market
instruments directly from an issuer, in which case no commissions or discounts
are paid. For the fiscal period January 15, 1991 through November 30, 1991, and
for the fiscal years ended November 30, 1992 and 1993, the Fund paid no
brokerage commissions.
The Investment Manager currently serves as investment manager to a
number of clients, including other investment companies, and may in the future
act as investment manager or adviser to others. It is the practice of the
Investment Manager to cause purchase and sale transactions to be allocated
among the Fund and others whose assets it manages in such manner as it deems
equitable. In making such allocations among the Fund and other client accounts,
the main factors considered are the respective investment objectives, the
relative size of portfolio holdings of the same or comparable securities, the
availability of cash for investment, the size of investment commitments
generally held and the opinion of the persons responsible for managing the
porfolios of the Fund and other client accounts.
The policy of the Fund, regarding purchases and sales of securities for
each Series' portfolio, is that primary consideration be given to obtaining the
most favorable prices and efficient execution of transactions. In seeking to
implement the Fund's policies, the Investment Manager effects transactions with
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<PAGE>
those brokers and dealers who the Investment Manager believes provide the most
favorable prices and are capable of providing efficient executions. If the
Investment Manager believes such price and executions are obtainable from more
than one broker or dealer, it may give consideration to placing portfolio
transactions with those brokers and dealers who also furnish research and other
services to the Fund or the Investment Manager. Such services may include, but
are not limited to, any one or more of the following: information as to the
availability of securities for purchase or sale; statistical or factual
information or opinions pertaining to investment; wire services; and appraisals
or evaluations of portfolio securities.
The information and services received by the Investment Manager from
brokers and dealers may be of benefit to the Investment Manager in the
management of accounts of some of its other clients and may not, in every case,
benefit the Fund directly. While the receipt of such information and services
is useful in varying degrees and would generally reduce the amount of research
or services otherwise performed by the Investment Manager and thereby reduce
its expenses, it is of indeterminable value and the Fund will not reduce the
management fee each Series pays to the Investment Manager by any amount that
may be attributable to the value of such services.
Pursuant to an order of the Securities and Exchange Commission, the
Fund, on behalf of each Series, may effect principal transactions in certain
money market instruments with DWR. The Fund, on behalf of each Series, will
limit its transactions with DWR to U.S. Government and Government Agency
Securities, Bank Money Instruments (i.e. Certificates of Deposit and Bankers'
Acceptances) and Commercial Paper. Such transactions will be effected with DWR
only when the price available from DWR is better than that available from other
dealers.
Consistent with the policy described above, brokerage transactions in
securities and commodities listed on exchanges or admitted to unlisted trading
privileges may be effected through DWR. In order for DWR to effect portfolio
transactions for each Series of the Fund, the commissions, fees or other
remuneration received by DWR must be reasonable and fair compared to the
commissions, fees or other remuneration paid to other brokers in connection
with comparable transactions involving similar securities being purchased or
sold on an exchange during a comparable period of time. This standard would
allow DWR to receive no more than the remuneration which would be expected to
be received by an unaffiliated broker in a commensurate arms-length
transaction. Furthermore, the Trustees of the Fund, including a majority of the
Trustees who are not "interested" Trustees, have adopted procedures which are
reasonably designed to provide that any commissions, fees or other remuneration
paid to DWR are consistent with the foregoing standard. During the fiscal year
ended November 30, 1993, the Fund paid no brokerage commissions to DWR.
PURCHASE OF FUND SHARES
===============================================================================
As discussed in the Prospectus, the Fund offers its shares for sale to the
public through Dean Witter Distributors Inc. (the "Distributor"). The
Distributor, a Delaware corporation, is a wholly-owned subsidiary of DWDC,
which in turn is a wholly-owned subsidiary of Sears, Roebuck and Co. The
Distributor has entered into a selected dealer agreement with DWR, which
through its own sales organization, sells shares of each Series of the Fund. In
addition, the Distributor may enter into selected dealer agreements with other
selected broker-dealers. The Trustees of the Fund, including a majority of the
Trustees who are not, and were not at the time they voted, interested persons
of the Fund, as defined in the Act (the "Independent Trustees"), approved, at
their meeting held on October 30, 1992, a Distribution Agreement appointing the
Distributor exclusive Distributor of the Fund's shares and providing for the
Distributor to bear distribution expenses not borne by The Fund. At the same
meeting, the Trustees of the Fund, including all of the Independent Trustees,
approved a new Distribution Agreement between the Fund and the Distributor,
which took effect upon the Spin-off. The new Distribution Agreement is
substantively identical to the current Distribution Agreement in all material
respects, except for the dates of effectiveness. By its terms, the Distribution
Agreement has an initial term ending April 30, 1994, and provides that it will
remain in effect from year to year thereafter if approved by the Board.
The Distributor bears all expenses it may incur in providing services
under the Distribution Agreement. Such expenses include the payment of
commissions for sales of the Fund's shares and incentive compensation to
account executives. The Distributor will also pay certain expenses in
connection with
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<PAGE>
the distribution of the shares of each Series of the Fund, including the costs
of preparing, printing and distributing advertising or promotional materials,
and the costs of printing and distributing prospectuses -and supplements
thereto used in connection with the offering and sale of the Fund's shares. The
Fund bears the costs of initial typesetting, printing and distribution of
prospectuses and supplements thereto to shareholders. The Fund also will bear
the costs of registering the Fund and its shares under federal and state
securities laws. The Fund and the Distributor have agreed to indemnify each
other against certain liabilities, including liabilities under the Securities
Act of 1933, as amended. Under the Distribution Agreement, the Distributor uses
its best efforts in rendering services to the Fund, but in the absence of
willful misfeasance, bad faith, gross negligence or reckless disregard of its
obligations, the Distributor is not liable to the Fund or any of its
shareholders for any error of judgment or mistake of law or for any act or
omission or for any losses sustained by the Fund or its shareholders.
PLAN OF DISTRIBUTION
The Fund has adopted a Plan of Distribution pursuant to Rule 12b-1
under the Act (the "Plan"). The Plan was approved by the Trustees on December
11, 1990, and by DWR as the Fund's then sole shareholder on December 26, 1990,
whereupon the Plan went into effect. With respect to the Arizona Series, the
Plan was initially approved by the Trustees on April 16, 1991. The Plan was
approved by the shareholders of each Series of the Fund at a Special Meeting of
shareholders on June 24, 1992. The vote of the Trustees, which was cast in
person at a meeting called for the purpose of voting on such Plan, included a
majority of the Trustees who are not and were not at the time of their voting
interested persons of the Fund and who have and had at the time of their votes
no direct or indirect financial interest in the operation of the Plan (the
"Independent 12b-1 Trustees"). In making their decision to adopt the Plan, the
Trustees requested from DWR and received such information as they deemed
necessary to make an informed determination as to whether or not adoption of
the Plan was in the best interests of the shareholders of the Fund. After due
consideration of the information received, the Trustees, including the
Independent 12b-1 Trustees, determined that adoption of the Plan would benefit
the shareholders of the Fund.
At their meeting held on October 30, 1992, the Trustees of the Fund,
including all of the Independent 12b-1 Trustees, approved certain amendments to
the Plan which took effect in January, 1993 and were designed to reflect the
fact that upon the reorganization described above the share distribution
activities theretofore performed for the Fund by DWR were assumed by the
Distributor and DWR's sales activities are now being performed pursuant to the
terms of a selected dealer agreement between the Distributor -and DWR. The
amendments provide that payments under the Plan will be made to the Distributor
rather than to DWR as before the amendment, and that the Distributor in turn is
authorized to make payments to DWR, its affiliates or other selected broker-
dealers (or direct that the Fund pay such entities directly). The Distributor
is also authorized to retain part of such fee as compensation for its own
distribution- -related expenses.
The Fund is authorized to reimburse the Distributor for specific
expenses the distributor incurs or plans to incur in promoting the distribution
of the Fund's shares. Reimbursement is made through monthly payments in amounts
determined in advance of each fiscal quarter by the Trustees, including a
majority of the Independent 12b-1 Trustees. The amount of each monthly payment
may in no event exceed an amount equal to a payment at the annual rate of 0.15
of 1% of the average daily net assets of the shares of each Series of the Fund
during the month. Such payment is treated by each Series of the Fund as an
expense in the year it is accrued. No interest or other financing charges will
be incurred by the Distributor for which reimbursement payments under the Plan
will be made. In addition, no interest charges, if any, incurred on any
distribution expense incurred by the Distributor pursuant to the Plan, will be
reimbursable under the Plan.
The Distributor has informed the Fund that the fee payable by the Fund
each year pursuant to the Plan not to exceed to 0.15% of the Fund's average
daily net assets is characterized as a "service fee" under the Rules of Fair
Practice of the National Association of Securities Dealers, Inc. (of which the
Distributor is a member). The fee is a payment made for personal service and/or
the maintenance of shareholder accounts.
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<PAGE>
Under the Plan, the Distributor uses its best efforts in rendering
services to the Fund, but in the absence of willful misfeasance, bad faith,
gross negligence or reckless disregard of its obligations, the Distributor is
not liable to the Fund or any of its shareholders for any error of judgment or
mistake of law or for any act or omission or for any losses sustained by the
Fund or its shareholders.
The Arizona Series, California Series, Florida Series, Massachusetts
Series, Michigan Series, Minnesota Series, New Jersey Series, New York Series,
Ohio Series and Pennsylvania Series, paid a total of $70,686, $174,478,
$105,940, $21,891, $27,507, $12,828, $67,391, $19,811, $28,529 and $64,199,
respectively pursuant to the Plan of Distribution for the fiscal year ended
November 30, 1993. Such payment amounted to an annual rate of 0.15 of 1% of the
average daily net assets of each respective Series of the Fund (0.14% of the
daily net assets of the Arizona Series and the Minnesota Series). It is
estimated that the amount paid by the Fund for distribution was for expenses
which relate to compensation of sales personnel and associated overhead
expenses. The Distributor has informed the Fund that it received sales charges
on sales of the Fund's shares in the approximate amounts of $4,309,079,
$5,637,203 and $6,322,103 for the period January 15, 1991 through November 30,
1991 (commencement of operations) and the fiscal years ended 1992 and 1993,
respectively.
The Plan remained in effect until April 30, 1991, and provides that it
will continue in effect, from year to year thereafter provided such continuance
is approved annually by a vote of the Trustees, including a majority of the
Independent 12b-1 Trustees. At their meeting held on April 28, 1993, the
Trustees approved the most recent continuation of the Plan until April 30,
1994. At that meeting, the Trustees, including a majority of the Independent
12b-1 Trustees, also approved certain technical amendments to the Plan in
connection with recent amendments adopted by the National Association of
Securities Dealers, Inc. to its Rules of Fair Practice. Prior to approving the
continuation of the Plan, the Trustees requested and received from the
Distributor and reviewed all the information which they deemed necessary to
arrive at an informed determination. In making their determination to continue
the Plan, the Trustees considered: (1) the Fund's experience under the Plan and
whether such experience indicates that the Plan is operating as anticipated:
(2) the benefits the Fund had obtained, was obtaining and would be likely to
obtain under the Plan; and (3) what services had been provided and were
continuing to be provided under the Plan to the Fund and its shareholders.
Based upon their review, the Trustees of the Fund, including each of the
independent 12b-1 Trustees, determined that continuation of the Plan would be
in the best interest of the Fund and would have a reasonable likelihood of
continuing to benefit the Fund and its shareholders. In the Trustees' quarterly
review of the Plan, they will consider its continued appropriateness and the
level of compensation provided herein. An amendment to increase materially the
maximum amount authorized to be spent under the Plan and Agreement on behalf of
any Series must be approved by the shareholders of such Series, and all
material amendments to the Plan must be approved by the Trustees in the manner
described above. The Plan may be terminated on behalf of any Series at any
time, without payment of any penalty, by vote of the holders of a majority of
the Independent 12b-1 Trustees or by a vote of a majority of the outstanding
voting securities of such Series (as defined in the Act) on not more than 30
days written notice to any other party to the Plan. The authority to make
reimbursement payments to the Distributor automatically terminates in the event
of an assignment (as defined in the Act); however the Trustees' authority under
the Plan to utilize its assets to finance the distribution of its shares would
continue. After such an assignment, the Fund's authority to make payments to
its Distributor would resume, subject to certain conditions. So long as the
Plan is in effect, the selection or nomination of the Independent 12b-1
Trustees is committed to the discretion of the Independent 12b-1 Trustees.
Under the Plan, the Distributor provides each Series of the Fund, for
review by the Trustees, and the Trustees review, promptly after the end of each
fiscal quarter, a written report regarding the incremental distribution
expenses incurred by the Distributor on behalf of each Series of the Fund
during such fiscal quarter, which report includes (1) an itemization of the
types of expenses and the purposes therefor; (2) the amounts of such expenses;
and (3) a description of the benefits derived by each Series of the Fund. In
the Trustees' quarterly review of the Plan they consider its continued
appropriateness and the level of compensation provided therein.
No interested person of the Fund nor any Trustee of the Fund who is not
an interested person of the Fund, as defined in the Act, had any direct or
indirect financial interest in the operation of the Plan except to the extent
that the Distributor or certain of its employees may be deemed to have such an
interest as a result of benefits derived from the successful operation of the
Plan or as a result of receiving a portion of the amounts expended thereunder
by the Fund.
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<PAGE>
REDUCED SALES CHARGES
Right of Accumulation. As discussed in the Prospectus, investors may
combine the current value of shares purchased in separate transactions for
purposes of benefitting from the reduced sales charges available for purchases
of shares of any Series of the Fund totalling at least $25,000 in net asset
value. For example, if any person or entity who qualifies for this privilege
holds shares of any Series of the Fund having a current value of $5,000, and
purchases $20,000 of additional shares of any Series of the Fund, the sales
charge applicable to the $20,000 purchase would be 3.5% of the offering price.
For the purposes of this Right of Accumulation, the cumulative current
net asset value of any shares of a Series and shares of any other Series held
by the shareholder will be added to the value of shares of the Fund owned by
the shareholder in determining the sales charge applicable to any new purchases
of Fund shares.
The Distributor must be notified by the dealer or the shareholder at
the time a purchase order is placed that the purchase qualifies for the reduced
charge under the Right of Accumulation. Similar notification must be made in
writing by the dealer or the shareholder when such an order is placed by mail.
The reduced sales charge will not be granted if: (a) such notification is not
furnished at the time of the order; or (b) a review of the records of the
Distributor or Dean Witter Trust Company (the "Transfer Agent") fails to
confirm the investor's represented holdings.
Letter of Intent. As discussed in the prospectus under the caption
"Reduced Sales Charges," reduced sales charges are available to investors who
enter into a written Letter of Intent providing for the purchase, within a
thirteen-month period, of shares of any Series of the Fund from the Distributor
or from a single dealer which has entered into a Selected Dealer Agreement with
the Distributor.
A Letter of Intent permits an investor to establish a total investment
goal to be achieved by any number of purchases over a thirteen-month period.
Each purchase made during the period will receive the reduced sales commission
applicable to the amount represented by the goal, as if it were a single
purchase. A number of shares equal in value to 5% of the dollar amount of the
Letter of Intent will be held in escrow by the Transfer Agent, in the name of
the shareholder. The initial purchase under a Letter of Intent must be equal to
at least 5% of the stated investment goal.
The Letter of Intent does not obligate the investor to purchase, nor the Fund
to sell, the indicated amount. In the event the Letter of Intent goal is not
achieved within the thirteen-month period, the investor is required to pay the
difference between the sales charge otherwise applicable to the purchases made
during this period and sales charges actually paid. Such payment may be made
directly to the Distributor or, if not paid, the Distributor is authorized by
the shareholder to liquidate a sufficient number of his or her escrowed shares
to obtain such difference.
If the goal is exceeded and purchases pass the next sales charge level,
the sales charge on the entire amount of the purchase that results in passing
that level and on subsequent purchases will be subject to further reduced sales
in the same manner as set forth above under Right of Accumulation , but there
will be no retroactive reduction of sales charges on previous purchases. For
the purpose of determining whether the investor is entitled to a further
reduced sales charge applicable to purchases at or above a sales charge level
which exceeds the stated goal of a Letter of Intent, the cumulative current net
asset value of shares of any Series owned by the investor will be added to the
cost or net asset value of shares of any other Series owned by the investor.
However, the purchase of shares of any other Dean Witter Funds will not be
included in determining whether the stated goal of a Letter of Intent has been
reached.
At any time while a Letter of Intent is in effect, a shareholder may,
by written notice to the Distributor, increase the amount of the stated goal.
In that event, only shares purchased during the previous 90-day period and
still owned by the shareholder will be included in the new sales charge
reduction. The 5% escrow and minimum purchase requirements will be applicable
to the new stated goal. Investors electing to purchase shares of the Fund
pursuant to a Letter of Intent should carefully read such Letter of Intent.
DETERMINATION OF NET ASSET VALUE
As discussed in the Prospectus, portfolio securities (other than short-
term debt securities and futures and options) are valued for the Fund by an
outside independent pricing service approved by the
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<PAGE>
Trustees. The pricing service has informed the Fund that in valuing the
portfolio securities for each Series of the Fund it uses both a computerized
grid 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 portfolio securities for
each Series 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. The Trustees believe
that timely and reliable market quotations are generally not readily available
to the Fund for purposes of valuing tax-exempt securities and that the
valuations supplied by the pricing service, using the procedures outlined above
and subject to periodic review, are more likely to approximate the fair value
of such securities.
As stated in the Prospectus, short-term debt securities with remaining
maturities of sixty days or less at the time of purchase are valued at
amortized cost, unless the Trustees determine such does not reflect the
securities' market value, in which case these securities will be valued at
their fair value as determined by the Trustees. Other short-term debt
securities will be valued on a mark-to-market basis until such time as they
reach a remaining maturity of sixty days, whereupon they will be valued at
amortized cost using their value on the 61st day unless the Trustees determine
such does not reflect the securities' market value, in which case these
securities will be valued at their fair value as determined by the Trustees.
Listed options are valued at the latest sale price on the exchange on which
they are listed unless no sales of such options have taken place that day, in
which case they will be valued at the mean between their latest bid and asked
prices. Unlisted options are valued at the mean between their latest bid and
asked prices. Futures are valued at the latest sale price on the commodities
exchange on which they trade unless the Trustees determine such price does not
reflect their market value, in which case they will be valued at their fair
value as determined by the Trustees. All other securities and other assets are
valued at their fair value as determined in good faith under procedures
established by and under the supervision of the Trustees.
The net asset value per share of each Series will not be determined on
such federal and non-federal holidays as are observed by the New York Stock
Exchange. The New York Stock Exchange currently observes the following
holidays: New Year's Day; Presidents' Day; Good Friday; Memorial Day;
Independence Day; Labor Day; Thanksgiving Day; and Christmas Day.
SHAREHOLDER SERVICES
===============================================================================
Upon the purchase of shares of any Series of the Fund, a Shareholder
Investment Account is opened for the investor on the books of the Fund and
maintained by the Fund's Transfer Agent, Dean Witter Trust Company (the
"Transfer Agent"). This is an open account in which shares owned by the
investor are credited by the Transfer Agent in lieu of issuance of a share
certificate. If a share certificate is desired, it must be requested in writing
for each transaction. Certificates are issued only for full shares and may be
redeposited in the account at any time. There is no charge to the investor for
issuance of a certificate. Whenever a shareholder instituted transaction takes
place in the Shareholder Investment Account, the shareholder will be mailed a
confirmation of the transaction from the Fund or from DWR or another selected
broker-dealer.
Investment of Dividends or Distributions Received in Cash. Any
shareholder who receives a cash payment representing a dividend or capital
gains distribution may invest such dividend or distribution at net asset value
(without sales charge), next determined by returning the check or the proceeds
to the Transfer Agent within thirty days after the payment date. If the
shareholder returns the proceeds of a dividend or distribution, such funds must
be accompanied by a signed statement indicating that the proceeds constitute a
dividend or distribution to be invested. Such investment will be made at the
net asset value per share next determined after receipt of the check or
proceeds by the Transfer Agent.
Systematic Withdrawal Plan. A systematic withdrawal plan (the
"Withdrawal Plan") is available for shareholders who own or purchase shares of
any Series of the Fund having a minimum value of $10,000 -based upon the then
current offering price. The Withdrawal Plan provides for monthly or quarterly
(March, June, September and December) checks in any dollar amount, not less
than $25, or in any whole percentage of the account balance, on an annualized
basis.
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<PAGE>
The Transfer Agent acts as agent for the shareholder in tendering to
the Fund for redemption sufficient full and fractional shares to provide the
amount of the periodic withdrawal payment designated in the application. The
shares will be redeemed at their net asset value determined, at the
shareholder's option on the tenth or twenty-fifth day (or next following
business day) of the relevant month or quarter and normally a check for the
proceeds will be mailed by the Transfer Agent within five business days after
the date of redemption. The Withdrawal Plan may be terminated at any time by
the Fund.
Withdrawal plan payments should not be considered as dividends, yields
or income. If periodic withdrawal plan payments continuously exceed net
investment income and net capital gains, the shareholder's original investment
will be correspondingly reduced and ultimately eausted.
Each withdrawal constitutes a redemption of shares and any gain or loss
realized must be recognized for federal income tax purposes. Although the
shareholder may make additional investments of $2,500 or more under the
Systematic Withdrawal Plan, withdrawals made concurrently with purchases of
additional shares are inadvisable because of the sales charges applicable to
the purchase of additional shares.
Any shareholder who wishes to have payments under the Withdrawal Plan
made to a third party or sent to an address other than the one listed on the
account must send complete written instructions to the Transfer Agent to enroll
in the Withdrawal Plan. The shareholder's signature on such instructions must
be guaranteed by an eligible guarantor acceptable to the Transfer Agent
(shareholders should contact the Transfer Agent for a determination as to
whether a particular institution is such an eligible guarantor). A shareholder
may, at any time change the amount and interval of withdrawal payments through
his or her Account Executive or by written notification to the Transfer Agent.
In addition, the party and/or address to which checks are mailed may be changed
by written notification to the Transfer Agent, with signature guarantees
required in the manner described above. The shareholder may also terminate the
Systematic Withdrawal Plan at any time by written notice to the Transfer Agent.
In the event of such termination, the account will be continued as a regular
shareholder investment account. The shareholder may also redeem all or part of
the shares held in the Withdrawal Plan account (see "Redemptions and
Repurchases" in the Prospectus) at any time.
Direct Investments through Transfer Agent. As discussed in the
Prospectus, a shareholder may make additional investments in Fund shares at any
time by sending a check in any amount, not less than $100, payable to Dean
Witter Multi-State Municipal Series Trust (include name of Series), directly to
the Fund's Transfer Agent. After deduction of the applicable sales charge, the
balance will be applied to the purchase of shares of the respective Series at
the net asset value per share of that Series next computed after receipt of the
check or purchase payment by the Transfer Agent. The shares so purchased will
be credited to the investor's account.
EXCHANGE PRIVILEGE
As discussed in the Prospectus, the Fund makes available to its
shareholders an Exchange Privilege whereby shareholders of any Series of the
Fund may exchange their shares for shares of any other Series of the Fund, for
shares of other Dean Witter Funds sold with a front-end (at time of purchase)
sales charge ("FESC Funds"), for shares of Dean Witter Funds sold with a
contingent deferred (at time of purchase) sales charge ("CDSC Funds "), for
shares of Dean Witter Short-Term U.S. Treasury Trust, Dean Witter Limited Term
Municipal Trust, Dean Witter Short-Term Bond Fund and five Dean Witter Funds
which are money market funds (the foregoing eight non-CDSC funds are
hereinafter referred to as the "Exchange Funds"). Exchanges may be made after
the shares of the CDSC fund or FESC fund acquired by purchase (not by exchange
or dividend reinvestment) have been held for thirty days. There is no holding
period for exchanges of shares acquired by exchange or dividend reinvestment.
However, shares of CDSC funds, including shares acquired in exchange for shares
of FESC funds, may not be exchanged for shares of FESC funds. Thus,
shareholders who exchange their Fund shares for shares of CDSC funds may
subsequently exchange those shares for shares of other CDSC funds or Exchange
Funds but may not reacquire FESC fund shares by exchange. An exchange will be
treated for federal income tax purposes and applicable state income tax
purposes the same as a repurchase or redemption of shares, on which the
shareholder may realize a capital gain or loss.
37
<PAGE>
Any new account established through the Exchange Privilege will have
the same registration and cash dividend or dividend reinvestment plan as the
present account, unless the Transfer Agent receives written notification to the
contrary. For telephone exchanges, the exact registration of the existing
account and the account number must be provided.
Any shares held in certificate form cannot be exchanged but must be
forwarded to the Transfer Agent and deposited into the shareholder's account
before being eligible for exchange. (Certificates mailed in for deposit should
not be endorsed.)
The Transfer Agent acts as agent for shareholders of the Fund in
effecting redemptions of Fund shares and in applying the proceeds to the
purchase of other fund shares. In the absence of negligence on its part,
neither the Transfer Agent nor the Fund shall be liable for any redemption of
Fund shares caused by unauthorized telephone or telegraph instructions.
Accordingly, in such event the investor shall bear the risk of loss. The staff
of the Securities and Exchange Commission is currently considering the
propriety of such a policy.
With respect to the repurchase of shares of any Series of the Fund, the
application of proceeds to the purchase of new shares in the Fund or any other
of the funds and the general administration of the Exchange Privilege, the
Transfer Agent acts as agent for the Distributor and for the shareholder's
selected broker-dealer, if any, in the performance of such functions. The
Transfer Agent shall be liable for its own negligence and not for the default
or negligence of its correspondents or for losses in transit. The Fund shall
not be liable for any default or negligence of the Transfer Agent, the
Distributor or any selected broker-dealer.
The Distributor and any selected broker-dealer have authorized and
appointed the Transfer Agent to act as their agent in connection with the
application of proceeds of any redemption of Fund shares to the purchase of
shares of any other fund and the general administration of the Exchange
Privilege. No commission or discounts will be paid to the Distributor or any
selected broker-dealer for any transactions pursuant to this Exchange
Privilege.
Exchanges are subject to the minimum investment requirement and any
other conditions imposed by each fund. (The minimum initial investment is
$5,000 for Dean Witter Liquid Asset Fund Inc., Dean Witter Tax-Free Daily
Income Trust, Dean Witter New York Municipal Money Market Trust and Dean Witter
California Tax-Free Daily Income Trust although those funds may, at their
discretion, accept initial investments of as low as $1,000. The minimum initial
investment for Dean Witter Short-Term U.S. Treasury Trust is $10,000, although
that fund, in its discretion, may accept initial investments of as low as
$5,000. The minimum initial investment for all other Dean Witter Funds for
which the Exchange Privilege is available is $1,000.) Upon exchange into an
Exchange Fund, the shares of that fund will be held in a special Exchange
Privilege Account separately from accounts of those shareholders who have
acquired their shares directly from that fund. As a result, certain services
normally available to shareholders of those funds, including the check writing
feature, will not be available for funds held in that account.
The Fund and each of the other Dean Witter Funds may limit the number
of times this Exchange Privilege may be exercised by any investor within a
specified period of time. Also, the Exchange Privilege may be terminated or
revised at any time by the Fund and/or any of the Dean Witter Funds for which
shares of the Fund have been exchanged, upon such notice as may be required by
applicable regulatory agencies (presently sixty days' prior written notice for
termination or material revision), provided that six months' prior written
notice of termination will be given to the shareholders who hold shares of an
Exchange Fund, pursuant to this Exchange Privilege and provided further that
the Exchange Privilege may be terminated or materially revised without notice
at times (a) when the New York Stock Exchange is closed for other than
customary weekends and holidays, (b) when trading on that Exchange is
restricted, (c) when an emergency exists as result of which disposal by the
Fund of securities owned by it is not reasonably practicable or it is not
reasonably practicable for the Fund fairly to determine the value of its net
assets, (d) during any other period when the Securities and Exchange Commission
by order so permits (provided that applicable rules and regulations of the
Securities and Exchange Commission shall govern as to whether the conditions
prescribed in (b) or (c) exist) or (e) if the Fund would be unable to invest
amounts effectively in accordance with its investment objective, policies and
restrictions.
38
<PAGE>
For further information regarding the Exchange Privilege, shareholders
should contact their DWR account executive or the Transfer Agent.
REDEMPTIONS AND REPURCHASES
===============================================================================
Payment for Shares Redeemed or Repurchased. As discussed in the
Prospectus, payment for shares presented for repurchase or redemption will be
made by check within seven days after receipt by the Transfer Agent of the
certificate and/or written request in good order. The term "good order" means
that the share certificate, if any, and request for redemption, are properly
signed, accompanied by any documentation required by the Transfer Agent, and
bear signature guarantees when required by the Fund or the Transfer Agent. Such
payment may be postponed or the right of redemption suspended at times (a) when
the New York Stock Exchange is closed for other than customary weekends and
holidays, (b) when trading on that Exchange is restricted, (c) when an
emergency exists as a result of which disposal by the Fund of securities owned
by it is not reasonably practicable or it is not reasonably practicable for the
Fund fairly to determine the value of its net assets, or (d) during any other
period when the Securities and Exchange Commission by order so permits;
provided that applicable rules and regulations of the Securities and Exchange
Commission shall govern as to whether the conditions prescribed in (b) or (c)
exist. If the shares to be redeemed have recently been purchased by check
(including a certified or bank cashier's check), payment of redemption proceeds
may be delayed for the minimum time needed to verify that the check used for
investment has been honored (nor more than fifteen days from the time of
receipt of the check by the Transfer Agent). Shareholders maintaining margin
accounts with DWR or another selected broker-dealer are referred to their
account executive regarding restrictions on redemption of shares of the Fund
pledged in the margin accounts.
Involuntary Redemption. As described in the Prospectus, due to the
relatively high cost of handling small investments, the Fund reserves the right
to redeem, at net asset value, the shares of any shareholder whose shares have
a value of less than $100, or such lesser amount as may be fixed by the Board -
of Trustees. However, before the Fund redeems such shares and sends the
proceeds to the shareholder, it will notify the shareholder that the value of
the shares is less than $100 and allow him or her 60 days to make an additional
investment in an amount which will increase the value of his or her account to
$100 or more before the redemption is processed.
Reinstatement Privilege. As discussed in the Prospectus, a shareholder
who has had his or her shares redeemed or repurchased and has not previously
exercised this reinstatement privilege may, within thirty days after the
redemption or repurchase, reinstate any portion or all of the proceeds of such
redemption or repurchase in shares of the Series of the Fund held by the
shareholder at the net asset value (without sales charge) next determined after
a reinstatement request, together with the proceeds, is received by the
Transfer Agent.
Exercise of the reinstatement privilege will not affect the federal
income tax and state income tax treatment of any gain or loss realized upon the
redemption or repurchase, except that if the redemption or repurchase resulted
in a loss and reinstatement is made in shares of the Fund, some or all of the
loss, depending on the amount reinstated, will not be allowed as a deduction
for federal income tax and state personal income tax purposes but will be
applied to adjust the cost basis of the shares acquired upon reinstatement.
DIVIDENDS, DISTRIBUTIONS AND TAXES
===============================================================================
As stated in the Prospectus, each Series of the Fund intends to
distribute substantially all of its net investment income and all of its net
short-term capital gains, if any, and will determine whether to retain all or
part of any net long-term capital gains for reinvestment. If any such gains are
retained, each Series -of the Fund will pay federal income tax thereon, and
will notify shareholders that following such election by that Series, the
shareholders of that Series will be required to include such undistributed
gains in determining their taxable income and may claim their share of the tax
paid by that Series as a credit against their individual federal income tax
(but not the personal income tax of a particular state).
39
<PAGE>
As discussed in the Prospectus, each Series of the Fund may invest a
portion of its assets in certain "private activity bonds" issued after August
7, 1986. As a result, a portion of the exempt-interest dividends paid by each
Series of the Fund may be an item of tax preference to shareholders subject to
the federal alternative minimum tax. Certain corporations which are subject to
the alternative minimum tax may also have to include exempt-interest dividends
in calculating their alternative minimum taxable income in situations where the
"adjusted current earnings" of the corporation exceeds its alternative minimum
taxable income.
Each shareholder will be sent a summary of his or her account, at least
quarterly, including information as to reinvested dividends and capital gains
distributions. Share certificates for dividends or distributions will not be
issued unless a shareholder requests in writing that a certificate be issued
for a specific number of shares.
In computing interest income, each Series of the Fund will amortize any
premiums and original issue discounts on securities owned. Capital gains or
losses realized upon sale or maturity of such securities will be based on their
amortized cost.
Gains or losses on the sales of securities by each Series of the Fund
will be long-term capital gains or losses if the securities have been held by a
Series for more than twelve months. Gains or losses on the sale of securities
held for twelve months or less will be short-term capital gains or losses.
Gains and losses on the sale, expiration or other termination of options on
securities will generally be treated as gains and losses from the sale of
securities. Pursuant to present federal income tax laws, futures contracts held
by each Series of the Fund at the end of each fiscal year will be required to
be "marked to market", that is, treated as having been sold at their fair
market value at such date. Sixty percent of any gain or loss recognized on
these deemed sales will be treated as long-term capital gain or loss, and the
remainder will be treated as short-term capital gain or loss. Gains or losses
from options on futures and options on debt instruments will also generally be
treated as part short-term and part long-term capital gains or losses, unless
such gains or losses were incurred as part of a securities "straddle," in which
case the appropriate straddle rules of the Internal Revenue Code (the "Code")
would apply.
Each Series of the Fund has qualified and intends to remain qualified as a
regulated investment company under Subchapter M of the Code. If so qualified,
each Series will not be subject to federal income tax on its net investment
income and capital gains, if any, realized during any fiscal year to the extent
that it distributes such income and capital gains to its shareholders.
One of the requirements for regulated investment company status is that
at least 90% of a fund's gross income be derived from dividends, interest,
gains from the sale or other disposition of securities and certain other
related income. Another requirement for regulated investment company status is
that less than 30% of a fund's gross income can be derived from gains from the
sale or other disposition of securities held less than three months.
Accordingly, each Series of the Fund may be restricted in the writing of
options on securities held for less than three months, in the writing of
options which expire in less than three months, and in effecting closing
transactions with respect to call or put options which have been written or
purchased less than three months prior to such transactions. Each Series of the
Fund may also be restricted in its ability to engage in transactions involving
futures contracts.
As discussed in the Prospectus, each Series of the Fund intends to
qualify to pay "exempt-interest dividends" to its shareholders by maintaining,
as of the close of each quarter of its taxable year, at least 50% of the value
of its total assets in tax-exempt securities. An exempt-interest dividend is
that part of -dividend distributions made by any Series which consists of
interest received by that Series on tax-exempt securities upon which the
shareholder incurs no federal income taxes (apart from any possible application
of the alternative minimum tax).
Within 60 days after the end of its fiscal year, the Fund will mail to
shareholders of each Series a statement indicating the percentage of the
dividend distributions for such fiscal year which constitutes exempt-interest
dividends and the percentage, if any, that is taxable, and the percentage, if
any, of the exempt-interest dividends which constitutes an item of tax
preference, and to what extent the taxable portion is long-term capital gain,
short-term capital gain or ordinary income. These percentages should be applied
uniformly to all monthly distributions made during the fiscal year to determine
the proportion of
40
<PAGE>
dividends that is tax-exempt. The percentages may differ from the percentage of
tax-exempt dividend distributions for any particular month.
Shareholders will be subject to federal income tax on dividends paid
from interest income derived from taxable securities and on distributions of
net short-term capital gains. Such dividends and distributions are taxable to
the shareholder as ordinary dividend income regardless of whether the
shareholder receives such distributions in additional shares or in cash.
Distributions of long-term capital gains, if any, are taxable as long-term
gains, regardless of how long the shareholder has held Fund shares of any
Series and whether the distribution is received in additional shares or in
cash. Since each Series' income is expected to be derived entirely from
interest rather than dividends, none of such dividend distributions will be
eligible for the 70% dividends received deduction generally available to
corporations. Net long-term capital gains distributions are not eligible for
the dividends received deduction.
Any loss on the sale or exchange of shares of any Series of the Fund
which are held for six months or less is disallowed to the extent of the amount
of any exempt-interest dividends paid with respect to such shares. Treasury
Regulations may provide for a reduction in such required holding period. If a
shareholder receives a distribution that is taxed as long-term capital gain on
shares held for six months or less and sells those shares at a loss, the loss
will be treated as a long-term capital loss to the extent of the capital gains
distribution.
Interest on indebtedness incurred or continued by a shareholder to
purchase or carry shares of a Series of the Fund is not deductible to the
extent allocable to exempt-interest dividends of that Series of the Fund (which
allocation does not take into account capital gain dividends of that Series of
the Fund). Furthermore, entities or persons who are "substantial users" (or
related persons) of facilities financed by -industrial development bonds should
consult their tax advisers before purchasing shares of any Series of the Fund.
"Substantial user" is defined generally by Income Tax Regulation 1.103-11 (b)
as including a "non-exempt person" who regularly uses in a trade or business a
part of a facility financed from the proceeds of industrial development bonds.
Federal Income Tax Status. At November 30, 1993, the Florida Series
had net capital loss carryovers of approximately $131,200 of which $8,400,
which will be available through November 30, 1999, $28,800 will be available
through November 30, 2000 and $94,000 will be available through November 30,
2001 to offset future gains to the extent provided by regulations. During the
year ended November 30, 1993, the California Series, the Massachusetts Series,
the Michigan Series, the New York Series and the Pennsylvania Series utilized
all of their carryover losses of $66,900, $2,900, $8,400, $47,100 and $17,500,
respectively. Capital losses incurred after October 31, within the taxable year
are deemed to arise on the first business day of the Fund's next taxable year.
The Florida Series incurred and elected to defer a net capital loss of
approximately $5,400 during fiscal 1993. To the extent that this net capital
loss carryover is used to offset future capital gains, it is probable that the
gains so offset will not be distributed to shareholders.
From time to time, proposals have been introduced before Congress for
the purpose of restricting or eliminating the federal income tax exemption for
interest on municipal securities. It can be expected that similar proposals may
be introduced in the future. If such a proposal were enacted, the availability
of municipal securities for investment by each Series of the Fund could be
affected. In such event, the Fund would re-evaluate its investment objective
and policies.
Any dividends or capital gains distributions received by a shareholder
from any investment company will have the effect of reducing the net asset
value of the shareholder's stock in that fund by the exact amount of the
dividend or capital gains distribution. Furthermore, capital gains
distributions are, and some portion of the dividends may be, subject to income
tax. If the net asset value of the shares should be reduced below a
shareholder's cost as a result of the payment of taxable dividends or the
distribution of realized long-term capital gains, such payment or distribution
would be in part a return of capital but nonetheless taxable to the
shareholder. Therefore, an investor should consider the tax implications of
purchasing Fund shares immediately prior to a distribution record date.
The foregoing relates to federal income taxation in effect as of the
date of the Prospectus.
41
<PAGE>
The Fund is organized as a Massachusetts business trust. Under current law,
so long as it qualifies as a "regulated investment company" under the Internal
Revenue Code, the Fund itself is not liable for any income or franchise tax in
The Commonwealth of Massachusetts.
PERFORMANCE INFORMATION
===============================================================================
As discussed in the Prospectus, from time to time each Series of the Fund may
quote its "yield" and/or its "total return" in advertisements and sales
literature. The yield of each Series is calculated for any 30-day period as
follows: the amount of interest income for each security in a particular
Series' portfolio is determined in accordance with regulatory requirements; the
total for the entire portfolio constitutes the Series' gross income for the
period. Expenses accrued during the period are subtracted to arrive at "net
investment income". The resulting amount is divided by the product of the net
asset value per share of that Series on the last day of the period multiplied
by the average number of the Series' shares outstanding during the period that
were entitled to dividends. This amount is added to 1 and raised to the sixth
power. 1 is then subtracted from the result and the difference is multiplied by
2 to arrive at the annualized yield. For the 30 day period ended November 30,
1993, the yields, calculated pursuant to the formula described above, for the
Arizona Series, the California Series, the Florida Series, the Massachusetts
Series, the Michigan Series, the Minnesota Series, the New Jersey Series, the
New York Series, the Ohio Series and the Pennsylvania Series were 4.41%, 4.81%,
4.54%, 4.77%, 4.56%, 4.46%, 4.73%, 4.90%, 4.55% and 4.67% respectively. During
the period, the Investment Manager assumed certain expenses with respect to
each Series of the Fund. Had each Series borne these expenses for the period,
the yield for the 30-day period ending November 30, 1993 would have 4.29%,
4.73%, 4.39%, 4.48%, 4.30%, 3.87%, 4.57%, 4.68%, 4.35% and 4.47% respectively.
To determine interest income from debt obligations, a yield-to-maturity,
expressed as a percentage, is determined for obligations held at the beginning
of the period, based on the current market value of the security plus accrued
interest, generally as of the end of the month preceding the 30-day period, or,
for obligations purchased during the period, based on the cost of the security
(including accrued interest). The yield-to-maturity is multiplied by the market
value (plus accrued interest) for each security and the result is divided by
360 and multiplied by 30 days or the number of days the security was held
during the period, if less. Modifications are made for determining yield-to-
maturity on certain tax-exempt securities.
Each Series of the Fund may also quote a "tax-equivalent yield" determined
by dividing the tax-exempt portion of the quoted yield by 1 minus the stated
income tax rate and adding the result to the portion of the yield that is not
tax-exempt. The tax-equivalent yield for the Arizona Series, the California
Series, the Florida Series, the Massachusetts Series, the Michigan Series, the
Minnesota Series, the New Jersey Series, the New York Series, the Ohio Series
and the Pennsylvania Series based upon a combined Federal and respective State
personal income tax bracket of 40.48%, 43.04%, 36.00, 43.68%, 38.94%, 41.44%,
40.48%, 41.96%, 40.80% and 37.79% respectively for the 30 day period ended
November 30, 1992, were 7.41%, 8.44%, 7.09%, 8.47%, 7.47%, 7.62%, 7.95%, 8.44%,
7.69% and 7.51% respectively based upon the respective yields quoted above.
During the period, the Investment Manager assumed certain expenses with respect
to each Series of the Fund. Had each Series borne these expenses for the
period, the yield for the 30-day period ending November 30, 1993 would have
7.21%, 8.30%, 6.86%, 7.95%, 7.04%, 6.61%, 7.68%, 8.06%, 7.35% and 7.19%
respectively.
Each Series' "average annual total return" represents an annualization of
that Series' total return over a particular period and is computed by finding
the annual percentage rate which will result in the ending redeemable value of
a hypothetical $1,000 investment made at the beginning of a one, five or ten
year period, or for the period from the date of commencement of the Fund's
operations, if shorter than any of the foregoing. For the purpose of this
calculation, it is assumed that all dividends and distributions are reinvested.
The formula for computing the average annual total return involves a percentage
obtained by dividing the ending redeemable value by the amount of the initial
investment, taking a root of -the quotient (where the root is equivalent to the
number of years in the period) and subtracting 1 from the result.
The average annual total returns of the California Series, the Florida
Series, the Massachusetts Series, the Michigan Series, the Minnesota Series,
the New Jersey Series, the New York Series, the Ohio
42
<PAGE>
Series and the Pennsylvania Series for the period January 15, 1991
(commencement of operations) (May 1, 1991 for the Arizona Series) through
November 30, 1993 were 9.19%, 10.03%, 9.56%, 10.31%, 10.13%, 8.87%, 9.92%,
10.27%, 9.80% and 9.88% respectively, and for the year ended November 30, 1993
were 6.96%, 8.26%, 7.71%, 8.53%, 7.79%, 8.13%, 7.55%, 8.39%, 8.66% and 8.13%
respectively. During the period January 15, 1991 through November 30, 1993, the
Investment Manager assumed certain expenses and waived the compensation
provided for in its Management Agreement with respect to each Series of the
Fund. Had each Series borne these expenses and paid these fees during the
stated period, the average annual total return for the period January 15, 1991
(commencement of operations) (May 1, 1991 for the Arizona Series) through
November 30, 1993 would have been 8.37%, 9.37%, 8.66%, 8.71%, 8.97%, 6.19%,
9.03%, 8.32%, 7.34%, and 8.90% respectively, and for the year ended November
30, 1993 would have been 6.75%, 8.14%, 7.53%, 8.12%, 7.41%, 7.49%, 7.29%,
7.94%, 8.03%, and 7.94% respectively. Computations of average annual total
return for periods of less than one year represent an annualization of a
Series' actual total return for the applicable period. A Series' actual total
return for its first full year of operations cannot be predicted and therefore
is likely to be different from any such annualized computations.
In addition to the foregoing, each Series of the Fund may advertise its
total return over different periods of time by means of aggregate, average,
year-by-year or other types of total return figures. Such calculations may or
may not reflect the imposition of the maximum front-end sales charge. In
addition, each Series of the Fund may also compute its aggregate total return
for specified periods by determining the aggregate percentage rate which will
result in the ending value of a hypothetical $1,000 investment made at the
beginning of the period. For the purpose of this calculation, it is assumed
that all dividends and distributions are reinvested. The formula for computing
aggregate total return involves a percentage obtained by dividing the ending
value by the initial $1,000 investment and subtracting 1 from the result.
Based on the foregoing calculation, the total returns (without
deduction for applicable sales charge) for the Arizona Series, the California
Series, the Florida Series, the Massachusetts Series, the Michigan Series, the
Minnesota Series, the New Jersey Series, the New York Series, the Ohio Series
and the Pennsylvania Series for the period January 15, 1991 (May 1, 1991 for
the Arizona Series) through November 30, 1993 were 10.93%, 11.60%, 11.13%,
11.89%, 11.71%, 10.42%, 11.49%, 11.84%, 11.37% and 11.45% respectively, and for
the year ended November 30, 1993 were 11.42%, 12.77%, 12.20%, 13.06%, 12.28%,
12.64%, 12.03%, 12.91%, 13.19% and 12.64% respectively.
The Fund may also advertise the growth of the hypothetical investments
of $10,000, $50,000 and $100,000 in shares of any Series of the Fund by adding
1 to the respective Series' aggregate total return to date and multiplying by
$9,600, $48,375 or $97,250 ($10,000, $50,000 or $100,000 adjusted for a 4.0%,
3.5% and 2.75% sales charge). Investments of $10,000 adjusted for a 4.0% sales
charge in the Arizona Series, California Series, Florida Series, Massachusetts
Series, Michigan Series, Minnesota Series, New Jersey Series, New York Series,
Ohio Series and Pennsylvania Series at inception would have grown to $12,554,
$13,162, $13,002, $13,259, $13,197, $12,767, $13,123, $13,244, $13,083, and
$13,112, respectively, at November 30, 1993. An investment of $50,000 adjusted
for a 3.5% sales charge, in the Arizona Series, California Series, Florida
Series, Massachusetts Series, Michigan Series, Minnesota Series, New Jersey
Series, New York Series, Ohio Series and Pennsylvania Series from inception
would have grown to $63,097, $66,151, $65,350, $66,638, $66,329, $64,168,
$65,958, $66,566, $65,755, and $65,900, respectively, at November 30, 1993. An
investment of $50,000 adjusted for a 2.75% sales charge, in the Arizona Series,
California Series, Florida Series, Massachusetts Series, Michigan Series,
Minnesota Series, New Jersey Series, New York Series, Ohio Series and
Pennsylvania Series from inception would have grown to $127,174, $133,330,
$131,715, $134,312, $133,690, $129,333, $132,941, $134,166, $132,532, and
$132,824, respectively, at November 30, 1993.
Each Series of the Fund from time to time may also advertise its
performance relative to certain performance rankings and indexes compiled by
independent organizations.
43
<PAGE>
SHARES OF THE FUND
===============================================================================
Shareholders of each Series of the Fund are entitled to a full vote for
each full share held. The Trustees have been elected by the Shareholders of the
Fund. The Trustees themselves have the power to alter the number and the terms
of office of the Trustees, and they may at any time lengthen their own terms or
make their terms of unlimited duration and appoint their own successors,
provided that always at least a majority of the Trustees has been elected by
the shareholders of the Fund. Under certain circumstances the Trustees may be
removed by action of the Trustees. The shareholders also have the right under
certain circumstances to remove the Trustees. The voting rights of shareholders
are not cumulative, so that holders of more than 50 percent of the shares
voting can, if they choose, elect all Trustees being selected, while the
holders of the remaining shares would be unable to elect any Trustees.
The Fund is not required to hold Annual Meetings of Shareholders and in
ordinary circumstances the Fund does not intend to hold such meetings. The
Trustees may call Special Meetings of Shareholders for action by shareholder
vote as may be required by the Act or the Declaration of Trust.
The Declaration of Trust permits the Trustees to authorize the creation
of additional series of shares (the proceeds of which would be invested in
separate, independently managed portfolios) and additional classes of shares
within any series (which would be used to distinguish among the rights of
different categories of shareholders, as might be required by future
regulations or other unforeseen circumstances). However, the Trustees have not
presently authorized any such additional series or classes of shares.
The Declaration of Trust further provides that no Trustee, officer,
employee or agent of the Fund is liable to the Fund or to a shareholder, nor is
any Trustee, officer, employee or agent liable to any third persons in
connection with the affairs of the Fund, except as such liability may arise
from his/her or its own bad faith, willful misfeasance, gross negligence, or
reckless disregard of his/her or its duties. It also -provides that all third
persons shall look solely to the Fund's property for satisfaction of claims
arising in connection with the affairs of the Fund. With the exceptions stated,
the Declaration of Trust provides that -a Trustee, officer, employee or agent
is entitled to be indemnified against all liability in connection with the
affairs of the Fund.
The Fund shall be of unlimited duration subject to the provisions in
the Declaration of Trust concerning termination by action of the shareholders.
CUSTODIAN AND TRANSFER AGENT
===============================================================================
The Bank of New York, 110 Washington Street, New York, New York 10286
is the Custodian of the Fund's assets. Any Fund cash balances with the
Custodian in excess of $100,000 are unprotected by Federal deposit insurance.
Such balances may at times be substantial.
Dean Witter Trust Company, Two Montgomery Street, Jersey City, New
Jersey 07302 is the Transfer Agent of the Fund's shares and Dividend Disbursing
Agent for payment of dividends and distributions of Fund shares and Agent for
shareholders under various investment plans described herein. Dean Witter Trust
Company is an affiliate of Dean Witter InterCapital Inc., the Fund's Investment
Manager and of Dean Witter Distributors Inc., the Fund's Distributor. As
Transfer Agent and Dividend Disbursing Agent, Dean Witter Trust Company's
responsibilities include maintaining shareholder accounts; disbursing cash
dividends and distributions and reinvesting dividends and distributions;
processing account registration changes; handling purchase and redemption
transactions; mailing prospectuses and reports; mailing and tabulating proxies;
processing share certificate transactions; and maintaining shareholder records
and lists. For these services, Dean Witter Trust Company receives a per
shareholder account fee from the Fund.
INDEPENDENT ACCOUNTANTS
===============================================================================
Price Waterhouse serves as the independent accountants of the Fund. The
independent accountants are responsible for auditing the annual financial
statements of the Fund.
44
<PAGE>
REPORTS TO SHAREHOLDERS
===============================================================================
The Fund, on behalf of each Series, will send to shareholders, at least
semi-annually, reports showing each Series' portfolio and other information. An
annual report, containing financial statements audited by independent
accountants, together with their report thereon, will be sent to shareholders
each year.
The Fund's fiscal year ends on November 30. The financial statements of
the Fund must be -audited at least once a year by independent accountants whose
selection is made annually by the Fund's Trustees.
VALIDITY OF SHARES OF BENEFICIAL INTEREST
===============================================================================
The validity of shares offered by the Prospectus will be passed upon
for the Fund by Sheldon Curtis, Esq., who is an officer and General Counsel of
the Investment Manager and an officer and General Counsel of the Fund.
LEGAL COUNSEL
===============================================================================
Sheldon Curtis, Esq., who is an officer and the General Counsel of the
Investment Manager, is an officer and the General Counsel of the Fund.
EXPERTS
===============================================================================
The financial statements of the Fund included in this Statement of
Additional Information and incorporated by reference in the Prospectus have
been so included and incorporated in reliance on the report of Price
Waterhouse, independent accountants, given on the authority of said firm as
experts in auditing and accounting.
REGISTRATION STATEMENT
===============================================================================
This Statement of Additional Information and the Prospectus do not
contain all of the information set forth in the Registration Statement the Fund
has filed with the Securities and Exchange Commission. The complete
Registration Statement may be obtained from the Securities and Exchange
Commission upon payment of the fee prescribed by the rules and regulations of
the Commission.
45
<PAGE>
APPENDIX
===============================================================================
RATINGS OF INVESTMENTS
MOODY'S INVESTORS SERVICE INC. ("MOODY'S")
MUNICIPAL BOND RATINGS
Aaa Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally
referred to as "gilt edge." Interest payments are protected by a
large or by an exceptionally stable margin and principal is secure.
While the various protective elements are likely to change, such
changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are
generally known as high grade bonds. They are rated lower than the
best bonds because margins of protection may not be as large as in
Aaa securities or fluctuation of protective elements may be of
greater amplitude or there may be other elements present which make
the long-term risks appear somewhat larger than in Aaa securities.
A Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors
giving security to principal and interest are considered adequate,
but elements may be present which suggest a susceptibility to
impairment sometime in the future.
Baa Bonds which are rated Baa are considered as medium grade obligation;
i.e., they are neither highly protected nor poorly secured. Interest
payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such
bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.
Bonds rated Aaa, Aa, A and Baa are considered investment grade bonds.
Ba Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the
protection of interest and principal payments may be very moderate,
and therefore not well safeguarded during both good and bad times
over the future. Uncertainty of position characterizes bonds in this
class.
B Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or
of maintenance of other terms of the contract over any long period of
time may be small.
Caa Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to
principal or interest.
Ca Bonds which are rated Ca present obligations which are speculative in
a high degree. Such issues are often in default or have other marked
shortcomings.
C Bonds which are rated C are the lowest rated class of bonds, and
issues so rated can be regarded as having extremely poor prospects of
ever attaining any real investment standing.
Conditional Rating: Bonds for which the security depends upon the
completion of some act of the fulfillment of some condition are rated
conditionally. These are bonds secured by (a) earnings of projects under
construction, (b) earnings of projects unseasoned in operation experience, (c)
rentals which begin when facilities are completed, or (d) payments to which
some other limiting condition attaches. Parenthetical rating denotes probable
credit stature upon completion of construction or elimination of basis of
condition.
Rating Refinements: Moody's may apply numerical modifiers, 1, 2 and 3
in each generic rating classification from Aa through B in its municipal bond
rating system. The modifier 1 indicates a mid-range ranking; and a modifier 3
indicates that the issue ranks in the lower end of its generic rating category.
46
<PAGE>
MUNICIPAL NOTE RATINGS
Moody's ratings for state and municipal notes and other short-term loans are
designated Moody's Investment Grade (MIG). MIG 1 denotes best quality and means
there is present strong protection from established cash flows, superior
liquidity support or demonstrated broad-based access to the market for
refinancing. MIG 2 denotes high quality and means that margins of protection
are ample although not as large as in MIG 1. MIG 3 denotes favorable quality
and means that all security elements are accounted for but that the undeniabale
strength of theprevious grades, MIG 1 and MIG 2, is lacking. MIG 4 denotes
adequate quality and means that the protection commonly regarded as required of
an investment security is present and that while the notes are not distinctly
or predominantly speculative, there is specific risk.
VARIABLE RATE DEMAND OBLIGATIONS
A short-term rating, in addition to the Bond or MIG ratings, designated VMIG
may also be assigned to an issue having a demand feature. The assignment of the
VMIG symbol reflects such characteristics as payment upon periodic demand
rather than fixed maturity dates and payment relying on external liquidity. The
VMIG rating criteria are identical to the MIG criteria discussed above.
COMMERCIAL PAPER RATINGS
Moody's Commercial Paper ratings are opinions of the ability to repay
punctually promissory obligations not having an original maturity in excess of
nine months. These ratings apply to Municipal commercial Paper as well as
taxable Commercial Paper. Moody's employs the following three designations, all
judged to be investment grade, to indicate the relative repayment capacity of
rated issuers: Prime-1, Prime-2, Prime-3.
Issuers rated Prime-1 have a superior capacity for repayment of short-
term promissory obligations. Issuers rated Prime-2 have a strong capacity for
repayment of short-term promissory obligations; and Issuers rated Prime-3 have
an acceptable capacity for repayment of short-term promissory obligations.
Issuers rated Not Prime do not fall within any of the Prime rating categories.
STANDARD & POOR'S CORPORATION ("STANDARD & POOR'S)
MUNICIPAL BOND RATINGS
A Standard & Poor's municipal rating is a current assessment of the
creditworthiness of an obligor with respect to a specific obligation. This
assessment may take into consideration obligors such as guarantors, insurers,
or lessees.
The ratings are based on current information furnished by the issuer or
obtained by Standard & Poor's from other sources it considers reliable. The
ratings are based, in varying degrees, on the follow- -ing considerations: (1)
likelihood of default-capacity and willingness of the obligor as to the timely
payment of interest and repayment of principal in accordance with the terms of
the obligation; (2) nature of and provisions of the obligation; and (3)
protection afforded by, and relative position of, the obligation in the event
of bankruptcy, reorganization or other arrangement under the laws of bankruptcy
and other laws affecting creditors' rights.
Standard & Poor's does not perform an audit in connection with any
rating and may, on occasion, rely on unaudited financial information. The
ratings may be changed, suspended or withdrawn as a result of changes in, or
unavailability of, such information, or for other reasons.
AAA Debt rated "AAA" has the highest rating assigned by Standard &
Poor's. Capacity to pay interest and repay principal is extremely
strong.
AA Debt rated "AA" has a very strong capacity to pay interest and repay
principal and differs from the highest-rated issues only in small
degree.
47
<PAGE>
A Debt rated "A" has a strong capacity to pay interest and repay
principal although they are somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than debt
in higher-rated categories.
BBB Debt rated "BBB" is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally eibits adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than for debt
in higher-rated categories.
Bonds rated AAA, AA, A and BBB are considered investment grade bonds.
BB Debt rated "BB" has less near-term vulnerability to default than
other speculative grade debt. However, it faces major ongoing
uncertainties or exposure to adverse business, financial or economic
conditions which could lead to inadequate capacity to meet timely
interest and principal payment.
B Debt rated "B" has a greater vulnerability to default but presently
has the capacity to meet interest payments and principal repayments.
Adverse business, financial or economic conditions would likely
impair capacity or willingness to pay interest and repay principal.
CCC Debt rated "CCC" has a current identifiable vulnerability to default,
and is dependent upon favorable business, financial and economic
conditions to meet timely payments of interest and repayments of
principal. In the event of adverse business, financial or economic
conditions, it is not likely to have the capacity to pay interest and
repay principal.
CC The rating "CC" is typically applied to debt subordinated to senior
debt which is assigned an - actual or implied "CCC" rating.
C The rating "C" is typically applied to debt subordinated to senior
debt which is assigned an actual or implied "CCC" debt rating.
Cl The rating "Cl" is reserved for income bonds on which no interest is
being paid.
D Debt rated "D" is in payment default. The `D' rating category is used
when interest payments or principal payments are not made on the date
due even if the applicable grace period has not expired, unless S&P
believes that such payments will be made during such grace period.
The `D' rating also will be used upon the filing of a bankruptcy
petition if debt service payments are jeopardized.
NR Indicates that no rating has been requested, that there is
insufficient information on which to base a rating or that Standard &
Poor's does not rate a particular type of obligation as a matter of
policy.
Bonds rated "BB", "B", "CCC", "CC" and "C" are regarded as having
predominantly speculative characteristics with respect to capacity to
pay interest and repay principal. "BB" indicates the least degree of
speculation and "C" the highest degree of speculation. While such
debt will likely have some quality and protective characteristics,
these are outweighed by large uncertainties or major risk exposures
to adverse conditions.
Plus (+) or minus(-): The ratings from "AA" to "CCC" may be modified
by the addition of a plus or minus sign to show relative standing
within the major ratings categories.
The foregoing ratings are sometimes followed by a "p" which indicates
that the rating is provisional. A provisional rating assumes the
successful completion of the project being financed by the bonds
being rated and indicates that payment of debt service requirements
is largely or entirely dependent upon the successful and timely
completion of the project. This rating, however, while addressing
credit quality subsequent to completion of the project, makes no
comment on the likelihood or risk of default upon failure of such
completion.
48
<PAGE>
MUNICIPAL NOTE RATINGS
Commencing on July 27, 1984, Standard & Poor's instituted a new rating
category with respect to certain municipal note issues with a maturity of less
than three years. The new note ratings denote the following:
SP-1 denotes a very strong or strong capacity to pay principal and
interest. Issues determined to possess overwhelming safety characteristics are
given a plus (+) designation (SP-1+).
SP-2 denotes a satisfactory capacity to pay principal and interest.
SP-3 denotes a speculative capacity to pay principal and interest.
COMMERICAL PAPER RATINGS
Standard and Poor's commerical paper rating is a current assessment of the
likelihood of timely payment of debt having an original maturity of no more
than 365 days. The commercial paper rating is not a recommendation to purchase
or sell a security. The ratings are based upon current information furnished by
the issuer or obtained by S&P from other sources it considers reliable. The
ratings may be changed, suspended, or withdrawn as a result of changes in or
unavailability of such information. Ratings are graded into group categories,
ranging from "A" for the highest quality obligations to "D" for the lowest.
Ratings are applicable to both taxable and tax-exempt commercial paper. The
categories are as follows:
Issues assigned A ratings are regarded as having the greatest capacity
for timely payment. Issues in this category are further refined with the
designation 1, 2 and 3 to indicate the relative degree of safety.
A-1 indicates that the degree of safety regarding timely payments is very
strong.
A-2 indicates capacity for timely payment on issues with this designation is
strong. However, the relative degree of safety is not as overwhelming as for
issues designated "A-1".
A-3 indicates a satisfactory capacity for timely payment. Obligations carrying
this designation are, however, somewhat more vulnerable to the adverse effects
of changes in circumstances than obligations carrying the higher designations.
49
<PAGE>
<TABLE>
DEAN WITTER MULTI-STATE MUNICIPAL SERIES TRUST
PORTFOLIO SUMMARY November 30, 1993
===================================================================================================================================
<CAPTION>
Arizona California Florida Massachusetts
Series Series Series Series
------- ---------- -------- --------------
<S> <C> <C> <C> <C>
Credit Ratings(1)
Aaa or AAA................ 32% 29% 55% 31%
Aa or AA.................. 39% 27% 13% 10%
A or A.................... 21% 32% 20% 43%
Baa or BBB................ 8% 12% 12% 16%
Average Weighted
Maturity.................. 22 Years 23 Years 23 Years 22 Years
Call Protection........... 8 Years 8 Years 8 Years 9 Years
Net Asset Value
November 30, 1992......... $10.18 $10.32 $10.29 $10.36
November 30, 1993......... $10.72 $11.00 $10.93 $11.08
Distributions(2)........... $0.595015 $0.611527 $0.588719 $0.604343
Total Return(3)
6 Months ended 11/30/93.. 4.15% 4.47% 4.60% 5.20%
12 Months ended 11/30/93.. 11.42% 12.77% 12.20% 13.06%
Tax Free Yield(4).......... 4.41% 4.81% 4.54% 4.77%
Taxable Equivalent Yield(5) 7.41% 8.44% 7.09% 8.47%
<FN>
- ------------
(1) Represents Moody's and Standard & Poor's ratings of the credit quality of the long-term bonds owned by the Fund.
(2) Includes all income dividends and capital gain distributions, if any, paid by each Fund Series for the year ended November 30,
1993.
(3) Total return figures represent the change in the Fund's total value for each period measured, taking into account the change
in price plus compounded, reinvested dividends.
(4) Yields were calculated for the 30-day period ended November 30, 1993, following the SEC yield formula.
(5) Assumes top federal and state income tax brackets, if any, and includes the effect of fully deducting state taxes on your
federal return.
</TABLE>
50
<PAGE>
<TABLE>
===================================================================================================================================
<CAPTION>
Michigan Minnesota New Jersey New York Ohio Pennsylvania
Series Series Series Series Series Series
-------- --------- ---------- -------- ------- ------------
<C> <C> <C> <C> <C> <C>
47% 26% 38% 8% 41% 42%
34% 29% 18% 21% 15% 22%
13% 36% 28% 40% 34% 18%
6% 9% 16% 31% 10% 18%
22 Years 22 Years 23 Years 23 Years 20 Years 19 Years
8 Years 8 Years 8 Years 8 Years 9 Years 8 Years
$10.41 $10.11 $10.35 $10.34 $10.25 $10.34
$11.05 $10.78 $10.94 $11.03 $10.97 $11.01
$0.609358 $0.580560 $0.627246 $0.618636 $0.602303 $0.609355
5.06% 5.13% 4.20% 4.35% 5.07% 4.76%
12.28% 12.64% 12.03% 12.91% 13.19% 12.64%
4.56% 4.46% 4.73% 4.90% 4.55% 4.67%
7.47% 7.62% 7.95% 8.44% 7.69% 7.51%
</TABLE>
51
<PAGE>
<TABLE>
DEAN WITTER MULTI-STATE MUNICIPAL SERIES TRUST
STATEMENT OF ASSETS AND LIABILITIES November 30, 1993
===================================================================================================================================
<CAPTION>
Arizona California Florida Massachusetts
Series Series Series Series
------- ---------- ----------- --------
<S> <C> <C> <C> <C>
ASSETS:
Investments in securities, at value (identified
cost $54,641,241, $128,415,319, $79,344,229,
$16,722,399, $20,160,251, $10,444,999,
$50,179,763, $14,617,135, $22,851,340, and
$48,144,174, respectively) (Note 1).................. $58,328,916 $136,292,620 $84,781,420 $17,701,558
Cash.................................................. 304,187 206,353 462,078 100,029
Receivables for:
Interest............................................. 1,259,929 2,436,345 1,290,308 385,686
Investments sold..................................... -- -- 85,000 65,000
Shares of beneficial interest sold................... 66,948 638,745 133,998 119,963
Deferred organizational expenses (Note 1)............. -- 7,046 7,046 7,046
Prepaid expenses...................................... 967 2,286 1,685 566
----------- ------------ ----------- -----------
TOTAL ASSETS...................................... 59,960,947 139,583,395 86,761,535 18,379,848
----------- ------------ ----------- -----------
LIABILITIES:
Payables for:
Investments purchased................................ -- -- 2,138,434 --
Shares of beneficial interest repurchased............ -- 103,179 21,100 --
Dividends to shareholders (Note 6).................... 34,301 82,434 48,660 10,586
Investment management fee payable (Note 2)............ 12,109 32,720 15,117 --
Plan of distribution fee payable (Note 3)............. 7,847 18,098 11,122 2,386
Accrued expenses (Note 4)............................. 29,483 38,472 32,987 23,296
----------- ------------ ----------- -----------
TOTAL LIABILITIES................................. 83,740 274,903 2,267,420 36,268
----------- ------------ ----------- -----------
NET ASSETS:
Paid in capital....................................... 56,124,222 129,684,215 79,193,604 17,196,504
Accumulated undistributed realized gain (loss)
on investments--net................................. 65,310 1,746,976 (136,680) 167,917
Unrealized appreciation on investments--net........... 3,687,675 7,877,301 5,437,191 979,159
----------- ------------ ----------- -----------
NET ASSETS........................................ $59,877,207 $139,308,492 $84,494,115 $18,343,580
=========== ============ =========== ===========
SHARES OF BENEFICIAL INTEREST OUTSTANDING............. 5,583,212 12,661,175 7,733,215 1,655,870
----------- ----------- ---------- -----------
NET ASSET VALUE PER SHARE (unlimited authorized
shares of $.01 par value)............................ $10.72 $11.00 $10.93 $11.08
====== ====== ====== ======
MAXIMUM OFFERING PRICE PER SHARE (net asset value
plus 4.17% of net asset value)*...................... $11.17 $11.46 $11.39 $11.54
====== ====== ====== ======
<FN>
* On sales of $25,000 or more, the offering price is reduced.
</TABLE>
<TABLE>
STATEMENT OF OPERATIONS For the year ended November 30, 1993
<CAPTION> Arizona California Florida Massachusetts
Series Series Series Series
------- ---------- ------- ------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
INTEREST INCOME..................................... $ 2,963,436 $ 7,236,390 $ 4,206,911 $ 882,562
----------- ------------ ----------- ----------
EXPENSES
Investment management fee (Note 2)................. 94,559 284,875 147,221 2,458
Plan of distribution fee (Note 3).................. 70,686 174,478 105,940 21,891
Professional fees.................................. 26,759 30,115 27,255 23,238
Transfer agent fees and expenses (Note 4).......... 17,757 29,445 23,024 5,264
Registration fees.................................. 13,270 15,696 13,802 7,394
Shareholder reports and notices.................... 7,381 5,262 9,225 2,242
Trustees' fees and expenses........................ 2,863 6,310 3,520 731
Organizational expenses (Note 1)................... -- 3,076 3,076 3,076
Other.............................................. 7,224 20,520 9,686 4,721
----------- ------------ ----------- ----------
TOTAL EXPENSES................................. 240,499 569,777 342,749 71,015
----------- ------------ ----------- ----------
INVESTMENT INCOME--NET..................... 2,722,937 6,666,613 3,864,162 811,547
----------- ------------ ----------- ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS--NET (NOTE 1):
Realized gain (loss) on investments--net........... 65,305 1,828,533 (90,829) 170,860
Change in unrealized appreciation on
investments--net................................. 2,294,142 5,043,740 3,872,974 702,398
----------- ------------ ----------- ----------
NET GAIN ON INVESTMENTS........................... 2,359,447 6,872,273 3,782,145 873,258
----------- ------------ ----------- ----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS................................ $ 5,082,384 $ 13,538,886 $ 7,646,307 $1,684,805
=========== ============ =========== ==========
See Notes to Financial Statements
</TABLE>
52
<PAGE>
<TABLE>
===================================================================================================================================
<CAPTION>
Michigan Minnesota New Jersey New York Ohio Pennsylvania
Series Series Series Series Series Series
------- ------- ------- ------- ------- -------
<C> <C> <C> <C> <C> <C>
$21,393,767 $11,002,142 $53,129,504 $15,543,915 $24,147,022 $51,233,965
310,637 314,361 78,234 145,821 126,609 1,124,792
315,170 198,120 1,014,253 245,357 370,817 810,898
-- -- -- -- -- 100,000
106,226 47,824 347,598 124,751 241,379 198,442
7,046 7,046 7,046 7,046 7,046 7,046
666 716 1,195 378 476 1,596
---------- ---------- ---------- ---------- ---------- ----------
22,133,512 11,570,209 54,577,830 16,067,268 24,893,349 53,476,739
---------- ---------- ---------- ---------- ---------- ----------
-- -- -- -- -- --
8,629 3,540 105 77,331 -- 25,182
12,388 6,225 31,553 9,628 13,596 30,487
1,959 -- 9,209 1,873 3,345 6,580
2,866 1,483 7,144 2,082 3,173 6,952
24,243 21,070 30,845 21,751 24,124 29,955
---------- ---------- ---------- ---------- ---------- ----------
50,085 32,318 78,856 112,665 44,238 99,156
---------- ---------- ---------- ---------- ---------- ----------
20,486,255 10,896,387 51,161,347 14,961,159 23,266,036 49,995,542
363,656 84,361 387,886 66,664 287,393 292,250
1,233,516 557,143 2,949,741 926,780 1,295,682 3,089,791
---------- ---------- ---------- ---------- ---------- ----------
$22,083,427 $11,537,891 $54,498,974 $15,954,603 $24,849,111 $53,377,583
=========== =========== =========== =========== =========== ===========
1,997,802 1,070,415 4,980,885 1,446,422 2,264,341 4,848,611
---------- ---------- ---------- ---------- ---------- ----------
$11.05 $10.78 $10.94 $11.03 $10.97 $11.01
====== ====== ====== ====== ====== ======
$11.51 $11.23 $11.40 $11.49 $11.43 $11.47
====== ====== ====== ====== ====== ======
<FN>
* On sales of $25,000 or more the offering price is reduced.
</TABLE>
<TABLE>
===================================================================================================================================
<CAPTION>
Michigan Minnesota New Jersey New York Ohio Pennsylvania
Series Series Series Series Series Series
------- ------- ------- -------- -------- --------
<C> <C> <C> <C> <C> <C>
$ 1,131,352 $ 519,716 $ 2,675,488 $ 820,598 $ 1,145,379 $ 2,598,246
---------- ---------- ---------- ---------- ---------- ----------
9,191 -- 72,074 2,933 13,156 69,372
27,507 12,828 67,391 19,811 28,529 64,199
24,170 19,851 26,553 19,851 23,318 24,762
9,529 2,729 18,650 4,701 7,996 17,007
5,971 1,423 13,195 8,563 6,099 10,565
3,850 360 7,539 1,857 3,360 6,889
930 207 2,262 441 963 1,538
3,076 3,076 3,076 3,076 3,076 3,076
5,669 2,024 6,880 3,198 5,865 8,875
---------- ---------- ---------- ---------- ---------- ----------
89,893 42,498 217,620 64,431 92,362 206,283
---------- ---------- ---------- ---------- ---------- ----------
1,041,459 477,218 2,457,868 756,167 1,053,017 2,391,963
---------- ---------- ---------- ---------- ---------- ----------
372,036 83,885 387,875 113,747 284,378 309,721
668,110 405,648 1,901,754 644,644 899,509 2,036,444
---------- ---------- ---------- ---------- ---------- ----------
1,040,146 489,533 2,289,629 758,391 1,183,887 2,346,165
---------- ---------- ---------- ---------- ---------- ----------
$ 2,081,605 $ 966,751 $ 4,747,497 $ 1,514,558 $ 2,236,904 $ 4,738,128
=========== =========== =========== =========== =========== ===========
</TABLE>
53
<PAGE>
<TABLE>
DEAN WITTER MULTI-STATE MUNICIPAL SERIES TRUST
STATEMENT OF CHANGES IN NET ASSETS
===================================================================================================================================
For the years ended November 30, 1993 and
November 30, 1992
<CAPTION>
Arizona Series California Series
---------------------- -------------------
1993 1992 1993 1992
---- ---- ---- ----
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Investment income--net................................ $ 2,722,937 $ 1,865,163 $ 6,666,613 $ 4,375,558
Realized gain (loss) on investments--net.............. 65,305 71,180 1,828,533 (79,570)
Change in unrealized appreciation on investments--net. 2,294,142 1,090,031 5,043,740 2,059,499
---------- ---------- ----------- -----------
Net increase in net assets resulting from operations 5,082,384 3,026,374 13,538,886 6,355,487
---------- ---------- ----------- -----------
Dividends and distributions to shareholders from:
Investment income--net................................ (2,722,937) (1,868,798) (6,666,613) (4,382,945)
Realized gain on investments--net..................... (67,643) -- -- (27,205)
---------- ---------- ----------- -----------
Total dividends and distributions................... (2,790,580) (1,868,798) (6,666,613) (4,410,150)
---------- ---------- ----------- -----------
Transactions in shares of beneficial interest:
Net proceeds from sales............................... 22,564,062 19,123,663 48,338,423 56,338,666
Reinvestment of dividends and distributions........... 1,500,480 1,016,483 3,677,922 2,474,060
Cost of shares repurchased............................ (5,291,203) (3,219,050) (15,184,188) (6,722,432)
---------- ---------- ----------- -----------
Transactions in shares of beneficial interest--
net increase....................................... 18,773,339 16,921,096 36,832,157 52,090,294
---------- ---------- ----------- -----------
Total increase...................................... 21,065,143 18,078,672 43,704,430 54,035,631
---------- ---------- ----------- -----------
NET ASSETS:
Beginning of period.................................... 38,812,064 20,733,392 95,604,062 41,568,431
---------- ---------- ----------- -----------
END OF PERIOD.......................................... $59,877,207 $38,812,064 $139,308,492 $95,604,062
========== =========== ============ ===========
SHARES ISSUED AND REPURCHASED:
Sold.................................................. 2,131,173 1,908,567 4,447,920 5,513,866
Issued in reinvestment of dividends and distributions. 137,235 101,454 337,857 242,165
Repurchased........................................... (497,023) (320,926) (1,386,260) (654,530)
---------- ---------- ----------- -----------
Net increase........................................ 1,771,385 1,689,095 3,399,517 5,101,501
========== ========== =========== ===========
</TABLE>
See Notes to Financial Statements
NOTES TO FINANCIAL STATEMENTS FOR ALL SERIES
===============================================================================
1. ORGANIZATION AND ACCOUNTING POLICIES--Dean Witter Multi-State Municipal
Series Trust (the "Fund") is registered under the Investment Company Act of
1940, as amended (the "Act"), as an open-end, non-diversified management
investment company, consisting of ten separate Series ("the Series"): the
Arizona Series, the California Series, the Florida Series, the Massachusetts
Series, the Michigan Series, the Minnesota Series, the New Jersey Series, the
New York Series, the Ohio Series, and the Pennsylvania Series. The Fund was
organized as a Massachusetts business trust on October 29, 1990 and the
California, Florida, Massachusetts, Michigan, Minnesota, New Jersey, New York,
Ohio, and the Pennsylvania Series commenced operations on January 15, 1991. The
Arizona Series commenced operations on April 30, 1991.
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 Fund's Trustees. The
pricing service has informed the Fund that in valuing the Fund's portfolio
securities, it uses both a computerized grid matrix of tax-exempt
54
<PAGE>
<TABLE>
===================================================================================================================================
<CAPTION>
Florida Series Massachusetts Series Michigan Series
---------------------- ---------------------- ----------------------
1993 1992 1993 1992 1993 1992
------- ------- ------- ------- ------- -------
<C> <C> <C> <C> <C> <C>
$ 3,864,162 $ 2,155,503 $ 811,547 $ 384,990 $ 1,041,459 $ 610,450
(90,829) (37,489) 170,860 (2,943) 372,036 (8,380)
3,872,974 1,293,565 702,398 216,710 668,110 419,849
----------- ---------- ----------- ---------- ---------- -----------
7,646,307 3,411,579 1,684,805 598,757 2,081,605 1,021,919
----------- ---------- ----------- ---------- ---------- -----------
(3,864,162) (2,158,548) (811,547) (385,581) (1,041,459) (611,615)
-- -- -- (14,602) -- (8,082)
----------- ---------- ----------- ---------- ---------- -----------
(3,864,162) (2,158,548) (811,547) (400,183) (1,041,459) (619,697)
----------- ---------- ----------- ---------- ---------- -----------
38,837,248 35,975,459 7,996,169 7,048,499 9,813,691 7,809,480
1,348,313 731,958 483,311 250,321 532,420 295,858
(11,033,570) (4,119,034) (1,122,022) (589,729) (3,112,259) (1,328,547)
----------- ---------- ----------- ---------- ---------- -----------
29,151,991 32,588,383 7,357,458 6,709,091 7,233,852 6,776,791
----------- ---------- ----------- ---------- ---------- -----------
32,934,136 33,841,414 8,230,716 6,907,665 8,273,998 7,179,013
----------- ---------- ----------- ---------- ---------- -----------
51,559,979 17,718,565 10,112,864 3,205,199 13,809,429 6,630,416
----------- ---------- ----------- ---------- ---------- -----------
$84,494,115 $51,559,979 $18,343,580 $10,112,864 $22,083,427 $13,809,429
=========== =========== =========== =========== =========== ===========
3,630,055 3,543,192 738,427 689,760 905,219 760,964
124,856 72,019 44,231 23,355 48,831 28,851
(1,030,156) (399,341) (103,229) (57,677) (282,640) (129,404)
----------- ---------- ----------- ---------- ---------- -----------
2,724,755 3,215,870 679,429 655,438 671,410 660,411
=========== ========== =========== ========== ========== ===========
</TABLE>
NOTES TO FINANCIAL STATEMENTS FOR ALL SERIES (continued)
===============================================================================
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.
B. Accounting for Investments--Security transactions are accounted for on the
trade date (date the order to buy or sell is executed). In computing net
investment income, the Fund amortizes premiums and original issue discounts.
Additionally, with respect to market discount on bonds purchased after April
30, 1993, a portion of any capital gain realized upon disposition is
recharacterized as taxable investment income. Realized gains and losses on
security transactions are determined on the identified cost method. Interest
income is accrued daily.
C. Federal Income Tax Status--It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its taxable and non-taxable income to its
shareholders. Accordingly, no federal income tax provision is required.
55
<PAGE>
<TABLE>
DEAN WITTER MULTI-STATE MUNICIPAL SERIES TRUST
STATEMENT OF CHANGES IN NET ASSETS (continued)
===================================================================================================================================
For the years ended November 30, 1993 and
November 30, 1992
<CAPTION>
Minnesota Series New Jersey Series
---------------------- -------------------
1993 1992 1993 1992
---- ---- ---- ----
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Investment income--net................................ $ 477,218 $ 277,806 $ 2,457,868 $ 1,501,389
Realized gain (loss) on investments--net.............. 83,885 8,427 387,875 102,268
Change in unrealized appreciation on investments--net. 405,648 115,125 1,901,754 796,267
---------- ---------- ---------- -----------
Net increase in net assets resulting from operations 966,751 401,358 4,747,497 2,399,924
---------- ---------- ---------- -----------
Dividends and distributions to shareholders from:
Investment income--net................................ (477,218) (278,328) (2,457,868) (1,504,213)
Realized gain on investments--net..................... -- -- (102,249) (89,848)
---------- ---------- ---------- -----------
Total dividends and distributions................... (477,218) (278,328) (2,560,117) (1,594,061)
---------- ---------- ---------- -----------
Transactions in shares of beneficial interest:
Net proceeds from sales............................... 5,407,008 3,551,230 24,886,881 17,286,675
Reinvestment of dividends and distributions........... 299,804 165,995 1,515,250 966,585
Cost of shares repurchased............................ (1,078,183) (552,022) (6,213,958) (2,748,154)
---------- ---------- ---------- -----------
Transactions in shares of beneficial interest--
net increase....................................... 4,628,629 3,165,203 20,188,173 15,505,106
---------- ---------- ---------- -----------
Total increase..................................... 5,118,162 3,288,233 22,375,553 16,310,969
---------- ---------- ---------- -----------
NET ASSETS:
Beginning of period.................................... 6,419,729 3,131,496 32,123,421 15,812,452
---------- ---------- ---------- -----------
END OF PERIOD.......................................... $11,537,891 $ 6,419,729 $54,498,974 $32,123,421
=========== =========== =========== ===========
SHARES ISSUED AND REPURCHASED:
Sold.................................................. 508,636 353,446 2,304,312 1,697,205
Issued in reinvestment of dividends and distributions. 28,188 16,561 139,917 88,618
Repurchased........................................... (101,542) (54,608) (568,527) (269,489)
---------- ---------- ---------- -----------
Net increase........................................ 435,282 315,399 1,875,702 1,516,334
========== ========== ========== ===========
</TABLE>
See Notes to Financial Statements
NOTES TO FINANCIAL STATEMENTS FOR ALL SERIES (continued)
===============================================================================
D. Dividends and Distributions to Shareholders--The Fund records dividends and
distributions to its shareholders on the record date.
E. Organizational Expenses--The Fund's Investment Manager paid the
organizational expenses of the Fund in the amount of approximately $204,000.
The Fund has agreed to bear and reimburse the Investment Manager for $150,000
of these costs ($16,667 for each of the initial Series excluding the Arizona
Series). The Fund deferred and is amortizing the reimbursed expenses on the
straight-line method over a period not to exceed five years from the
commencement of operations.
2. TRANSACTIONS WITH INVESTMENT MANAGER--Pursuant to an Investment Management
Agreement (the "Agreement") with Dean Witter InterCapital Inc., formerly the
InterCapital Division of Dean Witter Reynolds Inc., (the "Investment Manager"),
each Series of the Fund pays its Investment Manager a management fee,
calculated and accrued daily and payable monthly, by applying the annual rate
of 0.35% to the daily net assets of each Series.
56
<PAGE>
<TABLE>
===================================================================================================================================
<CAPTION>
New York Series Ohio Series Pennsylvania Series
---------------------- ---------------------- ----------------------
1993 1992 1993 1992 1993 1992
------- ------- ------- ------- ------- -------
<C> <C> <C> <C> <C> <C>
$ 756,167 $ 418,004 $ 1,053,017 $ 633,410 $ 2,391,963 $ 1,355,146
113,747 (47,083) 284,378 3,015 309,721 (15,290)
644,644 192,396 899,509 318,479 2,036,444 858,528
---------- ---------- ---------- ---------- ---------- ----------
1,514,558 563,317 2,236,904 954,904 4,738,128 2,198,384
---------- ---------- ---------- ---------- ---------- ----------
(756,167) (418,722) (1,053,017) (634,538) (2,391,963) (1,357,326)
-- (23,787) -- (4,032) -- --
---------- ---------- ---------- ---------- ---------- ----------
(756,167) (442,509) (1,053,017) (638,570) (2,391,963) (1,357,326)
---------- ---------- ---------- ---------- ---------- ----------
6,741,928 6,507,902 13,971,307 7,552,377 25,600,361 19,173,879
394,629 265,044 683,533 396,046 1,286,285 691,104
(1,544,324) (1,265,977) (4,675,125) (845,948) (7,364,381) (1,344,329)
---------- ---------- ---------- ---------- ---------- ----------
5,592,233 5,506,969 9,979,715 7,102,475 19,522,265 18,520,654
---------- ---------- ---------- ---------- ---------- ----------
6,350,624 5,627,777 11,163,602 7,418,809 21,868,430 19,361,712
---------- ---------- ---------- ---------- ---------- ----------
9,603,979 3,976,202 13,685,509 6,266,700 31,509,153 12,147,441
---------- ---------- ---------- ---------- ---------- ----------
$15,954,603 $ 9,603,979 $24,849,111 $13,685,509 $53,377,583 $31,509,153
=========== =========== =========== =========== =========== ===========
622,018 631,300 1,294,674 743,193 2,354,473 1,884,162
36,119 25,806 63,065 39,027 118,104 67,732
(140,708) (123,330) (427,972) (83,685) (671,934) (131,553)
---------- ---------- ---------- ---------- ---------- ----------
517,429 533,776 929,767 698,535 1,800,643 1,820,341
=========== =========== =========== =========== =========== ===========
</TABLE>
NOTES TO FINANCIAL STATEMENTS FOR ALL SERIES (continued)
===============================================================================
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 office space and 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.
The Investment Manager assumed all Fund expenses (except the 12b-1 fees
and brokerage fees) and waived the compensation provided for in its Management
Agreement with respect to each Series of the Fund through December 31, 1992.
The Investment Manager has also undertaken to waive management fees and to
assume any expenses exceeding 0.50% of the daily net assets with respect to the
Arizona Series, the California Series, the Florida Series, the New Jersey
Series and the Pennsylvania Series for the period January 1, 1993 through
December 31, 1993 and with respect to the Massachusetts Series, the Michigan
Series, the Minnesota Series, the New York Series and the Ohio Series for the
period January 1, 1993 through June 30, 1994.
57
<PAGE>
DEAN WITTER MULTI-STATE MUNICIPAL SERIES TRUST
NOTES TO FINANCIAL STATEMENTS FOR ALL SERIES (continued)
===============================================================================
The management fees waived and the other expenses assumed by the
Investment Manager for the year ended November 30, 1993 were as follows:
<TABLE>
<CAPTION>
Arizona California Florida Massachusetts Michigan
Series Series Series Series Series
-------- --------- -------- ------------- -------
<S> <C> <C> <C> <C> <C>
Management Fees.. $81,993 $134,315 $103,830 $49,513 $56,740
Other Expenses... $ 6,841 $ 10,037 $ 8,143 $ 4,242 $ 4,836
Minnesota New Jersey New York Ohio Pennsylvania
Series Series Series Series Series
-------- --------- -------- ------ -----------
<S> <C> <C> <C> <C> <C>
Management Fees... $30,975 $87,079 $44,232 $54,473 $81,805
Other Expenses.... $18,920 $ 7,149 $ 9,812 $ 4,607 $ 6,610
</TABLE>
3. PLAN OF DISTRIBUTION--Dean Witter Distributors Inc. (the "Distributor"), an
affiliate of the Investment Manager, is the distributor of the Fund's shares
and, in accordance with a Plan of Distribution (the "Plan") pursuant to Rule
12b-1 under the Act, finances certain expenses in connection therewith.
Under the Plan, the Distributor bears the expense of all promotional
and distribution related activities on behalf of the Fund, except for expenses
that the Trustees determine to reimburse, as described below. The following
activities and services may be provided by the Distributor, Dean Witter
Reynolds Inc. ("DWR"), an affiliate of the Distributor, its affiliates and
other dealers who have entered into selected dealer agreements with the
Distributor ("Selected Broker-Dealers") under the Plan: (1) compensation to and
expenses of DWR's and other Selected Broker-Dealers' account executives and
other employees, including overhead and telephone expenses; (2) sales
incentives and bonuses to sales representatives and to marketing personnel in
connection with promoting sales of the Fund's shares; (3) expenses incurred in
connection with promoting sales of the Fund's shares; (4) preparing and
distributing sales literature; and (5) providing advertising and promotional
activities, including direct mail solicitation and television, radio,
newspaper, magazine and other media advertisements.
The Fund is authorized to reimburse the Distributor for specific
expenses the Distributor incurs or plans to incur in promoting the distribution
of the Fund's shares. The amount of each monthly reimbursement payment may in
no event exceed an amount equal to a payment at the annual rate of .15 of 1% of
the Fund's average daily net assets during the month. For the year ended
November 30, 1993, the distribution fees accrued were at the annual rate as
follows:
<TABLE>
<CAPTION>
Arizona California Florida Massachusetts Michigan
Series Series Series Series Series
-------- --------- -------- ------------- --------
<S> <C> <C> <C> <C> <C>
Annual Rate....... 0.14% 0.15% 0.15% 0.15% 0.15%
<CAPTION>
Minnesota New Jersey New York Ohio Pennsylvania
Series Series Series Series Series
-------- --------- -------- ------ -----------
<S> <C> <C> <C> <C> <C>
Annual Rate....... 0.14% 0.15% 0.15% 0.15% 0.15%
</TABLE>
<PAGE>
For the same period the Distributor has informed the Fund that it
received commissions from the sale of the Fund's shares of beneficial interest.
Such commissions are not an expense of the Fund; they are deducted from the
proceeds of the sales of the shares of beneficial interest and the amounts were
as follows:
<TABLE>
<CAPTION>
Arizona California Florida Massachusetts Michigan
Series Series Series Series Series
-------- --------- -------- ------------- --------
<S> <C> <C> <C> <C> <C>
Commissions...... $737,748 $1,335,014 $1,295,560 $270,260 $355,681
<CAPTION>
Minnesota New Jersey New York Ohio Pennsylvania
Series Series Series Series Series
-------- --------- -------- ------ -----------
<S> <C> <C> <C> <C> <C>
Commissions...... $178,126 $825,942 $222,390 $383,062 $718,320
</TABLE>
4. SECURITY TRANSACTIONS--The cost of purchases and the proceeds from sales of
portfolio securities for the year ended November 30, 1993, excluding short-term
investments, were as follows:
<TABLE>
<CAPTION>
Arizona California Florida Massachusetts Michigan
Series Series Series Series Series
-------- --------- -------- ------------- --------
<S> <C> <C> <C> <C> <C>
Purchases...... $20,765,987 $48,878,537 $31,874,503 $8,694,153 $8,875,793
Sales.......... $ 2,256,790 $13,208,257 $ 2,240,015 $1,776,912 $2,588,376
<CAPTION>
Minnesota New Jersey New York Ohio Pennsylvania
Series Series Series Series Series
-------- --------- -------- ------ -----------
<S> <C> <C> <C> <C> <C>
Purchases....... $4,433,154 $21,555,305 $6,907,142 $10,897,586 $18,176,353
Sales........... $ 714,652 $ 3,059,385 $1,341,220 $ 3,314,031 $ 2,133,604
</TABLE>
58
<PAGE>
DEAN WITTER MULTI-STATE MUNICIPAL SERIES TRUST
NOTES TO FINANCIAL STATEMENTS FOR ALL SERIES (continued)
===============================================================================
Dean Witter Trust Company ("DWTC"), an affiliate of the Investment
Manager and the Distributor, is the Fund's transfer agent. During the year
ended November 30, 1993, transfer agent fees and expenses incurred and payable
were as follows:
<TABLE>
<CAPTION>
Transfer Agent Arizona California Florida Massachusetts Michigan
Fees and Expenses Series Series Series Series Series
- -------------------------- ---------- -------- ------------- --------
<S> <C> <C> <C> <C> <C>
Incurred......... $17,757 $29,445 $23,024 $5,264 $9,529
Payable.......... $ 2,935 $ 4,645 $ 3,823 $ 781 $1,472
<CAPTION>
Transfer Agent Minnesota New Jersey New York Ohio Pennsylvania
Fees and Expenses Series Series Series Series Series
- ------------------ --------- ---------- -------- ------ ------------
<S> <C> <C> <C> <C> <C>
Incurred.......... $2,729 $18,650 $4,701 $7,996 $17,007
Payable........... $ 799 $ 2,625 $ 802 $1,231 $ 2,571
</TABLE>
5. FEDERAL INCOME TAX STATUS--At November 30, 1993, the Florida Series had net
capital loss carryovers of approximately $131,200 of which $8,400 will be
available through November 30, 1999, $28,800 will be available through November
30, 2000 and $94,000 will be available through November 30, 2001 to offset
future capital gains to the extent provided by regulations. During the year
ended November 30, 1993, the California Series, the Massachusetts Series, the
Michigan Series, the New York Series and the Pennsylvania Series utilized all
of their carryover losses of $66,900, $2,900, $8,400, $47,100 and $17,500,
respectively. Capital losses incurred after October 31 within the taxable year
are deemed to arise on the first business day of the Fund's next taxable year.
The Florida Series incurred and elected to defer a net capital loss of
approximately $5,400 during fiscal 1993. To the extent that this net capital
loss carryover is used to offset future capital gains, it is probable that the
gains so offset will not be distributed to shareholders.
6. DIVIDENDS AND DISTRIBUTIONS--On a daily basis the Fund declares, on behalf
of each Series, dividends from its net investment income. Such dividends are
payable monthly. Net realized capital gains, if any, from all ten portfolios
are distributed at least annually.
<TABLE>
- -----------------------------------------------------------------------------------------------------------------------------------
1993 FEDERAL TAX NOTICE
During the year ended November 30, 1993, the Fund paid to shareholders dividends per share from net investment income, as follows:
<CAPTION>
Arizona California Florida Massachusetts Michigan
Series Series Series Series Series
-------- ---------- -------- ------------- --------
<C> <C> <C> <C> <C>
$.577665 $.611527 $.588719 $.604343 $.609358
<CAPTION>
Minnesota New Jersey New York Ohio Pennsylvania
Series Series Series Series Series
-------- --------- -------- ------ -----------
<C> <C> <C> <C> <C>
$.580560 $.595256 $.618636 $.602303 $.609355
<FN>
All of the Fund's dividends from net investment income were exempt interest dividends, excludable from gross income for Federal
income tax purposes.
For the same period, the Arizona Series and the New Jersey Series paid to shareholders $.00745 and $.01455 per share, respectively,
from long-term capital gains.
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
59
<PAGE>
<TABLE>
DEAN WITTER MULTI-STATE MUNICIPAL SERIES TRUST
FINANCIAL HIGHLIGHTS
===================================================================================================================================
Selected data and ratios for a share of beneficial interest outstanding throughout each period for their respective years ended
November 30:
<CAPTION>
Arizona Series California Series
------------------------------------- --------------------------------------
1993 1992 1991** 1993 1992 1991*
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning
of period....................... $10.18 $ 9.77 $ 9.60 $10.32 $ 9.99 $ 9.60
------- ------- ------- ------- ------- -------
Investment income--net............. 0.58 0.64 0.36 0.61 0.67 0.60
Realized and unrealized gain
on investments.................. 0.56 0.41 0.17 0.68 0.34 0.39
------- ------- ------- ------- ------- -------
Total from investment operations.. 1.14 1.05 0.53 1.29 1.01 0.99
------- ------- ------- ------- ------- -------
Less dividends and distributions:
Dividends from net investment
income......................... (0.58) (0.64) (0.36) (0.61) (0.67) (0.60)
Distributions from net realized
gain on investments............ (0.02) -0- -0- -0- (0.01) -0-
------- ------- ------- ------- ------- -------
Total dividends and distributions. (0.60) (0.64) (0.36) (0.61) (0.68) (0.60)
------- ------- ------- ------- ------- -------
Net asset value, end of period.. $10.72 $10.18 $ 9.77 $11.00 $10.32 $ 9.99
======= ====== ====== ====== ====== =======
TOTAL INVESTMENT RETURN+........... 11.42% 11.08% 5.66%(1) 12.77% 10.23% 10.29%(1)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands)................... $59,877 $38,812 $20,733 $139,308 $95,604 $41,568
Ratios to average net assets: (3)
Total expenses.................. 0.48% 0.15% 0.15%(2) 0.48% 0.15% 0.15%(2)
Investment income--net.......... 5.40% 6.33% 6.32%(2) 5.57% 6.36% 6.53%(2)
Portfolio turnover rate........... 5% 15% 8% 11% 5% 24%
<FN>
- ------------
* January 15, 1991 (commencement of operations) through November 30, 1991.
** April 30, 1991 (commencement of operations) through November 30, 1991.
+ Does not reflect the deduction of sales load.
(1) Not annualized.
(2) Annualized.
(3) If the Fund had borne all its expenses that were assumed or waived by the Investment Manager, the above ratios to average net
assets, after application of the Fund's expense limitation, would have been:
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Total expenses..................... 0.65% 0.74% 1.43%(2) 0.60% 0.67% 0.97%(2)
Investment income--net............. 5.22% 5.74% 5.04%(2) 5.45% 5.84% 5.71%(2)
</TABLE>
60
<PAGE>
<TABLE>
===============================================================================
<CAPTION>
Florida Series Massachusetts Series Michigan Series
--------------------------- --------------------------- ------------------------------
1993 1992 1991* 1993 1992 1991* 1993 1992 1991*
------ ------ ------ ------ ------ ------ ------ ------ ------
<C> <C> <C> <C> <C> <C> <C> <C> <C>
$10.29 $ 9.88 $ 9.60 $10.36 $ 9.98 $ 9.60 $10.41 $ 9.96 $ 9.60
------ ------ ------ ------ ------ ------ ------ ------ ------
0.59 0.64 0.55 0.60 0.66 0.54 0.61 0.65 0.54
0.64 0.41 0.28 0.72 0.42 0.38 0.64 0.46 0.36
------ ------ ------ ------ ------ ------ ------ ------ ------
1.23 1.05 0.83 1.32 1.08 0.92 1.25 1.11 0.90
------ ------ ------ ------ ------ ------ ------ ------ ------
(0.59) (0.64) (0.55) (0.60) (0.66) (0.54) (0.61) (0.65) (0.54)
-0- -0- -0- -0- (0.04) -0- -0- (0.01) -0-
------ ------ ------ ------ ------ ------ ------ ------ ------
(0.59) (0.64) (0.55) (0.60) (0.70) (0.54) (0.61) (0.66) (0.54)
------ ------ ------ ------ ------ ------ ------ ------ -------
$10.93 $10.29 $ 9.88 $11.08 $10.36 $ 9.98 $11.05 $10.41 $ 9.96
====== ====== ====== ====== ====== ====== ====== ====== ======
12.20% 10.92% 8.84%(1) 13.06% 11.19% 9.87%(1) 12.28% 11.78% 9.54%(1)
$84,494 $51,560 $17,719 $18,344 $10,113 $3,205 $22,083 $13,809 $6,630
0.48% 0.15% 0.15%(2) 0.48% 0.14% 0.15%(2) 0.48% 0.14% 0.15%(2)
5.39% 6.19% 6.45%(2) 5.47% 6.26% 6.50%(2) 5.53% 6.28% 6.54%(2)
3% 6% 10% 12% 10% 40% 15% 9% 46%
0.63% 0.73% 1.27%(2) 0.84% 1.25% 2.57%(2) 0.80% 1.01% 1.73%(2)
5.23% 5.62% 5.33%(2) 5.10% 5.16% 4.08%(2) 5.20% 5.42% 4.96%(2)
</TABLE>
61
<PAGE>
<TABLE>
DEAN WITTER MULTI-STATE MUNICIPAL SERIES TRUST
FINANCIAL HIGHLIGHTS (continued)
===================================================================================================================================
Selected data and ratios for a share of beneficial interest outstanding throughout each period for their respective years ended
November 30:
<CAPTION>
Minnesota Series New Jersey Series
------------------------------------- --------------------------------------
1993 1992 1991* 1993 1992 1991*
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $10.11 $ 9.79 $ 9.60 $10.35 $ 9.95 $ 9.60
------ ------ ------ ------ ------ ------
Investment income--net............. 0.58 0.63 0.51 0.60 0.66 0.55
Realized and unrealized gain on
investments....................... 0.67 0.32 0.19 0.62 0.44 0.35
------ ------ ------ ------ ------ ------
Total from investment operations.... 1.25 0.95 0.70 1.22 1.10 0.90
------ ------ ------ ------ ------ ------
Less dividends and distributions:
Dividends from net investment
income........................... (0.58) (0.63) (0.51) (0.60) (0.66) (0.55)
Distributions from net realized
gain on investments.............. -0- -0- -0- (0.03) (0.04) -0-
------ ------ ------ ------ ------ ------
Total dividends and distributions.. (0.58) (0.63) (0.51) (0.63) (0.70) (0.55)
------ ------ ------ ------ ------ ------
Net asset value, end of period..... $10.78 $10.11 $ 9.79 $10.94 $10.35 $ 9.95
====== ====== ====== ====== ====== ======
TOTAL INVESTMENT RETURN +............ 12.64% 9.91% 7.42%(1) 12.03% 11.34% 9.59%(1)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands)..................... $11,538 $6,420 $3,131 $54,499 $32,123 $15,812
Ratios to average net assets: (3)
Total expenses..................... 0.48% 0.14% 0.15%(2) 0.48% 0.15% 0.15%(2)
Investment income--net............. 5.39% 6.16% 6.04%(2) 5.41% 6.36% 6.43%(2)
Portfolio turnover rate............. 8% 23% 4% 7% 19% 36%
<FN>
- ----------
* January 15, 1991 (commencement of operations) through November 30, 1991.
+ Does not reflect the deduction of sales load.
(1)Not annualized.
(2) Annualized.
(3)If the Fund had borne all its expenses that were assumed or waived by the Investment Manager, the above ratios to average net
assets, after application of the Fund's expense limitation, would have been:
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Total expenses..................... 1.04% 1.46% 2.65%(2) 0.69% 0.79% 1.21%(2)
Investment income--net............. 4.83% 4.85% 2.87%(2) 5.20% 5.71% 5.36%(2)
</TABLE>
62
<PAGE>
<TABLE>
===================================================================================================================================
<CAPTION>
New York Series Ohio Series Pennsylvania Series
----------------------------- --------------------------- ------------------------------
1993 1992 1991* 1993 1992 1991* 1993 1992 1991*
------ ------ ------ ------ ------ ------ ------ ------ ------
<C> <C> <C> <C> <C> <C> <C> <C> <C>
$10.34 $10.06 $ 9.60 $10.25 $ 9.85 $ 9.60 $10.34 $ 9.90 $ 9.60
------ ------ ------ ------ ------ ------ ------ ------ ------
0.62 0.68 0.54 0.60 0.66 0.53 0.61 0.66 0.53
0.69 0.34 0.46 0.72 0.41 0.25 0.67 0.44 0.30
------ ------ ------ ------ ------ ------ ------ ------ ------
1.31 1.02 1.00 1.32 1.07 0.78 1.28 1.10 0.83
------ ------ ------ ------ ------ ------ ------ ------ ------
(0.62) (0.68) (0.54) (0.60) (0.66) (0.53) (0.61) (0.66) (0.53)
-0- (0.06) -0- -0- (0.01) -0- -0- -0- -0-
------ ------ ------ ------ ------ ------ ------ ------ ------
(0.62) (0.74) (0.54) (0.60) (0.67) (0.53) (0.61) (0.66) (0.53)
------ ------ ------ ------ ------ ------ ------ ------ ------
$11.03 $10.34 $10.06 $10.97 $10.25 $ 9.85 $11.01 $10.34 $ 9.90
====== ====== ====== ====== ====== ====== ====== ====== ======
12.91% 10.35% 10.73%(1) 13.19% 11.12% 8.35%(1) 12.64% 11.47% 8.77%(1)
$15,955 $9,604 $3,976 $24,849 $13,686 $6,267 $53,378 $31,509 $12,147
0.48% 0.15% 0.15%(2) 0.48% 0.15% 0.15%(2) 0.48% 0.15% 0.15%(2)
5.61% 6.45% 6.44%(2) 5.45% 6.41% 6.38%(2) 5.54% 6.31% 6.46%(2)
11% 21% 51% 20% 23% 22% 5% 3% 12%
0.88% 1.23% 2.22%(2) 0.78% 1.01% 2.04%(2) 0.68% 0.81% 1.54%(2)
5.21% 5.37% 4.37%(2) 5.14% 5.56% 4.48%(2) 5.33% 5.65% 5.07%(2)
</TABLE>
63
<PAGE>
<TABLE>
DEAN WITTER MULTI-STATE MUNICIPAL SERIES TRUST
PORTFOLIO OF INVESTMENTS--ARIZONA SERIES November 30, 1993
===================================================================================================================================
<CAPTION>
Principal
Amount (in Coupon Maturity
thousands) Rate Date Value
- ---------- ------- --------- -----
<C> <S> <C> <C> <C>
ARIZONA EXEMPT MUNICIPAL BONDS (95.7%)
GENERAL OBLIGATION (7.0%)
$ 200 Chandler, Sierra Vista Refg Ser 1991 (FGIC Insured)............. 7.00 % 7/ 1/12 $ 227,854
Phoenix,
1,250 Refg Ser 1993 A................................................ 5.25 7/ 1/12 1,219,513
1,550 Refg Ser 1992.................................................. 6.375 7/ 1/13 1,680,959
1,000 Tucson Unified School District #1, Impr 1989 Ser D 1992
(FGIC Insured).................................................. 6.10 7/ 1/11 1,059,120
- ------- ----------
4,000 4,187,446
- ------- ----------
EDUCATIONAL FACILITIES REVENUE (6.9%)
1,000 Arizona Board of Regents, Arizona State University Ser 1992 A... 5.50 7/ 1/19 989,100
1,000 Price-Elliot Research Park Inc, Arizona State University
Ser 1991 (MBIA Insured)........................................ 7.00 7/ 1/21 1,150,330
University of Arizona,
800 Ser 1990 B (Prerefunded)....................................... 6.90 6/ 1/16 919,184
1,000 Telecommunications Ser 1991 COPs............................... 6.50 7/15/12 1,085,420
- ------- ----------
3,800 4,144,034
- ------- ----------
ELECTRIC REVENUE (9.9%)
725 Arizona Power Authority, Hoover Uprating Refg 1993
Ser (MBIA Insured)............................................. 5.25 10/ 1/17 698,225
1,500 Central Arizona Water Conservation District, Ser B 1991......... 6.50 11/ 1/11 1,621,785
Salt River Project Agricultural Improvement & Power District,
1,000 1992 Ser D..................................................... 6.25 1/ 1/27 1,058,990
2,500 1991 Ser A..................................................... 6.00 1/ 1/31 2,553,250
- ------- ----------
5,725 5,932,250
- ------- ----------
HOSPITAL REVENUE (9.1%)
Arizona Health Facilities Authority,
1,150 Phoenix Baptist Hospital & Medical Center Ser 1992 (MBIA Insured) 6.25 9/ 1/11 1,234,962
700 Phoenix Memorial Hospital Refg Ser 1991........................ 8.20 6/ 1/21 786,058
600 Samaritan Health System Refg Ser 1993 (MBIA Insured)........... 5.625 12/ 1/15 603,378
300 Voluntary Hospital Federation Pooled 1985 Ser B (FGIC Insured). 7.25 10/ 1/13 340,746
2,000 Maricopa County Industrial Development Authority, Catholic
Healthcare West 1992 Ser A (MBIA Insured)...................... 5.75 7/ 1/11 2,042,820
400 University Medical Center Corporation, Ser 1991 (MBIA Insured)
(Prerefunded).................................................. 6.875 7/ 1/21 465,328
- ------- ----------
5,150 5,473,292
- ------- ----------
INDUSTRIAL DEVELOPMENT/POLLUTION CONTROL REVENUE (13.1%)
500 Douglas Industrial Development Authority, Kmart Corp
Refg Ser 1993.................................................. 6.50 7/ 1/08 530,005
2,000 Mohave County Industrial Development Authority, Citizens
Utilities Co 1993 Ser B (AMT)................................. 5.80 11/15/28 1,999,920
2,000 Navajo County Pollution Control Corporation, Arizona Public
Service Co Ser 1993 A (AMBAC Insured).......................... 5.50 8/15/28 1,984,460
1,700 Santa Cruz County Industrial Development Authority, Citizens
Utilities Co Ser 1991 (AMT).................................... 7.15 2/ 1/23 1,884,297
Puerto Rico Industrial, Medical & Environmental Pollution
Control Facilities Financing Authority,
800 American Airlines Inc 1985 Ser A.............................. 8.75 12/ 1/25 867,784
500 Baxter Travenol Labs Inc 1983 Ser A........................... 8.00 9/ 1/12 582,220
- ------- ----------
7,500 7,848,686
- ------- ----------
MORTGAGE REVENUE--MULTI-FAMILY (1.8%)
995 Pima County Industrial Development Authority, Rancho Mirage
Ser 1992 (AMT) (Asset Guaranty Insured)....................... 7.05 4/ 1/22 1,083,357
- ------- ----------
</TABLE>
64
<PAGE>
<TABLE>
DEAN WITTER MULTI-STATE MUNICIPAL SERIES TRUST
PORTFOLIO OF INVESTMENTS--ARIZONA SERIES November 30, 1993 (continued)
===================================================================================================================================
<CAPTION>
Principal
Amount (in Coupon Maturity
thousands) Rate Date Value
- ---------- ------ -------- -----
<C> <S> <C> <C> <C>
MORTGAGE REVENUE--SINGLE FAMILY (3.8%)
Maricopa County Industrial Development Authority,
$ 765 1991 Ser A......................................................... 7.375% 8/ 1/05 $ 818,060
760 1991 Ser A......................................................... 7.50 8/ 1/12 817,205
625 Puerto Rico Housing Bank & Finance Agency, Subsidy Prepayment
(Prerefunded)..................................................... 7.25 12/ 1/06 669,763
- ------- ----------
2,150 2,305,028
- ------- ----------
PUBLIC FACILITIES REVENUE (3.2%)
Arizona,
500 Refg Ser 1992 B COPs (AMBAC Insured).............................. 6.25 9/ 1/10 536,801
500 Ser 1991 COPs (FSA Insured)....................................... 6.25 9/ 1/11 538,915
700 Puerto Rico Infrastructure Financing Authority, Special Tax
Ser 1988 A........................................................ 7.90 7/ 1/07 803,649
- ------- ----------
1,700 1,879,365
- ------- ----------
TRANSPORTATION FACILITIES REVENUE (19.6%)
Arizona Transportation Board,
1,500 Sub Highway Ser 1991 A............................................ 6.50 7/ 1/11 1,623,345
1,000 Sub Highway Ser 1992 B............................................ 6.50 7/ 1/11 1,089,250
Phoenix, Street & Highway
2,000 User Refg Ser 1993................................................ 5.125 7/ 1/11 1,931,340
1,000 User Ser 1992..................................................... 6.25 7/ 1/11 1,129,290
2,000 Phoenix Civic Improvement Corporation, Airport Terminal Excise Tax
Ser 1989 (AMT).................................................... 7.80 7/ 1/11 2,255,280
800 Scottsdale, Street & Highway User Refg Ser 1993.................... 5.50 7/ 1/07 825,496
1,000 Tucson, Street & Highway User Sr Lien Refg Ser 1993................ 5.50 7/ 1/09 1,011,050
2,000 Puerto Rico Highway & Transportation Authority, Refg Ser X......... 5.25 7/ 1/21 1,859,760
- ------- ----------
11,300 11,724,811
- ------- ----------
WATER & SEWER REVENUE (21.3%)
1,000 Arizona Wastewater Management Authority, Wastewater Treatment
Financial Assistance Ser 1992 A (AMBAC Insured)................... 5.95 7/ 1/12 1,034,060
Chandler, Water & Sewer
750 Refg Ser 1991 (FGIC Insured)...................................... 7.00 7/ 1/12 854,452
1,000 Refg Ser 1992 (FGIC Insured)...................................... 6.25 7/ 1/13 1,069,880
1,000 Gilbert, Water & Wastewater Refg Ser 1992 (FGIC Insured)........... 6.50 7/ 1/22 1,093,430
1,000 Phoenix, Water Refg Ser 1993....................................... 5.50 7/ 1/22 981,560
1,000 Phoenix Civic Improvement Corporation, Wastewater Refg Ser 1993.... 5.00 7/ 1/18 910,420
500 Pima County, Sewer Refg Ser 1991 (FGIC Insured).................... 6.75 7/ 1/15 550,760
Tucson, Water
2,200 Refg Ser 1991..................................................... 6.50 7/ 1/16 2,378,200
1,000 Refg Ser 1989 A................................................... 5.75 7/ 1/18 1,021,410
500 1984 Ser C 1989 (Prerefunded)..................................... 6.90 7/ 1/19 560,335
2,000 Puerto Rico Aqueduct & Sewer Authority, 1988 A..................... 7.90 7/ 1/07 2,296,140
- ------- ----------
11,950 12,750,647
- ------- ----------
54,270 TOTAL MUNICIPAL BONDS (IDENTIFIED COST $53,641,241)................ 57,328,916
- ------- ----------
SHORT-TERM ARIZONA EXEMPT MUNICIPAL
OBLIGATION (1.7%)
1,000 Maricopa County Industrial Development Authority,
Samaritan Health Ser B-2 (MBIA Insured)
(Tender 12/1/93) (Identified Cost $1,000,000)..................... 1.90* 12/ 1/08 1,000,000
- ------- -----------
$55,270 TOTAL INVESTMENTS (IDENTIFIED COST $54,641,241)(A)................. 97.4% 58,328,916
=======
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES..................... 2.6 1,548,291
------ -----------
NET ASSETS......................................................... 100.0% $59,877,207
====== ===========
<FN>
- ------------
* Variable or floating rate security. Coupon rate shown reflects current rate.
(a) The aggregate cost for federal income tax purposes is $54,641,241; the aggregate gross unrealized appreciation is $3,802,843
and the aggregate gross unrealized depreciation is $115,168, resulting in net unrealized appreciation of $3,687,675.
See Notes to Financial Statements
</TABLE>
65
<PAGE>
<TABLE>
DEAN WITTER MULTI-STATE MUNICIPAL SERIES TRUST
PORTFOLIO OF INVESTMENTS--CALIFORNIA SERIES November 30, 1993
===================================================================================================================================
<CAPTION>
Principal
Amount (in Coupon Maturity
thousands) Rate Date Value
- ---------- ------- -------- -----
<C> <S> <C> <C> <C>
CALIFORNIA EXEMPT MUNICIPAL BONDS (97.8%)
GENERAL OBLIGATION (4.3%)
$ 2,000 California, Var Pur (FSA Insured).................................. 5.50 % 4/ 1/19 $ 1,964,960
Mojave Water Agency,
1,100 Impr Dist M Morongo Basin Pipeline Ser 1992....................... 6.60 9/ 1/13 1,155,099
2,700 Impr Dist M Morongo Basin Pipeline Ser 1992....................... 6.60 9/ 1/22 2,818,125
- -------- -----------
5,800 5,938,184
- -------- -----------
EDUCATIONAL FACILITIES REVENUE (15.0%)
California Educational Facilities Authority,
4,500 Carnegie Institution of Washington 1993 Ser A..................... 5.60 10/ 1/23 4,397,535
3,700 Claremont Colleges Ser 1992....................................... 6.375 5/ 1/22 3,867,314
2,000 Loyola Marymount University Refg Ser 1992......................... 6.00 10/ 1/14 2,032,260
2,000 University of San Francisco Ser 1992 ............................. 6.40 10/ 1/17 2,096,960
2,500 University of Southern California Ser 1993 B...................... 5.80 10/ 1/15 2,536,125
2,000 California Public Works Board, California State
University 1992 Ser A............................................ 6.70 10/ 1/17 2,151,440
4,000 University of California, Multiple Pur Refg 1993
Ser C (AMBAC Insured)............................................ 5.125 9/ 1/18 3,762,080
- -------- -----------
20,700 20,843,714
- -------- -----------
ELECTRIC REVENUE (9.1%)
2,000 Kings River Conservation District, Pine Power Ser D................ 6.00 1/ 1/17 2,054,800
2,000 Los Angeles Department of Water & Power, Third Issue of 1991....... 6.625 10/ 1/31 2,256,440
1,750 Northern California Power Agency, Geothermal #3 1993
Refg Ser 3........................................................ 5.85 7/ 1/10 1,808,240
5,000 Southern California Public Power Authority, Multiple Proj 1989 Ser. 6.00 7/ 1/18 5,061,900
500 Turlock Irrigation District, 1991 Cap Impr COPs.................... 7.30 1/ 1/11 549,775
1,000 Puerto Rico Electric Power Authority, Power Ser O.................. 5.00 7/ 1/12 938,880
- -------- -----------
12,250 12,670,035
- -------- -----------
HOSPITAL REVENUE (14.5%)
1,000 Berkeley, Alta Bates Medical Center Refg Ser A..................... 6.50 12/ 1/11 1,022,050
California Health Facilities Financing Authority,
3,000 Catholic Health Corp Ser 1992 (MBIA Insured)...................... 6.00 7/ 1/13 3,141,030
3,150 Downey Community Hospital Ser 1993................................ 5.75 5/15/15 3,066,651
2,000 Kaiser Permanente 1983 Ser........................................ 5.45 10/ 1/13 1,922,500
1,000 Kaiser Permanente 1991 Ser A...................................... 6.25 3/ 1/21 1,040,460
4,500 Scripps Memorial Hospitals Ser 1992 A (MBIA Insured) ............. 6.375 10/ 1/22 4,821,525
California Statewide Communities Development Authority,
2,000 Cedars Sinai Medical Center Ser 1992 COPs ........................ 6.50 8/ 1/12 2,213,980
1,000 Sutter Health Obligated Group COPs (AMBAC Insured)................ 6.125 8/15/22 1,049,960
2,000 Duarte, City of Hope National Medical Center COPs ................. 6.00 4/ 1/08 1,997,900
- -------- -----------
19,650 20,276,056
- -------- -----------
INDUSTRIAL DEVELOPMENT/POLLUTION CONTROL REVENUE (4.0%)
California Pollution Control Financing Authority,
1,000 Pacific Gas & Electric Co 1992 Ser A (AMT)........................ 6.625 6/ 1/09 1,080,540
1,000 Southern California Edison Co 1988 Ser A (AMT).................... 6.90 9/ 1/06 1,094,170
1,000 Southern California Edison Co 1992 Ser B (AMT).................... 6.40 12/ 1/24 1,060,820
1,050 San Diego, San Diego Gas & Electric 1986 Ser B (AMT)............... 7.375 12/ 1/21 1,164,807
Puerto Rico Industrial, Medical & Environmental Pollution Control
Facilities Financing Authority,
500 American Airlines Inc 1985 Ser A................................. 8.75 12/ 1/25 542,365
500 Baxter Travenol Labs Inc 1983 Ser A.............................. 8.00 9/ 1/12 582,220
- -------- -----------
5,050 5,524,922
- -------- -----------
</TABLE>
66
<PAGE>
<TABLE>
DEAN WITTER MULTI-STATE MUNICIPAL SERIES TRUST
PORTFOLIO OF INVESTMENTS--CALIFORNIA SERIES November 30, 1993 (continued)
===================================================================================================================================
<CAPTION>
Principal
Amount (in Coupon Maturity
thousands) Rate Date Value
- ---------- ------- -------- -----
<C> <S> <C> <C> <C>
MORTGAGE REVENUE--MULTI-FAMILY (1.9%)
California Housing Finance Agency,
$ 2,000 Rental II 1992 Ser B.............................................. 6.70 % 8/ 1/15 $ 2,102,460
500 1991 Ser A (AMT) (MBIA Insured)................................... 7.20 2/ 1/26 540,490
- -------- -----------
2,500 2,642,950
- -------- -----------
MORTGAGE REVENUE--SINGLE FAMILY (3.9%)
California Housing Finance Agency,
785 Home 1991 Ser B (AMT)............................................. 7.55 8/ 1/20 811,596
1,130 Home 1991 C (AMT) (MBIA Insured).................................. 7.00 8/ 1/23 1,215,846
1,000 Oakland Housing Finance Agency, Ser D-3 (AMT)...................... 7.10 1/ 1/24 1,060,500
530 Sacramento County, GNMA/FNMA-Backed Issue A of 1991 (AMT).......... 7.25 10/ 1/23 573,683
195 Southern California Home Financing Authority,
GNMA & FNMA-Backed 1991 Issue A (AMT)............................. 7.35 9/ 1/24 213,655
1,500 Puerto Rico Housing Finance Corporation, Portfolio One
GNMA-Backed Ser C................................................. 6.85 10/15/23 1,605,240
- -------- -----------
5,140 5,480,520
- -------- -----------
PUBLIC FACILITIES REVENUE (7.5%)
1,000 Los Angeles County, 1991 Master Refg COPs RIBS..................... 10.446+ 5/ 1/15 1,123,750
1,000 Modesto, Community Center Refg 1993 Ser A COPs (AMBAC Insured)..... 5.60 11/ 1/14 1,021,040
2,000 Nevada County, Western Nevada County Solid Waste
Management 1991................................................... 7.50 6/ 1/21 2,216,300
2,000 San Jose Financing Authority, Convention Center Refg 1993 Ser C.... 6.375 9/ 1/13 2,095,140
2,700 Torrance, Police Facility Refg 1991 COPs........................... 6.80 7/ 1/12 2,906,469
1,000 Puerto Rico Infrastructure Financing Authority, Special Tax
Ser 1988 A........................................................ 7.90 7/ 1/07 1,148,070
- -------- -----------
9,700 10,510,769
- -------- -----------
TAX ALLOCATION (4.0%)
1,000 Industry Urban--Development Agency, Transportation--Distribution
Ind Redev Proj #3 1992 Refg....................................... 6.90 11/ 1/16 1,086,190
1,000 Riverside County Redevelopment Agency, Proj #4 1991 Ser A.......... 7.50 10/ 1/26 1,121,190
3,000 Rosemead Redevelopment Agency, Proj #1 Ser 1993 A.................. 5.50 10/ 1/18 2,829,390
500 Victorville Redevelopment Agency, Bear Valley Road Ser 1991........ 7.50 11/ 1/16 560,360
- -------- -----------
5,500 5,597,130
- -------- -----------
TRANSPORTATION FACILITIES REVENUE (13.4%)
4,000 Los Angeles County Metropolitan Transportation Authority,
Sales Tax Refg Ser 1993-A (MBIA Insured).......................... 5.625 7/ 1/18 3,991,840
2,000 Los Angeles County Transportation Commission, Sales Tax
Ser 1991-B........................................................ 6.50 7/ 1/13 2,162,000
1,000 Orange County, Airport Refg Ser 1993 (AMT) (MBIA Insured).......... 5.50 7/ 1/18 974,940
1,000 San Diego County Transportation, Sales Tax 1991 Ser A.............. 6.00 4/ 1/08 1,043,450
1,000 San Francisco Airports Commission, San Francisco Int'l Airport
Second Ser Refg Issue 4 (MBIA Insured)............................ 6.00 5/ 1/20 1,041,920
1,000 San Francisco Bay Area Rapid Transit District, Sales Tax Ser 1991
(FGIC Insured).................................................... 6.60 7/ 1/12 1,091,750
750 San Jose, Airport Ser of 1993 (AMT) (FGIC Insured)................. 5.70 3/ 1/18 753,623
</TABLE>
67
<PAGE>
<TABLE>
DEAN WITTER MULTI-STATE MUNICIPAL SERIES TRUST
PORTFOLIO OF INVESTMENTS--CALIFORNIA SERIES November 30, 1993 (continued)
===================================================================================================================================
<CAPTION>
Principal
Amount (in Coupon Maturity
thousands) Rate Date Value
- ---------- ------- -------- -----
<C> <S> <C> <C> <C>
$ 2,500 Santa Clara Transit District, Sales Tax 1991 Ser A................. 6.25 % 6/ 1/21 $ 2,588,650
Puerto Rico Highway & Transportation Authority,
3,000 Refg Ser X........................................................ 5.25 7/ 1/21 2,789,640
2,000 Ser S (Prerefunded)............................................... 6.50 7/ 1/22 2,279,580
- -------- ------------
18,250 18,717,393
- -------- ------------
WATER & SEWER REVENUE (19.6%)
1,000 Alameda County Water District, 1992 COPs (MBIA Insured)............ 6.20 6/ 1/13 1,062,660
California Department of Water Resources,
1,000 Central Valley Ser J-2............................................ 6.00 12/ 1/20 1,021,600
2,000 Central Valley Ser K.............................................. 6.00 12/ 1/21 2,043,720
2,000 Central Coast Water Authority, Ser 1992 (AMBAC Insured)............ 6.50 10/ 1/14 2,176,260
1,000 Contra Costa Water Authority, Water 1992 Ser E
(AMBAC Insured)................................................... 6.25 10/ 1/12 1,100,870
3,000 East Bay Municipal Utility District, Water Refg Ser 1992........... 6.00 6/ 1/20 3,072,750
500 Eastern Municipal Water District, 1991 COPs........................ 6.00 7/ 1/23 507,975
Los Angeles, Wastewater
2,000 Refg Ser 1993-A (MBIA Insured).................................... 5.70 6/ 1/20 2,012,560
1,000 1991 Ser C........................................................ 7.10 6/ 1/18 1,113,130
3,250 Los Angeles County Sanitation Districts Financing Authority,
1993 Ser A........................................................ 5.25 10/ 1/10 3,168,197
2,000 San Diego County Water Authority, Ser 1991-B COPs CARs
(MBIA Insured).................................................... 9.67+ 4/ 8/21 2,315,000
2,000 San Francisco Public Utilities Commission, Water 1992 Refg Ser A... 6.00 11/ 1/15 2,055,440
1,000 United Water Conservation District, 1993 COPs (FSA Insured)........ 5.80 5/ 1/13 1,014,530
2,000 West Basin Municipal Water District, Reclamation Ser 1991 COPs
(Prerefunded)..................................................... 7.00 8/ 1/11 2,319,920
2,000 Puerto Rico Aqueduct & Sewer Authority, Ser 1988 A................. 7.90 7/ 1/07 2,296,140
- -------- ------------
25,750 27,280,752
- -------- ------------
OTHER REVENUE (0.6%)
750 Rancho-Santa Margarita Community Facilities District #86-2,
Ser A of 1990..................................................... 7.65 8/15/17 810,195
- -------- ------------
$131,040 TOTAL INVESTMENTS (IDENTIFIED COST $128,415,319) (A)............... 97.8% 136,292,620
========
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES..................... 2.2 3,015,872
------ ------------
NET ASSETS......................................................... 100.0% $139,308,492
====== ============
<FN>
- ------------
+ Current coupon rate for residual interest bonds. This rate resets periodically as the auction rate on the related short-term
securities fluctuates.
(a) The aggregate cost for federal income tax purposes is $128,415,319; the aggregate gross unrealized appreciation is $8,304,586
and the aggregate gross unrealized depreciation is $427,285 resulting in net unrealized appreciation of $7,877,301.
See Notes to Financial Statements
</TABLE>
68
<PAGE>
<TABLE>
DEAN WITTER MULTI-STATE MUNICIPAL SERIES TRUST
PORTFOLIO OF INVESTMENTS--FLORIDA SERIES November 30, 1993
===================================================================================================================================
<CAPTION>
Principal
Amount (in Coupon Maturity
thousands) Rate Date Value
- ---------- ------- -------- -----
<C> <S> <C> <C> <C>
FLORIDA EXEMPT MUNICIPAL BONDS (98.4%)
GENERAL OBLIGATION (4.2%)
$ 200 Broward County, Refg Ser 1986 (Prerefunded)...................... 7.875 % 1/ 1/12 $ 224,676
200 Florida Board of Education, Cap Outlay Refg Ser 1989 A........... 7.25 6/ 1/23 228,700
2,000 Guam, Ser 1993 A................................................. 5.375 11/15/13 1,913,840
1,000 Puerto Rico, Pub Impr Ser 1991 (Prerefunded)..................... 7.30 7/ 1/20 1,179,210
- ------- ----------
3,400 3,546,426
- ------- ----------
ELECTRIC REVENUE (12.3%)
500 Jacksonville Beach, Utility Ser 1991 (MBIA Insured) (Prerefunded) 6.75 10/ 1/20 576,660
2,500 Jacksonville Electric Authority, St Johns River Power Park
Issue 2 Ser 7.................................................. 5.50 10/ 1/14 2,484,450
Orlando Utilities Commission,
1,000 Refg Ser 1993 A................................................. 5.25 10/ 1/14 967,920
2,250 Ser 1993........................................................ 5.125 10/ 1/19 2,096,055
1,900 Ser 1991 A...................................................... 6.50 10/ 1/20 2,060,113
300 Ser 1989 C (Prerefunded)........................................ 7.00 10/ 1/23 346,071
2,000 Puerto Rico Electric Power Authority, Power Ser O................ 5.00 7/ 1/12 1,877,760
- ------- ----------
10,450 10,409,029
- ------- ----------
HOSPITAL REVENUE (16.1%)
285 Altamonte Springs Health Facilities Authority, Adventist
Health/Sunbelt Inc Ser 1984 (MBIA Insured)..................... 7.90 10/ 1/14 319,183
500 Cape Canaveral Hospital District, Ser 1991 COPs (AMBAC Insured).. 6.875 1/ 1/21 554,765
2,500 Dade County, Jackson Memorial Hospital Ser 1993 (MBIA Insured)... 5.625 6/ 1/13 2,530,625
1,000 Jacksonville, University Medical Center Inc Ser 1992
(Connie Lee Insured)........................................... 6.60 2/ 1/21 1,094,040
2,500 Jacksonville Health Facilities Authority, Daughters of
Charity/St Vincent's Medical Center Inc Ser 1993 A............... 5.00 11/15/15 2,288,100
1,000 Lakeland, Regional Medical Center Ser 1992 A (FGIC Insured)...... 6.125 11/15/22 1,058,500
750 Miami Beach Health Facilities Authority, Mount Sinai
Medical Center Refg Ser 1992 (Capital Guaranty Insured)........ 6.125 11/15/14 793,875
2,000 Orange County Health Facilities Authority, Orlando Regional
Healthcare Ser 1993 A (MBIA Insured)........................... 6.00 11/ 1/24 2,096,220
140 Palm Beach County Health Facilities Authority, JFK Medical
Center Inc Ser 1988............................................ 8.875 12/ 1/18 158,542
1,000 Polk County Industrial Development Authority, United Haven
Hospital 1985 Ser 2 (MBIA Insured)............................. 6.25 9/ 1/15 1,071,340
500 South Broward Hospital District, Ser 1991 C RIBS (AMBAC Insured). 10.302+ 5/13/21 591,250
1,000 Tallahassee, Tallahassee Memorial Regional Medical Center Inc
Refg Ser 1992 B (MBIA Insured).................................. 6.00 12/ 1/15 1,048,430
- ------- ----------
13,175 13,604,870
- ------- ----------
INDUSTRIAL DEVELOPMENT/POLLUTION CONTROL REVENUE (8.4%)
Citrus County, Florida Power Corp
2,000 Refg Ser 1992 B................................................. 6.35 2/ 1/22 2,152,380
2,000 Refg Ser 1992 A................................................. 6.625 1/ 1/27 2,184,660
St Lucie County, Florida Power & Light Co
490 Ser 1991 (AMT).................................................. 7.15 2/ 1/23 537,829
1,000 Ser 1992 (AMT).................................................. 6.70 5/ 1/27 1,079,320
Puerto Rico Industrial, Medical & Environmental Pollution
Control Facilities Financing Authority,
500 American Airlines Inc 1985 Ser A............................... 8.75 12/ 1/25 542,365
500 Baxter Travenol Labs Inc 1983 Ser A............................ 8.00 9/ 1/12 582,220
- ------- ----------
6,490 7,078,774
- ------- ----------
</TABLE>
69
<PAGE>
<TABLE>
DEAN WITTER MULTI-STATE MUNICIPAL SERIES TRUST
PORTFOLIO OF INVESTMENTS--FLORIDA SERIES November 30, 1993 (continued)
===================================================================================================================================
<CAPTION>
Principal
Amount (in Coupon Maturity
thousands) Rate Date Value
- ---------- ------- -------- -----
<C> <S> <C> <C> <C>
MORTGAGE REVENUE--SINGLE FAMILY (5.6%)
$ 1,205 Brevard County Housing Finance Authority, Refg Ser 1991 B
(FSA Insured)..................................................... 7.00 % 3/ 1/13 $ 1,300,159
80 Broward County Housing Finance Authority, GNMA & FNMA
Collateralized 1991 Ser A (AMT)................................... 7.35 3/ 1/23 86,033
200 Dade County Housing Finance Authority, GNMA & FNMA
Collateralized 1991 Ser B (AMT).................................. 7.25 9/ 1/23 215,390
700 Florida Housing Finance Agency, GNMA Collateralized 1990
Ser G-1 (AMT)................................................... 7.90 3/ 1/22 768,719
110 Orange County Housing Finance Authority, GNMA Collateralized
1991 Ser A (AMT).................................................. 7.375 9/ 1/24 117,615
105 Puerto Rico Housing & Finance Agency, Subsidy Prepayment
(Prerefunded)..................................................... 7.25 12/ 1/06 112,520
2,000 Puerto Rico Housing Finance Corporation, Portfolio One GNMA-Backed
Ser C............................................................. 6.85 10/15/23 2,140,320
- ------- ----------
4,400 4,740,756
- ------- ----------
NURSING & HEALTH RELATED FACILITIES REVENUE (1.3%)
1,000 Hillsborough County Industrial Authority, Allegany Health/John
- ------- Knox Village of Tampa Bay Inc Ser 1992 (MBIA Insured)........... 6.375 12/ 1/12 1,079,400
----------
PUBLIC FACILITIES REVENUE (7.8%)
1,500 Brevard County School Board, Florida School Boards Association Inc
Ser 1992 A COPs (AMBAC Insured)................................... 6.50 7/ 1/12 1,638,660
1,000 Miami Sports & Eibition Authority, Refg Ser 1992 A (FGIC Insured).. 6.15 10/ 1/20 1,059,980
500 Orange County, Solid Waste Ser 1992 (FGIC Insured)................. 6.375 10/ 1/17 537,850
1,000 Palm Beach County, Criminal Justice Refg Ser 1993 (FGIC Insured)... 5.375 6/ 1/08 1,022,770
2,150 St Lucie County, Sales Tax Ser 1992 (FGIC Insured)................. 6.50 10/ 1/22 2,352,229
- ------- ----------
6,150 6,611,489
- ------- ----------
RESOURCE RECOVERY REVENUE (3.6%)
Broward County,
690 SES Broward Co LP South Ser 1984.................................. 7.95 12/ 1/08 782,763
1,070 Broward Waste Energy Co North Ser 1984............................ 7.95 12/ 1/08 1,213,851
1,000 Lee County, Solid Waste Ser 1991 A (AMT) (MBIA Insured)............ 6.50 10/ 1/13 1,085,950
- ------- ----------
2,760 3,082,564
- ------- ----------
TRANSPORTATION FACILITIES REVENUE (24.8%)
Dade County, Aviation,
400 Ser U (AMT)....................................................... 6.75 10/ 1/06 430,984
1,000 1992 Ser B (MBIA Insured)......................................... 6.60 10/ 1/22 1,097,310
Mid-Bay Bridge Authority,
5,000 Sr Lien Crossover Refg Ser 1993 A................................. 6.10 10/ 1/22 5,113,700
500 Ser 1991 A (ETM).................................................. 6.875 10/ 1/22 605,455
Florida Department of Transportation, Turnpike
1,000 Ser 1991 A (AMBAC Insured)........................................ 6.25 7/ 1/20 1,052,270
1,000 Ser 1992 A (FGIC Insured) (Prerefunded)........................... 6.35 7/ 1/22 1,101,101
</TABLE>
70
<PAGE>
<TABLE>
DEAN WITTER MULTI-STATE MUNICIPAL SERIES TRUST
PORTFOLIO OF INVESTMENTS--FLORIDA SERIES November 30, 1993 (continued)
===================================================================================================================================
<CAPTION>
Principal
Amount (in Coupon Maturity
thousands) Rate Date Value
- ---------- ------- -------- -----
<C> <S> <C> <C> <C>
Greater Orlando Aviation Authority,
$ 750 Ser 1992 A (AMT) (FGIC Insured)................................... 6.50 % 10/ 1/12 $ 824,452
275 Ser 1988 A (AMT).................................................. 8.375 10/ 1/16 319,120
2,000 Ser 1993 A (AMT) (AMBAC Insured).................................. 5.50 10/ 1/18 1,975,820
1,250 Hillsborough County Aviation Authority, Tampa Intl Airport Refg
Ser 1993 B (FGIC Insured)......................................... 5.60 10/ 1/19 1,253,100
1,500 Lee County, Refg Ser 1991 (AMBAC Insured).......................... 6.00 10/ 1/17 1,556,745
1,500 Osceola County, Osceola Parkway (MBIA Insured)..................... 6.10 4/ 1/17 1,580,985
300 Volusia County, Daytona Beach Regional Airport Ser 1991 (AMT)
(MBIA Insured).................................................... 7.00 10/ 1/21 340,128
500 Puerto Rico Highway Authority, Ser Q............................... 6.00 7/ 1/20 505,370
Puerto Rico Highway & Transportation Authority,
2,000 Refg Ser X........................................................ 5.25 7/ 1/21 1,859,760
1,200 Ser S (Prerefunded)............................................... 6.50 7/ 1/22 1,367,748
- ------- -----------
20,175 20,984,048
- ------- -----------
WATER & SEWER REVENUE (10.6%)
500 Boynton Beach, Utility Ser 1992 (FGIC Insured)..................... 6.25 11/ 1/12 537,675
1,425 Charlotte County, Utility Refg Ser 1993 (FGIC Insured)............. 5.25 10/ 1/21 1,372,432
1,000 Key West, Sewer Refg Ser 1993 (FGIC Insured)....................... 5.70 10/ 1/20 1,011,920
1,000 Orange County, Water Utilities Ser 1992 (AMBAC Insured)............ 6.25 10/ 1/17 1,065,740
500 Port St Lucie, Stormwater Utility Ser 1991 (AMBAC Insured)......... 6.625 5/ 1/15 541,555
2,000 Tampa, Water & Sewer Ser 1992 A (FGIC Insured)..................... 6.00 10/ 1/17 2,095,740
2,030 Puerto Rico Aqueduct & Sewer Authority, Ser 1988 A................. 7.90 7/ 1/07 2,330,582
- ------- -----------
8,455 8,955,644
- ------- -----------
OTHER REVENUE (3.7%)
1,000 Homestead, Hurricane Andrew Special Insurance Assessment
Ser 1993 (MBIA Insured)........................................... 5.25 3/ 1/03 1,027,200
2,000 Orlando, Cap Impr Refg Ser 1992.................................... 6.00 10/ 1/22 2,061,220
- ------- -----------
3,000 3,088,420
- ------- -----------
79,455 TOTAL MUNICIPAL BONDS (IDENTIFIED COST $77,744,229)................ 83,181,420
- ------- -----------
SHORT-TERM FLORIDA EXEMPT MUNICIPAL OBLIGATION (1.9%)
1,600 Sarasota County Health Authority, Venice Hospital (Tender 12/1/93). 2.00* 12/ 1/15
(Identified Cost $1,600,000)...................................... 1,600,000
- ------- -----------
$81,055 TOTAL INVESTMENTS (IDENTIFIED COST $79,344,229) (A)................ 100.3% 84,781,420
=======
LIABILITIES IN EXCESS OF CASH AND OTHER ASSETS..................... (0.3) (287,305)
------- -----------
NET ASSETS......................................................... 100.0% $84,494,115
======= ===========
<FN>
- ------------
+ Current coupon rate for residual interest bonds. This rate resets periodically as the auction rate on the related short-term
security fluctuates.
* Variable or floating rate security. Coupon rate shown reflects current rate.
(a) The aggregate cost for federal income tax purposes is $79,344,229; the aggregate gross unrealized appreciation is $5,631,750
and the aggregate gross unrealized depreciation is $194,559, resulting in net unrealized appreciation of $5,437,191.
See Notes to Financial Statements
</TABLE>
71
<PAGE>
<TABLE>
DEAN WITTER MULTI-STATE MUNICIPAL SERIES TRUST
PORTFOLIO OF INVESTMENTS--MASSACHUSETTS SERIES November 30, 1993
===================================================================================================================================
<CAPTION>
Principal
Amount (in Coupon Maturity
thousands) Rate Date Value
- ---------- ------- -------- -----
<C> <S> <C> <C> <C>
MASSACHUSETTS EXEMPT MUNICIPAL BONDS (96.0%)
GENERAL OBLIGATION (9.4%)
Massachusetts,
$ 500 Refg 1992 Ser B................................................... 6.50 % 8/ 1/08 $ 553,040
1,000 Refg 1992 Ser A................................................... 5.50 2/ 1/11 1,001,560
150 Nantucket, 1991.................................................... 6.80 12/ 1/11 165,354
- ------- ----------
1,650 1,719,954
- ------- ----------
EDUCATIONAL FACILITIES REVENUE (24.6%)
Massachusetts Health & Educational Facilities Authority,
100 Amherst College Ser E............................................. 6.80 11/ 1/21 110,844
1,000 Boston College Ser K.............................................. 5.25 6/ 1/18 942,220
200 Boston University Ser L RIBS (MBIA Insured)....................... 10.308+ 10/ 1/31 238,250
150 Community College Ser A (Connie Lee Insured)...................... 6.60 10/ 1/22 164,652
200 Stonehill College Ser E (MBIA Insured)............................ 6.60 7/ 1/20 219,996
400 Suffolk University Ser B (Connie Lee Insured)..................... 6.25 7/ 1/12 426,780
500 University of Massachusetts Foundation Inc/Medical School
Research Ser A (Connie Lee Insured)............................. 6.00 7/ 1/23 516,985
150 Worcester Polytechnic Institute Refg Ser E........................ 6.625 9/ 1/17 165,881
Massachusetts Industrial Finance Agency,
200 Babson College Ser 1992 A (MBIA Insured).......................... 6.50 10/ 1/22 218,962
1,000 Brooks School Ser 1993............................................ 5.90 7/ 1/13 1,029,550
150 Holy Cross College Ser 1992....................................... 6.45 1/ 1/12 158,177
300 Mount Holyoke College Refg Ser 1992 A (MBIA Insured).............. 6.30 7/ 1/13 322,068
- ------- ----------
4,350 4,514,365
- ------- ----------
ELECTRIC REVENUE (2.9%)
500 Massachusetts Municipal Wholesale Electric Company, Power Supply
1992 Ser C........................................................ 6.625 7/ 1/18 535,110
- ------- ----------
HOSPITAL REVENUE (17.7%)
500 Boston, Boston City Hospital--FHA Insured Mtge Refg Ser B.......... 5.75 2/15/13 495,360
Massachusetts Health & Educational Facilities Authority,
100 Charlton Memorial Hospital Ser B.................................. 7.25 7/ 1/13 111,591
500 Dana-Farber Cancer Institute Ser F (FGIC Insured)................. 6.00 12/ 1/15 524,885
500 Lahey Clinic Medical Center Ser B (MBIA Insured).................. 5.625 7/ 1/15 501,445
1,000 Massachusetts General Hospital Ser F (MBIA Insured)............... 6.00 7/ 1/15 1,048,480
200 McLean Hospital Ser C (FGIC Insured).............................. 6.625 7/ 1/15 220,338
100 New England Deaconess Hospital Ser C.............................. 7.20 4/ 1/22 111,481
200 New England Medical Center Hospitals Ser F (FGIC Insured)......... 6.625 7/ 1/25 220,338
- ------- ----------
3,100 3,233,918
- ------- ----------
INDUSTRIAL DEVELOPMENT/POLLUTION CONTROL REVENUE (5.5%)
1,000 Massachusetts Industrial Finance Agency, Eastern Edison Co
Refg 1993 Ser..................................................... 5.875 8/ 1/08 1,007,030
- ------- ----------
MORTGAGE REVENUE--MULTI-FAMILY (2.3%)
Massachusetts Housing Finance Agency,
200 Hsg Dev 1986 Ser A (AMT).......................................... 7.75 12/ 1/19 210,914
200 Residential Dev 1992 Ser F FNMA Collateralized.................... 6.30 11/15/24 210,170
- ------- ----------
400 421,084
- ------- ----------
</TABLE>
72
<PAGE>
<TABLE>
DEAN WITTER MULTI-STATE MUNICIPAL SERIES TRUST
PORTFOLIO OF INVESTMENTS--MASSACHUSETTS SERIES November 30, 1993 (continued)
===================================================================================================================================
<CAPTION>
Principal
Amount (in Coupon Maturity
thousands) Rate Date Value
- ---------- ------- -------- -----
<C> <S> <C> <C> <C>
MORTGAGE REVENUE--SINGLE FAMILY (3.7%)
Massachusetts Housing Finance Agency,
$ 435 Ser 21 (AMT)...................................................... 6.30 % 6/ 1/25 $ 446,419
220 Ser 21 (AMT)...................................................... 7.125 6/ 1/25 236,236
- ------- ----------
655 682,655
- ------- ----------
RESOURCE RECOVERY (4.8%)
Massachusetts Industrial Finance Agency,
300 Massachusetts REFUSE TECH Inc Refg Ser 1993 A...................... 6.30 7/ 1/05 318,228
500 SEMASS Inc Ser 1991 A.............................................. 9.00 7/ 1/15 565,345
- ------- ----------
800 883,573
- ------- ----------
STUDENT LOAN REVENUE (3.5%)
200 Massachusetts Educational Facilities Authority, Education
Loan Issue D Ser 1991 (AMT) (MBIA Insured)........................ 7.25 1/ 1/09 215,070
400 New England Education Loan Marketing Corporation, 1992 Sub Issue H
(AMT)............................................................. 6.90 11/ 1/09 434,839
- ------- ----------
600 649,909
- ------- ----------
TRANSPORTATION FACILITIES REVENUE (13.3%)
300 Guam, Highway 1992 Ser A (Capital Guaranty Insured)................ 6.30 5/ 1/12 322,767
300 Massachusetts, Highway Impr 1992 Ser A............................. 6.00 6/ 1/13 311,931
Massachusetts Port Authority,
500 Ser 1992-B........................................................ 6.00 7/ 1/13 524,240
100 Ser A 1990 (AMT) (FGIC Insured)................................... 7.50 7/ 1/20 115,809
250 Massachusetts Turnpike Authority, 1993 Ser A....................... 5.00 1/ 1/13 234,765
1,000 Puerto Rico Highway & Transportation Authority, Refg Ser X......... 5.25 7/ 1/21 929,880
- ------- ----------
2,450 2,439,392
- ------- ----------
WATER & SEWER REVENUE (8.3%)
500 Boston Water & Sewer Commission, Sr 1992 Ser A..................... 5.75 11/ 1/13 518,065
500 Massachusetts Water Resources Authority, Ser A 1990................ 6.50 12/ 1/19 537,275
400 Puerto Rico Aqueduct & Sewer Authority, Ser 1988 A................. 7.90 7/ 1/07 459,228
- ------- ----------
1,400 1,514,568
- ------- ----------
16,905 TOTAL MUNICIPAL BONDS (IDENTIFIED COST $16,622,399)................ 17,601,558
- ------- ----------
SHORT-TERM MASSACHUSETTS EXEMPT MUNICIPAL
OBLIGATION (0.5%)
100 Massachusetts Health & Educational Facilities Authority,
Williams College Ser E (Tender 12/1/93)(Identified Cost $100,000) 1.90* 8/ 1/14 100,000
- -------
----------
$17,005 TOTAL INVESTMENTS (IDENTIFIED COST $16,722,399) (A)................ 96.5% 17,701,558
=======
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES..................... 3.5 642,022
------ -----------
NET ASSETS......................................................... 100.0% $18,343,580
====== ===========
<FN>
- ------------
+ Current coupon rate for residual interest bonds. This rate resets periodically as the auction rate on the related short-term
securities fluctuates.
* Variable or floating rate security. Coupon rate shown reflects current rate.
(a) The aggregate cost for federal income tax purposes is $16,722,399; the aggregate gross unrealized appreciation is $997,045 and
the aggregate gross unrealized depreciation is $17,886, resulting in net unrealized appreciation of $979,159.
See Notes to Financial Statements
</TABLE>
73
<PAGE>
<TABLE>
DEAN WITTER MULTI-STATE MUNICIPAL SERIES TRUST
PORTFOLIO OF INVESTMENTS--MICHIGAN SERIES November 30, 1993
===================================================================================================================================
<CAPTION>
Principal
Amount (in Coupon Maturity
thousands) Rate Date Value
- ---------- ------- -------- -----
<C> <S> <C> <C> <C>
MICHIGAN EXEMPT MUNICIPAL BONDS (89.2%)
GENERAL OBLIGATION (5.2%)
$ 500 Kentwood Public Schools, 1992 Bldg & Site Refg..................... 6.40 % 5/ 1/15 $ 536,940
600 River Rouge School District, Bldg & Unltd Tax 1993 (FSA Insured)... 5.625 5/ 1/22 602,022
- ------- ---------
1,100 1,138,962
- ------- ---------
EDUCATIONAL FACILITIES REVENUE (13.8%)
Central Michigan University,
300 Refg Ser 1992 (MBIA Insured)...................................... 5.50 10/ 1/15 299,595
1,000 Refg Ser 1993 (MBIA Insured)...................................... 5.50 10/ 1/10 997,740
1,000 Michigan State University, Ser 1992 A.............................. 6.00 8/15/16 1,041,600
500 Wayne State University, Ser 1993 (AMBAC Insured)................... 5.50 11/15/18 492,645
200 Western Michigan University, Ser 1991 B (AMBAC Insured)............ 6.50 7/15/21 217,694
- ------- ---------
3,000 3,049,274
- ------- ---------
ELECTRIC REVENUE (5.4%)
500 Michigan Public Power Agency, Belle River 1993 A................... 5.25 1/ 1/18 475,080
500 Wyandotte, Electric Refg 1992 (MBIA Insured)....................... 6.25 10/ 1/17 533,205
200 Puerto Rico Electric Power Authority, Power Ser O.................. 5.00 7/ 1/12 187,776
- ------- ---------
1,200 1,196,061
- ------- ---------
HOSPITAL REVENUE (17.5%)
1,000 Kent Hospital Finance Authority, Butterworth Hospital Refg
Ser 1993 A....................................................... 5.375 1/15/19 949,120
Michigan Hospital Finance Authority,
300 Detroit Medical Center Oblig Group Ser 1991 A..................... 7.50 8/15/11 343,644
100 Henry Ford Continuing Care Corp Ser 1991.......................... 6.75 7/ 1/11 109,052
500 Henry Ford Health System Refg Ser 1992 A.......................... 5.75 9/ 1/17 505,940
1,000 Oakwood Hospital Oblig Group Refg Ser 1993 A (FGIC Insured)....... 5.625 11/ 1/18 996,620
500 Royal Oak Hospital Finance Authority, William Beaumont Hospital
Ser 1991 D....................................................... 6.75 1/ 1/20 549,550
400 University of Michigan, Ser 1990................................... 6.375 12/ 1/24 415,176
- ------- ---------
3,800 3,869,102
- ------- ---------
INDUSTRIAL DEVELOPMENT/POLLUTION CONTROL REVENUE (7.7%)
200 Michigan Strategic Fund, Ford Motor Co Refg Ser 1991 A............. 7.10 2/ 1/06 229,634
Monroe County,
200 Detroit Edison Co Proj #1 (AMT) (FGIC Insured)..................... 7.65 9/ 1/20 233,528
500 Detroit Edison Co Monroe & Fermi Plants Collateralized Ser 1-1992
(AMT) (MBIA Insured)............................................. 6.875 9/ 1/22 552,675
Puerto Rico Industrial, Medical & Environmental Pollution Control
Facilities Financing Authority,
300 American Airlines Inc 1985 Ser A................................. 8.75 12/ 1/25 325,419
300 Baxter Travenol Labs Inc 1983 Ser A.............................. 8.00 9/ 1/12 349,332
- ------- ---------
1,500 1,690,588
- ------- ---------
</TABLE>
74
<PAGE>
<TABLE>
DEAN WITTER MULTI-STATE MUNICIPAL SERIES TRUST
PORTFOLIO OF INVESTMENTS--MICHIGAN SERIES November 30, 1993 (continued)
===================================================================================================================================
<CAPTION>
Principal
Amount (in Coupon Maturity
thousands) Rate Date Value
- ---------- ------- -------- -----
<C> <S> <C> <C> <C>
MORTGAGE REVENUE--MULTI-FAMILY (9.1%)
Michigan Housing Development Authority,
$ 500 Rental Ser 1992 A................................................. 6.60 % 4/ 1/12 $ 523,190
1,000 1992 Ser A (FSA Insured).......................................... 6.50 4/ 1/23 1,051,510
400 Ser 1990 A (AMT).................................................. 7.70 4/ 1/23 430,176
- ------- ----------
1,900 2,004,876
- ------- ----------
NURSING & HEALTH RELATED FACILITIES REVENUE (5.8%)
1,200 University of Michigan, Medical Service Plan Ser 1991.............. 6.50 12/ 1/21 1,288,512
- ------- ----------
PUBLIC FACILITIES REVENUE (7.2%)
1,500 Michigan Building Authority, Refg Ser.............................. 6.25 10/ 1/20 1,586,775
- ------- ----------
RESOURCE RECOVERY REVENUE (2.2%)
300 Detroit Economic Development Corporation, Ser A 1991 (AMT)
(FSA Insured)..................................................... 6.875 5/ 1/09 330,195
150 Greater Detroit Resource Recovery Authority, Ser A................. 9.25 12/13/08 164,839
- ------- ----------
450 495,034
- ------- ----------
TRANSPORTATION REVENUE (5.1%)
250 Michigan, Trunk Line Refg Ser 1992 A............................... 5.75 10/ 1/12 254,128
Wayne County, Detroit Metropolitan Wayne County Airport Sub Lien
200 Ser 1991 A (MBIA Insured)......................................... 6.75 12/ 1/19 219,966
250 Ser 1991 B (AMT) (MBIA Insured)................................... 6.75 12/ 1/21 273,250
400 Ser 1993 C (MBIA Insured)......................................... 5.25 12/ 1/13 385,604
- ------- ----------
1,100 1,132,948
- ------- ----------
WATER & SEWER REVENUE (10.2%)
Detroit,
500 Sewage Disposal Ser 1991 (FGIC Insured).......................... 6.625 7/ 1/21 546,975
500 Sewage Refg Ser 1993 A INFLOS (FGIC Insured)..................... 8.480+ 7/ 1/23 506,875
500 Water Supply Refg Ser 1992 INFLOS (FGIC Insured)................. 9.830+ 7/ 1/22 613,750
500 Puerto Rico Aqueduct & Sewer Authority, Ser 1988 A................ 7.90 7/ 1/07 574,035
- ------- ----------
2,000 2,241,635
- ------- ----------
18,750 TOTAL MUNICIPAL BONDS (IDENTIFIED COST $18,460,251)............... 19,693,767
- ------- ----------
SHORT-TERM MICHIGAN EXEMPT MUNICIPAL
OBLIGATIONS (7.7%)
700 Grand Rapids, Water Supply Impr Ser 1993 (FGIC Insured)
(Tender 12/1/93).................................................. 2.10* 1/ 1/20 700,000
1,000 University of Michigan, Hospital Ser 1992 A (Tender 12/1/93)....... 1.90* 12/ 1/19 1,000,000
- ------- ----------
1,700 TOTAL SHORT-TERM MICHIGAN EXEMPT MUNICIPAL
OBLIGATIONS (IDENTIFIED COST $1,700,000).......................... 1,700,000
- ------- ----------
$20,450 TOTAL INVESTMENTS (IDENTIFIED COST $20,160,251)(A)................. 96.9% 21,393,767
=======
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES..................... 3.1 689,660
------ ----------
NET ASSETS......................................................... 100.0% $22,083,427
====== ===========
<FN>
- ------------
+ Current coupon rate for residual interest bonds. This rate resets periodically as the auction rate on the related short-term
securities fluctuates.
* Variable or floating rate securities. Coupon rate shown reflects current rate.
(a) The aggregate cost for federal income tax purposes is $20,160,251; the aggregate gross unrealized appreciation is $1,278,236
and the aggregate gross unrealized depreciation is $44,720, resulting in net unrealized appreciation of $1,233,516.
See Notes to Financial Statements
</TABLE>
75
<PAGE>
<TABLE>
DEAN WITTER MULTI-STATE MUNICIPAL SERIES TRUST
PORTFOLIO OF INVESTMENTS--MINNESOTA SERIES November 30, 1993
===================================================================================================================================
<CAPTION>
Principal
Amount (in Coupon Maturity
thousands) Rate Date Value
- ---------- ------- -------- -----
<C> <S> <C> <C> <C>
MINNESOTA EXEMPT MUNICIPAL BONDS (91.0%)
GENERAL OBLIGATION (7.3%)
$ 100 Little Falls Independent School District #482, Ser 1991
(AMBAC Insured)................................................... 6.80 % 2/ 1/10 $ 109,865
100 Minneapolis, Sales Tax Refg Ser 1992............................... 6.25 4/ 1/12 107,393
300 Minneapolis Board of Estimate & Taxation........................... 5.90 12/ 1/13 309,933
100 South Washington Independent School District #833, Ser 1991 A
(FGIC Insured).................................................... 6.875 6/ 1/09 111,945
200 Puerto Rico, Pub Impr Ser 1991..................................... 6.00 7/ 1/14 204,864
- ------- ---------
800 844,000
- ------- ---------
EDUCATIONAL FACILITIES REVENUE (13.6%)
Minnesota Higher Education Facilities Authority,
200 Hamline University Ser Three-K.................................... 6.60 6/ 1/09 213,662
250 St Marys College Ser Three-Q...................................... 6.15 10/ 1/23 257,825
100 University of St Thomas Ser Three-C (Prerefunded)................. 7.10 9/ 1/10 110,917
250 University of St Thomas Refg Ser Three-R2......................... 5.60 9/ 1/14 253,632
200 Northfield, St Olaf College Ser 1992............................... 6.40 10/ 1/21 218,458
500 University of Minnesota, Ser 1993 A INFLOS......................... 6.477+ 8/15/03 509,375
- ------- ---------
1,500 1,563,869
- ------- ---------
ELECTRIC REVENUE (6.5%)
300 Northern Municipal Power Agency, Refg Ser 1989 A................... 5.00 1/ 1/21 279,783
500 Southern Minnesota Municipal Power Agency, Ser 1993 B.............. 5.00 1/ 1/13 471,780
- ------- ---------
800 751,563
- ------- ---------
HOSPITAL REVENUE (22.3%)
500 Breckenridge, Catholic Health Corp Ser 1993........................ 5.25 11/15/13 473,365
200 Duluth Economic Development Authority, Saint Lukes Hospital Refg
Ser 1992 B (Connie Lee Insured)................................... 6.40 5/ 1/18 215,600
100 Minneapolis, Lifespan Inc/Children's Medical Center Ser 1990 C..... 7.00 12/ 1/20 110,386
500 Robbinsdale, North Memorial Medical Center Ser 1993-A
(AMBAC Insured)................................................... 5.45 5/15/13 499,390
Rochester, Mayo Foundation/Mayo Medical Center
250 Ser 1992 I........................................................ 5.75 11/15/21 253,440
200 Ser 1992 F........................................................ 6.25 11/15/21 210,868
Saint Paul Housing & Redevelopment Authority,
300 Health East Refg Ser 1993-A....................................... 6.625 11/ 1/17 309,843
500 St Paul-Ramsey Medical Center Ser 1993 (AMBAC Insured)............ 5.55 5/15/23 499,980
- ------- ---------
2,550 2,572,872
- ------- ---------
INDUSTRIAL DEVELOPMENT/POLLUTION CONTROL REVENUE (11.1%)
500 Anoka County, United Power Assoc Ser 1987 A (NRU-CFC Gtd) (AMT).... 6.95 12/ 1/08 545,640
500 Bass Brook, Minnesota Power & Light Co Refg Ser 1992............... 6.00 7/ 1/22 510,565
Minneapolis Community Development Agency,
100 Ltd Tax Supported Common Bond Fund Ser 1991-3 (AMT)............... 8.25 12/ 1/11 114,143
100 Ltd Tax Supported Common Bond Fund Ser 1991-1 (AMT)............... 8.00 12/ 1/16 113,466
- ------- ---------
1,200 1,283,814
- ------- ---------
</TABLE>
76
<PAGE>
<TABLE>
DEAN WITTER MULTI-STATE MUNICIPAL SERIES TRUST
PORTFOLIO OF INVESTMENTS--MINNESOTA SERIES November 30, 1993 (continued)
===================================================================================================================================
<CAPTION>
Principal
Amount (in Coupon Maturity
thousands) Rate Date Value
- ---------- ------- -------- -----
<C> <S> <C> <C> <C>
MORTGAGE REVENUE--MULTI-FAMILY (5.6%)
$ 300 Burnsville, Summit Park Apts FHA Insured Refg Ser 1993............. 6.00 % 7/ 1/33 $ 304,230
50 Minneapolis, Riverplace Ser 1987 A................................. 7.10 1/ 1/20 52,532
200 Minneapolis Housing Finance Agency, Ser 1992 A..................... 6.95 8/ 1/17 209,476
75 Saint Cloud, Northway A&B Ser 1990................................. 7.50 12/ 1/18 78,852
- ------- ----------
625 645,090
- ------- ----------
MORTGAGE REVENUE--SINGLE FAMILY (10.7%)
100 Dakota & Washington Counties Housing & Redevelopment Authority,
GNMA-Backed Ser 1988 (AMT)........................................ 8.375 9/ 1/21 144,036
200 Minneapolis-Saint Paul Housing Finance Board, GNMA-Backed
Phase IX Ser 1991 (AMT)........................................... 7.25 8/ 1/21 215,778
Minnesota Housing Finance Agency,
130 Ser 1990 D (AMT).................................................. 8.00 1/ 1/23 142,808
500 Ser 1992 C-1 (AMT)................................................ 6.75 7/ 1/23 527,935
200 Ser 1992 H (AMT).................................................. 6.50 1/ 1/26 206,200
- ------- ----------
1,130 1,236,757
- ------- ----------
NURSING & HEALTH RELATED FACILITIES REVENUE (4.7%)
500 Minneapolis & Saint Paul Housing & Redevelopment Authority,
Group Health Plan Inc Ser 1992.................................... 6.75 12/ 1/13 545,930
- ------- ----------
PUBLIC FACILITIES REVENUE (6.4%)
300 Hennepin County, Ser 1991 COPs..................................... 6.80 5/15/17 328,287
400 Saint Paul Housing & Redevelopment Authority, Civic Center Ser 1993 5.45 11/ 1/13 399,493
- ------- ----------
700 727,780
- ------- ----------
TRANSPORTATION REVENUE (0.9%)
100 Minneapolis-St Paul Metropolitan Airports Commission, Ser 8 (AMT).. 6.60 1/ 1/11 108,317
- ------- ----------
WATER & SEWER REVENUE (1.9%)
Minnesota Public Facilities Authority,
100 Water Pollution Control Ser 1991 A................................ 6.95 3/ 1/13 112,996
100 Water Pollution Control Ser 1992 A................................ 6.50 3/ 1/14 109,154
- ------- ----------
200 222,150
- ------- ----------
10,105 TOTAL MUNICIPAL BONDS (IDENTIFIED COST $9,944,999)................. 10,502,142
- ------- ----------
SHORT-TERM MINNESOTA EXEMPT MUNICIPAL
OBLIGATION (4.3%)
500 Beltrami County, Environmental Northwood Panelboard
(Tender 12/1/93) (Identified Cost $500,000)....................... 1.90 * 12/ 1/21 500,000
- ------- ----------
$10,605 TOTAL INVESTMENTS (IDENTIFIED COST $10,444,999)(A)................. 95.3% 11,002,142
=======
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES..................... 4.7 535,749
------ -----------
NET ASSETS......................................................... 100.0% $11,537,891
====== ===========
<FN>
- ------------
+ Current coupon rate for residual interest bonds. This rate resets periodically as the auction rate on the related short-term
securities fluctuates.
* Variable or floating rate securities. Coupon rate shown reflects current rate.
(a) The aggregate cost for federal income tax purposes is $10,444,999; the aggregate gross unrealized appreciation is $589,615 and
the aggregate gross unrealized depreciation is $32,472, resulting in net appreciation of $557,143.
See Notes to Financial Statements
</TABLE>
77
<PAGE>
<TABLE>
DEAN WITTER MULTI-STATE MUNICIPAL SERIES TRUST
PORTFOLIO OF INVESTMENTS--NEW JERSEY SERIES November 30, 1993
===================================================================================================================================
<CAPTION>
Principal
Amount (in Coupon Maturity
thousands) Rate Date Value
- ---------- ------- -------- -----
<C> <S> <C> <C> <C>
NEW JERSEY EXEMPT MUNICIPAL BONDS (95.8%)
GENERAL OBLIGATION (6.3%)
$ 500 Essex County, FY Ser 1991 (FSA Insured)............................ 6.50 % 12/ 1/11 $ 545,080
3,000 Guam, 1993 Ser A................................................... 5.375 11/15/13 2,870,760
- ------- ---------
3,500 3,415,840
- ------- ---------
EDUCATIONAL FACILITIES REVENUE (3.0%)
500 New Jersey Economic Development Authority, The Seeing Eye Inc 1991. 7.30 4/ 1/11 541,435
500 Rutgers, The State University Refg Ser R........................... 6.50 5/ 1/13 545,660
500 University of Medicine & Dentistry of New Jersey, Refg Ser D....... 6.50 12/ 1/04 553,600
- ------- ---------
1,500 1,640,695
- ------- ---------
ELECTRIC REVENUE (3.4%)
2,000 Puerto Rico Electric Power Authority, Power Ser O.................. 5.00 7/ 1/12 1,877,760
- ------- ---------
HOSPITAL REVENUE (10.5%)
New Jersey Health Care Facilities Financing Authority,
1,000 Atlantic City Medical Center Ser C................................ 6.80 7/ 1/11 1,099,060
500 Cathedral Health Services Inc Ser A FHA Insured Mtges............. 7.25 2/15/21 553,150
1,000 Chilton Memorial Hospital Ser D................................... 5.00 7/ 1/13 914,680
1,000 Columbus Hospital Ser A........................................... 7.50 7/ 1/08 1,031,580
500 Pascack Valley Hospital Assn Ser 1991............................. 6.90 7/ 1/21 546,595
500 Robert Wood Johnson University Hospital Ser B (MBIA Insured)...... 6.625 7/ 1/16 548,290
1,000 Underwood-Memorial Hospital Ser B (AMBAC Insured)................. 5.70 7/ 1/23 1,015,200
- ------- ---------
5,500 5,708,555
- ------- ---------
INDUSTRIAL DEVELOPMENT/POLLUTION CONTROL REVENUE (14.3%)
500 Middlesex County Pollution Control Financing Authority,
Amerada Hess Corp Refg Ser 1992................................... 6.875 12/ 1/22 531,135
New Jersey Economic Development Authority,
500 American Airlines Inc Ser 1991 (AMT).............................. 7.10 11/ 1/31 541,155
1,000 BP Oil Ser 1982................................................... 6.55 10/ 1/12 1,065,520
500 Hackensack Water Co Ser C (AMT)................................... 7.00 10/ 1/17 542,265
300 Jersey Central Power & Light Co 1985 Ser.......................... 7.10 7/ 1/15 333,402
500 New Jersey Natural Gas Co, Ser 1991 B (AMT)....................... 7.25 3/ 1/21 548,040
Salem County Pollution Control Financing Authority,
2,100 E I du Pont de Nemours & Co 1992 Ser A (AMT)...................... 6.125 7/15/22 2,195,781
2,000 Public Service Electric & Gas Co 1993 Ser A (MBIA Insured)........ 5.70 5/ 1/28 2,033,460
- ------- ---------
7,400 7,790,758
- ------- ---------
MORTGAGE REVENUE--MULTI-FAMILY (3.0%)
New Jersey Housing & Mortgage Finance Agency,
1,000 Presidential Plaza at Newport--FHA Insured Mtges Refg 1991 Ser 1.. 7.00 5/ 1/30 1,098,710
500 Rental 1991 Ser A (AMT)........................................... 7.25 11/ 1/22 523,560
- ------- ---------
1,500 1,622,270
- ------- ---------
MORTGAGE REVENUE--SINGLE FAMILY (1.3%)
New Jersey Housing & Mortgage Finance Agency, Home Buyer Ser E
170 (AMT) (MBIA Insured).............................................. 7.65 10/ 1/16 176,146
500 Puerto Rico Housing Finance Corporation, Portfolio Two GNMA-Backed
Ser E RIBS (AMT)................................................. 10.255+ 8/ 4/25 548,750
- ------- ----------
670 724,896
- ------- ----------
NURSING & HEALTH RELATED FACILITIES REVENUE (2.0%)
1,000 New Jersey Health Care Facilities Financing Authority, Spectrum For
- ------- Living--FHA Insured Mortgage Refg Ser B........................... 6.50 2/ 1/22 1,069,380
---------
</TABLE>
78
<PAGE>
<TABLE>
DEAN WITTER MULTI-STATE MUNICIPAL SERIES TRUST
PORTFOLIO OF INVESTMENTS--NEW JERSEY SERIES November 30, 1993 (continued)
===================================================================================================================================
<CAPTION>
Principal
Amount (in Coupon Maturity
thousands) Rate Date Value
- ---------- ------- -------- -----
<C> <S> <C> <C> <C>
PUBLIC FACILITIES REVENUE (10.9%)
$ 1,000 Atlantic County Utilities Authority, Solid Waste Ser 1992.......... 7.125% 3/ 1/16 $1,074,770
500 Essex County Improvement Authority, Irvington Township School
District Ser 1992 (FSA Insured).................................. 6.625 10/ 1/17 556,265
750 Monmouth County Improvement Authority, Millstone Township Board
of Education Ser 1993............................................. 5.55 2/15/18 751,170
New Jersey Sports & Exposition Authority,
1,000 Convention Ctr Luxury Tax 1992 Ser A (MBIA Insured)............... 6.00 7/ 1/12 1,057,760
2,000 State Contract 1993 Ser A......................................... 5.50 9/ 1/23 1,991,080
500 Passaic County Utilities Authority, Solid Waste Ser 1991 A......... 7.00 11/15/07 536,385
- ------- ---------
5,750 5,967,430
- ------- ---------
RESOURCE RECOVERY REVENUE (9.9%)
1,000 Mercer County Improvement Authority, Solid Waste Refg Ser A of 1992
(AMT) (FGIC Insured).............................................. 6.70 4/ 1/13 1,106,900
3,000 Union County Utilities Authority, 1991 Ser A (AMT)................. 7.20 6/15/14 3,292,980
900 Warren County Pollution Control Financing Authority, Warren Energy
Resource Co Ltd Partnership Ser 1984 (MBIA Insured)............... 6.60 12/ 1/07 1,013,490
- ------- ----------
4,900 5,413,370
- ------- ----------
TRANSPORTATION FACILITIES REVENUE (11.7%)
1,000 Delaware River & Bay Authority, Ser 1993 (MBIA Insured)............ 5.00 1/ 1/17 957,700
1,500 New Jersey Highway Authority, Sr Parkway Refg 1992 Ser............. 6.25 1/ 1/14 1,596,855
1,000 New Jersey Turnpike Authority, Ser C............................... 5.75 1/ 1/11 1,018,560
3,000 Puerto Rico Highway & Transportation Authority, Refg Ser X......... 5.25 7/ 1/21 2,789,640
- ------- ----------
6,500 6,362,755
- ------- ----------
WATER & SEWER REVENUE (19.5%)
1,000 Atlantic City Municipal Utilities Authority, Refg Ser 1993......... 5.75 5/ 1/17 1,013,240
1,000 Lacey Municipal Utilities Authority, Ser 1993 A (MBIA Insured)..... 5.50 12/ 1/19 1,005,220
500 North Jersey District Supply Commission, Wanaque North Ser 1991 B
(MBIA Insured).................................................... 6.25 11/15/17 536,770
1,000 Northwest Bergen County Utilities Authority, Refg 1992 Ser
(MBIA Insured)................................................... 6.00 7/15/13 1,068,150
Passaic Valley Sewerage Commissioners,
2,000 Ser D (AMBAC Insured)............................................. 5.75 12/ 1/13 2,067,560
1,000 Refg Ser 1992 D (AMBAC Insured)................................... 5.80 12/ 1/18 1,027,830
2,000 Passaic Valley Water Commission, 1992 Ser A (FGIC Insured)......... 6.40 12/15/22 2,194,920
1,500 Puerto Rico Aqueduct & Sewer Authority, Ser 1988 A................. 7.90 7/ 1/07 1,722,105
- ------- ----------
10,000 10,635,795
- ------- ----------
50,220 TOTAL MUNICIPAL BONDS (IDENTIFIED COST $49,279,763)................ 52,229,504
- ------- ----------
SHORT-TERM NEW JERSEY EXEMPT MUNICIPAL
OBLIGATION (1.7%)
900 Union County Industrial Pollution Control Financing Authority,
Exxon (Tender 12/1/93) (Identified Cost $900,000)................ 1.80 * 10/ 1/24 900,000
- ------- ----------
$51,120 TOTAL INVESTMENTS (IDENTIFIED COST $50,179,763)(A)................. 97.5% 53,129,504
=======
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES .................... 2.5 1,369,470
------ ----------
NET ASSETS......................................................... 100.0% $54,498,974
====== ===========
<FN>
- ------------
+ Coupon rate for residual interest bonds. This rate resets periodically as the auction rate on the related short-term
securities fluctuate.
* Variable or floating rate security. Coupon rate shown reflects current rate.
(a) The aggregate cost for federal income tax purposes is $50,179,763; the aggregate gross unrealized appreciation is $3,150,214
and the gross unrealized depreciation is $200,473, resulting in net unrealized appreciation of $2,949,741.
See Notes to Financial Statements
</TABLE>
79
<PAGE>
<TABLE>
DEAN WITTER MULTI-STATE MUNICIPAL SERIES TRUST
PORTFOLIO OF INVESTMENTS--NEW YORK SERIES November 30, 1993
===================================================================================================================================
<CAPTION>
Principal
Amount (in Coupon Maturity
thousands) Rate Date Value
- ---------- ------- -------- -----
<C> <S> <C> <C> <C>
NEW YORK EXEMPT MUNICIPAL BONDS (95.5%)
GENERAL OBLIGATION (2.5%)
$ 100 New York City, 1990 Ser D.......................................... 6.00 % 8/ 1/06 $ 100,281
300 Puerto Rico, Pub Impr Refg Ser 1992 A.............................. 6.00 7/ 1/14 307,296
- ------- ---------
400 407,577
- ------- ---------
EDUCATIONAL FACILITIES REVENUE (16.2%)
New York State Dormitory Authority,
400 Manhattan College Ser 1992 A...................................... 6.50 7/ 1/19 433,088
1,000 State University Ser 1993 A....................................... 5.25 5/15/15 937,590
100 State University Ser 1990......................................... 7.00 5/15/16 110,966
345 University of Rochester Ser 1987.................................. 6.50 7/ 1/09 373,121
500 University of Rochester Ser 1993 A................................ 5.625 7/ 1/12 503,990
200 Upstate Community Colleges Ser 1991 A............................. 7.30 7/ 1/21 226,858
- ------- ---------
2,545 2,585,613
- ------- ---------
ELECTRIC REVENUE (4.9%)
New York State Power Authority,
500 Gen Pur Ser CC.................................................... 5.25 1/ 1/18 482,500
100 Gen Pur Ser AA.................................................... 6.25 1/ 1/23 105,820
200 Puerto Rico Electric Power Authority, Power Ser O.................. 5.00 7/ 1/12 187,776
- ------- ---------
800 776,096
- ------- ---------
HOSPITAL REVENUE (1.4%)
200 New York State Medical Care Facilities Finance Agency, Insured
- ------- Hospital & Nursing Home--FHA Insured Mortgage 1992 Ser A........... 6.70 8/15/23 219,484
---------
INDUSTRIAL DEVELOPMENT/POLLUTION CONTROL REVENUE (13.0%)
New York State Energy Research & Development Authority,
500 Brooklyn Union Gas Co 1991 Ser B (AMT) RIBS....................... 10.953+ 7/15/26 629,375
100 Consolidated Edison Co of New York Ser 1991 A (AMT)............... 7.50 1/ 1/26 114,108
500 Consolidated Edison Co of New York Ser 1991 A (AMT)............... 6.00 3/15/28 506,900
300 Long Island Lighting Co 1990 Ser A (AMT).......................... 7.15 6/ 1/20 324,216
250 Rochester Gas & Electric Corp Ser 1992 B (AMT) (MBIA Insured)..... 6.50 5/15/32 272,098
Puerto Rico Industrial, Medical & Environmental Pollution
Control Facilities Financing Authority,
100 American Airlines Inc 1985 Ser A................................. 8.75 12/ 1/25 108,473
100 Baxter Travenol Labs Inc 1983 Ser A.............................. 8.00 9/ 1/12 116,444
- ------- ---------
1,850 2,071,614
- ------- ---------
MORTGAGE REVENUE--SINGLE FAMILY (7.4%)
New York State Mortgage Agency,
500 Home Owners Ser 27 ............................................... 6.90 4/ 1/15 528,700
100 Home Owners Ser UU (AMT).......................................... 7.75 10/ 1/23 111,167
500 Puerto Rico Housing Finance Corporation, Portfolio Two
GNMA-Backed Ser E (AMT) RIBS.................................... 10.255+ 8/ 4/25 548,750
- ------- ---------
1,100 1,188,617
- ------- ---------
NURSING & HEALTH RELATED FACILITIES REVENUE (2.5%)
New York State Medical Care Facilities Finance Agency,
100 Mental Health 1991 Ser A.......................................... 7.75 8/15/11 115,748
250 Mental Health 1991 Ser D.......................................... 7.40 2/15/18 287,442
- ------- ---------
350 403,190
- ------- ---------
</TABLE>
80
<PAGE>
<TABLE>
DEAN WITTER MULTI-STATE MUNICIPAL SERIES TRUST
PORTFOLIO OF INVESTMENTS--NEW YORK SERIES November 30, 1993 (continued)
===================================================================================================================================
<CAPTION>
Principal
Amount (in Coupon Maturity
thousands) Rate Date Value
- ---------- ------- -------- -----
<C> <S> <C> <C> <C>
PUBLIC FACILITIES REVENUE (6.1%)
$ 350 New York City Cultural Resources Trust, The Museum of Modern Art
Refg Ser 1993 A................................................... 5.40 % 1/ 1/12 $ 352,884
95 New York State Urban Development Corporation, Correctional Ser 1... 7.75 1/ 1/14 108,401
500 United Nations Development Corporation, Sr Lien 1992 Refg Ser A.... 6.00 7/ 1/26 510,005
- ------- -----------
945 971,290
- ------- -----------
RESOURCE RECOVERY REVENUE (13.6%)
100 Hempstead Industrial Development Agency, 1985 American REF-FUEL
Co of Hempstead................................................... 7.40 12/ 1/10 108,704
655 New York State Environmental Facilities Corporation, Huntington
1989 Ser A (AMT).................................................. 7.50 10/ 1/12 715,365
500 Oneida-Herkimer Solid Waste Management Authority, Ser 1992......... 6.50 4/ 1/05 538,135
750 Onondaga County Resource Recovery Agency, Ser 1992 (AMT)........... 7.00 5/ 1/15 808,628
- ------- -----------
2,005 2,170,832
- ------- -----------
TRANSPORTATION FACILITIES REVENUE (10.7%)
200 Port Authority of New York & New Jersey, Cons 76 Ser (AMT)......... 6.50 11/ 1/26 215,190
500 Triborough Bridge & Tunnel Authority, Gen Pur Ser 1993 B........... 5.00 1/ 1/20 462,500
100 Puerto Rico Highway Authority, Ser Q............................... 6.00 7/ 1/20 101,074
1,000 Puerto Rico Highway & Transportation Authority Refg Ser X.......... 5.25 7/ 1/21 929,880
- ------- -----------
1,800 1,708,644
- ------- -----------
WATER & SEWER REVENUE (13.0%)
New York City Municipal Water Finance Authority,
600 1994 Ser B........................................................ 5.375 6/15/07 594,006
1,000 1993 Ser A........................................................ 6.00 6/15/17 1,013,990
400 Puerto Rico Aqueduct & Sewer Authority, Ser 1988 A................. 7.90 7/ 1/07 459,228
- ------- -----------
2,000 2,067,224
- ------- -----------
OTHER REVENUE (4.2%)
New York Local Government Assistance Corporation,
500 Ser 1991 C........................................................ 7.00 4/ 1/10 561,445
100 Ser 1991 A........................................................ 7.00 4/ 1/16 112,289
- ------- -----------
600 673,734
- ------- -----------
14,595 TOTAL MUNICIPAL BONDS (IDENTIFIED COST $14,317,135)................ 15,243,915
- ------- -----------
SHORT-TERM NEW YORK EXEMPT MUNICIPAL OBLIGATION (1.9%)
300 New York State Environmental Facilities Corporation, OFS Equity of
- ------- Huntington Inc Ser 1989 (AMT) (Tender 12/1/93)
(Identified Cost $300,000)........................................ 2.00* 12/ 1/24 300,000
-----------
$14,895 TOTAL INVESTMENTS (IDENTIFIED COST $14,617,135) (A)................ 97.4 % 15,543,915
=======
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES..................... 2.6 410,688
----- -----------
NET ASSETS......................................................... 100.0 % $15,954,603
===== ===========
<FN>
- ------------
+ Current coupon rate for residual interest bonds. This rate resets periodically as the auction on the related short-term
securities fluctuates.
* Variable or floating rate security. Coupon rate shown reflects current rate.
(a) The aggregate cost for federal income tax purposes is $14,617,135; the aggregate gross unrealized appreciation is $953,532 and
the aggregate gross unrealized depreciation is $26,752, resulting in net unrealized appreciation of $926,780.
See Notes to Financial Statements
</TABLE>
81
<PAGE>
<TABLE>
DEAN WITTER MULTI-STATE MUNICIPAL SERIES TRUST
PORTFOLIO OF INVESTMENTS--OHIO SERIES November 30, 1993
===================================================================================================================================
<CAPTION>
Principal
Amount (in Coupon Maturity
thousands) Rate Date Value
- ---------- ------- -------- -----
<C> <S> <C> <C> <C>
OHIO EXEMPT MUNICIPAL BONDS (88.3%)
GENERAL OBLIGATION (6.9%)
$ 300 Bedford School District, Ser 1993.................................. 6.25 % 12/ 1/13 $ 314,847
500 Columbus School District, Renovation & Impr Ser 1992
(FGIC Insured) (Prerefunded).................................... 6.65 12/ 1/12 579,890
180 Euclid, Ser 1991................................................... 6.625 12/ 1/11 198,878
100 Euclid City School District, School Impr Ser 1991.................. 7.10 12/ 1/11 114,130
100 Gahanna, Ser A..................................................... 7.00 6/ 1/12 111,563
250 Hilliard City School District, School Impr Refg Ser 1992
(FGIC Insured)................................................... 6.55 12/ 1/05 283,205
100 South Euclid, Unltd Tax Recreational............................... 7.00 12/ 1/11 114,333
- ------- ----------
1,530 1,716,846
- ------- ----------
EDUCATIONAL FACILITIES REVENUE (16.3%)
Ohio Higher Educational Facility Commission,
500 Case Western Reserve University, Ser 1992........................ 6.00 10/ 1/22 513,580
1,000 Oberlin College Ser 1993......................................... 5.375 10/ 1/15 970,540
University of Cincinnati,
1,000 General Receipts Ser R7.......................................... 5.20 6/ 1/10 968,780
500 General Receipts Ser G........................................... 7.00 6/ 1/11 560,465
1,000 University of Toledo, Ser 1992 A (FGIC Insured)................... 5.90 6/ 1/20 1,034,360
- ------- ----------
4,000 4,047,725
- ------- ----------
ELECTRIC REVENUE (5.6%)
500 Hamilton, Refg 1992 Ser A (FGIC Insured).......................... 6.00 10/15/12 531,155
500 Ohio Municipal Electric Generation Agency Joint Venture 5,
Belleville Hydro 1993 Certificates (AMBAC Insured).............. 5.375 2/15/13 494,345
400 Puerto Rico Electric Power Authority, Power Ser O................. 5.00 7/ 1/12 375,552
- ------- ----------
1,400 1,401,052
- ------- ----------
HOSPITAL REVENUE (23.2%)
Akron Bath & Copley Joint Township Hospital District,
500 General Medical Center Ser 1993 (AMBAC Insured)................... 5.50 1/ 1/21 495,100
1,000 Summa Health Ser 1992 A........................................... 6.25 11/15/07 1,055,180
Clermont County,
400 Mercy Health Ser 1993 B (AMBAC Insured)........................... 6.00 9/ 1/19 423,140
500 Mercy Health Ser 1991 A MVRICs RIBs (AMBAC Insured)............... 10.591+ 10/ 5/21 606,250
490 Cuyahoga County, Meridia Health Ser 1990........................... 7.25 8/15/19 546,365
Hamilton County,
475 Bethesda Hospital Inc Ser 1986 A.................................. 7.00 1/ 1/09 516,966
500 Franciscan Sisters of the Poor/Providence Hospital Ser 1992....... 6.875 7/ 1/15 526,265
200 Saint Francis-Saint George Hospital/Franciscan Sisters of the Poor
Health Systems Inc Ser 1985...................................... 9.375 7/ 1/15 212,722
Lucas County,
100 Flower Memorial................................................... 8.125 12/ 1/11 116,473
1,000 Toledo Hospital Impr & Refg Ser 1993 (MBIA Insured)............... 5.00 11/15/22 933,430
300 Middleburg Heights, Southwest General Hospital Ser 1991............ 7.20 8/15/19 337,830
- ------- ----------
5,465 5,769,721
- ------- ----------
INDUSTRIAL DEVELOPMENT/POLLUTION CONTROL REVENUE (6.1%)
400 Ashtabula County, Ashland Oil Inc Refg 1992 Ser A.................. 6.90 5/ 1/10 431,424
Ohio Economic Development Authority,
500 Dayton Power & Light Co Collateralized Refg 1992 Ser A............ 6.40 8/15/27 525,660
100 Super Forge & Steel Corp Ser 1991-3 (AMT)......................... 7.625 6/ 1/11 107,710
Puerto Rico Industrial, Medical & Environmental Pollution
Control Facilities Financing Authority,
200 American Airlines Inc 1985 Ser A................................. 8.75 12/ 1/25 216,946
200 Travenol Labs Inc 1983 Ser A..................................... 8.00 9/ 1/12 232,888
- ------- ----------
1,400 1,514,628
- ------- ----------
</TABLE>
82
<PAGE>
<TABLE>
DEAN WITTER MULTI-STATE MUNICIPAL SERIES TRUST
PORTFOLIO OF INVESTMENTS--OHIO SERIES November 30, 1993 (continued)
===================================================================================================================================
<CAPTION>
Principal
Amount (in Coupon Maturity
thousands) Rate Date Value
- ---------- ------- -------- -----
<C> <S> <C> <C> <C>
MORTGAGE REVENUE--SINGLE FAMILY (1.8%)
Ohio Housing Finance Agency,
$ 400 GNMA-Backed 1991 Ser A-2 (AMT) RIBS............................... 10.937+% 3/24/31 $ 450,000
- ------- ----------
PUBLIC FACILITIES REVENUE (7.9%)
Ohio Building Authority,
1,000 1993 Ser A........................................................ 5.50 10/ 1/12 1,000,000
1,000 Workers' Compensation/William Green Building 1993 Ser A........... 5.125 4/ 1/10 961,920
- ------- ----------
2,000 1,961,920
- ------- ----------
TRANSPORTATION FACILITIES REVENUE (5.5%)
400 Guam, Highway 1992 Ser A (Capital Guaranty Insured)................ 6.30 5/ 1/12 430,356
1,000 Puerto Rico Highway & Transportation Authority, Refg Ser X......... 5.25 7/ 1/21 929,880
- ------- ----------
1,400 1,360,236
- ------- ----------
WATER & SEWER REVENUE (15.0%)
Cleveland, Waterworks,
300 Ser F 1992 B (AMBAC Insured)...................................... 6.25 1/ 1/16 320,091
500 Refg Ser G 1993 (MBIA Insured).................................... 5.50 1/ 1/21 508,830
300 Columbus, Sewerage Refg Ser 1992................................... 6.25 6/ 1/08 321,978
500 Hamilton!, Water 1991 Ser A (MBIA Insured)......................... 6.30 10/15/21 539,615
1,250 Montgomery County, Water Ser 1992 (FGIC Insured)................... 6.25 11/15/17 1,345,538
600 Puerto Rico Aqueduct & Sewer Authority, Ser 1988 A................. 7.90 7/ 1/07 688,842
- ------- ----------
3,450 3,724,894
- ------- ----------
21,045 TOTAL MUNICIPAL BONDS (IDENTIFIED COST $20,651,340)................ 21,947,022
- ------- ----------
SHORT-TERM OHIO EXEMPT MUNICIPAL OBLIGATIONS (8.9%)
600 Cuyahoga County, Ohio University Hospitals of Cleveland Ser 1985
(Tender 12/1/93).................................................. 2.00* 1/ 1/16 600,000
700 Hamilton County, Health System Franciscan Sisters of The Poor
Health Systems Inc Ser 1987 A (Tender 12/1/93).................... 2.00* 3/ 1/17 700,000
900 Ohio Air Quality Development Authority, Mead Corp 1986 Ser A
(Tender 12/1/93).................................................. 1.80* 10/ 1/01 900,000
- ------- ----------
2,200 TOTAL SHORT-TERM OHIO EXEMPT MUNICIPAL OBLIGATIONS
(IDENTIFIED COST $2,200,000)...................................... 2,200,000
- ------- ----------
$23,245 TOTAL INVESTMENTS (IDENTIFIED COST $22,851,340) (A)................ 97.2 % 24,147,022
=======
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES .................... 2.8 702,089
------ -----------
NET ASSETS......................................................... 100.0 % $24,849,111
====== ===========
<FN>
- ------------
+ Coupon rate for residual interest bonds. This rate resets periodically as the auction rate on the related short-term
securities fluctuates.
* Variable or floating rate securities. Coupon rate shown reflects current rate.
(a) The aggregate cost for federal income tax purposes is $22,851,340; the aggregate gross unrealized appreciation is $1,351,076
and the aggregate gross unrealized depreciation is $55,394, resulting in net unrealized appreciation of $1,295,682.
See Notes to Financial Statements
</TABLE>
83
<PAGE>
<TABLE>
DEAN WITTER MULTI-STATE MUNICIPAL SERIES TRUST
PORTFOLIO OF INVESTMENTS--PENNSYLVANIA SERIES November 30, 1993
===================================================================================================================================
<CAPTION>
Principal
Amount (in Coupon Maturity
thousands) Rate Date Value
- ---------- ------- -------- -----
<C> <S> <C> <C> <C>
PENNSYLVANIA EXEMPT MUNICIPAL BONDS (91.1%)
GENERAL OBLIGATION (8.0%)
$ 2,000 Berks County, Second Ser 1992 (FGIC Insured)....................... 5.75 % 11/15/12 $ 2,027,860
200 Lycoming County, Ser B of 1991 (FGIC Insured) (Prerefunded)........ 6.85 8/15/16 227,240
300 McKeesport Area School District, Refg Ser 1991..................... 5.00 4/ 1/13 279,216
1,000 Reading, Ser of 1992 (AMBAC Insured) (Prerefunded)................. 6.50 11/15/12 1,135,040
600 Puerto Rico, Pub Impr Refg-Ser 1992 A.............................. 6.00 7/ 1/14 614,592
- ------- ----------
4,100 4,283,948
- ------- ----------
EDUCATIONAL FACILITIES REVENUE (24.7%)
1,000 Delaware County Authority, Villanova University Ser 1993
(MBIA Insured).................................................... 5.50 8/ 1/23 992,680
1,000 Northeastern Pennsylvania Hospital & Education Authority,
Kings College Ser B 1993.......................................... 6.00 7/15/11 999,900
Pennsylvania Higher Educational Facilities Authority,
750 Allegheny College Impr & Refg Ser 1993 B.......................... 6.00 11/ 1/22 737,317
200 Hahneman University Ser of 1989 (MBIA Insured).................... 7.20 7/ 1/19 227,492
500 Medical College of Pennsylvania 1991 Ser A........................ 7.25 3/ 1/11 543,375
500 Temple University First Ser 1991 (MBIA (Insured).................. 6.50 4/ 1/21 543,475
1,000 Thomas Jefferson University 1992 Ser A............................ 6.625 8/15/09 1,101,820
1,000 Thomas Jefferson University 1993 Ser A............................ 5.30 11/ 1/15 959,290
Pennsylvania State University,
1,000 Second Refg Ser 1992.............................................. 5.50 8/15/16 983,990
1,750 Ser 1991 (Prerefunded)............................................ 6.75 7/ 1/10 2,015,790
1,000 Ser B 1992........................................................ 5.50 8/15/16 983,990
1,000 Swarthmore Borough Authority, Swarthmore College Ser 1992.......... 6.00 9/15/20 1,027,070
2,000 University of Pittsburgh, Cap 1992 Ser A (MBIA Insured)............ 6.125 6/ 1/21 2,108,500
- ------- ----------
12,700 13,224,689
- ------- ----------
ELECTRIC REVENUE (1.8%)
1,000 Puerto Rico Electric Power Authority, Power Ser O.................. 5.00 7/ 1/12 938,880
- ------- ----------
HOSPITAL REVENUE (16.5%)
Allegheny County Hospital Development Authority,
200 Mercy Hospital of Pittsburgh Ser 1991 (AMBAC Insured)............. 6.75 4/ 1/21 219,884
1,000 Ohio Valley General Hospital Refg Ser 1993........................ 5.87 4/ 1/11 999,900
1,000 Presbyterian University Health System Inc Ser 1992 B
(MBIA Insured)................................................... 6.00 11/ 1/12 1,041,410
1,000 Berks County Municipal Authority, Reading Hospital & Medical Center
(MBIA Insured).................................................... 5.50 10/ 1/08 1,028,580
500 Chester County Health & Education Facilities Authority, Bryn Mawr
Rehabilitation Hospital Refg Ser 1992............................. 6.75 7/ 1/14 535,920
100 Erie County Hospital Authority, Hamot Medical Center 1991 Ser A
(AMBAC Insured)................................................... 7.10 2/15/10 115,020
Philadelphia Hospital & Higher Education Facilities Authority,
1,750 Chestnut Hill Hospital Ser of 1992................................ 6.375 11/15/11 1,819,178
1,000 Temple University Hospital 1993 Ser A............................. 6.50 11/15/08 1,033,860
2,000 The Children's Hospital of Philadelphia Ser A of 1993............. 5.375 2/15/14 1,899,400
100 Scranton-Lackawanna Health & Welfare Authority, Mercy Health
Ser 1989 B (MBIA Insured)......................................... 6.90 1/ 1/23 109,789
- ------- ----------
8,650 8,802,941
- ------- ----------
</TABLE>
84
<PAGE>
<TABLE>
DEAN WITTER MULTI-STATE MUNICIPAL SERIES TRUST
PORTFOLIO OF INVESTMENTS--PENNSYLVANIA SERIES November 30, 1993 (continued)
===================================================================================================================================
<CAPTION>
Principal
Amount (in Coupon Maturity
thousands) Rate Date Value
- ---------- ------- -------- -----
<C> <S> <C> <C> <C>
INDUSTRIAL DEVELOPMENT/POLLUTION CONTROL REVENUE (5.9%)
$ 500 Lehigh County Industrial Development Authority, Strawbridge &
Clothier Refg Ser of 1991........................................ 7.20 % 12/15/01 $ 561,780
Montgomery County Industrial Development Authority,
150 Philadelphia Electric Co 1991 Ser A (AMT)......................... 7.60 4/ 1/21 167,710
1,000 Philadelphia Electric Co Refg 1991 Ser B (MBIA Insured)........... 6.70 12/ 1/21 1,107,660
200 Pennsylvania Industrial Development Authority, Ser A 1991.......... 7.00 1/ 1/11 219,858
Puerto Rico Industrial, Medical & Environmental Pollution
Control Facilities Financing Authority,
500 American Airlines Inc 1985 Ser A................................. 8.75 12/ 1/25 542,365
500 Baxter Travenol Labs Ser A....................................... 8.00 9/ 1/12 582,220
- ------- ----------
2,850 3,181,593
- ------- ----------
MORTGAGE REVENUE--MULTI-FAMILY (1.2%)
Pennsylvania Housing Finance Agency,
100 Moderate Rehab Sec 8 Assisted Issue B............................. 9.00 8/ 1/01 106,692
500 Ser 1992-35 D RIBS (AMT).......................................... 9.175+ 4/ 1/25 520,000
- ------- ----------
600 626,692
- ------- ----------
MORTGAGE REVENUE--SINGLE FAMILY (9.7%)
145 Allegheny County Residential Finance Authority, GNMA-Backed
1991 Ser Q (AMT).................................................. 7.40 12/ 1/22 158,336
Pennsylvania Housing Finance Agency,
2,000 Ser 1993-37 A..................................................... 5.45 10/ 1/17 1,940,140
170 Ser 1990-28 (AMT)................................................. 7.65 10/ 1/23 182,825
1,000 Ser 1991-31 C RIBS (AMT).......................................... 11.030+ 10/ 3/23 1,130,000
200 Pittsburgh Urban Development Authority, 1991 Ser A (AMT)........... 7.40 4/ 1/24 211,992
440 Puerto Rico Housing Bank & Finance Agency, Subsidy Prepayment
(Prerefunded)..................................................... 7.25 12/ 1/06 471,512
1,000 Puerto Rico Housing Finance Corporation, Portfolio One GNMA-Backed
Ser C............................................................. 6.85 10/15/23 1,070,160
- ------- ----------
4,955 5,164,965
- ------- ----------
PUBLIC FACILITIES REVENUE (1.7%)
800 Northumberland County Authority, Ser of 1991 (MBIA Insured)
(Prerefunded)..................................................... 6.25 10/15/09 888,000
- ------- ----------
RESOURCE RECOVERY (2.7%)
300 Cambria County Industrial Development Authority, Cambria Cogen Co
Ser 1989 F-1 (AMT)................................................ 7.75 9/ 1/19 323,400
1,000 Montgomery County Industrial Development Authority, Ser 1989....... 7.50 1/ 1/12 1,099,400
- ------- ----------
1,300 1,422,800
- ------- ----------
STUDENT LOAN REVENUE (3.0%)
Pennsylvania Higher Education Assistance Agency,
1,000 1988 Ser D (AMT) (AMBAC Insured).................................. 6.05 1/ 1/19 1,031,880
500 1991 Ser B RIBS (AMT) (AMBAC Insured)............................. 10.535+ 9/ 3/26 566,250
- ------- ----------
1,500 1,598,130
- ------- ----------
</TABLE>
85
<PAGE>
<TABLE>
DEAN WITTER MULTI-STATE MUNICIPAL SERIES TRUST
PORTFOLIO OF INVESTMENTS--PENNSYLVANIA SERIES November 30, 1993 (continued)
===================================================================================================================================
<CAPTION>
Principal
Amount (in Coupon Maturity
thousands) Rate Date Value
- ---------- ------- -------- -----
<C> <S> <C> <C> <C>
TRANSPORTATION FACILITIES REVENUE (9.5%)
$ 1,000 Guam, Highway, 1992 Ser A (Capital Guaranty Insured)............... 6.30 % 5/ 1/12 $ 1,075,890
500 Allegheny County, Greater Pittsburgh Int'l Airport Ser 1992 (AMT)
(FSA Insured)..................................................... 6.625 1/ 1/22 539,455
2,000 Pennsylvania Turnpike Commission, Ser O of 1992 (FGIC Insured)..... 6.00 12/ 1/12 2,101,960
1,000 Pittsburgh Public Parking Authority, Ser 1992 A (FGIC Insured)..... 5.875 12/ 1/12 1,033,970
300 Puerto Rico Highway Authority, Ser Q............................... 6.00 7/ 1/20 303,222
- ------- ----------
4,800 5,054,497
- ------- ----------
WATER & SEWER REVENUE (3.4%)
500 Harrisburg Authority, Refg Ser B-3 of 1993 CARS (FGIC Insured)..... 8.820+ 6/18/15 526,250
150 Warrington Township Municipal Authority, Ser 1991 (FGIC Insured)... 7.10 12/ 1/21 169,055
1,000 Puerto Rico Aqueduct & Sewer Authority, Ser 1988 A................. 7.90 7/ 1/07 1,148,070
- ------- ----------
1,650 1,843,375
- ------- ----------
OTHER REVENUE (3.0%)
1,500 Pennsylvania Finance Authority, Municipal Cap Impr Refg Ser 1993... 6.60 11/ 1/09 1,603,455
- ------- ----------
46,405 TOTAL MUNICIPAL BONDS (IDENTIFIED COST $45,544,174)................ 48,633,965
- ------- ----------
SHORT-TERM PENNSYLVANIA EXEMPT MUNICIPAL
OBLIGATIONS (4.9%)
400 Delaware County Industrial Development Authority, United Parcel
Service Ser 1985 (Tender 12/1/93)................................ 1.80* 12/ 1/15 400,000
2,200 Schuylkill County Industrial Development Authority, Northeastern
Power Co Ser 1985 (Tender 12/1/93)................................ 1.85* 12/ 1/11 2,200,000
- ------- -----------
2,600 TOTAL SHORT-TERM PENNSYLVANIA EXEMPT MUNICIPAL
OBLIGATIONS (IDENTIFIED COST $2,600,000).......................... 2,600,000
- ------- -----------
$49,005 TOTAL INVESTMENTS (IDENTIFIED COST $48,144,174) (A)................ 96.0% 51,233,965
=======
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES..................... 4.0 2,143,618
------ -----------
NET ASSETS......................................................... 100.0% $53,377,583
====== ===========
<FN>
- ------------
+ Coupon rate for residual interest bonds. This rate resets periodically as the auction rate on the related short-term
securities fluctuates.
* Variable or floating rate security. Coupon rate shown reflects current rate.
(a) The aggregate cost for federal income tax purpose is $48,144,174; the aggregate gross unrealized appreciation is $3,188,784
and the aggregate gross unrealized depreciation is $98,993, resulting in net unrealized appreciation of $3,089,791.
See Notes to Financial Statements
</TABLE>
86
<PAGE>
DEAN WITTER MULTI-STATE MUNICIPAL SERIES TRUST
REPORT OF INDEPENDENT ACCOUNTANTS
===============================================================================
To the Shareholders and Trustees of Dean Witter Multi-State Municipal Series
Trust
In our opinion, the accompanying statements of assets and liabilities,
including the portfolios 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 the Arizona Series,
the California Series, the Florida Series, the Massachusetts Series, the
Michigan Series, the Minnesota Series, the New Jersey Series, the New York
Series, the Ohio Series and the Pennsylvania Series (constituting the Dean
Witter Multi-State Municipal Series Trust (the "Fund")) at November 30, 1993,
and the results of each of their operations for the year then ended, the
changes in each of their net assets for each of the two years in the period
then ended and the financial highlights for each of the two years in the period
then ended and for the period January 15, 1991 (commencement of operations for
all Series except the Arizona Series) and April 30, 1991 (commencement of
operations for the Arizona Series) through November 30, 1993, in conformity
with generally accepted accounting principles. 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 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 owned at November 30,
1993 by correspondence with the custodian and a broker, provide a reasonable
basis for the opinion expressed above.
PRICE WATERHOUSE
New York, New York
January 14, 1994
87
<PAGE>
DEAN WITTER MULTI-STATE MUNICIPAL SERIES TRUST
PART C OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements
(1) Financial statements and schedules, included
in Prospectus (Part A): Page in
Prospectus
Financial highlights from the period
January 15, 1991 through November 30, 1991
(April 30, 1991 through November 30, 1991 for
Arizona Series) and for the years ended
November 30, 1992 and 1993........................... 4
(2) Financial statements included in the Statement of
Additional Information (Part B): Page in
SAI
Statement of assets and liabilities at
November 30, 1993.................................... 52
Statement of operations for the year
ended November 30, 1993.............................. 52
Statement of changes in net assets for the years
ended November 30, 1992 and 1993..................... 54
Notes to Financial Statements ....................... 54
Portfolio of Investments at November 30, 1993........ 64
(3) Financial statements included in Part C:
None
(b) Exhibits:
5. - Form of Investment Management Agreement between
Registrant and Dean Witter InterCapital Inc.
6.(a) - Form of Distribution Agreement between
Registrant and Dean Witter Distributors Inc.
(b) - Form of Selected Dealers Agreement
8. - Form of Amended and Restated Transfer Agency and
Service Agreement
1
<PAGE>
9. - Form of Services Agreement between Dean Witter
InterCapital Inc. and Dean Witter Services
Company Inc.
11. - Consent of Independent Accountants
16. - Schedules for Computation of Performance
Quotations
All other exhibits previously filed and incorporated
by reference.
Item 25. Persons Controlled by or Under Common Control With
Registrant.
None
Item 26. Number of Holders of Securities.
(1) (2)
Number of Record Holders
Title of Class at January 12, 1994
Shares of Beneficial Interest 13,032
Item 27. Indemnification
Pursuant to Section 5.3 of the Registrant's Declaration of
Trust and under Section 4.8 of the Registrant's By-Laws, the
indemnification of the Registrant's trustees, officers, employees
and agents is permitted if it is determined that they acted under
the belief that their actions were in or not opposed to the best
interest of the Registrant, and, with respect to any criminal
proceeding, they had reasonable cause to believe their conduct
was not unlawful. In addition, indemnification is permitted only
if it is determined that the actions in question did not render
them liable by reason of willful misfeasance, bad faith or gross
negligence in the performance of their duties or by reason of
reckless disregard of their obligations and duties to the
Registrant. Trustees, officers, employees and agents will be
indemnified for the expense of litigation if it is determined
that they are entitled to indemnification against any liability
established in such litigation. The Registrant may also advance
money for these expenses provided that they give their
undertakings to repay the Registrant unless their conduct is
later determined to permit indemnification.
2
<PAGE>
Pursuant to Section 5.2 of the Registrant's Declaration of
Trust and paragraph 8 of the Registrant's Investment Management
Agreement, neither the Investment Manager nor any trustee,
officer, employee or agent of the Registrant shall be liable for
any action or failure to act, except in the case of bad faith,
willful misfeasance, gross negligence or reckless disregard of
duties to the Registrant.
Insofar as indemnification for liabilities arising under
the Securities Act of 1933 (the "Act") may be permitted to
trustees, officers and controlling persons of the Registrant
pursuant to the foregoing provisions or otherwise, the
Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a trustee, officer, or
controlling person of the Registrant in connection with the
successful defense of any action, suit or proceeding) is asserted
against the Registrant by such trustee, officer or controlling
person in connection with the shares being registered, the
Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Act, and will be governed by the final adjudication of such
issue.
The Registrant hereby undertakes that it will apply the
indemnification provision of its by-laws in a manner consistent
with Release 11330 of the Securities and Exchange Commission
under the Investment Company Act of 1940, so long as the
interpretation of Sections 17(h) and 17(i) of such Act remains in
effect.
Registrant, in conjunction with the Investment Manager,
Registrant's Trustees, and other registered investment management
companies managed by the Investment Manager, maintains insurance
on behalf of any person who is or was a Trustee, officer,
employee, or agent of Registrant, or who is or was serving at the
request of Registrant as a trustee, director, officer, employee
or agent of another trust or corporation, against any liability
asserted against him and incurred by him or arising out of his
position. However, in no event will Registrant maintain
insurance to indemnify any such person for any act for which
Registrant itself is not permitted to indemnify him.
Item 28. Business and Other Connections of Investment Adviser.
See "The Fund and Its Management" in the Prospectus regarding the
3
<PAGE>
business of the investment adviser. The following information is
given regarding officers of Dean Witter InterCapital Inc.
Information regarding the other officers of InterCapital is
included in Item 29(b) below. The term "Dean Witter Funds" used
below refers to the following Funds: (1) InterCapital Income
Securities Inc., (2) High Income Advantage Trust, (3) High Income
Advantage Trust II, (4) High Income Advantage Trust III, (5)
Municipal Income Trust, (6) Municipal Income Trust II, (7)
Municipal Income Trust III, (8) Dean Witter Government Income
Trust, (9) Municipal Premium Income Trust, (10) Municipal Income
Opportunities Trust, (11) Municipal Income Opportunities Trust
II, (12) Municipal Income Opportunities Trust III, (13) Prime
Income Trust, (14) InterCapital Insured Municipal Bond Trust,
(15) InterCapital Quality Municipal Income Trust, (16)
InterCapital Quality Municipal Investment Trust, (17)
InterCapital Insured Municipal Income Trust, (18) InterCapital
California Insured Municipal Income Trust, (19) InterCapital
Insured Municipal Trust, (20) InterCapital Quality Municipal
Securities (21) InterCapital New York Quality Municipal
Securities, and (22) InterCapital California Municipal
Securities, registered closed-end investment companies, and (1)
Dean Witter Equity Income Trust, (2) Dean Witter Tax-Exempt
Securities Trust, (3) Dean Witter Tax-Free Daily Income Trust,
(4) Dean Witter Dividend Growth Securities Inc., (5) Dean Witter
Convertible Securities Trust, (6) Dean Witter Liquid Asset Fund
Inc., (7) Dean Witter Developing Growth Securities Trust, (8)
Dean Witter Retirement Series, (9) Dean Witter Federal Securities
Trust, (10) Dean Witter World Wide Investment Trust, (11) Dean
Witter U.S. Government Securities Trust, (12) Dean Witter Select
Municipal Reinvestment Fund, (13) Dean Witter High Yield
Securities Inc., (14) Dean Witter Intermediate Income Securities,
(15) Dean Witter New York Tax-Free Income Fund, (16) Dean Witter
California Tax-Free Income Fund, (17) Dean Witter Health Sciences
Trust, (18) Dean Witter California Tax-Free Daily Income Trust,
(19) Dean Witter Managed Assets Trust, (20) Dean Witter American
Value Fund, (21) Dean Witter Strategist Fund, (22) Dean Witter
Utilities Fund, (23) Dean Witter World Wide Income Trust, (24)
Dean Witter New York Municipal Money Market Trust, (25) Dean
Witter Capital Growth Securities, (26) Dean Witter Precious
Metals and Minerals Trust, (27) Dean Witter European Growth Fund
Inc., (28) Dean Witter Global Short-Term Income Fund Inc., (29)
Dean Witter Pacific Growth Fund Inc., (30) Dean Witter Multi-
State Municipal Series Trust, (31) Dean Witter Premier Income
Trust, (32) Dean Witter Short-Term U.S. Treasury Trust, (33) Dean
Witter Diversified Income Trust, (34) Dean Witter U.S. Government
Money Market Trust, (35) Dean Witter Global Dividend Growth
Securities, (36) Active Assets California Tax-Free Trust, (37)
Dean Witter Natural Resource Development Securities Inc., (38)
Active Assets Government Securities Trust, (39) Active Assets
Money Trust, (40) Active Assets Tax-Free Trust, (41) Dean Witter
Limited Term Municipal Trust, (42) Dean Witter Variable
Investment Series, (43) Dean Witter Value-Added Market Series and
4
<PAGE>
(44) Dean Witter Short-Term Bond Fund, registered open-end
investment companies. InterCapital is a wholly-owned subsidiary
of Dean Witter, Discover & Co. The principal address of the Dean
Witter Funds is Two World Trade Center, New York, New York 10048.
The term "TCW/DW Funds" refers to the following Funds: (1) TCW/DW
Core Equity Trust, (2) TCW/DW North American Government Income
Trust, (3) TCW/DW Latin American Growth Fund, (4) TCW/DW Income
and Growth Fund, (5) TCW/DW Small Cap Growth Fund, (6) TCW/DW
Balanced Fund, registered open-end investment companies and (7)
TCW/DW Term Trust 2000, (8) TCW/DW Term Trust 2002 and (9)
TCW/DW Term Trust 2003, registered closed-end investment
companies.
<TABLE>
<CAPTION>
Other Substantial
Business, Profession,
Position with Vocation or Employment,
Dean Witter including Name, Prin-
InterCapital cipal Address and
Name Inc. Nature of Connection
---- ------------- ----------------------
<S> <C> <C>
Charles A. Chairman, Chief Executive Vice
Fiumefreddo Executive Officer President and Director
and Director of Dean Witter
Reynolds Inc.
("DWR"); Chairman,
Director or Trustee,
President and Chief
Executive Officer of
the Dean Witter Funds;
Chairman, Chief
Executive Officer and
Trustee of the TCW/DW
Funds; Chairman and
Director of Dean
Witter Trust Company
("DWTC"); Chairman,
Chief Executive
Officer and Director
of Dean Witter
Distributors Inc.
("Distributors") and
Dean Witter Services
Company Inc. ("DWSC");
Formerly Executive
Vice President and
Director of Dean
Witter, Discover & Co.
("DWDC"); Director
and/or officer of DWDC
subsidiaries.
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
Other Substantial
Business, Profession,
Position with Vocation or Employment,
Dean Witter including Name, Prin-
InterCapital cipal Address and
Name Inc. Nature of Connection
---- ------------- ----------------------
<S> <C> <C>
Philip J. Director Chairman, Chief
Purcell Executive Officer and
Director of DWDC and
DWR; Director of
DWSC and Distributors.
Richard M. Director President and Chief
DeMartini Operating Officer of
Dean Witter Capital
and Director of DWDC,
DWR, DWSC and Distributors.
James F. Director President and Chief
Higgins Operating Officer of
Dean Witter Financial;
Director of DWDC, DWR,
DWSC and Distributors.
Thomas C. Executive Vice Executive Vice
Schneider President, Chief President, Chief
Financial Officer Financial Officer
and Director and Director of
DWDC, DWR, DWSC
and Distributors.
Christine A. Director Executive Vice
Edwards President, Secretary,
General Counsel and
Director of DWDC, DWR,
DWSC and Distributors.
Robert M. Scanlan President and Vice President of
Chief Operating the Dean Witter Funds
Officer and the TCW/DW Funds;
President of DWSC;
Executive Vice
President of
Distributors;
Executive Vice
President and
Director of DWTC.
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
Other Substantial
Business, Profession,
Position with Vocation or Employment,
Dean Witter including Name, Prin-
InterCapital cipal Address and
Name Inc. Nature of Connection
---- ------------- ----------------------
<S> <C> <C>
David A. Hughey Executive Vice Vice President of the
President and Dean Witter Funds and
Chief Administrative the TCW/DW Funds;
Officer Executive Vice
President, Chief
Administrative Officer
and Director of DWTC;
Executive Vice
President and Chief
Administrative Officer
of DWSC and
Distributors.
Edmund C. Executive Vice Vice President of the
Puckhaber President Dean Witter Funds.
John Van Heuvelen Executive Vice President and Chief
President Executive Officer of
DWTC.
Sheldon Curtis Senior Vice Vice President,
President, Secretary and
General Counsel General Counsel of the
and Secretary Dean Witter Funds and
the TCW/DW Funds;
Senior Vice President
and Secretary of
DWTC; Assistant
Secretary of DWR and
DWDC; Senior Vice
President, General
Counsel and Secretary
of DWSC; Senior Vice
President, Assistant
General Counsel and
Assistant Secretary of
Distributors.
Peter M. Avelar Senior Vice Vice President of
President various Dean Witter
Funds.
Mark Bavoso Senior Vice Vice President of
President various Dean Witter
Funds.
Thomas H. Connelly Senior Vice Vice President of
President various Dean Witter
Funds.
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
Other Substantial
Business, Profession,
Position with Vocation or Employment,
Dean Witter including Name, Prin-
InterCapital cipal Address and
Name Inc. Nature of Connection
---- ------------- ----------------------
<S> <C> <C>
Edward Gaylor Senior Vice Vice President of
President various Dean Witter
Funds.
Rajesh K. Gupta Senior Vice Vice President of
President various Dean Witter
Funds.
Kenton J. Senior Vice Vice President of
Hinchliffe President various Dean Witter
Funds.
John B. Kemp, III Senior Vice Director of the
President Provident Savings
Bank, Jersey City,
New Jersey.
Anita Kolleeny Senior Vice Vice President of
President various Dean Witter
Funds.
Jonathan R. Page Senior Vice Vice President of
President various Dean Witter
Funds.
Ira Ross Senior Vice Vice President of
President various Dean Witter
Funds.
Rochelle G. Siegel Senior Vice Vice President of
President various Dean Witter
Funds.
Paul D. Vance Senior Vice Vice President of
President various Dean Witter
Funds.
Elizabeth A. Senior Vice
Vetell President
James F. Willison Senior Vice Vice President of
President various Dean Witter
Funds.
Ronald Worobel Senior Vice Vice President of
President various Dean Witter
Funds.
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
Other Substantial
Business, Profession,
Position with Vocation or Employment,
Dean Witter including Name, Prin-
InterCapital cipal Address and
Name Inc. Nature of Connection
---- ------------- ----------------------
<S> <C> <C>
Thomas F. Caloia First Vice Treasurer of the
President and Dean Witter Funds
Assistant Treasurer and the TCW/DW Funds;
First Vice President
and Assistant Treasury
of DWSC; Assistant
Treasurer of
Distributors.
Barry Fink First Vice Assistant Secretary
President of the Dean Witter
Funds and TCW/DW
Funds; First Vice
President and
Assistant Secretary of
DWSC.
Michael First Vice First Vice President
Interrante President and and Controller of
Controller DWSC; Assistant
Treasurer of
Distributors.
Robert Zimmerman First Vice
President
Joseph Arcieri Vice President
Douglas Brown Vice President
Rosalie Clough Vice President
B. Catherine Vice President
Connelly
Marilyn K. Cranney Vice President Assistant Secretary
and Assistant of the Dean Witter
Secretary Funds and the TCW/DW
Funds; Vice President
and Assistant
Secretary of DWSC;
Assistant
Secretary of DWR and
DWDC.
Salvatore DeSteno Vice President Vice President of
DWSC.
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
Other Substantial
Business, Profession,
Position with Vocation or Employment,
Dean Witter including Name, Prin-
InterCapital cipal Address and
Name Inc. Nature of Connection
---- ------------- ----------------------
<S> <C> <C>
Dwight Doolan Vice President
Bruce Dunn Vice President
Geoffrey D. Flynn Vice President Vice President of
DWSC.
Bette Freedman Vice President
Deborah Genovese Vice President
Peter W. Gurman Vice President
Shant Harootunian Vice President
John Hechtlinger Vice President
David Johnson Vice President
Christopher Jones Vice President
Stanley Kapica Vice President
Paula LaCosta Vice President Vice President of
various Dean Witter
Funds.
Lawrence S. Lafer Vice President Assistant Secretary
and Assistant of the Dean Witter
Secretary Funds and the TCW/DW
Funds; Vice President
and Assistant
Secretary of DWSC.
Thomas Lawlor Vice President
Lou Anne D. McInnis Vice President Assistant Secretary
and Assistant of the Dean Witter
Secretary Funds and the TCW/DW
Funds; Vice President
and Assistant
Secretary of DWSC.
James Mulcahy Vice President
James Nash Vice President
Hugh Rose Vice President
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
Other Substantial
Business, Profession,
Position with Vocation or Employment,
Dean Witter including Name, Prin-
InterCapital cipal Address and
Name Inc. Nature of Connection
---- ------------- ----------------------
<S> <C> <C>
Ruth Rossi Vice President Assistant Secretary
and Assistant of the Dean Witter
Secretary Funds and the TCW/DW
Funds; Vice President
and Assistant
Secretary of DWSC.
Howard A. Schloss Vice President
Rose Simpson Vice President
Diane Lisa Sobin Vice President Vice President of
various Dean Witter
Funds.
Kathleen Stromberg Vice President Vice President of
various Dean Witter
Funds.
Vinh Q. Tran Vice President Vice President of
various Dean Witter
Funds.
Alice Weiss Vice President Vice President of
various Dean Witter
Funds.
Marianne Zalys Vice President
</TABLE>
Item 29. Principal Underwriters
(a) Dean Witter Distributors Inc. ("Distributors"), a Delaware
corporation, is the principal underwriter of the Registrant.
Distributors is also the principal underwriter of the following
investment companies:
<TABLE>
<S> <C>
(1) Dean Witter Liquid Asset Fund Inc.
(2) Dean Witter Tax-Free Daily Income Trust
(3) Dean Witter California Tax-Free Daily Income Trust
(4) Dean Witter Retirement Series
(5) Dean Witter Dividend Growth Securities Inc.
(6) Dean Witter Natural Resource Development Securities Inc.
(7) Dean Witter World Wide Investment Trust
(8) Dean Witter Capital Growth Securities
(9) Dean Witter Convertible Securities Trust
(10) Active Assets Tax-Free Trust
</TABLE>
11
<PAGE>
<TABLE>
<S> <C>
(11) Active Assets Money Trust
(12) Active Assets California Tax-Free Trust
(13) Active Assets Government Securities Trust
(14) Dean Witter Equity Income Trust
(15) Dean Witter Federal Securities Trust
(16) Dean Witter U.S. Government Securities Trust
(17) Dean Witter High Yield Securities Inc.
(18) Dean Witter New York Tax-Free Income Fund
(19) Dean Witter Tax-Exempt Securities Trust
(20) Dean Witter California Tax-Free Income Fund
(21) Dean Witter Managed Assets Trust
(22) Dean Witter Limited Term Municipal Trust
(23) Dean Witter World Wide Income Trust
(24) Dean Witter Utilities Fund
(25) Dean Witter Strategist Fund
(26) Dean Witter New York Municipal Money Market Trust
(27) Dean Witter Intermediate Income Securities
(28) Prime Income Trust
(29) Dean Witter European Growth Fund Inc.
(30) Dean Witter Developing Growth Securities Trust
(31) Dean Witter Precious Metals and Minerals Trust
(32) Dean Witter Pacific Growth Fund Inc.
(33) Dean Witter Multi-State Municipal Series Trust
(34) Dean Witter Premier Income Trust
(35) Dean Witter Short-Term U.S. Treasury Trust
(36) Dean Witter Diversified Income Trust
(37) Dean Witter Health Sciences Trust
(38) Dean Witter Global Dividend Growth Securities
(39) Dean Witter American Value Fund
(40) Dean Witter U.S. Government Money Market Trust
(41) Dean Witter Global Short-Term Income Fund Inc.
(42) Dean Witter Variable Investment Series
(43) Dean Witter Value-Added Market Series
(44) Dean Witter Short-Term Bond Fund
(1) TCW/DW Core Equity Trust
(2) TCW/DW North American Government Income Trust
(3) TCW/DW Latin American Growth Fund
(4) TCW/DW Income and Growth Fund
(5) TCW/DW Small Cap Growth Fund
(6) TCW/DW Balanced Fund
</TABLE>
(b) The following information is given regarding directors and officers
of Distributors not listed in Item 28 above. The principal address of
Distributors is Two World Trade Center, New York, New York 10048. None of
the following persons has any position or office with the Registrant.
<TABLE>
<CAPTION>
Positions and
Office with
Name Distributors
- ---- -------------
<S> <C>
Fredrick K. Kubler Senior Vice President, Assistant
Secretary and Chief Compliance
Officer.
Michael T. Gregg Vice President and Assistant
Secretary.
Edward C. Oelsner III Vice President of Distributors.
Samuel Wolcott III Vice President of Distributors.
</TABLE>
12
<PAGE>
Item 30. Location of Accounts and Records
All accounts, books and other documents required to be maintained
by Section 31(a) of the Investment Company Act of 1940 and the Rules
thereunder are maintained by the Investment Manager at its offices,
except records relating to holders of shares issued by the Registrant,
which are maintained by the Registrant's Transfer Agent, at its place of
business as shown in the prospectus.
Item 31. Management Services
Registrant is not a party to any such management-related service
contract.
Item 32. Undertakings
Registrant hereby undertakes to furnish each person to whom a
prospectus is delivered with a copy of the Registrant's latest annual
report to shareholders, upon request and without charge.
13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Registration Statement pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this Post-
Effective Amendment to the Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of New York and
State of New York on the 17th day of February, 1994.
DEAN WITTER MULTI-STATE MUNICIPAL SERIES TRUST
By /s/ Sheldon Curtis
Sheldon Curtis
Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this Post-
Effective Amendment No. 5 has been signed below by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signatures Title Date
---------- ----- ----
<S> <C> <C>
(1) Principal Executive Officer President, Chief
Executive Officer,
Trustee and Chairman
By /s/ Charles A. Fiumefreddo 02/17/94
Charles A. Fiumefreddo
(2) Principal Financial Officer Treasurer and Principal
Accounting Officer
By /s/ Thomas F. Caloia 02/17/94
Thomas F. Caloia
(3) Majority of the Trustees
Charles A. Fiumefreddo (Chairman)
Edward R. Telling
By /s/ Sheldon Curtis 02/17/94
Sheldon Curtis
Attorney-in-Fact
Jack F. Bennett Paul Kolton
John R. Haire Michael E. Nugent
John E. Jeuck Albert T. Sommers
Manuel H. Johnson Edwin J. Garn
By /s/ David M. Butowsky 02/17/94
David M. Butowsky
Attorney-in-Fact
</TABLE>
<PAGE>
DEAN WITTER MULTI-STATE MUNICIPAL SERIES TRUST
EXHIBIT INDEX
Exhibit No. Description
5. - Form of Investment Management Agreement between
Registrant and Dean Witter InterCapital Inc.
6.(a) - Form of Distribution Agreement between
Registrant and Dean Witter Distributors Inc.
(b) - Form of Selected Dealers Agreement
8. - Form of Amended and Restated Transfer Agency and
Service Agreement
9. - Form of Services Agreement between Dean Witter
InterCapital Inc. and Dean Witter Services
Company Inc.
11. - Consent of Independent Accountants
16. - Schedules for Computation of Performance Quotations
INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT made as of the 30th day of June, 1993 by and between Dean
Witter Multi-State Municipal Series Trust, an unincorporated business trust
organized under the laws of the Commonwealth of Massachusetts (hereinafter
called the "Fund"), and Dean Witter InterCapital Inc., a Delaware corporation
(hereinafter called the "Investment Manager"):
Whereas, The Fund is engaged in business as an open-end management
investment company and is registered as such under the Investment Company Act
of 1940, as amended (the "Act"); and
Whereas, The Investment Manager is registered as an investment adviser
under the Investment Advisers Act of 1940, and engages in the business of
acting as investment adviser; and
Whereas, The Fund is authorized to issue shares of beneficial interest
in separate portfolios (the "Series") with each Series representing interests
in a separate portfolio of securities and other assets; and
Whereas, The Fund presently offers shares in several Series, such
Series together with all other Series subsequently established by the Fund with
respect to which the Fund desires to retain the Investment Manager to render
management and investment advisory services in the manner and on the terms and
conditions hereinafter set forth being collectively referred to as the
"Series"; and
Whereas, The Investment Manager desires to be retained to perform
services on said terms and conditions:
Now, Therefore, this Agreement
W I T N E S S E T H:
that in consideration of the premises and the mutual covenants hereinafter
contained, the Fund and the Investment Manager agree as follows:
1. The Fund hereby retains the Investment Manager to act as investment
manager of the Series and, subject to the supervision of the Trustees, to
supervise the investment activities of the Series as hereinafter set forth.
Without limiting the generality of the foregoing, the Investment Manager shall
obtain and evaluate such information and advice relating to the economy,
securities and commodities markets and securities and commodities as it deems
necessary or useful to discharge its duties hereunder; shall continuously
manage the assets of the Series in a manner consistent with the investment
objectives and policies of the Series; shall determine the securities and
commodities to be purchased, sold or otherwise disposed of by the Series and
the timing of such purchases, sales and dispositions; and shall take such
further action, including the placing of purchase and sale orders on behalf of
the Series, as the Investment Manager shall deem necessary or appropriate. The
Investment Manager shall also furnish to or place at the disposal of the Fund
such of the information, evaluations, analyses and opinions formulated or
obtained by the Investment Manager in the discharge of its duties as the Fund
may, from time to time, reasonably request.
In the event the Fund establishes another Series other than the current
Series with respect to which it desires to retain the Investment Manager to
render investment advisory services hereunder, it shall notify the Investment
Manager in writing. If the Investment Manager is willing to render such
services, it shall notify the Fund in writing, whereupon such other Series
shall become a Series hereunder.
2. The Investment Manager shall, at its own expense, maintain such
staff and employ or retain such personnel and consult with such other persons
as it shall from time to time determine to be necessary or useful to the
performance of its obligations under this Agreement. Without limiting the
generality of the foregoing, the staff and personnel of the Investment Manager
shall be deemed to include persons employed or otherwise retained by the
Investment Manager to furnish statistical and other factual data, advice
regarding economic factors and trends, information with respect to technical
and scientific developments, and such other information, advice and assistance
as the Investment Manager may desire. The Investment Manager shall, as agent
for the Fund, maintain the Fund's records and books of account (other than
those maintained by the Fund's transfer agent, registrar, custodian and other
agencies). All such books and records so maintained shall be the property of
the Fund and, upon request therefor, the Investment Manager shall surrender to
the Fund such of the books and records so requested.
3. The Fund will, from time to time, furnish or otherwise make
available to the Investment Manager such financial reports, proxy statements
and other information relating to the business and affairs of the Fund as the
Investment Manager may reasonably require in order to discharge its duties and
obligations hereunder.
<PAGE>
4. The Investment Manager shall bear the cost of rendering the
investment management and supervisory services to be performed by it under this
Agreement, and shall, at its own expense, pay the compensation of the officers
and employees, if any, of the Fund, and provide such office space, facilities
and equipment and such clerical help and bookkeeping services as the Fund shall
reasonably require in the conduct of its business. The Investment Manager shall
also bear the cost of telephone service, heat, light, power and other utilities
provided to the Fund.
5. The Fund assumes and shall pay or cause to be paid all other
expenses of the Fund, including without limitation: fees pursuant to any plan
of distribution that the Fund may adopt; the charges and expenses of any
registrar, any custodian or depository appointed by the Fund for the
safekeeping of its cash, portfolio securities or commodities and other
property, and any stock transfer or dividend agent or agents appointed by the
Fund; brokers' commissions chargeable to the Fund in connection with portfolio
transactions to which the Fund is a party; all taxes, including securities or
commodities issuance and transfer taxes, and fees payable by the Fund to
federal, state or other governmental agencies; the cost and expense of
engraving or printing certificates representing shares of the Fund; all costs
and expenses in connection with the registration and maintenance of
registration of the Fund and its shares with the Securities and Exchange
Commission and various states and other jurisdictions (including filing fees
and legal fees and disbursements of counsel); the cost and expense of printing
(including typesetting) and distributing prospectuses and statements of
additional information of the Fund and supplements thereto to the Fund's
shareholders; all expenses of shareholders' and Trustees' meetings and of
preparing, printing and mailing proxy statements and reports to shareholders;
fees and travel expenses of Trustees or members of any advisory board or
committee who are not employees of the Investment Manager or any corporate
affiliate of the Investment Manager; all expenses incident to the payment of
any dividend, distribution, withdrawal or redemption, whether in shares or in
cash; charges and expenses of any outside service used for pricing of the
Fund's shares; charges and expenses of legal counsel, including counsel to the
Trustees of the Fund who are not interested persons (as defined in the Act) of
the Fund or the Investment Manager, and of independent accountants, in
connection with any matter relating to the Fund; membership dues of industry
associations; interest payable on Fund borrowings; postage; insurance premiums
on property or personnel (including officers and Trustees) of the Fund which
inure to its benefit; extraordinary expenses (including, but not limited to,
legal claims and liabilities and litigation costs and any indemnification
related thereto); and all other charges and costs of the Fund's operation
unless otherwise explicitly provided herein.
6. For the services to be rendered, the facilities furnished, and the
expenses assumed by the Investment Manager, the Fund shall pay to the
Investment Manager monthly compensation determined by applying the annual rate
of 0.35% to the daily net assets of the respective Series determined as of the
close of each business day. Except as hereinafter set forth, compensation under
this Agreement shall be calculated and accrued daily and the amounts of the
daily accruals shall be paid monthly. Such calculations shall be made by
applying 1/365ths of the annual rates to the net assets of the respective
Series each day determined as of the close of business on that day or the last
previous business day. If this Agreement becomes effective subsequent to the
first day of a month or shall terminate before the last day of a month,
compensation for that part of the month this Agreement is in effect shall be
prorated in a manner consistent with the calculation of the fees as set forth
above.
Subject to the provisions of paragraph 7 hereof, payment of the
Investment Manager's compensation for the preceding month shall be made as
promptly as possible after completion of the computations contemplated by
paragraph 7 hereof.
7. In the event the operating expenses of a Series, including amounts
payable to the Investment Manager pursuant to paragraph 6 hereof, for any
fiscal year ending on a date on which this Agreement is in effect, exceed the
expense limitations applicable to such Series imposed by state securities laws
or regulations thereunder, as such limitations may be raised or lowered
from time to time, the Investment Manager shall reduce its management fee in
respect of such Series to the extent of such excess and, if required, pursuant
to any such laws or regulations, will reimburse the Fund for annual operating
expenses in excess of any expense limitation that may be applicable; provided,
however, there shall be excluded from such expenses the amount of any interest,
taxes, brokerage commissions, distribution fees and extraordinary expenses
(including but not limited to legal claims and liabilities and litigation costs
and any indemnification related thereto) paid or payable by such Series. Such
reduction, if any, shall be computed and accrued daily, shall be settled on a
monthly basis, and shall be based upon the expense limitation applicable to
such Series
2
<PAGE>
as at the end of the last business day of the month. Should two or more such
expense limitations be applicable as at the end of the last business day of the
month, that expense limitation which results in the largest reduction in the
Investment Manager's fee shall be applicable.
For purposes of this provision, should any applicable expense
limitation be based upon the gross income of the Series, such gross income
shall include, but not be limited to, interest on debt securities in the
portfolio of such Series accrued to and including the last day of the Fund's
fiscal year, and dividends declared on equity securities in the portfolio of
such Series, the record dates for which fall on or prior to the last day of
such fiscal year, but shall not include gains from the sale of securities.
8. The Investment Manager will use its best efforts in the supervision
and management of the investment activities of the Fund, but in the absence of
willful misfeasance, bad faith, gross negligence or reckless disregard of its
obligations hereunder, the Investment Manager shall not be liable to the Fund
or any of its investors for any error of judgment or mistake of law or for any
act or omission by the Investment Manager or for any losses sustained by the
Fund or its investors.
9. Nothing contained in this Agreement shall prevent the Investment
Manager or any affiliated person of the Investment Manager from acting as
investment adviser or manager for any other person, firm or corporation and
shall not in any way bind or restrict the Investment Manager or any such
affiliated person from buying, selling or trading any securities or commodities
for their own accounts or for the account of others for whom they may be
acting. Nothing in this Agreement shall limit or restrict the right of any
Trustee, officer or employee of the Investment Manager to engage in any other
business or to devote his or her time and attention in part to the management
or other aspects of any other business whether of a similar or dissimilar
nature.
10. This Agreement shall remain in effect until April 30, 1994 and from
year to year thereafter with respect to each Series provided such continuance
with respect to a Series is approved at least annually by the vote of holders
of a majority (as defined in the Act) of the outstanding voting securities of
such Series or by the Trustees of the Fund; provided that in either event such
continuance is also approved annually by the vote of a majority of the Trustees
of the Fund who are not parties to this Agreement or "interested persons" (as
defined in the Act) of any such party, which vote must be cast in person at a
meeting called for the purpose of voting on such approval; provided, however,
that (a) the Fund may, at any time and without the payment of any penalty,
terminate this Agreement upon thirty days' written notice to the Investment
Manager, either by majority vote of the Trustees of the Fund or, with respect
to a Series, by the vote of a majority of the outstanding voting securities of
such Series; (b) this Agreement shall immediately terminate in the event of its
assignment (to the extent required by the Act and the rules thereunder) unless
such automatic terminations shall be prevented by an exemptive order of the
Securities and Exchange Commission; and (c) the Investment Manager may
terminate this Agreement without payment of penalty on thirty days' written
notice to the Fund. Any notice under this Agreement shall be given in writing,
addressed and delivered, or mailed post-paid, to the other party at the
principal office of such party.
Any approval of this Agreement by the holders of a majority of the
outstanding voting securities of any Series shall be effective to continue this
Agreement with respect to such Series notwithstanding (a) that this Agreement
has not been approved by the holders of a majority of the outstanding voting
securities of any other Series or (b) that this Agreement has not been approved
by the vote of a majority of the outstanding voting securities of the Fund,
unless such approval shall be required by any other applicable law or
otherwise.
11. This Agreement may be amended by the parties without the vote or
consent of the shareholders of the Fund to supply any omission, to cure,
correct or supplement any ambiguous, defective or inconsistent provision
hereof, or if they deem it necessary to conform this Agreement to the
requirements of applicable federal laws or regulations, but neither the Fund
nor the Investment Manager shall be liable for failing to do so.
12. This Agreement shall be construed in accordance with the laws of
the State of New York and the applicable provisions of the Act. To the extent
the applicable law of the State of New York, or any of the provisions herein,
conflicts with the applicable provisions of the Act, the latter shall control.
13. The Investment Manager and the Fund each agree that the name "Dean
Witter", which comprises a component of the Fund's name, is a property right of
Dean Witter Reynolds Inc. The Fund agrees and consents that (i) it will only
use the name "Dean Witter" as a component of its name and for no other purpose,
(ii) it will not purport to grant to any third party the right to use the name
"Dean Witter" for any
3
<PAGE>
purpose, (iii) the Investment Manager or its parent, Dean Witter Reynolds Inc.,
or any corporate affiliate of the Investment Manager's parent, may use or grant
to others the right to use the name "Dean Witter", or any combination or
abbreviation thereof, as all or a portion of a corporate or business name or
for any commercial purpose, including a grant of such right to any other
investment company, (iv) at the request of the Investment Manager or its
parent, the Fund will take such action as may be required to provide its
consent to the use of the name "Dean Witter", or any combination or
abbreviation thereof, by the Investment Manager or its parent or any corporate
affiliate of the Investment Manager's parent, or by any person to whom the
Investment Manager or its parent or any corporate affiliate of the Investment
Manager's parent shall have granted the right to such use, and (v) upon the
termination of any investment advisory agreement into which the Investment
Manager and the Fund may enter, or upon termination of affiliation of the
Investment Manager with its parent, the Fund shall, upon request by the
Investment Manager or its parent, cease to use the name "Dean Witter" as a
component of its name, and shall not use the name, or any combination or
abbreviation thereof, as a part of its name or for any other commercial
purpose, and shall cause its officers, Trustees and shareholders to take any
and all actions which the Investment Manager or its parent may request to
effect the foregoing and to reconvey to the Investment Manager or its parent
any and all rights to such name.
14. The Declaration of Trust establishing Dean Witter Multi-State
Municipal Series Trust, dated October 29, 1990, a copy of which, together with
all amendments thereto (the "Declaration"), is on file in the office of the
Secretary of the Commonwealth of Massachusetts, provides that the name Dean
Witter Multi-State Municipal Series Trust refers to the Trustees under the
Declaration collectively as Trustees, but not as individuals or personally; and
no Trustee, shareholder, officer, employee or agent of Dean Witter Multi-State
Municipal Series Trust shall be held to any personal liability, nor shall
resort be had to their private property for the satisfaction of any obligation
or claim or otherwise, in connection with the affairs of said Dean Witter
Multi-State Municipal Series Trust, but the Trust Estate only shall be liable.
In Witness Whereof, the parties hereto have executed and delivered this
Agreement on the day and year first above written in New York, New York.
Dean Witter Multi-State Municipal
Series Trust
By
Attest:
Dean Witter InterCapital Inc.
By
Attest:
4
DEAN WITTER MULTI-STATE MUNICIPAL SERIES TRUST
DISTRIBUTION AGREEMENT
AGREEMENT made this 30th day of June, 1993 between Dean Witter Multi-State
Municipal Series Trust, an unincorporated business trust organized under the
laws of the Commonwealth of Massachusetts (the "Trust"), and Dean Witter
Distributors Inc., a Delaware corporation (the "Distributor");
W I T N E S S E T H:
WHEREAS, the Trust is registered under the Investment Company Act of 1940, as
amended (the "1940 Act"), as a non-diversified open-end investment company and
it is in the interest of the Trust to offer its shares for sale continuously,
and
WHEREAS, the Trust and the Distributor wish to enter into an agreement with
each other with respect to the continuous offering of each Series of the
Trust's transferable shares of beneficial interest, of $.01 par value
("Shares"), in order to promote the growth of the Trust and facilitate the
distribution of its shares.
NOW, THEREFORE, the parties agree as follows:
SECTION 1. Appointment of the Distributor. (a) The Trust hereby appoints the
Distributor as the principal underwriter of the Trust to sell Shares to the
public on the terms set forth in this Agreement and the Trust's Prospectus and
the Distributor hereby accepts such appointment and agrees to act hereunder.
The Trust, during the term of this Agreement, shall sell Shares to the
Distributor upon the terms and conditions set forth herein.
(b) The Distributor agrees to purchase Shares, as principal for its own
account, from the Trust and to sell Shares as principal to investors and
securities dealers, including Dean Witter Reynolds Inc. ("DWR"), an affiliate
of the Distributor, upon the terms described herein and in the Trust's
prospectus (the "Prospectus") and statement of additional information included
in the Trust's registration statement (the "Registration Statement") most
recently filed from time to time with the Securities and Exchange Commission
(the "SEC") and effective under the Securities Act of 1933, as amended (the
"1933 Act"), and 1940 Act or as said Prospectus may be otherwise amended or
supplemented and filed with the SEC pursuant to Rule 497 under the 1933 Act.
SECTION 2. Exclusive Nature of Duties. The Distributor shall be the exclusive
principal underwriter and distributor of the Trust, except that the exclusive
rights granted to the Distributor to sell the Shares shall not apply to Shares
issued by the Trust: (i) in connection with the merger or consolidation of any
other investment company or personal holding company with the Trust or the
acquisition by purchase or otherwise of all (or substantially all) the assets
or the outstanding shares of any such company by the Trust; or (ii) pursuant to
reinvestment of dividends or capital gains distributions; or (iii) pursuant to
the reinstatement privilege afforded redeeming shareholders.
SECTION 3. Purchase of Shares from the Trust. (a) The Distributor shall have
the right to buy from the Trust the Shares needed, but not more than the Shares
needed (except for clerical errors in transmission), to fill unconditional
orders for Shares placed with the Distributor by investors and securities
dealers. The price which the Distributor shall pay for the Shares so purchased
from the Trust shall be the net asset value, determined as set forth in the
Prospectus, used in determining the public offering price on which such orders
were based.
(b) The shares are to be resold by the Distributor at the public offering
price, as set forth in Section 3(c) hereof to investors or to securities
dealers including DWR, who have entered into selected dealer agreements with
the Distributor pursuant to Section 7 ("Selected Dealers").
(c) The public offering price(s) of the Shares, i.e., the price per share at
which the Distributor may sell Shares to the public, shall be the public
offering price as set forth in the Prospectus relating to such Shares, but not
to exceed the net asset value at which the Distributor is to purchase the
shares, plus a sales charge not to exceed 4.0% of the public offering price,
subject to reductions for volume purchases. If the public offering price does
not equal an even cent, the public offering price may be adjusted to the
nearest cent.
1
<PAGE>
(d) The Trust shall have the right to suspend the sale of the Shares at times
when redemption is suspended pursuant to the conditions set forth in Section
4(d) hereof. The Trust shall also have the right to suspend the sale of the
Shares if trading on the New York Stock Exchange shall have been suspended, if
a banking moratorium shall have been declared by federal or New York
authorities, or if there shall have been some other extraordinary event which,
in the judgment of the Trust, makes it impracticable to sell the Shares.
(e) The Trust, or any agent of the Trust designated in writing by the Trust,
shall be promptly advised of all purchase orders for Shares received by the
Distributor. Any order may be rejected by the Trust; provided, however, that
the Trust will not arbitrarily or without reasonable cause refuse to accept
orders for the purchase of Shares. The Distributor will confirm orders upon
their receipt, and the Trust (or its agent) upon receipt of payment therefor
and instructions will deliver share certificates for such Shares or a statement
confirming the issuance of Shares. Payment shall be made to the Trust in New
York Clearing House funds. The Distributor agrees to cause such payment and
such instructions to be delivered promptly to the Trust (or its agent).
With respect to Shares sold by any Selected Dealer, the Distributor is
authorized to direct the Trust's transfer agent to receive instructions
directly from the Selected Dealer on behalf of the Distributor as to
registration of Shares in the names of investors and to confirm issuance of the
Shares to such investors. The Distributor is also authorized to instruct the
transfer agent to receive payment directly from the Selected Dealer on behalf
of the Distributor, for prompt transmittal to the Trust's custodian, of the
purchase price of the Shares. In such event the Distributor shall obtain from
the Selected Dealer and maintain a record of such registration instructions and
payments.
SECTION 4. Repurchase or Redemption of Shares. (a) Any of the outstanding
Shares may be tendered for redemption at any time, and the Trust agrees to
redeem the Shares so tendered in accordance with the applicable provisions set
forth in the Prospectus. The price to be paid to redeem the Shares shall be
equal to the net asset value determined as set forth in the Prospectus. All
payments by the Trust hereunder shall be made in the manner set forth below.
The redemption by the Trust of any of the Shares purchased by or through the
Distributor will not affect the sales charge secured by the Distributor in the
course of the original sale, except that if any Shares are tendered for
redemption within seven business days after the date of the confirmation of the
original purchase, the right to the sales charge shall be forfeited by the
Distributor.
Upon any redemption of Shares the Trust shall pay the total amount of the
redemption price in accordance with applicable provisions of the Prospectus in
New York Clearing House funds on or before the seventh day subsequent to its
having received the notice of redemption in proper form.
(b) The Distributor is authorized, as agent for the Trust, to repurchase
Shares, represented by a share certificate which is delivered to any office of
the Distributor in accordance with applicable provisions set forth in the
Prospectus. The Distributor shall promptly transmit to the transfer agent of
the Trust for redemption all Shares so delivered. The Distributor shall be
responsible for the accuracy of instructions transmitted to the Trust's
transfer agent in connection with all such repurchases.
(c) The Distributor is authorized, as agent for the Trust, to repurchase
Shares held in a share holder's account with the Trust for which no share
certificate has been issued, upon the telephonic or telegraphic request of the
shareholder, or at the discretion of the Distributor. The Distributor shall
promptly transmit to the transfer agent of the Trust, for redemption, all such
orders for repurchase of shares. Payment for shares repurchased may be made by
the Trust to the Distributor for the account of the shareholder. The
Distributor shall be responsible for the accuracy of instructions transmitted
to the Trust's transfer agent in connection with all such repurchases.
With respect to Shares tendered for redemption or repurchase by any Selected
Dealer on behalf of its customers, the Distributor is authorized to instruct
the transfer agent of the Trust to accept orders for redemption or repurchase
directly from the Selected Dealer on behalf of the Distributor and to instruct
the Trust to transmit payments for such redemptions and repurchases directly to
the Selected Dealer on behalf of the Distributor for the account of the
shareholder. The Distributor shall obtain from the Se-
2
<PAGE>
lected Dealer and maintain a record of such orders. The Distributor is further
authorized to obtain from the Trust, and shall maintain, a record of payments
made directly to the Selected Dealer on behalf of the Distributor.
(d) Redemption of Shares or payment by the Trust may be suspended at times
when the New York Stock Exchange is closed, when trading on said Exchange is
restricted, when an emergency exists as a result of which disposal by the Trust
of securities owned by it is not reasonably practicable or it is not reasonably
practicable for the Trust fairly to determine the value of its net assets, or
during any other period when the Securities and Exchange Commission, by order,
so permits.
SECTION 5. Duties of the Trust. (a) The Trust shall furnish to the
Distributor copies of all information, financial statements and other papers
which the Distributor may reasonably request for use in connection with the
distribution of the Shares, including one certified copy, upon request by the
Distributor, of all financial statements prepared by the Trust and examined by
independent accountants. The Trust shall, at the expense of the Distributor,
make available to the Distributor such number of copies of the Prospectus as
the Distributor shall reasonably request.
(b) The Trust shall take, from time to time, but subject to the necessary
approval of its share holders, all necessary action to fix the number of its
authorized Shares and to register Shares under the 1933 Act, to the end that
there will be available for sale such number of Shares as investors may
reasonably be expected to purchase.
(c) The Trust shall use its best efforts to qualify and maintain the
qualification of an appropriate number of the Shares for sale under the
securities laws of such states as the Distributor and the Trust may approve.
Any such qualification may be withheld, terminated or withdrawn by the Trust at
any time in its discretion. As provided in Section 8(c) hereof, the expense of
qualification and maintenance of qualification shall be borne by the Trust. The
Distributor shall furnish such information and other material relating to its
affairs and activities as may be required by the Trust in connection with such
qualification.
(d) The Trust shall, at the expense of the Distributor, furnish, in
reasonable quantities upon request by the Distributor, copies of annual and
interim reports of the Trust.
SECTION 6. Duties of the Distributor. (a) The Distributor shall sell Shares
of the Trust through DWR and may sell Shares through other securities dealers
and its own Account Executives and shall devote reasonable time and effort to
promote sales of the Shares, but shall not be obligated to sell any specific
number of Shares. The services of the Distributor hereunder are not exclusive
and it is understood that the Distributor acts as principal underwriter for
other registered investment companies and intends to do so in the future. It is
also understood that Selected Dealers, including DWR, may also sell shares for
other registered investment companies.
(b) The Distributor and any Selected Dealers shall not give any information
or make any representations, other than those contained in the Registration
Statement or related Prospectus and any sales literature specifically approved
by the Trust.
(c) The Distributor agrees that it will comply with the terms and limitations
of the Rules of Fair Practice of the National Association of Security Dealers,
Inc. (NASD).
SECTION 7. Selected Dealers Agreements. (a) The Distributor shall have the
right to enter into selected dealers agreements with Selected Dealers for the
sale of Shares. In making agreements with Selected Dealers, the Distributor
shall act only as principal and not as agent for the Fund. Shares sold to
Selected Dealers shall be for resale by such dealers only at the public
offering price set forth in the Prospectus.
(b) Within the United States, the Distributor shall offer and sell Shares
only to Selected Dealers that are members in good standing of the NASD.
(c) The Distributor shall adopt and follow procedures, as approved by the
Fund, for the confirmation of sales of Shares to investors and Selected
Dealers, the collection of amounts payable by investors and Selected Dealers on
such sales, and the cancellation of unsettled transactions, as may be necessary
to comply with the requirements of the NASD, as such requirements may from time
to time exist.
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SECTION 8. Payment of Expenses. (a) The Trust shall bear all costs and
expenses of the Trust, including fees and disbursements of legal counsel
including counsel to the Trustees of the Trust who are not interested persons
(as defined in the 1940 Act) of the Trust or the Distributor, and independent
accountants, in connection with the preparation and filing of any required
Registration Statements and Prospectuses and Statements of Additional
Information and all amendments and supplements thereto, and the expense of
preparing, printing, mailing and otherwise distributing prospectuses and
statements of additional information, annual or interim reports or proxy
materials to shareholders.
(b) After the Prospectuses and annual and interim reports have been prepared,
set in type and mailed to shareholders, the Distributor shall bear the costs
and expenses of printing and distributing any copies thereof which are used in
connection with the offering of Shares to investors. The Distributor shall bear
the costs and expenses of preparing, printing and distributing any
supplementary sales literature used by the Distributor in connection with the
offering of the Shares for sale. Any expenses of advertising incurred in
connection with such offering will also be the obligation of the Distributor.
(c) The Trust shall bear the cost and expenses of qualification of the Shares
for sale, and, if necessary or advisable in connection therewith, of qualifying
the Trust as a broker or dealer, in such states of the United States or other
jurisdictions as shall be selected by the Trust and the Distributor pursuant to
Section 5(c) hereof and the cost and expenses payable to each such state for
continuing qualification therein until the Trust decides to discontinue such
qualification pursuant to Section 5(c) hereof.
SECTION 9. Indemnification. (a) The Trust shall indemnify and hold harmless
the Distributor and each person, if any, who controls the Distributor against
any loss, liability, claim, damage or expense (including the reasonable cost of
investigating or defending any alleged loss, liability, claim, damage or
expense and reasonable counsel fees incurred in connection therewith) arising
by reason of any person acquiring any Shares, which may be based upon the 1933
Act, or on any other statute or at common law, on the ground that the
Registration Statement or related Prospectus and Statements of Additional
Information, as from time to time amended and supplemented, or the annual or
interim reports to shareholders of the Trust, includes an untrue statement of a
material fact or omits to state a material fact required to be stated therein
or necessary in order to make the statements therein not misleading, unless
such statement or omission was made in reliance upon, and in conformity with,
information furnished to the Trust in connection therewith by or on behalf of
the Distributor; provided, however, that in no case (i) is the indemnity of the
Trust in favor of the Distributor and any such controlling persons to be deemed
to protect the Distributor or any such controlling persons thereof against any
liability to the Trust or its security holders to which the Distributor or any
such controlling persons would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of its duties or
by reason of reckless disregard of its obligations and duties under this
Agreement; or (ii) is the Trust to be liable under its indemnity agreement
contained in this paragraph with respect to any claim made against the
Distributor or any such controlling persons, unless the Distributor or any such
controlling persons, as the case may be, shall have notified the Trust in
writing within a reasonable time after the summons or other first legal process
giving information of the nature of the claim shall have been served upon the
Distributor or such controlling persons (or after the Distributor or such
controlling persons shall have received notice of such service on any
designated agent), but failure to notify the Trust of any such claim shall not
relieve it from any liability which it may have to the person against whom such
action is brought otherwise than on account of its indemnity agreement
contained in this paragraph. The Trust will be entitled to participate at its
own expense in the defense, or, if it so elects, to assume the defense, of any
suit brought to enforce any such liability, but if the Trust elects to assume
the defense, such defense shall be conducted by counsel chosen by it and
satisfactory to the Distributor or such controlling person or persons,
defendant or defendants in the suit. In the event the Trust elects to assume
the defense of any such suit and retain such counsel, the Distributor or such
controlling persons or persons, defendant or defendants in the suit, shall bear
the fees and expenses of any additional counsel retained by them, but, in case
the Trust does not elect to assume the defense of any such suit, it will
reimburse the Distributor or such controlling person or persons, defendant or
defendants in the suit, for the reasonable fees and expenses of any counsel
retained by them. The Trust shall promptly notify the Distributor of the
commencement of any litigation or proceedings against it or any of its officers
or trustees in connection with the issuance or sale of the Shares.
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<PAGE>
(b) (i) The Distributor shall indemnify and hold harmless the Trust and each
of its trustees and officers and each person, if any, who controls the Trust
against any loss, liability, claim, damage, or expense described in the
foregoing indemnity contained in subsection (a) of this Section, but only with
respect to statements or omissions made in reliance upon, and in conformity
with, information furnished to the Trust in writing by or on behalf of the
Distributor for use in connection with the Registration Statement or related
Prospectus and Statement of Additional Information, as from time to time
amended, or the annual or interim reports to shareholders.
(ii) The Distributor shall indemnify and hold harmless the Trust and the
Trust's transfer agent, individually and in its capacity as the Trust's
transfer agent, from and against any claims, damages and liabilities which
arise as a result of actions taken pursuant to instructions from, or on behalf
of, the Distributor to: (1) redeem all or a part of shareholder accounts in the
Trust pursuant to subsection 4(c) hereof and pay the proceeds to, or as
directed by, the Distributor for the account of each shareholder whose Shares
are so redeemed; and (2) register Shares in the names of investors, confirm the
issuance thereof and receive payment therefor pursuant to subsection 3(e).
(iii) In case any action shall be brought against the Trust or any person so
indemnified by this subsection 9(b) in respect of which indemnity may be sought
against the Distributor, the Distributor shall have the rights and duties given
to the Trust, and the Trust and each person so indemnified shall have the
rights and duties given to the Distributor by the provisions of subsection (a)
of this Section 9.
(c) If the indemnification provided for in this Section 9 is unavailable or
insufficient to hold harmless an indemnified party under subsection (a) or (b)
above in respect of any losses, claims, damages, liabilities or expenses (or
actions in respect thereof) referred to herein, then each indemnifiying party
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages, liabilities or expenses (or actions in
respect thereof) in such proportion as is appropriate to reflect the relative
benefits received by the Trust on the one hand and the Distributor on the other
from the offering of the Shares. If, however, the allocation provided by the
immediately preceding sentence is not permitted by applicable law, then each
indemnifying party shall contribute to such amount paid or payable by such
indemnified party in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of the Trust on the one hand and
the Distributor on the other in connection with the statements or omissions
which resulted in such losses, claims, damages, liabilities or expenses (or
actions in respect thereof), as well as any other relevant equitable
considerations. The relative benefits received by the Trust on the one hand and
the Distributor on the other shall be deemed to be in the same proportion as
the total net proceeds from the offering (before deducting expenses) received
by the Trust bear to the total compensation received by the Distributor, in
each case as set forth in the Prospectus. The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by the Trust or the
Distributor and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The Trust and
the Distributor agree that it would not be just and equitable if contribution
were determined by pro rata allocation or by any other method of allocation
which does not take into account the equitable considerations referred to
above. The amount paid or payable by an indemnified party as a result of the
losses, claims, damages, liabilities or expenses (or actions in respect
thereof) referred to above shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such claim. Notwithstanding the provisions of
this subsection (c), the Distributor shall not be required to contribute any
amount in excess of the amount by which the total price at which the Shares
distributed by it to the public were offered to the public exceeds the amount
of any damages which it has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
1933 Act) shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation.
SECTION 10. Duration and Termination of this Agreement. This Agreement shall
become effective as of the date first above written and shall remain in force
until April 30, 1994, and thereafter, but only so long as such continuance is
specifically approved at least annually by (i) the Board of Trus tees of the
Trust, or by the vote of a majority of the outstanding voting securities of the
Trust, cast in
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person or by proxy, and (ii) a majority of those Trustees who are not parties
to this Agreement or interested persons of any such party and who have no
direct or indirect financial interest in this Agreement or in the operation of
the Trust's Rule 12b-1 Plan or in any agreement related thereto, cast in person
at a meeting called for the purpose of voting upon such approval.
This Agreement may be terminated at any time without the payment of any
penalty, by the Trus tees of the Trust, or by vote of a majority of the
outstanding voting securities of the Trust, or by the Distributor, on sixty
days' written notice to the other party. This Agreement shall automatically
terminate in the event of its assignment.
The terms "vote of a majority of the outstanding voting securities,"
"assignment" and "interested person", when used in this Agreement, shall have
the respective meanings specified in the 1940 Act.
SECTION 11. Amendments of this Agreement. This Agreement may be amended by
the parties only if such amendment is specifically approved by (i) the Trustees
of the Trust, or by the vote of a majority of outstanding voting securities of
the Trust, and (ii) a majority of those Trustees of the Trust who are not
parties to this Agreement or interested persons of any such party and who have
no direct or indirect financial interest in this Agreement cast in person at a
metting called for the purpose of voting on such approval.
SECTION 12. Governing Law. This Agreement shall be construed in accordance
with the law of the State of New York and the applicable provisions of the 1940
Act. To the extent the applicable law of the State of New York, or any of the
provisions herein, conflict with the applicable provisions of the 1940 Act, the
latter shall control.
SECTION 13. Personal Liability. The Declaration of the Trust establishing
Dean Witter Multi-State Municipal Series Trust, dated October 29, 1990, a copy
of which, together with all amendments thereto (the "Declaration"), is on file
in the office of the Secretary of the Commonwealth of Massachusetts, provides
that the name Dean Witter Multi-State Municipal Series Trust refers to the
Trustees under the Declaration collectively as Trustees, but not as individuals
or personally; and no Trustee, shareholder, officer, employee or agent of Dean
Witter Multi-State Municipal Series Trust shall be held to any personal
liability, nor shall resort be had to their private property for the
satisfaction of any obligation or claim or otherwise, in connection with the
affairs of said Dean Witter Multi-State Municipal Series Trust, but the Trust
Estate only shall be liable.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first written in New York, New York.
DEAN WITTER MULTI-STATE MUNICIPAL SERIES
TRUST
By: ....................................
DEAN WITTER DISTRIBUTORS INC.
By: ...................................
6
DEAN WITTER DISTRIBUTORS INC.
Gentlemen:
Dean Witter Distributors Inc. (the "Distributor") has a distribution
agreement (the "Distribution Agreement") with Dean Witter Multi-State Municipal
Series Trust, a Massachusetts business trust (the "Fund"), pursuant to which it
acts as the Distributor for the sale of the Fund's shares of beneficial
interest, par value $0.01 per share (the "Shares"). Under the Distribution
Agreement, the Distributor has the right to distribute Shares for resale.
The Fund is an open-end management investment company registered under
the Investment Company Act of 1940, as amended, and the Shares being offered to
the public are registered under the Securities Act of 1933, as amended. You
have received a copy of the Distribution Agreement between us and the Fund and
reference is made herein to certain provisions of such Distribution Agreement.
The terms used herein, including "Prospectus" and "Registration Statement" of
the Fund and "Selected Dealer" shall have the same meaning in this Agreement as
in the Distribution Agreement. As principal, we offer to sell shares to your
customers, upon the following terms and conditions:
1. In all sales of Shares to the public you shall act on behalf of your
customers, and in no transaction shall you have any authority to act as agent
for the Fund, for us or for any Selected Dealer.
2. Orders received from you will be accepted through us or on our
behalf only at the net asset value applicable to each order, as set forth in
the current Prospectus. The procedure relating to the handling of orders shall
be subject to instructions which we or the Fund shall forward from time to time
to you. All orders are subject to acceptance or rejection by the Distributor or
the Fund in the sole discretion of either.
3. You shall not place orders for any Shares unless you have already
received purchase orders for such Shares at the applicable net asset values and
subject to the terms hereof and of the Distribution Agreement and the
Prospectus. You agree that you will not offer or sell any of the Shares except
under circumstances that will result in compliance with the applicable Federal
and state securities laws and that in connection with sales and offers to sell
Shares you will furnish to each person to whom any such sale or offer is made a
copy of the Prospectus (as then amended or supplemented) and will not furnish
to any person any information relating to the Shares, which is inconsistent in
any respect with the information contained in the Prospectus (as then amended
or supplemented) or cause any advertisement to be published by radio or
television or in any newspaper or posted in any public place or use any sales
promotional material without our consent and the consent of the Fund.
4. The Distributor will compensate you for sales of shares of the Fund
and personal services to Fund shareholders by paying you a sales charge and/or
other commission (which may be in the form of a gross sales credit and/or an
annual residual commission) and/or a service fee, under the terms as are set
forth in the Fund's Prospectus.
5. If any Shares sold to your customers under the terms of this
Agreement are repurchased by us for the account of the Fund or are tendered for
redemption within seven business days after the date of the confirmation of the
original purchase by you, it is agreed that you shall forfeit your right to,
and refund to us, any commission received by you with respect to such Shares.
6. No person is authorized to make any representations concerning the
Shares or the Fund except those contained in the current Prospectus and in such
printed information subsequently issued by us or the Fund as information
supplemental to such Prospectus. In selling Shares, you shall rely solely on
the representations contained in the Prospectus and supplemental information
mentioned above. Any printed information which we furnish you other than the
Prospectus and the Fund's periodic reports and proxy solicitation material are
our sole responsibility and not the responsibility of the Fund, and you agree
that the Fund shall have no liability or responsibility to you in these
respects unless expressly assumed in connection therewith.
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7. You agree to deliver to each of the purchasers making purchases a
copy of the then current Prospectus at or prior to the time of offering or
sale, and you agree thereafter to deliver to such purchasers copies of the
annual and interim reports and proxy solicitation materials of the Fund. You
further agree to endeavor to obtain proxies from such purchasers. Additional
copies of the Prospectus, annual or interim reports and proxy solicitation
materials of the Fund will be supplied to you in reasonable quantities upon
request.
8. You are hereby authorized (i) to place orders directly with the Fund
or its agent for shares of the Fund to be sold by us subject to the applicable
terms and conditions governing the placement of orders for the purchase of Fund
shares, as set forth in the Distribution Agreement, and (ii) to tender shares
directly to the Fund or its agent for redemption subject to the applicable
terms and conditions set forth in the Distribution Agreement.
9. We reserve the right in our discretion, without notice, to suspend
sales or withdraw the offering of Shares entirely. Each party hereto has the
right to cancel this agreement upon notice to the other party.
10. I. You shall indemnify and hold harmless the Distributor, from and
against any claims, damages and liabilities which arise as a result of action
taken pursuant to instructions from you, or on your behalf to: a)(i) place
orders for Shares of the Fund with the Fund's transfer agent or direct the
transfer agent to receive instructions for the order of Shares, and (ii) accept
monies or direct that the transfer agent accept monies as payment for the order
of such Shares, all as contemplated by and in accordance with Section 3 of the
Distribution Agreement; b)(i) place orders for the redemption of Shares of the
Fund with the Fund's transfer agent or direct the transfer agent to receive
instruction for the redemption of Shares and (ii) to pay redemption proceeds or
to direct that the transfer agent pay redemption proceeds in connection with
orders for the redemption of Shares, all as contemplated by and in accordance
with Section 4 of the Distribution Agreement; provided, however, that in no
case, (i) is this indemnity in favor of the Distributor and any such
controlling persons to be deemed to protect the Distributor or any such
controlling persons thereof against any liability to which the Distributor or
any such controlling persons would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of its duties or
by reason of reckless disregard of its obligations and duties under this
Agreement or the Distribution Agreement; or (ii) are you to be liable under the
indemnity agreement contained in this paragraph with respect to any claim made
against the Distributor or any such controlling persons, unless the Distributor
or any such controlling persons, as the case may be, shall have notified you in
writing within a reasonable time after the summons or other first legal process
giving information of the nature of the claim shall have been served upon the
Distributor or such controlling persons (or after the Distributor or such
controlling persons shall have received notice of such service on any
designated agent), but failure to notify you of any such claim shall not
relieve you from any liability which you may have to the person against whom
such action is brought otherwise than on account of the indemnity agreement
contained in this paragraph. You will be entitled to participate at your own
expense in the defense, or, if you so elect, to assume the defense, of any suit
brought to enforce any such liability, but if you elect to assume the defense,
such defense shall be conducted by counsel chosen by you and satisfactory to
the Distributor or such controlling person or persons, defendant or defendants
in the suit. In the event you elect to assume the defense of any such suit and
retain such counsel, the Distributor or such controlling person or persons,
defendant or defendants in the suit, shall bear the fees and expenses of any
additional counsel retained by them, but, in case you do not elect to assume
the defense of any such suit, you will reimburse the Distributor or such
controlling person or persons, defendant or defendants in the suit, for the
reasonable fees and expenses of any counsel retained by them. You shall
promptly notify the Distributor of the commencement of any litigation or
proceedings against it or any of its officers or directors in connection with
the issuance or sale of the Shares.
II. If the indemnification provided for in this Section 10 is
unavailable or insufficient to hold harmless the Distributor, as provided above
in respect of any losses, claims, damages, liabilities or expenses (or actions
in respect thereof) referred to herein, then you shall contribute to the amount
paid or payable by the Distributor as a result of such losses, claims, damages,
liabilities or expenses (or actions in respect thereof) in such proportion as
is appropriate to reflect the relative benefits received by you on the one hand
and the
2
<PAGE>
Distributor on the other from the offering of the Shares. If, however, the
allocation provided by the immediately preceding sentence is not permitted by
applicable law, then you shall contribute to such amount paid or payable by
such indemnified party in such proportion as is appropriate to reflect not only
such relative benefits but also your relative fault on the one hand and the
relative fault of the Distributor on the other, in connection with the
statements or omissions which resulted in such losses, claims, damages,
liabilities or expenses (or actions in respect thereof), as well as any other
relevant equitable considerations. You and the Distributor agree that it would
not be just and equitable if contribution were determined by pro rata
allocation or by any other method of allocation which does not take into
account the equitable considerations referred to above. The amount paid or
payable by the Distributor as a result of the losses, claims, damages,
liabilities or expenses (or actions in respect thereof) referred to above shall
be deemed to include any legal or other expenses reasonably incurred by the
Distributor in connection with investigating or defending any such claim.
Notwithstanding the provisions of this subsection (II), you shall not be
required to contribute any amount in excess of the amount by which the total
price at which the Shares distributed by it to the public were offered to the
public exceeds the amount of any damages which it has otherwise been required
to pay by reason of such untrue or alleged untrue statement or omission or
alleged omission. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act of 1933 Act) shall be entitled
to contribution from any person who was not guilty of such fraudulent
misrepresentation.
11. We shall have full authority to take such action as we may deem
advisable in respect of all matters pertaining to the distribution and
redemption of Fund shares. We shall be under no liability to you except for
lack of good faith and for obligations expressly assumed by us herein. Nothing
contained in this paragraph is intended to operate as, and the provisions of
this paragraph shall not in any way whatsoever constitute, a waiver by you of
compliance with any provision of the Securities Act of 1933, as amended, or of
the rules and regulations of the Securities and Exchange Commission issued
thereunder.
12. You represent that you are a member of the National Association of
Securities Dealers, Inc. and, with respect to any sales in the United States,
we both hereby agree to abide by the Rules of Fair Practice of such
Association.
13. Upon application to us, we will inform you as to the states in
which we believe the Shares have been qualified for sale under, or are exempt
from the requirements of, the respective securities laws of such states, but we
assume no responsibility or obligation as to your right to sell Shares in any
jurisdiction.
14. All communications to us should be sent to the address shown below.
Any notice to you shall be duly given if mailed or telegraphed to you at the
address specified by you below.
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15. This Agreement shall become effective as of the date of your
acceptance hereof, provided that you return to us promptly a signed and dated
copy.
Dean Witter Distributors Inc.
By
(Authorized Signature)
Please return one signed copy
of this agreement to:
Dean Witter Distributors Inc.
Two World Trade Center
New York, New York 10048
Accepted:
Firm Name:
By:
Address:
Date:
4
AMENDED AND RESTATED
TRANSFER AGENCY AND SERVICE AGREEMENT
with
DEAN WITTER TRUST COMPANY
DWR
[open-end]
<PAGE>
TABLE OF CONTENTS
Page
Article 1 Terms of Appointment; Duties of DWTC . . . 2
Article 2 Fees and Expenses. . . . . . . . . . . . . 6
Article 3 Representations and Warranties of DWTC . . 7
Article 4 Representations and Warranties of the
Fund . . . . . . . . . . . . . . . . . . . 8
Article 5 Duty of Care and Indemnification . . . . . 9
Article 6 Documents and Covenants of the Fund and
DWTC . . . . . . . . . . . . . . . . . . . 12
Article 7 Duration and Termination of Agreement. . . 16
Article 8 Assignment . . . . . . . . . . . . . . . . 16
Article 9 Affiliations . . . . . . . . . . . . . . . 17
Article 10 Amendment. . . . . . . . . . . . . . . . . 18
Article 11 Applicable Law . . . . . . . . . . . . . . 18
Article 12 Miscellaneous. . . . . . . . . . . . . . . 18
Article 13 Merger of Agreement. . . . . . . . . . . . 20
Article 14 Personal Liability . . . . . . . . . . . . 21
-i-
<PAGE>
AMENDED AND RESTATED TRANSFER AGENCY AND SERVICE AGREEMENT
AMENDED AND RESTATED AGREEMENT made as of the 1st
day of August, 1993 by and between each of the Dean Witter
Funds listed on the signature pages hereof, each of such Funds
acting severally on its own behalf and not jointly with any of
such other Funds (each such Fund hereinafter referred to as
the "Fund"), each such Fund having its principal office and
place of business at Two World Trade Center, New York, New
York, 10048, and DEAN WITTER TRUST COMPANY, a trust company
organized under the laws of New Jersey, having its principal
office and place of business at Harborside Financial Center,
Plaza Two, Jersey City, New Jersey 07311 ("DWTC").
WHEREAS, the Fund desires to appoint DWTC as its
transfer agent, dividend disbursing agent and shareholder
servicing agent and DWTC desires to accept such appointment;
NOW THEREFORE, in consideration of the mutual
covenants herein contained, the parties hereto agree as
follows:
-1-
<PAGE>
Article 1 Terms of Appointment; Duties of DWTC
1.1 Subject to the terms and conditions set
forth in this Agreement, the Fund hereby employs and appoints
DWTC to act as, and DWTC agrees to act as, the transfer agent
for each series and class of shares of the Fund, whether now
or hereafter authorized or issued ("Shares"), dividend
disbursing agent and shareholder servicing agent in connection
with any accumulation, open-account or similar plans provided
to the holders of such Shares ("Shareholders") and set out in
the currently effective prospectus and statement of additional
information ("prospectus") of the Fund, including without
limitation any periodic investment plan or periodic withdrawal
program.
1.2 DWTC agrees that it will perform the fol-
lowing services:
(a) In accordance with procedures established
from time to time by agreement between the Fund and DWTC, DWTC
shall:
(i) Receive for acceptance, orders for the
purchase of Shares, and promptly deliver payment and
appropriate documentation therefor to the custodian of the
assets of the Fund (the "Custodian");
-2-
<PAGE>
(ii) Pursuant to purchase orders, issue the
appropriate number of Shares and issue certificates therefor
or hold such Shares in book form in the appropriate
Shareholder account;
(iii) Receive for acceptance redemption
requests and redemption directions and deliver the appropriate
documentation therefor to the Custodian;
(iv) At the appropriate time as and when it
receives monies paid to it by the Custodian with respect to
any redemption, pay over or cause to be paid over in the
appropriate manner such monies as instructed by the redeeming
Shareholders;
(v) Effect transfers of Shares by the
registered owners thereof upon receipt of appropriate
instructions;
(vi) Prepare and transmit payments for divi-
dends and distributions declared by the Fund;
(vii) Calculate any sales charges payable by
a Shareholder on purchases and/or redemptions of Shares of the
Fund as such charges may be reflected in the prospectus;
(viii) Maintain records of account for and
advise the Fund and its Shareholders as to the foregoing; and
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<PAGE>
(ix) Record the issuance of Shares of the Fund
and maintain pursuant to Rule 17Ad-10(e) under the Securities
Exchange Act of 1934 ("1934 Act") a record of the total number
of Shares of the Fund which are authorized, based upon data
provided to it by the Fund, and issued and outstanding. DWTC
shall also provide to the Fund on a regular basis the total
number of Shares which are authorized, issued and outstanding
and shall notify the Fund in case any proposed issue of Shares
by the Fund would result in an overissue. In case any issue
of Shares would result in an overissue, DWTC shall refuse to
issue such Shares and shall not countersign and issue any
certificates requested for such Shares. When recording the
issuance of Shares, DWTC shall have no obligation to take
cognizance of any Blue Sky laws relating to the issue of sale
of such Shares, which functions shall be the sole
responsibility of the Fund.
(b) In addition to and not in lieu of the
services set forth in the above paragraph (a), DWTC shall: (i)
perform all of the customary services of a transfer agent,
dividend disbursing agent and, as relevant, shareholder ser-
vicing agent in connection with dividend reinvestment,
accumulation, open-account or similar plans (including without
limitation any periodic investment plan or periodic withdrawal
program), including but not limited to, maintaining all
Shareholder accounts, preparing Shareholder meeting lists,
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<PAGE>
mailing proxies, receiving and tabulating proxies, mailing
shareholder reports and prospectuses to current Shareholders,
withholding taxes on U.S. resident and non-resident alien
accounts, preparing and filing appropriate forms required with
respect to dividends and distributions by federal tax
authorities for all Shareholders, preparing and mailing
confirmation forms and statements of account to Shareholders
for all purchases and redemptions of Shares and other confirm-
able transactions in Shareholder accounts, preparing and
mailing activity statements for Shareholders and providing
Shareholder account information; (ii) open any and all bank
accounts which may be necessary or appropriate in order to
provide the foregoing services; and (iii) provide a system
which will enable the Fund to monitor the total number of
Shares sold in each State or other jurisdiction.
(c) In addition, the Fund shall (i) identify
to DWTC in writing those transactions and assets to be treated
as exempt from Blue Sky reporting for each State and (ii)
verify the establishment of transactions for each State on the
system prior to activation and thereafter monitor the daily
activity for each State. The responsibility of DWTC for the
Fund's registration status under the Blue Sky or securities
laws of any State or other jurisdiction is solely limited to
the initial establishment of transactions subject to Blue Sky
compliance by the Fund and the reporting of such transactions
-5-
<PAGE>
to the Fund as provided above and as agreed from time to time
by the Fund and DWTC.
(d) DWTC shall provide such additional
services and functions not specifically described herein as
may be mutually agreed between DWTC and the Fund. Procedures
applicable to such services may be established from time to
time by agreement between the Fund and DWTC.
Article 2 Fees and Expenses
2.1 For performance by DWTC pursuant to this
Agreement, each Fund agrees to pay DWTC an annual maintenance
fee for each Shareholder account and certain transactional
fees, if applicable, as set out in the respective fee schedule
attached hereto as Schedule A. Such fees and out-of-pocket
expenses and advances identified under Section 2.2 below may
be changed from time to time subject to mutual written
agreement between the Fund and DWTC.
2.2 In addition to the fees paid under Section
2.1 above, the Fund agrees to reimburse DWTC in connection
with the services rendered by DWTC hereunder. In addition,
any other expenses incurred by DWTC at the request or with the
consent of the Fund will be reimbursed by the Fund.
2.3 The Fund agrees to pay all fees and
reimbursable expenses within a reasonable period of time
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<PAGE>
following the mailing of the respective billing notice.
Postage for mailing of dividends, proxies, Fund reports and
other mailings to all Shareholder accounts shall be advanced
to DWTC by the Fund upon request prior to the mailing date of
such materials.
Article 3 Representations and Warranties of DWTC
DWTC represents and warrants to the Fund that:
3.1 It is a trust company duly organized and
existing and in good standing under the laws of New Jersey and
it is duly qualified to carry on its business in New Jersey.
3.2 It is and will remain registered with the
U.S. Securities and Exchange Commission ("SEC") as a Transfer
Agent pursuant to the requirements of Section 17A of the 1934
Act.
3.3 It is empowered under applicable laws and
by its charter and By-Laws to enter into and perform this
Agreement.
3.4 All requisite corporate proceedings have
been taken to authorize it to enter into and perform this
Agreement.
3.5 It has and will continue to have access to
the necessary facilities, equipment and personnel to perform
its duties and obligations under this Agreement.
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<PAGE>
Article 4 Representations and Warranties of the Fund
The Fund represents and warrants to DWTC that:
4.1 It is a corporation duly organized and
existing and in good standing under the laws of Delaware or
Maryland or a trust duly organized and existing and in good
standing under the laws of Massachusetts, as the case may be.
4.2 It is empowered under applicable laws and
by its Articles of Incorporation or Declaration of Trust, as
the case may be, and under its By-Laws to enter into and
perform this Agreement.
4.3 All corporate proceedings necessary to
authorize it to enter into and perform this Agreement have
been taken.
4.4 It is an investment company registered
with the SEC under the Investment Company Act of 1940, as
amended (the "1940 Act").
4.5 A registration statement under the
Securities Act of 1933 (the "1933 Act") is currently effective
and will remain effective, and appropriate state securities
law filings have been made and will continue to be made, with
respect to all Shares of the Fund being offered for sale.
-8-
<PAGE>
Article 5 Duty of Care and Indemnification
5.1 DWTC shall not be responsible for, and the
Fund shall indemnify and hold DWTC harmless from and against,
any and all losses, damages, costs, charges, counsel fees,
payments, expenses and liability arising out of or
attributable to:
(a) All actions of DWTC or its agents or
subcontractors required to be taken pursuant to this
Agreement, provided that such actions are taken in good faith
and without negligence or willful misconduct.
(b) The Fund's refusal or failure to comply with
the terms of this Agreement, or which arise out of the Fund's
lack of good faith, negligence or willful misconduct or which
arise out of breach of any representation or warranty of the
Fund hereunder.
(c) The reliance on or use by DWTC or its agents or
subcontractors of information, records and documents which (i)
are received by DWTC or its agents or subcontractors and
furnished to it by or on behalf of the Fund, and (ii) have
been prepared and/or maintained by the Fund or any other
person or firm on behalf of the Fund.
(d) The reliance on, or the carrying out by DWTC or
its agents or subcontractors of, any instructions or requests
-9-
<PAGE>
of the Fund.
(e) The offer or sale of Shares in violation of any
requirement under the federal securities laws or regulations
or the securities or Blue Sky laws of any State or other
jurisdiction that such Shares be registered in such State or
other jurisdiction or in violation of any stop order or other
determination or ruling by any federal agency or any State or
other jurisdiction with respect to the offer or sale of such
Shares in such State or other jurisdiction.
5.2 DWTC shall indemnify and hold the Fund
harmless from or against any and all losses, damages, costs,
charges, counsel fees, payments, expenses and liability
arising out of or attributable to any action or failure or
omission to act by DWTC as a result of the lack of good faith,
negligence or willful misconduct of DWTC, its officers,
employees or agents.
5.3 At any time, DWTC may apply to any officer
of the Fund for instructions, and may consult with legal
counsel to the Fund, with respect to any matter arising in
connection with the services to be performed by DWTC under
this Agreement, and DWTC and its agents or subcontractors
shall not be liable and shall be indemnified by the Fund for
any action taken or omitted by it in reliance upon such
instructions or upon the opinion of such counsel. DWTC, its
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<PAGE>
agents and subcontractors shall be protected and indemnified
in acting upon any paper or document furnished by or on behalf
of the Fund, reasonably believed to be genuine and to have
been signed by the proper person or persons, or upon any
instruction, information, data, records or documents provided
to DWTC or its agents or subcontractors by machine readable
input, telex, CRT data entry or other similar means authorized
by the Fund, and shall not be held to have notice of any
change of authority of any person, until receipt of written
notice thereof from the Fund. DWTC, its agents and
subcontractors shall also be protected and indemnified in
recognizing stock certificates which are reasonably believed
to bear the proper manual or facsimile signature of the
officers of the Fund, and the proper countersignature of any
former transfer agent or registrar, or of a co-transfer agent
or co-registrar.
5.4 In the event either party is unable to
perform its obligations under the terms of this Agreement
because of acts of God, strikes, equipment or transmission
failure or damage reasonably beyond its control, or other
causes reasonably beyond its control, such party shall not be
liable for damages to the other for any damages resulting from
such failure to perform or otherwise from such causes.
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<PAGE>
5.5 Neither party to this Agreement shall be
liable to the other party for consequential damages under any
provision of this Agreement or for any act or failure to act
hereunder.
5.6 In order that the indemnification
provisions contained in this Article 5 shall apply, upon the
assertion of a claim for which either party may be required to
indemnify the other, the party seeking indemnification shall
promptly notify the other party of such assertion, and shall
keep the other party advised with respect to all developments
concerning such claim. The party who may be required to
indemnify shall have the option to participate with the party
seeking indemnification in the defense of such claim. The
party seeking indemnification shall in no case confess any
claim or make any compromise in any case in which the other
party may be required to indemnify it except with the other
party's prior written consent.
Article 6 Documents and Covenants of the Fund and DWTC
6.1 The Fund shall promptly furnish to DWTC
the following:
(a) If a corporation:
(i) A certified copy of the resolution of the Board
of Directors of the Fund authorizing the appointment of DWTC
and the execution and delivery of this Agreement;
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<PAGE>
(ii) A certified copy of the Articles of
Incorporation and By-Laws of the Fund and all amendments
thereto;
(iii) Certified copies of each vote of the Board
of Directors designating persons authorized to give
instructions on behalf of the Fund and signature cards bearing
the signature of any officer of the Fund or any other person
authorized to sign written instructions on behalf of the Fund;
(iv) A specimen of the certificate for Shares of the
Fund in the form approved by the Board of Directors, with a
certificate of the Secretary of the Fund as to such approval;
(b) If a business trust:
(i) A certified copy of the resolution of the Board
of Trustees of the Fund authorizing the appointment of DWTC
and the execution and delivery of this Agreement;
(ii) A certified copy of the Declaration of Trust
and By-laws of the Fund and all amendments thereto;
(iii) Certified copies of each vote of the Board
of Trustees designating persons authorized to give
instructions on behalf of the Fund and signature cards bearing
the signature of any officer of the Fund or any other person
authorized to sign written instructions on behalf of the Fund;
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<PAGE>
(iv) A specimen of the certificate for Shares of the
Fund in the form approved by the Board of Trustees, with a
certificate of the Secretary of the Fund as to such approval;
(c) The current registration statements and any
amendments and supplements thereto filed with the SEC pursuant
to the requirements of the 1933 Act or the 1940 Act;
(d) All account application forms or other
documents relating to Shareholder accounts and/or relating to
any plan, program or service offered or to be offered by the
Fund; and
(e) Such other certificates, documents or opinions
as DWTC deems to be appropriate or necessary for the proper
performance of its duties.
6.2 DWTC hereby agrees to establish and
maintain facilities and procedures reasonably acceptable to
the Fund for safekeeping of Share certificates, check forms
and facsimile signature imprinting devices, if any; and for
the preparation or use, and for keeping account of, such
certificates, forms and devices.
6.3 DWTC shall prepare and keep records
relating to the services to be performed hereunder, in the
form and manner as it may deem advisable and as required by
applicable laws and regulations. To the extent required by
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<PAGE>
Section 31 of the 1940 Act, and the rules and regulations
thereunder, DWTC agrees that all such records prepared or
maintained by DWTC relating to the services performed by DWTC
hereunder are the property of the Fund and will be preserved,
maintained and made available in accordance with such Section
31 of the 1940 Act, and the rules and regulations thereunder,
and will be surrendered promptly to the Fund on and in
accordance with its request.
6.4 DWTC and the Fund agree that all books,
records, information and data pertaining to the business of
the other party which are exchanged or received pursuant to
the negotiation or the carrying out of this Agreement shall
remain confidential and shall not be voluntarily disclosed to
any other person except as may be required by law or with the
prior consent of DWTC and the Fund.
6.5 In case of any request or demands for the
inspection of the Shareholder records of the Fund, DWTC will
endeavor to notify the Fund and to secure instructions from an
authorized officer of the Fund as to such inspection. DWTC
reserves the right, however, to exhibit the Shareholder
records to any person whenever it is advised by its counsel
that it may be held liable for the failure to exhibit the
Shareholder records to such person.
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<PAGE>
Article 7 Duration and Termination of Agreement
7.1 This Agreement shall remain in full force
and effect until July 31, 1996 and from year-to-year
thereafter unless terminated by either party as provided in
Section 7.2 hereof.
7.2 This Agreement may be terminated by the
Fund on 60 days written notice, and by DWTC on 90 days written
notice, to the other party without payment of any penalty.
7.3 Should the Fund exercise its right to
terminate, all out-of-pocket expenses associated with the
movement of records and other materials will be borne by the
Fund. Additionally, DWTC reserves the right to charge for any
other reasonable fees and expenses associated with such
termination.
Article 8 Assignment
8.1 Except as provided in Section 8.3 below,
neither this Agreement nor any rights or obligations hereunder
may be assigned by either party without the written consent of
the other party.
8.2 This Agreement shall inure to the benefit
of and be binding upon the parties and their respective
permitted successors and assigns.
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<PAGE>
8.3 DWTC may, in its sole discretion and
without further consent by the Fund, subcontract, in whole or
in part, for the performance of its obligations and duties
hereunder with any person or entity including but not limited
to companies which are affiliated with DWTC; provided,
however, that such person or entity has and maintains the
qualifications, if any, required to perform such obligations
and duties, and that DWTC shall be as fully responsible to the
Fund for the acts and omissions of any agent or subcontractor
as it is for its own acts or omissions under this Agreement.
Article 9 Affiliations
9.1 DWTC may now or hereafter, without the
consent of or notice to the Fund, function as transfer agent
and/or shareholder servicing agent for any other investment
company registered with the SEC under the 1940 Act and for any
other issuer, including without limitation any investment
company whose adviser, administrator, sponsor or principal
underwriter is or may become affiliated with Dean Witter,
Discover & Co. or any of its direct or indirect subsidiaries
or affiliates.
9.2 It is understood and agreed that the
Directors or Trustees (as the case may be), officers,
employees, agents and shareholders of the Fund, and the
directors, officers, employees, agents and shareholders of the
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<PAGE>
Fund's investment adviser and/or distributor, are or may be
interested in DWTC as directors, officers, employees, agents
and shareholders or otherwise, and that the directors,
officers, employees, agents and shareholders of DWTC may be
interested in the Fund as Directors or Trustees (as the case
may be), officers, employees, agents and shareholders or
otherwise, or in the investment adviser and/or distributor as
directors, officers, employees, agents, shareholders or
otherwise.
Article 10 Amendment
10.1 This Agreement may be amended or modified
by a written agreement executed by both parties and authorized
or approved by a resolution of the Board of Directors or the
Board of Trustees (as the case may be) of the Fund.
Article 11 Applicable Law
11.1 This Agreement shall be construed and the
provisions thereof interpreted under and in accordance with
the laws of the State of New York.
Article 12 Miscellaneous
12.1 In the event that one or more additional
investment companies managed or administered by Dean Witter
InterCapital Inc. or any of its affiliates ("Additional
Funds") desires to retain DWTC to act as transfer agent,
dividend disbursing agent and/or shareholder servicing agent,
-18-
<PAGE>
and DWTC desires to render such services, such services shall
be provided pursuant to a letter agreement, substantially in
the form of Exhibit A hereto, between DWTC and each Additional
Fund.
12.2 In the event of an alleged loss or
destruction of any Share certificate, no new certificate shall
be issued in lieu thereof, unless there shall first be
furnished to DWTC an affidavit of loss or non-receipt by the
holder of Shares with respect to which a certificate has been
lost or destroyed, supported by an appropriate bond
satisfactory to DWTC and the Fund issued by a surety company
satisfactory to DWTC, except that DWTC may accept an affidavit
of loss and indemnity agreement executed by the registered
holder (or legal representative) without surety in such form
as DWTC deems appropriate indemnifying DWTC and the Fund for
the issuance of a replacement certificate, in cases where the
alleged loss is in the amount of $1000 or less.
12.3 In the event that any check or other order for
payment of money on the account of any Shareholder or new
investor is returned unpaid for any reason, DWTC will (a) give
prompt notification to the Fund's distributor ("Distributor")
(or to the Fund if the Fund acts as its own distributor) of
such non-payment; and (b) take such other action, including
imposition of a reasonable processing or handling fee, as DWTC
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<PAGE>
may, in its sole discretion, deem appropriate or as the Fund
and, if applicable, the Distributor may instruct DWTC.
12.4 Any notice or other instrument authorized or
required by this Agreement to be given in writing to the Fund
or to DWTC shall be sufficiently given if addressed to that
party and received by it at its office set forth below or at
such other place as it may from time to time designate in
writing.
To the Fund:
[Name of Fund]
Two World Trade Center
New York, New York 10048
Attention: General Counsel
To DWTC:
Dean Witter Trust Company
Harborside Financial Center
Plaza Two
Jersey City, New Jersey 07311
Attention: President
Article 13 Merger of Agreement
13.1 This Agreement constitutes the entire
agreement between the parties hereto and supersedes any prior
agreement with respect to the subject matter hereof whether
oral or written.
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<PAGE>
Article 14 Personal Liability
14.1 In the case of a Fund organized as a
Massachusetts business trust, a copy of the Declaration of
Trust of the Fund is on file with the Secretary of The
Commonwealth of Massachusetts, and notice is hereby given that
this instrument is executed on behalf of the Board of Trustees
of the Fund as Trustees and not individually and that the
obligations of this instrument are not binding upon any of the
Trustees or shareholders individually but are binding only
upon the assets and property of the Fund; provided, however,
that the Declaration of Trust of the Fund provides that the
assets of a particular Series of the Fund shall under no
circumstances be charged with liabilities attributable to any
other Series of the Fund and that all persons extending credit
to, or contracting with or having any claim against, a
particular Series of the Fund shall look only to the assets of
that particular Series for payment of such credit, contract or
claim.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused
this Amended and Restated Agreement to be executed in their
names and on their behalf by and through their duly authorized
officers, as of the day and year first above written.
(1) Dean Witter Liquid Asset Fund Inc.
(2) Dean Witter Tax-Free Daily Income Trust
(3) Dean Witter California Tax-Free Daily Income Trust
(4) Dean Witter Retirement Series
(5) Dean Witter Dividend Growth Securities Inc.
(6) Dean Witter Natural Resource Development Securities Inc.
(7) Dean Witter World Wide Investment Trust
(8) Dean Witter Capital Growth Securities
(9) Dean Witter Convertible Securities Trust
(10) Active Assets Tax-Free Trust
(11) Active Assets Money Trust
(12) Active Assets California Tax-Free Trust
(13) Active Assets Government Securities Trust
(14) Dean Witter Equity Income Trust
(15) Dean Witter Federal Securities Trust
(16) Dean Witter U.S. Government Securities Trust
(17) Dean Witter High Yield Securities Inc.
(18) Dean Witter New York Tax-Free Income Fund
(19) Dean Witter Tax-Exempt Securities Trust
(20) Dean Witter California Tax-Free Income Fund
(21) Dean Witter Managed Assets Trust
(22) Dean Witter Limited Term Municipal Trust
(23) Dean Witter World Wide Income Trust
(24) Dean Witter Utilities Fund
(25) Dean Witter Strategist Fund
(26) Dean Witter New York Municipal Money Market Trust
(27) Dean Witter Intermediate Income Securities
(28) Prime Income Trust
(29) Dean Witter European Growth Fund Inc.
(30) Dean Witter Developing Growth Securities Trust
(31) Dean Witter Precious Metals and Minerals Trust
(32) Dean Witter Pacific Growth Fund Inc.
(33) Dean Witter Multi-State Municipal Series Trust
(34) Dean Witter Premier Income Trust
(35) Dean Witter Short-Term U.S. Treasury Trust
(36) Dean Witter Diversified Income Trust
(37) Dean Witter Health Sciences Trust
(38) Dean Witter Global Dividend Growth Securities
(39) Dean Witter American Value Fund
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<PAGE>
(40) Dean Witter U.S. Government Money Market Trust
(41) Dean Witter Global Short-Term Income Fund Inc.
(42) Dean Witter Value-Added Market Series
(43) Dean Witter Select Municipal Reinvestment Fund
(44) Dean Witter Variable Investment Series
By:/s/ Sheldon Curtis
Sheldon Curtis
Vice President and General Counsel
ATTEST:
/s/ Barry Fink
Barry Fink
Assistant Secretary
DEAN WITTER TRUST COMPANY
By:/s/ Charles A. Fiumefreddo
Charles A. Fiumefreddo
Chairman
ATTEST:
/s/ David A. Hughey
David A. Hughey
Executive Vice President
f:\transfer.dw
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<PAGE>
Dean Witter Trust Company
Harborside Financial Center
Plaza Two
Jersey City, NJ 07311
Gentlemen:
The undersigned, (THE FUND NAME) a (Massachusetts
business trust/Maryland corporation) (the "Fund"), desires to
employ and appoint Dean Witter Trust Company ("DWTC") to act
as transfer agent for each series and class of shares of the
Fund, whether now or hereafter authorized or issued
("Shares"), dividend disbursing agent and shareholder
servicing agent, registrar and agent in connection with any
accumulation, open-account or similar plan provided to the
holders of Shares, including without limitation any periodic
investment plan or periodic withdrawal plan.
The Fund hereby agrees that, in consideration for
the payment by the Fund to DWTC of fees as set out in the fee
schedule attached hereto as Schedule A, DWTC shall provide
such services to the Fund pursuant to the terms and conditions
set forth in the Transfer Agency and Service Agreement annexed
hereto, as if the Fund was a signatory thereto.
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<PAGE>
Please indicate DWTC's acceptance of employment and
appointment by the Fund in the capacities set forth above by
so indicating in the space provided below.
Very truly yours,
(NAME OF THE FUND)
By:__________________________________
Sheldon Curtis
Vice President and General Counsel
ACCEPTED AND AGREED TO:
DEAN WITTER TRUST COMPANY
By:_______________________
Its:______________________
Date:_____________________
f:\transfer.dw
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<PAGE>
SCHEDULE A
Fund: Dean Witter Multi-State Municipal Series Trust
Fees: (1) Annual maintenance fee of $11.50 per
shareholder account, payable monthly.
(2) A fee equal to 1/12 of the fee set forth
in (1) above, for providing Forms 1099 for
accounts closed during the year, payable
following the end of the calendar year.
(3) Out-of-pocket expenses in accordance with
Section 2.2 of the Agreement.
(4) Fees for additional services not set
forth in this Agreement shall be as negotiated
between the parties.
f:\schedA\21
-26-
SERVICES AGREEMENT
AGREEMENT made as of the 31st day of December, 1993 by and between Dean
Witter InterCapital Inc., a Delaware corporation (herein referred to as
"InterCapital"), and Dean Witter Services Company Inc., a New Jersey
corporation (herein referred to as "DWS").
WHEREAS, InterCapital has entered into separate agreements (each such
agreement being herein referred to as an "Investment Management Agreement")
with certain investment companies as set forth on Schedule A (each such
investment company being herein referred to as a "Fund" and, collectively, as
the "Funds") pursuant to which InterCapital is to perform, or supervise the
performance of, among other services, administrative services for the Funds
(and, in the case of Funds with multiple portfolios, the Series or Portfolios
of the Funds (such Series and Portfolio being herein individually referred to
as "a Series" and, collectively, as "the Series"));
WHEREAS, InterCapital desires to retain DWS to perform the administrative
services as described below; and
WHEREAS, DWS desires to be retained by InterCapital to perform such
administrative services:
Now, therefore, in consideration of the mutual covenants and agreements of
the parties hereto as herein set forth, the parties covenant and agree as
follows:
1. DWS agrees to provide administrative services to each Fund as hereinafter
set forth. Without limiting the generality of the foregoing, DWS shall (i)
administer the Fund's business affairs and supervise the overall day-to-day
operations of the Fund (other than rendering investment advice); (ii) provide
the Fund with full administrative services, including the maintenance of
certain books and records, such as journals, ledger accounts and other records
required under the Investment Company Act of 1940, as amended (the"Act"), the
notification to the Fund and InterCapital of available funds for investment,
the reconciliation of account information and balances among the Fund's
custodian, transfer agent and dividend disbursing agent and InterCapital, and
the calculation of the net asset value of the Fund's shares; (iii) provide the
Fund with the services of persons competent to perform such supervisory,
administrative and clerical functions as are necessary to provide effective
operation of the Fund; (iv) oversee the performance of administrative and
professional services rendered to the Fund by others, including its custodian,
transfer agent and dividend disbursing agent, as well as accounting, auditing
and other services; (v) provide the Fund with adequate general office space and
facilities; (vi) assist in the preparation and the printing of the periodic
updating of the Fund's registration statement and prospectus (and, in the case
of an open-end Fund, the statement of additional information), tax returns,
proxy statements, and reports to its shareholders and the Securities and
Exchange Commission; and (vii) monitor the compliance of the Fund's investment
policies and restrictions.
In the event that InterCapital enters into an Investment Management Agreement
with another investment company, and wishes to retain DWS to perform
administrative services hereunder, it shall notify DWS in writing. If DWS is
willing to render such services, it shall notify InterCapital in writing,
whereupon such other Fund shall become a Fund as defined herein.
2. DWS shall, at its own expense, maintain such staff and employ or retain
such personnel and consult with such other persons as it shall from time to
time determine to be necessary or useful to the performance of its obligations
under this Agreement. Without limiting the generality of the foregoing, the
staff and personnel of DWS shall be deemed to include officers of DWS and
persons employed or otherwise retained by DWS (including officers and employees
of InterCapital, with the consent of InterCapital) to furnish services,
statistical and other factual data, information with respect to technical and
scientific developments, and such other information, advice and assistance as
DWS may desire. DWS shall maintain each Fund's records and books of account
(other than those maintained by the Fund's transfer agent, registrar, custodian
and other agencies). All such books and records so maintained shall be the
property of the Fund and, upon request therefor, DWS shall surrender to
InterCapital or to the Fund such of the books and records so requested.
3. InterCapital will, from time to time, furnish or otherwise make available
to DWS such financial reports, proxy statements and other information relating
to the business and affairs of the Fund as DWS may
1
<PAGE>
reasonably require in order to discharge its duties and obligations to the Fund
under this Agreement or to comply with any applicable law and regulation or
request of the Board of Directors/Trustees of the Fund.
4. For the services to be rendered, the facilities furnished, and the
expenses assumed by DWS, InterCapital shall pay to DWS monthly compensation
calculated daily (in the case of an open-end Fund) or
weekly (in the case of a closed-end Fund) by applying the annual rate or rates
set forth on Schedule B to the net assets of each Fund. Except as hereinafter
set forth, (i) in the case of an open-end Fund, compensation under this
Agreement shall be calculated by applying 1/365th of the annual rate or rates
to the Fund's or the Series' daily net assets determined as of the close of
business on that day or the last previous business day and (ii) in the case of
a closed-end Fund, compensation under this Agreement shall be calculated by
applying the annual rate or rates to the Fund's average weekly net assets
determined as of the close of the last business day of each week. If this
Agreement becomes effective subsequent to the first day of a month or shall
terminate before the last day of a month, compensation for that part of the
month this Agreement is in effect shall be prorated in a manner consistent with
the calculation of the fees as set forth on Schedule B. Subject to the
provisions of paragraph 5 hereof, payment of DWS' compensation for the
preceding month shall be made as promptly as possible after completion of the
computations contemplated by paragraph 5 hereof.
5. In the event the operating expenses of any open-end Fund and/or any Series
thereof, or of InterCapital Income Securities Inc., including amounts payable
to InterCapital pursuant to the Investment Management Agreement, for any fiscal
year ending on a date on which this Agreement is in effect, exceed the expense
limitations applicable to the Fund and/or any Series thereof imposed by state
securities laws or regulations thereunder, as such limitations may be raised or
lowered from time to time, or, in the case of InterCapital Income Securities
Inc. or Dean Witter Variable Investment Series or any Series thereof, the
expense limitation specified in the Fund's Investment Management Agreement, the
fee payable hereunder shall be reduced on a pro rata basis in the same
proportion as the fee payable by the Fund under the Investment Management
Agreement is reduced.
6. DWS shall bear the cost of rendering the administrative services to be
performed by it under this Agreement, and shall, at its own expense, pay the
compensation of the officers and employees, if any, of the Fund employed by
DWS, and such clerical help and bookkeeping services as DWS shall reasonably
require in performing its duties hereunder.
7. DWS will use its best efforts in the performance of administrative
activitives on behalf of each Fund, but in the absence of willful misfeasance,
bad faith, gross negligence or reckless disregard of its obligations hereunder,
DWS shall not be liable to the Fund or any of its investors for any error of
judgment or mistake of law or for any act or omission by DWS or for any losses
sustained by the Fund or its investors. It is understood that, subject to the
terms and conditions of the Investment Management Agreement between each Fund
and InterCapital, InterCapital shall retain ultimate responsibility for all
services to be performed hereunder by DWS. DWS shall indemnify InterCapital and
hold it harmless from any liability that InterCapital may incur arising out of
any act or failure to act by DWS in carrying out its responsibilities
hereunder.
8. It is understood that any of the shareholders, Directors/Trustees,
officers and employees of the Fund may be a shareholder, director, officer or
employee of, or be otherwise interested in, DWS, and in any person controlling,
controlled by or under common control with DWS, and that DWS and any person
controlling, controlled by or under common control with DWS may have an
interest in the Fund. It is also understood that DWS and any affiliated persons
thereof or any persons controlling, controlled by or under common control with
DWS have and may have advisory, management, administration service or other
contracts with other organizations and persons, and may have other interests
and businesses, and further may purchase, sell or trade any securities or
commodities for their own accounts or for the account of others for whom they
may be acting.
9. This Agreement shall continue until April 30, 1994, and thereafter shall
continue automatically for successive periods of one year unless terminated by
either party by written notice delivered to the other party within 30 days of
the expiration of the then-existing period. Notwithstanding the foregoing, this
Agreement may be terminated at any time, by either party on 30 days' written
notice delivered to the other party. In the
2
<PAGE>
event that the Investment Management Agreement between any Fund and
InterCapital is terminated, this Agreement will automatically terminate with
respect to such Fund.
10. This Agreement may be amended or modified by the parties in any manner by
mutual written agreement executed by each of the parties hereto.
11. This Agreement shall be construed and interpreted in accordance with the
laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written in New York, New York.
DEAN WITTER INTERCAPITAL INC.
By: .....................
Attest:
.....................
DEAN WITTER SERVICES COMPANY INC.
By: .....................
Attest:
.....................
C 65500
3
<PAGE>
SCHEDULE A
DEAN WITTER FUNDS
AT DECEMBER 31, 1993
OPEN-END FUNDS
1. Active Assets California Tax-Free Trust
2. Active Assets Government Securities Trust
3. Active Assets Money Trust
4. Active Assets Tax-Free Trust
5. Dean Witter American Value Fund
6. Dean Witter California Tax-Free Daily Income Trust
7. Dean Witter California Tax-Free Income Fund
8. Dean Witter Capital Growth Securities
9. Dean Witter Convertible Securities Trust
10. Dean Witter Developing Growth Securities Trust
11. Dean Witter Diversified Income Trust
12. Dean Witter Dividend Growth Securities Inc.
13. Dean Witter Equity Income Trust
14. Dean Witter European Growth Fund Inc.
15. Dean Witter Federal Securities Trust
16. Dean Witter Global Dividend Growth Securities
17. Dean Witter Global Short-Term Income Fund Inc.
18. Dean Witter Health Sciences Trust
19. Dean Witter High Yield Securities Inc.
20. Dean Witter Intermediate Income Securities
21. Dean Witter Limited Term Municipal Trust
22. Dean Witter Liquid Asset Fund Inc.
23. Dean Witter Managed Assets Trust
24. Dean Witter Multi-State Municipal Series Trust
25. Dean Witter Natural Resource Development Securities Inc.
26. Dean Witter New York Municipal Money Market Trust
27. Dean Witter New York Tax-Free Income Fund
28. Dean Witter Pacific Growth Fund Inc.
29. Dean Witter Precious Metals and Minerals Trust
30. Dean Witter Premier Income Trust
31. Dean Witter Retirement Series
32. Dean Witter Select Municipal Reinvestment Fund
33. Dean Witter Short-Term U.S. Treasury Trust
34. Dean Witter Strategist Fund
35. Dean Witter Tax-Exempt Securities Trust
36. Dean Witter Tax-Free Daily Income Trust
37. Dean Witter U.S. Government Money Market Trust
38. Dean Witter U.S. Government Securities Trust
39. Dean Witter Utilities Fund
40. Dean Witter Value-Added Market Series
41. Dean Witter Variable Investment Series
42. Dean Witter World Wide Income Trust
43. Dean Witter World Wide Investment Trust
CLOSED-END FUNDS
44. High Income Advantage Trust
45. High Income Advantage Trust II
46. High Income Advantage Trust III
47. InterCapital Income Securities Inc.
48. Dean Witter Government Income Trust
49. InterCapital Insured Municipal Bond Trust
50. InterCapital Insured Municipal Trust
51. InterCapital Insured Municipal Income Trust
52. InterCapital California Insured Municipal Income Trust
53. InterCapital Quality Municipal Investment Trust
54. InterCapital Quality Municipal Income Trust
55. InterCapital Quality Municipal Securities
56. InterCapital California Quality Municipal Securities
57. InterCapital New York Quality Municipal Securities
4
<PAGE>
DEAN WITTER SERVICES COMPANY
SCHEDULE OF ADMINISTRATIVE FEES - JANUARY 1, 1994
Monthly compensation calculated daily by applying the following annual rates to
a fund's net assets:
Dean Witter Multi-State 0.035% to the net assets.
Municipal Series
Trust (10)
Consent of Independent Accountants
We hereby consent to the use in the Statement of Additional Information
constituting part of this Post-Effective Amendment No. 5 to the registration
statement on Form N-1A (the "Registration Statement") of our report dated
January 14, 1994 relating to the financial statements and financial highlights
of Dean Witter Multi-State Municipal Series Trust, comprising, Arizona Series,
California Series, Florida Series, Massachusetts Series, Michigan Series,
Minnesota Series, New Jersey Series, New York Series, Ohio Series and
Pennsylvania Series, which appears in such Statement of Additional Information,
and to the incorporation by reference of such report into the Prospectus which
constitutes part of this Registration Statement. We also consent to the
reference to us under the heading "Financial Highlights" in the Prospectus and
to the references to us under the headings "Independent Accountants" and
"Experts" in the Statement of Additional Information.
PRICE WATERHOUSE
1177 Avenue of the Americas
New York, New York
February 9, 1994
SCHEDULE OF COMPUTATION OF YIELD QUOTATION
DEAN WITTER MULTI - STATE MUNICIPAL SERIES TRUST - ARIZONA
FOR THE 30 DAY PERIOD ENDED NOVEMBER 30, 1993
6
(A) YIELD = 2{ [ ((a-b)/c d) + 1] -1}
WHERE: a = Dividends and interest earned during the period
b = Expenses accrued for the period
c = The average daily number of shares outstanding
during the period that were entitled to receive
dividends
d = The maximum offering price per share on the last
day of the period
6
YIELD = 2{ [(( 251,195 - 26,158)/5,529,494 X 11.17)+1] -1}
= 4.41%
(B) TAX EQUIVALENT YIELD = SEC Yield - (1- stated tax rate)
= 4.41% / (1-.4048)
= 7.41%
(C) WITHOUT WAIVER OF FEES AND ASSUMPTION OF EXPENSES.
6
YIELD = 2{ [ ((a-b)/c d) + 1] -1}
6
= 2{ [ ((251,195-32,196)/5,529,494 X 11.17) + 1] -1}
= 4.29%
(D) TAX EQUIVALENT YIELD = SEC Yield - (1- stated tax rate)
= 4.29% / (1-.4048)
= 7.21%
<PAGE>
SCHEDULE OF COMPUTATION OF YIELD QUOTATION
DEAN WITTER MULTI - STATE MUNICIPAL SERIES TRUST - CALIFORNIA
FOR THE 30 DAY PERIOD ENDED NOVEMBER 30, 1993
6
(A) YIELD = 2{ [ ((a-b)/c d) + 1] -1}
WHERE: a = Dividends and interest earned during the period
b = Expenses accrued for the period
c = The average daily number of shares outstanding
during the period that were entitled to receive
dividends
d = The maximum offering price per share on the last
day of the period
6
YIELD = 2{ [(( 621,512 - 60,328)/12,345,187 * 11.46)+1] -1}
= 4.81%
(B) TAX EQUIVALENT YIELD = SEC Yield - (1- stated tax rate)
= 4.81% / (1-.4304)
= 8.44%
(C) WITHOUT WAIVER OF FEES AND ASSUMPTION OF EXPENSES.
6
YIELD = 2{ [ ((a-b)/c d) + 1] -1}
6
= 2{ [ ((621,512-69,837)/12,345,187 * 11.46) + 1] -1}
= 4.73%
(D) TAX EQUIVALENT YIELD = SEC Yield - (1- stated tax rate)
= 4.73% / (1-.4304)
= 8.30%
<PAGE>
SCHEDULE OF COMPUTATION OF YIELD QUOTATION
DEAN WITTER MULTI - STATE MUNICIPAL SERIES TRUST - FLORIDA
FOR THE 30 DAY PERIOD ENDED NOVEMBER 30, 1993
6
(A) YIELD = 2{ [ ((a-b)/c d) + 1] -1}
WHERE: a = Dividends and interest earned during the period
b = Expenses accrued for the period
c = The average daily number of shares outstanding
during the period that were entitled to receive
dividends
d = The maximum offering price per share on the last
day of the period
6
YIELD = 2{ [((365,139 - 37,074)/7,684,037 * 11.39)+1] -1}
= 4.54%
(B) TAX EQUIVALENT YIELD = SEC Yield - (1- stated tax rate)
= 4.54% / (1-.3600)
= 7.09%
(C) WITHOUT WAIVER OF FEES AND ASSUMPTION OF EXPENSES.
6
YIELD = 2{ [ ((a-b)/c d) + 1] -1}
6
= 2{ [ ((365,139 - 47,908)/7,684,037 * 11.39) + 1] -1}
= 4.39%
(D) TAX EQUIVALENT YIELD = SEC Yield - (1- stated tax rate)
= 4.39% / (1-.3600)
= 6.86%
<PAGE>
SCHEDULE OF COMPUTATION OF YIELD QUOTATION
DEAN WITTER MULTI - STATE MUNICIPAL SERIES TRUST - MASSACHUSETTS
FOR THE 30 DAY PERIOD ENDED NOVEMBER 30, 1993
6
(A) YIELD = 2{ [ ((a-b)/c d) + 1] -1}
WHERE: a = Dividends and interest earned during the period
b = Expenses accrued for the period
c = The average daily number of shares outstanding
during the period that were entitled to receive
dividends
d = The maximum offering price per share on the last
day of the period
6
YIELD = 2{ [(( 81,864 - 7,954)/1,626,297 X 11.54)+1] -1}
= 4.77%
(B) TAX EQUIVALENT YIELD = SEC Yield - (1- stated tax rate)
= 4.77% / (1-.4368)
= 8.47%
(C) WITHOUT WAIVER OF FEES AND ASSUMPTION OF EXPENSES.
6
YIELD = 2{ [ ((a-b)/c d) + 1] -1}
6
= 2{ [ ((81,864-12,520)/1,626,297 X 11.54) + 1] -1}
= 4.48%
(D) TAX EQUIVALENT YIELD = SEC Yield - (1- stated tax rate)
= 4.48% / (1-.4368)
= 7.95%
<PAGE>
SCHEDULE OF COMPUTATION OF YIELD QUOTATION
DEAN WITTER MULTI - STATE MUNICIPAL SERIES TRUST - MICHIGAN
FOR THE 30 DAY PERIOD ENDED NOVEMBER 30, 1993
6
(A) YIELD = 2{ [ ((a-b)/c d) + 1] -1}
WHERE: a = Dividends and interest earned during the period
b = Expenses accrued for the period
c = The average daily number of shares outstanding
during the period that were entitled to receive
dividends
d = The maximum offering price per share on the last
day of the period
6
YIELD = 2{ [(( 93,944 - 9,554)/1,946,673 * 11.51)+1] -1}
= 4.56%
(B) TAX EQUIVALENT YIELD = SEC Yield - (1- stated tax rate)
= 4.56% / (1-.3894)
= 7.47%
(C) WITHOUT WAIVER OF FEES AND ASSUMPTION OF EXPENSES.
6
YIELD = 2{ [ ((a-b)/c d) + 1] -1}
6
= 2{ [ ((93,944-14,283)/1,946,673 * 11.51) + 1] -1}
= 4.30%
(D) TAX EQUIVALENT YIELD = SEC Yield - (1- stated tax rate)
= 4.30% / (1-.3894)
= 7.04%
<PAGE>
SCHEDULE OF COMPUTATION OF YIELD QUOTATION
DEAN WITTER MULTI - STATE MUNICIPAL SERIES TRUST - MINNESOTA
FOR THE 30 DAY PERIOD ENDED NOVEMBER 30, 1993
6
(A) YIELD = 2{ [ ((a-b)/c d) + 1] -1}
WHERE: a = Dividends and interest earned during the period
b = Expenses accrued for the period
c = The average daily number of shares outstanding
during the period that were entitled to receive
dividends
d = The maximum offering price per share on the last
day of the period
6
YIELD = 2{ [(( 47,688 - 4,943)/1,033,347 * 11.23)+1] -1}
= 4.46%
(B) TAX EQUIVALENT YIELD = SEC Yield - (1- stated tax rate)
= 4.46% / (1-.4144)
= 7.62%
(C) WITHOUT WAIVER OF FEES AND ASSUMPTION OF EXPENSES.
6
YIELD = 2{ [ ((a-b)/c d) + 1] -1}
6
= 2{ [ ((47,688 - 10,522)/1,033,347 * 11.23) + 1] -1}
= 3.87%
(D) TAX EQUIVALENT YIELD = SEC Yield - (1- stated tax rate)
= 3.87% / (1-.4144)
= 6.61%
<PAGE>
SCHEDULE OF COMPUTATION OF YIELD QUOTATION
DEAN WITTER MULTI - STATE MUNICIPAL SERIES TRUST - NEW JERSEY
FOR THE 30 DAY PERIOD ENDED NOVEMBER 30, 1993
6
(A) YIELD = 2{ [ ((a-b)/c d) + 1] -1}
WHERE: a = Dividends and interest earned during the period
b = Expenses accrued for the period
c = The average daily number of shares outstanding
during the period that were entitled to receive
dividends
d = The maximum offering price per share on the last
day of the period
6
YIELD = 2{ [(( 242,418 - 23,814)/4,908,858 * 11.40)+1] -1}
= 4.73%
(B) TAX EQUIVALENT YIELD = SEC Yield - (1- stated tax rate)
= 4.73% / (1-.4048)
= 7.95%
(C) WITHOUT WAIVER OF FEES AND ASSUMPTION OF EXPENSES.
6
YIELD = 2{ [ ((a-b)/c d) + 1] -1}
6
= 2{ [ ((242,418 - 31,275)/4,908,858 * 11.40) + 1] -1}
= 4.57%
(D) TAX EQUIVALENT YIELD = SEC Yield - (1- stated tax rate)
= 4.57% / (1-.4048)
= 7.68%
<PAGE>
SCHEDULE OF COMPUTATION OF YIELD QUOTATION
DEAN WITTER MULTI - STATE MUNICIPAL SERIES TRUST - NEW YORK
FOR THE 30 DAY PERIOD ENDED NOVEMBER 30, 1993
6
(A) YIELD = 2{ [ ((a-b)/c d) + 1] -1}
WHERE: a = Dividends and interest earned during the period
b = Expenses accrued for the period
c = The average daily number of shares outstanding
during the period that were entitled to receive
dividends
d = The maximum offering price per share on the last
day of the period
6
YIELD = 2{ [(( 72,853 - 6,941)/1,418,481 * 11.49)+1] -1}
= 4.90%
(B) TAX EQUIVALENT YIELD = SEC Yield - (1- stated tax rate)
= 4.90% / (1-.4196)
= 8.44%
(C) WITHOUT WAIVER OF FEES AND ASSUMPTION OF EXPENSES.
6
YIELD = 2{ [ ((a-b)/c d) + 1] -1}
6
= 2{ [ ((72,853 - 9,926)/1,418,481 * 11.49) + 1] -1}
= 4.68%
(D) TAX EQUIVALENT YIELD = SEC Yield - (1- stated tax rate)
= 4.68% / (1-.4196)
= 8.06%
<PAGE>
SCHEDULE OF COMPUTATION OF YIELD QUOTATION
DEAN WITTER MULTI - STATE MUNICIPAL SERIES TRUST - OHIO
FOR THE 30 DAY PERIOD ENDED NOVEMBER 30, 1993
6
(A) YIELD = 2{ [ ((a-b)/c d) + 1] -1}
WHERE: a = Dividends and interest earned during the period
b = Expenses accrued for the period
c = The average daily number of shares outstanding
during the period that were entitled to receive
dividends
d = The maximum offering price per share on the last
day of the period
6
YIELD = 2{ [(( 103,402 - 10,575)/2,161,610 * 11.43)+1] -1}
= 4.55%
(B) TAX EQUIVALENT YIELD = SEC Yield - (1- stated tax rate)
= 4.55% / (1-.4080)
= 7.69%
(C) WITHOUT WAIVER OF FEES AND ASSUMPTION OF EXPENSES.
6
YIELD = 2{ [ ((a-b)/c d) + 1] -1}
6
= 2{ [ ((103,402-14,633)/2,161,610 * 11.43) + 1] -1}
= 4.35%
(D) TAX EQUIVALENT YIELD = SEC Yield - (1- stated tax rate)
= 4.35% / (1-.4080)
= 7.35%
<PAGE>
SCHEDULE OF COMPUTATION OF YIELD QUOTATION
DEAN WITTER MULTI - STATE MUNICIPAL SERIES TRUST - PENNSYLVANIA
FOR THE 30 DAY PERIOD ENDED NOVEMBER 30, 1993
6
(A) YIELD = 2{ [ ((a-b)/c d) + 1] -1}
WHERE: a = Dividends and interest earned during the period
b = Expenses accrued for the period
c = The average daily number of shares outstanding
during the period that were entitled to receive
dividends
d = The maximum offering price per share on the last
day of the period
6
YIELD = 2{ [(( 233,818 - 23,175)/4,760,869 X 11.47)+1] -1}
= 4.67%
(B) TAX EQUIVALENT YIELD = SEC Yield - (1- stated tax rate)
= 4.67% / (1-.37792)
= 7.51%
(C) WITHOUT WAIVER OF FEES AND ASSUMPTION OF EXPENSES.
6
YIELD = 2{ [ ((a-b)/c d) + 1] -1}
6
= 2{ [ ((233,818-32,428)/4,760,869 X 11.47) + 1] -1}
= 4.47%
(D) TAX EQUIVALENT YIELD = SEC Yield - (1- stated tax rate)
= 4.47% / (1-.37792)
= 7.19%
<PAGE>
SCHEDULE FOR COMPUTATIONS OF PERFORMANCE QUOTATIONS
DEAN WITTER MULTI - STATE MUNICIPAL SERIES TRUST - ARIZONA
(A) AVERAGE ANNUAL TOTAL RETURNS (I.E. STANDARDIZED COMPUTATIONS)
_ _
| ________________________|
FORMULA: | | |
| /\ n | ERV |
T = | \ | ------------ | - 1
| \ | P |
| \| |
|_ _|
T = AVERAGE ANNUAL COMPOUND RETURN
n = NUMBER OF YEARS
ERV = ENDING REDEEMABLE VALUE
P = INITIAL INVESTMENT
(A)
$1,000 ERV AS OF AGGREGATE NUMBER OF AVERAGE ANNUAL
INVESTED-P 30-Nov-93 TOTAL RETURN YEARS - n COMPOUND RETURN - T
- ---------- --------- ------------ --------- -------------------
30-Nov-92 $1,069.60 6.96% 1.00 6.96%
01-May-91 $1,255.40 25.54% 2.59 9.19%
(B) AVERAGE ANNUAL TOTAL RETURNS (STANDARDIZED COMPUTATIONS) WITHOUT WAIVER OF
FEES AND ASSUMPTION OF EXPENSES.
_ _
| ______________________ |
FORMULA: | | |
| /\ n | EVb |
tb = | \ | ------------- | - 1
| \ | P |
| \| |
|_ _|
tb = AVERAGE ANNUAL COMPOUND RETURN
(DEDUCTION FOR EXPENSES ASSUMED BY FUND MANAGER)
n = NUMBER OF YEARS
EVb = ENDING VALUE (DEDUCTION FOR EXPENSES
ASSUMED BY FUND MANAGER)
P = INITIAL INVESTMENT
(B)
$1,000 EVb AS OF NUMBER OF AVERAGE ANNUAL
INVESTED-P 30-Nov-93 YEARS - n COMPOUND RETURN - tb
- ---------- --------- --------- --------------------
30-Nov-92 $1,067.50 1.00 6.75%
01-May-91 $1,231.20 2.59 8.37%
(C) AVERAGE ANNUAL TOTAL RETURNS WITHOUT DEDUCTION FOR APPLICABLE
SALES CHARGE (NON STANDARD COMPUTATIONS)
(D) TOTAL RETURN WITHOUT DEDUCTION FOR APPLICABLE SALES CHARGE
(NON STANDARD COMPUTATIONS)
_ _
| ________________________|
FORMULA: | | |
| /\ n | EV |
t = | \ | ------------ | - 1
| \ | P |
| \| |
|_ _|
EV
TR = ---------- - 1
P
t = AVERAGE ANNUAL COMPOUND RETURN
(NO DEDUCTION FOR APPLICABLE SALES CHARGE)
n = NUMBER OF YEARS
EV = ENDING VALUE (NO DEDUCTION FOR APPLICABLE SALES CHARGE)
P = INITIAL INVESTMENT
TR = TOTAL RETURN (NO DEDUCTION FOR APPLICABLE SALES CHARGE)
(D) (C)
$1,000 EV AS OF TOTAL NUMBER OF AVERAGE ANNUAL
INVESTED-P 30-Nov-93 RETURN-TR YEARS - n COMPOUND RETURN - t
- ---------- --------- --------- --------- -------------------
30-Nov-92 $1,114.20 11.42% 1.00 11.42%
01-May-91 $1,307.70 30.77% 2.59 10.93%
(E) GROWTH OF $10,000*
(F) GROWTH OF $50,000*
(G) GROWTH OF $100,000*
FORMULA: G = (TR + 1)*P
<PAGE>
G = GROWTH OF INITIAL INVESTMENT
P = INITIAL INVESTMENT
TR = TOTAL RETURN SINCE INCEPTION
* ORIGINAL VALUE $9,600, $48,250 & $97,250 RESPECTIVELY ADJUSTED
FOR 4.0%, 3.5% & 2.75% SALES CHARGES
(E) (F) (G)
$10,000* TOTAL GROWTH OF GROWTH OF GROWTH OF
INVESTED-P RETURN-TR $10,000 INVESTMENT-$50,000 INVESTMENT-$100,000INVESTMENT-G
- ---------- --------- ------------------ ------------------ -------------------
01-May-91 0.3077 $12,554 $63,097 $127,174
<PAGE>
SCHEDULE FOR COMPUTATIONS OF PERFORMANCE QUOTATIONS
DEAN WITTER MULTI - STATE MUNICIPAL SERIES TRUST - CALIFORNIA
(A) AVERAGE ANNUAL TOTAL RETURNS (I.E. STANDARDIZED COMPUTATIONS)
_ _
| ________________________|
FORMULA: | | |
| /\ n | ERV |
T = | \ | ------------ | - 1
| \ | P |
| \| |
|_ _|
T = AVERAGE ANNUAL COMPOUND RETURN
n = NUMBER OF YEARS
ERV = ENDING REDEEMABLE VALUE
P = INITIAL INVESTMENT
(A)
$1,000 ERV AS OF AGGREGATE NUMBER OF AVERAGE ANNUAL
INVESTED-P 30-Nov-93 TOTAL RETURN YEARS - n COMPOUND RETURN - T
- ---------- --------- ------------ --------- -------------------
30-Nov-92 $1,082.60 8.26% 1.00 8.26%
15-Jan-91 $1,316.10 31.61% 2.87 10.03%
(B) AVERAGE ANNUAL TOTAL RETURNS (STANDARDIZED COMPUTATIONS) WITHOUT WAIVER OF
FEES AND ASSUMPTION OF EXPENSES.
_ _
| ______________________ |
FORMULA: | | |
| /\ n | EVb |
tb = | \ | ------------- | - 1
| \ | P |
| \| |
|_ _|
tb = AVERAGE ANNUAL COMPOUND RETURN
(DEDUCTION FOR EXPENSES ASSUMED BY FUND MANAGER)
n = NUMBER OF YEARS
EVb = ENDING VALUE (DEDUCTION FOR EXPENSES
ASSUMED BY FUND MANAGER)
P = INITIAL INVESTMENT
(B)
$1,000 EVb AS OF NUMBER OF AVERAGE ANNUAL
INVESTED-P 30-Nov-93 YEARS - n COMPOUND RETURN - tb
- ---------- --------- --------- --------------------
30-Nov-92 $1,081.40 1.00 8.14%
15-Jan-91 $1,293.60 2.87 9.37%
(C) AVERAGE ANNUAL TOTAL RETURNS WITHOUT DEDUCTION FOR APPLICABLE
SALES CHARGE (NON STANDARD COMPUTATIONS)
(D) TOTAL RETURN WITHOUT DEDUCTION FOR APPLICABLE SALES CHARGE
(NON STANDARD COMPUTATIONS)
_ _
| ________________________|
FORMULA: | | |
| /\ n | EV |
t = | \ | ------------ | - 1
| \ | P |
| \| |
|_ _|
EV
TR = ---------- - 1
P
t = AVERAGE ANNUAL COMPOUND RETURN
(NO DEDUCTION FOR APPLICABLE SALES CHARGE)
n = NUMBER OF YEARS
EV = ENDING VALUE (NO DEDUCTION FOR APPLICABLE SALES CHARGE)
P = INITIAL INVESTMENT
TR = TOTAL RETURN (NO DEDUCTION FOR APPLICABLE SALES CHARGE)
(D) (C)
$1,000 EV AS OF TOTAL NUMBER OF AVERAGE ANNUAL
INVESTED-P 30-Nov-93 RETURN-TR YEARS - n COMPOUND RETURN - t
- ---------- --------- --------- --------- -------------------
30-Nov-92 $1,127.70 12.77% 1.00 12.77%
15-Jan-91 $1,371.00 37.10% 2.87 11.60%
(E) GROWTH OF $10,000*
(F) GROWTH OF $50,000*
(G) GROWTH OF $100,000*
FORMULA: G = (TR + 1)*P
G = GROWTH OF INITIAL INVESTMENT
P = INITIAL INVESTMENT
<PAGE>
TR = TOTAL RETURN SINCE INCEPTION
* ORIGINAL VALUE $9,600, $48,250 & $97,250 RESPECTIVELY ADJUSTED
FOR 4.0%, 3.5% & 2.75% SALES CHARGES
(E) (F) (G)
$10,000* TOTAL GROWTH OF GROWTH OF GROWTH OF
INVESTED-P RETURN-TR $10,000 INVESTMENT-$50,000 INVESTMENT-$100,000INVESTMENT-G
- ---------- --------- ------------------ ------------------ -------------------
15-Jan-91 0.371 $13,162 $66,151 $133,330
<PAGE>
SCHEDULE FOR COMPUTATIONS OF PERFORMANCE QUOTATIONS
DEAN WITTER MULTI - STATE MUNICIPAL SERIES TRUST - FLORIDA
(A) AVERAGE ANNUAL TOTAL RETURNS (I.E. STANDARDIZED COMPUTATIONS)
_ _
| ________________________|
FORMULA: | | |
| /\ n | ERV |
T = | \ | ------------ | - 1
| \ | P |
| \| |
|_ _|
T = AVERAGE ANNUAL COMPOUND RETURN
n = NUMBER OF YEARS
ERV = ENDING REDEEMABLE VALUE
P = INITIAL INVESTMENT
(A)
$1,000 ERV AS OF AGGREGATE NUMBER OF AVERAGE ANNUAL
INVESTED-P 30-Nov-93 TOTAL RETURN YEARS - n COMPOUND RETURN - T
- ---------- --------- ------------ --------- -------------------
30-Nov-92 $1,077.10 7.71% 1.00 7.71%
15-Jan-91 $1,300.20 30.02% 2.87 9.56%
(B) AVERAGE ANNUAL TOTAL RETURNS (STANDARDIZED COMPUTATIONS) WITHOUT WAIVER OF
FEES AND ASSUMPTION OF EXPENSES.
_ _
| ______________________ |
FORMULA: | | |
| /\ n | EVb |
tb = | \ | ------------- | - 1
| \ | P |
| \| |
|_ _|
tb = AVERAGE ANNUAL COMPOUND RETURN
(DEDUCTION FOR EXPENSES ASSUMED BY FUND MANAGER)
n = NUMBER OF YEARS
EVb = ENDING VALUE (DEDUCTION FOR EXPENSES
ASSUMED BY FUND MANAGER)
P = INITIAL INVESTMENT
(B)
$1,000 EVb AS OF NUMBER OF AVERAGE ANNUAL
INVESTED-P 30-Nov-93 YEARS - n COMPOUND RETURN - tb
- ---------- --------- --------- --------------------
30-Nov-92 $1,075.30 1.00 7.53%
15-Jan-91 $1,269.80 2.87 8.66%
(C) AVERAGE ANNUAL TOTAL RETURNS WITHOUT DEDUCTION FOR APPLICABLE
SALES CHARGE (NON STANDARD COMPUTATIONS)
(D) TOTAL RETURN WITHOUT DEDUCTION FOR APPLICABLE SALES CHARGE
(NON STANDARD COMPUTATIONS)
_ _
| ________________________|
FORMULA: | | |
| /\ n | EV |
t = | \ | ------------ | - 1
| \ | P |
| \| |
|_ _|
EV
TR = ---------- - 1
P
t = AVERAGE ANNUAL COMPOUND RETURN
(NO DEDUCTION FOR APPLICABLE SALES CHARGE)
n = NUMBER OF YEARS
EV = ENDING VALUE (NO DEDUCTION FOR APPLICABLE SALES CHARGE)
P = INITIAL INVESTMENT
TR = TOTAL RETURN (NO DEDUCTION FOR APPLICABLE SALES CHARGE)
(D) (C)
$1,000 EV AS OF TOTAL NUMBER OF AVERAGE ANNUAL
INVESTED-P 30-Nov-93 RETURN-TR YEARS - n COMPOUND RETURN - t
- ---------- --------- --------- --------- -------------------
30-Nov-92 $1,122.00 12.20% 1.00 12.20%
15-Jan-91 $1,354.40 35.44% 2.87 11.13%
(E) GROWTH OF $10,000*
(F) GROWTH OF $50,000*
(G) GROWTH OF $100,000*
FORMULA: G = (TR + 1)*P
G = GROWTH OF INITIAL INVESTMENT
P = INITIAL INVESTMENT
<PAGE>
TR = TOTAL RETURN SINCE INCEPTION
* ORIGINAL VALUE $9,600, $48,250 & $97,250 RESPECTIVELY ADJUSTED
FOR 4.0%, 3.5% & 2.75% SALES CHARGES
(E) (F) (G)
$10,000* TOTAL GROWTH OF GROWTH OF GROWTH OF
INVESTED-P RETURN-TR $10,000 INVESTMENT-$50,000 INVESTMENT-$100,000INVESTMENT-G
- ---------- --------- ------------------ ------------------ -------------------
15-Jan-91 0.3544 $13,002 $65,350 $131,715
<PAGE>
SCHEDULE FOR COMPUTATIONS OF PERFORMANCE QUOTATIONS
DEAN WITTER MULTI - STATE MUNICIPAL SERIES TRUST - MASSACHUSETTS
(A) AVERAGE ANNUAL TOTAL RETURNS (I.E. STANDARDIZED COMPUTATIONS)
_ _
| ________________________|
FORMULA: | | |
| /\ n | ERV |
T = | \ | ------------ | - 1
| \ | P |
| \| |
|_ _|
T = AVERAGE ANNUAL COMPOUND RETURN
n = NUMBER OF YEARS
ERV = ENDING REDEEMABLE VALUE
P = INITIAL INVESTMENT
(A)
$1,000 ERV AS OF AGGREGATE NUMBER OF AVERAGE ANNUAL
INVESTED-P 30-Nov-93 TOTAL RETURN YEARS - n COMPOUND RETURN - T
- ---------- --------- ------------ --------- -------------------
30-Nov-92 $1,085.30 8.53% 1.00 8.53%
15-Jan-91 $1,325.90 32.59% 2.87 10.31%
(B) AVERAGE ANNUAL TOTAL RETURNS (STANDARDIZED COMPUTATIONS) WITHOUT WAIVER OF
FEES AND ASSUMPTION OF EXPENSES.
_ _
| ______________________ |
FORMULA: | | |
| /\ n | EVb |
tb = | \ | ------------- | - 1
| \ | P |
| \| |
|_ _|
tb = AVERAGE ANNUAL COMPOUND RETURN
(DEDUCTION FOR EXPENSES ASSUMED BY FUND MANAGER)
n = NUMBER OF YEARS
EVb = ENDING VALUE (DEDUCTION FOR EXPENSES
ASSUMED BY FUND MANAGER)
P = INITIAL INVESTMENT
(B)
$1,000 EVb AS OF NUMBER OF AVERAGE ANNUAL
INVESTED-P 30-Nov-93 YEARS - n COMPOUND RETURN - tb
- ---------- --------- --------- --------------------
30-Nov-92 $1,081.20 1.00 8.12%
15-Jan-91 $1,271.40 2.87 8.71%
(C) AVERAGE ANNUAL TOTAL RETURNS WITHOUT DEDUCTION FOR APPLICABLE
SALES CHARGE (NON STANDARD COMPUTATIONS)
(D) TOTAL RETURN WITHOUT DEDUCTION FOR APPLICABLE SALES CHARGE
(NON STANDARD COMPUTATIONS)
_ _
| ________________________|
FORMULA: | | |
| /\ n | EV |
t = | \ | ------------ | - 1
| \ | P |
| \| |
|_ _|
EV
TR = ---------- - 1
P
t = AVERAGE ANNUAL COMPOUND RETURN
(NO DEDUCTION FOR APPLICABLE SALES CHARGE)
n = NUMBER OF YEARS
EV = ENDING VALUE (NO DEDUCTION FOR APPLICABLE SALES CHARGE)
P = INITIAL INVESTMENT
TR = TOTAL RETURN (NO DEDUCTION FOR APPLICABLE SALES CHARGE)
(D) (C)
$1,000 EV AS OF TOTAL NUMBER OF AVERAGE ANNUAL
INVESTED-P 30-Nov-93 RETURN-TR YEARS - n COMPOUND RETURN - t
- ---------- --------- --------- --------- -------------------
30-Nov-92 $1,130.60 13.06% 1.00 13.06%
15-Jan-91 $1,381.10 38.11% 2.87 11.89%
(E) GROWTH OF $10,000*
(F) GROWTH OF $50,000*
(G) GROWTH OF $100,000*
FORMULA: G = (TR + 1)*P
G = GROWTH OF INITIAL INVESTMENT
P = INITIAL INVESTMENT
<PAGE>
TR = TOTAL RETURN SINCE INCEPTION
* ORIGINAL VALUE $9,600, $48,250 & $97,250 RESPECTIVELY ADJUSTED
FOR 4.0%, 3.5% & 2.75% SALES CHARGES
(E) (F) (G)
$10,000* TOTAL GROWTH OF GROWTH OF GROWTH OF
INVESTED-P RETURN-TR $10,000 INVESTMENT-$50,000 INVESTMENT-$100,000INVESTMENT-G
- ---------- --------- ------------------ ------------------ -------------------
15-Jan-91 0.3811 $13,259 $66,638 $134,312
<PAGE>
SCHEDULE FOR COMPUTATIONS OF PERFORMANCE QUOTATIONS
DEAN WITTER MULTI - STATE MUNICIPAL SERIES TRUST - MICHIGAN
(A) AVERAGE ANNUAL TOTAL RETURNS (I.E. STANDARDIZED COMPUTATIONS)
_ _
| ________________________|
FORMULA: | | |
| /\ n | ERV |
T = | \ | ------------ | - 1
| \ | P |
| \| |
|_ _|
T = AVERAGE ANNUAL COMPOUND RETURN
n = NUMBER OF YEARS
ERV = ENDING REDEEMABLE VALUE
P = INITIAL INVESTMENT
(A)
$1,000 ERV AS OF AGGREGATE NUMBER OF AVERAGE ANNUAL
INVESTED-P 30-Nov-93 TOTAL RETURN YEARS - n COMPOUND RETURN - T
- ---------- --------- ------------ --------- -------------------
30-Nov-92 $1,077.90 7.79% 1.00 7.79%
15-Jan-91 $1,319.70 31.97% 2.87 10.13%
(B) AVERAGE ANNUAL TOTAL RETURNS (STANDARDIZED COMPUTATIONS) WITHOUT WAIVER OF
FEES AND ASSUMPTION OF EXPENSES.
_ _
| ______________________ |
FORMULA: | | |
| /\ n | EVb |
tb = | \ | ------------- | - 1
| \ | P |
| \| |
|_ _|
tb = AVERAGE ANNUAL COMPOUND RETURN
(DEDUCTION FOR EXPENSES ASSUMED BY FUND MANAGER)
n = NUMBER OF YEARS
EVb = ENDING VALUE (DEDUCTION FOR EXPENSES
ASSUMED BY FUND MANAGER)
P = INITIAL INVESTMENT
(B)
$1,000 EVb AS OF NUMBER OF AVERAGE ANNUAL
INVESTED-P 30-Nov-93 YEARS - n COMPOUND RETURN - tb
- ---------- --------- --------- --------------------
30-Nov-92 $1,074.10 1.00 7.41%
15-Jan-91 $1,280.10 2.87 8.97%
(C) AVERAGE ANNUAL TOTAL RETURNS WITHOUT DEDUCTION FOR APPLICABLE
SALES CHARGE (NON STANDARD COMPUTATIONS)
(D) TOTAL RETURN WITHOUT DEDUCTION FOR APPLICABLE SALES CHARGE
(NON STANDARD COMPUTATIONS)
_ _
| ________________________|
FORMULA: | | |
| /\ n | EV |
t = | \ | ------------ | - 1
| \ | P |
| \| |
|_ _|
EV
TR = ---------- - 1
P
t = AVERAGE ANNUAL COMPOUND RETURN
(NO DEDUCTION FOR APPLICABLE SALES CHARGE)
n = NUMBER OF YEARS
EV = ENDING VALUE (NO DEDUCTION FOR APPLICABLE SALES CHARGE)
P = INITIAL INVESTMENT
TR = TOTAL RETURN (NO DEDUCTION FOR APPLICABLE SALES CHARGE)
(D) (C)
$1,000 EV AS OF TOTAL NUMBER OF AVERAGE ANNUAL
INVESTED-P 30-Nov-93 RETURN-TR YEARS - n COMPOUND RETURN - t
- ---------- --------- --------- --------- -------------------
30-Nov-92 $1,122.80 12.28% 1.00 12.28%
15-Jan-91 $1,374.70 37.47% 2.87 11.71%
(E) GROWTH OF $10,000*
(F) GROWTH OF $50,000*
(G) GROWTH OF $100,000*
FORMULA: G = (TR + 1)*P
G = GROWTH OF INITIAL INVESTMENT
P = INITIAL INVESTMENT
<PAGE>
TR = TOTAL RETURN SINCE INCEPTION
* ORIGINAL VALUE $9,600, $48,250 & $97,250 RESPECTIVELY ADJUSTED
FOR 4.0%, 3.5% & 2.75% SALES CHARGES
(E) (F) (G)
$10,000* TOTAL GROWTH OF GROWTH OF GROWTH OF
INVESTED-P RETURN-TR $10,000 INVESTMENT-$50,000 INVESTMENT-$100,000INVESTMENT-G
- ---------- --------- ------------------ ------------------ -------------------
15-Jan-91 0.3747 $13,197 $66,329 $133,690
<PAGE>
SCHEDULE FOR COMPUTATIONS OF PERFORMANCE QUOTATIONS
DEAN WITTER MULTI - STATE MUNICIPAL SERIES TRUST - MINNESOTA
(A) AVERAGE ANNUAL TOTAL RETURNS (I.E. STANDARDIZED COMPUTATIONS)
_ _
| ________________________|
FORMULA: | | |
| /\ n | ERV |
T = | \ | ------------ | - 1
| \ | P |
| \| |
|_ _|
T = AVERAGE ANNUAL COMPOUND RETURN
n = NUMBER OF YEARS
ERV = ENDING REDEEMABLE VALUE
P = INITIAL INVESTMENT
(A)
$1,000 ERV AS OF AGGREGATE NUMBER OF AVERAGE ANNUAL
INVESTED-P 30-Nov-93 TOTAL RETURN YEARS - n COMPOUND RETURN - T
- ---------- --------- ------------ --------- -------------------
30-Nov-92 $1,081.30 8.13% 1.00 8.13%
15-Jan-91 $1,276.70 27.67% 2.87 8.87%
(B) AVERAGE ANNUAL TOTAL RETURNS (STANDARDIZED COMPUTATIONS) WITHOUT WAIVER OF
FEES AND ASSUMPTION OF EXPENSES.
_ _
| ______________________ |
FORMULA: | | |
| /\ n | EVb |
tb = | \ | ------------- | - 1
| \ | P |
| \| |
|_ _|
tb = AVERAGE ANNUAL COMPOUND RETURN
(DEDUCTION FOR EXPENSES ASSUMED BY FUND MANAGER)
n = NUMBER OF YEARS
EVb = ENDING VALUE (DEDUCTION FOR EXPENSES
ASSUMED BY FUND MANAGER)
P = INITIAL INVESTMENT
(B)
$1,000 EVb AS OF NUMBER OF AVERAGE ANNUAL
INVESTED-P 30-Nov-93 YEARS - n COMPOUND RETURN - tb
- ---------- --------- --------- --------------------
30-Nov-92 $1,074.90 1.00 7.49%
15-Jan-91 $1,188.40 2.87 6.19%
(C) AVERAGE ANNUAL TOTAL RETURNS WITHOUT DEDUCTION FOR APPLICABLE
SALES CHARGE (NON STANDARD COMPUTATIONS)
(D) TOTAL RETURN WITHOUT DEDUCTION FOR APPLICABLE SALES CHARGE
(NON STANDARD COMPUTATIONS)
_ _
| ________________________|
FORMULA: | | |
| /\ n | EV |
t = | \ | ------------ | - 1
| \ | P |
| \| |
|_ _|
EV
TR = ---------- - 1
P
t = AVERAGE ANNUAL COMPOUND RETURN
(NO DEDUCTION FOR APPLICABLE SALES CHARGE)
n = NUMBER OF YEARS
EV = ENDING VALUE (NO DEDUCTION FOR APPLICABLE SALES CHARGE)
P = INITIAL INVESTMENT
TR = TOTAL RETURN (NO DEDUCTION FOR APPLICABLE SALES CHARGE)
(D) (C)
$1,000 EV AS OF TOTAL NUMBER OF AVERAGE ANNUAL
INVESTED-P 30-Nov-93 RETURN-TR YEARS - n COMPOUND RETURN - t
- ---------- --------- --------- --------- -------------------
30-Nov-92 $1,126.40 12.64% 1.00 12.64%
15-Jan-91 $1,329.90 32.99% 2.88 10.42%
(E) GROWTH OF $10,000*
(F) GROWTH OF $50,000*
(G) GROWTH OF $100,000*
FORMULA: G = (TR + 1)*P
G = GROWTH OF INITIAL INVESTMENT
P = INITIAL INVESTMENT
<PAGE>
TR = TOTAL RETURN SINCE INCEPTION
* ORIGINAL VALUE $9,600, $48,250 & $97,250 RESPECTIVELY ADJUSTED
FOR 4.0%, 3.5% & 2.75% SALES CHARGES
(E) (F) (G)
$10,000* TOTAL GROWTH OF GROWTH OF GROWTH OF
INVESTED-P RETURN-TR $10,000 INVESTMENT-$50,000 INVESTMENT-$100,000INVESTMENT-G
- ---------- --------- ------------------ ------------------ -------------------
15-Jan-91 0.3299 $12,767 $64,168 $129,333
<PAGE>
SCHEDULE FOR COMPUTATIONS OF PERFORMANCE QUOTATIONS
DEAN WITTER MULTI - STATE MUNICIPAL SERIES TRUST - NEW JERSEY
(A) AVERAGE ANNUAL TOTAL RETURNS (I.E. STANDARDIZED COMPUTATIONS)
_ _
| ________________________|
FORMULA: | | |
| /\ n | ERV |
T = | \ | ------------ | - 1
| \ | P |
| \| |
|_ _|
T = AVERAGE ANNUAL COMPOUND RETURN
n = NUMBER OF YEARS
ERV = ENDING REDEEMABLE VALUE
P = INITIAL INVESTMENT
(A)
$1,000 ERV AS OF AGGREGATE NUMBER OF AVERAGE ANNUAL
INVESTED-P 30-Nov-93 TOTAL RETURN YEARS - n COMPOUND RETURN - T
- ---------- --------- ------------ --------- -------------------
30-Nov-92 $1,075.50 7.55% 1.00 7.55%
15-Jan-91 $1,312.30 31.23% 2.87 9.92%
(B) AVERAGE ANNUAL TOTAL RETURNS (STANDARDIZED COMPUTATIONS) WITHOUT WAIVER OF
FEES AND ASSUMPTION OF EXPENSES.
_ _
| ______________________ |
FORMULA: | | |
| /\ n | EVb |
tb = | \ | ------------- | - 1
| \ | P |
| \| |
|_ _|
tb = AVERAGE ANNUAL COMPOUND RETURN
(DEDUCTION FOR EXPENSES ASSUMED BY FUND MANAGER)
n = NUMBER OF YEARS
EVb = ENDING VALUE (DEDUCTION FOR EXPENSES
ASSUMED BY FUND MANAGER)
P = INITIAL INVESTMENT
(B)
$1,000 EVb AS OF NUMBER OF AVERAGE ANNUAL
INVESTED-P 30-Nov-93 YEARS - n COMPOUND RETURN - tb
- ---------- --------- --------- --------------------
30-Nov-92 $1,072.90 1.00 7.29%
15-Jan-91 $1,282.10 2.87 9.03%
(C) AVERAGE ANNUAL TOTAL RETURNS WITHOUT DEDUCTION FOR APPLICABLE
SALES CHARGE (NON STANDARD COMPUTATIONS)
(D) TOTAL RETURN WITHOUT DEDUCTION FOR APPLICABLE SALES CHARGE
(NON STANDARD COMPUTATIONS)
_ _
| ________________________|
FORMULA: | | |
| /\ n | EV |
t = | \ | ------------ | - 1
| \ | P |
| \| |
|_ _|
EV
TR = ---------- - 1
P
t = AVERAGE ANNUAL COMPOUND RETURN
(NO DEDUCTION FOR APPLICABLE SALES CHARGE)
n = NUMBER OF YEARS
EV = ENDING VALUE (NO DEDUCTION FOR APPLICABLE SALES CHARGE)
P = INITIAL INVESTMENT
TR = TOTAL RETURN (NO DEDUCTION FOR APPLICABLE SALES CHARGE)
(D) (C)
$1,000 EV AS OF TOTAL NUMBER OF AVERAGE ANNUAL
INVESTED-P 30-Nov-93 RETURN-TR YEARS - n COMPOUND RETURN - t
- ---------- --------- --------- --------- -------------------
30-Nov-92 $1,120.30 12.03% 1.00 12.03%
15-Jan-91 $1,367.00 36.70% 2.87 11.49%
(E) GROWTH OF $10,000*
(F) GROWTH OF $50,000*
(G) GROWTH OF $100,000*
FORMULA: G = (TR + 1)*P
G = GROWTH OF INITIAL INVESTMENT
P = INITIAL INVESTMENT
<PAGE>
TR = TOTAL RETURN SINCE INCEPTION
* ORIGINAL VALUE $9,600, $48,250 & $97,250 RESPECTIVELY ADJUSTED
FOR 4.0%, 3.5% & 2.75% SALES CHARGES
(E) (F) (G)
$10,000* TOTAL GROWTH OF GROWTH OF GROWTH OF
INVESTED-P RETURN-TR $10,000 INVESTMENT-$50,000 INVESTMENT-$100,000INVESTMENT-G
- ---------- --------- ------------------ ------------------ -------------------
15-Jan-91 0.367 $13,123 $65,958 $132,941
<PAGE>
SCHEDULE FOR COMPUTATIONS OF PERFORMANCE QUOTATIONS
DEAN WITTER MULTI - STATE MUNICIPAL SERIES TRUST - NEW YORK
(A) AVERAGE ANNUAL TOTAL RETURNS (I.E. STANDARDIZED COMPUTATIONS)
_ _
| ________________________|
FORMULA: | | |
| /\ n | ERV |
T = | \ | ------------ | - 1
| \ | P |
| \| |
|_ _|
T = AVERAGE ANNUAL COMPOUND RETURN
n = NUMBER OF YEARS
ERV = ENDING REDEEMABLE VALUE
P = INITIAL INVESTMENT
(A)
$1,000 ERV AS OF AGGREGATE NUMBER OF AVERAGE ANNUAL
INVESTED-P 30-Nov-93 TOTAL RETURN YEARS - n COMPOUND RETURN - T
- ---------- --------- ------------ --------- -------------------
30-Nov-92 $1,083.90 8.39% 1.00 8.39%
15-Jan-91 $1,324.40 32.44% 2.87 10.27%
(B) AVERAGE ANNUAL TOTAL RETURNS (STANDARDIZED COMPUTATIONS) WITHOUT WAIVER OF
FEES AND ASSUMPTION OF EXPENSES.
_ _
| ______________________ |
FORMULA: | | |
| /\ n | EVb |
tb = | \ | ------------- | - 1
| \ | P |
| \| |
|_ _|
tb = AVERAGE ANNUAL COMPOUND RETURN
(DEDUCTION FOR EXPENSES ASSUMED BY FUND MANAGER)
n = NUMBER OF YEARS
EVb = ENDING VALUE (DEDUCTION FOR EXPENSES
ASSUMED BY FUND MANAGER)
P = INITIAL INVESTMENT
(B)
$1,000 EVb AS OF NUMBER OF AVERAGE ANNUAL
INVESTED-P 30-Nov-93 YEARS - n COMPOUND RETURN - tb
- ---------- --------- --------- --------------------
30-Nov-92 $1,079.40 1.00 7.94%
15-Jan-91 $1,258.40 2.87 8.32%
(C) AVERAGE ANNUAL TOTAL RETURNS WITHOUT DEDUCTION FOR APPLICABLE
SALES CHARGE (NON STANDARD COMPUTATIONS)
(D) TOTAL RETURN WITHOUT DEDUCTION FOR APPLICABLE SALES CHARGE
(NON STANDARD COMPUTATIONS)
_ _
| ________________________|
FORMULA: | | |
| /\ n | EV |
t = | \ | ------------ | - 1
| \ | P |
| \| |
|_ _|
EV
TR = ---------- - 1
P
t = AVERAGE ANNUAL COMPOUND RETURN
(NO DEDUCTION FOR APPLICABLE SALES CHARGE)
n = NUMBER OF YEARS
EV = ENDING VALUE (NO DEDUCTION FOR APPLICABLE SALES CHARGE)
P = INITIAL INVESTMENT
TR = TOTAL RETURN (NO DEDUCTION FOR APPLICABLE SALES CHARGE)
(D) (C)
$1,000 EV AS OF TOTAL NUMBER OF AVERAGE ANNUAL
INVESTED-P 30-Nov-93 RETURN-TR YEARS - n COMPOUND RETURN - t
- ---------- --------- --------- --------- -------------------
30-Nov-92 $1,129.10 12.91% 1.00 12.91%
15-Jan-91 $1,379.60 37.96% 2.87 11.84%
(E) GROWTH OF $10,000*
(F) GROWTH OF $50,000*
(G) GROWTH OF $100,000*
FORMULA: G = (TR + 1)*P
G = GROWTH OF INITIAL INVESTMENT
P = INITIAL INVESTMENT
<PAGE>
TR = TOTAL RETURN SINCE INCEPTION
* ORIGINAL VALUE $9,600, $48,250 & $97,250 RESPECTIVELY ADJUSTED
FOR 4.0%, 3.5% & 2.75% SALES CHARGES
(E) (F) (G)
$10,000* TOTAL GROWTH OF GROWTH OF GROWTH OF
INVESTED-P RETURN-TR $10,000 INVESTMENT-$50,000 INVESTMENT-$100,000INVESTMENT-G
- ---------- --------- ------------------ ------------------ -------------------
15-Jan-91 0.3796 $13,244 $66,566 $134,166
<PAGE>
SCHEDULE FOR COMPUTATIONS OF PERFORMANCE QUOTATIONS
DEAN WITTER MULTI - STATE MUNICIPAL SERIES TRUST - OHIO
(A) AVERAGE ANNUAL TOTAL RETURNS (I.E. STANDARDIZED COMPUTATIONS)
_ _
| ________________________|
FORMULA: | | |
| /\ n | ERV |
T = | \ | ------------ | - 1
| \ | P |
| \| |
|_ _|
T = AVERAGE ANNUAL COMPOUND RETURN
n = NUMBER OF YEARS
ERV = ENDING REDEEMABLE VALUE
P = INITIAL INVESTMENT
(A)
$1,000 ERV AS OF AGGREGATE NUMBER OF AVERAGE ANNUAL
INVESTED-P 30-Nov-93 TOTAL RETURN YEARS - n COMPOUND RETURN - T
- ---------- --------- ------------ --------- -------------------
30-Nov-92 $1,086.60 8.66% 1.00 8.66%
15-Jan-91 $1,308.30 30.83% 2.87 9.80%
(B) AVERAGE ANNUAL TOTAL RETURNS (STANDARDIZED COMPUTATIONS) WITHOUT WAIVER OF
FEES AND ASSUMPTION OF EXPENSES.
_ _
| ______________________ |
FORMULA: | | |
| /\ n | EVb |
tb = | \ | ------------- | - 1
| \ | P |
| \| |
|_ _|
tb = AVERAGE ANNUAL COMPOUND RETURN
(DEDUCTION FOR EXPENSES ASSUMED BY FUND MANAGER)
n = NUMBER OF YEARS
EVb = ENDING VALUE (DEDUCTION FOR EXPENSES
ASSUMED BY FUND MANAGER)
P = INITIAL INVESTMENT
(B)
$1,000 EVb AS OF NUMBER OF AVERAGE ANNUAL
INVESTED-P 30-Nov-93 YEARS - n COMPOUND RETURN - tb
- ---------- --------- --------- --------------------
30-Nov-92 $1,080.30 1.00 8.03%
15-Jan-91 $1,225.70 2.87 7.34%
(C) AVERAGE ANNUAL TOTAL RETURNS WITHOUT DEDUCTION FOR APPLICABLE
SALES CHARGE (NON STANDARD COMPUTATIONS)
(D) TOTAL RETURN WITHOUT DEDUCTION FOR APPLICABLE SALES CHARGE
(NON STANDARD COMPUTATIONS)
_ _
| ________________________|
FORMULA: | | |
| /\ n | EV |
t = | \ | ------------ | - 1
| \ | P |
| \| |
|_ _|
EV
TR = ---------- - 1
P
t = AVERAGE ANNUAL COMPOUND RETURN
(NO DEDUCTION FOR APPLICABLE SALES CHARGE)
n = NUMBER OF YEARS
EV = ENDING VALUE (NO DEDUCTION FOR APPLICABLE SALES CHARGE)
P = INITIAL INVESTMENT
TR = TOTAL RETURN (NO DEDUCTION FOR APPLICABLE SALES CHARGE)
(D) (C)
$1,000 EV AS OF TOTAL NUMBER OF AVERAGE ANNUAL
INVESTED-P 30-Nov-93 RETURN-TR YEARS - n COMPOUND RETURN - t
- ---------- --------- --------- --------- -------------------
30-Nov-92 $1,131.90 13.19% 1.00 13.19%
15-Jan-91 $1,362.80 36.28% 2.87 11.37%
(E) GROWTH OF $10,000*
(F) GROWTH OF $50,000*
(G) GROWTH OF $100,000*
FORMULA: G = (TR + 1)*P
G = GROWTH OF INITIAL INVESTMENT
P = INITIAL INVESTMENT
<PAGE>
TR = TOTAL RETURN SINCE INCEPTION
* ORIGINAL VALUE $9,600, $48,250 & $97,250 RESPECTIVELY ADJUSTED
FOR 4.0%, 3.5% & 2.75% SALES CHARGES
(E) (F) (G)
$10,000* TOTAL GROWTH OF GROWTH OF GROWTH OF
INVESTED-P RETURN-TR $10,000 INVESTMENT-$50,000 INVESTMENT-$100,000INVESTMENT-G
- ---------- --------- ------------------ ------------------ -------------------
15-Jan-91 0.3628 $13,083 $65,755 $132,532
<PAGE>
SCHEDULE FOR COMPUTATIONS OF PERFORMANCE QUOTATIONS
DEAN WITTER MULTI - STATE MUNICIPAL SERIES TRUST - PENNSYLVANIA
(A) AVERAGE ANNUAL TOTAL RETURNS (I.E. STANDARDIZED COMPUTATIONS)
_ _
| ________________________|
FORMULA: | | |
| /\ n | ERV |
T = | \ | ------------ | - 1
| \ | P |
| \| |
|_ _|
T = AVERAGE ANNUAL COMPOUND RETURN
n = NUMBER OF YEARS
ERV = ENDING REDEEMABLE VALUE
P = INITIAL INVESTMENT
(A)
$1,000 ERV AS OF AGGREGATE NUMBER OF AVERAGE ANNUAL
INVESTED-P 30-Nov-93 TOTAL RETURN YEARS - n COMPOUND RETURN - T
- ---------- --------- ------------ --------- -------------------
30-Nov-92 $1,081.30 8.13% 1.00 8.13%
15-Jan-91 $1,311.10 31.11% 2.87 9.88%
(B) AVERAGE ANNUAL TOTAL RETURNS (STANDARDIZED COMPUTATIONS) WITHOUT WAIVER OF
FEES AND ASSUMPTION OF EXPENSES.
_ _
| ______________________ |
FORMULA: | | |
| /\ n | EVb |
tb = | \ | ------------- | - 1
| \ | P |
| \| |
|_ _|
tb = AVERAGE ANNUAL COMPOUND RETURN
(DEDUCTION FOR EXPENSES ASSUMED BY FUND MANAGER)
n = NUMBER OF YEARS
EVb = ENDING VALUE (DEDUCTION FOR EXPENSES
ASSUMED BY FUND MANAGER)
P = INITIAL INVESTMENT
(B)
$1,000 EVb AS OF NUMBER OF AVERAGE ANNUAL
INVESTED-P 30-Nov-93 YEARS - n COMPOUND RETURN - tb
- ---------- --------- --------- --------------------
30-Nov-92 $1,079.40 1.00 7.94%
15-Jan-91 $1,277.90 2.87 8.90%
(C) AVERAGE ANNUAL TOTAL RETURNS WITHOUT DEDUCTION FOR APPLICABLE
SALES CHARGE (NON STANDARD COMPUTATIONS)
(D) TOTAL RETURN WITHOUT DEDUCTION FOR APPLICABLE SALES CHARGE
(NON STANDARD COMPUTATIONS)
_ _
| ________________________|
FORMULA: | | |
| /\ n | EV |
t = | \ | ------------ | - 1
| \ | P |
| \| |
|_ _|
EV
TR = ---------- - 1
P
t = AVERAGE ANNUAL COMPOUND RETURN
(NO DEDUCTION FOR APPLICABLE SALES CHARGE)
n = NUMBER OF YEARS
EV = ENDING VALUE (NO DEDUCTION FOR APPLICABLE SALES CHARGE)
P = INITIAL INVESTMENT
TR = TOTAL RETURN (NO DEDUCTION FOR APPLICABLE SALES CHARGE)
(D) (C)
$1,000 EV AS OF TOTAL NUMBER OF AVERAGE ANNUAL
INVESTED-P 30-Nov-93 RETURN-TR YEARS - n COMPOUND RETURN - t
- ---------- --------- --------- --------- -------------------
30-Nov-92 $1,126.40 12.64% 1.00 12.64%
15-Jan-91 $1,365.80 36.58% 2.87 11.45%
(E) GROWTH OF $10,000*
(F) GROWTH OF $50,000*
(G) GROWTH OF $100,000*
FORMULA: G = (TR + 1)*P
G = GROWTH OF INITIAL INVESTMENT
P = INITIAL INVESTMENT
<PAGE>
TR = TOTAL RETURN SINCE INCEPTION
* ORIGINAL VALUE $9,600, $48,250 & $97,250 RESPECTIVELY ADJUSTED
FOR 4.0%, 3.5% & 2.75% SALES CHARGES
(E) (F) (G)
$10,000* TOTAL GROWTH OF GROWTH OF GROWTH OF
INVESTED-P RETURN-TR $10,000 INVESTMENT-$50,000 INVESTMENT-$100,000INVESTMENT-G
- ---------- --------- ------------------ ------------------ -------------------
15-Jan-91 0.3658 $13,112 $65,900 $132,824
