<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 29, 1995
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. 6 [X]
AND/OR
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940 [X]
AMENDMENT NO. 7 [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)
[ ] immediately upon filing pursuant to paragraph (b)
[ ] on March 29, 1995 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,
1994 WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 19, 1995.
AMENDING THE PROSPECTUS AND UPDATING FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER MULTI-STATE MUNICIPAL SERIES TRUST
CROSS-REFERENCE SHEET
<TABLE>
<CAPTION>
FORM N-1A
PART A
ITEM CAPTION PROSPECTUS
----------------------------- -------------------------------------------------------
<S> <C>
1. .......................... Cover Page
2. .......................... Summary of Fund Expenses; Prospectus Summary
3. .......................... Financial Highlights; Performance Information
Investment Objective and Policies; The Fund and its
Management; Cover Page; Investment Restrictions;
4. .......................... Prospectus Summary
The Fund and Its Management; Back Cover; Investment
5. .......................... Objective and Policies
Dividends, Distributions and Taxes; Additional
6. .......................... Information
7. .......................... Purchase of Fund Shares; Shareholder Services
8. .......................... Redemptions and Repurchases; Shareholder Services
9. .......................... Not Applicable
<CAPTION>
PART B
ITEM STATEMENT OF ADDITIONAL INFORMATION
---------------------------- -----------------------------------------------------------
<S> <C>
10. .......................... Cover Page
11. .......................... Table of Contents
12. .......................... The Fund and Its Management
Investment Practices and Policies; Investment Restrictions;
13. .......................... Portfolio Transactions and Brokerage
14. .......................... The Fund and Its Management; Trustees and Officers
15. .......................... Trustees and Officers
The Fund and Its Management; Purchase of Fund Shares;
16. .......................... Custodian and Transfer Agent; Independent Accountants
17. .......................... Portfolio Transactions and Brokerage
Description of Shares; Validity of Shares of Beneficial
18. .......................... Interest
Repurchase of Fund Shares; Redemptions and Repurchases;
19. .......................... Statement of Assets and Liabilities; Shareholder Services
20. .......................... Dividends, Distributions and Taxes
21. .......................... Not applicable
22. .......................... Dividends, Distributions and Taxes
23. .......................... Performance Information; Financial Statements
</TABLE>
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
MARCH 29, 1995
-----------------------------------------------------------------------------
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 March 29, 1995, 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.
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 ............................................... 15
Shareholder Services .................................................. 17
Redemptions and Repurchases ........................................... 19
Dividends, Distributions and Taxes .................................... 20
Performance Information ............................................... 28
Additional Information ................................................ 29
Appendix .............................................................. 30
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 MULTI-STATE MUNICIPAL
SERIES TRUST
TWO WORLD TRADE CENTER
NEW YORK, NEW YORK 10048
(212) 392-2550
(800) 526-3143
Dean Witter Distributors Inc.
Distributor
<PAGE>
PROSPECTUS SUMMARY
-----------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
The The Fund is organized as a Trust, commonly known as a Massachusetts
Fund 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 Offered Shares of beneficial interest with $0.01 par value (see page 29).
-------------------------------------------------------------------------------
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 15).
-------------------------------------------------------------------------------
Minimum Minimum initial investment, $1,000. Minimum subsequent investment, $100
Purchase (see page 15).
-------------------------------------------------------------------------------
Investment The investment objective of each Series is to provide a high level of
Objective current income exempt from both federal and the designated state income
taxes consistent with preservation of capital.
-------------------------------------------------------------------------------
Investment Dean Witter InterCapital Inc., ("InterCapital"), the Investment Manager of
Manager the Fund, and its wholly-owned subsidiary, Dean Witter Services Company
Inc., serve in various investment management, advisory, management and
administrative capacities to ninety investment companies and other
portfolios with assets of approximately $66.9 billion at December 31, 1994
(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 Income dividends are declared daily and paid monthly; capital gains
Capital Gains distributions, if any, may be distributed annually or retained for
Distributions 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 17 and 20).
-------------------------------------------------------------------------------
Plan of The Fund is authorized to reimburse Dean Witter Distributors Inc. (the
Distribution "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 15-16).
-------------------------------------------------------------------------------
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 The value of each Series' portfolio securities, and therefore the net asset
Considerations 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 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
10-13 and the Appendix on page 30). 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
10).
-------------------------------------------------------------------------------
</TABLE>
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>
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, 1994, except as otherwise noted.
<TABLE>
<CAPTION>
<S> <C>
Shareholder Transaction Expenses (for each Series)
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
</TABLE>
Annual Operating Expenses (as a Percentage of Average Net Assets)*
<TABLE>
<CAPTION>
ARIZONA CALIFORNIA FLORIDA MASSACHUSETTS MICHIGAN MINNESOTA
SERIES SERIES SERIES SERIES SERIES SERIES
---------- ------------ ---------- --------------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
MANAGEMENT FEES*
(AFTER FEE WAIVER) ... .3408% .3424% .3400% .0696% .0997% .0 %
12B-1 FEES** .......... .1401 .1479 .1449 .1444 .1456 .1448
OTHER EXPENSES*
(AFTER EXPENSE
ASSUMPTION) .......... .1389 .0879 .1208 .2860 .2547 .3552
TOTAL SERIES OPERATING
EXPENSES* ............ .6198% .5782% .6057% .5000% .5000% .5000%
<CAPTION>
NEW JERSEY NEW YORK OHIO PENNSYLVANIA
SERIES SERIES SERIES SERIES
------------ ---------- ---------- --------------
<S> <C> <C> <C> <C>
MANAGEMENT FEES*
(AFTER FEE WAIVER) ... .3368% .0319% .1363% .3341%
12B-1 FEES** .......... .1460 .1447 .1447 .1479
OTHER EXPENSES*
(AFTER EXPENSE
ASSUMPTION) .......... .1538 .3234 .2190 .1573
TOTAL SERIES OPERATING
EXPENSES* ............ .6366% .5000% .5000% .6393%
<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
SERIES SERIES SERIES SERIES SERIES SERIES
---------- ------------ ---------- --------------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
1 YEAR .... $ 46 $ 46 $ 46 $ 45 $ 45 $ 45
3 YEARS .. 59 58 59 55 55 55
5 YEARS .. 73 71 72 67 67 67
10 YEARS . 114 109 113 100 100 100
<CAPTION>
NEW JERSEY NEW YORK OHIO PENNSYLVANIA
SERIES SERIES SERIES SERIES
------------ ---------- ---------- --------------
<S> <C> <C> <C> <C>
1 YEAR .... $ 46 $ 45 $ 45 $ 46
3 YEARS .. 60 55 55 60
5 YEARS .. 74 67 67 74
10 YEARS . 116 100 100 117
</TABLE>
*The annual Operating Expenses are based upon the actual expenses incurred
by the Fund during the fiscal year ended November 30, 1994. The Investment
Manager had undertaken to waive management fees and assume expenses to the
extent that they exceeded 0.50% of the daily net assets with respect to each
Series of the Fund until January 1, 1994, and, with respect to the
Massachusetts Series, Michigan Series, Minnesota Series, New York Series and
Ohio Series has undertaken to extend such waiver until January 1, 1996.
Total operating expenses for each Series for the fiscal year of the Fund
ended November 30, 1994, 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
SERIES SERIES SERIES SERIES SERIES SERIES
---------- ------------ ---------- --------------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
MANAGEMENT FEES ....... .3500% .3500% .3500% .3500% .3500% .3500%
12B-1 FEES ............ .1401 .1479 .1449 .1444 .1456 .1448
OTHER EXPENSES ........ .1389 .0879 .1208 .2860 .2546 .4174
TOTAL SERIES OPERATING
EXPENSES* ............ .6290% .5858% .6157% .7804% .7502% .9122%
<CAPTION>
NEW JERSEY NEW YORK OHIO PENNSYLVANIA
SERIES SERIES SERIES SERIES
------------ ---------- ---------- --------------
<S> <C> <C> <C> <C>
MANAGEMENT FEES ....... .3500% .3500% .3500% .3500%
12B-1 FEES ............ .1460 .1447 .1447 .1479
OTHER EXPENSES ........ .1538 .3234 .2191 .1573
TOTAL SERIES OPERATING
EXPENSES* ............ .6498% .8181% .7138% .6552%
</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>
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 LLP, 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.
<TABLE>
<CAPTION>
NET ASSET
VALUE NET NET REALIZED TOTAL FROM
PERIOD ENDED BEGINNING INVESTMENT AND UNREALIZED INVESTMENT DIVIDENDS TO DISTRIBUTIONS
NOVEMBER 30 OF PERIOD INCOME GAIN (LOSS) OPERATIONS SHAREHOLDERS TO SHAREHOLDERS
----------------- ----------- ------------ -------------- ------------ -------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Arizona Series
1991** $ 9.60 $0.36 $ 0.17 $ 0.53 $(0.36) --
1992 9.77 0.64 0.41 1.05 (0.64) --
1993 10.18 0.58 0.56 1.14 (0.58) $(0.02)
1994 10.72 0.55 (1.29) (0.74) (0.55) (0.01)
California Series
1991* 9.60 0.60 0.39 0.99 (0.60) --
1992 9.99 0.67 0.34 1.01 (0.67) (0.01)
1993 10.32 0.61 0.68 1.29 (0.61) --
1994 11.00 0.58 (1.48) (0.90) (0.58) (0.14)
Florida Series
1991* 9.60 0.55 0.28 0.83 (0.55) --
1992 9.88 0.64 0.41 1.05 (0.64) --
1993 10.29 0.59 0.64 1.23 (0.59) --
1994 10.93 0.56 (1.33) (0.77) (0.56) --
Massachusetts Series
1991* 9.60 0.54 0.38 0.92 (0.54) --
1992 9.98 0.66 0.42 1.08 (0.66) (0.04)
1993 10.36 0.60 0.72 1.32 (0.60) --
1994 11.08 0.56 (1.38) (0.82) (0.56) (0.10)
Michigan Series
1991* 9.60 0.54 0.36 0.90 (0.54) --
1992 9.96 0.65 0.46 1.11 (0.65) (0.01)
1993 10.41 0.61 0.64 1.25 (0.61) --
1994 11.05 0.56 (1.41) (0.85) (0.56) (0.18)
<FN>
----------
* January 15, 1991 (commencement of operations) to November 30, 1991.
** April 30, 1991 (commencement of operations) to November 30, 1991.
*** After application of the Fund's expense limitation.
+ Does not reflect the deduction of sales load.
(1) Not annualized.
(2) Annualized.
</TABLE>
See Notes to Financial Statements.
4
<PAGE>
-----------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATIOS TO AVERAGE NET RATIOS TO AVERAGE NET
ASSETS (AFTER EXPENSES ASSETS (BEFORE EXPENSES
WERE ASSUMED) WERE ASSUMED)***
------------------------ ------------------------
NET
ASSET NET ASSETS
TOTAL DIVIDENDS VALUE TOTAL AT END OF NET NET PORTFOLIO
AND END OF INVESTMENT PERIOD INVESTMENT INVESTMENT TURNOVER
DISTRIBUTIONS PERIOD RETURN+ (000'S) EXPENSES INCOME EXPENSES INCOME RATE
--------------- -------- ------------ ----------- ---------- ------------ ---------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$(0.36) $ 9.77 5.66%(1) $ 20,733 0.15%(2) 6.32%(2) 1.43%(2) 5.04%(2) 8%(1)
(0.64) 10.18 11.08 38,812 0.15 6.33 0.74 5.74 15
(0.60) 10.72 11.42 59,877 0.48 5.40 0.65 5.22 5
(0.56) 9.42 (7.16) 47,628 0.62 5.33 0.63 5.32 11
(0.60) 9.99 10.29 (1) 41,568 0.15 (2) 6.53 (2) 0.97 (2) 5.71 (2) 24 (1)
(0.68) 10.32 10.23 95,604 0.15 6.36 0.67 5.84 5
(0.61) 11.00 12.77 139,308 0.48 5.57 0.60 5.45 11
(0.72) 9.38 (8.65) 112,450 0.58 5.59 0.59 5.58 12
(0.55) 9.88 8.84 (1) 17,719 0.15 (2) 6.45 (2) 1.27 (2) 5.33 (2) 10 (1)
(0.64) 10.29 10.92 51,560 0.15 6.19 0.73 5.62 6
(0.59) 10.93 12.20 84,494 0.48 5.39 0.63 5.23 3
(0.56) 9.60 (7.29) 71,458 0.61 5.34 0.62 5.33 3
(0.54) 9.98 9.87 (1) 3,205 0.15 (2) 6.50 (2) 2.50 (2) 4.08 (2) 40 (1)
(0.70) 10.36 11.19 10,113 0.14 6.26 1.25 5.16 10
(0.60) 11.08 13.06 18,344 0.48 5.47 0.84 5.10 12
(0.66) 9.60 (7.71) 15,507 0.50 5.35 0.78 5.07 10
(0.54) 9.96 9.54 (1) 6,630 0.15 (2) 6.54 (2) 1.73 (2) 4.96 (2) 46 (1)
(0.66) 10.41 11.78 13,809 0.14 6.28 1.01 5.42 9
(0.61) 11.05 12.28 22,083 0.48 5.53 0.80 5.20 15
(0.74) 9.46 (8.07) 19,831 0.50 5.44 0.75 5.19 9
</TABLE>
5
<PAGE>
FINANCIAL HIGHLIGHTS (continued)
-----------------------------------------------------------------------------
Selected data and ratios for a share of beneficial interest outstanding
throughout each period for their respective years ended November 30:
<TABLE>
<CAPTION>
NET ASSET
VALUE NET NET REALIZED TOTAL FROM
PERIOD ENDED BEGINNING INVESTMENT AND UNREALIZED INVESTMENT DIVIDENDS TO DISTRIBUTIONS
NOVEMBER 30 OF PERIOD INCOME GAIN (LOSS) OPERATIONS SHAREHOLDERS TO SHAREHOLDERS
------------------- ----------- ------------ -------------- ------------ -------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Minnesota Series
1991* $ 9.60 $0.51 $ 0.19 $ 0.70 $(0.51) --
1992 9.79 0.63 0.32 0.95 (0.63) --
1993 10.11 0.58 0.67 1.25 (0.58) --
1994 10.78 0.55 (1.42) (0.87) (0.55) $(0.08)
New Jersey Series
1991* 9.60 0.55 0.35 0.90 (0.55) --
1992 9.95 0.66 0.44 1.10 (0.66) (0.04)
1993 10.35 0.60 0.62 1.22 (0.60) (0.03)
1994 10.94 0.55 (1.39) (0.84) (0.55) (0.08)
New York Series
1991* 9.60 0.54 0.46 1.00 (0.54) --
1992 10.06 0.68 0.34 1.02 (0.68) (0.06)
1993 10.34 0.62 0.69 1.31 (0.62) --
1994 11.03 0.57 (1.52) (0.95) (0.57) (0.05)
Ohio Series
1991* 9.60 0.53 0.25 0.78 (0.53) --
1992 9.85 0.66 0.41 1.07 (0.66) (0.01)
1993 10.25 0.60 0.72 1.32 (0.60) --
1994 10.97 0.55 (1.43) (0.88) (0.55) (0.12)
Pennsylvania Series
1991* 9.60 0.53 0.30 0.83 (0.53) --
1992 9.90 0.66 0.44 1.10 (0.66) --
1993 10.34 0.61 0.67 1.28 (0.61) --
1994 11.01 0.56 (1.39) (0.83) (0.56) (0.06)
<FN>
----------
* January 15, 1991 (commencement of operations) to November 30, 1991.
*** After application of the Fund's expense limitation.
+ Does not reflect the deduction of sales load.
(1) Not annualized.
(2) Annualized.
</TABLE>
See Notes to Financial Statements.
6
<PAGE>
-----------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATIOS TO AVERAGE NET RATIOS TO AVERAGE NET
ASSETS (AFTER EXPENSES ASSETS (BEFORE EXPENSES
WERE ASSUMED) WERE ASSUMED)***
------------------------ ------------------------
NET
ASSET NET ASSETS
TOTAL DIVIDENDS VALUE TOTAL AT END OF NET NET PORTFOLIO
AND END OF INVESTMENT PERIOD INVESTMENT INVESTMENT TURNOVER
DISTRIBUTIONS PERIOD RETURN+ (000'S) EXPENSES INCOME EXPENSES INCOME RATE
--------------- -------- ------------ ----------- ---------- ------------ ---------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$(0.51) $ 9.79 7.42%(1) $ 3,131 0.15%(2) 6.04%(2) 2.65%(2) 2.87%(2) 4%(1)
(0.63) 10.11 9.91 6,420 0.14 6.16 1.46 4.85 23
(0.58) 10.78 12.64 11,538 0.48 5.39 1.04 4.83 8
(0.63) 9.28 (8.42) 9,793 0.50 5.41 0.91 5.00 14
(0.55) 9.95 9.59 (1) 15,812 0.15 (2) 6.43 (2) 1.21 (2) 5.36 (2) 36 (1)
(0.70) 10.35 11.34 32,123 0.15 6.36 0.79 5.71 19
(0.63) 10.94 12.03 54,499 0.48 5.41 0.69 5.20 7
(0.63) 9.47 (7.96) 45,497 0.64 5.38 0.65 5.37 6
(0.54) 10.06 10.73 (1) 3,976 0.15 (2) 6.44 (2) 2.22 (2) 4.37 (2) 51 (1)
(0.74) 10.34 10.35 9,604 0.15 6.45 1.23 5.37 21
(0.62) 11.03 12.91 15,955 0.48 5.61 0.88 5.21 11
(0.62) 9.46 (8.96) 14,522 0.50 5.48 0.82 5.16 14
(0.53) 9.85 8.35 (1) 6,267 0.15 (2) 6.38 (2) 2.04 (2) 4.48 (2) 22 (1)
(0.67) 10.25 11.12 13,686 0.15 6.41 1.01 5.56 23
(0.60) 10.97 13.19 24,849 0.48 5.45 0.78 5.14 20
(0.67) 9.42 (8.34) 20,693 0.50 5.31 0.71 5.10 18
(0.53) 9.90 8.77 (1) 12,147 0.15 (2) 6.46 (2) 1.54 (2) 5.07 (2) 12 (1)
(0.66) 10.34 11.47 31,509 0.15 6.31 0.81 5.65 3
(0.61) 11.01 12.64 53,378 0.48 5.54 0.68 5.33 5
(0.62) 9.56 (7.84) 47,557 0.64 5.37 0.66 5.35 19
</TABLE>
7
<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 ninety investment companies, thirty of which are
listed on the New York Stock Exchange, with combined assets of approximately
$64.9 billion at December 31, 1994. 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
waived management fees and assumed 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; the Investment Manager continued to waive
management fees and assume expenses with respect to the Massachusetts,
Michigan, Minnesota, New York and Ohio Series of the Fund to the extent they
exceeded 0.50% of the daily net assets of each respective Series from January
1, 1994 to January 1, 1996. For the fiscal year ended November 30, 1994, 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 0.34%, 0.34%, 0.34%, 0.07%, 0.10%, 0.0%, 0.34%, 0.03%, 0.14% and
0.33% respectively of average daily net assets and the total expenses of each
respective Series amounted to 0.62%, 0.58%, 0.61%, 0.50%, 0.50%, 0.50%,
0.64%, 0.50%, 0.50% and 0.64%, respectively, of the average daily net assets
of each 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.
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, therefore, 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
9
<PAGE>
of purchase): (i) obligations of the United States Government, its agencies,
instrumentalities or authorities; (ii) commercial paper 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
10
<PAGE>
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 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 Fund may purchase
Municipal Obligations which had originally been issued by the same issuer as
two separate series of the same issue with different interest rates, but
which are now linked together to form one series.
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, 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 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
11
<PAGE>
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 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.
The Trust may also purchase "certificates of participation," which are
securities issued by a particular municipality or municipal authority to
evidence a proportionate interest in base rental or lease payments relating to
a specific project to be made by a municipality, agency or authority. The risks
and characteristics of investments in certificates of participation are similar
to the risks and characteristics of lease obligations discussed above.
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 there-after reflect the value
each day of such security in determining its net asset value. There is no
overall limit on the percentage of the Fund's assets which may be committed
to the purchase of securities on a when-issued, delayed delivery or forward
commitment basis. An increase in the percentage of the Fund's assets
committed to the purchase of securities on a when-issued, delayed delivery or
forward commitment basis may increase the volatility of the Fund's 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.
12
<PAGE>
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 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
for option 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.
13
<PAGE>
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 39 tax-exempt
municipal funds and fund portfolios, with approximately $10.5 billion in
assets as of January 31, 1995. 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 Manager'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 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
14
<PAGE>
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 purchases made pursuant to Systematic Payroll Deduction
plans, the Fund, in its discretion, may accept such purchases 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:
<TABLE>
<CAPTION>
SALES CHARGE
-------------------------------
PERCENTAGE OF APPROXIMATE
PUBLIC PERCENTAGE OF
AMOUNT OF SINGLE TRANSACTION OFFERING PRICE AMOUNT INVESTED
--------------------------------- -------------- ---------------
<S> <C> <C>
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
</TABLE>
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; (e) tax-exempt organizations
enumerated in Section 501(c)(3) or (13) of the Internal Revenue Code; (f)
employee benefit plans qualified under Section 401 of the Internal Revenue
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.
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Sales personnel are compensated for selling shares of the Fund at the time
of their sale by the Distributor and/or Selected Broker-Dealer. In addition,
some sales personnel of the Selected Broker-Dealer will receive various types
of non-cash compensation as special sales incentives, including trips,
educational and/or business seminars and merchandise.
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
payment is 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 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 in-
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curred 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 $79,297, $193,303, $118,900,
$25,842, $31,438, $16,700, $75,697, $22,495, $36,275 and $77,808, respectively
under the Plan for the fiscal year ended November 30, 1994. This accrual is an
amount equal to 0.14% of the daily net assets of each respective Series of
the Fund (0.15% of the daily net assets of the Michigan Series, New Jersey
Series and the Pennsylvania 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
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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 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(Trademark). Shareholders may subscribe to EasyInvest, an
automatic purchase plan which pro-
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vides 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, Dean
Witter Balanced Income Fund, Dean Witter Balanced Growth 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 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.
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<PAGE>
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.
The current prospectus for each fund describes its investment objective(s)
and policies, and shareholders should obtain a copy and examine it carefully
before investing. Exchanges are subject to the minimum investment requirement
and any other conditions imposed by each fund. An exchange will be treated
for federal income tax purposes the same as a repurchase or redemption of
shares, on which the shareholder may realize a capital gain or loss. However,
the ability to deduct capital losses on an exchange may be limited in situations
where there is an exchange of shares within ninety days after the shares are
purchased. The Exchange Privilege is only available in states where an exchange
may legally be made.
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 DWR or other Selected Broker-Dealer 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 forward 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 next
determined (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.
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<PAGE>
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. 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 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 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 distribute 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
20
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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 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 divi-
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<PAGE>
dends, 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 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 total amount 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
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<PAGE>
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 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. Under existing Florida law, neither the State of Florida nor any
of its political subdivisions or other governmental authorities may impose an
income tax on individuals. Accordingly, individual shareholders of the
Florida Series will not be subject to any Florida state or local income taxes
on income derived from investments in the Florida Series. However, such
income may be subject to state or local income taxation under applicable
state or local laws in jurisdictions other than Florida. In addition, the
income received from the Florida Series may be subject to estate taxes under
present Florida law and certain corporations may be subject to the taxes
imposed by Chapter 220, Florida Statutes, on interest, income or profits on
debt obligations owned by corporations as defined in said Chapter 220.
The State of Florida also imposes an annual tax of 2 mills on each dollar
($2.00 per $1,000) of the just valuation of all intangible personal property
that has a taxable situs within the State. However, the entire value of a
shareholder's interest in the Florida Series will be exempt from Florida's
intangible personal property tax if, as is intended, all of the investments
and other assets held by the Florida Series on the applicable assessment date
are exempt individually from the intangible personal property tax. [It
presently is the policy and intention of the Fund and the Investment Manager
to manage the Florida Series in such a manner as to ensure that on each
annual assessment date the Florida Series will consist of only those
investments and other assets which are exempt from the Florida intangible
personal property tax. Accordingly, it is unlikely that any shareholder of
the Florida Series will ever be subject to such tax. In the event that the
Florida Series includes investments or other assets on the annual
23
<PAGE>
assessment date which may subject shareholders to the Florida intangible
personal property tax, the Fund shall so notify the Shareholders.]
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) of the 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.
As a result of a change in the Massachusetts tax laws, applicable to
taxable years beginning on or after January 1, 1996, gain income from the
sale or exchange of shares of the Massachusetts Series will be taxed at a
stepped down rate depending on the number of years such shares have been
held. For purposes of determining the holding period, shares acquired prior
to 1/1/96 shall be deemed to have been acquired on 1/1/95, or on the date of
actual acquisition, whichever is later.
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 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
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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 not derived 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 shareholders 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 the 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 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.
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<PAGE>
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, all distributions 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,
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
26
<PAGE>
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
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" as defined in
Section 852 of the Code. Shares of the Ohio Series will, however, 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 (including the Governments of Puerto Rico, the Virgin Islands,
and Guam), 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 any profits
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 or continued (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.
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<PAGE>
Corporate shareholders who are subject to the Pennsylvania Corporate Net
Income Tax will not be subject to that tax on distributions by the
Pennsylvania 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.
Most Pennsylvania counties are authorized to impose a tax on intangible
personal property of their residents, and many 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 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 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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<PAGE>
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.
Code of Ethics. Directors, officers and employees of InterCapital, Dean
Witter Services Company Inc. and the Distributor are subject to a strict Code
of Ethics adopted by those companies. The Code of Ethics is intended to
ensure that the interests of shareholders and other clients are placed ahead
of any personal interest, that no undue personal benefit is obtained from a
person's employment activities and that actual and potential conflicts of
interest are avoided. To achieve these goals and comply with regulatory
requirements, the Code of Ethics requires, among other things, that personal
securities transactions by employees of the companies be subject to an
advance clearance process to monitor that no Dean Witter Fund is engaged at
the same time in a purchase or sale of the same security. The Code of Ethics
bans the purchase of securities in an initial public offering, and also
prohibits engaging in futures and option transactions and profiting on
short-term trading (that is, a purchase within 60 days of a sale or a sale
within 60 days of a purchase) of a security. In addition, investment
personnel may not purchase or sell a security for their personal account
within 30 days before or after any transaction in any Dean Witter Fund
managed by them. Any violations of the Code of Ethics are subject to
sanctions, including reprimand, demotion or suspension or termination of
employment. The Code of Ethics comports with regulatory requirements and the
recommendations in the recent report by the Investment Company Institute
Advisory Group on Personal Investing.
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.
29
<PAGE>
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 increasing by approximately 10% from 1990 to
1994. Although slowed, Arizona's rate of growth 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 be recovering 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
expanding 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 and resulted in a surplus for the
fiscal year ended June 30, 1994. A portion of the surplus was used to fund a
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 interest or repay principal. Various developments regarding
the California Constitution and State statutes
30
<PAGE>
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 was adversely affected by both the
national recession and the cutbacks in aerospace and defense spending which
had a severe impact on the economy in Southern California. Although the
national economic recovery continued at a strong pace in the fourth quarter
of 1994, California is still experiencing the effects of a recession.
However, the State's budget for fiscal year 1994-95 assumes that the State
will begin to recover from recessionary conditions in 1994, with a modest
upturn in 1994 and continuing in 1995.
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 five of the past
six 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 1994-95 State budget does not include any additional increase
in the sales tax rate.
On July 8, 1994, the Governor signed into law a $57.5 billion budget
which, among other things, (a) reduces welfare grants and aid to families and
to the aged, blind and disabled, and (b) relies on the State's ability to
obtain $2.8 billion in new reimbursement from the federal government for the
State's cost of serving illegal immigrants. Although the State legislature
has passed a standby measure which could trigger automatic budget reductions
if the State's fiscal condition worsens over the next two years, the
stability of the budget would be jeopardized if the State is unable to obtain
the hoped-for federal funds.
The current budget includes General Fund spending of $40.9 billion, up
4.2% from the level of spending during the 1993-94 fiscal year. The budget
also envisions General Fund spending climbing another 8.4% in the 1995-96
fiscal year. The budget forecasts levels of revenues and expenditures which
will result in operating surpluses in both 1994-95 and 1995-96, leading to
the elimination of an estimated $2.0 billion accumulated budget deficit by
June 30, 1996.
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<PAGE>
Because of the State of California's continuing budget problems, the
State's General Obligation bonds were downgraded in July 1994 from A1 to Aa
by Moody's, from A+ to A by Standard & Poor's, and from AA to A by Fitch
Investors Service, Inc. All three rating agencies expressed uncertainty in
the State's ability to balance its budget by 1996.
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
The following information is provided only for general information
purposes and is not intended to be a description or summary of the investment
considerations and factors which may have an affect on the Florida Series or
the obligations of the issuers in which the Florida Series may invest.
Prospective investors must read the entire prospectus to obtain information
essential to the making of an informed investment decision.
The Florida Series invests primarily in municipal securities and
obligations of counties, cities, school districts, special districts, and
other government authorities and issuers of the State of Florida, the
interest on which is excludable from gross income for federal income tax
purposes. The municipal securities market of Florida is very diverse and
includes obligations that are issued by a number of different issuers and
which are payable from a variety of revenue sources. Accordingly, the ability
of Florida issuers to meet their obligations with respect to such municipal
securities is influenced by various political, legal, economic and regulatory
factors affecting such issuers, the State of Florida and the repayment
sources supporting municipal obligations. If any of such issuers cannot
satisfy their repayment obligations, for any reason, the income, value and
liquidity of the Florida Series may be adversely affected.
Florida presently is the fourth largest state in the United States and
continues to be one of the most rapidly growing states. Between 1980 and
1990, Florida's population increased by approximately 3.2 million people, the
second largest population increase for any state during the decade
(California was first). During such period of time, Florida's total
percentage growth in population was 32.7%, the fourth largest percentage
increase among states. Florida's population has continued to grow since 1990,
but at a slower pace than during the 1980s and prior decades. As of April 1,
1994, Florida's population had grown approximately 7.3 percent since April 1,
1990. This slowing in population growth is due primarily to the general
economic slowdown that affected Florida and the entire nation during such
period.
Florida's principal economic sectors include services and tourism, retail,
light manufacturing, particularly in the electronic, chemical and
transportation areas, finance and insurance, real estate, transportation and
communications, agriculture, government and the military. Florida's
unemployment figures continue to be slightly higher than the national
average. As the national economy continues to gain strength, so should
Florida's economy. Most of Florida's economic sectors are expected to grow in
the future and in light of Florida's geographic location and diverse
population, it is anticipated that Florida will benefit greatly from the
expanding world markets, especially Latin America.
The State of Florida and its political subdivisions are each required by
law to maintain balanced budgets. In order to satisfy this requirement,
Florida government entities have utilized a combination of spending
32
<PAGE>
reductions and revenue enhancements. From time to time, tax and/or spending
limitation initiatives are introduced by the Florida Legislature or are
proposed by the citizens of the State in the form of amendments to the
Florida Constitution. Some have already become law within the State and
others are likely to become law. The impact of such measures cannot be
ascertained with any certainty but may have some effect on various issuers of
municipal securities in the State of Florida.
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. 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%, and further decreased to 6.4% at
the end of fiscal 1994.
The recent economic growth has resulted in the growth of state tax
revenues in 1993 and in 1994. Tax revenues for fiscal year 1995 are currently
projected to be approximately 6% above fiscal year 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 both in 1993 and in 1994. In 1992, Standard &
Poor's and Moody's raised their ratings of the Commonwealth's general
obligation 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.
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The principal sectors of Michigan's economy are durable goods
manufacturing (including automobile and office equipment manufacturing),
tourism and agriculture. Employment of Michigan's labor force in durable
goods manufacturing has dropped from 33% in 1960 to 14.2% in 1993. However,
manufacturing (including auto-related manufacturing) continues to be an
important part of Michigan's economy. Those industries are highly cyclical
and are expected to operate at somewhat less than full capacity in 1995.
Historically, during periods of economic decline or slow economic growth, the
cyclical nature of those industries has adversely affected the revenue
streams of Michigan and its political subdivisions because it has adversely
impacted certain tax sources, particularly sales taxes, income taxes and
single business taxes.
The State reports its financial condition using generally accepted
accounting principles. Michigan's Fiscal Year begins on October 1 and ends on
September 30 of the following year.
Michigan ended fiscal year 1988-89 with a General Fund surplus of $61.1
million. Michigan ended fiscal years 1989-90 and 1990-91 with 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 General Fund budget. Michigan ended fiscal years
1991-92 and 1992-93 with General Fund surpluses of $24 million and $280.1
million, respectively. During fiscal years 1990-91 and 1991-92, Michigan
utilized $230 million and $170.1 million, respectively, from its
Counter-Cyclical Budget and Economic Stabilization Fund (BSF) to add to the
General Fund balances in those years. In fiscal year 1992-93, the State of
Michigan made a deposit of $312.2 million into the BSF, the first since 1986.
The unreserved balance for the BSF as of the end of fiscal years 1990-91,
1991-92 and 1992-93 were $182.2 million, $20.1 million and $303.4 million,
respectively.
In fiscal year 1993-94, General Fund revenues increased by approximately
$500 million, an increase of approximately 6.6%, from the amount of revenues
collected during fiscal year 1992-93. The final amount of the General Fund
surplus will not be known until the State closes its books for fiscal year
1993-94 in late January 1995. The State of Michigan, however, has already
transferred approximately $345 million into the BSF out of the surpluses from
all of its funds for fiscal year 1993-94. In June 1994, the Michigan
Legislature adopted the budget for fiscal year 1994-95. As of January 12,
1995, the State of Michigan estimated that, in the absence of any future tax
cuts, the aggregate of the surpluses in all of its funds at the end of fiscal
year 1994-95 would be approximately $295 million.
As of January 25, 1995, general obligation bonds of the State of Michigan
were rated "AA" by Standard and Poor's Ratings Group, "A1" by Moody's
Investors Service and "AA" by Fitch Investors Service. 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, 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
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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 forecast,
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 and increased revenues a total of $125.5 million.
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.
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 shortfall 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.
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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.
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.
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 continued unchanged, revenue would grow 7.7 percent and
expenditures 6.0 percent in the 1995-1997 biennium.
A March 1994 forecast projected an Accounting General Fund balance at June
30, 1995, at $623 million, principally due to a projected $235 million
increase in revenues to $16.6 billion for the biennium. The balance at June
30, 1997, was estimated to be $247 million.
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The 1994 Legislature provided for a $500 million budget reserve;
appropriated to school districts $172 million to allow the districts, for
purposes of state aid calculations, to reduce the portion of property tax
collections that the school districts must recognize in the fiscal year
during which they receive the property taxes; increased expenditures $184
million; and increased expected revenues $4 million.
Of the $184 million in increased expenditures, criminal justice
initiatives totaled $45 million, elementary and higher education $31 million,
environment and flood relief $18 million, property tax relief $55 million,
and transit $11 million. A six-year strategic capital budget plan was adopted
with $450 million in projects financed by bonds supported by the Accounting
General Fund. Other expenditure increases total $16.5 million.
Included in the expected revenue increase of $4 million were comformity
with federal tax changes to increase revenues $27.5 million, a sales tax
phasedown on replacement capital equipment and miscellaneous sales tax
exemptions decreasing revenues $17.3 million, and other measures decreasing
revenues $6.2 million.
After the Legislature adjourned in May 1994, the Commissioner of Finance
estimated the Accounting General Fund balance at June 30, 1995, at $130
million.
The Commissioner of Finance, in a November 1994 forecast, estimated the
Accounting General Fund balance at June 30, 1995, at $268 million, due to
projected increases in revenues and decreases in expenditures, and the
balance at June 30, 1997, at $190 million.
The State of Minnesota has no obligation to pay any bonds of its political
or governmental subdivisions, 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 September, 1994 were Aa1 by Moody's and AA+ by
S&P. 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 portfolio of the New Jersey Series contains different issues of debt
obligations issued by or on behalf of the State of New Jersey (the "State")
and counties, municipalities and other political subdivisions and other
public authorities thereof or by the Government of Puerto Rico or by their
respective authorities. Investment
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in the New Jersey Series should be made with an understanding that the value
of the underlying Portfolio may decline with increases in interest rates.
Prospective investors should consider the recent financial difficulties and
pressures which the State of New Jersey and certain of its public authorities
have undergone.
The New Jersey State Constitution prohibits the legislature from making
appropriations in any fiscal year in excess of the total revenue on hand and
anticipated. A debt or liability that exceeds 1% of total appropriations for
the year is also prohibited, unless it is in connection with a refinancing to
produce a debt service savings or it is approved at a general election. Such
debt must be authorized by law and applied to a single specified object or
work. These Constitutional provisions do not apply to debt incurred because
of war, insurrection or emergencies caused by disaster.
Pursuant to Article VIII, Section II, par. 2 of the New Jersey
Constitution, no monies may be drawn from the State Treasury except for
appropriations made by law. In addition, the monies for the support of State
government and all State purposes, as far as can be ascertained, must be
provided for in one general appropriation law covering one and the same
fiscal year.
In addition to the Constitutional provisions, the New Jersey statutes
contain provisions concerning the budget and appropriation system. Under
these provisions, each unit of the State requests an appropriation from the
Director of the Division of Budget and Accounting, who reviews the budget
requests and forwards them with her recommendations to the Governor. The
Governor then transmits his recommended expenditures and sources of
anticipated revenue to the legislature, which reviews the Governor's Budget
Message and submits an appropriation bill to the Governor for his signature
by July 1 of each year. At the time of signing the bill, the Governor may
revise appropriations or anticipated revenues. That action can be reversed by
a two-thirds vote of each House. No supplemental appropriation may be enacted
after adoption of the act, except where there are sufficient revenues on hand
or anticipated, as certified by the Governor, to meet the appropriation.
Finally, the Governor may, during the course of the year, prevent the
expenditure of various appropriations when revenues are below those
anticipated or when she determines that such expenditure is not in the best
interest of the State.
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 a recessionary peak of
9.3% during 1992. Since then, the unemployment rate fell to 6.7% during the
fourth quarter of 1993. The jobless rate averaged 7.1% during the first nine
months of 1994, but this estimate is not comparable to those prior to January
because of major changes in the federal survey from which these statistics
are obtained.
Economic recovery is anticipated to be slow and uneven in New Jersey and
may lag behind such recovery in other parts of the nation. Some sectors, like
commercial and industrial construction, will lag because of continued excess
capacity. Employers in rebounding sectors may be expected to remain cautious
about hiring until they become convinced that improved business will be
sustained. Mergers or downsizing to increase profitability are a factor to be
considered. As a result, unemployment should be anticipated to recede at a
correspondingly slow pace.
One of the major reasons for cautious optimism is found in the
construction industry. Total construction contracts awarded in New Jersey
have risen by 8.6% in 1993 compared with 1992. The largest increase came from
residential construction awards, which increased by 37.7% in 1993 compared
with 1992.
The State's 1995 Fiscal Year budget became law on June 30, 1994. For
Fiscal Year 1995, the Governor has recommended appropriations of $103.5
million for principal and interest payments for general obligation bonds. Of
the $15,291.0 million appropriated in Fiscal Year 1995 from the General Fund,
the Property Tax
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Relief Fund, the Gubernatorial Elections Fund, the Casino Control Fund and
the Casino Revenue Fund, $5,782.2 million (37.8%) was appropriated for State
Aid to Local Governments, $3,761.6 million (24.6%) is appropriated for
Grants-in-Aid, $5,203.1 million (34.0%) for Direct State Services, $103.5
million (0.7%) for Debt Service on State general obligation bonds and $440.6
million (2.9%) for Capital Construction.
State Aid to Local Governments was the largest portion of Fiscal Year 1995
appropriations. In Fiscal Year 1995, $5,782.2 million of the State's
appropriations consisted of funds which are distributed to municipalities,
counties and school districts. The largest State Aid appropriation, in the
amount of $3,900.1 million, is provided for local elementary and secondary
education programs. Of this amount, $2,431.6 million was provided as
foundation aid to school districts by formula based upon the number of
students and the ability of a school district to raise taxes from its own
base. In addition, the State provides $582.5 million for special education
programs for children with disabilities. A $293.0 million program was also
funded for pupils at risk of educational failure, including basic skills
improvement. The State appropriated $474.8 million on behalf of school
districts as the employer share of the teachers' pension and benefits
programs, $263.8 million to pay for the cost of pupil transportation and
$57.4 million for transition aid, which guaranteed school districts a 6.5%
increase over the aid received in Fiscal Year 1991 and is being phased out
over six years.
Appropriations to the State Department of Community Affairs total $635.1
million in State Aid monies for Fiscal Year 1995. The principal programs
funded were the Supplemental Municipal Property Tax Act ($314.1 million), the
Municipal Revitalization Program ($165.0 million); municipal aid to urban
communities to maintain and upgrade municipal services ($40.7 million); and
the Safe and Clean Neighborhoods Program ($58.9 million). Appropriations to
the State Department of the Treasury totalled $321.3 million in State Aid
monies for Fiscal Year 1995. The principal programs funded by these
appropriations were payments under the Business Personal Property Tax
Replacement Programs ($158.7 million); the cost of senior citizens, disabled
and veterans property tax deductions and exemptions ($41.7 million); aid to
densely populated municipalities ($25.0 million); Municipal Purposes Tax
Assistance ($30.0 million); and payments to municipalities for services to
state owned property ($34.9 million).
Other appropriations of State Aid in Fiscal Year 1995 include welfare
programs ($499.1 million); aid to county colleges ($123.2 million); and aid
to county mental hospitals ($79.4 million).
The second largest portion of appropriations in Fiscal Year 1995 is
applied to Direct State Services: the operation of State government's 17
departments, the Executive Office, several commissions, the State Legislature
and the Judiciary. In Fiscal Year 1995, appropriations for Direct State
Services aggregate to $5,203.1 million. Some of the major appropriations for
Direct State Services during Fiscal Year 1995 are detailed below.
At any given time, there are various numbers of claims and cases pending
against the State. State agencies and employees, seeking recovery of monetary
damages that are primarily paid out of the fund created pursuant to the Tort
Claims Act, N.J.S.A. 59:1-1 et seq. In addition, at any given time there are
various contract claims against the State and State agencies seeking recovery
of monetary damages. The State is unable to estimate its exposure for these
claims and cases. An independent study estimated an aggregate potential
exposure of $50 million for tort claims pending, as of January 1, 1982. It is
estimated that were a similar study made of claims currently pending the
amount of estimated exposure would be higher. Moreover, New Jersey is
involved in a number of other lawsuits in which adverse decisions could
materially affect revenue or expenditures. Such cases include challenges to
its system of educational funding, the methods by which the State Department
of Human Services shares with county governments the maintenance recoveries
and costs for residents in state psychiatric hospitals and residential
facilities for the developmentally disabled.
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Other lawsuits, that could materially affect revenue or expenditures
include a suit by a number of taxpayers seeking refunds of taxes paid to the
Spill Compensation Fund pursuant to N.J.S.A. 58:10-23.11, a suit alleging
that unreasonably low Medicaid payment rates have been implemented for
long-term care facilities in New Jersey, a suit alleging unfair taxation on
interstate commerce, a suit by Essex County seeking to invalidate the State's
method of funding the judicial system and a suit seeking return of moneys
paid by various counties for maintenance of Medicaid or Medicare eligible
residents of institutions and facilities for the developmentally disabled and
a suit challenging the imposition of premium tax surcharges on insurers doing
business in New Jersey, and assessments upon property and casualty liability
insurers pursuant to the Fair Automobile Insurance Reform Act and a suit
challenging amendments to the pension laws enacted on June 30, 1994
concerning the funding of the Teachers Pension and Annuity Fund (TPAF). The
Public Employee's Retirement System (PERS), the Police and Firemen's
Retirement System (PFRS), the State Police Retirement System (SPRS) and the
Judiciary Retirement System (JRS).
Moody's, citing a developing pattern of reliance on non-recurring measures
to achieve budgetary balance, and repeated revenue shortfalls, on August 24,
1992 Moody's lowered from Aaa to Aa1 its rating assigned New Jersey general
obligation bonds. The Aa-1 rating from Moody's is equivalent to Standard &
Poor's AA rating. On August 1, 1994, Standard & Poor's affirmed its AA+
ratings on New Jersey's general obligation debt.
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, 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 potential economic problems.
The City accounts for a large portion 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
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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 reversal 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 June 27, 1994,
Moody's reconfirmed its A rating on the State's general obligation 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. On April 26, 1993, S&P raised its outlook to
positive and, on June 27, 1994, confirmed its A-rating.
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 auto-related manufacturing) in Ohio
remains an important part of the State's economy, the greatest growth in
employment in Ohio in recent years, consistent with national trends, has been
in the non-manufacturing area. Ohio ranked third in the nation in 1990 gross
state product derived from manufacturing. Manufacturing was 27.5% of Ohio's
gross state product compared to 17.1% 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 15.2 million acres (of a total land area of 26.4 million acres)
in farm land and an estimated 76,000 individual farms, it is by many measures
Ohio's leading industry, contributing nearly $5.7 billion to the State's
economy each year. This represents 13.5% of the total output, 15.9% of the
total employment (approximately 750,000 jobs) and 10.1% of the value-added
products produced in the State. Farm income alone amounted in 1993 to just
over $4.5 billion. In 1993, Ohio exported over $1.2 billion in farm products
(primarily 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 1993 sales as reported in 1994 by Fortune magazine),
42 had headquarters in Ohio, placing Ohio fourth as a "headquarters" state
for industrial corporations, and of the top 500 service corporations, 24 had
headquarters in Ohio, placing Ohio tied for fifth as a "headquarters" state
for service corporations.
41
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Payroll employment in Ohio, in the diversifying employment base, showed a
steady upward trend until 1979, then decreased until 1982. It reached a high
in the summer of 1993 after a slight decrease in 1992, then decreased
slightly but it is now at a new high. 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 Ohio constitutional 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 Ohio 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 Ohio Constitution to $750,000. As
discussed below, the Ohio General Assembly is considering proposing to the
voters amendments to the Ohio Constitution that would increase the authority
of the General Assembly to authorize the issuance of general obligation debt
of the State without further voter approval.
Most State operations are financed through the general revenue fund (GRF),
with personal income and sales-use taxes being the major GRF sources,
totalling $5 billion and $4.4 billion in 1994, respectively. An amendment to
the Ohio Constitution, approved in November, 1994, added express exclusions
from sales or other excise taxes upon food; the estimated effect of that
amendment is a reduction in GRF revenues of $67 million annually.
The Ohio 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. There is no present
constitutional limit on the rates of State-levied taxes and excises, except
for taxes on intangible property. The General Assembly is currently
considering whether to propose to the voters a constitutional amendment which
would authorize the General Assembly to approve the issuance of general
obligations of the State for capital improvements (or for the refunding of
obligations issued for capital improvements) without further voter approval,
subject to a requirement that the debt service on State obligations to be
paid from GRF resources not exceed 5% of GRF annual expenditures. At present
the State itself does not levy any ad valorem taxes on real or tangible
personal property. Those taxes are levied by local political subdivisions.
The Ohio Constitution limits the amount of ad valorem property taxes that may
be levied by local political subdivisions in the aggregate, without a vote of
the electors or a municipal charter provision, to 1% of the true value, and
statutes further limit the amount of the aggregate levy, without a vote or
charter provision, to 10 mills per $1 of assessed valuation.
The GRF ending (June 30) fund balance is typically 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,
42
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the 1983 GRF ending fund balance was $43,600,000. Recent biennium GRF ending
fund balances were $475,100,000 in 1989, $135,365,000 in 1991 and
$111,013,000 in 1993. The first year of the current biennium, Fiscal Year
1994, ended with a GRF fund balance of over $560,000,000.
The GRF appropriations bill for the 1994-1995 biennium was passed on June
30, 1993, and promptly 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 were 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 education 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, Department of
Public Safety, and Bureau of Workers' Compensation appropriations acts,
containing lease-rental appropriations for certain DOT, DPS and BWC projects
financed by the Ohio Building Authority.
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.
In 1981, a Budget Stabilization Fund (BSF) was created for purposes of
cash and budgetary management. In 1992, the entire balance of the BSF was
transferred to the GRF. In 1993, $21 million was deposited to the BSF and an
additional $260.3 million was deposited in 1994, giving the BSF a current
balance of $281.3 million.
Litigation contesting the Ohio system of school funding for violation of
various provisions of the Ohio Constitution is pending. The trial court has
adopted findings of fact and conclusions of law, including conclusions that
certain provisions of current Ohio law violate the Ohio Constitution, and has
directed the State "forthwith to provide for and fund a system of funding
public elementary and secondary education in compliance with the Ohio
Constitution." The trial court has, however, granted a stay of its findings
and conclusions and of its orders, except for requirements that proposals be
prepared and presented to the General Assembly for a school funding system
that complies with court-specified criteria and for periodic reports to the
trial court. An appeal of the trial court's decision has been filed.
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.
43
<PAGE>
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 in
recent years, 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
12 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 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 18.4% in 1993, while service sector
employment has increased from 24.6% of non-agricultural employment in 1985 to
29.9% in 1993. 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 1992 and 1993, the average annual
unemployment rates for the Commonwealth were 7.5% and 7.1% respectively,
compared to rates of 7.4% and 6.8% 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 1994. The major tax sources for
the General Fund are the sales tax, which accounted for $5.1 billion or 33.7%
of General Fund revenues in fiscal 1994, the personal income tax, which
accounted for $4.9 billion or 32.0% of General Fund revenues, and the
corporate net income tax which accounted for $1.6 billion or 10.2% of tax
revenues. Federal revenues are those federal receipts which pay or reimburse
the Commonwealth for funds disbursed for federally assisted programs.
44
<PAGE>
The primary expenditures of the General Fund are for education (30% of
total General Fund expenditures in fiscal 1993) and public health and welfare
(51%).
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 1993 refers to the fiscal year ending June 30, 1993.)
The five year period from fiscal 1989 through fiscal 1993 was marked by
public health and welfare costs growing at a rate double the growth rate for
all state expenditures. Rising caseloads, increased utilization of services
and rising prices joined to produce the rapid rise of public health and
welfare costs at a time when a national recession caused tax revenues to
stagnate and even decline. During the period from fiscal 1989 through fiscal
1993, public health and welfare costs rose by an average annual rate of 10.9%
while tax revenues were growing at an average annual rate of 5.5%.
Consequently, spending on other budget programs was restrained to a growth
rate below 5.0% and sources of revenues other than taxes became larger
components of fund revenues. Among those sources were transfers from other
funds and hospital and nursing home pooling of contributions to use as
federal matching funds.
Tax revenues declined in fiscal 1991 as a result of the recession in the
economy. A $2.7 billion tax increase enacted for fiscal 1992 brought
financial stability to the General Fund. That tax increase included several
taxes with retroactive effective dates which generated some one-time revenues
during fiscal 1992. The absence of those revenues in fiscal 1993 contributed
to the decline in tax revenues for fiscal 1993.
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 Fund
annually pays debt service on Commonwealth bonds issued for projects
constructed for the benefit of that fund.
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
45
<PAGE>
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.
46
<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
Dean Witter Global Utilities Fund
Dean Witter International Small Cap Fund
Dean Witter Mid-Cap Growth Fund
Dean Witter Balanced Growth Fund
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 National Municipal Trust
Dean Witter High Income Securities
Dean Witter Balanced Income 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
Dean Witter Global Asset Allocation 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
Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn
John R. Haire
Dr. Manuel H. Johnson
Paul Kolton
Michael E. Nugent
Philip J. Purcell
John L. Schroeder
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
90 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 LLP
1177 Avenue of the Americas
New York, New York 10036
INVESTMENT MANAGER
Dean Witter InterCapital Inc.
Dean Witter
Multi-State
Municipal
Series Trust
Prospectus
March 29, 1995
<PAGE>
DEAN WITTER
MULTI-STATE
MUNICIPAL SERIES TRUST
STATEMENT OF ADDITIONAL INFORMATION
MARCH 29, 1995
-----------------------------------------------------------------------------
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 March 29, 1995, 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
-----------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
The Fund and its Management .............. 3
Trustees and Officers .................... 6
Investment Practices and Policies ....... 13
Investment Restrictions .................. 37
Portfolio Transactions and Brokerage .... 38
Purchase of Fund Shares .................. 39
Shareholder Services ..................... 43
Redemptions and Repurchases .............. 46
Dividends, Distributions and Taxes ...... 46
Performance Information .................. 49
Shares of the Fund ....................... 51
Custodian and Transfer Agent ............. 51
Independent Accountants .................. 52
Reports to Shareholders .................. 52
Validity of Shares of Beneficial Interest 52
Legal Counsel ............................ 52
Experts .................................. 52
Registration Statement ................... 52
Appendix ................................. 53
Financial Statements--November 30, 1994 . 58
</TABLE>
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 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, InterCapital Insured Municipal Securities,
InterCapital Insured California Municipal Securities, 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, Dean Witter
Global Utilities Fund, Dean Witter National Municipal Trust, Dean Witter High
Income Securities, Dean Witter International Small Cap Fund, Dean Witter
Mid-Cap Growth Fund, Dean Witter Select Dimensions Series, Dean Witter Global
Asset Allocation Fund, Dean Witter Balanced Income Fund, Dean Witter Balanced
Growth 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
3
<PAGE>
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 North
American Intermediate Income Trust, TCW/DW Global Convertible Trust, TCW/DW
Total Return Trust, TCW/DW Emerging Markets Opportunities Trust, 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 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
4
<PAGE>
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.
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, and during a portion of the fiscal year ended
November 30, 1994 (December 1, 1993 to January 1, 1994) 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. Additionally, during the fiscal year
ended November 30, 1994, the Investment Manager continued to waive management
fees and assume expenses with respect to the Massachusetts Series, Michigan
Series, Minnesota Series, New York Series and Ohio Series to the extent they
exceed 0.50% of the daily net assets of each respective Series and will continue
to waive such fees and assume such expenses to the extent they exceed 0.50% of
the daily net assets of each such respective Series until January 1996. 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. During the fiscal year ended November 30,
1994, 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 $198,139, $457,543,
$287,107, $62,634, $75,569, $40,379, $181,438, $54,392, $87,759 and $184,131,
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, 1992, 1993 and 1994
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
5
<PAGE>
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. At their meeting held on
April 8, 1994 the Fund's Trustees, including all of the Independent Trustees,
approved the continuation of the Agreement until April 30, 1995.
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 76 Dean Witter Funds and the 13 TCW/DW Funds are shown
below.
<TABLE>
<CAPTION>
NAME, AGE, POSITION WITH FUND AND
ADDRESS PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS
---------------------------------------- --------------------------------------------------------------------
<S> <C>
Jack F. Bennett (71) Retired; Director or Trustee of the Dean Witter Funds; formerly Senior
Trustee c/o Gordon Altman Vice President and Director of Exxon Corporation (1975-January, 1989)
Butowsky Weitzen Shalov & Wein and Under Secretary of the U.S. Treasury for Monetary Affairs (1974-1975);
Counsel to director of Philips Electronics N.V., Tandem Computers Inc. and Massachusetts
the Independent Trustees Mutual Life Insurance Co.; director or trustee of various not-for-profit
114 West 47th Street and business organizations.
New York, New York
Michael Bozic (54) President and Chief Executive Officer of Hills Department Stores (since
Trustee May, 1991); formerly Chairman and Chief Executive Officer (January,
c/o Hills Stores Inc. 1987-August, 1990) and President and Chief Operating Officer (August,
15 Dan Road 1990-February, 1991) of the Sears Merchandise Group of Sears, Roebuck
Canton, Massachusetts and Co.; Director or Trustee of the Dean Witter Funds; Director of Eaglemark
Financial Services, Inc., the United Negro College Fund and Domain Inc.
(home decor retailer).
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
NAME, AGE, POSITION WITH FUND AND
ADDRESS PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS
---------------------------------------- --------------------------------------------------------------------
<S> <C>
Charles A. Fiumefreddo* (61) Chairman, Chief Executive Officer and Director of InterCapital, Dean Witter
Chairman of the Distributors Inc. ("Distributors") and DWSC; Executive Vice President
Board, President, Chief Executive Officer and Director of DWR; Chairman, Director or Trustee, President and Chief
and Trustee Executive Officer of the Dean Witter Funds; Chairman, Chief Executive
Two World Trade Center Officers and Trustee of the TCW/DW Funds; Chairman and Director of Dean
New York, New York Witter Trust Company ("DWTC"); Director and/or officer of various DWDC
subsidiaries; formerly Executive Vice President and Director of DWDC (until
February 1993).
Edwin J. Garn (62) Director or Trustee of the Dean Witter Funds; formerly United States Senator
Trustee (R-Utah) (1974-1992) and Chairman, Senate Banking Committee (1980-1986);
c/o Huntsman formerly Mayor of Salt Lake City, Utah (1971-1974); formerly Astronaut,
Chemical Corporation Space Shuttle Discovery (April 12-19, 1985); Vice Chairman, Huntsman Chemical
2000 Eagle Gate Tower Corporation (since January, 1993); Member of the board of various civic
Salt Lake City, Utah and charitable organizations.
John R. Haire (70) Chairman of the Audit Committee and Chairman of the Committee of the
Trustee Independent Directors or Trustees and Director or Trustee of the Dean
Two World Trade Witter Funds; Trustee of the TCW/DW Funds; formerly President, Council
Center for Aid to Education (1978-October, 1989), Chairman and Chief Executive
New York, New York Officer of Anchor Corporation, an Investment Adviser (1964-1978); Director
of Washington National Corporation (insurance).
Dr. Manuel H. Johnson (46) Senior Partner, Johnson Smick International, Inc., a consulting firm;
Trustee Koch Professor of International Economics and Director of the Center for
c/o Johnson Smick International, Inc. Global Market Studies at George Mason University (since September, 1990);
1133 Connecticut Avenue, N.W. Co-Chairman and a founder of the Group of Seven Council (G7C), an international
Washington, D.C. 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 (71) Director or Trustee of the Dean Witter Funds; Chairman of the Audit Committee
Trustee and the Committee of the Independent Trustees and Trustee of the TCW/DW
c/o Gordon Altman Funds; formerly Chairman of the Financial Accounting Standards Advisory
Butowsky Weitzen Shalov & Wein Council and Chairman and Chief Executive Officer of the American Stock
Counsel to Exchange; Director of UCC Investors Holding Inc. (Uniroyal Chemical Company,
the Independent Trustees Inc.); director or trustee of various not-for profit organizations.
114 West 47th Street
New York, New York
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
NAME, AGE, POSITION WITH FUND AND
ADDRESS PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS
---------------------------------------- --------------------------------------------------------------------
<S> <C>
Michael E. Nugent (58) General Partner, Triumph Capital, L.P., a private investment partnership
Trustee (since April, 1988); Director or Trustee of the Dean Witter Funds; Trustee
c/o Triumph of the TCW/DW Funds; formerly Vice President, Bankers Trust Company and
Capital, L.P. BT Capital Corporation (September, 1984-March, 1988); Director of various
237 Park Avenue business organizations.
New York, New
York
Philip J. Purcell* (51) Chairman of the Board of Directors and Chief Executive Officer of DWDC,
Trustee DWR and Novus Credit Services Inc.; Director of InterCapital, DWSC and
Two World Distributors; Director or Trustee of the Dean Witter Funds; Director and/or
Trade Center officer of various DWDC subsidiaries.
New York, New York
John L. Schroeder (64) Executive Vice President and Chief Investment Officer of the Home Insurance
Trustee c/o The Home Company (since August, 1991); Director or Trustee of the Dean Witter Funds;
Insurance Company Director of Citizens Utilities Company; formerly Chairman and Chief
59 Maiden Lane Investment Officer of Axe-Houghton Management and the Axe-Houghton Funds
New York, (April, 1983-June, 1991) and President of USF&G Financial Services, Inc.
New York (June, 1990-June, 1991).
Sheldon Curtis (63) Senior Vice President, Secretary and General Counsel of InterCapital and
Vice President, Secretary DWSC; Assistant Secretary of DWR; Senior Vice President, Assistant Secretary
and General Counsel and Assistant General Counsel of Distributors; Senior Vice President and
Two World Trade Center Secretary of DWTC; and Vice President, Secretary and General Counsel of
New York, New York the Dean Witter Funds and the TCW/DW Funds.
James F. Willison (51) Senior Vice President of InterCapital; Vice President of various Dean
Vice President Witter Funds.
Two World Trade Center
New York, New York
Thomas F. Caloia (48) First Vice President (since May, 1991) and Assistant Treasurer (since
Treasurer January, 1993) of InterCapital; First Vice President and Assistant Treasurer
Two World Trade Center of DWSC and Treasurer of the Dean Witter Funds and the TCW/DW Funds; previously
New York, New York Vice President of InterCapital.
</TABLE>
* Denotes Trustees who are "interested persons" of the Fund, as defined
in the Act.
In addition, Robert M. Scanlan, President of InterCapital and Chief
Operating Officer of InterCapital and DWSC, Executive Vice President of
Distributors and DWTC and Director of DWTC, David A. Hughey, Executive Vice
President and Chief Administrative Officer of InterCapital, DWSC,
Distributors and DWTC and Director of DWTC 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 and Marilyn
K. Cranney, First Vice Presidents and Assistant General Counsels of
InterCapital, and 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 Independent Trustee an annual fee of $1,200 plus $50
for each meeting of the Board of Trustees or any Committee of the Board of
Trustees attended by the Trustee in person (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
8
<PAGE>
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.
BOARD OF TRUSTEES; RESPONSIBILITIES AND COMPENSATION OF INDEPENDENT TRUSTEES
As mentioned above under the caption "The Fund and its Management," the
Fund is one of the Dean Witter Funds, a group of investment companies managed
by InterCapital. As of the date of this Statement of Additional Information,
there are a total of 74 Dean Witter Funds, comprised of 114 portfolios. As of
December 31, 1994, the Dean Witter Funds had total net assets of
approximately $59.59 billion and more than five million shareholders.
The Board of Directors or Trustees, consisting of ten (10) directors or
trustees, is the same for each of the Dean Witter Funds. Some of the Funds
are organized as business trusts, others as corporations, but the functions
and duties of directors and trustees are the same. Accordingly, directors and
trustees of the Dean Witter Funds are referred to in this section as
Trustees.
Eight Trustees, that is, 80% of the total number, have no affiliation or
business connection with InterCapital or any of its affiliated persons and do
not own any stock or other securities issued by InterCapital's parent
company, DWDC. These are the "disinterested" or "independent" Trustees. Four
of the eight Independent Trustees are also Independent Trustees of the TCW/DW
Funds. As of the date of this Statement of Additional Information, there are
a total of 13 TCW/DW Funds. Two of the Funds' Trustees, that is, the
management Trustees, are affiliated with InterCapital.
As noted in a federal court ruling, "[T]he independent directors . . . are
expected to look after the interests of shareholders by 'furnishing an
independent check upon management,' especially with respect to fees paid to
the investment company's sponsor." In addition to their general "watchdog"
duties, the Independent Trustees are charged with a wide variety of
responsibilities under the Act. In order to perform their duties effectively,
the Independent Trustees are required to review and understand large amounts
of material, often of a highly technical and legal nature.
The Dean Witter Funds seek as Independent Trustees individuals of
distinction and experience in business and finance, government service or
academia; that is, people whose advice and counsel are valuable and in demand
by others and for whom there is often competition. To accept a position on
the Funds' Boards, such individuals may reject other attractive assignments
because of the demands made on their time by the Funds. Indeed, to serve on
the Funds' Boards, certain Trustees who would be qualified and in demand to
serve on bank boards would be prohibited by law from serving at the same time
as a director of a national bank and as a Trustee of a Fund.
The Independent Trustees are required to select and nominate individuals
to fill any Independent Trustee vacancy on the Board of any Fund that has a
Rule 12b-1 plan of distribution. Since most of the Dean Witter Funds have
such a plan, and since all of the Funds' Boards have the same members, the
Independent Trustees effectively control the selection of other Independent
Trustees of all the Dean Witter Funds.
GOVERNANCE STRUCTURE OF THE DEAN WITTER FUNDS
While the regulatory system establishes both general guidelines and
specific duties for the Independent Trustees, the governance arrangements
from one investment company group to another vary significantly. In some
groups the Independent Trustees perform their role by attendance at periodic
meetings of the board of directors with study of materials furnished to them
between meetings. At the other extreme, an investment company complex may
employ a full-time staff to assist the Independent Trustees in the
performance of their duties.
The governance structure of the Dean Witter Funds lies between these two
extremes. The Independent Trustees and the Funds' Investment Manager alike
believe that these arrangements are effective and serve the interests of the
Funds' shareholders. All of the Independent Trustees serve as members of the
Audit Committee and the Committee of the Independent Trustees. Three of them
also serve as members of the Derivatives Committee.
9
<PAGE>
The Committee of the Independent Trustees is charged with recommending to
the full Board approval of management, advisory and administration contracts,
Rule 12b-1 plans and distribution and underwriting agreements, continually
reviewing Fund performance, checking on the pricing of portfolio securities,
brokerage commissions, transfer agent costs and performance, and trading
among Funds in the same complex, and approving fidelity bond and related
insurance coverage and allocations, as well as other matters that arise from
time to time.
The Audit Committee is charged with recommending to the full Board the
engagement or discharge of the Fund's independent accountants; directing
investigations into matters within the scope of the independent accountants'
duties, including the power to retain outside specialists; reviewing with the
independent accountants the audit plan and results of the auditing
engagement; approving professional services provided by the independent
accountants and other accounting firms prior to the performance of such
services; reviewing the independence of the independent accountants;
considering the range of audit and non-audit fees; reviewing the adequacy of
the Fund's system of internal controls; advising the independent accountants
and Management personnel that they have direct access to the Committee at all
times; and preparing and submitting Committee meeting minutes to the full
Board.
Finally, the Board of each Fund has established a Derivatives Committee to
establish parameters for and oversee the activities of the Fund with respect
to derivative investments, if any, made by the Fund.
During the calendar year ended December 31, 1994, the three Committees
held a combined total of eleven meetings. The Committee meetings are
sometimes held away from the offices of InterCapital and sometimes in the
Board room of InterCapital. These meetings are held without management
directors or officers being present, unless and until they may be invited to
the meeting for purposes of furnishing information or making a report. These
separate meetings provide the Independent Trustees an opportunity to explore
in depth with their own independent legal counsel, independent auditors and
other independent consultants, as needed, the issues they believe should be
addressed and resolved in the interests of the Funds' shareholders.
DUTIES OF CHAIRMAN OF COMMITTEES
The Chairman of the Committees maintains an office at the Funds'
headquarters in New York. He is responsible for keeping abreast of regulatory
and industry developments and the Funds' operations and management. He
screens and/or prepares written materials and identifies critical issues for
the Independent Trustees to consider, develops agendas for Committee
meetings, determines the type and amount of information that the Committees
will need to form a judgment on the issues, and arranges to have the
information furnished. He also arranges for the services of independent
experts to be provided to the Committees and consults with them in advance of
meetings to help refine reports and to focus on critical issues. Members of
the Committees believe that the person who serves as Chairman of all three
Committees and guides their efforts is pivotal to the effective functioning
of the Committees.
The Chairman of the Committees also maintains continuous contact with the
Funds' management, with independent counsel to the Independent Trustees and
with the Funds' independent auditors. He arranges for a series of special
meetings involving the annual review of investment management and other
operating contracts of the Funds and, on behalf of the Committees, conducts
negotiations with the Investment Manager and other service providers. In
effect, the Chairman of the Committees serves as a combination of chief
executive and support staff of the Independent Trustees.
The Chairman of the Committees is not employed by any other organization
and devotes his time primarily to the services he performs as Committee
Chairman and Independent Trustee of the Dean Witter Funds and as an
Independent Trustee of the TCW/DW Funds. The current Committee Chairman has
had more than 35 years experience as a senior executive in the investment
company industry.
VALUE OF HAVING SAME INDIVIDUALS AS INDEPENDENT TRUSTEES FOR ALL DEAN WITTER
FUNDS
The Independent Trustees and the Funds' management believe that having the
same Independent Trustees for each of the Dean Witter Funds is in the best
interests of all the Funds' shareholders. This
10
<PAGE>
arrangement avoids the duplication of effort that would arise from having
different groups of individuals serving as Independent Trustees for each of
the Funds or even of sub-groups of Funds. It is believed that having the same
individuals serve as Independent Trustees of all the Funds tends to increase
their knowledge and expertise regarding matters which affect the Fund complex
generally and enhances their ability to negotiate on behalf of each Fund with
the Fund's service providers. This arrangement also precludes the likelihood
of separate groups of Independent Trustees arriving at conflicting decisions
regarding operations and management of the Funds and avoids the cost and
confusion that would likely ensue. Finally, it is believed that having the
same Independent Trustees serve on all Fund Boards enhances the ability of
each Fund to obtain, at modest cost to each separate Fund, the services of
Independent Trustees, and a Chairman of their Committees, of the caliber,
experience and business acumen of the individuals who serve as Independent
Trustees of the Dean Witter Funds.
COMPENSATION OF INDEPENDENT TRUSTEES
The Fund pays each Independent Trustee an annual fee of $1,200 plus a per
meeting fee of $50 for meetings of the Board of Trustees or committees of the
Board of Trustees attended by the Trustee (the Fund pays the Chairman of the
Audit Committee an 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 serving for at least five years (or such lesser
period as may be determined by the Board) as an Independent Director or
Trustee of any Dean Witter Fund that has adopted the retirement program (each
such Fund referred to as an "Adopting Fund" and each such Trustee referred to
as an "Eligible Trustee") is entitled to retirement payments upon reaching
the eligible retirement age (normally, after attaining age 72). Annual
payments are based upon length of service. Currently, upon retirement, each
Eligible Trustee is entitled to receive from the Fund, commencing as of his
or her retirement date and continuing for the remainder of his or her life,
an annual retirement benefit (the "Regular Benefit") equal to 28.75% of his
or her Eligible Compensation plus 0.4791666% of such Eligible Compensation
for each full month of service as an Independent Director or Trustee of any
Adopting Fund in excess of five years up to a maximum of 57.50% after ten
years of service. The foregoing percentages may be changed by the Board.((1))
"Eligible Compensation" is one-fifth of the total compensation earned by such
Eligible Trustee for service to the Fund in the five year period prior to the
date of the Eligible Trustee's retirement. Benefits under the retirement
program are not secured or funded by the Fund. As of the date of this
Statement of Additional Information, 58 Dean Witter Funds have adopted the
retirement program.
---------------
(1) An Eligible Trustee may elect alternate payments of his or her
retirement benefits based upon the combined life expectancy of such
Eligible Trustee and his or her spouse on the date of such Eligible
Trustee's retirement. The amount estimated to be payable under this
method, through the remainder of the later of the lives of such
Eligible Trustee and spouse, will be the actuarial equivalent of the
Regular Benefit. In addition, the Eligible Trustee may elect that the
surviving spouse's periodic payment of benefits will be equal to
either 50% or 100% of the previous periodic amount, an election that,
respectively, increases or decreases the previous periodic amount so
that the resulting payments will be the actuarial equivalent of the
Regular Benefit.
11
<PAGE>
The following table illustrates the estimated retirement benefits for the
Fund's Independent Trustees as of November 30, 1994. No payments under such
program were made to such persons during the fiscal year ended November 30,
1994.
<TABLE>
<CAPTION>
FUND COMPENSATION
------------------------------------
AGGREGATE RETIREMENT
COMPENSATION FROM BENEFITS ACCRUED
NAME OF INDEPENDENT TRUSTEE THE FUND AS FUND EXPENSES
------------------------------ ----------------- -----------------
<S> <C> <C>
Jack F. Bennett ............... $1,359 $1,753
Michael Bozic ................. 861 0
Edwin J. Garn ................. 1,351 524
John R. Haire ................. 3,561(4) 4,399
Dr. Manuel H. Johnson ......... 1,315 209
Paul Kolton ................... 1,384 2,265
Michael E. Nugent ............. 1,235 394
John L. Schroeder ............. 889 0
<CAPTION>
ESTIMATED RETIREMENT BENEFITS
-------------------------------------------------------------------------
ESTIMATED CREDITED ESTIMATED ESTIMATED
YEARS OF SERVICE PERCENTAGE OF ESTIMATED ANNUAL BENEFITS
AT RETIREMENT ELIGIBLE ELIGIBLE UPON
NAME OF INDEPENDENT TRUSTEE (MAXIMUM 10) COMPENSATION COMPENSATION((2)) RETIREMENT((3))
------------------------------ ------------------ ----------------- ----------------- ---------------
<S> <C> <C> <C> <C>
Jack F. Bennett ............... 8 46.0% $1,273 $ 585
Michael Bozic ................. 10 57.5 1,950 1,121
Edwin J. Garn ................. 10 57.5 1,950 1,121
John R. Haire ................. 10 57.5 4,193 2,411
Dr. Manuel H. Johnson ......... 10 57.5 1,950 1,121
Paul Kolton ................... 9 51.3 1,045 536
Michael E. Nugent ............. 10 57.5 1,950 1,121
John L. Schroeder ............. 8 47.9 1,950 934
</TABLE>
[FN]
(2) Based on current levels of compensation.
(3) Based on current levels of compensation. amount of annual benefits
also varies depending on the trustee's elections described in
footnote (1) above.
(4) Of Mr. Haire's compensation from the fund, $3,400 is paid to him as
Chairman of the Committee of the independent trustees ($2,400) and as
Chairman of the Audit Committee ($1,000).
CASH COMPENSATION FROM DEAN WITTER FUNDS AND TCW/DW FUNDS
The following table illustrates the compensation paid to the Fund's
Independent Trustees for the calendar year ended December 31, 1994 for
services to the 73 Dean Witter Funds and, in the case of Messrs. Haire,
Johnson, Kolton and Nugent, the 13 TCW/DW Funds that were in operation at
December 31, 1994. With respect to Messrs. Haire, Johnson, Kolton and Nugent,
the TCW/DW Funds are included solely because of a limited exchange privilege
between those Funds and five Dean Witter Money Market Funds.
<TABLE>
<CAPTION>
FOR SERVICE AS
FOR SERVICE AS CHAIRMAN OF TOTAL CASH
DIRECTOR OR FOR SERVICE AS COMMITTEES OF COMPENSATION
TRUSTEE AND TRUSTEE AND INDEPENDENT FOR SERVICES TO
COMMITTEE MEMBER COMMITTEE MEMBER DIRECTORS/ 73 DEAN WITTER
NAME OF INDEPENDENT OF 73 DEAN WITTER OF 13 TCW/DW TRUSTEES AND FUNDS AND 13
TRUSTEE FUNDS FUNDS AUDIT COMMITTEES TCW/DW FUNDS
-------------------------- ----------------- ---------------- ---------------- ---------------
<S> <C> <C> <C> <C>
Jack F. Bennett ........... $125,761 -- -- $125,761
Michael Bozic ............. 82,637 -- -- 82,637
Edwin J. Garn ............. 125,711 -- -- 125,711
John R. Haire ............. 101,061 $66,950 $225,563((5)) 393,574
Dr. Manuel H. Johnson .... 122,461 60,750 -- 183,211
Paul Kolton ............... 128,961 51,850 34,200((6)) 215,011
Michael E. Nugent ......... 115,761 52,650 -- 168,411
John L. Schroeder ......... 85,938 -- -- 85,938
<FN>
((5)) For the 73 Dean Witter Funds.
((6)) For the 13 TCW/DW Funds.
</TABLE>
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 of
beneficial interest outstanding.
12
<PAGE>
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, 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.
13
<PAGE>
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 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
14
<PAGE>
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).
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
15
<PAGE>
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, 1994, 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.
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
16
<PAGE>
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,
1994, 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 sale 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.
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.
17
<PAGE>
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 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.
18
<PAGE>
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.
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
19
<PAGE>
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.
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
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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 Nordlinger 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 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 a 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
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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 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.
The State is a party to numerous legal proceedings, many of which normally
occur in governmental operations. In addition, the State is involved in
certain other legal proceedings that, if decided against the State, might
require the State to make significant future expenditures or impair future
revenue sources. Two such court cases may upset California's budgetary
balance. In 1992-93 and 1993-94, the State met part of its Proposition 98
commitment to education through $1.8 billion in off-book loans. These loans
were held to be illegal in a lower court decision, California Teachers
Association v. Gould. If this decision is upheld on appeal, the schools will
not be required to repay these loans, and the officially recognized 1994-95
year-end deficit would increase by $1.8 billion. In July, 1994, a federal
appeals court invalidated the Bush Administration's approval of a 5.8%
welfare benefits cut imposed in December, 1992. The ruling
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could also nullify a further 2.7% reduction approved in 1993 and a 2.3%
reduction scheduled to go into effect in September, 1994. It has been
estimated that, if the ruling is upheld on appeal, it could cost the State up
to $175 million per year in additional welfare benefit payments.
Since 1990, California has faced the worst economic, fiscal and budget
conditions since the 1930s. After experiencing strong growth throughout much
of the 1980s, the State was adversely affected by the national recession and
cutbacks in aerospace and defense spending, both of which had a severe impact
on the economy in Southern California. Although the national economic
recovery continued at a strong pace in the third quarter of 1994, California
is still experiencing the effects of the recession. However, the State's
budget for fiscal year 1994-95 assumes that the State will begin to recover
from recessionary conditions in 1994, with a modest upturn in 1994 and
continuing in 1995.
On July 8, 1994, the Governor signed into law a $57.5 billion budget
which, among other things, (a) reduces welfare grants and aid to families and
to the aged, blind and disabled, and (b) relies on the State's ability to
obtain $2.8 billion in new reimbursement from the federal government for the
State's cost of serving illegal immigrants. Although the State legislature
has passed a standby measure which could trigger automatic budget reductions
if the State's fiscal condition worsens over the next two years, the
stability of the budget would be jeopardized if the State is unable to obtain
the hoped-for federal funds.
The current budget includes General Fund spending of $40.9 billion, up
4.2% from the level of spending during the 1993-94 fiscal year. The budget
also envisions General Fund spending climbing another 8.4% in the 1995-96
fiscal year. The budget forecasts levels of revenues and expenditures which
will result in operating surpluses in both 1994-95 and 1995-96, leading to
the elimination of an estimated $2.0 billion accumulated budget deficit by
June 30, 1996.
Although an improving economy and healthier tax revenues are anticipated,
the political environment and voter initiatives may constrain the State's
financial flexibility. For example, according to the Legislative Analyst's
Office the passage of Proposition 187 in the November 1994 election, which in
part denies certain social services to illegal immigrants, could jeopardize
$15 billion in federal funding. In addition, the passage of Proposition 184
in the November 1994 election, which imposes mandatory, lengthy prison
sentences on individuals convicted of three felonies, is expected to increase
prison operating costs by $3 billion annually and increase prison
construction costs by $20 billion.
Because of the State of California's continuing budget problems, the
State's General Obligation bonds were downgraded in July 1994 from Aa to A1
by Moody's, from A+ to A by Standard & Poor's, and from AA to A by Fitch
Investors Service, Inc. All three rating agencies expressed uncertainty in
the State's ability to balance its budget by 1996.
On December 6, 1994, Orange County became the largest municipality in the
United States to file for protection under the Federal bankruptcy laws. The
filing stemmed from approximately $1.7 billion in losses suffered by the
County's investment pool due to investments in high risk "derivative"
securities. Over 185 public agencies had funds invested in the pool, and
these funds may be accessed only with permission of the bankruptcy court. It
is unclear whether the State will lend financial or other assistance to
Orange County to prevent the County from defaulting on its other obligations.
The bipartisan Commission on State Finance believes that, although it may
carry long-term implications for the City of Los Angeles, the earthquake
which struck Northridge, California on January 17, 1994 will not derail the
State's economic recovery.
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 Massachusetts had a strong
economy which was evidenced by low unemployment and high personal income
growth as compared to national trends.
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Economic growth in the Commonwealth slowed from 1988 to 1992, however, as the
Commonwealth experienced a significant economic slowdown, with particular
deterioration in the construction, real estate, financial, insurance and
manufacturing sectors, including certain high technology areas. Economic
activity began to improve in 1993 and continued to improve in 1994,
particularly in the construction and service sectors as well as in housing
sales. 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. Unemployment fell an
additional 2% to 6.4% at the end of fiscal 1994 as compared to the national
average of 5.8%.
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 $1.362 billion, respectively. The Commonwealth
achieved budget surpluses in each of fiscal 1991, 1992, 1993 and 1994. In
fiscal 1994 year end, revenues exceeded expenditures by a significant amount
for the third consecutive year. 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 and 1994 tax revenues increased to account
for approximately 45% of all revenues and financing sources. Fiscal 1993 tax
revenues are forecasted to further increase approximately 6%; 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 to10 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 from the 1981 level of $1.632 billion to the fiscal 1989 level of
$2.9 billion; however, direct local aid dropped in fiscal 1991 and 1992 to
approximately $2.6 billion and $2.3 billion, respectively. Fiscal 1993 and
1994 direct aid increased to $2.5 billion and $2.7 billion, respectively.
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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.
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 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.
Economy. The principal sectors of Michigan's economy are manufacturing of
durable goods manufacturing (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 14.2% in 1993. However,
manufacturing (including auto-related manufacturing) continues to be an
important part of Michigan's economy. Those industries are highly cyclical
and are expected to operate at substantially less than full capacity in 1995.
Historically, during periods of economic decline or slow economic growth, the
cyclical nature of those industries has adversely affected the revenue
streams of Michigan and its political subdivisions because it has adversely
impacted certain tax sources, particularly sales taxes, income taxes and
single business taxes. Income per capita in Michigan is approximately one
percent less than the national average. Recently, contrary to the historical
trend, the average monthly unemployment rate in Michigan has been slightly
lower 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. Approximately 59% of
General Fund revenues are obtained from the payment of state taxes and
approximately 41% are obtained 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
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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 assistance programs in Michigan, 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 year 1988-89 with a General Fund surplus of $61.1
million. Michigan ended fiscal years 1989-90 and 1990-91 with 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 General Fund budget. Michigan ended fiscal years
1991-92 and 1992-93 with General Fund surpluses of $24 million and $280.1
million, respectively. During fiscal years 1990-91 and 1991-92, Michigan
utilized $230 million and $170.1 million, respectively, from its BSF to add
to the General Fund balances in those years. In fiscal year 1992-93, the
State of Michigan made a deposit of $312.2 million into the BSF, the first
since 1986. The unreserved balances for the BSF as of the end of fiscal years
1990-91, 1991-92 and 1992-93 were $182.2 million, $20.1 million and $303.4
million, respectively.
In fiscal year 1993-94, General Fund revenues increased by approximately
$500 million, an increase of approximately 6.6%, from the amount of revenues
collected during fiscal year 1992-93. The final amount of the General Fund
surplus will not be known until the State closes its books for fiscal year
1993-94 in late January 1995. The State of Michigan, however, has already
transferred approximately $345 million into the BSF out of the surpluses from
all of its funds for fiscal year 1993-94. In June 1994, the Michigan
Legislature adopted the budget for fiscal year 1994-95. As of January 12,
1995, the State of Michigan estimated that, in the absence of any future tax
cuts, the aggregate of the surpluses in all of its funds at the end of fiscal
year 1994-95 would be approximately $295 million.
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 school loan purposes, which as of September 30, 1993
totalled approximately $421 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 $440 million remained to be issued as of September 30, 1993. On
December 16, 1993, the State issued $16.67 million in general obligation
bonds to provide the State with matching funds in connection with federal
capitalization grants received from the State's Revolving Fund Program. On
October 11, 1994, the State of Michigan issued $65 million in short-term
general obligation school loan notes for the purpose of providing funds for
making loans to school districts and renewing the principal and interest of
certain prior notes. Those notes mature on April 11, 1995.
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.
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 June 17, 1992, the trial court in the consolidated cases of Grand
Traverse County, et al. v. The State of Michigan, et al., issued a written
opinion which ruled that the State of Michigan must, under a State statute,
pay for the cost of operating all courts in the State. However, the Court
rejected plaintiffs'
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claim that the State Constitution also compelled the State to pay the costs
of all courts. On January 5, 1994, the Court of Appeals entered a decision
which affirmed the trial court, but modified the trial court's decision by
holding that there shall be no determination of money damages. Both parties
have filed applications for leave to appeal in the Michigan Supreme Court. No
calculation of the amount due, if any, under the Court's decision will be
made until all appeals are exhausted. Similar litigation entitled Alcona
County, et al. v. The State of Michigan, et al. has been filed in the Court
of Claims raising the same issues. However, the claims there cover a shorter
time period. On August 10, 1994, the trial court issued a written opinion
against ruling that the State must, under a State statute, pay for the cost
of operating the courts in the State, while rejecting plaintiff's
constitutional claim. An appeal of this decision will be taken upon the entry
of a final order.
Property Tax Initiatives. On March 15, 1994, Michigan voters approved a
property tax and school finance reform measure known as Proposal A. Under
Proposal A, as approved, effective May 1, 1994, the State sales and use tax
increased from 4% to 6%, the State income tax decreased from 4.6% to 4.4%,
the cigarette tax was increased from $.25 to $.75 per pack and an additional
tax of 16% of the wholesale price began to be imposed on certain other
tobacco products. A .75% real estate transfer tax became effective on January
1, 1995. Beginning in 1994, a State of Michigan property tax of 6 mills began
to be imposed on all real and personal property currently subject to the
general property tax. All local school boards are authorized, with voter
approval, to levy up to the lesser of 18 mills or the number of mills levied
in 1993 for school operating purposes on nonhomestead property. Proposal A
contains additional provisions regarding the ability of local school
districts to levy taxes as well as a limit on assessment increases for each
parcel of property, beginning in 1995, to the lesser of 5% or the rate of
inflation. When property is subsequently sold, its assessed value will revert
to the current assessment level of 50% of true cash value. Under Proposal A,
much of the additional revenue generated by the new taxes will be dedicated
to the State's School Aid Fund. Proposal A shifts significant portions of the
cost of local school operations from local school districts to the State of
Michigan and raises additional State revenues to fund those additional State
expenses. Those additional revenues will be included within the State's
constitutional revenue limitations and may impact the State's ability to
raise additional revenues in the future.
Ratings. As of January 25, 1995, Michigan's general obligation bonds were
rated "A1" by Moody's Investors Service, "AA" by Standard & Poor's Ratings
Group and "AA" by Fitch Investors Service. 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 matters not directly
impacting the State.
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.
During the 1990 and 1991 fiscal years, the rate of economic growth in the
City slowed substantially and 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. Employment losses moderated and real Gross City
Product increased, boosted by strong wage gains. The City now projects, and
its current four-year financial plan assumes, that the City's economic growth
will slow in calendar years 1995 and 1996 with
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local employment increasing modestly. In December 1994, the City experienced
substantial shortfalls in payments of non-property tax revenues from those
forecasted. Through December 1994, collections of non-property taxes were
approximately $200 million lower than expected.
For each of the 1981 through 1994 fiscal years, the City achieved balanced
operating results as reported in accordance with generally accepted
accounting principles ("GAAP") and the City's 1995 fiscal year results are
projected to be balanced in accordance with GAAP. The City was required to
close substantial budget gaps in recent fiscal years in order to maintain
balanced operating results. For fiscal year 1995, the City adopted a budget
which halted the trend in recent years of substantial increases in City
spending from one year to the next.
1995-1998 New York City Financial Plan. The Mayor is responsible for
preparing the City's four-year financial plan (the "1995-1998 Financial
Plan," the "Financial Plan" or "City Plan"). The Financial Plan is a proposed
modification to a financial plan submitted to the Control Board on July 8,
1994 (the "July Financial Plan").
The July Financial Plan set forth proposed actions for the 1995 fiscal
year to close a previously projected gap of approximately $2.3 billion for
the 1995 fiscal year, which included City actions aggregating $1.9 billion, a
$288 million increase in State actions over the 1994-1995 fiscal years, and a
$200 million increase in Federal assistance.
The 1995-1998 Financial Plan reflects actual receipts and expenditures and
changes in forecast revenues and expenditures since the July Financial Plan
and projects revenues and expenditures for the 1995 fiscal year balanced in
accordance with GAAP. The City Plan includes actions to offset an additional
$1.1 billion budget gap resulting principally from a decrease in the
projected surplus from the 1994 fiscal year to be transferred to the 1995
fiscal year; reductions from projected tax revenues for the 1995 fiscal year;
increased City pension contributions resulting from lower than expected
earnings on pension fund assets for the 1994 fiscal year; a shortfall in the
projected increased Federal assistance due primarily to the failure to enact
national health care reform; and other decreases in projected revenues and
increases in projected expenditures. The gap-closing actions for the 1995
fiscal year include agency actions, including, reduced personal service costs
resulting from a reduction in the number of City employees; greater
miscellaneous revenues than forecasted; availability of funds from reserves
held for unreported health insurance claims; and expenditure reductions,
including for the Police Department, the Department of Corrections and in
subsidies and allocations to certain City agencies.
The City Plan also sets forth projections for the 1996 through 1998 fiscal
years and outlines a proposed gap-closing program to close projected budget
gaps of $1.0 billion, $1.5 billion and $2.0 billion for the 1995 through 1997
years, respectively, after successful implementation of the $1.1 billion
gap-closing program for the 1995 fiscal year. These projections take into
account expected increases in Federal and State assistance. These include the
proposed extension of the 14% personal income tax surcharge beyond calendar
year 1995 and the proposed extension of the 12.5% personal income tax
surcharge beyond calendar year 1996 and proposed tort reform. The projections
also assume agreement with the City's unions with respect to savings to be
derived from efficiencies in management of employee health insurance programs
and other health benefit related services for each of the 1996 through 1998
fiscal years. The City Plan assumes the continuation of the current
assumption with respect to wages for City employees and the assumed 9%
earnings on pension fund assets affecting the City's pension fund
contributions. An actuarial audit of the City's pension system is currently
being conducted, which is expected to significantly increase the City's
pension costs.
Various actions proposed in the City Plan 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 certain of the City's proposals for the State
assumption of certain Medicaid costs and mandate relief 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.
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Based on currently available results, the Mayor's office of Management and
Budget ("OMB") believes that developments since the publication of the
Financial Plan on October 25, 1994, have caused an additional $650 million
budget gap in the 1995 fiscal year and have caused the $1.0 billion gap
projected in the Financial Plan for the 1996 fiscal year to increase to $2.5
billion. In February, the Mayor is expected to publish a modification to the
Financial Plan for the City's 1995 through 1998 fiscal years (the "February
Modification") and a preliminary budget for the City's 1996 fiscal year. The
February Modification will reflect changes since the Financial Plan including
measures to be taken to assure balance in the 1995 fiscal year described
above and the City's program to address the currently forecast gap of
approximately $2.5 billion in fiscal year 1996. It can be expected that the
proposal contained in the February Modification to close the projected budget
gaps for the 1995 and 1996 fiscal years will engender substantial public
debate, and that the public debate relating to the 1996 fiscal year budget
will continue through the time the budget is scheduled to be adopted in June
1995.
The City depends on the State for State aid both to enable the City to
balance its budget and to meet its cash requirements. The State completed its
1994 fiscal year with a cash-basis balanced budget in its General Fund (the
major operating fund of the State) after depositing $1.5 billion in various
reserve funds. The State's 1994-1995 Financial Plan projects a balanced
General Fund, although it has been reported that the State expects a revenue
shortfall in its General Fund for its 1994-1995 fiscal year. There can be no
assurance that there will not be reduction in State aid to the City from
amounts currently projected or that the State budgets in future fiscal years
will be adopted by the April 1 statutory deadline and that such reductions or
delays will not have adverse effects on the City's cash flow or expenditures.
If the State experiences revenue shortfalls or spending increases beyond its
projections during its 1995 fiscal year or subsequent years, such
developments could result in reductions in anticipated State aid to the City.
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 absence of wage increases for City employees in
excess of the increases assumed in the City Plan, provision of State and
Federal aid and mandate relief, including the proposed State takeover of
certain Medicaid costs; approval of the proposed continuation of the personal
income tax surcharge; the ability of the City to implement proposed
reductions in City personnel and other cost reduction initiatives, which may
require, in certain cases, the cooperation of the City's municipal unions;
the success with which the City controls expenditures; 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 1995 through 1998 contemplates the
issuance of $10.7 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.
Ratings
On January 17, 1995, Standard & Poor's ("S&P") placed the City's general
obligation bonds on CreditWatch with negative implications. S&P stated that
it will review the February Modification for
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evidence of continued progress toward long-term structural balance, and
eventual elimination of these types of budget devices, as well as the next
State budget proposal, to determine the extent of the City's relief from
State mandates in education, social services, and health care expenditures.
S&P stated that by April 15, 1995, financial plans, which continue to
incorporate budget devices, or fail to reflect ongoing budget relief from the
State, will result in a lowering of the rating to the "BBB" category for New
York City's general obligation bonds. Since February 1991, Moody's has rated
the City's general obligation bonds Baa1. 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 September 30, 1994, the City and the Municipal Assistance
Corporation for the City of New York had, respectively, $21.673 billion and
$4.146 billion of outstanding net long-term debt.
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, 1994, the City
estimated its potential future liability on account of all outstanding claims
against it to be approximately $2.6 billion.
NEW YORK STATE
The 1994 Election. On November 8, 1994, George Pataki was elected by the
voters of the State to replace Mario Cuomo as Governor upon the expiration of
Mr. Cuomo's four-year term on December 31, 1994. The Annual Information
Statement, dated June 28, 1994 (the "Information Statement") furnished by the
State indicates that the Information Statement will be updated on a quarterly
basis, on or about August 1, November 1 and February 1. Due to the change in
the State administration, it is anticipated that the February update, which
is being prepared by members of Mr. Pataki's staff, will contain revisions of
many of the projections reflected in the Information Statement and the August
and November updates. Accordingly, much of the following information,
especially information concerning future projections, which is derived from
the Information Statement and the updates thereto, will no longer be accurate
following the publication of the February update. As of February 17, 1995,
the February update to the Information was not yet available from the State
Division of the Budget.
Recent Developments. The national economy began to expand in 1991,
although the growth rate for the first two years of the expansion was modest
by historical standards. The State economy remained in recession until 1993,
when employment growth resumed. Since early 1993, the State has gained
approximately 100,000 jobs. Employment growth has been hindered during recent
years by significant cutbacks in the computer and instrument manufacturing,
utility, and defense industries. Personal income increased substantially in
1992 and 1993, aided significantly by large bonus payments in banking and
financial industries.
The 1994-1995 New York State Financial Plan (the "State Plan") is based on
a projection that New York's economy was expected to expand during 1994.
Industries that export goods and services to the rest of the country and
abroad are expected to benefit from growing national and international
markets. Both upstate and downstate regions are expected to continue to share
in this renewed growth. Employment was expected to increase throughout 1994
and is expected to increase in 1995 as well. It is anticipated that
employment growth will moderate in 1995 when the pace of national economic
growth is projected to slacken and entire industries adjust to changing
markets and the State's economy absorbs the full impact of these
developments. Personal income was estimated to increase by 5.3 percent in
1994, and is estimated to increase at a more moderate rate in 1995.
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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 1994-95 fiscal year, with corresponding material and adverse
effects on the State's projections of receipts and disbursements.
1994-95 Fiscal Year. The State's General Fund (the major operating fund of
the State) was projected in the State Plan to be balanced on a cash basis for
the 1994-95 fiscal year. The State Plan projected General Fund receipts and
transfers from other funds at $34.321 billion, an increase of $2.092 billion
over total receipts in the prior fiscal year, and disbursements and transfers
to other funds at $34.248 billion, an increase of $2.351 billion over the
total amount disbursed and transferred in the prior fiscal year.
The State issued its second quarterly update to the cash-basis 1994-95
State Financial Plan on October 28, 1994. Revisions have been made to
estimates of both receipts and disbursements in the General Fund, based on:
(1) updated economic forecasts for both the nation and the State, (2) an
analysis of actual receipts and disbursements through the first six months of
the fiscal year, and (3) an assessment of changing program requirements and
cost-savings initiatives. The update projects a year-end surplus of $14
million in the General Fund, with estimated receipts reduced by $267 million
and estimated disbursements reduced by $281 million, compared to the State
Financial Plan as initially formulated.
The Information Statement indicated that 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. There can be no assurance, however, that the State's
actions will be sufficient to preserve budgetary balance in a given fiscal
year or to align recurring receipts and disbursements in future fiscal years.
The November 4 update to the Information Statement states that the major
uncertainties in the 1994-95 State Plan continue to be those related to the
economy and tax collections, and could produce either favorable or
unfavorable variances during the balance of the year. While adjustments to
the forecast have been made to reflect emerging relative weakness in the
financial services industry, due in large part to currency and credit market
volatility, it is possible that the weakness in that sector could precipitate
further deterioration in State receipts. On the other hand, recent evidence
suggests that the national economy may perform better than projected, with
potentially beneficial short-term results on State receipts.
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 November 4, 1994, LGAC had issued bonds to provide net proceeds of
$3.856 billion and was authorized to issue its bonds to provide net proceeds
of up to an additional $315 million during the State's 1994-95 fiscal year.
The impact of the borrowings together with the availability of certain cash
reserves is that, for the first time in nearly 35 years, the State Plan
included no seasonal short-term borrowing.
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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: (i) the General Fund,
which receives all income not required by law to be deposited in another fund
and which for the State's 1994-95 fiscal year is expected to account for
approximately 52% of total projected governmental fund receipts and 51% of
total projected government fund disbursements; (ii) 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 are expected to comprise approximately 39% of
total projected governmental funds receipts and disbursements in the 1994-95
fiscal year; (iii) Capital Projects Funds, used to finance the acquisition,
construction and rehabilitation of major capital facilities by the State and
to aid in certain of such projects conducted by local governments or public
authorities; and which are expected to comprise 5% of total governmental
receipts and 6% of total governmental disbursements in the State's 1994-1995
fiscal year; and (iv) 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 Debt Service Funds are expected to comprise 4% of total projected
governmental funds receipts and disbursements in the 1994-95 fiscal year.
Taxation and Economic Incentives. Although the State ranks 22nd in the
nation for its State tax burden, the State has the second highest combined
state and local tax burden in the United States. The State and localities
have used these taxes to develop and maintain their respective transportation
networks, 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, may have contributed to the decisions of some
businesses and individuals to relocate outside, or not locate within, the
State. To stimulate economic growth, the State has developed programs,
including the provision of direct financial assistance, designed to assist
businesses to expand existing operations located within the State and to
attract new businesses to the State. In addition, the State has provided
various tax incentives to encourage business relocation and expansion.
The 1994-1995 budget contains a significant investment in efforts to spur
economic growth. These efforts include provisions to reduce the level of
business taxation in New York such as cuts in the corporate tax surcharge,
the alternative minimum tax imposed on business, repeal of the State's hotel
occupancy tax and reductions in the real property gains tax to stimulate
construction and facilitate the real estate industry's access to capital. To
help strengthen the State's economic recovery, the 1994-1995 budget also
includes more than $200 million in additional funding for economic
development programs.
Authorities. The fiscal stability of the State is related to the fiscal
stability of its public authorities (i.e. public benefit corporations created
pursuant to State law, other than local authorities), which generally have
responsibility for financing, constructing and operating revenue-producing
public benefit facilities. The State's public authorities ("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, 1993, the latest data available, there were 18
Authorities that had outstanding debt of $100 million or more and the
aggregate outstanding debt, including refunding bonds, of these 18
Authorities was $63.5 billion.
Authorities are generally supported by revenues generated by the projects
financed or operated, such as tolls charged for the use of highways, bridges
or tunnels, rentals charged for housing units and charges for occupancy at
medical care facilities. In addition, State legislation authorizes several
financing techniques for the Authorities, including lease-purchase and
contractual-obligation financing and moral obligation financing. There are
also statutory arrangements providing for State local assistance payments
otherwise payable to localities to be made under certain circumstances to the
Authorities. Although the State has no obligation to provide additional
assistance to localities whose local assistance payments have been paid to
public authorities under these arrangements, if local assistance payments are
diverted, the affected localities could seek additional State assistance. The
State has, in the past, 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
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moral obligation indebtedness or otherwise, for debt service. The State has
not been called upon to make any payments pursuant to any moral obligations
since the 1986-87 fiscal year and no such requirements are anticipated during
the 1994-95 fiscal year.
Ratings. On January 6, 1992, Moody's announced that it had put New York
State's general obligation debt rated A under review for possible downgrade
in the coming months. On June 27, 1994, Moody's reconfirmed its A rating on
the State's general obligation long-term indebtedness. On January 13, 1992,
S&P changed its ratings of all of the State's outstanding 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 general
obligation debt. On April 26, 1993, S&P raised its outlook positive. On June
27, 1994, S&P confirmed its A-rating. 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 Obligation Debt. As of March 31, 1994, the State had outstanding
approximately $5.370 billion in general obligation bonds, including $224
million in bond anticipation notes outstanding. Principal and interest due on
general obligation bonds and interest due on bond anticipation notes and on
tax and revenue anticipation notes were $782.5 million for the 1992-93 fiscal
year and are estimated to be $786.3 million for the State's 1994-95 fiscal
year, not including interest on State General Obligation Refunding Bonds,
issued in July 1992, to the extent that such interest was 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. These proceedings could affect adversely the financial condition of the
State in the 1994-1995 fiscal year or thereafter.
The State believes that the 1994-1995 State Financial Plan includes
sufficient reserves for the payment of judgments that may be required during
the 1994-95 fiscal year. There can be no assurance, however, that an adverse
decision in any of these proceedings would not exceed the amount of the
1994-1995 Financial Plan reserves for the payment of judgments and,
therefore, could affect the ability of the State to maintain a balanced
1994-1995 State Financial Plan. In its audited financial statements for the
fiscal year ended March 31, 1994, the State reported its estimated liability
for awarded and unanticipated unfavorable judgments at $675 million.
In connection with a settlement agreement entered into between New York
and Delaware arising from the case of State of Delaware v. State of New York,
the State was required to make a $23 million payment to Delaware during the
1993-94 fiscal year and is required to make five annual payments thereafter
of $33 million. New York and Massachusetts have executed a similar settlement
agreement which provides for aggregate payments by New York of $23 million,
payable over five consecutive years. Claims of other states and the District
of Columbia arising from this action remain.
Other Localities. Certain localities in addition to the City could have
financial problems leading to requests for additional State assistance during
the State's 1994-95 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 1994-95 fiscal year.
For example, 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.
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From time to time, Federal expenditure reductions could reduce, or in some
cases eliminate, Federal funding of some local programs and accordingly might
impose substantial increased expenditure requirements on affected localities.
If the State, the City or any of the Authorities were to suffer serious
financial difficulties jeopardizing their respective access to the public
credit markets, the marketability of notes and bonds issued by localities
within the State could be adversely affected. Localities also face
anticipated and potential problems resulting from certain pending litigation,
judicial decisions and long-range economic trends. Long-range potential
problems of declining urban population, increasing expenditures and other
economic trends could adversely affect localities and require increasing
State assistance in the future.
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 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 $5,076 million (of which
$3,998 million was for non-highway purposes) at June 30, 1994, an increase of
$355 million from June 30, 1993. Over the 10-year period ending June 30,
1994, total outstanding general obligation debt increased at an annual rate
of 1.3 percent. Within the most recent 5-year period, outstanding general
obligation debt has grown at an annual rate of 1.5 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 $57.4 million in bonds
outstanding as of June 30, 1994.
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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 $233.8 million in revenue bond debt
outstanding on June 30, 1994.
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 $380.8 million
of debt outstanding as of June 30, 1994.
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 $163.7 million in bonds outstanding as of June 30, 1994.
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, 1994.
Pennsylvania Higher Education Facilities Authority ("PHEFA"): The PHEFA is
a public corporation of the Commonwealth established to finance college
facilities. As of June 30, 1994, the PHEFA had $1,933.7 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.
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 $357.3 million in revenue bond
debt outstanding on June 30, 1994, to which all of its revenues are pledged.
Pennsylvania Turnpike Commission ("PTC"): The PTC operates the
Pennsylvania Turnpike System ("System"). Its outstanding indebtedness,
$1,268.3 million as of June 30, 1994, 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 $107.5 million revenue bonds outstanding
as of June 30, 1994.
Philadelphia Regional Port Authority ("PRPA"). The PRPA was created in
1989 for the purpose of acquiring and operating port facilities in Bucks and
Delaware Counties, and the City of Philadelphia. Debt service on the bonds is
paid by a pledge of the PRPA's revenues, rentals and receipts. The PRPA had
$53.1 million in bonds outstanding as of June 30, 1994.
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 $280.9 million of revenue bonds outstanding on June 30, 1994.
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"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, 1994, PHFA had $1,972.0 million of revenue bonds
and $13.0 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 which were refunded in 1993 by a $21.1 million bond issue of
the Hospitals Authority (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,
1994, $1.64 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.
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.
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<PAGE>
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 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.
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<PAGE>
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 years ended
November 30, 1992, 1993 and 1994, 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 portfolios 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 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.
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<PAGE>
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, 1994, 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.
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 by Sears, Roebuck &
Co. of its remaining shares of DWDC. 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 had an initial term ending April 30, 1994, and will
remain in effect from year to year thereafter if approved by the Board. At
their meeting held on April 8, 1994, the Trustees , including all of the
Independent Trustees, approved the continuation of the Distribution Agreement
until April 30, 1995.
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 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.
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<PAGE>
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 and on January 12, 1993. 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.
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, accrued a total of $79,297,
$193,303, $118,900, $25,842, $31,438, $16,700, $75,697, $22,495, $36,275 and
$77,808, respectively pursuant to the Plan of Distribution for the fiscal
year ended November 30, 1994. Such payment amounted to an annual rate of 0.14
of 1% of the average daily net assets of each respective Series of the Fund
(0.15% of the daily net assets of the California Series, Michigan Series, New
Jersey Series and Pennsylvania Series). It is estimated that the amount paid by
the Fund for
40
<PAGE>
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 $5,637,203, $6,322,103 and $2,373,022 for the fiscal years ended 1992, 1993
and 1994, respectively.
The Plan remained in effect until April 30, 1991 and 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 8, 1994, the Trustees approved
the most recent continuation of the Plan until April 30, 1995. 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.
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 benefiting 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.
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<PAGE>
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 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
42
<PAGE>
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.
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.
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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 exhausted.
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, Dean Witter
Balanced Income Fund, Dean Witter Balanced Growth 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.
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.
44
<PAGE>
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.
For further information regarding the Exchange Privilege, shareholders
should contact their DWR account executive or the Transfer Agent.
45
<PAGE>
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).
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
46
<PAGE>
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 calendar 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 dividends that is tax-exempt. The percentages may
differ from the percentage of tax-exempt dividend distributions for any
particular month.
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<PAGE>
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, 1994, the Florida Series had
net capital loss carryovers of approximately $374,900 of which $8,400, which
will be available through November 30, 1999, $28,800 will be available
through November 30, 2000, $94,000 will be available through November 30,
2001 and $243,700 will be available through November 30, 2002 to offset
future gains to the extent provided by regulations. At November 30, 1994, the
Arizona Series, California Series, Massachusetts Series, Michigan Series,
Minnesota Series, New Jersey Series, New York Series, Ohio Series and
Pennsylvania Series had net capital loss carryovers of approximately $377,200,
$76,900, $43,800, $24,200, $32,000, $207,100, $13,800, $300,100 and $74,600,
respectively, available through November 30, 2002 to offset future gains to the
extent provided by regulations. To the extent that these net capital loss
carryovers are 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.
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.
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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, 1994, 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 5.50%, 5.83%, 5.60%, 5.75%, 5.76%, 5.99%, 5.70%,
5.33%, 4.55% and 5.69% respectively. During the period, the Investment
Manager assumed certain expenses with respect to the Massachusetts Series,
the Michigan Series, the Minnesota Series, the New York Series and the Ohio
Series. Had each Series borne these expenses for the period, the yield for
each of the aforementioned Series for the 30-day period ending November 30,
1994 would have been 5.61%, 5.65%, 5.51%, 5.14% and 4.35%, 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 43.77%, 46.24%, 39.60%,
46.84%, 42.25%, 44.73%, 43.57%, 46.88%, 44.13% and 41.29% respectively for
the 30 day period ended November 30, 1994, were 9.78%, 10.84%, 9.27%, 10.82%,
9.98%, 10.84%, 10.10%, 10.39%, 7.69% and 9.69% respectively based upon the
respective yields quoted above. During the period, the Investment Manager
assumed certain expenses with respect to the Massachusetts Series, the
Michigan Series, the Minnesota Series, the New York Series and the Ohio
Series. Had each Series borne these expenses for the period, the yield for
each of the aforementioned Series for the 30-day period ending November 30,
1994 would have been 10.55%, 9.78%, 9.97%, , 9.68% and 7.35%, 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 Arizona Series, 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 (commencement
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<PAGE>
of operations) (May 1, 1991 for the Arizona Series) through November 30, 1994
were 4.36%, 4.8%, 4.94%, 5.35%, 5.12%, 4.12%, 5.0%, 4.95%, 4.80% and 5.01%
respectively, and for the year ended November 30, 1994 were -12.31%, -10.99%,
-11.40%, -11.75%, -12.08%, -11.64%, -12.60%, 12.01%, -11.53% and -10.87%
respectively. During the period January 15, 1991 through November 30, 1994,
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, 1994 would have been 4.39%, 4.3%, 4.11%, 4.20%, 2.08%,
4.31%, 3.48%, 2.98%, 4.10%, and 3.82% respectively, and for the year ended
November 30, 1994 would have been -12.33%, -11.01%, -11.74%, -12.04%,
-12.50%, -11.67%, -12.90%, -12.25%, -12.09%, and -10.88% 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, 1994 were 5.56%, 5.98%, 6.05%,
6.46%, 6.23%, 5.22%, 6.11%, 6.06%, 5.91% and 6.12% respectively, and for the
year ended November 30, 1994 were -7.16%, -8.65%, -7.29%, -7.71%, -8.07%,
-8.42%, -7.96%, -8.96%, -8.34% and -7.84% 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%,
3.25% 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 $11,655, $12,022, $12,055, $12,236, $12,132, $11,692, $12,079,
$12,058, $11,991, and $12,084, respectively, at November 30, 1994. An
investment of $50,000 adjusted for a 3.25% 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 $58,580, $60,423,
$60,588, $61,499, $60,974, $58,764, $60,708, $60,602, $60,269, and $60,732,
respectively, at November 30, 1994. An investment of $100,000 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 $118,071, $121,786, $122,117, $123,955, $122,895, $118,441,
$122,360, $122,146, $121,475, and $122,409, respectively, at November 30,
1994.
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.
50
<PAGE>
SHARES OF THE FUND
-----------------------------------------------------------------------------
Shareholders of each Series of the Fund are entitled to a full vote for
each full share held. All of the Trustees except for Messrs. Bozic, Purcell
and Schroeder have been elected by the Shareholders of the Fund at a Special
Meeting of Shareholders held on January 12, 1993. Messrs. Bozic, Purcell and
Schroeder were elected by the other Trustees of the Fund on April 8, 1994.
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 con-cerning termination by action of the shareholders.
CUSTODIAN AND TRANSFER AGENT
-----------------------------------------------------------------------------
The Bank of New York, 90 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.
51
<PAGE>
INDEPENDENT ACCOUNTANTS
-----------------------------------------------------------------------------
Price Waterhouse LLP serves as the independent accountants of the Fund.
The independent accountants are responsible for auditing the annual financial
statements of the Fund.
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 for the fiscal year ended November
30, 1994 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 LLP, 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.
52
<PAGE>
APPENDIX
-----------------------------------------------------------------------------
RATINGS OF INVESTMENTS
MOODY'S INVESTORS SERVICE INC. ("MOODY'S")
MUNICIPAL BOND RATINGS
<TABLE>
<CAPTION>
<S> <C>
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.
</TABLE>
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.
53
<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 the previous 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 following 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.
<TABLE>
<CAPTION>
<S> <C>
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.
54
<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 exhibits 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.
</TABLE>
55
<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.
COMMERCIAL 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.
56
(This page has been left blank intentionally.)
57
<PAGE>
DEAN WITTER MULTI-STATE MUNICIPAL SERIES TRUST
PORTFOLIO SUMMARY November 30, 1994
-----------------------------------------------------------------------------
<TABLE>
<CAPTION>
ARIZONA CALIFORNIA FLORIDA MASSACHUSETTS
SERIES SERIES SERIES SERIES
------------- -------------- ------------- -----------------
<S> <C> <C> <C> <C>
Credit Ratings(1)
Aaa or AAA .................... 42% 32% 60% 36%
Aa or AA ...................... 35% 27% 13% 13%
A or A ........................ 20% 31% 17% 45%
Baa or BBB .................... 3% 10% 10% 6%
Average Weighted
Maturity ...................... 19 Years 21 Years 20 Years 19 Years
Call Protection ............... 7 Years 9 Years 7 Years 9 Years
Duration ...................... 10 Years 12 Years 11 Years 11 Years
Net Asset Value
November 30, 1993 ............. $10.72 $11.00 $10.93 $11.08
November 30, 1994 ............. $ 9.42 $ 9.38 $ 9.60 $ 9.60
Distributions(2) ............... $0.558380 $0.712322 $0.559761 $0.661892
Total Return(3)
6 Months ended 11/30/94 ..... (4.51)% (4.76)% (4.91)% (4.47)%
12 Months ended 11/30/94 ..... (7.16)% (8.65)% (7.29)% (7.71)%
Tax Free Yield(4) .............. 5.50 % 5.83 % 5.60 % 5.75 %
Taxable Equivalent Yield(5) ... 9.78 % 10.84 % 9.27 % 10.82%
</TABLE>
----------
(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, 1994.
(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, 1994,
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.
58
<PAGE>
-----------------------------------------------------------------------------
<TABLE>
<CAPTION>
MICHIGAN MINNESOTA NEW JERSEY NEW YORK PENNSYLVANIA
SERIES SERIES SERIES SERIES OHIO SERIES SERIES
------------- ------------- -------------- ------------- ------------- ----------------
<S> <C> <C> <C> <C> <C>
42% 22% 41% 15% 38% 46%
41% 34% 18% 21% 23% 25%
16% 36% 26% 49% 34% 19%
1% 8% 15% 15% 5% 10%
21 Years 21 Years 20 Years 19 Years 20 Years 19 Years
7 Years 8 Years 7 Years 9 Years 8 Years 8 Years
12 Years 11 Years 11 Years 11 Years 11 Years 11 Years
$11.05 $10.78 $10.94 $11.03 $10.97 $11.01
$ 9.46 $ 9.28 $ 9.47 $ 9.46 $ 9.42 $ 9.56
$0.743871 $0.629922 $0.633502 $0.619679 $0.676251 $0.618238
(4.94)% (5.46)% (4.80)% (5.42)% (5.21)% (4.46)%
(8.07)% (8.42)% (7.96)% (8.96)% (8.34)% (7.84)%
5.76 % 5.99 % 5.70 % 5.52 % 5.80 % 5.69 %
9.98 % 10.84 % 10.10 % 10.39 % 10.38 % 9.69 %
</TABLE>
59
<PAGE>
DEAN WITTER MULTI-STATE MUNICIPAL SERIES TRUST
STATEMENT OF ASSETS AND LIABILITIES November 30, 1994
-----------------------------------------------------------------------------
<TABLE>
<CAPTION>
ARIZONA CALIFORNIA FLORIDA MASSACHUSETTS
SERIES SERIES SERIES SERIES
------------- -------------- ------------- ---------------
<S> <C> <C> <C> <C>
ASSETS:
Investments in securities, at value* (Note 1) .............. $44,379,741 $107,461,452 $68,718,498 $15,092,476
Cash ....................................................... -- 37,003 322,591 50,499
Receivable for:
Investments sold ......................................... 2,323,939 3,336,032 1,375,722 65,187
Shares of beneficial interest sold ....................... 1,067 45,728 164,034 27,921
Interest ................................................. 1,062,283 1,978,302 1,107,019 355,527
Deferred organizational expenses (Note 1) .................. -- 3,684 3,684 3,684
Prepaid expenses and other assets .......................... 3,736 4,196 2,429 2,742
------------- -------------- ------------- ---------------
TOTAL ASSETS ............................................. 47,770,766 112,866,397 71,693,977 15,598,036
------------- -------------- ------------- ---------------
LIABILITIES:
Payable for:
Shares of beneficial interest repurchased ................. 69,940 301,121 153,349 57,805
Dividends to shareholders ................................. 17,406 34,954 22,783 5,016
Investment management fee (Note 2) ........................ 14,014 32,462 20,553 2,570
Plan of distribution fee (Note 3) ......................... 6,006 13,912 8,809 1,942
Accrued expenses and other liabilities (Note 4) ........... 35,045 33,890 30,877 23,935
------------- -------------- ------------- ---------------
TOTAL LIABILITIES ........................................ 142,411 416,339 236,371 91,268
------------- -------------- ------------- ---------------
NET ASSETS:
Paid-in-capital ............................................ 51,104,442 123,642,718 76,660,245 16,905,878
Net unrealized depreciation on investments ................. (3,098,853) (11,115,771) (4,827,733) (1,355,271)
Accumulated net realized loss on investments ............... (377,234) (76,889) (374,906) (43,839)
------------- -------------- ------------- ---------------
Net Assets ............................................... $47,628,355 $112,450,058 $71,457,606 $15,506,768
============= ============== ============= ===============
* Identified Cost .......................................... $47,478,594 $118,577,223 $73,546,231 $16,447,747
============= ============== ============= ===============
Shares of Beneficial Interest Outstanding .................. 5,054,237 11,988,826 7,444,462 1,615,288
============= ============== ============= ===============
Net Asset Value Per Share (unlimited authorized shares of
$.01 par value) ........................................... $9.42 $9.38 $9.60 $9.60
============= ============== ============= ===========
Maximum Offering Price Per Share (net asset value plus
4.17% of net asset value)** ............................... $9.81 $9.77 $10.00 $10.00
============= ============== ============= ===========
</TABLE>
----------
**On sales of $25,000 or more, the offering price is reduced.
See Notes to Financial Statements
60
<PAGE>
-----------------------------------------------------------------------------
<TABLE>
<CAPTION>
MICHIGAN MINNESOTA NEW JERSEY NEW YORK PENNSYLVANIA
SERIES SERIES SERIES SERIES OHIO SERIES SERIES
------------- ------------- ------------- ------------- ------------- --------------
<S> <C> <C> <C> <C> <C>
$18,997,268 $ 9,072,737 $43,644,799 $13,940,255 $19,609,270 $45,025,053
297,107 12,488 78,314 66,994 226,243 114,931
211,434 590,525 825,064 315,389 659,885 1,533,531
28,710 7,113 81,150 -- 5,685 306,973
332,488 165,495 924,084 224,028 333,226 702,353
3,684 3,684 3,684 3,684 3,684 3,684
2,296 641 2,129 2,158 2,022 1,145
------------- ------------- ------------- ------------- ------------- --------------
19,872,987 9,852,683 45,559,224 14,552,508 20,840,015 47,687,670
------------- ------------- ------------- ------------- ------------- --------------
5,214 34,920 2,000 -- 113,040 64,845
6,399 3,305 14,492 4,485 6,765 19,095
3,734 -- 13,036 1,847 1,771 13,678
2,425 1,215 5,587 1,787 2,568 5,862
24,220 20,392 26,854 22,466 23,210 26,934
------------- ------------- ------------- ------------- ------------- --------------
41,992 59,832 61,969 30,585 147,354 130,414
------------- ------------- ------------- ------------- ------------- --------------
21,594,910 10,839,507 49,599,733 15,907,357 22,853,468 51,579,945
(1,739,668) (973,693) (3,851,390) (1,370,054) (1,829,641) (3,938,305)
(24,247) (72,963) (251,088) (15,380) (331,166) (84,384)
------------- ------------- ------------- ------------- ------------- --------------
$19,830,995 $ 9,792,851 $45,497,255 $14,521,923 $20,692,661 $47,557,256
============= ============= ============= ============= ============= ==============
$20,736,936 $10,046,430 $47,496,189 $15,310,309 $21,438,911 $48,963,358
============= ============= ============= ============= ============= ==============
2,096,327 1,054,915 4,806,875 1,534,975 2,196,075 4,972,627
============= ============= ============= ============= ============= ==============
$9.46 $9.28 $9.47 $9.46 $9.42 $9.56
============= ============= ============= ============= ============= ==============
$9.85 $9.67 $9.86 $9.85 $9.81 $9.96
============= ============= ============= ============= ============= ==============
</TABLE>
61
<PAGE>
DEAN WITTER MULTI-STATE MUNICIPAL SERIES TRUST
STATEMENT OF OPERATIONS
-----------------------------------------------------------------------------
For the year ended November 30, 1994
<TABLE>
<CAPTION>
ARIZONA CALIFORNIA FLORIDA MASSACHUSETTS
SERIES SERIES SERIES SERIES
-------------- --------------- -------------- ---------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
INTEREST INCOME ....................................... $ 3,370,010 $ 8,066,513 $ 4,878,755 $ 1,046,417
-------------- --------------- -------------- ---------------
EXPENSES
Investment management fee (Note 2) ................... 198,139 457,543 287,107 62,634
Plan of distribution fee (Note 3) .................... 79,297 193,303 118,900 25,842
Professional fees .................................... 28,880 29,757 27,691 25,176
Transfer agent fees and expenses (Note 4) ........... 22,359 38,953 30,613 7,814
Registration fees .................................... 7,350 4,138 7,857 5,145
Shareholder reports and notices ...................... 6,833 16,603 11,096 2,277
Trustees' fees and expenses (Note 4) ................. 3,966 8,858 5,579 1,186
Organizational expenses (Note 1) ..................... -- 3,362 3,362 3,362
Other ................................................ 9,248 13,206 12,860 6,220
-------------- --------------- -------------- ---------------
TOTAL EXPENSES BEFORE AMOUNTS WAIVED/ASSUMED ....... 356,072 765,723 505,065 139,656
Less: Amounts Waived/Assumed (Note 2) ................ (5,185) (9,875) (8,239) (50,182)
-------------- --------------- -------------- ---------------
TOTAL EXPENSES AFTER AMOUNTS WAIVED/ASSUMED ........ 350,887 755,848 496,826 89,474
-------------- --------------- -------------- ---------------
NET INVESTMENT INCOME ............................... 3,019,123 7,310,665 4,381,929 956,943
-------------- --------------- -------------- ---------------
NET REALIZED AND UNREALIZED LOSS (Note 1):
Net realized loss on investments ...................... (377,211) (76,890) (238,226) (43,840)
Net change in unrealized appreciation on investments . (6,786,528) (18,993,072) (10,264,924) (2,334,430)
-------------- --------------- -------------- ---------------
NET LOSS ON INVESTMENTS ............................. (7,163,739) (19,069,962) (10,503,150) (2,378,270)
-------------- --------------- -------------- ---------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $(4,144,616) $(11,759,297) $ (6,121,221) $(1,421,327)
============== =============== ============== ===============
</TABLE>
See Notes to Financial Statements
62
<PAGE>
-----------------------------------------------------------------------------
<TABLE>
<CAPTION>
MICHIGAN MINNESOTA NEW JERSEY NEW YORK OHIO PENNSYLVANIA
SERIES SERIES SERIES SERIES SERIES SERIES
-------------- ------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
$ 1,282,804 $ 682,250 $ 3,116,547 $ 929,628 $ 1,457,587 $ 3,161,328
-------------- ------------- -------------- -------------- -------------- --------------
75,569 40,379 181,438 54,392 87,759 184,131
31,438 16,700 75,697 22,495 36,275 77,808
24,700 23,745 25,343 23,686 24,067 28,334
13,942 6,353 26,815 6,772 11,597 25,272
2,873 3,372 5,956 7,230 3,565 5,713
2,475 1,361 5,851 2,007 2,913 6,266
1,445 621 3,483 1,043 1,616 3,470
3,362 3,362 3,362 3,362 3,362 3,362
6,184 9,340 8,937 6,162 7,810 10,312
-------------- ------------- -------------- -------------- -------------- --------------
161,988 105,233 336,882 127,149 178,964 344,668
(54,032) (47,548) (6,823) (49,427) (53,594) (8,358)
-------------- ------------- -------------- -------------- -------------- --------------
107,956 57,685 330,059 77,722 125,370 336,310
-------------- ------------- -------------- -------------- -------------- --------------
1,174,848 624,565 2,786,488 851,906 1,332,217 2,825,018
-------------- ------------- -------------- -------------- -------------- --------------
(24,247) (73,439) (251,096) (15,381) (334,182) (84,384)
(2,973,184) (1,530,836) (6,801,131) (2,296,834) (3,125,323) (7,028,096)
-------------- ------------- -------------- -------------- -------------- --------------
(2,997,431) (1,604,275) (7,052,227) (2,312,215) (3,459,505) (7,112,480)
-------------- ------------- -------------- -------------- -------------- --------------
$(1,822,583) $ (979,710) $(4,265,739) $(1,460,309) $(2,127,288) $(4,287,462)
============== ============= ============== ============== ============== ==============
</TABLE>
63
<PAGE>
DEAN WITTER MULTI-STATE MUNICIPAL SERIES TRUST
STATEMENT OF CHANGES IN NET ASSETS
-----------------------------------------------------------------------------
For the years ended November 30
<TABLE>
<CAPTION>
ARIZONA SERIES CALIFORNIA SERIES
----------------------------- ------------------------------
1994 1993 1994 1993
-------------- ------------- -------------- --------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income ........................ $ 3,019,123 $ 2,722,937 $ 7,310,665 $ 6,666,613
Net realized gain (loss) on investments ...... (377,211) 65,305 (76,890) 1,828,533
Net change in unrealized appreciation on
investments ................................. (6,786,528) 2,294,142 (18,993,072) 5,043,740
-------------- ------------- -------------- --------------
Net increase (decrease) in assets resulting
from operations ............................ (4,144,616) 5,082,384 (11,759,297) 13,538,886
-------------- ------------- -------------- --------------
Dividends and distributions to shareholders
from:
Net investment income ........................ (3,019,123) (2,722,937) (7,310,665) (6,666,613)
Net realized gain on investments ............. (65,333) (67,643) (1,746,975) --
-------------- ------------- -------------- --------------
Total dividends and distributions ........... (3,084,456) (2,790,580) (9,057,640) (6,666,613)
-------------- ------------- -------------- --------------
Transactions in shares of beneficial
interest:
Net proceeds from sales ...................... 8,302,316 22,564,062 18,530,482 48,338,423
Reinvestment of dividends and distributions .. 1,628,501 1,500,480 5,154,881 3,677,922
Cost of shares repurchased ................... (14,950,597) (5,291,203) (29,726,860) (15,184,188)
-------------- ------------- -------------- --------------
Net increase (decrease) in net assets from
transactions in shares of beneficial
interest .................................... (5,019,780) 18,773,339 (6,041,497) 36,832,157
-------------- ------------- -------------- --------------
Total increase (decrease) ................... (12,248,852) 21,065,143 (26,858,434) 43,704,430
-------------- ------------- -------------- --------------
NET ASSETS:
Beginning of period ............................ 59,877,207 38,812,064 139,308,492 95,604,062
-------------- ------------- -------------- --------------
END OF PERIOD .................................. $ 47,628,355 $59,877,207 $112,450,058 $139,308,492
============== ============= ============== ==============
SHARES ISSUED AND REPURCHASED:
Sold ........................................... 795,764 2,131,173 1,777,153 4,447,920
Issued in reinvestment of dividends and
distributions ................................ 159,652 137,235 495,104 337,857
Repurchased .................................... (1,484,391) (497,023) (2,944,606) (1,386,260)
-------------- ------------- -------------- --------------
Net increase (decrease) ....................... (528,975) 1,771,385 (672,349) 3,399,517
============== ============= ============== ==============
</TABLE>
See Notes to Financial Statements
64
<PAGE>
-----------------------------------------------------------------------------
<TABLE>
<CAPTION>
FLORIDA SERIES MASSACHUSETTS SERIES MICHIGAN SERIES
------------------------------ ---------------------------- ----------------------------
1994 1993 1994 1993 1994 1993
-------------- -------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
$ 4,381,929 $ 3,864,162 $ 956,943 $ 811,547 $ 1,174,848 $ 1,041,459
(238,226) (90,829) (43,840) 170,860 (24,247) 372,036
(10,264,924) 3,872,974 (2,334,430) 702,398 (2,973,184) 668,110
-------------- -------------- ------------- ------------- ------------- -------------
(6,121,221) 7,646,307 (1,421,327) 1,684,805 (1,822,583) 2,081,605
-------------- -------------- ------------- ------------- ------------- -------------
(4,381,929) (3,864,162) (956,943) (811,547) (1,174,848) (1,041,459)
-- -- (167,916) -- (363,656) --
-------------- -------------- ------------- ------------- ------------- -------------
(4,381,929) (3,864,162) (1,124,859) (811,547) (1,538,504) (1,041,459)
-------------- -------------- ------------- ------------- ------------- -------------
16,449,296 38,837,248 2,842,908 7,996,169 3,330,753 9,813,691
1,503,336 1,348,313 662,124 483,311 892,827 532,420
(20,485,991) (11,033,570) (3,795,658) (1,122,022) (3,114,925) (3,112,259)
-------------- -------------- ------------- ------------- ------------- -------------
(2,533,359) 29,151,991 (290,626) 7,357,458 1,108,655 7,233,852
-------------- -------------- ------------- ------------- ------------- -------------
(13,036,509) 32,934,136 (2,836,812) 8,230,716 (2,252,432) 8,273,998
-------------- -------------- ------------- ------------- ------------- -------------
84,494,115 51,559,979 18,343,580 10,112,864 22,083,427 13,809,429
-------------- -------------- ------------- ------------- ------------- -------------
$ 71,457,606 $ 84,494,115 $15,506,768 $18,343,580 $19,830,995 $22,083,427
============== ============== ============= ============= ============= =============
1,560,132 3,630,055 267,619 738,427 315,764 905,219
144,781 124,856 62,943 44,231 85,272 48,831
(1,993,666) (1,030,156) (371,144) (103,229) (302,511) (282,640)
-------------- -------------- ------------- ------------- ------------- -------------
(288,753) 2,724,755 (40,582) 679,429 98,525 671,410
============== ============== ============= ============= ============= =============
</TABLE>
65
<PAGE>
DEAN WITTER MULTI-STATE MUNICIPAL SERIES TRUST
STATEMENT OF CHANGES IN NET ASSETS (continued)
-----------------------------------------------------------------------------
For the years ended November 30
<TABLE>
<CAPTION>
MINNESOTA SERIES NEW JERSEY SERIES
---------------------------- -----------------------------
1994 1993 1994 1993
------------- ------------- -------------- -------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income ........................ $ 624,565 $ 477,218 $ 2,786,488 $ 2,457,868
Net realized gain (loss) on investments ...... (73,439) 83,885 (251,096) 387,875
Net change in unrealized appreciation on
investments ................................. (1,530,836) 405,648 (6,801,131) 1,901,754
------------- ------------- -------------- -------------
Net increase (decrease) in assets resulting
from operations ............................ (979,710) 966,751 (4,265,739) 4,747,497
------------- ------------- -------------- -------------
Dividends and distributions to shareholders
from:
Net investment income ........................ (624,565) (477,218) (2,786,488) (2,457,868)
Net realized gain on investments ............. (83,885) -- (387,878) (102,249)
------------- ------------- -------------- -------------
Total dividends and distributions ........... (708,450) (477,218) (3,174,366) (2,560,117)
------------- ------------- -------------- -------------
Transactions in shares of beneficial
interest:
Net proceeds from sales ...................... 1,972,261 5,407,008 8,465,825 24,886,881
Reinvestment of dividends and distributions .. 450,744 299,804 1,869,538 1,515,250
Cost of shares repurchased ................... (2,479,885) (1,078,183) (11,896,977) (6,213,958)
------------- ------------- -------------- -------------
Net increase (decrease) in net assets from
transactions in shares of beneficial
interest .................................... (56,880) 4,628,629 (1,561,614) 20,188,173
------------- ------------- -------------- -------------
Total increase (decrease) ................... (1,745,040) 5,118,162 (9,001,719) 22,375,553
------------- ------------- -------------- -------------
NET ASSETS:
Beginning of period ............................ 11,537,891 6,419,729 54,498,974 32,123,421
------------- ------------- -------------- -------------
END OF PERIOD .................................. $ 9,792,851 $11,537,891 $ 45,497,255 $54,498,974
============= ============= ============== =============
SHARES ISSUED AND REPURCHASED:
Sold ........................................... 191,155 508,636 806,053 2,304,312
Issued in reinvestment of dividends and
distributions ................................ 44,176 28,188 180,172 139,917
Repurchased .................................... (250,831) (101,542) (1,160,235) (568,527)
------------- ------------- -------------- -------------
Net increase (decrease) ....................... (15,500) 435,282 (174,010) 1,875,702
============= ============= ============== =============
</TABLE>
See Notes to Financial Statements
66
<PAGE>
-----------------------------------------------------------------------------
<TABLE>
<CAPTION>
NEW YORK SERIES OHIO SERIES PENNSYLVANIA SERIES
---------------------------- ----------------------------- ----------------------------
1994 1993 1994 1993 1994 1993
------------- ------------- -------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
$ 851,906 $ 756,167 $ 1,332,217 $ 1,053,017 $ 2,825,018 $ 2,391,963
(15,381) 113,747 (334,182) 284,378 (84,384) 309,721
(2,296,834) 644,644 (3,125,323) 899,509 (7,028,096) 2,036,444
------------- ------------- -------------- ------------- ------------- -------------
(1,460,309) 1,514,558 (2,127,288) 2,236,904 (4,287,462) 4,738,128
------------- ------------- -------------- ------------- ------------- -------------
(851,906) (756,167) (1,332,217) (1,053,017) (2,825,018) (2,391,963)
(66,663) -- (284,377) -- (292,250) --
------------- ------------- -------------- ------------- ------------- -------------
(918,569) (756,167) (1,616,594) (1,053,017) (3,117,268) (2,391,963)
------------- ------------- -------------- ------------- ------------- -------------
3,239,727 6,741,928 10,906,004 13,971,307 8,825,758 25,600,361
494,616 394,629 1,085,139 683,533 1,724,222 1,286,285
(2,788,145) (1,544,324) (12,403,711) (4,675,125) (8,965,577) (7,364,381)
------------- ------------- -------------- ------------- ------------- -------------
946,198 5,592,233 (412,568) 9,979,715 1,584,403 19,522,265
------------- ------------- -------------- ------------- ------------- -------------
(1,432,680) 6,350,624 (4,156,450) 11,163,602 (5,820,327) 21,868,430
------------- ------------- -------------- ------------- ------------- -------------
15,954,603 9,603,979 24,849,111 13,685,509 53,377,583 31,509,153
------------- ------------- -------------- ------------- ------------- -------------
$14,521,923 $15,954,603 $ 20,692,661 $24,849,111 $47,557,256 $53,377,583
============= ============= ============== ============= ============= =============
307,576 622,018 1,040,504 1,294,674 840,565 2,354,473
47,552 36,119 104,330 63,065 165,631 118,104
(266,575) (140,708) (1,213,100) (427,972) (882,180) (671,934)
------------- ------------- -------------- ------------- ------------- -------------
88,553 517,429 (68,266) 929,767 124,016 1,800,643
============= ============= ============== ============= ============= =============
</TABLE>
67
<PAGE>
DEAN WITTER MULTI-STATE MUNICIPAL SERIES TRUST
NOTES TO FINANICAL STATEMENTS
-----------------------------------------------------------------------------
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 a non-diversified, open-end management
investment company.
The Fund, organized on October 29, 1990 as a Massachusetts business trust, is
comprised of ten separate Series (the "Series") and commenced operations as
follows:
<TABLE>
<CAPTION>
COMMENCEMENT OF
SERIES OPERATIONS
------------------ --------------------
<S> <C>
Arizona ........... April 30, 1991
California ........ January 15, 1991
Florida ........... January 15, 1991
Massachusetts ..... January 15, 1991
Michigan .......... January 15, 1991
Minnesota ......... January 15, 1991
New Jersey ........ January 15, 1991
New York .......... January 15, 1991
Ohio .............. January 15, 1991
Pennsylvania ...... January 15, 1991
</TABLE>
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 each day, it uses both a computerized matrix of tax-exempt
securities and evaluations by its staff, in each case based on available
information concerning market transactions and quotations from dealers which
reflect the bid side of the market. The Fund's portfolio securities are thus
valued by reference to a combination of transactions and quotations for the
same or other securities believed to be comparable in quality, coupon,
maturity, type of issue, call provisions, trading characteristics and other
features deemed to be relevant. Short-term debt securities having a maturity
date of more than sixty days at time of purchase are valued on a
mark-to-market basis until sixty days prior to maturity and thereafter at
amortized cost based on their value on the 61st day. Short-term debt
securities having a maturity date of sixty days or less at the time of
purchase are valued at amortized cost.
B. Accounting for Investments --Security transactions are accounted for on
the trade date (date the order to buy or sell is executed). Realized gains
and losses on security transactions are determined on the identified cost
method. Interest income is accrued daily. Premiums and discounts on
securities are amortized over the life of the respective securities.
C. Federal Income Tax Status --It is the Fund's policy to comply individually
for each Series with the requirements of the Internal Revenue Code applicable
to regulated investment companies and to distribute all of its taxable and
nontaxable income to its shareholders. Accordingly, no federal income tax
provision is required.
D. Dividends and Distributions to Shareholders --The Fund records dividends
and distributions to its shareholders on the record date. The amount of
dividends and distributions from net investment income and net realized
capital gains are determined in accordance with federal income tax
regulations which may differ from generally accepted accounting principles.
These "book/tax" differences are either considered temporary or permanent in
nature. To the extent these differences are permanent in nature, such amounts
are reclassified within the capital accounts based on their
68
<PAGE>
DEAN WITTER MULTI-STATE MUNICIPAL SERIES TRUST
NOTES TO FINANCIAL STATEMENTS (continued)
-----------------------------------------------------------------------------
federal tax-basis treatment; temporary differences do not require
reclassification. Dividends and distributions which exceed net investment
income and net realized capital gains for financial reporting purposes but
not for tax purposes are reported as dividends in excess of net investment
income or distributions in excess of net realized capital gains. To the
extent they exceed net investment income and net realized capital gains for
tax purposes, they are reported as distributions of paid-in-capital.
E. Organizational Expenses --Dean Witter InterCapital Inc. (the "Investment
Manager") paid the organizational expenses of the Fund of approximately
$204,000 of which the Fund has agreed to bear and reimburse the Investment
Manager for $150,000 of such costs ($16,667 for each of the initial Series
excluding the Arizona Series). Such reimbursed expenses have been deferred
and are being amortized by the straight-line method over a period not to
exceed five years from the commencement of operations.
F. Expenses --Direct expenses are charged to the respective Series and
general corporate expenses are allocated on the basis of relative net assets.
2. TRANSACTIONS WITH THE INVESTMENT MANAGER --Pursuant to an Investment
Management Agreement, each Series of the Fund pays its Investment Manager a
management fee, accrued daily and payable monthly, by applying the annual
rate of 0.35% to the daily net assets of each Series determined as of the
close of each business day.
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 had undertaken to waive management fees and assume
all expenses that exceeded 0.50% of the daily net assets with respect to each
Series of the Fund through December 31, 1993 and with respect to
Massachusetts, Michigan, Minnesota, New York and Ohio has undertaken to
extend such expense limitation for the period January 1, 1994 through
December 31, 1995.
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 with the
distribution of shares of the Fund.
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 determined to reimburse, as described below. The following
activities and services may be provided by the Distributor, under the Plan:
(1) compensation to, and expenses of, account executives of Dean Witter
Reynolds Inc., an affilate of the Investment Manager and Distributor, and
other selected broker-dealers; (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.
69
<PAGE>
DEAN WITTER MULTI-STATE MUNICIPAL SERIES TRUST
NOTES TO FINANCIAL STATEMENTS (continued)
-----------------------------------------------------------------------------
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 0.15% of the
Fund's average daily net assets during the month. 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. For the year
ended November 30, 1994, the distribution fees were accrued at the following
annual rates:
<TABLE>
<CAPTION>
ARIZONA CALIFORNIA FLORIDA MASSACHUSETTS MICHIGAN
SERIES SERIES SERIES SERIES SERIES
--------- ------------ --------- --------------- ----------
<S> <C> <C> <C> <C> <C>
Annual Rate .. 0.14% 0.14% 0.14% 0.14% 0.15%
--------- ------------ --------- --------------- ----------
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<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% 0.14% 0.14% 0.15%
----------- ------------ ---------- -------- --------------
</TABLE>
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
SERIES SERIES SERIES SERIES MICHIGAN SERIES
------------- -------------- ------------ ----------------- ----------------
<S> <C> <C> <C> <C> <C>
Commissions ..... $248,859 $503,199 $498,882 $ 97,405 $119,134
------------- -------------- ------------ ----------------- ----------------
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
MINNESOTA NEW JERSEY NEW YORK PENNSYLVANIA
SERIES SERIES SERIES OHIO SERIES SERIES
------------- -------------- ------------ ----------------- ----------------
<S> <C> <C> <C> <C> <C>
Commissions ..... $ 68,773 $288,332 $107,806 $188,053 $252,579
------------- -------------- ------------ ----------------- ----------------
</TABLE>
4. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES --The cost of
purchases and proceeds from the sales of portfolio securities, excluding
short-term investments, for the year ended November 30, 1994 were as follows:
<TABLE>
<CAPTION>
ARIZONA CALIFORNIA FLORIDA MASSACHUSETTS MICHIGAN
SERIES SERIES SERIES SERIES SERIES
------------ ------------- ------------ --------------- --------------
<S> <C> <C> <C> <C> <C>
Purchases . $ 5,843,716 $14,541,560 $ 2,405,840 $1,585,490 $2,156,170
------------ ------------- ------------ --------------- --------------
Sales ..... 13,814,643 32,222,558 10,866,163 2,618,363 1,654,104
------------ ------------- ------------ --------------- --------------
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
MINNESOTA NEW JERSEY NEW YORK PENNSYLVANIA
SERIES SERIES SERIES OHIO SERIES SERIES
------------ ------------- ------------ --------------- --------------
<S> <C> <C> <C> <C> <C>
Purchases . $ 1,517,265 $ 2,856,500 $ 1,934,181 $4,359,550 $9,183,450
------------ ------------- ------------ --------------- --------------
Sales ...... 1,544,070 7,201,847 3,724,705 4,037,235 9,591,023
------------ ------------- ------------ --------------- --------------
</TABLE>
70
<PAGE>
DEAN WITTER MULTI-STATE MUNICIPAL SERIES TRUST
NOTES TO FINANCIAL STATEMENTS (continued)
-----------------------------------------------------------------------------
Dean Witter Trust Company, an affiliate of the Investment Manager and
Distributor, is the Fund's transfer agent. At November 30, 1994, each of the
Series had transfer agent fees and expenses payable as follows:
<TABLE>
<CAPTION>
ARIZONA CALIFORNIA FLORIDA MASSACHUSETTS MICHIGAN
--------- ------------ --------- --------------- ----------
<S> <C> <C> <C> <C> <C>
Transfer Agent Fees
and Expenses
Payable ........... $2,289 $3,748 $2,483 $1,153 $1,442
--------- ------------ --------- --------------- ----------
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
MINNESOTA NEW JERSEY NEW YORK OHIO PENNSYLVANIA
----------- ------------ ---------- -------- --------------
<S> <C> <C> <C> <C> <C>
Transfer Agent Fees
and Expenses
Payable ........... $650 $2,729 $854 $1,256 $2,747
----------- ------------ ---------- -------- --------------
</TABLE>
Effective January 1, 1994, the Fund adopted an unfunded noncontributory
defined benefit pension plan covering all Trustees of the Fund who will have
served as independent Trustees for at least five years at the time of
retirement. Benefits under this plan are based on years of service and
compensation during the last five years of service. Aggregate pension costs
for the year ended November 30, 1994, included in Trustees' fees and expenses
in the Statement of Operations and the accrued pension liability included in
accrued expenses in the Statement of Assets and Liabilities for each of the
respective Series were as follows:
<TABLE>
<CAPTION>
ARIZONA CALIFORNIA FLORIDA MASSACHUSETTS MICHIGAN
--------- ------------ --------- --------------- ----------
<S> <C> <C> <C> <C> <C>
Aggregate Pension
Costs ........... $1,296 $3,075 $1,960 $422 $534
--------- ------------ --------- --------------- ----------
Accrued Pension
Liability ....... 1,284 3,048 1,943 422 534
--------- ------------ --------- --------------- ----------
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
MINNESOTA NEW JERSEY NEW YORK OHIO PENNSYLVANIA
----------- ------------ ---------- ------ --------------
<S> <C> <C> <C> <C> <C>
Aggregate Pension
Costs ........... $296 $1,245 $394 $565 $1,292
----------- ------------ ---------- ------ --------------
Accrued Pension
Liability ....... 296 1,234 394 561 1,281
----------- ------------ ---------- ------ --------------
</TABLE>
5. FEDERAL INCOME TAX STATUS --At November 30, 1994, the following Series had
approximate net capital loss carryovers which may be used to offset future
capital gains to the extent provided by regulations:
<TABLE>
<CAPTION>
AVAILABLE THROUGH NOVEMBER 30, 1999 2000 2001 2002 TOTAL
------------------------------ -------- --------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Arizona ....................... -- -- -- $377,200 $377,200
California .................... -- -- -- 76,900 76,900
Florida ....................... $8,400 $28,800 $94,000 243,700 374,900
Massachusetts ................. -- -- -- 43,800 43,800
Michigan ...................... -- -- -- 24,200 24,200
Minnesota ..................... -- -- -- 32,000 32,000
New Jersey .................... -- -- -- 207,100 207,100
New York ...................... -- -- -- 13,800 13,800
Ohio .......................... -- -- -- 300,100 300,100
Pennsylvania .................. -- -- -- 74,600 74,600
</TABLE>
Capital losses incurred after October 31 ("Post-October" losses) within
the taxable year are deemed to arise on the first business day of the Funds'
next taxable year. The following Series incurred and will elect to defer net
capital losses during fiscal 1994:
<TABLE>
<CAPTION>
MINNESOTA NEW JERSEY NEW YORK OHIO PENNSYLVANIA
----------- ------------ ---------- --------- --------------
<S> <C> <C> <C> <C>
$41,430 $43,957 $1,575 $34,090 $9,803
----------- ------------ ---------- --------- --------------
</TABLE>
71
<PAGE>
DEAN WITTER MULTI-STATE MUNICIPAL SERIES TRUST
FINANCIAL HIGHLIGHTS
-----------------------------------------------------------------------------
Selected ratios and per share data for a share of beneficial interest
outstanding throughout each period:
<TABLE>
<CAPTION>
NET ASSET
VALUE NET NET REALIZED TOTAL FROM
PERIOD ENDED BEGINNING INVESTMENT AND UNREALIZED INVESTMENT DIVIDENDS TO DISTRIBUTIONS
NOVEMBER 30 OF PERIOD INCOME GAIN (LOSS) OPERATIONS SHAREHOLDERS TO SHAREHOLDERS
----------------- ----------- ------------ -------------- ------------ -------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Arizona Series
1991** $ 9.60 $0.36 $ 0.17 $ 0.53 $(0.36) --
1992 9.77 0.64 0.41 1.05 (0.64) --
1993 10.18 0.58 0.56 1.14 (0.58) $(0.02)
1994 10.72 0.55 (1.29) (0.74) (0.55) (0.01)
California Series
1991* 9.60 0.60 0.39 0.99 (0.60) --
1992 9.99 0.67 0.34 1.01 (0.67) (0.01)
1993 10.32 0.61 0.68 1.29 (0.61) --
1994 11.00 0.58 (1.48) (0.90) (0.58) (0.14)
Florida Series
1991* 9.60 0.55 0.28 0.83 (0.55) --
1992 9.88 0.64 0.41 1.05 (0.64) --
1993 10.29 0.59 0.64 1.23 (0.59) --
1994 10.93 0.56 (1.33) (0.77) (0.56) --
Massachusetts Series
1991* 9.60 0.54 0.38 0.92 (0.54) --
1992 9.98 0.66 0.42 1.08 (0.66) (0.04)
1993 10.36 0.60 0.72 1.32 (0.60) --
1994 11.08 0.56 (1.38) (0.82) (0.56) (0.10)
Michigan Series
1991* 9.60 0.54 0.36 0.90 (0.54) --
1992 9.96 0.65 0.46 1.11 (0.65) (0.01)
1993 10.41 0.61 0.64 1.25 (0.61) --
1994 11.05 0.56 (1.41) (0.85) (0.56) (0.18)
<FN>
----------
* January 15, 1991 (commencement of operations) to November 30, 1991.
** April 30, 1991 (commencement of operations) to November 30, 1991.
*** After application of the Fund's expense limitation.
+ Does not reflect the deduction of sales load.
(1) Not annualized.
(2) Annualized.
</TABLE>
See Notes to Financial Statements.
72
<PAGE>
-----------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATIOS TO AVERAGE NET RATIOS TO AVERAGE NET
ASSETS (AFTER EXPENSES ASSETS (BEFORE EXPENSES
WERE ASSUMED) WERE ASSUMED)***
------------------------ ------------------------
NET
ASSET NET ASSETS
TOTAL DIVIDENDS VALUE TOTAL AT END OF NET NET PORTFOLIO
AND END OF INVESTMENT PERIOD INVESTMENT INVESTMENT TURNOVER
DISTRIBUTIONS PERIOD RETURN+ (000'S) EXPENSES INCOME EXPENSES INCOME RATE
--------------- -------- ------------ ----------- ---------- ------------ ---------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$(0.36) $ 9.77 5.66%(1) $ 20,733 0.15%(2) 6.32%(2) 1.43%(2) 5.04%(2) 8%(1)
(0.64) 10.18 11.08 38,812 0.15 6.33 0.74 5.74 15
(0.60) 10.72 11.42 59,877 0.48 5.40 0.65 5.22 5
(0.56) 9.42 (7.16) 47,628 0.62 5.33 0.63 5.32 11
(0.60) 9.99 10.29 (1) 41,568 0.15 (2) 6.53 (2) 0.97 (2) 5.71 (2) 24 (1)
(0.68) 10.32 10.23 95,604 0.15 6.36 0.67 5.84 5
(0.61) 11.00 12.77 139,308 0.48 5.57 0.60 5.45 11
(0.72) 9.38 (8.65) 112,450 0.58 5.59 0.59 5.58 12
(0.55) 9.88 8.84 (1) 17,719 0.15 (2) 6.45 (2) 1.27 (2) 5.33 (2) 10 (1)
(0.64) 10.29 10.92 51,560 0.15 6.19 0.73 5.62 6
(0.59) 10.93 12.20 84,494 0.48 5.39 0.63 5.23 3
(0.56) 9.60 (7.29) 71,458 0.61 5.34 0.62 5.33 3
(0.54) 9.98 9.87 (1) 3,205 0.15 (2) 6.50 (2) 2.50 (2) 4.08 (2) 40 (1)
(0.70) 10.36 11.19 10,113 0.14 6.26 1.25 5.16 10
(0.60) 11.08 13.06 18,344 0.48 5.47 0.84 5.10 12
(0.66) 9.60 (7.71) 15,507 0.50 5.35 0.78 5.07 10
(0.54) 9.96 9.54 (1) 6,630 0.15 (2) 6.54 (2) 1.73 (2) 4.96 (2) 46 (1)
(0.66) 10.41 11.78 13,809 0.14 6.28 1.01 5.42 9
(0.61) 11.05 12.28 22,083 0.48 5.53 0.80 5.20 15
(0.74) 9.46 (8.07) 19,831 0.50 5.44 0.75 5.19 9
</TABLE>
73
DEAN WITTER MULTI-STATE MUNICIPAL SERIES TRUST
FINANCIAL HIGHLIGHTS (continued)
-----------------------------------------------------------------------------
Selected ratios and per share data for a share of beneficial interest
outstanding throughout each period:
<TABLE>
<CAPTION>
NET ASSET
VALUE NET NET REALIZED TOTAL FROM
PERIOD ENDED BEGINNING INVESTMENT AND UNREALIZED INVESTMENT DIVIDENDS TO DISTRIBUTIONS
NOVEMBER 30 OF PERIOD INCOME GAIN (LOSS) OPERATIONS SHAREHOLDERS TO SHAREHOLDERS
------------------- ----------- ------------ -------------- ------------ -------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Minnesota Series
1991* $ 9.60 $0.51 $ 0.19 $ 0.70 $(0.51) --
1992 9.79 0.63 0.32 0.95 (0.63) --
1993 10.11 0.58 0.67 1.25 (0.58) --
1994 10.78 0.55 (1.42) (0.87) (0.55) $(0.08)
New Jersey Series
1991* 9.60 0.55 0.35 0.90 (0.55) --
1992 9.95 0.66 0.44 1.10 (0.66) (0.04)
1993 10.35 0.60 0.62 1.22 (0.60) (0.03)
1994 10.94 0.55 (1.39) (0.84) (0.55) (0.08)
New York Series
1991* 9.60 0.54 0.46 1.00 (0.54) --
1992 10.06 0.68 0.34 1.02 (0.68) (0.06)
1993 10.34 0.62 0.69 1.31 (0.62) --
1994 11.03 0.57 (1.52) (0.95) (0.57) (0.05)
Ohio Series
1991* 9.60 0.53 0.25 0.78 (0.53) --
1992 9.85 0.66 0.41 1.07 (0.66) (0.01)
1993 10.25 0.60 0.72 1.32 (0.60) --
1994 10.97 0.55 (1.43) (0.88) (0.55) (0.12)
Pennsylvania Series
1991* 9.60 0.53 0.30 0.83 (0.53) --
1992 9.90 0.66 0.44 1.10 (0.66) --
1993 10.34 0.61 0.67 1.28 (0.61) --
1994 11.01 0.56 (1.39) (0.83) (0.56) (0.06)
<FN>
----------
* January 15, 1991 (commencement of operations) to November 30, 1991.
*** After application of the Fund's expense limitation.
+ Does not reflect the deduction of sales load.
(1) Not annualized.
(2) Annualized.
</TABLE>
See Notes to Financial Statements.
74
<PAGE>
-----------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATIOS TO AVERAGE NET RATIOS TO AVERAGE NET
ASSETS (AFTER EXPENSES ASSETS (BEFORE EXPENSES
WERE ASSUMED) WERE ASSUMED)***
------------------------ ------------------------
NET
ASSET NET ASSETS
TOTAL DIVIDENDS VALUE TOTAL AT END OF NET NET PORTFOLIO
AND END OF INVESTMENT PERIOD INVESTMENT INVESTMENT TURNOVER
DISTRIBUTIONS PERIOD RETURN+ (000'S) EXPENSES INCOME EXPENSES INCOME RATE
--------------- -------- ------------ ----------- ---------- ------------ ---------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$(0.51) $ 9.79 7.42%(1) $ 3,131 0.15%(2) 6.04%(2) 2.65%(2) 2.87%(2) 4%(1)
(0.63) 10.11 9.91 6,420 0.14 6.16 1.46 4.85 23
(0.58) 10.78 12.64 11,538 0.48 5.39 1.04 4.83 8
(0.63) 9.28 (8.42) 9,793 0.50 5.41 0.91 5.00 14
(0.55) 9.95 9.59 (1) 15,812 0.15 (2) 6.43 (2) 1.21 (2) 5.36 (2) 36 (1)
(0.70) 10.35 11.34 32,123 0.15 6.36 0.79 5.71 19
(0.63) 10.94 12.03 54,499 0.48 5.41 0.69 5.20 7
(0.63) 9.47 (7.96) 45,497 0.64 5.38 0.65 5.37 6
(0.54) 10.06 10.73 (1) 3,976 0.15 (2) 6.44 (2) 2.22 (2) 4.37 (2) 51 (1)
(0.74) 10.34 10.35 9,604 0.15 6.45 1.23 5.37 21
(0.62) 11.03 12.91 15,955 0.48 5.61 0.88 5.21 11
(0.62) 9.46 (8.96) 14,522 0.50 5.48 0.82 5.16 14
(0.53) 9.85 8.35 (1) 6,267 0.15 (2) 6.38 (2) 2.04 (2) 4.48 (2) 22 (1)
(0.67) 10.25 11.12 13,686 0.15 6.41 1.01 5.56 23
(0.60) 10.97 13.19 24,849 0.48 5.45 0.78 5.14 20
(0.67) 9.42 (8.34) 20,693 0.50 5.31 0.71 5.10 18
(0.53) 9.90 8.77 (1) 12,147 0.15 (2) 6.46 (2) 1.54 (2) 5.07 (2) 12 (1)
(0.66) 10.34 11.47 31,509 0.15 6.31 0.81 5.65 3
(0.61) 11.01 12.64 53,378 0.48 5.54 0.68 5.33 5
(0.62) 9.56 (7.84) 47,557 0.64 5.37 0.66 5.35 19
</TABLE>
75
<PAGE>
DEAN WITTER MULTI-STATE MUNICIPAL SERIES TRUST
PORTFOLIO OF INVESTMENTS --ARIZONA SERIES November 30, 1994
-----------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATE VALUE
----------- --------- ---------- -------------
<C> <S> <C> <C> <C>
ARIZONA EXEMPT MUNICIPAL BONDS (88.6%)
GENERAL OBLIGATION (7.7%)
$ 200 Chandler, Sierra Vista Refg Ser 1991 (FGIC Insured) ............ 7.00 % 7/ 1/12 $ 203,980
Phoenix,
1,250 Refg Ser 1993 A ................................................ 5.25 7/ 1/12 1,036,113
1,550 Refg Ser 1992 .................................................. 6.375 7/ 1/13 1,507,980
1,000 Tucson Unified School District #1, Impr 1989 Ser D 1992 (FGIC
Insured) ........................................................ 6.10 7/ 1/11 930,930
----------- -------------
4,000 3,679,003
----------- -------------
EDUCATIONAL FACILITIES REVENUE (5.9%)
1,000 Arizona Board of Regents, Arizona State University Ser 1992 A .. 5.50 7/ 1/19 822,100
1,000 Price-Elliot Research Park Inc, Arizona State University Ser
1991 (MBIA Insured) ............................................. 7.00 7/ 1/21 1,004,380
1,000 University of Arizona, Telecommunications Ser 1991 COPs ........ 6.50 7/15/12 957,500
----------- -------------
3,000 2,783,980
----------- -------------
ELECTRIC REVENUE (5.0%)
725 Arizona Power Authority, Hoover Uprating Refg 1993 Ser (MBIA
Insured) ........................................................ 5.25 10/ 1/17 575,788
Salt River Project Agricultural Improvement & Power District,
1,000 Refg 1992 Ser D ................................................ 6.25 1/ 1/27 911,620
1,000 1991 Ser A ..................................................... 6.00 1/ 1/31 864,360
----------- -------------
2,725 2,351,768
----------- -------------
HOSPITAL REVENUE (9.4%)
Arizona Health Facilities Authority,
1,150 Phoenix Baptist Hospital & Medical Center Inc & Medical
Environments Inc Ser 1992 (MBIA Insured) ....................... 6.25 9/ 1/11 1,090,453
700 Phoenix Memorial Hospital Refg Ser 1991 ........................ 8.20 6/ 1/21 703,486
2,000 Maricopa County Industrial Development Authority, Catholic
Healthcare West 1992 Ser A (MBIA Insured) ....................... 5.75 7/ 1/11 1,758,580
1,100 Pima County Industrial Development Authority, Carondelet Health
Care Corp Ser 1993 (MBIA Insured) ............................... 5.25 7/ 1/13 898,524
----------- -------------
4,950 4,451,043
----------- -------------
INDUSTRIAL DEVELOPMENT/POLLUTION CONTROL REVENUE (8.8%)
1,000 Greenlee County Industrial Development Authority, Phelps Dodge
Corp Refg 1994 .................................................. 5.45 6/ 1/09 857,740
2,000 Mohave County Industrial Development Authority, Citizens
Utilities Co 1993 Ser B (AMT) ................................... 5.80 11/15/28 1,641,940
1,700 Santa Cruz County Industrial Development Authority, Citizens
Utilities Co Ser 1991 (AMT) ..................................... 7.15 2/ 1/23 1,703,094
----------- -------------
4,700 4,202,774
----------- -------------
MORTGAGE REVENUE -MULTI-FAMILY (2.0%)
985 Pima County Industrial Development Authority, Rancho Mirage Ser
1992 (AMT) (Asset Guaranty Insured) ............................. 7.05 4/ 1/22 962,699
----------- -------------
</TABLE>
76
<PAGE>
DEAN WITTER MULTI-STATE MUNICIPAL SERIES TRUST
PORTFOLIO OF INVESTMENTS --ARIZONA SERIES November 30, 1994 (continued)
------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATE VALUE
----------- --------- ---------- -------------
<C> <S> <C> <C> <C>
MORTGAGE REVENUE -SINGLE FAMILY (2.4%)
Maricopa County Industrial Development Authority,
$ 560 1991 Ser A ..................................................... 7.375% 8/ 1/05 $ 567,235
570 1991 Ser A ..................................................... 7.50 8/ 1/12 573,870
----------- -------------
1,130 1,141,105
----------- -------------
PUBLIC FACILITIES REVENUE (3.5%)
Arizona,
500 Refg Ser 1992 B COPs (AMBAC Insured) ........................... 6.25 9/ 1/10 477,770
500 Ser 1991 COPs (FSA Insured) .................................... 6.25 9/ 1/11 472,685
700 Puerto Rico Infrastructure Financing Authority, Special Tax Ser
1988 A .......................................................... 7.90 7/ 1/07 731,927
----------- -------------
1,700 1,682,382
----------- -------------
TRANSPORTATION FACILITIES REVENUE (18.0%)
1,500 Arizona Transportation Board, Sub Highway Ser 1991 A
(Prerefunded) ................................................... 6.50 7/ 1/11 1,562,085
Phoenix, Street & Highway
2,000 User Refg Ser 1993 ............................................. 5.125 7/ 1/11 1,611,740
1,000 User Ser 1992 .................................................. 6.25 7/ 1/11 958,150
2,000 Phoenix Civic Improvement Corporation, Airport Terminal Excise
Tax Ser 1989 (AMT) .............................................. 7.80 7/ 1/11 2,095,660
800 Scottsdale, Street & Highway User Refg Ser 1993 ................. 5.50 7/ 1/07 719,176
1,000 Tucson, Street & Highway User Sr Lien Refg Ser 1993 ............ 5.50 7/ 1/09 864,190
1,000 Puerto Rico Highway & Transportation Authority, Refg Ser X ..... 5.25 7/ 1/21 772,330
----------- -------------
9,300 8,583,331
----------- -------------
WATER AND SEWER REVENUE (25.9%)
1,000 Arizona Wastewater Management Authority, Wastewater Treatment
Financial Assistance Ser 1992 A (AMBAC Insured) ................. 5.95 7/ 1/12 903,050
1,495 Central Arizona Water Conservation District, Ser 1991 B
(Prerefunded) ................................................... 6.50 11/ 1/11 1,565,295
Chandler, Water & Sewer
750 Refg Ser 1991 (FGIC Insured) ................................... 7.00 7/ 1/12 765,427
1,000 Refg Ser 1992 (FGIC Insured) ................................... 6.25 7/ 1/13 943,370
1,000 Gilbert, Water & Wastewater Refg Ser 1992 (FGIC Insured) ....... 6.50 7/ 1/22 956,790
Phoenix Civic Improvement Corporation, Wastewater
2,000 Refg Ser 1993 .................................................. 4.75 7/ 1/23 1,394,800
2,000 Jr Lien Ser 1994 ............................................... 5.45 7/ 1/19 1,616,700
2,200 Tucson, Water Refg Ser 1991 ..................................... 6.50 7/ 1/16 2,094,664
2,000 Puerto Rico Aqueduct & Sewer Authority, Ser 1988 A .............. 7.90 7/ 1/07 2,101,560
----------- -------------
13,445 12,341,656
----------- -------------
45,935 TOTAL MUNICIPAL BONDS (IDENTIFIED COST $45,278,594) ........................ 42,179,741
----------- -------------
</TABLE>
77
<PAGE>
DEAN WITTER MULTI-STATE MUNICIPAL SERIES TRUST
PORTFOLIO OF INVESTMENTS -- ARIZONA SERIES November 30, 1994 (continued)
-----------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATE VALUE
----------- --------- ---------- -------------
<C> <S> <C> <C> <C>
SHORT-TERM ARIZONA EXEMPT MUNICIPAL OBLIGATIONS (4.6%)
$ 800 Maricopa County Industrial Development Authority, Samaritan
Health Ser 1985B 2 (MBIA Insured) (Tender 12/1/94) .............. 3.50 %* 12/ 1/08 $ 800,000
1,400 Phoenix, Ser 1994-1 (Tender 12/1/94) ............................ 3.50 * 6/ 1/18 1,400,000
----------- -------------
2,200 TOTAL SHORT-TERM ARIZONA EXEMPT MUNICIPAL OBLIGATIONS (IDENTIFIED COST
$2,200,000) ................................................................ 2,200,000
----------- -------------
$48,135 TOTAL INVESTMENTS (IDENTIFIED COST $47,478,594) (A) ........................ 93.2% 44,379,741
===========
OTHER ASSETS IN EXCESS OF LIABILITIES ...................................... 6.8 3,248,614
-------------
NET ASSETS ................................................................. 100.0% $47,628,355
========== =============
<FN>
----------
* Variable or floating rate securities. Coupon rate shown reflects current
rate.
AMT Alternative Minimum Tax.
COPs Certificates of Participation.
(a) The aggregate cost for federal income tax purposes is $47,478,594; the
aggregate gross unrealized appreciation is $246,195 and the gross
unrealized depreciation is $3,345,048, resulting in net unrealized
depreciation of $3,098,853.
</TABLE>
See Notes to Financial Statements
78
<PAGE>
DEAN WITTER MULTI-STATE MUNICIPAL SERIES TRUST
PORTFOLIO OF INVESTMENTS -- CALIFORNIA SERIES November 30, 1994
-----------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATE VALUE
----------- -------- ---------- -------------
<C> <S> <C> <C> <C>
CALIFORNIA EXEMPT MUNICIPAL BONDS (88.6%)
GENERAL OBLIGATION (4.5%)
$2,000 California, Various Purpose dtd 4/1/93 (FSA Insured) ........ 5.50 % 4/ 1/19 $ 1,637,520
Mojave Water Agency,
1,100 Impr Dist M Morongo Basin Pipeline Ser 1992 ................ 6.60 9/ 1/13 1,011,340
2,700 Impr Dist M Morongo Basin Pipeline Ser 1992 ................. 6.60 9/ 1/22 2,386,314
----------- -------------
5,800 5,035,174
----------- -------------
EDUCATIONAL FACILITIES REVENUE (15.3%)
California Educational Facilities Authority,
4,500 Carnegie Institution of Washington 1993 Ser A ............... 5.60 10/ 1/23 3,648,015
3,000 Claremont Colleges Ser 1992 ................................. 6.375 5/ 1/22 2,718,630
2,000 Loyola Marymount University Refg Ser 1992 ................... 6.00 10/ 1/14 1,775,280
2,000 University of San Francisco Ser 1992 ........................ 6.40 10/ 1/17 1,836,300
2,500 University of Southern California Ser 1993 B ................ 5.80 10/ 1/15 2,163,525
2,000 California Public Works Board, California State University
1992 Ser A ................................................... 6.70 10/ 1/17 1,899,140
4,000 University of California, Multiple Purpose Refg 1993 Ser C
(AMBAC Insured) .............................................. 5.125 9/ 1/18 3,121,760
----------- -------------
20,000 17,162,650
----------- -------------
ELECTRIC REVENUE (12.7%)
2,000 Kings River Conservation District, Pine Power Ser D ......... 6.00 1/ 1/17 1,766,440
3,000 Los Angeles Department of Water & Power, Refg Issue of 1993 . 5.375 9/ 1/23 2,361,210
1,750 Northern California Power Agency, Geothermal #3 1993 Refg Ser
3 ............................................................ 5.85 7/ 1/10 1,556,188
Southern California Public Power Authority,
8,600 Mead -Phoenix (AMBAC Insured) ............................... 5.01 7/ 1/15 6,807,846
2,090 Multiple Proj 1989 Ser ...................................... 6.00 7/ 1/18 1,828,499
----------- -------------
17,440 14,320,183
----------- -------------
HOSPITAL REVENUE (12.6%)
1,000 Berkeley, Alta Bates Medical Center Refg Ser A ............... 6.50 12/ 1/11 882,960
California Health Facilities Financing Authority,
3,000 Catholic Health Corp Ser 1992 (MBIA Insured) ................ 6.00 7/ 1/13 2,733,960
3,150 Downey Community Hospital Ser 1993 .......................... 5.75 5/15/15 2,533,136
2,000 Kaiser Permanente 1983 Ser .................................. 5.45 10/ 1/13 1,645,480
3,000 Scripps Memorial Hospitals Ser 1992 A (MBIA Insured) ....... 6.375 10/ 1/22 2,774,640
2,000 California Statewide Communities Development Authority,
Cedars Sinai Medical Center Ser 1992 COPs .................... 6.50 8/ 1/12 1,879,960
2,000 Duarte, City of Hope National Medical Center COPs ........... 6.00 4/ 1/08 1,730,620
----------- -------------
16,150 14,180,756
----------- -------------
INDUSTRIAL DEVELOPMENT/POLLUTION CONTROL REVENUE (1.8%)
California Pollution Control Financing Authority,
1,000 Pacific Gas & Electric Co 1992 Ser A (AMT) .................. 6.625 6/ 1/09 958,280
1,000 Southern California Edison Co 1988 Ser A (AMT) .............. 6.90 9/ 1/06 1,009,640
----------- -------------
2,000 1,967,920
----------- -------------
</TABLE>
79
<PAGE>
<TABLE>
DEAN WITTER MULTI-STATE MUNICIPAL SERIES TRUST
PORTFOLIO OF INVESTMENTS -- CALIFORNIA SERIES November 30, 1994 (continued)
-----------------------------------------------------------------------------------------------------------------
<CAPTION>
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATE VALUE
----------- -------- ---------- -------------
<C> <S> <C> <C> <C>
MORTGAGE REVENUE -MULTI-FAMILY (1.7%)
$ 2,000 California Housing Finance Agency, Rental II 1992 Ser B ..... 6.70 % 8/ 1/15 $ 1,880,780
----------- -------------
MORTGAGE REVENUE -SINGLE FAMILY (2.3%)
1,130 California Housing Finance Agency, Home 1991 Ser C (AMT)
(MBIA Insured) ............................................... 7.00 8/ 1/23 1,085,410
1,500 Puerto Rico Housing Finance Corporation, Portfolio One
GNMA-Backed Ser C ............................................ 6.85 10/15/23 1,448,700
----------- -------------
2,630 2,534,110
----------- -------------
PUBLIC FACILITIES REVENUE (8.2%)
2,000 Los Angeles County, 1991 Master Refg COPs .................... 6.708 5/ 1/15 1,881,560
2,000 Nevada County, Western Nevada County Solid Waste Management
1991 ......................................................... 7.50 6/ 1/21 1,794,440
2,000 San Jose Financing Authority, Convention Center Refg 1993 Ser
C ............................................................ 6.375 9/ 1/13 1,852,600
2,700 Torrance, Police Facility Refg 1991 COPs ..................... 6.80 7/ 1/12 2,608,605
1,000 Puerto Rico Infrastructure Financing Authority, Special Tax
Ser 1988 A ................................................... 7.90 7/ 1/07 1,045,610
----------- -------------
9,700 9,182,815
----------- -------------
TAX ALLOCATION (3.9%)
1,000 Industry Urban-Development Agency,
Transportation-Distribution Ind Redev Proj #3 1992 Refg ..... 6.90 11/ 1/16 962,830
1,000 Riverside County Redevelopment Agency, Proj #4 1991 Ser A ... 7.50 10/ 1/26 992,640
3,000 Rosemead Redevelopment Agency, Proj #1 Ser 1993 A ........... 5.50 10/ 1/18 2,405,250
----------- -------------
5,000 4,360,720
----------- -------------
TRANSPORTATION FACILITIES REVENUE (6.2%)
2,000 Los Angeles County Transportation Commission, Sales Tax Ser
1991-B ....................................................... 6.50 7/ 1/13 1,880,920
1,000 San Diego County Regional Transportation Commission, Sales
Tax 1991 Ser A (ETM) ......................................... 6.00 4/ 1/08 961,770
1,000 San Francisco Airports Commission, San Francisco Intl Airport
Second Ser Refg Issue 4 (MBIA Insured) ....................... 6.00 5/ 1/20 882,980
1,000 San Francisco Bay Area Rapid Transit District, Sales Tax Ser
1991 (FGIC Insured) .......................................... 6.60 7/ 1/12 976,580
2,500 Santa Clara Transit District, Sales Tax 1991 Ser A .......... 6.25 6/ 1/21 2,258,750
----------- -------------
7,500 6,961,000
----------- -------------
WATER & SEWER REVENUE (19.4%)
1,000 Alameda County Water District, 1992 COPs (MBIA Insured) ..... 6.20 6/ 1/13 931,390
California Department of Water Resources,
1,000 Central Valley Ser J-2 ...................................... 6.00 12/ 1/20 874,570
2,000 Central Valley Ser K ........................................ 6.00 12/ 1/21 1,745,820
2,000 Central Coast Water Authority, Ser 1992 (AMBAC Insured) ..... 6.50 10/ 1/14 1,928,600
1,000 Contra Costa Water Authority, Water 1992 Ser E (AMBAC
Insured) ..................................................... 6.25 10/ 1/12 945,500
3,000 East Bay Municipal Utility District, Water Refg Ser 1992 .... 6.00 6/ 1/20 2,619,960
3,250 Los Angeles County Sanitation Districts Financing Authority,
1993 Ser A ................................................... 5.25 10/ 1/10 2,732,405
</TABLE>
80
<PAGE>
DEAN WITTER MULTI-STATE MUNICIPAL SERIES TRUST
PORTFOLIO OF INVESTMENTS -- CALIFORNIA SERIES November 30, 1994 (continued)
-----------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATE VALUE
----------- -------- ---------- -------------
<C> <S> <C> <C> <C>
Los Angeles, Wastewater
$ 2,000 Refg Ser 1993-A (MBIA Insured) .............................. 5.70 % 6/ 1/20 $ 1,690,700
1,000 1991 Ser C .................................................. 7.10 6/ 1/18 993,220
4,000 San Diego County Water Authority, Ser 1991-B COPs
(MBIA Insured) .............................................. 6.30 4/ 8/21 3,633,760
2,000 San Francisco Public Utilities Commission, Water 1992
Refg Ser A .................................................. 6.00 11/ 1/15 1,777,860
2,000 Puerto Rico Aqueduct & Sewer Authority, Ser 1988 A ......... 7.90 7/ 1/07 2,101,559
----------- -------------
24,250 21,975,344
----------- -------------
112,470 TOTAL MUNICIPAL BONDS (IDENTIFIED COST $110,677,223) ................... 99,561,452
----------- -------------
SHORT-TERM CALIFORNIA EXEMPT MUNICIPAL OBLIGATIONS (7.0%)
4,900 Irvine Assessment District No 89-10 (Tender 12/1/94) ........ 3.35* 9/ 2/15 4,900,000
3,000 Newport Beach, Hoag Memorial Hospital Presbyterian Ser 1992
(Tender 12/1/94) ............................................ 3.55* 10/ 1/22 3,000,000
----------- -------------
7,900 TOTAL SHORT TERM CALIFORNIA EXEMPT MUNICIPAL OBLIGATIONS (IDENTIFIED
COST $7,900,000) ....................................................... 7,900,000
----------- -------------
$120,370 TOTAL INVESTMENTS (Identified Cost $118,577,223) (a) ................... 95.6% 107,461,452
==========
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES .......................... 4.4 4,988,606
-------- -------------
NET ASSETS ............................................................... 100.0% $112,450,058
======== =============
<FN>
----------
* Variable or floating rate securities. Coupon rate shown reflects current
rate.
AMT Alternative Minimum Tax.
COPs Certificates of Participation.
ETM Escrowed to Maturity.
(a) The aggregate cost for federal income tax purposes is $118,577,223;
the aggregate gross unrealized appreciation is $67,997 and the
aggregate gross unrealized depreciation is $11,183,768, resulting in
net unrealized depreciation of $11,115,771.
</TABLE>
See Notes to Financial Statements
81
<PAGE>
DEAN WITTER MULTI-STATE MUNICIPAL SERIES TRUST
PORTFOLIO OF INVESTMENTS -- FLORIDA SERIES November 30, 1994
-----------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATE VALUE
----------- -------- ---------- ------------
<C> <S> <C> <C> <C>
FLORIDA EXEMPT MUNICIPAL BONDS (89.9%)
GENERAL OBLIGATION (3.8%)
$2,000 Guam, Ser 1993 A ................................................ 5.375% 11/15/13 $ 1,597,520
1,000 Puerto Rico, Pub Impr Ser 1991 (Prerefunded)+ ................... 7.30 7/ 1/20 1,089,660
----------- ------------
3,000 2,687,180
----------- ------------
ELECTRIC REVENUE (11.3%)
2,500 Jacksonville Electric Authority, St Johns River Power Park Issue
2 Ser 7 ......................................................... 5.50 10/ 1/14 2,105,575
Orlando Utilities Commission,
1,000 Refg Ser 1993 A ................................................ 5.25 10/ 1/14 816,510
2,000 Ser 1993 ....................................................... 5.125 10/ 1/19 1,553,340
1,900 Ser 1991 A (Prerefunded) ....................................... 6.50 10/ 1/20 1,989,775
2,000 Puerto Rico Electric Power Authority, Power Ser O+ .............. 5.00 7/ 1/12 1,585,140
----------- ------------
9,400 8,050,340
----------- ------------
HOSPITAL REVENUE (17.6%)
275 Altamonte Springs Health Facilities Authority, Adventist
Health/Sunbelt Inc Ser 1984 (MBIA Insured) (Prerefunded) ....... 7.90 10/ 1/14 293,516
500 Cape Canaveral Hospital District, Ser 1991 COPs (AMBAC Insured) 6.875 1/ 1/21 501,025
2,500 Dade County, Jackson Memorial Hospital Ser 1993 (MBIA Insured) . 5.625 6/ 1/13 2,160,300
1,000 Jacksonville, University Medical Center Inc Ser 1992 (Connie Lee
Insured) ........................................................ 6.60 2/ 1/21 946,450
2,000 Jacksonville Health Facilities Authority, Daughters of Charity/
St Vincent's Medical Center Inc Ser 1993 A ...................... 5.00 11/15/15 1,508,240
1,000 Lakeland, Regional Medical Center Ser 1992 A (FGIC Insured) .... 6.125 11/15/22 903,350
2,000 Orange County Health Facilities Authority, Orlando Regional
Healthcare Ser 1993 A (MBIA Insured) ............................ 6.00 11/ 1/24 1,770,960
125 Palm Beach County Health Facilities Authority, JFK Medical
Center Inc Ser 1988 ............................................. 8.875 12/ 1/18 131,560
1,000 Polk County Industrial Development Authority, United Haven
Hospital 1985 Ser 2 (MBIA Insured) .............................. 6.25 9/ 1/15 933,910
1,000 South Broward Hospital District, Ser 1991 B & C (AMBAC Insured) 6.611 5/ 1/21 946,740
1,000 Tallahassee, Tallahassee Memorial Regional Medical Center Inc
Refg Ser 1992 B (MBIA Insured) .................................. 6.00 12/ 1/15 905,030
2,000 Tampa, Allegany Health System, St Mary's Hospital Ser 1993 (MBIA
Insured) ........................................................ 5.00 12/ 1/12 1,606,340
----------- ------------
14,400 12,607,421
----------- ------------
INDUSTRIAL DEVELOPMENT/POLLUTION CONTROL REVENUE (5.2%)
Citrus County, Florida Power Corp
1,000 Refg Ser 1992 B ................................................ 6.35 2/ 1/22 916,820
2,000 Refg Ser 1992 A ................................................ 6.625 1/ 1/27 1,894,720
St Lucie County, Florida Power & Light Co
1,000 Ser 1992 (AMT) ................................................. 6.70 5/ 1/27 924,600
----------- ------------
4,000 3,736,140
----------- ------------
</TABLE>
82
<PAGE>
DEAN WITTER MULTI-STATE MUNICIPAL SERIES TRUST
PORTFOLIO OF INVESTMENTS --FLORIDA SERIES November 30, 1994 (continued)
------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATE VALUE
----------- -------- ---------- ------------
<C> <S> <C> <C> <C>
MORTGAGE REVENUE -SINGLE FAMILY (4.8%)
$ 875 Brevard County Housing Finance Authority, Refg Ser 1991 B (FSA
Insured) ........................................................ 7.00 % 3/ 1/13 $ 868,630
615 Florida Housing Finance Agency, GNMA Collaterized 1990 Ser G-1
(AMT) ........................................................... 7.90 3/ 1/22 629,877
2,000 Puerto Rico Housing Finance Corporation, Portfolio One
GNMA-Backed Ser C+ .............................................. 6.85 10/15/23 1,931,600
----------- ------------
3,490 3,430,107
----------- ------------
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/ 1/12 953,260
----------- ------------
PUBLIC FACILITIES REVENUE (7.7%)
1,500 Brevard County School Board, Florida School Boards Association
Inc Ser 1992 A COPs (AMBAC Insured) ............................. 6.50 7/ 1/12 1,469,160
1,000 Miami Sports & Exhibition Authority, Refg Ser 1992 A (FGIC
Insured) ........................................................ 6.15 10/ 1/20 912,810
1,000 Palm Beach County, Criminal Justice Refg Ser 1993 (FGIC Insured) 5.375 6/ 1/08 871,390
2,150 St Lucie County, Sales Tax Ser 1992 (FGIC Insured) (Prerefunded) 6.50 10/ 1/22 2,245,998
----------- ------------
5,650 5,499,358
----------- ------------
RESOURCE RECOVERY REVENUE (3.9%)
Broward County,
670 Broward Waste Energy Co North Ser 1984 ......................... 7.95 12/ 1/08 711,011
1,040 SES Broward Co LP South Ser 1984 ............................... 7.95 12/ 1/08 1,103,658
1,000 Lee County, Solid Waste Ser 1991 A (AMT) (MBIA Insured) ........ 6.50 10/ 1/13 959,060
----------- ------------
2,710 2,773,729
----------- ------------
TRANSPORTATION FACILITIES REVENUE (19.6%)
Dade County, Aviation,
400 Ser U (AMT) .................................................... 6.75 10/ 1/06 404,820
1,000 1992 Ser B (MBIA Insured) ...................................... 6.60 10/ 1/22 952,310
Mid-Bay Bridge Authority,
5,000 Sr Lien Crossover Refg Ser 1993 A .............................. 6.10 10/ 1/22 4,166,100
500 Ser 1991 A (Crossover ETM) ..................................... 6.875 10/ 1/22 509,000
1,000 Florida Department of Transportation, Turnpike Ser 1991 A (AMBAC
Insured) ........................................................ 6.25 7/ 1/20 925,140
Greater Orlando Aviation Authority
750 Ser 1992 A (AMT) (FGIC Insured) ................................ 6.50 10/ 1/12 724,598
1,000 Ser 1993 A (AMT) (AMBAC Insured) ............................... 5.50 10/ 1/18 830,180
1,250 Hillsborough County Aviation Authority, Tampa Intl Airport Refg
Ser 1993 B (FGIC Insured) ....................................... 5.60 10/ 1/19 1,055,425
1,500 Lee County, Refg Ser 1991 (AMBAC Insured) ....................... 6.00 10/ 1/17 1,353,660
1,500 Osceola County, Osceola Parkway (MBIA Insured) .................. 6.10 4/ 1/17 1,372,080
500 Puerto Rico Highway Authority, Ser Q+ ........................... 6.00 7/ 1/20 434,960
1,200 Puerto Rico Highway & Transportation Authority, Ser S
(Prerefunded)+ .................................................. 6.50 7/ 1/22 1,253,520
----------- ------------
15,600 13,981,793
----------- ------------
</TABLE>
83
<PAGE>
<TABLE>
DEAN WITTER MULTI-STATE MUNICIPAL SERIES TRUST
PORTFOLIO OF INVESTMENTS --FLORIDA SERIES November 30, 1994 (continued)
-----------------------------------------------------------------------------------------------------------------
<CAPTION>
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATE VALUE
----------- -------- ---------- ------------
<C> <S> <C> <C> <C>
WATER & SEWER REVENUE (10.9%)
$ 500 Boynton Beach, Utility Ser 1992 (FGIC Insured) .................. 6.25 % 11/ 1/12 $ 474,690
1,425 Charlotte County, Utility Refg Ser 1993 (FGIC Insured) ......... 5.25 10/ 1/21 1,127,688
1,000 Key West, Sewer Refg Ser 1993 (FGIC Insured) .................... 5.70 10/ 1/20 858,780
1,000 Orange County, Water Utilities Ser 1992 (AMBAC Insured) ........ 6.25 10/ 1/17 927,850
500 Port St Lucie, Stormwater Utility Ser 1991 (AMBAC Insured) ..... 6.625 5/ 1/15 491,460
2,000 Tampa, Water & Sewer Ser 1992 A (FGIC Insured) .................. 6.00 10/ 1/17 1,804,880
2,030 Puerto Rico Aqueduct & Sewer Authority, Ser 1988 A+ ............ 7.90 7/ 1/07 2,133,082
----------- ------------
8,455 7,818,430
----------- ------------
OTHER REVENUE (3.8%)
1,000 Homestead, Hurricane Andrew Special Insurance Assessment Ser
1993 (MBIA Insured) ............................................. 5.25 3/ 1/03 935,560
2,000 Orlando, Cap Impr Refg Ser 1992 ................................. 6.00 10/ 1/22 1,745,180
----------- ------------
3,000 2,680,740
----------- ------------
70,705 TOTAL MUNICIPAL BONDS (IDENTIFIED COST $69,046,231) ....................... 64,218,498
----------- ------------
SHORT-TERM FLORIDA EXEMPT MUNICIPAL OBLIGATIONS (6.3%)
2,300 Dade County, Health Facilities Authority, Miami Children
Hospital Ser 1990 (Tender 12/1/94) .............................. 3.55 * 1/ 2/00 2,300,000
2,200 Sarasota County Health Facilities Authority, Venice Hospital Ser
1992 (Tender 12/1/94) ........................................... 3.65 * 12/ 1/22 2,200,000
----------- ------------
4,500 TOTAL SHORT-TERM FLORIDA EXEMPT MUNICIPAL OBLIGATIONS (IDENTIFIED COST
$4,500,000) ............................................................... 4,500,000
----------- ------------
$75,205 TOTAL INVESTMENTS (Identified Cost $73,546,231) (a) ......................... 96.2% 68,718,498
=========
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES ............................. 3.8 2,739,108
-------- ------------
NET ASSETS .................................................................. 100.0% $71,457,606
======== ============
<FN>
----------
* Variable or floating rate securities. Coupon rate shown reflects current
rate.
+ Investment in Puerto Rico represents 11.79% of net assets.
AMT Alternative Minimum Tax.
COPs Certificates of Participation.
ETM Escrowed to Maturity.
(a) The aggregate cost for federal income tax purposes is $73,546,231; the
aggregate gross unrealized appreciation is $582,604 and the aggregate
gross unrealized depreciation is $5,410,337, resulting in net
unrealized depreciation of $4,827,733.
</TABLE>
See Notes to Financial Statements
84
<PAGE>
DEAN WITTER MULTI-STATE MUNICIPAL SERIES TRUST
PORTFOLIO OF INVESTMENTS -- MASSACHUSETTS SERIES November 30, 1994
-----------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATE VALUE
----------- -------- ---------- -------------
<C> <S> <C> <C> <C>
MASSACHUSETTS EXEMPT MUNICIPAL BONDS (91.5%)
GENERAL OBLIGATION (9.7%)
Massachusetts,
$ 500 Refg 1992 Ser B ............................................. 6.50 % 8/ 1/08 $ 497,255
1,000 Refg 1993 Ser A ............................................. 5.50 2/ 1/11 853,450
150 Nantucket, 1991 .............................................. 6.80 12/ 1/11 147,480
----------- -------------
1,650 1,498,185
----------- -------------
EDUCATIONAL FACILITIES REVENUE (23.5%)
Massachusetts Health & Educational Facilities Authority,
100 Amherst College Ser E ....................................... 6.80 11/ 1/21 97,111
1,000 Boston College Ser K ........................................ 5.25 6/ 1/18 791,900
400 Boston University Ser L (MBIA Insured) ...................... 6.66 10/ 1/31 374,596
150 Community College Ser A (Connie Lee Insured) ................ 6.60 10/ 1/22 139,226
400 Suffolk University Ser B (Connie Lee Insured) ............... 6.25 7/ 1/12 365,744
500 University of Massachusetts Foundation Inc/Medical School
Research Ser A (Connie Lee Insured) ......................... 6.00 7/ 1/23 428,720
150 Worcester Polytechnic Institute Refg Ser E .................. 6.625 9/ 1/17 140,871
Massachusetts Industrial Finance Agency,
1,000 Brooks School Ser 1993 ...................................... 5.90 7/ 1/13 884,620
150 Holy Cross College Ser 1992 ................................. 6.45 1/ 1/12 142,410
300 Mount Holyoke College Refg Ser 1992 A (MBIA Insured) ....... 6.30 7/ 1/13 281,580
----------- -------------
4,150 3,646,778
----------- -------------
ELECTRIC REVENUE (3.1%)
500 Massachusetts Municipal Wholesale Electric Company, Power
Supply 1992 Ser C ............................................ 6.625 7/ 1/18 475,145
----------- -------------
HOSPITAL REVENUE (16.6%)
500 Boston, Boston City Hospital-FHA Insured Mtge Refg Ser B .... 5.75 2/15/13 436,155
Massachusetts Health & Educational Facilities Authority,
100 Charlton Memorial Hospital Ser B ............................ 7.25 7/ 1/13 97,994
500 Dana-Farber Cancer Institute Ser F (FGIC Insured) .......... 6.00 12/ 1/15 443,905
500 Lahey Clinic Medical Center Ser B (MBIA Insured) ........... 5.625 7/ 1/15 421,740
1,000 Massachusetts General Hospital Ser F (MBIA Insured) ........ 6.00 7/ 1/15 889,730
200 McLean Hospital Ser C (FGIC Insured) ........................ 6.625 7/ 1/15 192,286
100 New England Deaconess Hospital Ser C ........................ 7.20 4/ 1/22 94,639
----------- -------------
2,900 2,576,449
----------- -------------
INDUSTRIAL DEVELOPMENT/POLLUTION CONTROL REVENUE (5.6%)
1,000 Massachusetts Industrial Finance Agency, Eastern Edison Co
Refg 1993 Ser ................................................ 5.875 8/ 1/08 868,560
----------- -------------
MORTGAGE REVENUE -MULTI-FAMILY (3.0%)
500 Massachusetts Housing Finance Agency, Rental 1994 Ser A (AMT)
(AMBAC Insured) .............................................. 6.60 7/ 1/14 467,720
----------- -------------
MORTGAGE REVENUE -SINGLE FAMILY (3.8%)
Massachusetts Housing Finance Agency,
435 Ser 21 (AMT) ................................................ 6.30 6/ 1/25 375,057
220 Ser 21 (AMT) ................................................ 7.125 6/ 1/25 214,007
----------- -------------
655 589,064
----------- -------------
</TABLE>
85
<PAGE>
DEAN WITTER MULTI-STATE MUNICIPAL SERIES TRUST
PORTFOLIO OF INVESTMENTS -- MASSACHUSETTS SERIES November 30, 1994 (continued)
-----------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATE VALUE
----------- -------- ---------- -------------
<C> <S> <C> <C> <C>
STUDENT LOAN REVENUE (3.8%)
$ 195 Massachusetts Educational Facilities Authority, Education
Loan Issue D Ser 1991 (AMT) (MBIA Insured) ................... 7.25 % 1/ 1/09 $ 197,952
400 New England Education Loan Marketing Corporation, 1992 Sub
Issue H (AMT) ................................................ 6.90 11/ 1/09 399,596
----------- -------------
595 597,548
----------- -------------
TRANSPORTATION FACILITIES REVENUE (13.5%)
300 Guam, Highway 1992 Ser A (Capital Guaranty Insured) ......... 6.30 5/ 1/12 288,048
300 Massachusetts, Highway Impr 1992 Ser A ....................... 6.00 6/ 1/13 268,851
Massachusetts Port Authority,
500 Ser 1992-B .................................................. 6.00 7/ 1/13 451,295
100 Ser A 1990 (AMT) (FGIC Insured) ............................. 7.50 7/ 1/20 102,128
250 Massachusetts Turnpike Authority, 1993 Ser A ................. 5.00 1/ 1/13 198,918
500 Woods Hole, Martha's Vineyard & Nantucket Steamship
Authority, 1994 Ser A ........................................ 5.125 3/ 1/12 399,210
500 Puerto Rico Highway & Transportation Authority, Refg Ser X .. 5.25 7/ 1/21 386,165
----------- -------------
2,450 2,094,615
----------- -------------
WATER & SEWER REVENUE (8.9%)
500 Boston Water & Sewer Commission, Sr 1992 Ser A ............... 5.75 11/ 1/13 433,560
500 Massachusetts Water Resources Authority, Ser A 1990 ......... 6.50 12/ 1/19 524,540
400 Puerto Rico Aqueduct & Sewer Authority, Ser 1988 A .......... 7.90 7/ 1/07 420,312
----------- -------------
1,400 1,378,412
----------- -------------
15,800 TOTAL MUNICIPAL BONDS (IDENTIFIED COST $15,547,747) .................... 14,192,476
----------- -------------
SHORT-TERM MASSACHUSETTS EXEMPT MUNICIPAL OBLIGATIONS (5.8%)
Massachusetts Health & Educational Facilities Authority,
200 Capital Asset Ser B (MBIA Insured) (Tender 12/1/94) ........ 3.35* 7/ 1/05 200,000
700 Williams College Ser E (Tender 12/1/94) ..................... 3.30* 8/ 1/14 700,000
----------- -------------
900 TOTAL SHORT-TERM MASSACHUSETTS EXEMPT MUNICIPAL OBLIGATIONS (IDENTIFIED
COST $900,000) ......................................................... 900,000
----------- -------------
$16,700 TOTAL INVESTMENTS (Identified Cost $16,447,747)(a) ....................... 97.3% 15,092,476
=========
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES .......................... 2.7 414,292
-------- ------------
NET ASSETS ............................................................... 100.0% $15,506,768
======== ============
<FN>
----------
* Variable or floating rate securities. Coupon rate shown reflects current
rate.
AMT Alternative Minimum Tax.
(a) The aggregate cost for federal income tax purposes is $16,447,747; the
aggregate gross unrealized appreciation is $58,736 and the aggregate
gross unrealized depreciation is $1,414,007, resulting in net
unrealized depreciation of $1,355,271.
</TABLE>
See Notes to Financial Statements
86
<PAGE>
DEAN WITTER MULTI-STATE MUNICIPAL SERIES TRUST
PORTFOLIO OF INVESTMENTS -- MICHIGAN SERIES November 30, 1994
-----------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATE VALUE
----------- -------- ---------- ------------
<C> <S> <C> <C> <C>
MICHIGAN EXEMPT MUNICIPAL BONDS (86.7%)
GENERAL OBLIGATION (2.4%)
$ 500 Kentwood Public Schools, 1992 Bldg & Site Refg ............. 6.40 % 5/ 1/15 $ 473,840
----------- ------------
EDUCATIONAL FACILITIES REVENUE (11.9%)
1,000 Central Michigan University, Refg Ser 1993 (MBIA Insured) . 5.50 10/ 1/10 862,830
1,000 Michigan State University, Ser 1992 A ...................... 6.00 8/15/16 890,110
500 Wayne State University, Ser 1993 (AMBAC Insured) .......... 5.50 11/15/18 413,945
200 Western Michigan University, Ser 1991 B (AMBAC Insured) ... 6.50 7/15/21 190,522
----------- ------------
2,700 2,357,407
----------- ------------
ELECTRIC REVENUE (11.1%)
2,000 Michigan Public Power Agency, Belle River 1993 A .......... 5.25 1/ 1/18 1,578,080
500 Wyandotte, Electric Refg 1992 (MBIA Insured) ............... 6.25 10/ 1/17 463,385
200 Puerto Rico Electric Power Authority, Power Ser O ......... 5.00 7/ 1/12 158,514
----------- ------------
2,700 2,199,979
----------- ------------
HOSPITAL REVENUE (16.5%)
1,000 Kent Hospital Finance Authority, Butterworth Hospital Refg
Ser 1993 A ................................................. 5.375 1/15/19 784,850
Michigan Hospital Finance Authority,
300 Detroit Medical Center Oblig Group Ser 1991 A ............. 7.50 8/15/11 305,505
100 Henry Ford Continuing Care Corp Ser 1991 .................. 6.75 7/ 1/11 97,274
500 Henry Ford Health System Refg Ser 1992 A .................. 5.75 9/ 1/17 410,260
1,000 Oakwood Hospital Oblig Group Refg Ser 1993 A (FGIC
Insured) ................................................... 5.625 11/ 1/18 832,330
500 Royal Oak Hospital Finance Authority, William Beaumont
Hospital Ser 1991 D ........................................ 6.75 1/ 1/20 480,155
400 University of Michigan, Ser 1990 .......................... 6.375 12/ 1/24 352,580
----------- ------------
3,800 3,262,954
----------- ------------
INDUSTRIAL DEVELOPMENT/POLLUTION CONTROL REVENUE (4.5%)
200 Michigan Strategic Fund, Ford Motor Co Refg Ser 1991 A .... 7.10 2/ 1/06 204,772
Monroe County, Detroit Edison Co
200 Proj #1 (AMT) (FGIC Insured) .............................. 7.65 9/ 1/20 206,078
500 Monroe & Fermi Plants Collateralized Ser 1-1992 (AMT)
(MBIA Insured) ............................................ 6.875 9/ 1/22 486,955
----------- ------------
900 897,805
----------- ------------
MORTGAGE REVENUE -MULTI-FAMILY (9.0%)
Michigan Housing Development Authority,
500 Rental Ser 1992 A ......................................... 6.60 4/ 1/12 470,960
1,000 Ser 1992 A (FSA Insured) .................................. 6.50 4/ 1/23 904,640
400 Ser 1990 A (AMT) .......................................... 7.70 4/ 1/23 405,564
----------- ------------
1,900 1,781,164
----------- ------------
NURSING & HEALTH RELATED FACILITIES REVENUE (5.7%)
1,200 University of Michigan, Medical Service Plan Ser 1991 ..... 6.50 12/ 1/21 1,122,156
----------- ------------
PUBLIC FACILITIES REVENUE (6.8%)
1,500 Michigan Building Authority Revenue, Refg Ser I ........... 6.25 10/ 1/20 1,353,105
----------- ------------
</TABLE>
87
<PAGE>
DEAN WITTER MULTI-STATE MUNICIPAL SERIES TRUST
PORTFOLIO OF INVESTMENTS --MICHIGAN SERIES November 30, 1994 (continued)
------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATE VALUE
----------- -------- ---------- ------------
<C> <S> <C> <C> <C>
RESOURCE RECOVERY REVENUE (2.3%)
$ 300 Detroit Economic Development Corporation, Ser A 1991 (AMT)
(FSA Insured) .............................................. 6.875 % 5/ 1/09 $ 301,206
150 Greater Detroit Resource Recovery Authority, Ser A ........ 9.25 12/13/08 156,945
----------- ------------
450 458,151
----------- ------------
TRANSPORTATION FACILITIES REVENUE (3.9%)
250 Michigan, Trunk Line Rfg Ser 1992 A ........................ 5.75 10/ 1/12 219,338
Wayne County, Detroit Metropolitan Wayne County Airport Sub
Lien
400 Ser 1993 C (MBIA Insured) ................................. 5.25 12/ 1/13 325,960
250 Ser 1991 B (AMT) (MBIA Insured) ........................... 6.75 12/ 1/21 238,682
----------- ------------
900 783,980
----------- ------------
WATER & SEWER REVENUE (12.6%)
Detroit,
500 Sewage Disposal Ser 1991 (FGIC Insured) ................... 6.625 7/ 1/21 480,960
1,000 Sewage Refg Ser 1993 A (FGIC Insured) ..................... 5.70 7/ 1/23 825,440
400 Water Supply Rfg Ser 1992 (FGIC Insured) .................. 6.375 7/ 1/22 363,312
300 Water Supply Rfg Ser 1992 INFLOS (FGIC Insured)
(Prerefunded) ............................................. 8.999+ 7/ 1/22 311,625
500 Puerto Rico Aqueduct & Sewer Authority, Ser 1988 A ........ 7.90 7/ 1/07 525,390
----------- ------------
2,700 2,506,727
----------- ------------
19,250 TOTAL MUNICIPAL BONDS (IDENTIFIED COST $18,936,936) .................. 17,197,268
----------- ------------
SHORT-TERM MICHIGAN EXEMPT MUNICIPAL OBLIGATIONS (9.1%)
900 Delta County Economic Development Corporation,
Mead-Escanaba Paper Co 1985 Ser E (Tender 12/1/94) ........ 3.55* 12/ 1/23 900,000
900 University of Michigan, Hospital Ser 1992 A (Tender
12/1/94) .................................................. 3.50* 12/ 1/19 900,000
----------- ------------
1,800 TOTAL SHORT-TERM MICHIGAN EXEMPT MUNICIPAL OBLIGATIONS (IDENTIFIED
COST $1,800,000) ..................................................... 1,800,000
----------- ------------
$21,050 TOTAL INVESTMENTS (Identified Cost $20,736,936) (a) .................... 95.8% 18,997,268
=========
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES ........................ 4.2 833,727
-------- ------------
NET ASSETS ............................................................. 100.0% $19,830,995
======== ============
<FN>
---------------
* Variable or floating rate securities. Coupon rate shown reflects current
rate.
+ Current coupon rate for residual interest bonds. This rate resets
periodically as the auction rate on the related short-term securities
fluctuates.
AMT Alternative Minimum Tax.
INFLOS Inverse Floating Rate Securities.
(a) The aggregate cost for federal income tax purposes is $20,736,936;
the aggregate gross unrealized appreciation is $41,532, and the
aggregate gross unrealized depreciation is $1,781,200, resulting in
net unrealized depreciation of $1,739,668.
</TABLE>
See Notes to Financial Statements
88
<PAGE>
DEAN WITTER MULTI-STATE MUNICIPAL SERIES TRUST
PORTFOLIO OF INVESTMENTS -- MINNESOTA SERIES November 30, 1994
-----------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATE VALUE
----------- -------- ---------- -----------
<C> <S> <C> <C> <C>
MINNESOTA EXEMPT MUNICIPAL BONDS (90.6%)
GENERAL OBLIGATION (5.9%)
$ 100 Little Falls Independent School District #482, Ser 1991
(AMBAC Insured) ........................................... 6.80 % 2/ 1/10 $ 104,095
Minneapolis,
100 Sales Tax Refg Ser 1992 .................................. 6.25 4/ 1/12 96,606
300 Dtd 8/15/92 .............................................. 5.90 12/ 1/13 266,760
100 South Washington Independent School District #833, Ser
1991 A (FGIC Insured) ..................................... 6.875 6/ 1/09 105,050
----------- -----------
600 572,511
----------- -----------
EDUCATIONAL FACILITIES REVENUE (15.1%)
200 Minnesota Higher Education Facilities Authority, Hamline
University Ser Three-K .................................... 6.60 6/ 1/09 193,488
250 University of St Thomas Refg Ser Three-R2 ................ 5.60 9/ 1/14 211,165
200 Northfield, St Olaf College 1992 .......................... 6.40 10/ 1/21 183,510
1,000 University of Minnesota, Ser 1993 A ....................... 4.80 8/15/03 891,450
----------- -----------
1,650 1,479,613
----------- -----------
ELECTRIC REVENUE (6.3%)
300 Northern Municipal Power Agency, Refg Ser 1989 A ......... 5.00 1/ 1/21 224,769
500 Southern Minnesota Municipal Power Agency, Ser 1993 B .... 5.00 1/ 1/13 392,880
----------- -----------
800 617,649
----------- -----------
HOSPITAL REVENUE (19.1%)
500 Breckenridge, Catholic Health Corp Ser 1993 ............... 5.25 11/15/13 393,050
500 Robbinsdale, North Memorial Medical Center Ser 1993A
(AMBAC Insured) ........................................... 5.45 5/15/13 419,445
Rochester, Mayo Foundation/Mayo Medical Center
250 Ser 1992 I ............................................... 5.75 11/15/21 210,223
200 Ser 1992 F ............................................... 6.25 11/15/21 180,802
300 St Paul Housing & Redevelopment Authority, Health East
Refg Ser 1993-A ........................................... 6.625 11/ 1/17 258,624
500 St Paul-Ramsey Medical Center Ser 1993 (AMBAC Insured) .. 5.55 5/15/23 404,520
----------- -----------
2,250 1,866,664
----------- -----------
INDUSTRIAL DEVELOPMENT/POLLUTION CONTROL REVENUE (11.6%)
500 Anoka County, United Power Assoc Ser 1987 A (NRU-CFC Gtd)
(AMT) ..................................................... 6.95 12/ 1/08 503,095
500 Bass Brook, Minnesota Power & Light Co Refg Ser 1992 ..... 6.00 7/ 1/22 425,315
Minneapolis Community Development Agency,
100 Ltd Tax Supported Common Bond Fund Ser 1991-3 ........... 8.25 12/ 1/11 107,005
100 Ltd Tax Supported Common Bond Fund Ser 1991-1 (AMT) ..... 8.00 12/ 1/16 103,958
----------- -----------
1,200 1,139,373
----------- -----------
MORTGAGE REVENUE -MULTI-FAMILY (4.5%)
300 Burnsville, Summit Park Apts FHA Insured Refg Ser 1993 ... 6.00 7/ 1/33 249,249
200 Minneapolis Housing Finance Agency, Ser 1992 A ........... 6.95 8/ 1/17 193,126
----------- -----------
500 442,375
----------- -----------
</TABLE>
89
<PAGE>
DEAN WITTER MULTI-STATE MUNICIPAL SERIES TRUST
PORTFOLIO OF INVESTMENTS --MINNESOTA SERIES November 30, 1994 (continued)
-----------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATE VALUE
----------- -------- ---------- -----------
<C> <S> <C> <C> <C>
MORTGAGE REVENUE -SINGLE FAMILY (10.8%)
$ 100 Dakota & Washington Counties Housing & Redevelopment
Authority, GNMA-Backed Ser 1988 (AMT) ..................... 8.375% 9/ 1/21 $ 117,877
200 Minneapolis-Saint Paul Housing Finance Board, GNMA-Backed
Phase IX Ser 1991 (AMT) ................................... 7.25 8/ 1/21 196,272
Minnesota Housing Finance Agency,
115 Ser 1990 D (AMT) ......................................... 8.00 1/ 1/23 116,004
475 Ser 1992 C-1 (AMT) ....................................... 6.75 7/ 1/23 441,631
200 Ser 1992 H (AMT) ......................................... 6.50 1/ 1/26 179,528
----------- -----------
1,090 1,051,312
----------- -----------
NURSING & HEALTH RELATED FACILITIES REVENUE (4.8%)
500 Minneapolis & Saint Paul Housing & Redevelopment
Authority, Group Health Plan Inc Ser 1992 ................. 6.75 12/ 1/13 472,460
----------- -----------
PUBLIC FACILITIES REVENUE (10.5%)
300 Hennepin County, Ser 1991 COPs ............................ 6.80 5/15/17 298,956
Saint Paul Housing & Redevelopment Authority,
400 Civic Center Ser 1993 .................................... 5.45 11/ 1/13 330,940
500 Civic Center Ser 1993 .................................... 5.55 11/ 1/23 401,725
----------- -----------
1,200 1,031,621
----------- -----------
WATER & SEWER REVENUE (2.0%)
Minnesota Public Facilities Authority,
100 Water Pollution Control Ser 1991 A ....................... 6.95 3/ 1/13 101,740
100 Water Pollution Control Ser 1992 A ....................... 6.50 3/ 1/14 97,419
----------- -----------
200 199,159
----------- -----------
9,990 TOTAL MUNICIPAL BONDS (Identified Cost $9,846,430) .................. 8,872,737
----------- -----------
SHORT-TERM MINNESOTA EXEMPT MUNICIPAL OBLIGATION (2.0%)
200 Beltrami County, Northwood Panelboard Co Ser 1991 (Tender
12/1/94) (Identified Cost $200,000) ....................... 3.55* 12/ 1/21 200,000
----------- -----------
$10,190 TOTAL INVESTMENTS (Identified Cost $10,046,430) (a) .................... 92.6% 9,072,737
=========
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES ........................ 7.4 720,114
-------- -----------
NET ASSETS .............................................................100.0% $9,792,851
======== ===========
<FN>
----------
* Variable or floating rate security. Coupon rate shown reflects current
rate.
AMT Alternative Minimum Tax.
COPs Certificates of Participation.
(a) The aggregate cost for federal income tax purposes is $10,046,430; the
aggregate gross unrealized appreciation is $37,920 and the aggregate
gross unrealized depreciation is $1,011,613, resulting in net
unrealized depreciation of $973,693.
</TABLE>
See Notes to Financial Statements
90
<PAGE>
DEAN WITTER MULTI-STATE MUNICIPAL SERIES TRUST
PORTFOLIO OF INVESTMENTS -- NEW JERSEY SERIES November 30, 1994
-----------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATE VALUE
----------- --------- ---------- -------------
<C> <S> <C> <C> <C>
NEW JERSEY EXEMPT MUNICIPAL BONDS (89.8%)
GENERAL OBLIGATIONS (6.3%)
$ 3,000 Guam, 1993 Ser A .............................................. 5.375% 11/15/13 $ 2,396,280
500 Essex County, FY Ser 1991 (FSA Insured) ....................... 6.50 12/ 1/11 493,420
----------- -------------
3,500 2,889,700
----------- -------------
EDUCATIONAL FACILITIES REVENUE (3.3%)
500 New Jersey Economic Development Authority, The Seeing Eye Inc
1991 .......................................................... 7.30 4/ 1/11 481,500
500 Rutgers, The State University Refg Ser R ...................... 6.50 5/ 1/13 491,025
500 University of Medicine & Dentistry of New Jersey, Refg Ser D . 6.50 12/ 1/04 508,160
----------- -------------
1,500 1,480,685
----------- -------------
ELECTRIC REVENUE (3.5%)
2,000 Puerto Rico Electric Power Authority, Power Ser O+ ........... 5.00 7/ 1/12 1,585,140
----------- -------------
HOSPITAL REVENUE (12.7%)
New Jersey Health Care Facilities Financing Authority,
1,000 Allegany Health System Ser 1993 (MBIA Insured) ............... 5.125 7/ 1/13 810,200
1,000 Atlantic City Medical Center Ser C ........................... 6.80 7/ 1/11 964,340
500 Cathedral Health Services Inc -FHA Insured Mtges Ser A ...... 7.25 2/15/21 496,435
1,000 Columbus Hospital Ser A ...................................... 7.50 7/ 1/08 965,310
460 Pascack Valley Hospital Assn Ser 1991 ........................ 6.90 7/ 1/21 423,420
500 Robert Wood Johnson University Hospital Ser B (MBIA Insured) 6.625 7/ 1/16 484,095
1,000 Somerset Medical Center Ser A (FGIC Insured) ................ 5.10 7/ 1/14 804,490
1,000 Underwood-Memorial Hospital Ser B (AMBAC Insured) .......... 5.70 7/ 1/23 838,040
----------- -------------
6,460 5,786,330
----------- -------------
INDUSTRIAL DEVELOPMENT/POLLUTION CONTROL REVENUE (13.5%)
500 Middlesex County Pollution Control Financing Authority,
Amerada Hess Corp Refg Ser 1992 ............................. 6.875 12/ 1/22 454,465
New Jersey Economic Development Authority,
500 American Airlines Inc Ser 1991 (AMT) ......................... 7.10 11/ 1/31 461,115
1,000 BP Oil Inc Ser 1982 .......................................... 6.55 10/ 1/12 966,260
500 Hackensack Water Co Ser C (AMT) .............................. 7.00 10/ 1/17 490,995
300 Jersey Central Power & Light Co 1985 Ser ..................... 7.10 7/ 1/15 285,978
Salem County Pollution Control Financing Authority,
2,100 E I du Pont de Nemours & Co 1992 Ser A (AMT) ................. 6.125 7/15/22 1,851,045
2,000 Public Service Electric & Gas Co 1993 Ser A (MBIA Insured) .. 5.70 5/ 1/28 1,641,640
----------- -------------
6,900 6,151,498
----------- -------------
MORTGAGE REVENUE -MULTI-FAMILY (3.2%)
New Jersey Housing & Mortgage Finance Agency,
1,000 Presidential Plaza at Newport -FHA Insured Mtges Refg 1991
Ser 1 ......................................................... 7.00 5/ 1/30 989,570
500 Rental 1991 Ser A (AMT) ...................................... 7.25 11/ 1/22 486,555
----------- -------------
1,500 1,476,125
----------- -------------
</TABLE>
91
DEAN WITTER MULTI-STATE MUNICIPAL SERIES TRUST
PORTFOLIO OF INVESTMENTS -- NEW JERSEY SERIES November 30, 1994 (continued)
-----------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATE VALUE
----------- --------- ---------- -------------
<C> <S> <C> <C> <C>
MORTGAGE REVENUE -SINGLE FAMILY (2.0%)
$ 1,000 Puerto Rico Housing Finance Corporation, Portfolio Two
GNMA-Backed Ser E (AMT)+ ...................................... 6.562% 8/ 4/25 $ 890,000
----------- -------------
NURSING & HEALTH RELATED FACILITIES REVENUE (2.0%)
985 New Jersey Health Care Facilities Financing Authority,
Spectrum For Living-FHA Insured Mortgage Refg Ser B .......... 6.50 2/ 1/22 902,024
----------- -------------
PUBLIC FACILITIES REVENUE (5.6%)
1,000 Atlantic County Utilities Authority, Solid Waste Ser 1992 .... 7.125 3/ 1/16 933,240
2,000 New Jersey Sports & Exposition Authority, State Contract 1993
Ser A ......................................................... 5.50 9/ 1/23 1,620,020
----------- -------------
3,000 2,553,260
----------- -------------
RESOURCE RECOVERY REVENUE (8.4%)
1,000 Mercer County Improvement Authority, Solid Waste Refg Ser A of
1992 (AMT) (FGIC Insured) ..................................... 6.70 4/ 1/13 980,260
2,000 Union County Utilities Authority, 1991 Ser A (AMT) ........... 7.20 6/15/14 1,928,940
900 Warren County Pollution Control Financing Authority, Warren
Energy Resource Co Ltd Partnership Ser 1984 (MBIA Insured) ... 6.60 12/ 1/07 909,819
----------- -------------
3,900 3,819,019
----------- -------------
TRANSPORTATION FACILITIES REVENUE (10.2%)
1,000 Delaware River & Bay Authority, Ser 1993 (MBIA Insured) ...... 5.00 1/ 1/17 775,800
1,500 New Jersey Highway Authority, Sr Parkway Refg 1992 Ser ....... 6.25 1/ 1/14 1,415,475
1,000 New Jersey Turnpike Authority, Ser C .......................... 5.75 1/ 1/11 891,450
2,000 Puerto Rico Highway & Transportation Authority, Refg Ser X+ .. 5.25 7/ 1/21 1,544,660
----------- -------------
5,500 4,627,385
----------- -------------
WATER & SEWER REVENUE (19.1%)
1,000 Atlantic City Municipal Utilities Authority, Refg Ser 1993 ... 5.75 5/ 1/17 851,560
1,000 Lacey Municipal Utilities Authority, Ser 1993 A (MBIA Insured) 5.50 12/ 1/19 829,160
1,000 Northwest Bergen County Utilities Authority, Refg 1992 Ser
(MBIA Insured) ................................................ 6.00 7/15/13 922,050
Passaic Valley Sewerage Commissioners,
2,000 Ser 1992 D (AMBAC Insured) ................................... 5.75 12/ 1/13 1,777,820
1,000 Refg Ser 1992 D (AMBAC Insured) .............................. 5.80 12/ 1/18 871,860
1,790 Passaic Valley Water Commission, 1992 Ser A (FGIC Insured)
(Prerefunded) ................................................. 6.40 12/15/22 1,855,013
1,500 Puerto Rico Aqueduct & Sewer Authority, Ser 1988 A+ .......... 7.90 7/ 1/07 1,576,170
----------- -------------
9,290 8,683,633
----------- -------------
45,535 TOTAL MUNICIPAL BONDS (IDENTIFIED COST $44,696,189) ...................... 40,844,799
----------- -------------
</TABLE>
92
<PAGE>
DEAN WITTER MULTI-STATE MUNICIPAL SERIES TRUST
PORTFOLIO OF INVESTMENTS -- NEW JERSEY SERIES November 30, 1994 (continued)
------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATE VALUE
----------- --------- ---------- -------------
<C> <S> <C> <C> <C>
SHORT-TERM NEW JERSEY EXEMPT MUNICIPAL OBLIGATIONS (6.1%)
New Jersey Economic Development Authority, El Dorado
$ 1,800 Terminal Ser 1984 A (Tender 12/1/94) ......................... 3.40 %* 5/ 1/01 $ 1,800,000
1,000 Toys R US Inc (Tender 12/1/94) ............................... 3.35 * 4/ 1/19 1,000,000
----------- -------------
2,800 TOTAL SHORT-TERM NEW JERSEY EXEMPT MUNICIPAL OBLIGATIONS (IDENTIFIED COST
$2,800,000) .............................................................. 2,800,000
----------- -------------
$48,335 TOTAL INVESTMENTS (Identified Cost $47,496,189) (a) ........................ 95.9% 43,644,799
=========
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES ............................ 4.1 1,852,456
-------- ------------
NET ASSETS ................................................................. 100.0% $45,497,255
======== ============
<FN>
----------
* Variable or floating rate securities. Coupon rate shown reflects
current rate.
+ Investment in Puerto Rico represents 12.30% of net assets.
AMT Alternative Minimum Tax.
(a) The aggregate cost for federal income tax purposes is $47,496,189;
the aggregate gross unrealized appreciation is $155,242 and the gross
unrealized depreciation is $4,006,632, resulting in net unrealized
depreciation of $3,851,390.
</TABLE>
See Notes to Financial Statements
93
<PAGE>
DEAN WITTER MULTI-STATE MUNICIPAL SERIES TRUST
PORTFOLIO OF INVESTMENTS -- NEW YORK SERIES November 30, 1994
-----------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATE VALUE
----------- -------- ---------- -------------
<C> <S> <C> <C> <C>
NEW YORK EXEMPT MUNICIPAL BONDS (76.7%)
GENERAL OBLIGATION (2.5%)
$ 100 New York City, 1990 Ser D ..................................... 6.00 % 8/ 1/06 $ 91,358
300 Puerto Rico, Pub Impr Refg Ser 1992 A+ ........................ 6.00 7/ 1/14 266,505
----------- -------------
400 357,863
----------- -------------
EDUCATIONAL FACILITIES REVENUE (14.6%)
New York State Dormitory Authority,
400 Manhattan College Ser 1992 ................................... 6.50 7/ 1/19 373,556
1,000 State University Ser 1993 A .................................. 5.25 5/15/15 780,370
345 University of Rochester Ser 1987 ............................. 6.50 7/ 1/09 333,018
500 University of Rochester Ser 1993 A ........................... 5.625 7/ 1/12 421,675
200 Upstate Community Colleges Ser 1991 A (Prerefunded) ......... 7.30 7/ 1/21 218,268
----------- -------------
2,445 2,126,887
----------- -------------
ELECTRIC REVENUE (3.8%)
500 New York State Power Authority, General Purpose Ser CC ....... 5.25 1/ 1/18 391,930
200 Puerto Rico Electric Power Authority, Power Ser O+ ........... 5.00 7/ 1/12 158,514
----------- -------------
700 550,444
----------- -------------
HOSPITAL REVENUE (2.6%)
New York State Medical Care Facilities Finance Agency, Insured
Hospital & Nursing Home -FHA Insured Mortgage
250 1993 Ser B ................................................... 5.50 2/15/22 196,598
200 1992 Ser A ................................................... 6.70 8/15/23 187,674
----------- -------------
450 384,272
----------- -------------
INDUSTRIAL DEVELOPMENT/POLLUTION CONTROL REVENUE (12.6%)
New York State Energy Research & Development Authority,
1,000 Brooklyn Union Gas Co 1991 Ser A & B (AMT) ................... 6.952 7/ 1/26 923,700
500 Consolidated Edison Co of New York Ser 1991 A (AMT) ......... 6.00 3/15/28 408,550
300 Long Island Lighting Co 1990 Ser A (AMT) ..................... 7.15 6/ 1/20 270,642
250 Rochester Gas & Electric Corp Ser 1992 B (AMT) (MBIA
Insured) ...................................................... 6.50 5/15/32 231,940
----------- -------------
2,050 1,834,832
----------- -------------
MORTGAGE REVENUE -SINGLE FAMILY (10.2%)
New York State Mortgage Agency,
500 Home Owners Ser 27 ........................................... 6.90 4/ 1/15 483,525
100 Home Owners Ser UU (AMT) ..................................... 7.75 10/ 1/23 101,697
1,000 Puerto Rico Housing Finance Corporation, Portfolio Two
GNMA-Backed Ser E (AMT)+ ...................................... 6.562 8/ 4/25 890,000
----------- -------------
1,600 1,475,222
----------- -------------
PUBLIC FACILITIES REVENUE (5.0%)
350 New York City Cultural Resources Trust, The Museum of Modern
Art Refg Ser 1993 A ........................................... 5.40 1/ 1/12 302,806
500 United Nations Development Corporation, Sr Lien 1992 Refg Ser
A ............................................................. 6.00 7/ 1/26 421,770
----------- -------------
850 724,576
----------- -------------
RESOURCE RECOVERY REVENUE (3.4%)
500 Oneida-Herkimer Solid Waste Management Authority, Ser 1992 ... 6.65 4/ 1/05 490,085
----------- -------------
</TABLE>
94
<PAGE>
DEAN WITTER MULTI-STATE MUNICIPAL SERIES TRUST
PORTFOLIO OF INVESTMENTS -- NEW YORK SERIES November 30, 1994 (continued)
-----------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATE VALUE
----------- -------- ---------- -------------
<C> <S> <C> <C> <C>
TAX ALLOCATION (3.6%)
$ 700 Grand Central District Management Association Inc, Cap Impr
Refg Ser 1994 ................................................. 5.25 % 1/ 1/22 $ 526,617
----------- -------------
TRANSPORTATION FACILITIES REVENUE (2.6%)
500 Triborough Bridge & Tunnel Authority, Gen Pur Ser 1993 B ..... 5.00 1/ 1/20 374,950
----------- -------------
WATER & SEWER REVENUE (12.3%)
New York City Municipal Water Finance Authority,
600 1994 Ser B ................................................... 5.375 6/15/07 510,960
1,000 1993 Ser A ................................................... 6.00 6/15/17 860,180
400 Puerto Rico Aqueduct & Sewer Authority, Ser 1988 A+ .......... 7.90 7/ 1/07 420,312
----------- -------------
2,000 1,791,452
----------- -------------
OTHER REVENUE (3.5%)
500 New York Local Government Assistance Corporation, Ser 1991 C . 7.00 4/ 1/10 503,055
----------- -------------
12,695 TOTAL MUNICIPAL BONDS (IDENTIFIED COST $12,510,309) ..................... 11,140,255
----------- -------------
SHORT-TERM NEW YORK EXEMPT MUNICIPAL OBLIGATIONS (19.3%)
700 New York City Cultural Resources Trust, Solomon R Guggenheim
Foundation Ser 1990 B (Tender 12/1/94) ........................ 3.40* 12/ 1/15 700,000
New York State Dormitory Authority,
700 Cornell University 1990 Ser B (Tender 12/1/94) ............... 3.40* 7/ 1/25 700,000
700 Oxford University Press Inc Ser 1993 (Tender 12/1/94) ....... 3.40* 7/ 1/23 700,000
700 Port Authority of New York & New Jersey, Ser 2 (Tender
12/1/94) ...................................................... 3.40* 5/ 1/19 700,000
----------- -------------
2,800 TOTAL SHORT-TERM NEW YORK EXEMPT MUNICIPAL OBLIGATIONS (IDENTIFIED COST
$2,800,000) ............................................................. 2,800,000
----------- -------------
$15,495 TOTAL INVESTMENTS (Identified Cost $15,310,309) (a) ....................... 96.0% 13,940,255
=========
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES ........................... 4.0 581,668
-------- ------------
NET ASSETS ................................................................ 100.0% $14,521,923
======== ============
<FN>
----------
* Variable or floating rate security. Coupon rate shown reflects current
rate.
+ Investment in Puerto Rico represents 11.95% of net assets.
AMT Alternative Minimum Tax.
(a) The aggregate cost for federal income tax purposes is $15,310,309;
the aggregate gross unrealized appreciation is $26,856 and the
aggregate gross unrealized depreciation is $1,396,910, resulting in
net unrealized depreciation of $1,370,054.
</TABLE>
See Notes to Financial Statements
95
<PAGE>
DEAN WITTER MULTI-STATE MUNICIPAL SERIES TRUST
PORTFOLIO OF INVESTMENTS --OHIO SERIES November 30, 1994
-----------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATE VALUE
----------- -------- ---------- -------------
<C> <S> <C> <C> <C>
OHIO EXEMPT MUNICIPAL BONDS (90.9%)
GENERAL OBLIGATION (7.5%)
$ 300 Bedford School District, Ser 1993 .......................... 6.25 % 12/ 1/13 $ 277,140
500 Columbus School District, Renovation & Impr Ser 1992 (FGIC
Insured) (Prerefunded) ..................................... 6.65 12/ 1/12 527,955
180 Euclid, Ser 1991 ........................................... 6.625 12/ 1/11 177,386
100 Euclid City School District, School Impr Ser 1991 ......... 7.10 12/ 1/11 101,490
100 Gahanna, Ser A (Prerefunded) ............................... 7.00 6/ 1/12 107,127
250 Hilliard City School District, School Impr Refg Ser 1992
(FGIC Insured) ............................................. 6.55 12/ 1/05 255,503
100 South Euclid, Unltd Tax Recreational ...................... 7.00 12/ 1/11 100,994
----------- -------------
1,530 1,547,595
----------- -------------
EDUCATIONAL FACILITIES REVENUE (20.7%)
Ohio Higher Educational Facility Commission,
500 Case Western Reserve University Ser 1992 .................. 6.00 10/ 1/22 441,800
1,000 John Carroll University Refg .............................. 5.30 11/15/14 802,180
1,000 Oberlin College Ser 1993 .................................. 5.375 10/ 1/15 825,950
University of Cincinnati,
1,000 General Receipts Ser R7 ................................... 5.20 6/ 1/10 843,890
500 General Receipts Ser G .................................... 7.00 6/ 1/11 507,340
1,000 University of Toledo, Ser 1992 A (FGIC Insured) ........... 5.90 6/ 1/20 873,220
----------- -------------
5,000 4,294,380
----------- -------------
ELECTRIC REVENUE (5.8%)
500 Hamilton! Refg 1992 Ser A (FGIC Insured) ................... 6.00 10/15/12 457,965
500 Ohio Municipal Electric Generation Agency Joint Venture 5,
Belleville Hydro 1993 Certificates (AMBAC Insured) ........ 5.375 2/15/13 422,480
400 Puerto Rico Electric Power Authority, Power Ser O ......... 5.00 7/ 1/12 317,028
----------- -------------
1,400 1,197,473
----------- -------------
HOSPITAL REVENUE (21.6%)
1,000 Akron Bath & Copley Joint Township Hospital District, Summa
Health Ser 1992 A .......................................... 6.25 11/15/07 959,720
1,000 Clermont County, Mercy Health Ser 1991 ..................... 6.733 10/ 5/21 950,050
490 Cuyahoga County, Meridia Health Ser 1990 ................... 7.25 8/15/19 486,580
Hamilton County,
475 Bethesda Hospital Inc Ser 1986 A .......................... 7.00 1/ 1/09 476,620
500 Franciscan Sisters of the Poor/Providence Hospital Ser
1992 ....................................................... 6.875 7/ 1/15 439,530
Lucas County,
100 Flower Memorial Hospital Ser A ............................ 8.125 12/ 1/11 100,600
1,000 Toledo Hospital Impr & Refg Ser 1993 (MBIA Insured) ...... 5.00 11/15/22 751,080
300 Middleburg Heights, Southwest General Hospital Ser 1991 ... 7.20 8/15/19 299,607
----------- -------------
4,865 4,463,787
----------- -------------
INDUSTRIAL DEVELOPMENT/POLLUTION CONTROL REVENUE (4.5%)
400 Ashtabula County, Ashland Oil Inc Refg 1992 Ser A ......... 6.90 5/ 1/10 383,520
100 Ohio Economic Development Authority, Superior Forge & Steel
Corp Ser 1991-3 (AMT) ...................................... 7.625 6/ 1/11 98,389
500 Ohio Water Development Authority, Dayton Power & Light Co
Collateralized Refg 1992 Ser A ............................. 6.40 8/15/27 447,580
----------- -------------
1,000 929,489
----------- -------------
</TABLE>
96
<PAGE>
DEAN WITTER MULTI-STATE MUNICIPAL SERIES TRUST
PORTFOLIO OF INVESTMENTS -- OHIO SERIES November 30, 1994 (continued)
----------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATE VALUE
----------- -------- ---------- -------------
<C> <S> <C> <C> <C>
MORTGAGE REVENUE -SINGLE FAMILY (3.7%) .....................
$ 800 Ohio Housing Finance Agency, GNMA-Backed 1990 Ser A-1 & 2
(AMT) ...................................................... 6.903% 3/ 1/31 $ 764,480
----------- -------------
PUBLIC FACILITIES REVENUE (8.0%)
Ohio Building Authority,
1,000 1993 Ser A ................................................ 5.50 10/ 1/12 845,720
1,000 Workers' Compensation/William Green Building 1993 Ser A .. 5.125 4/ 1/10 816,330
----------- -------------
2,000 1,662,050
----------- -------------
TRANSPORTATION FACILITIES REVENUE (4.1%)
1,000 Ohio Turnpike Commission, 1994 Ser A ....................... 5.75 2/15/24 841,990
----------- -------------
WATER & SEWER REVENUE (15.0%)
1,000 Clermont County, Sewer Refg (AMBAC Insured) ................ 5.20 12/ 1/21 782,960
300 Columbus, Sewerage Refg Ser 1992 ........................... 6.25 6/ 1/08 289,928
500 Hamilton! Water 1991 Ser A (MBIA Insured) .................. 6.30 10/15/21 469,280
1,000 Montgomery County, Water Ser 1992 (FGIC Insured) .......... 6.25 11/15/17 5,390
600 Puerto Rico Aqueduct & Sewer Authority, Ser 1988 A ........ 7.90 7/ 1/07 630,468
----------- -------------
3,400 3,108,026
----------- -------------
20,995 TOTAL MUNICIPAL BONDS (IDENTIFIED COST $20,638,911 ) ................. 18,809,270
----------- -------------
SHORT-TERM OHIO EXEMPT MUNICIPAL OBLIGATIONS (3.9%)
300 Ohio Water Development Authority, Mead Corp 1986 Ser B
(Tender 12/1/94) ........................................... 3.45* 11/ 1/15 300,000
500 Cuyahoga County, University Hospitals of Cleveland Ser 1985
(Tender 12/1/94) ........................................... 3.65* 1/ 1/16 500,000
----------- -------------
800 TOTAL SHORT-TERM OHIO EXEMPT MUNICIPAL OBLIGATIONS (IDENTIFIED COST
$800,000) ............................................................ 800,000
----------- -------------
$21,795 TOTAL INVESTMENTS (Identified Cost $21,438,911) (a) .................... 94.8% 19,609,270
=========
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES ........................ 5.2 1,083,391
-------- ------------
NET ASSETS ............................................................. 100.0% $20,692,661
======== ============
<FN>
----------
* Variable or floating rate securities. Coupon rate shown reflects
current rate.
AMT Alternative Minimum Tax.
(a) The aggregate cost for federal income tax purposes is $21,438,911;
the aggregate gross unrealized appreciation is $54,645, and the
aggregate gross unrealized depreciation is $1,884,286, resulting in
net unrealized depreciation of $1,829,641.
</TABLE>
See Notes to Financial Statements
97
<PAGE>
DEAN WITTER MULTI-STATE MUNICIPAL SERIES TRUST
PORTFOLIO OF INVESTMENTS -- PENNSYLVANIA SERIES November 30, 1994
-----------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATE VALUE
----------- ---------- ---------- -------------
<C> <S> <C> <C> <C>
PENNSYLVANIA EXEMPT MUNICIPAL BONDS (86.5%)
GENERAL OBLIGATION (7.5%)
$ 2,000 Berks County, Second Ser 1992 (FGIC Insured) ................. 5.75 % 11/15/12 $ 1,776,440
300 McKeesport Area School District, Refg Ser 1991 ............... 5.00 4/ 1/13 235,152
1,000 Reading, Ser of 1992 (AMBAC Insured) (Prerefunded) .......... 6.50 11/15/12 1,033,790
600 Puerto Rico, Pub Impr Refg Ser 1992 A ........................ 6.00 7/ 1/14 533,010
----------- -------------
3,900 3,578,392
----------- -------------
EDUCATIONAL FACILITIES REVENUE (19.9%)
1,000 Delaware County Authority, Villanova University Ser 1993
(MBIA Insured) ............................................... 5.50 8/ 1/23 807,080
1,000 Northeastern Pennsylvania Hospital & Education Authority,
Kings College Ser B 1993 ..................................... 6.00 7/15/11 876,750
Pennsylvania Higher Educational Facilities Authority,
750 Allegheny College Impr & Refg Ser 1993 B .................... 6.00 11/ 1/22 627,465
500 Medical College of Pennsylvania 1991 Ser A .................. 7.25 3/ 1/11 501,455
500 Temple University First Ser 1991 (MBIA Insured) ............ 6.50 4/ 1/21 473,495
1,000 Thomas Jefferson University 1992 Ser A ...................... 6.625 8/15/09 988,320
1,000 Thomas Jefferson University 1993 Ser A ...................... 5.30 11/ 1/15 812,770
Pennsylvania State University,
1,000 Second Refg Ser 1992 ........................................ 5.50 8/15/16 830,800
1,000 Ser B 1992 .................................................. 5.50 8/15/16 836,640
1,000 Swarthmore Borough Authority, Swarthmore College Ser 1992 ... 6.00 9/15/20 888,820
2,000 University of Pittsburgh, Cap 1992 Ser A (MBIA Insured) ..... 6.125 6/ 1/21 1,801,400
----------- -------------
10,750 9,444,995
----------- -------------
ELECTRIC REVENUE (1.7%)
1,000 Puerto Rico Electric Power Authority, Power Ser 0 ........... 5.00 7/ 1/12 792,570
----------- -------------
HOSPITAL REVENUE (17.6%)
Allegheny County Hospital Development Authority,
1,000 Ohio Valley General Hospital Refg Ser 1993 .................. 5.875 4/ 1/11 834,270
1,000 Presbyterian University Health System Inc Ser 1992 B (MBIA
Insured) ..................................................... 6.00 11/ 1/12 916,800
1,000 Berks County Municipal Authority, Reading Hospital & Medical
Center (MBIA Insured) ........................................ 5.50 10/ 1/08 882,870
500 Chester County Health & Education Facilities Authority, Bryn
Mawr Rehabilitation Hospital Refg Ser 1992 (Prerefunded) .... 6.75 7/ 1/14 529,875
1,500 Doylestown Hospital Authority, Doylestown Hospital 1993 Ser B
(AMBAC Insured) .............................................. 5.00 7/ 1/23 1,102,245
Philadelphia Hospital & Higher Education Facilities
Authority,
1,750 Chestnut Hill Hospital Ser of 1992 .......................... 6.375 11/15/11 1,597,068
1,000 Temple University Hospital 1993 Ser A ....................... 6.50 11/15/08 915,130
2,000 The Children's Hospital of Philadelphia Ser A of 1993 ...... 5.375 2/15/14 1,603,640
----------- -------------
9,750 8,381,898
----------- -------------
INDUSTRIAL DEVELOPMENT/POLLUTION CONTROL REVENUE (3.1%)
500 Lehigh County Industrial Development Authority, Strawbridge &
Clothier Refg Ser of 1991 .................................... 7.20 12/15/01 523,520
Montgomery County Industrial Development Authority,
1,000 Philadelphia Electric Co Refg 1991 Ser B (MBIA Insured) .... 6.70 12/ 1/21 960,310
----------- -------------
1,500 1,483,830
----------- -------------
</TABLE>
98
<PAGE>
DEAN WITTER MULTI-STATE MUNICIPAL SERIES TRUST
PORTFOLIO OF INVESTMENTS --PENNSYLVANIA SERIES November 30, 1994 (continued)
-----------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATE VALUE
----------- ---------- ---------- -------------
<C> <S> <C> <C> <C>
MORTGAGE REVENUE -MULTI-FAMILY (2.0%)
Pennsylvania Housing Finance Agency,
$ 100 Moderate Rehab Sec 8 Assisted Issue B ....................... 9.00 % 8/ 1/01 $ 103,854
1,000 Ser 1992-35 D (AMT) ......................................... 6.06 4/ 1/25 832,820
----------- -------------
1,100 936,674
----------- -------------
MORTGAGE REVENUE -SINGLE FAMILY (9.3%)
Pennsylvania Housing Finance Agency,
2,000 Ser 1993-37 A ............................................... 5.45 10/ 1/17 1,604,620
2,000 Ser 1991-31 C (AMT) ......................................... 7.00 10/ 1/23 1,873,440
1,000 Puerto Rico Housing Finance Corporation, Portfolio One
GNMA-Backed Ser C ............................................ 6.85 10/15/23 965,800
----------- -------------
5,000 4,443,860
----------- -------------
RESOURCE RECOVERY (2.8%) .....................................
300 Cambria County Industrial Development Authority, Cambria
Cogen Co Ser 1989 F-1 (AMT) .................................. 7.75 9/ 1/19 308,058
1,000 Montgomery County Industrial Development Authority, Ser 1989 7.50 1/ 1/12 1,001,690
----------- -------------
1,300 1,309,748
----------- -------------
STUDENT LOAN REVENUE (3.9%)
Pennsylvania Higher Education Assistance Agency,
1,000 1988 Ser D (AMT) (AMBAC Insured) ............................ 6.05 1/ 1/19 882,700
1,000 1991 Ser B (AMT) (AMBAC Insured) ............................ 6.854 9/ 1/26 950,430
----------- -------------
2,000 1,833,130
----------- -------------
TRANSPORTATION FACILITIES REVENUE (9.3%)
1,000 Guam, Highway 1992 Ser A (Capital Guaranty Insured) ......... 6.30 5/ 1/12 960,160
500 Allegheny County, Greater Pittsburgh Intl Airport Ser 1992
(AMT) (FSA Insured) .......................................... 6.625 1/ 1/22 469,850
2,000 Pennsylvania Turnpike Commission, Ser O of 1992 (FGIC
Insured) ..................................................... 6.00 12/ 1/12 1,841,100
1,000 Pittsburgh Public Parking Authority, Ser 1992 A (FGIC
Insured) ..................................................... 5.875 12/ 1/12 900,950
300 Puerto Rico Highway Authority, Ser Q ......................... 6.00 7/ 1/20 260,976
----------- -------------
4,800 4,433,036
----------- -------------
WATER & SEWER REVENUE (6.3%)
Bethlehem Authority, Northampton & Lehigh Counties
1,000 Refg Ser of 1994 (MBIA Insured) ............................. 4.875 11/15/14 770,610
1,500 Refg Ser of 1994 (MBIA Insured) ............................. 5.30 11/15/17 1,194,870
1,000 Puerto Rico Aqueduct & Sewer Authority, Ser 1988 A .......... 7.90 7/ 1/07 1,050,780
----------- -------------
3,500 3,016,260
----------- -------------
OTHER REVENUE (3.1%)
1,500 Pennsylvania Finance Authority, Muni Cap Impr Refg Ser 1993 . 6.60 11/ 1/09 1,470,660
----------- -------------
46,100 TOTAL MUNICIPAL BONDS (IDENTIFIED COST $45,063,358) ...................... 41,125,053
----------- -------------
</TABLE>
99
<PAGE>
DEAN WITTER MULTI-STATE MUNICIPAL SERIES TRUST
PORTFOLIO OF INVESTMENTS -- PENNSYLVANIA SERIES November 30, 1994 (continued)
-----------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATE VALUE
----------- ---------- ---------- -------------
<C> <S> <C> <C> <C>
SHORT-TERM PENNSYLVANIA EXEMPT MUNICIPAL OBLIGATIONS (8.2%)
$ 1,800 Schuylkill Cnty Industrial Development Authority,
Northeastern Power Co Ser 1985 (Tender 12/1/94) .............. 3.50 %* 12/ 1/11 $ 1,800,000
2,100 University of Pittsburgh, Cap Proj 1989 Ser A (Tender
12/1/94) ..................................................... 3.525 * 1/ 1/19 2,100,000
----------- -------------
3,900 TOTAL SHORT-TERM PENNSYLVANIA EXEMPT MUNICIPAL OBLIGATIONS (IDENTIFIED
COST $3,900,000) ......................................................... 3,900,000
----------- -------------
$50,000 TOTAL INVESTMENTS (Identified Cost $48,963,358) (a) ........................ 94.7% 45,025,053
=========
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES ............................ 5.3 2,532,203
-------- ------------
NET ASSETS ................................................................. 100.0% $47,557,256
======== ============
<FN>
----------
* Variable or floating rate securities. Coupon rate shown reflects
current rate.
AMT Alternative Minimum Tax.
(a) The aggregate cost for federal income tax purpose is $48,963,358; the
aggregate gross unrealized appreciation is $149,749 and the gross
unrealized depreciation is $4,088,054, resulting in net unrealized
depreciation of $3,938,305.
</TABLE>
See Notes to Financial Statements
100
<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, hereafter referred to as the
"Fund") at November 30, 1994, 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
three 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, 1991, 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, 1994 by
correspondence with the custodian, provide a reasonable basis for the opinion
expressed above.
PRICE WATERHOUSE LLP
New York, New York
January 13, 1995
1994 FEDERAL INCOME TAX NOTICE (unaudited)
During the year ended November 30, 1994, the Fund paid to shareholders
dividends per share from net investment income as follows:
<TABLE>
<CAPTION>
ARIZONA CALIFORNIA FLORIDA MASSACHUSETTS MICHIGAN MINNESOTA NEW JERSEY NEW YORK OHIO PENNSYLVANIA
---------- ------------ ---------- --------------- ---------- ----------- ------------ ---------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$.546730 $.576309 $.559761 $.560443 $.563926 $.552558 $.557291 $.572666 $.553790 $.559057
</TABLE>
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 Fund paid to shareholders long-term capital gains
per share as follows:
<TABLE>
<CAPTION>
ARIZONA CALIFORNIA MASSACHUSETTS MICHIGAN MINNESOTA NEW JERSEY NEW YORK OHIO PENNSYLVANIA
---------- ------------ --------------- ---------- ----------- ------------ ---------- ---------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$.011650 $.104152 $.095349 $.179945 $.077364 $.076211 $.047013 $.116042 $.059181
</TABLE>
101
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 for period January 15, 1991 to
November 30, 1991 and for the period April 30, 1991
to November 30, 1991 and for the years ended
November 30, 1993 and 1994 ........................... 4
(2) Financial statements included in the Statement of
Additional Information (Part B): Page in
SAI
Portfolio Summary at November 30, 1994 ............... 58
Statement of assets and liabilities at
November 30, 1994..................................... 60
Statement of operations for the year ended
November 30, 1994..................................... 62
Statement of changes in net assets for the
years ended November 30, 1993 and 1994................ 64
Notes to Financial Statements......................... 68
Financial highlights for the period January 15, 1991
to November 30, 1991 and April 30, 1991 to November
30, 1991 and for the years ended November 30, 1993
and November 30, 1994 ................................ 72
(3) Financial statements included in Part C:
None
(b) Exhibits:
2. - Amended and Restated By-Laws of the Registrant
11. - Consent of Independent Accountants
16. - Schedules for Computation of Performance Quotations
27. - Financial Data Schedules
Other - Powers of Attorney
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 February 3, 1995
---------------------------- -------------------------
Shares of Beneficial Interest 11,940
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.
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
business of the investment adviser. The following information is given
regarding officers of Dean Witter InterCapital Inc. 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 "Dean Witter Funds" used below refers to the following registered
investment companies:
Closed-End Investment Companies
(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
3
(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
(22) InterCapital California Quality Municipal Securities
(23) InterCapital Insured California Municipal Securities
(24) InterCapital Insured Municipal Securities
Open-end Investment Companies:
(1) Dean Witter Short-Term Bond Fund
(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.
4
(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
(44) Dean Witter Global Utilities Fund
(45) Dean Witter High Income Securities
(46) Dean Witter National Municipal Trust
(47) Dean Witter International SmallCap Fund
(48) Dean Witter Mid-Cap Growth Fund
(49) Dean Witter Select Dimensions Investment Series
(50) Dean Witter Global Asset Allocation Fund
(51) Dean Witter Balanced Income Fund
(52) Dean Witter Balanced Growth Fund
The term "TCW/DW Funds" refers to the following registered investment
companies:
Open-End Investment Companies
(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
(7) TCW/DW North American Intermediate Income Trust
(8) TCW/DW Global Convertible Trust
(9) TCW/DW Total Return Trust
Closed-End Investment Companies
(1) TCW/DW Term Trust 2000
(2) TCW/DW Term Trust 2002
(3) TCW/DW Term Trust 2003
(4) TCW/DW Emerging Markets Opportunities Trust
Name and Position Other Substantial Business, Profession, Vocation
with Dean Witter or Employment, including Name, Principal Address
InterCapital Inc. and Nature of Connection
---------------------- -------------------------------------------------
Charles A. Fiumefreddo Executive Vice President and Director of Dean
Chairman, Chief Witter Reynolds Inc. ("DWR"); Chairman, Chief
Executive Officer and Executive Officer and Director of Dean Witter
Director Distributors Inc. ("Distributors") and Dean
Witter Services Company Inc. ("DWSC"); Chairman
and Director of Dean Witter Trust Company
("DWTC"); Chairman, Director or Trustee, President
and Chief Executive Officer of the Dean Witter
Funds and Chairman, Chief Executive Officer and
Trustee of the TCW/DW Funds; Formerly Executive
Vice President and Director of Dean Witter,
Discover & Co. ("DWDC"); Director and/or officer
of various DWDC subsidiaries.
5
Name and Position Other Substantial Business, Profession, Vocation
with Dean Witter or Employment, including Name, Principal Address
InterCapital Inc. and Nature of Connection
---------------------- -------------------------------------------------
Philip J. Purcell Chairman, Chief Executive Officer and Director of
Director of DWDC and DWR; Director of DWSC and
Distributors; Director or Trustee of the Dean
Witter Funds; Director and/or officer of various
DWDC subsidiaries.
Richard M. DeMartini Executive Vice President and member of the
Director management committee of DWDC; Chief Operating
Officer of Dean Witter Capital;Director of DWR,
DWSC, Distributors and DWTC; Trustee of the TCW/DW
Funds.
James F. Higgins Executive Vice President of DWDC; President and
Director Chief Operating Officer of Dean Witter Financial;
Director of DWR, DWSC, Distributors and DWTC.
Thomas C. Schneider Executive Vice President and Chief Financial
Executive Vice Officer of DWDC, DWR, DWSC and Distributors;
President, Chief Director of DWR, DWSC and Distributors.
Financial Officer and
Director
Christine A. Edwards Executive Vice President, Secretary and General
Director Counsel of DWDC and DWR; Executive Vice President,
Secretary and Chief Legal Officer of Distributors;
Director of DWR, DWSC and Distributors.
Robert M. Scanlan President and Chief Operating Officer of DWSC,
President and Chief Executive Vice President of Distributors;
Operating Officer Executive Vice President and Director of DWTC;
Vice President of the Dean Witter Funds and the
TCW/DW Funds.
David A. Hughey Executive Vice President and Chief Administrative
Executive Vice Officer of DWSC, Distributors and DWTC; Director
President and Chief of DWTC; Vice President of the Dean Witter Funds
Administrative Officer and the TCW/DW Funds.
Edmund C. Puckhaber Director of DWTC; Vice President of the Dean
Executive Vice Witter Funds.
President
John Van Heuvelen President, Chief Operating Officer and Director
Executive Vice of DWTC.
President
6
Name and Position Other Substantial Business, Profession, Vocation
with Dean Witter or Employment, including Name, Principal Address
InterCapital Inc. and Nature of Connection
---------------------- -------------------------------------------------
Sheldon Curtis Assistant Secretary of DWR; Senior Vice President,
Senior Vice President, Secretary and General Counsel of DWSC; Senior Vice
General Counsel and President, Assistant General Counsel and Assistant
Secretary Secretary of Distributors; Senior Vice President
and Secretary of DWTC; Vice President, Secretary
and General Counsel of the Dean Witter Funds and
the TCW/DW Funds.
Peter M. Avelar
Senior Vice President Vice President of various Dean Witter Funds.
Mark Bavoso
Senior Vice President Vice President of various Dean Witter Funds.
Thomas H. Connelly
Senior Vice President Vice President of various Dean Witter Funds.
Edward Gaylor
Senior Vice President Vice President of various Dean Witter Funds.
Rajesh K. Gupta
Senior Vice President Vice President of various Dean Witter Funds.
Kenton J. Hinchcliffe
Senior Vice President Vice President of various Dean Witter Funds.
John B. Kemp, III Director of the Provident Savings Bank, Jersey
Senior Vice President City, New Jersey.
Anita Kolleeny
Senior Vice President Vice President of various Dean Witter Funds.
Jonathan R. Page
Senior Vice President Vice President of various Dean Witter Funds.
Ira Ross
Senior Vice President Vice President of various Dean Witter Funds.
Rochelle G. Siegel
Senior Vice President Vice President of various Dean Witter Funds.
Paul D. Vance
Senior Vice President Vice President of various Dean Witter Funds.
Elizabeth A. Vetell
Senior Vice President
James F. Willison
Senior Vice President Vice President of various Dean Witter Funds.
7
Name and Position Other Substantial Business, Profession, Vocation
with Dean Witter or Employment, including Name, Principal Address
InterCapital Inc. and Nature of Connection
---------------------- -------------------------------------------------
Ronald J. Worobel
Senior Vice President Vice President of various Dean Witter Funds.
Thomas F. Caloia First Vice President and Assistant Treasurer of
First Vice President DWSC, Assistant Treasurer of Distributors; and
and Assistant Treasurer of the Dean Witter Funds and the TCW/DW
Treasurer Funds.
Marilyn K. Cranney Assistant Secretary of DWR; First Vice President
First Vice President and Assistant Secretary of DWSC; Assistant
and Assistant Secretary Secretary of the Dean Witter Funds and the TCW/DW
Funds.
Barry Fink First Vice President and Assistant Secretary of
First Vice President DWSC; Assistant Secretary of the Dean Witter
and Assistant Secretary Funds and the TCW/DW Funds.
Michael Interrante First Vice President and Controller of DWSC;
First Vice President Assistant Treasurer of Distributors; First Vice
and Controller President and Treasurer of DWTC.
Robert Zimmerman
First Vice President
Joan Allman
Vice President
Joseph Arcieri
Vice President Vice President of various Dean Witter Funds.
Stephen Brophy
Vice President
Terence P. Brennan, II
Vice President
Douglas Brown
Vice President
Thomas Chronert
Vice President
Rosalie Clough
Vice President
Patricia A. Cuddy
Vice President Vice President of various Dean Witter Funds.
B. Catherine Connelly
Vice President
8
Name and Position Other Substantial Business, Profession, Vocation
with Dean Witter or Employment, including Name, Principal Address
InterCapital Inc. and Nature of Connection
---------------------- -------------------------------------------------
Salvatore DeSteno
Vice President Vice President of DWSC.
Frank J. DeVito
Vice President Vice President of DWSC.
Dwight Doolan
Vice President
Bruce Dunn
Vice President
Jeffrey D. Geffen
Vice President
Deborah Genovese
Vice President
Peter W. Gurman
Vice President
Russell Harper
Vice President
John Hechtlinger
Vice President
David Hoffman
Vice President
David Johnson
Vice President
Christopher Jones
Vice President
Stanley Kapica
Vice President
Konrad J. Krill
Vice President Vice President of various Dean Witter Funds.
Paul LaCosta
Vice President Vice President of various Dean Witter Funds.
Lawrence S. Lafer Vice President and Assistant Secretary of DWSC;
Vice President and Assistant Secretary of the Dean Witter Funds and
Assistant Secretary the TCW/DW Funds.
Thomas Lawlor
Vice President
9
Name and Position Other Substantial Business, Profession, Vocation
with Dean Witter or Employment, including Name, Principal Address
InterCapital Inc. and Nature of Connection
---------------------- -------------------------------------------------
Lou Anne D. McInnis Vice President and Assistant Secretary of DWSC;
Vice President and Assistant Secretary of the Dean Witter Funds and
Assistant Secretary the TCW/DW Funds.
Sharon K. Milligan
Vice President
James Nash
Vice President
Richard Norris
Vice President
Hugh Rose
Vice President
Ruth Rossi Vice President and Assistant Secretary of DWSC;
Vice President and Assistant Secretary of the Dean Witter Funds and
Assistant Secretary the TCW/DW Funds.
Carl F. Sadler
Vice President
Rafael Scolari
Vice President Vice President of Prime Income Trust
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.
Jayne M. Wolff
Vice President Vice President of various Dean Witter Funds.
Marianne Zalys
Vice President
10
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:
(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 Short-Term Bond Fund
(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 Global Utilities Fund
11
(45) Dean Witter High Income Securities
(46) Dean Witter National Municipal Trust
(47) Dean Witter International SmallCap Fund
(48) Dean Witter Mid-Cap Growth Fund
(49) Dean Witter Global Asset Allocation Fund
(50) Dean Witter Balanced Growth Fund
(51) Dean Witter Balanced Income 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
(7) TCW/DW North American Intermediate Income Trust
(8) TCW/DW Global Convertible Trust
(9) TCW/DW Total Return Trust
(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.
Positions and
Office with
Name Distributors
---- -------------
Fredrick K. Kubler Senior Vice President, Assistant
Secretary and Chief Compliance
Officer.
Michael T. Gregg Vice President and Assistant
Secretary.
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.
12
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 27th day of March, 1995.
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. 6 has been signed below by the following persons in the
capacities and on the dates indicated.
Signatures Title Date
(1) Principal Executive Officer President, Chief
Executive Officer,
Trustee and Chairman
By /s/Charles A. Fiumefreddo 03/27/95
Charles A. Fiumefreddo
(2) Principal Financial Officer Treasurer and Principal
Accounting Officer
By /s/Thomas F. Caloia 03/27/95
Thomas F. Caloia
(3) Majority of the Trustees
Charles A. Fiumefreddo (Chairman)
Philip J. Purcell
By /s/Sheldon Curtis 03/27/95
Sheldon Curtis
Attorney-in-Fact
Jack F. Bennett Paul Kolton
Michael Bozic Michael E. Nugent
John R. Haire Manuel H. Johnson
Edwin J. Garn John L. Schroeder
By /s/David M. Butowsky 03/27/95
David M. Butowsky
Attorney-in-Fact
DEAN WITTER MULTI-STATE MUNICIPAL SERIES TRUST
EXHIBIT INDEX
2. -- Amended and Restated By-Laws of the Registrant
11. -- Consent of Independent Accountants
16. -- Schedules for Computation of Performance Quotations
27. -- Financial Data Schedules
Other -- Powers of Attorney
<PAGE>
<PAGE>
BY-LAWS
OF
DEAN WITTER MULTI-STATE MUNICIPAL SERIES TRUST
(AMENDED AND RESTATED AS OF JANUARY 25, 1995)
ARTICLE I
DEFINITIONS
The terms "Commission", "Declaration", "Distributor", "Investment
Adviser", "Majority Shareholder Vote", "1940 Act", "Shareholder", "Shares",
"Transfer Agent", "Trust", "Trust Property", and "Trustees" have the
respective meanings given them in the Declaration of Trust of Dean Witter
Multi-State Municipal Series Trust dated October 26, 1990.
ARTICLE II
OFFICES
SECTION 2.1. Principal Office. Until changed by the Trustees, the
principal office of the Trust in the Commonwealth of Massachusetts shall be
in the City of Boston, County of Suffolk.
SECTION 2.2. Other Offices. In addition to its principal office in the
Commonwealth of Massachusetts, the Trust may have an office or offices in the
City of New York, State of New York, and at such other places within and
without the Commonwealth as the Trustees may from time to time designate or
the business of the Trust may require.
ARTICLE III
SHAREHOLDERS' MEETINGS
SECTION 3.1. Place of Meetings. Meetings of Shareholders shall be held at
such place, within or without the Commonwealth of Massachusetts, as may be
designated from time to time by the Trustees.
SECTION 3.2. Meetings. Meetings of Shareholders of the Trust shall be held
whenever called by the Trustees or the President of the Trust and whenever
election of a Trustee or Trustees by Shareholders is required by the
provisions of Section 16(a) of the 1940 Act, for that purpose. Meetings of
Shareholders shall also be called by the Secretary upon the written request
of the holders of Shares entitled to vote not less than twenty-five percent
(25%) of all the votes entitled to be cast at such meeting, except to the
extent otherwise required by Section 16C of the 1940 Act, as made applicable
to the Trust by the provisions of Section 2.3 of the Declaration. Such
request shall state the purpose or purposes of such meeting and the matters
proposed to be acted on thereat. Except to the extent otherwise required by
Section 16(c) of the 1940 Act, as made applicable to the Trust by the
provisions of Section 2.3 of the Declaration, the Secretary shall inform such
Shareholders of the reasonable estimated cost of preparing and mailing such
notice of the meeting, and upon payment to the Trust of such costs, the
Secretary shall give notice stating the purpose or purposes of the meeting to
all entitled to vote at such meeting. No meeting need be called upon the
request of the holders of Shares entitled to cast less than a majority of all
votes entitled to be cast at such meeting, to consider any matter which is
substantially the same as a matter voted upon at any meeting of Shareholders
held during the preceding twelve months.
SECTION 3.3. Notice of Meetings. Written or printed notice of every
Shareholders' meeting stating the place, date, and purpose or purposes
thereof, shall be given by the Secretary not less than ten (10) nor more than
ninety (90) days before such meeting to each Shareholder entitled to vote at
such meeting. Such notice shall be deemed to be given when deposited in the
United States mail, postage prepaid, directed to the Shareholder at his
address as it appears on the records of the Trust.
<PAGE>
SECTION 3.4. Quorum and Adjournment of Meetings. Except as otherwise
provided by law, by the Declaration or by these By-Laws, at all meetings of
Shareholders the holders of a majority of the Shares issued and outstanding
and entitled to vote thereat, present in person or represented by proxy,
shall be requisite and shall constitute a quorum for the transaction of
business. In the absence of a quorum, the Shareholders present or represented
by proxy and entitled to vote thereat shall have power to adjourn the meeting
from time to time. Any adjourned meeting may be held as adjourned without
further notice. At any adjourned meeting at which a quorum shall be present,
any business may be transacted as if the meeting had been held as originally
called.
SECTION 3.5. Voting Rights, Proxies. At each meeting of Shareholders, each
holder of record of Shares entitled to vote thereat shall be entitled to one
vote in person or by proxy, executed in writing by the Shareholder or his
duly authorized attorney-in-fact, for each Share of beneficial interest of
the Trust and for the fractional portion of one vote for each fractional
Share entitled to vote so registered in his name on the records of the Trust
on the date fixed as the record date for the determination of Shareholders
entitled to vote at such meeting. No proxy shall be valid after eleven months
from its date, unless otherwise provided in the proxy. At all meetings of
Shareholders, unless the voting is conducted by inspectors, all questions
relating to the qualification of voters and the validity of proxies and the
acceptance or rejection of votes shall be decided by the chairman of the
meeting. Pursuant to a resolution of a majority of the Trustees, proxies may
be solicited in the name of one or more Trustees or Officers of the Trust.
SECTION 3.6. Vote Required. Except as otherwise provided by law, by the
Declaration of Trust, or by these By-Laws, at each meeting of Shareholders at
which a quorum is present, all matters shall be decided by Majority
Shareholder Vote.
SECTION 3.7. Inspectors of Election. In advance of any meeting of
Shareholders, the Trustees may appoint Inspectors of Election to act at the
meeting or any adjournment thereof. If Inspectors of Election are not so
appointed, the chairman of any meeting of Shareholders may, and on the
request of any Shareholder or his proxy shall, appoint Inspectors of Election
of the meeting. In case any person appointed as Inspector fails to appear or
fails or refuses to act, the vacancy may be filled by appointment made by the
Trustees in advance of the convening of the meeting or at the meeting by the
person acting as chairman. The Inspectors of Election shall determine the
number of Shares outstanding, the Shares represented at the meeting, the
existence of a quorum, the authenticity, validity and effect of proxies,
shall receive votes, ballots or consents, shall hear and determine all
challenges and questions in any way arising in connection with the right to
vote, shall count and tabulate all votes or consents, determine the results,
and do such other acts as may be proper to conduct the election or vote with
fairness to all Shareholders. On request of the chairman of the meeting, or
of any Shareholder or his proxy, the Inspectors of Election shall make a
report in writing of any challenge or question or matter determined by them
and shall execute a certificate of any facts found by them.
SECTION 3.8. Inspection of Books and Records. Shareholders shall have such
rights and procedures of inspection of the books and records of the Trust as
are granted to Shareholders under Corporations and Associations Law of the
State of Maryland.
SECTION 3.9. Action by Shareholders Without Meeting. Except as otherwise
provided by law, the provisions of these By-Laws relating to notices and
meetings to the contrary notwithstanding, any action required or permitted to
be taken at any meeting of Shareholders may be taken without a meeting if a
majority of the Shareholders entitled to vote upon the action consent to the
action in writing and such consents are filed with the records of the Trust.
Such consent shall be treated for all purposes as a vote taken at a meeting
of Shareholders.
ARTICLE IV
TRUSTEES
SECTION 4.1. Meetings of the Trustees. The Trustees may in their
discretion provide for regular or special meetings of the Trustees. Regular
meetings of the Trustees may be held at such time and place as shall be
determined from time to time by the Trustees without further notice. Special
meetings of the Trustees may be called at any time by the President and shall
be called by the President or the Secretary upon the written request of any
two (2) Trustees.
2
<PAGE>
SECTION 4.2. Notice of Special Meetings. Written notice of special
meetings of the Trustees, stating the place, date and time thereof, shall be
given not less than two (2) days before such meeting to each Trustee,
personally, by telegram, by mail, or by leaving such notice at his place of
residence or usual place of business. If mailed, such notice shall be deemed
to be given when deposited in the United States mail, postage prepaid,
directed to the Trustee at his address as it appears on the records of the
Trust. Subject to the provisions of the 1940 Act, notice or waiver of notice
need not specify the purpose of any special meeting.
SECTION 4.3. Telephone Meetings. Subject to the provisions of the 1940
Act, any Trustee, or any member or members of any committee designated by the
Trustees, may participate in a meeting of the Trustees, or any such
committee, as the case may be, by means of a conference telephone or similar
communications equipment if all persons participating in the meeting can hear
each other at the same time. Participation in a meeting by these means
constitutes presence in person at the meeting.
SECTION 4.4. Quorum, Voting and Adjournment of Meetings. At all meetings
of the Trustees, a majority of the Trustees shall be requisite to and shall
constitute a quorum for the transaction of business. If a quorum is present,
the affirmative vote of a majority of the Trustees present shall be the act
of the Trustees, unless the concurrence of a greater proportion is expressly
required for such action by law, the Declaration or these By-Laws. If at any
meeting of the Trustees there be less than a quorum present, the Trustees
present thereat may adjourn the meeting from time to time, without notice
other than announcement at the meeting, until a quorum shall have been
obtained.
SECTION 4.5. Action by Trustees Without Meeting. The provisions of these
By-Laws covering notices and meetings to the contrary notwithstanding, and
except as required by law, any action required or permitted to be taken at
any meeting of the Trustees may be taken without a meeting if a consent in
writing setting forth the action shall be signed by all of the Trustees
entitled to vote upon the action and such written consent is filed with the
minutes of proceedings of the Trustees.
SECTION 4.6. Expenses and Fees. Each Trustee may be allowed expenses, if
any, for attendance at each regular or special meeting of the Trustees, and
each Trustee who is not an officer or employee of the Trust or of its
investment manager or underwriter or of any corporate affiliate of any of
said persons shall receive for services rendered as a Trustee of the Trust
such compensation as may be fixed by the Trustees. Nothing herein contained
shall be construed to preclude any Trustee from serving the Trust in any
other capacity and receiving compensation therefor.
SECTION 4.7. Execution of Instruments and Documents and Signing of Checks
and Other Obligations and Transfers. All instruments, documents and other
papers shall be executed in the name and on behalf of the Trust and all
checks, notes, drafts and other obligations for the payment of money by the
Trust shall be signed, and all transfer of securities standing in the name of
the Trust shall be executed, by the Chairman, the President, any Vice
President or the Treasurer or by any one or more officers or agents of the
Trust as shall be designated for that purpose by vote of the Trustees;
notwithstanding the above, nothing in this Section 4.7 shall be deemed to
preclude the electronic authorization, by designated persons, of the Trust's
Custodian (as described herein in Section 9.1) to transfer assets of the
Trust, as provided for herein in Section 9.1.
SECTION 4.8. Indemnification of Trustees, Officers, Employees and
Agents. (a) The Trust shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending, or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Trust) by
reason of the fact that he is or was a Trustee, officer, employee, or agent
of the Trust. The indemnification shall be against expenses, including
attorneys' fees, judgments, fines, and amounts paid in settlement, actually
and reasonably incurred by him in connection with the action, suit, or
proceeding, if he acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the Trust, and, with respect
to any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo contendere or
its equivalent, shall not, of itself, create a presumption that the person
did not act in good faith and in a manner which he reasonably believed to be
in or not opposed to the best interests of the Trust, and, with respect to
any criminal action or proceeding, had reasonable cause to believe that his
conduct was unlawful.
3
<PAGE>
(b) The Trust shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action
or suit by or on behalf of the Trust to obtain a judgment or decree in its
favor by reason of the fact that he is or was a Trustee, officer, employee,
or agent of the Trust. The indemnification shall be against expenses,
including attorneys' fees actually and reasonably incurred by him in
connection with the defense or settlement of the action or suit, if he acted
in good faith and in a manner he reasonably believed to be in or not opposed
to the best interests of the Trust; except that no indemnification shall be
made in respect of any claim, issue, or matter as to which the person has
been adjudged to be liable for negligence or misconduct in the performance of
his duty to the Trust, except to the extent that the court in which the
action or suit was brought, or a court of equity in the county in which the
Trust has its principal office, determines upon application that, despite the
adjudication of liability but in view of all circumstances of the case, the
person is fairly and reasonably entitled to indemnity for those expenses
which the court shall deem proper, provided such Trustee, officer, employee
or agent is not adjudged to be liable by reason of his willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved in
the conduct of his office.
(c) To the extent that a Trustee, officer, employee, or agent of the Trust
has been successful on the merits or otherwise in defense of any action, suit
or proceeding referred to in subsection (a) or (b) or in defense of any
claim, issue or matter therein, he shall be indemnified against expenses,
including attorneys' fees, actually and reasonably incurred by him in
connection therewith.
(d) (1) Unless a court orders otherwise, any indemnification under
subsections (a) or (b) of this section may be made by the Trust only as
authorized in the specific case after a determination that indemnification of
the Trustee, officer, employee, or agent is proper in the circumstances
because he has met the applicable standard of conduct set forth in
subsections (a) or (b).
(2) The determination shall be made:
(i) By the Trustees, by a majority vote of a quorum which consists
of Trustees who were not parties to the action, suit or proceeding; or
(ii) If the required quorum is not obtainable, or if a quorum of
disinterested Trustees so directs, by independent legal counsel in a
written opinion; or
(iii) By the Shareholders.
(3) Notwithstanding any provision of this Section 4.8, no person
shall be entitled to indemnification for any liability, whether or not
there is an adjudication of liability, arising by reason of willful
misfeasance, bad faith, gross negligence, or reckless disregard of duties
as described in Section 17(h) and (i) of the Investment Company Act of
1940 ("disabling conduct"). A person shall be deemed not liable by reason
of disabling conduct if, either:
(i) a final decision on the merits is made by a court or other body
before whom the proceeding was brought that the person to be indemnified
("indemnitee") was not liable by reason of disabling conduct; or
(ii) in the absence of such a decision, a reasonable determination,
based upon a review of the facts, that the indemnitee was not liable by
reason of disabling conduct, is made by either--
(A) a majority of a quorum of Trustees who are neither
"interested persons" of the Trust, as defined in Section 2(a)(19) of
the Investment Company Act of 1940, nor parties to the action, suit
or proceeding, or
(B) an independent legal counsel in a written opinion.
(e) Expenses, including attorneys' fees, incurred by a Trustee, officer,
employee or agent of the Trust in defending a civil or criminal action, suit
or proceeding may be paid by the Trust in advance of the final disposition
thereof if:
(1) authorized in the specific case by the Trustees; and
(2) the Trust receives an undertaking by or on behalf of the Trustee,
officer, employee or agent of the Trust to repay the advance if it is not
ultimately determined that such person is entitled to be indemnified by
the Trust; and
4
<PAGE>
(3) either, (i) such person provides a security for his
undertaking, or
(ii) the Trust is insured against losses by reason of any lawful
advances, or
(iii) a determination, based on a review of readily available
facts, that there is reason to believe that such person ultimately
will be found entitled to indemnification, is made by either--
(A) a majority of a quorum which consists of Trustees who are
neither "interested persons" of the Trust, as defined in Section
2(a)(19) of the 1940 Act, nor parties to the action, suit or
proceeding, or
(B) an independent legal counsel in a written opinion.
(f) The indemnification provided by this Section shall not be deemed
exclusive of any other rights to which a person may be entitled under any
by-law, agreement, vote of Shareholders or disinterested Trustees or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding the office, and shall continue as to a person
who has ceased to be a Trustee, officer, employee, or agent and inure to the
benefit of the heirs, executors and administrators of such person; provided
that no person may satisfy any right of indemnity or reimbursement granted
herein or to which he may be otherwise entitled except out of the property of
the Trust, and no Shareholder shall be personally liable with respect to any
claim for indemnity or reimbursement or otherwise.
(g) The Trust may purchase and maintain insurance on behalf of any person
who is or was a Trustee, officer, employee, or agent of the Trust, against
any liability asserted against him and incurred by him in any such capacity,
or arising out of his status as such. However, in no event will the Trust
purchase insurance to indemnify any officer or Trustee against liability for
any act for which the Trust itself is not permitted to indemnify him.
(h) Nothing contained in this Section shall be construed to protect any
Trustee or officer of the Trust against any liability to the Trust or to its
security holders to which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office.
ARTICLE V
COMMITTEES
SECTION 5.1. Executive and Other Committees. The Trustees, by resolution
adopted by a majority of the Trustees, may designate an Executive Committee
and/or committees, each committee to consist of two (2) or more of the
Trustees of the Trust and may delegate to such committees, in the intervals
between meetings of the Trustees, any or all of the powers of the Trustees in
the management of the business and affairs of the Trust. In the absence of
any member of any such committee, the members thereof present at any meeting,
whether or not they constitute a quorum, may appoint a Trustee to act in
place of such absent member. Each such committee shall keep a record of its
proceedings.
The Executive Committee and any other committee shall fix its own rules or
procedure, but the presence of at least fifty percent (50%) of the members of
the whole committee shall in each case be necessary to constitute a quorum of
the committee and the affirmative vote of the majority of the members of the
committee present at the meeting shall be necessary to take action.
All actions of the Executive Committee shall be reported to the Trustees
at the meeting thereof next succeeding to the taking of such action.
SECTION 5.2. Advisory Committee. The Trustees may appoint an advisory
committee which shall be composed of persons who do not serve the Trust in
any other capacity and which shall have advisory functions with respect to
the investments of the Trust but which shall have no power to determine that
any security or other investment shall be purchased, sold or otherwise
disposed of by the Trust. The number of persons constituting any such
advisory committee shall be determined from time to time by the Trustees. The
members of any such advisory committee may receive compensation for their
services and may be allowed such fees and expenses for the attendance at
meetings as the Trustees may from time to time determine to be appropriate.
5
<PAGE>
SECTION 5.3. Committee Action Without Meeting. The provisions of these
By-Laws covering notices and meetings to the contrary notwithstanding, and
except as required by law, any action required or permitted to be taken at
any meeting of any Committee of the Trustees appointed pursuant to Section
5.1 of these By-Laws may be taken without a meeting if a consent in writing
setting forth the action shall be signed by all members of the Committee
entitled to vote upon the action and such written consent is filed with the
records of the proceedings of the Committee.
ARTICLE VI
OFFICERS
SECTION 6.1. Executive Officers. The executive officers of the Trust shall
be a Chairman, a President, one or more Vice Presidents, a Secretary and a
Treasurer. The Chairman shall be selected from among the Trustees but none of
the other executive officers need be a Trustee. Two or more offices, except
those of President and any Vice President, may be held by the same person,
but no officer shall execute, acknowledge or verify any instrument in more
than one capacity. The executive officers of the Trust shall be elected
annually by the Trustees and each executive officer so elected shall hold
office until his successor is elected and has qualified.
SECTION 6.2. Other Officers and Agents. The Trustees may also elect one or
more Assistant Vice Presidents, Assistant Secretaries and Assistant
Treasurers and may elect, or may delegate to the Chairman the power to
appoint, such other officers and agents as the Trustees shall at any time or
from time to time deem advisable.
SECTION 6.3. Term and Removal and Vacancies. Each officer of the Trust
shall hold office until his successor is elected and has qualified. Any
officer or agent of the Trust may be removed by the Trustees whenever, in
their judgment, the best interests of the Trust will be served thereby, but
such removal shall be without prejudice to the contractual rights, if any, of
the person so removed.
SECTION 6.4. Compensation of Officers. The compensation of officers and
agents of the Trust shall be fixed by the Trustees, or by the President to
the extent provided by the Trustees with respect to officers appointed by the
President.
SECTION 6.5. Power and Duties. All officers and agents of the Trust, as
between themselves and the Trust, shall have such authority and perform such
duties in the management of the Trust as may be provided in or pursuant to
these By-Laws, or to the extent not so provided, as may be prescribed by the
Trustees; provided, that no rights of any third party shall be affected or
impaired by any such By-Law or resolution of the Trustees unless he has
knowledge thereof.
SECTION 6.6. The Chairman. The Chairman shall preside at all meetings of
the Shareholders and of the Trustees, he shall be a signatory on all Annual
and Semi-Annual Reports as may be sent to shareholders, and he shall perform
such other duties as the Trustees may from time to time prescribe.
SECTION 6.7. The President. (a) The President shall be the chief executive
officer of the Trust; he shall have general and active management of the
business of the Trust, shall see that all orders and resolutions of the
Trustees are carried into effect, and, in connection therewith, shall be
authorized to delegate to one or more Vice Presidents such of his powers and
duties at such times and in such manner as he may deem advisable.
(b) In the absence of the Chairman, the President shall preside at all
meetings of the Shareholders and the Board of Trustees; and he shall perform
such other duties as the Board of Trustees may from time to time prescribe.
SECTION 6.8. The Vice Presidents. The Vice Presidents shall be of such
number and shall have such titles as may be determined from time to time by
the Trustees. The Vice President, or, if there be more than one, the Vice
Presidents in the order of their seniority as may be determined from time to
time by the Trustees or the President, shall, in the absence or disability of
the President, exercise the powers and perform the duties of the President,
and he or they shall perform such other duties as the Trustees or the
President may from time to time prescribe.
6
<PAGE>
SECTION 6.9. The Assistant Vice Presidents. The Assistant Vice President,
or, if there be more than one, the Assistant Vice Presidents, shall perform
such duties and have such powers as may be assigned them from time to time by
the Trustees or the President.
SECTION 6.10. The Secretary. The Secretary shall attend all meetings of
the Trustees and all meetings of the Shareholders and record all the
proceedings of the meetings of the Shareholders and of the Trustees in a book
to be kept for that purpose, and shall perform like duties for the standing
committees when required. He shall give, or cause to be given, notice of all
meetings of the Shareholders and special meetings of the Trustees, and shall
perform such other duties and have such powers as the Trustees, or the
President, may from time to time prescribe. He shall keep in safe custody the
seal of the Trust and affix or cause the same to be affixed to any instrument
requiring it, and, when so affixed, it shall be attested by his signature or
by the signature of an Assistant Secretary.
SECTION 6.11. The Assistant Secretaries. The Assistant Secretary, or, if
there be more than one, the Assistant Secretaries in the order determined by
the Trustees or the President, shall, in the absence or disability of the
Secretary, perform the duties and exercise the powers of the Secretary and
shall perform such duties and have such other powers as the Trustees or the
President may from time to time prescribe.
SECTION 6.12. The Treasurer. The Treasurer shall be the chief financial
officer of the Trust. He shall keep or cause to be kept full and accurate
accounts of receipts and disbursements in books belonging to the Trust, and
he shall render to the Trustees and the President, whenever any of them
require it, an account of his transactions as Treasurer and of the financial
condition of the Trust; and he shall perform such other duties as the
Trustees, or the President, may from time to time prescribe.
SECTION 6.13. The Assistant Treasurers. The Assistant Treasurer, or, if
there shall be more than one, the Assistant Treasurers in the order
determined by the Trustees or the President, shall, in the absence or
disability of the Treasurer, perform the duties and exercise the powers of
the Treasurer and shall perform such other duties and have such other powers
as the Trustees, or the President, may from time to time prescribe.
SECTION 6.14. Delegation of Duties. Whenever an officer is absent or
disabled, or whenever for any reason the Trustees may deem it desirable, the
Trustees may delegate the powers and duties of an officer or officers to any
other officer or officers or to any Trustee or Trustees.
ARTICLE VII
DIVIDENDS AND DISTRIBUTIONS
Subject to any applicable provisions of law and the Declaration, dividends
and distributions upon the Shares may be declared at such intervals as the
Trustees may determine, in cash, in securities or other property, or in
Shares, from any sources permitted by law, all as the Trustees shall from
time to time determine.
Inasmuch as the computation of net income and net profits from the sales
of securities or other properties for federal income tax purposes may vary
from the computation thereof on the records of the Trust, the Trustees shall
have power, in their discretion, to distribute as income dividends and as
capital gain distributions, respectively, amounts sufficient to enable the
Trust to avoid or reduce liability for federal income taxes.
ARTICLE VIII
CERTIFICATES OF SHARES
SECTION 8.1. Certificates of Shares. Certificates for Shares of each
series or class of Shares shall be in such form and of such design as the
Trustees shall approve, subject to the right of the Trustees to change such
form and design at any time or from time to time, and shall be entered in the
records of the Trust as they are issued. Each such certificate shall bear a
distinguishing number; shall exhibit the holder's name and certify the number
of full Shares owned by such holder; shall be signed by or in the name of
7
<PAGE>
the Trust by the President, or a Vice President, and countersigned by the
Secretary or an Assistant Secretary or the Treasurer and an Assistant
Treasurer of the Trust; shall be sealed with the seal; and shall contain such
recitals as may be required by law. Where any certificate is signed by a
Transfer Agent or by a Registrar, the signature of such officers and the seal
may be facsimile, printed or engraved. The Trust may, at its option,
determine not to issue a certificate or certificates to evidence Shares owned
of record by any Shareholder.
In case any officer or officers who shall have signed, or whose facsimile
signature or signatures shall appear on, any such certificate or certificates
shall cease to be such officer or officers of the Trust, whether because of
death, resignation or otherwise, before such certificate or certificates
shall have been delivered by the Trust, such certificate or certificates
shall, nevertheless, be adopted by the Trust and be issued and delivered as
though the person or persons who signed such certificate or certificates or
whose facsimile signature or signatures shall appear therein had not ceased
to be such officer or officers of the Trust.
No certificate shall be issued for any share until such share is fully
paid.
SECTION 8.2. Lost, Stolen, Destroyed and Mutilated Certificates. The
Trustees may direct a new certificate or certificates to be issued in place
of any certificate or certificates theretofore issued by the Trust alleged to
have been lost, stolen or destroyed, upon satisfactory proof of such loss,
theft, or destruction; and the Trustees may, in their discretion, require the
owner of the lost, stolen or destroyed certificate, or his legal
representative, to give to the Trust and to such Registrar, Transfer Agent
and/or Transfer Clerk as may be authorized or required to countersign such
new certificate or certificates, a bond in such sum and of such type as they
may direct, and with such surety or sureties, as they may direct, as
indemnity against any claim that may be against them or any of them on
account of or in connection with the alleged loss, theft or destruction of
any such certificate.
ARTICLE IX
CUSTODIAN
SECTION 9.1. Appointment and Duties. The Trust shall at times employ a
bank or trust company having capital, surplus and undivided profits of at
least five million dollars ($5,000,000) as custodian with authority as its
agent, but subject to such restrictions, limitations and other requirements,
if any, as may be contained in these By-Laws and the 1940 Act:
(1) to receive and hold the securities owned by the Trust and deliver
the same upon written or electronically transmitted order;
(2) to receive and receipt for any moneys due to the Trust and
deposit the same in its own banking department or elsewhere as the
Trustees may direct;
(3) to disburse such funds upon orders or vouchers;
all upon such basis of compensation as may be agreed upon between the
Trustees and the custodian. If so directed by a Majority Shareholder Vote,
the custodian shall deliver and pay over all property of the Trust held by it
as specified in such vote.
The Trustees may also authorize the custodian to employ one or more
sub-custodians from time to time to perform such of the acts and services of
the custodian and upon such terms and conditions as may be agreed upon
between the custodian and such sub-custodian and approved by the Trustees.
SECTION 9.2. Central Certificate System. Subject to such rules,
regulations and orders as the Commission may adopt, the Trustees may direct
the custodian to deposit all or any part of the securities owned by the Trust
in a system for the central handling of securities established by a national
securities exchange or a national securities association registered with the
Commission under the Securities Exchange Act of 1934, or such other person as
may be permitted by the Commission, or otherwise in accordance with the 1940
Act, pursuant to which system all securities of any particular class or
series of any issuer deposited within the system are treated as fungible and
may be transferred or pledged by bookkeeping entry without physical delivery
of such securities, provided that all such deposits shall be subject to
withdrawal only upon the order of the Trust.
8
<PAGE>
ARTICLE X
WAIVER OF NOTICE
Whenever any notice of the time, place or purpose of any meeting of
Shareholders, Trustees, or of any committee is required to be given in
accordance with law or under the provisions of the Declaration or these
By-Laws, a waiver thereof in writing, signed by the person or persons
entitled to such notice and filed with the records of the meeting, whether
before or after the holding thereof, or actual attendance at the meeting of
shareholders, Trustees or committee, as the case may be, in person, shall be
deemed equivalent to the giving of such notice to such person.
ARTICLE XI
MISCELLANEOUS
SECTION 11.1. Location of Books and Records. The books and records of the
Trust may be kept outside the Commonwealth of Massachusetts at such place or
places as the Trustees may from time to time determine, except as otherwise
required by law.
SECTION 11.2. Record Date. The Trustees may fix in advance a date as the
record date for the purpose of determining Shareholders entitled to notice
of, or to vote at, any meeting of Shareholders, or Shareholders entitled to
receive payment of any dividend or the allotment of any rights, or in order
to make a determination of Shareholders for any other proper purpose. Such
date, in any case, shall be not more than ninety (90) days, and in case of a
meeting of Shareholders not less than ten (10) days, prior to the date on
which particular action requiring such determination of Shareholders is to be
taken. In lieu of fixing a record date the Trustees may provide that the
transfer books shall be closed for a stated period but not to exceed, in any
case, twenty (20) days. If the transfer books are closed for the purpose of
determining Shareholders entitled to notice of a vote at a meeting of
Shareholders, such books shall be closed for at least ten (10) days
immediately preceding such meeting.
SECTION 11.3. Seal. The Trustees shall adopt a seal, which shall be in
such form and shall have such inscription thereon as the Trustees may from
time to time provide. The seal of the Trust may be affixed to any document,
and the seal and its attestation may be lithographed, engraved or otherwise
printed on any document with the same force and effect as if it had been
imprinted and attested manually in the same manner and with the same effect
as if done by a Massachusetts business corporation under Massachusetts law.
SECTION 11.4. Fiscal Year. The fiscal year of the Trust shall end on such
date as the Trustees may by resolution specify, and the Trustees may by
resolution change such date for future fiscal years at any time and from time
to time.
SECTION 11.5. Orders for Payment of Money. All orders or instructions for
the payment of money of the Trust, and all notes or other evidences of
indebtedness issued in the name of the Trust, shall be signed by such officer
or officers or such other person or persons as the Trustees may from time to
time designate, or as may be specified in or pursuant to the agreement
between the Trust and the bank or trust company appointed as Custodian of the
securities and funds of the Trust.
ARTICLE XII
COMPLIANCE WITH FEDERAL REGULATIONS
The Trustees are hereby empowered to take such action as they may deem to
be necessary, desirable or appropriate so that the Trust is or shall be in
compliance with any federal or state statute, rule or regulation with which
compliance by the Trust is required.
9
<PAGE>
ARTICLE XIII
AMENDMENTS
These By-Laws may be amended, altered, or repealed, or new By-Laws may be
adopted, (a) by a Majority Shareholder Vote, or (b) by the Trustees;
provided, however, that no By-Law may be amended, adopted or repealed by the
Trustees if such amendment, adoption or repeal requires, pursuant to law, the
Declaration, or these By-Laws, a vote of the Shareholders. The Trustees shall
in no event adopt By-Laws which are in conflict with the Declaration, and any
apparent inconsistency shall be construed in favor of the related provisions
in the Declaration.
ARTICLE XIV
DECLARATION OF TRUST
The Declaration of Trust establishing Dean Witter Multi-State Municipal
Series Trust, dated October 26, 1990, a copy of which 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.
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. 6 to the registration
statement on Form N-1A (the "Registration Statement") of our report dated
January 13, 1995, relating to the financial statements and financial highlights
of Dean Witter Multi-State Municipal Series Trust (comprising of the 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 our report into the Prospectus which
constitutes part of this Registration Statement. We also consent to the
references to us under the heading "Financial Highlights" in such Prospectus
and to the references to us under the headings "Independent Accountants" and
"Experts" in such Statement of Additional Information.
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York 10036
March 24, 1995
<PAGE>
<TABLE>
<S><C>
SCHEDULE OF COMPUTATION OF YIELD QUOTATION
DEAN WITTER MULTI - STATE MUNICIPAL SERIES TRUST - ARIZONA
FOR THE 30 DAY PERIOD ENDED NOVEMBER 30, 1994
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{ [(( 256,133 - 25,634)/5,184,554 X 9.81)+1] -1}
=5.50%
(B) TAX EQUIVALENT YIELD = SEC Yield - (1- stated tax rate)
= 5.50% / (1-.4377)
= 9.78%
(C) WITHOUT WAIVER OF FEES AND ASSUMPTION OF EXPENSES.
6
YIELD = 2{ [ ((a-b)/c d) + 1] -1}
(D) TAX EQUIVALENT YIELD = SEC Yield - (1- stated tax rate)
SCHEDULE OF COMPUTATION OF YIELD QUOTATION
DEAN WITTER MULTI - STATE MUNICIPAL SERIES TRUST - CALIFORNIA
FOR THE 30 DAY PERIOD ENDED NOVEMBER 30, 1994
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{ [(( 625,802.54 - 57,302.06)/12,112,433.260 * 9.77)+1] -1}
= 5.83%
(B) TAX EQUIVALENT YIELD = SEC Yield / (1- stated tax rate)
= 5.83% / (1-.4624)
= 10.84%
(C) WITHOUT WAIVER OF FEES AND ASSUMPTION OF EXPENSES. NA
6
YIELD = 2{ [ ((a-b)/c d) + 1] -1}
6
= 2{ [ ((625,802.54-57,302.06)/12,112,433.260 * 9.77) + 1] -1}
= 5.83%
(D) TAX EQUIVALENT YIELD = SEC Yield / (1- stated tax rate) NA
= 5.83% / (1-.4624)
= 10.84%
SCHEDULE OF COMPUTATION OF YIELD QUOTATION
DEAN WITTER MULTI - STATE MUNICIPAL SERIES TRUST - FLORIDA
FOR THE 30 DAY PERIOD ENDED NOVEMBER 30, 1994
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{ [((383,638 - 36,653)/7,518,389 * 10.00)+1] -1}
= 5.60%
(B) TAX EQUIVALENT YIELD = SEC Yield - (1- stated tax rate)
= 5.60% / (1-.396)
= 9.27%
8
(C) WITHOUT WAIVER OF FEES AND ASSUMPTION OF EXPENSES. N/A
6
YIELD = 2{ [ ((a-b)/c d) + 1] -1}
6
(D) TAX EQUIVALENT YIELD = SEC Yield - (1- stated tax rate) N/A
SCHEDULE OF COMPUTATION OF YIELD QUOTATION
DEAN WITTER MULTI - STATE MUNICIPAL SERIES TRUST - MASSACHUSETTS
FOR THE 30 DAY PERIOD ENDED NOVEMBER 30, 1994
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{ [(( 84,734.06 - 6,474.55)/1,651,522 X 10.00)+1] -1}
=5.75%
(B) TAX EQUIVALENT YIELD = SEC Yield - (1- stated tax rate)
= 5.75% / (1-.46848)
= 10.82%
(C) WITHOUT WAIVER OF FEES AND ASSUMPTION OF EXPENSES.
6
YIELD = 2{ [ ((a-b)/c d) + 1] -1}
6
= 2{ [ ((84,734.06-8,437.04)/1,651,522.33 X 10.00) + 1] -1}
= 5.61%
(D) TAX EQUIVALENT YIELD = SEC Yield - (1- stated tax rate)
= 5.61% / (1-.46848)
= 10.55%
SCHEDULE OF COMPUTATION OF YIELD QUOTATION
DEAN WITTER MULTI - STATE MUNICIPAL SERIES TRUST - MICHIGAN
FOR THE 30 DAY PERIOD ENDED NOVEMBER 30, 1994
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{ [(( 105,886.77 - 8,084.12)/2,092,031.790 * 9.85)+1] -1}
= 5.76%
(B) TAX EQUIVALENT YIELD = SEC Yield - (1- stated tax rate)
= 5.76% / (1-.42258)
= 9.98%
(C) WITHOUT WAIVER OF FEES AND ASSUMPTION OF EXPENSES.
6
YIELD = 2{ [ ((a-b)/c d) + 1] -1}
6
= 2{ [ ((105,886.77-10,009.07)/2,092,031.790 * 9.85) + 1] -1}
= 5.65%
(D) TAX EQUIVALENT YIELD = SEC Yield - (1- stated tax rate)
= 5.76% / (1-.42258)
= 9.78%
SCHEDULE OF COMPUTATION OF YIELD QUOTATION
DEAN WITTER MULTI - STATE MUNICIPAL SERIES TRUST - MINNESOTA
FOR THE 30 DAY PERIOD ENDED NOVEMBER 30, 1994
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{ [(( 54,713 - 4,050)/1,062,546 * 9.67)+1] -1}
= 5.99%
(B) TAX EQUIVALENT YIELD = SEC Yield - (1- stated tax rate)
= 5.99% / (1-.4473)
= 10.84%
(C) WITHOUT WAIVER OF FEES AND ASSUMPTION OF EXPENSES.
6
YIELD = 2{ [ ((a-b)/c d) + 1] -1}
6
= 2{ [ ((54,713 - 6886.48)/1,062,546 * 9.67) + 1] -1}
= 5.51.%
(D) TAX EQUIVALENT YIELD = SEC Yield - (1- stated tax rate)
=5.51% / (1-.4473)
=9.97%
SCHEDULE OF COMPUTATION OF YIELD QUOTATION
DEAN WITTER MULTI - STATE MUNICIPAL SERIES TRUST - NEW JERSEY
FOR THE 30 DAY PERIOD ENDED NOVEMBER 30, 1994
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{ [(( 248,981 - 25,836)/4,816,801 * 9.86)+1] -1}
= 5.70%
(B) TAX EQUIVALENT YIELD = SEC Yield - (1- stated tax rate)
= 5.70% / (1-.43574)
= 10.10%
(C) WITHOUT WAIVER OF FEES AND ASSUMPTION OF EXPENSES. N/A
6
YIELD = 2{ [ ((a-b)/c d) + 1] -1}
(D) TAX EQUIVALENT YIELD = SEC Yield - (1- stated tax rate) N/A
SCHEDULE OF COMPUTATION OF YIELD QUOTATION
DEAN WITTER MULTI - STATE MUNICIPAL SERIES TRUST - NEW YORK
FOR THE 30 DAY PERIOD ENDED NOVEMBER 30, 1994
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{ [(( 74,603 - 5,956)/1,531,775 * 9.85)+1] -1}
= 5.33%
(B) TAX EQUIVALENT YIELD = SEC Yield - (1- stated tax rate)
= 5.33% / (1-.4688)
= 10.39%
(C) WITHOUT WAIVER OF FEES AND ASSUMPTION OF EXPENSES.
6
YIELD = 2{ [ ((a-b)/c d) + 1] -1}
6
= 2{ [ ((74,603 - 8,276)/1,531,775 * 9.85) + 1] -1}
=5.14%
(D) TAX EQUIVALENT YIELD = SEC Yield - (1- stated tax rate)
= 5.33% / (1-.4688)
= 9.68%
SCHEDULE OF COMPUTATION OF YIELD QUOTATION
DEAN WITTER MULTI - STATE MUNICIPAL SERIES TRUST - OHIO
FOR THE 30 DAY PERIOD ENDED NOVEMBER 30, 1994
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{ [(( 112,424.66 - 8,561.15)/2,217,760.910 * 9.81)+1] -1}
= 5.80%
(B) TAX EQUIVALENT YIELD = SEC Yield - (1- stated tax rate)
= 5.80% / (1-.4413)
= 10.38%
(C) WITHOUT WAIVER OF FEES AND ASSUMPTION OF EXPENSES.
6
YIELD = 2{ [ ((a-b)/c d) + 1] -1}
6
= 2{ [(( 112,424.66 - 12,783.09)/2,217,760.910 * 9.81)+1] -1}
= 5.56%
(D) TAX EQUIVALENT YIELD = SEC Yield - (1- stated tax rate)
= 5.56% / (1-.4413)
= 9.95%
SCHEDULE OF COMPUTATION OF YIELD QUOTATION
DEAN WITTER MULTI - STATE MUNICIPAL SERIES TRUST - PENNSYLVANIA
FOR THE 30 DAY PERIOD ENDED NOVEMBER 30, 1994
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{ [(( 256,423-23,537)/4,989,029*9.96)+1] -1}
=5.69%
(B) TAX EQUIVALENT YIELD = SEC Yield - (1- stated tax rate)
= 5.69% / (1-.4129)
= 9.69%
(C) WITHOUT WAIVER OF FEES AND ASSUMPTION OF EXPENSES.
6
YIELD = 2{ [ ((a-b)/c d) + 1] -1}
(D) TAX EQUIVALENT YIELD = SEC Yield - (1- stated tax rate)
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-94 TOTAL RETURN YEARS - n COMPOUND RETURN - T
----------- ---------- -------------- --------- -------------------
30-NOV-93 $ 891.3 -0.1087% 1 -0.1087%
30-APR-91 $1,165.5 0.1655% 3.5890411 0.0435951%
(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-94 YEARS - n COMPOUND RETURN - tb
----------- ---------- --------- --------------------
30-NOV-93 $ 891.2 1 -0.1088%
30-APR-91 $1,143.9 3.5865845 0.0381965%
(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-94 RETURN - TR YEARS - n COMPOUND RETURN - t
----------- ---------- ----------- --------- -------------------
30-NOV-93 $ 928.4 0.-716% 1 -0.0716%
30-APR-91 $1,214.1 0.2141% 3.5865845 0.055581%
(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
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 $100,000 INVESTMENT - G
----------- ----------- ------------------------------------------------------------------------
30-APR-91 21.41 $11,655.36 $58,580.325 $118,071.23
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-94 TOTAL RETURN YEARS - n COMPOUND RETURN - T
----------- ---------- -------------- --------- -------------------
30-NOV-93 $ 876.9 -0.1231% 1 -0.1231%
15-JAN-91 $1,202.3 0.2023% 3.8740589 0.0487054%
(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-94 YEARS - n COMPOUND RETURN - tb
----------- ---------- --------- --------------------
30-NOV-93 $ 876.7 1 -0.1233%
15-JAN-91 $1,181.3 3.8740589 0.0439462%
(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-94 RETURN - TR YEARS - n COMPOUND RETURN - t
----------- ---------- ----------- --------- -------------------
30-NOV-93 $ 913.5 0.-865% 1 -0.0865%
15-JAN-91 $1,252.3 0.2523% 3.8740589 0.0597934%
(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
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 $100,000 INVESTMENT - G
----------- ----------- ------------------------------------------------------------------------
15-JAN-91 25.23 $12,022.08 $60,423.475 $121,786.18
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-94 TOTAL RETURN YEARS - n COMPOUND RETURN - T
----------- ---------- -------------- --------- -------------------
30-NOV-93 $ 890.1 -0.1099% 1 -0.1099%
15-JAN-91 $1,205.5 0.2055% 3.8740589 0.0494251%
(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-94 YEARS - n COMPOUND RETURN - tb
----------- ---------- --------- --------------------
30-NOV-93 $ 889.9 1 -0.1101%
15-JAN-91 $1,177.2 3.8740589 0.0430098%
(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-94 RETURN - TR YEARS - n COMPOUND RETURN - t
----------- ---------- ----------- --------- -------------------
30-NOV-93 $ 927.1 0.-729% 1 -0.0729%
15-JAN-91 $1 255.7 0.2557% 3.8740589 0.0605353%
(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
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 $100,000 INVESTMENT - G
----------- ----------- ------------------------------------------------------------------------
15-JAN-91 25.57 $12,054.72 $60,587.525 $122,116.83
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-94 TOTAL RETURN YEARS - n COMPOUND RETURN - T
----------- ---------- -------------- --------- -------------------
30-NOV-93 $ 886 -0.114% 1 -0.114%
15-JAN-91 $1,223.7 0.2237% 3.8740589 0.0534921%
(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-94 YEARS - n COMPOUND RETURN - tb
----------- ---------- --------- --------------------
30-NOV-93 $ 882.6 1 -0.1174%
15-JAN-91 $1,169 3.8740589 0.0411295%
(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-94 RETURN - TR YEARS - n COMPOUND RETURN - t
----------- ---------- ----------- --------- -------------------
30-NOV-93 $ 922.9 0.-771% 1 -0.0771%
15-JAN-91 $1,274.6 0.2746% 3.8740589 0.0646329%
(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
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 $100,000 INVESTMENT - G
----------- ----------- ------------------------------------------------------------------------
15-JAN-91 27.46 $12,236.16 $61,499.45 $123,954.85
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-94 TOTAL RETURN YEARS - n COMPOUND RETURN - T
----------- ---------- -------------- --------- -------------------
30-NOV-93 $ 882.5 -0.1175% 1 -0.1175%
15-JAN-91 $1,213.2 0.2132% 3.8740589 0.0511513%
(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-94 YEARS - n COMPOUND RETURN - tb
----------- ---------- --------- --------------------
30-NOV-93 $ 879.6 1 -0.1204%
15-JAN-91 $1,172.8 3.8740589 0.0420021%
(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-94 RETURN - TR YEARS - n COMPOUND RETURN - t
----------- ---------- ----------- --------- -------------------
30-NOV-93 $ 919.3 0.-807% 1 -0.0807%
15-JAN-91 $1,263.7 0.2637% 3.8740589 0.0622753%
(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
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 $100,000 INVESTMENT - G
----------- ----------- ------------------------------------------------------------------------
15-JAN-91 26.37 $12,131.52 $60,973.525 $122,894.83
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-94 TOTAL RETURN YEARS - n COMPOUND RETURN - T
----------- ---------- -------------- --------- -------------------
30-NOV-93 $ 879.2 -0.1208% 1 -0.1208%
15-JAN-91 $1,169.2 0.1692% 3.8740589 0.0411755%
(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-94 YEARS - n COMPOUND RETURN - tb
----------- ---------- --------- --------------------
30-NOV-93 $ 875 1 -0.125%
15-JAN-91 $1,083.2 3.8740589 0.0208437%
(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-94 RETURN - TR YEARS - n COMPOUND RETURN - t
----------- ---------- ----------- --------- -------------------
30-NOV-93 $ 915.8 0.-842% 1 -0.0842%
15-JAN-91 $1,217.09 0.2179% 3.8745893 0.0521936%
(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
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 $100,000 INVESTMENT - G
----------- ----------- ------------------------------------------------------------------------
15-JAN-91 21.79 $11,691.84 $58,763.675 $118,440.78
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-94 TOTAL RETURN YEARS - n COMPOUND RETURN - T
----------- ---------- -------------- --------- -------------------
30-NOV-93 $883.6 -0.1164% 1 -0.1164%
15-JAN-91 $1,207.9 0.2079% 3.8740589 0.0499640%
(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-94 YEARS - n COMPOUND RETURN - tb
----------- ---------- --------- --------------------
30-NOV-93 $ 883.3 1 -0.1167%
15-JAN-91 $1,177.7 3.8740589 0.0431241%
(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-94 RETURN - TR YEARS - n COMPOUND RETURN - t
----------- ---------- ----------- --------- -------------------
30-NOV-93 $ 920.4 0.-796% 1 -0.0796%
15-JAN-91 $1,258.2 0.2582% 3.8740589 0.0610799%
(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
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 $100,000 INVESTMENT - G
----------- ----------- ------------------------------------------------------------------------
15-JAN-91 25.82 $12,078.72 $60,708.15 $122,359.95
SCHEDULE FOR COMPUTATIONS OF PERFORMANCE QUOTATIONS
DEAN WITTER MULTI-STATE MUNICIPAL SERIES TRUST - NEW YORK SERIES
(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-94 TOTAL RETURN YEARS - n COMPOUND RETURN - T
----------- ---------- -------------- --------- -------------------
30-Nov-93 $874.00 -12.60% 1.00 -12.60%
15-Jan-91 $1,205.80 20.58% 3.87 4.95%
(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-94 YEARS - n COMPOUND RETURN - tb
----------- ---------- --------- --------------------
30-Nov-93 $871.00 1.00 -12.90%
15-Jan-91 $1,141.70 3.87 3.48%
(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-94 RETURN - TR YEARS - n COMPOUND RETURN - t
----------- ---------- ----------- --------- -------------------
30-Nov-93 $910.40 -8.96% 1.00 -8.96%
15-Jan-91 $1,256.00 25.60% 3.87 6.06%
(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
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 - G $50,000 INVESTMENT - G $100,000 INVESTMENT - G
----------- ----------- ------------------------------------------------------------------------
15-Jan-91 25.6 $12,058 $60,602 $122,146
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-94 TOTAL RETURN YEARS - n COMPOUND RETURN - T
----------- ---------- -------------- --------- -------------------
30-NOV-93 $ 879.9 -0.1201% 1 -0.1201%
15-JAN-91 $1,199.1 0.1991% 3.8740589 0.0479842%
(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-94 YEARS - n COMPOUND RETURN - tb
----------- ---------- --------- --------------------
30-NOV-93 $ 877.5 1 -0.1225%
15-JAN-91 $1,120.5 3.8740589 0.0298039%
(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-94 RETURN - TR YEARS - n COMPOUND RETURN - t
----------- ---------- ----------- --------- -------------------
30-NOV-93 $ 916.6 0.-834% 1 -0.0834%
15-JAN-91 $1,249.1 0.2491% 3.8740589 0.0590937%
(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
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 $100,000 INVESTMENT - G
----------- ----------- ------------------------------------------------------------------------
15-JAN-91 24.91 $11,991.36 $60,269.075 $121,474.98
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-94 TOTAL RETURN YEARS - n COMPOUND RETURN - T
----------- ---------- -------------- --------- -------------------
30-NOV-93 $ 884.7 -0.1153% 1 -0.1153%
15-JAN-91 $1,208.3 0.2083% 3.8740589 0.0500538%
(B) AVERAGE ANNUAL TOTAL RETURNS (STANDARIZED 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-94 YEARS - n COMPOUND RETURN - tb
----------- ---------- --------- --------------------
30-NOV-93 $ 879.1 1 -0.1209%
15-JAN-91 $1,168.4 3.8740589 0.0409916%
(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-94 RETURN - TR YEARS - n COMPOUND RETURN - t
----------- ---------- ----------- --------- -------------------
30-NOV-93 $ 921.6 0.-784% 1 -0.0784%
15-JAN-91 $1,258.7 0.2587% 3.8740589 0.0611888%
(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
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 $100,000 INVESTMENT - G
----------- ----------- ------------------------------------------------------------------------
15-JAN-91 25.87 $12,083.52 $60,732.275 $122,408.58
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 1
<NAME> ARIZONA
<S> <C>
<PERIOD-TYPE> 12-MOS
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<PERIOD-END> NOV-30-1994
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</TABLE>
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<NAME> CALIFORNIA
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</TABLE>
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<NAME> FLORIDA
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</TABLE>
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<NAME> MASSACHUSETTS
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</TABLE>
<TABLE> <S> <C>
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<NAME> MICHIGAN
<S> <C>
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<TOTAL-ASSETS> 19,872,987
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<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 41,992
<TOTAL-LIABILITIES> 41,992
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 21,594,910
<SHARES-COMMON-STOCK> 2,096,327
<SHARES-COMMON-PRIOR> 1,997,802
<ACCUMULATED-NII-CURRENT> 0
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<ACCUMULATED-NET-GAINS> (24,247)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (1,739,668)
<NET-ASSETS> 19,830,995
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,282,804
<OTHER-INCOME> 0
<EXPENSES-NET> 107,956
<NET-INVESTMENT-INCOME> 1,174,848
<REALIZED-GAINS-CURRENT> (24,247)
<APPREC-INCREASE-CURRENT> (2,973,184)
<NET-CHANGE-FROM-OPS> (1,822,583)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1,174,848)
<DISTRIBUTIONS-OF-GAINS> (363,656)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 315,764
<NUMBER-OF-SHARES-REDEEMED> (302,511)
<SHARES-REINVESTED> 85,272
<NET-CHANGE-IN-ASSETS> (2,252,432)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 363,656
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 75,569
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 161,988
<AVERAGE-NET-ASSETS> 21,591,184
<PER-SHARE-NAV-BEGIN> 11.05
<PER-SHARE-NII> 0.56
<PER-SHARE-GAIN-APPREC> (1.41)
<PER-SHARE-DIVIDEND> (0.56)
<PER-SHARE-DISTRIBUTIONS> (0.18)
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<PER-SHARE-NAV-END> 9.46
<EXPENSE-RATIO> 0.50
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<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 6
<NAME> MINNESOTA
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> NOV-30-1994
<PERIOD-END> NOV-30-1994
<INVESTMENTS-AT-COST> 10,046,430
<INVESTMENTS-AT-VALUE> 9,072,737
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<OTHER-ITEMS-LIABILITIES> 59,832
<TOTAL-LIABILITIES> 59,832
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<SHARES-COMMON-STOCK> 1,054,915
<SHARES-COMMON-PRIOR> 1,070,415
<ACCUMULATED-NII-CURRENT> 0
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<ACCUMULATED-NET-GAINS> (72,963)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (973,693)
<NET-ASSETS> 9,792,851
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 682,250
<OTHER-INCOME> 0
<EXPENSES-NET> 57,685
<NET-INVESTMENT-INCOME> 624,565
<REALIZED-GAINS-CURRENT> (73,439)
<APPREC-INCREASE-CURRENT> (1,530,836)
<NET-CHANGE-FROM-OPS> (979,710)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (624,565)
<DISTRIBUTIONS-OF-GAINS> (83,885)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 191,155
<NUMBER-OF-SHARES-REDEEMED> (250,831)
<SHARES-REINVESTED> 44,176
<NET-CHANGE-IN-ASSETS> (1,745,040)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 84,361
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 40,379
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 105,233
<AVERAGE-NET-ASSETS> 11,536,964
<PER-SHARE-NAV-BEGIN> 10.78
<PER-SHARE-NII> 0.55
<PER-SHARE-GAIN-APPREC> (1.42)
<PER-SHARE-DIVIDEND> (0.55)
<PER-SHARE-DISTRIBUTIONS> (0.08)
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<PER-SHARE-NAV-END> 9.28
<EXPENSE-RATIO> 0.50
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<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 7
<NAME> NEW JERSEY
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> NOV-30-1994
<PERIOD-END> NOV-30-1994
<INVESTMENTS-AT-COST> 47,496,189
<INVESTMENTS-AT-VALUE> 43,644,799
<RECEIVABLES> 1,830,298
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<OTHER-ITEMS-ASSETS> 0
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<TOTAL-LIABILITIES> 61,969
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 49,599,733
<SHARES-COMMON-STOCK> 4,806,875
<SHARES-COMMON-PRIOR> 4,980,885
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (251,088)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (3,851,390)
<NET-ASSETS> 45,497,255
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3,116,547
<OTHER-INCOME> 0
<EXPENSES-NET> 330,059
<NET-INVESTMENT-INCOME> 2,786,488
<REALIZED-GAINS-CURRENT> (251,096)
<APPREC-INCREASE-CURRENT> (6,801,131)
<NET-CHANGE-FROM-OPS> (4,265,739)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (2,786,488)
<DISTRIBUTIONS-OF-GAINS> (387,878)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 806,053
<NUMBER-OF-SHARES-REDEEMED> (1,160,235)
<SHARES-REINVESTED> 180,172
<NET-CHANGE-IN-ASSETS> (9,001,719)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 387,886
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 181,438
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 336,882
<AVERAGE-NET-ASSETS> 51,839,554
<PER-SHARE-NAV-BEGIN> 10.94
<PER-SHARE-NII> 0.55
<PER-SHARE-GAIN-APPREC> (1.39)
<PER-SHARE-DIVIDEND> (0.55)
<PER-SHARE-DISTRIBUTIONS> (0.08)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.47
<EXPENSE-RATIO> 0.64
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<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 8
<NAME> NEW YORK
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> NOV-30-1994
<PERIOD-END> NOV-30-1994
<INVESTMENTS-AT-COST> 15,310,309
<INVESTMENTS-AT-VALUE> 13,940,255
<RECEIVABLES> 539,417
<ASSETS-OTHER> 72,836
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 14,552,508
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 30,585
<TOTAL-LIABILITIES> 30,585
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 15,907,357
<SHARES-COMMON-STOCK> 1,534,975
<SHARES-COMMON-PRIOR> 1,446,422
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (15,380)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (1,370,054)
<NET-ASSETS> 14,521,923
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 929,628
<OTHER-INCOME> 0
<EXPENSES-NET> 77,722
<NET-INVESTMENT-INCOME> 851,906
<REALIZED-GAINS-CURRENT> (15,381)
<APPREC-INCREASE-CURRENT> (2,296,834)
<NET-CHANGE-FROM-OPS> (1,460,309)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (851,906)
<DISTRIBUTIONS-OF-GAINS> (66,663)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 307,576
<NUMBER-OF-SHARES-REDEEMED> (266,575)
<SHARES-REINVESTED> 47,552
<NET-CHANGE-IN-ASSETS> (1,432,680)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 66,664
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 54,392
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 127,149
<AVERAGE-NET-ASSETS> 15,541,401
<PER-SHARE-NAV-BEGIN> 11.03
<PER-SHARE-NII> 0.57
<PER-SHARE-GAIN-APPREC> (1.52)
<PER-SHARE-DIVIDEND> (0.57)
<PER-SHARE-DISTRIBUTIONS> (0.05)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.46
<EXPENSE-RATIO> 0.50
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 9
<NAME> OHIO
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> NOV-30-1994
<PERIOD-END> NOV-30-1994
<INVESTMENTS-AT-COST> 21,438,911
<INVESTMENTS-AT-VALUE> 19,609,270
<RECEIVABLES> 998,796
<ASSETS-OTHER> 231,949
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 20,840,015
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 147,354
<TOTAL-LIABILITIES> 147,354
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 22,853,468
<SHARES-COMMON-STOCK> 2,196,075
<SHARES-COMMON-PRIOR> 2,264,341
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (331,166)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (1,829,641)
<NET-ASSETS> 20,692,661
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,457,587
<OTHER-INCOME> 0
<EXPENSES-NET> 125,370
<NET-INVESTMENT-INCOME> 1,332,217
<REALIZED-GAINS-CURRENT> (334,182)
<APPREC-INCREASE-CURRENT> (3,125,323)
<NET-CHANGE-FROM-OPS> (2,127,288)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1,332,217)
<DISTRIBUTIONS-OF-GAINS> (284,377)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,040,504
<NUMBER-OF-SHARES-REDEEMED> (1,213,100)
<SHARES-REINVESTED> 104,330
<NET-CHANGE-IN-ASSETS> (4,156,450)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 287,393
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 87,759
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 178,964
<AVERAGE-NET-ASSETS> 25,074,135
<PER-SHARE-NAV-BEGIN> 10.97
<PER-SHARE-NII> 0.55
<PER-SHARE-GAIN-APPREC> (1.43)
<PER-SHARE-DIVIDEND> (0.55)
<PER-SHARE-DISTRIBUTIONS> (0.12)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.42
<EXPENSE-RATIO> 0.50
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 10
<NAME> PENNSYLVANIA
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> NOV-30-1994
<PERIOD-END> NOV-30-1994
<INVESTMENTS-AT-COST> 48,963,358
<INVESTMENTS-AT-VALUE> 45,025,053
<RECEIVABLES> 2,542,857
<ASSETS-OTHER> 119,760
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 47,687,670
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 130,414
<TOTAL-LIABILITIES> 130,414
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 51,579,945
<SHARES-COMMON-STOCK> 4,972,627
<SHARES-COMMON-PRIOR> 4,848,611
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (84,384)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (3,938,305)
<NET-ASSETS> 47,557,256
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3,161,328
<OTHER-INCOME> 0
<EXPENSES-NET> 336,310
<NET-INVESTMENT-INCOME> 2,825,018
<REALIZED-GAINS-CURRENT> (84,384)
<APPREC-INCREASE-CURRENT> (7,028,096)
<NET-CHANGE-FROM-OPS> (4,287,462)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (2,825,018)
<DISTRIBUTIONS-OF-GAINS> (292,250)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 8,825,758
<NUMBER-OF-SHARES-REDEEMED> (8,965,577)
<SHARES-REINVESTED> 1,724,222
<NET-CHANGE-IN-ASSETS> (5,820,327)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 292,250
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 184,131
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 344,668
<AVERAGE-NET-ASSETS> 52,609,070
<PER-SHARE-NAV-BEGIN> 11.01
<PER-SHARE-NII> 0.56
<PER-SHARE-GAIN-APPREC> (1.39)
<PER-SHARE-DIVIDEND> (0.56)
<PER-SHARE-DISTRIBUTIONS> (0.06)
<RETURNS-OF-CAPITAL> (7.84)
<PER-SHARE-NAV-END> 9.56
<EXPENSE-RATIO> 0.64
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of CHARLES A.
FIUMEFREDDO and EDWARD R. TELLING, whose signatures appear below,
constitutes and appoints Sheldon Curtis, Marilyn K. Cranney and
Barry Fink, or any of them, his true and lawful attorneys-in-fact
and agent, with full power of substitution among himself and each
of the persons appointed herein, for him and in his name, place and
stead, in any and all capacities, to sign any amendments to any
registration statement of ANY OF THE DEAN WITTER FUNDS SET FORTH ON
SCHEDULE A ATTACHED HERETO, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of
them, may lawfully do or cause to be done by virtue hereof.
Dated: May 10, 1994
/s/ Charles A. Fiumefreddo /s/ Edward R. Telling
Charles A. Fiumefreddo Edward R. Telling
DEAN WITTER FUNDS
MONEY MARKET
1. Dean Witter Liquid Asset Fund Inc.
2. Active Assets Money Trust
3. Active Assets Tax-Free Trust
4. Active Assets California Tax-Free Trust
5. Active Assets Government Securities Trust
6. Dean Witter Tax-Free Daily Income Trust
7. Dean Witter U.S. Government Money Market Trust
8. Dean Witter California Tax-Free Daily Income Trust
9. Dean Witter New York Municipal Money Market Trust
EQUITY FUNDS
10. Dean Witter American Value Fund
11. Dean Witter Dividend Growth Securities Inc.
12. Dean Witter Capital Growth Securities
13. Dean Witter Natural Resource Development Securities Inc.
14. Dean Witter Precious Metals & Minerals Trust
15. Dean Witter Developing Growth Securities Trust
16. Dean Witter World Wide Investment Trust
17. Dean Witter Value-Added Market Series
18. Dean Witter European Growth Fund Inc.
19. Dean Witter Pacific Growth Fund Inc.
20. Dean Witter Equity Income Trust
21. Dean Witter Utilities Fund
22. Dean Witter Health Sciences Trust
23. Dean Witter Global Dividend Growth Securities
ASSET ALLOCATION FUNDS
24. Dean Witter Managed Assets Trust
25. Dean Witter Strategist Fund
FIXED-INCOME FUNDS
26. Dean Witter High Yield Securities Inc.
27. Dean Witter Convertible Securities Trust
28. Dean Witter Intermediate Income Securities
29. Dean Witter World Wide Income Trust
30. Dean Witter Global Short-Term Income Fund Inc.
31. Dean Witter Diversified Income Trust
32. Dean Witter Premier Income Trust
33. Dean Witter U.S. Government Securities Trust
34. Dean Witter Federal Securities Trust
35. Dean Witter Short-Term U.S. Treasury Trust
36. Dean Witter Tax-Exempt Securities Trust
37. Dean Witter California Tax-Free Income Fund
38. Dean Witter New York Tax-Free Income Fund
39. Dean Witter Multi-State Municipal Series Trust
Arizona Series
California Series
Florida Series
Massachusetts Series
Michigan Series
Minnesota Series
New Jersey Series
New York Series
Ohio Series
Pennsylvania Series
40. Dean Witter Select Municipal Reinvestment Fund
41. Dean Witter Limited Term Municipal Trust
SPECIAL PURPOSE FUNDS
42. Dean Witter Variable Investment Series
Money Market Portfolio
Quality Income Plus Portfolio
High Yield Portfolio
Utilities Portfolio
Dividend Growth Portfolio
Capital Growth Portfolio
European Growth Portfolio
Equity Portfolio
Managed Assets Portfolio
43. 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
Value-Added Market Series
Global Equity Series
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 Quality Municipal Investment Trust
52. InterCapital Quality Municipal Income Trust
53. Municipal Income Trust
54. Municipal Income Trust II
55. Municipal Income Trust III
56. Municipal Income Opportunities Trust
57. Municipal Income Opportunities Trust II
58. Municipal Income Opportunities Trust III
59. Municipal Premium Income Trust
60. Prime Income Trust
61. InterCapital Insured Municipal Income Trust
62. InterCapital California Insured Municipal Income Trust
63. InterCapital Quality Municipal Securities
64. InterCapital California Quality Municipal Securities
65. InterCapital New York Quality Municipal Securities
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of JACK F. BENNETT,
EDWIN J. GARN, JOHN R. HAIRE, JOHN E. JEUCK, MANUEL H. JOHNSON,
PAUL KOLTON and MICHAEL E. NUGENT, whose signatures appear below,
constitutes and appoints David M. Butowsky, Ronald Feiman and
Stuart Strauss, or any of them, his true and lawful attorneys-in-
fact and agents, with full power of substitution among himself and
each of the persons appointed herein, for him and in his name,
place and stead, in any and all capacities, to sign any amendments
to any registration statement of ANY OF THE DEAN WITTER FUNDS SET
FORTH ON SCHEDULE A ATTACHED HERETO, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with
the Securities and Exchange Commission, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of
them, may lawfully do or cause to be done by virtue hereof.
Dated: May 10, 1994
/s/ Jack F. Bennett /s/ Manuel H. Johnson
Jack F. Bennett Manuel H. Johnson
/s/ Edwin J. Garn /s/ Paul Kolton
Edwin J. Garn Paul Kolton
/s/ John R. Haire /s/ Michael E. Nugent
John R. Haire Michael E. Nugent
/s/ John E. Jeuck
John E. Jeuck
DEAN WITTER FUNDS
MONEY MARKET
1. Dean Witter Liquid Asset Fund Inc.
2. Active Assets Money Trust
3. Active Assets Tax-Free Trust
4. Active Assets California Tax-Free Trust
5. Active Assets Government Securities Trust
6. Dean Witter Tax-Free Daily Income Trust
7. Dean Witter U.S. Government Money Market Trust
8. Dean Witter California Tax-Free Daily Income Trust
9. Dean Witter New York Municipal Money Market Trust
EQUITY FUNDS
10. Dean Witter American Value Fund
11. Dean Witter Dividend Growth Securities Inc.
12. Dean Witter Capital Growth Securities
13. Dean Witter Natural Resource Development Securities Inc.
14. Dean Witter Precious Metals & Minerals Trust
15. Dean Witter Developing Growth Securities Trust
16. Dean Witter World Wide Investment Trust
17. Dean Witter Value-Added Market Series
18. Dean Witter European Growth Fund Inc.
19. Dean Witter Pacific Growth Fund Inc.
20. Dean Witter Equity Income Trust
21. Dean Witter Utilities Fund
22. Dean Witter Health Sciences Trust
23. Dean Witter Global Dividend Growth Securities
ASSET ALLOCATION FUNDS
24. Dean Witter Managed Assets Trust
25. Dean Witter Strategist Fund
FIXED-INCOME FUNDS
26. Dean Witter High Yield Securities Inc.
27. Dean Witter Convertible Securities Trust
28. Dean Witter Intermediate Income Securities
29. Dean Witter World Wide Income Trust
30. Dean Witter Global Short-Term Income Fund Inc.
31. Dean Witter Diversified Income Trust
32. Dean Witter Premier Income Trust
33. Dean Witter U.S. Government Securities Trust
34. Dean Witter Federal Securities Trust
35. Dean Witter Short-Term U.S. Treasury Trust
36. Dean Witter Tax-Exempt Securities Trust
37. Dean Witter California Tax-Free Income Fund
38. Dean Witter New York Tax-Free Income Fund
39. Dean Witter Multi-State Municipal Series Trust
Arizona Series
California Series
Florida Series
Massachusetts Series
Michigan Series
Minnesota Series
New Jersey Series
New York Series
Ohio Series
Pennsylvania Series
40. Dean Witter Select Municipal Reinvestment Fund
41. Dean Witter Limited Term Municipal Trust
SPECIAL PURPOSE FUNDS
42. Dean Witter Variable Investment Series
Money Market Portfolio
Quality Income Plus Portfolio
High Yield Portfolio
Utilities Portfolio
Dividend Growth Portfolio
Capital Growth Portfolio
European Growth Portfolio
Equity Portfolio
Managed Assets Portfolio
43. 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
Value-Added Market Series
Global Equity Series
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 Quality Municipal Investment Trust
52. InterCapital Quality Municipal Income Trust
53. Municipal Income Trust
54. Municipal Income Trust II
55. Municipal Income Trust III
56. Municipal Income Opportunities Trust
57. Municipal Income Opportunities Trust II
58. Municipal Income Opportunities Trust III
59. Municipal Premium Income Trust
60. Prime Income Trust
61. InterCapital Insured Municipal Income Trust
62. InterCapital California Insured Municipal Income Trust
63. InterCapital Quality Municipal Securities
64. InterCapital California Quality Municipal Securities
65. InterCapital New York Quality Municipal Securities
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that PHILIP J. PURCELL, whose signature
appears below, constitutes and appoints Sheldon Curtis, Marilyn K. Cranney and
Barry Fink, or any of them, his true and lawful attorneys-in-fact and agents,
with full power of substitution among himself and each of the persons appointed
herein, for him and in his name, place and stead, in any and all capacities, to
sign any amendments to any registration statement OF ANY OF THE DEAN WITTER
FUNDS SET FORTH ON SCHEDULE A ATTACHED HERETO, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, may lawfully do or cause to be
done by virtue hereof.
Dated: April 8, 1994
/s/ Philip J. Purcell
Philip J. Purcell
DEAN WITTER FUNDS
MONEY MARKET
1. Dean Witter Liquid Asset Fund Inc.
2. Active Assets Money Trust
3. Active Assets Tax-Free Trust
4. Active Assets California Tax-Free Trust
5. Active Assets Government Securities Trust
6. Dean Witter Tax-Free Daily Income Trust
7. Dean Witter U.S. Government Money Market Trust
8. Dean Witter California Tax-Free Daily Income Trust
9. Dean Witter New York Municipal Money Market Trust
EQUITY FUNDS
10. Dean Witter American Value Fund
11. Dean Witter Dividend Growth Securities Inc.
12. Dean Witter Capital Growth Securities
13. Dean Witter Natural Resource Development Securities Inc.
14. Dean Witter Precious Metals & Minerals Trust
15. Dean Witter Developing Growth Securities Trust
16. Dean Witter World Wide Investment Trust
17. Dean Witter Value-Added Market Series
18. Dean Witter European Growth Fund Inc.
19. Dean Witter Pacific Growth Fund Inc.
20. Dean Witter Equity Income Trust
21. Dean Witter Utilities Fund
22. Dean Witter Health Sciences Trust
23. Dean Witter Global Dividend Growth Securities
24. Dean Witter Global Utilities Fund
ASSET ALLOCATION FUNDS
25. Dean Witter Managed Assets Trust
26. Dean Witter Strategist Fund
FIXED-INCOME FUNDS
27. Dean Witter High Yield Securities Inc.
28. Dean Witter Convertible Securities Trust
29. Dean Witter Intermediate Income Securities
30. Dean Witter World Wide Income Trust
31. Dean Witter Global Short-Term Income Fund Inc.
32. Dean Witter Diversified Income Trust
33. Dean Witter Premier Income Trust
34. Dean Witter U.S. Government Securities Trust
35. Dean Witter Federal Securities Trust
36. Dean Witter Short-Term U.S. Treasury Trust
37. Dean Witter Tax-Exempt Securities Trust
38. Dean Witter California Tax-Free Income Fund
39. Dean Witter New York Tax-Free Income Fund
40. Dean Witter Multi-State Municipal Series Trust
Arizona Series
California Series
Florida Series
Massachusetts Series
Michigan Series
Minnesota Series
New Jersey Series
New York Series
Ohio Series
Pennsylvania Series
41. Dean Witter Select Municipal Reinvestment Fund
42. Dean Witter Limited Term Municipal Trust
43. Dean Witter Short-Term Bond Fund
SPECIAL PURPOSE FUNDS
44. Dean Witter Variable Investment Series
Money Market Portfolio
Quality Income Plus Portfolio
High Yield Portfolio
Utilities Portfolio
Dividend Growth Portfolio
Capital Growth Portfolio
European Growth Portfolio
Equity Portfolio
Managed Assets Portfolio
45. 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
Value-Added Market Series
Global Equity Series
CLOSED-END FUNDS
46. High Income Advantage Trust
47. High Income Advantage Trust II
48. High Income Advantage Trust III
49. InterCapital Income Securities Inc.
50. Dean Witter Government Income Trust
51. InterCapital Insured Municipal Bond Trust
52. InterCapital Insured Municipal Trust
53. InterCapital Quality Municipal Investment Trust
54. InterCapital Quality Municipal Income Trust
55. Municipal Income Trust
56. Municipal Income Trust II
57. Municipal Income Trust III
58. Municipal Income Opportunities Trust
59. Municipal Income Opportunities Trust II
60. Municipal Income Opportunities Trust III
61. Municipal Premium Income Trust
62. Prime Income Trust
63. InterCapital Insured Municipal Income Trust
64. InterCapital California Insured Municipal Income Trust
65. InterCapital Quality Municipal Securities
66. InterCapital California Quality Municipal Securities
67. InterCapital New York Quality Municipal Securities
68. InterCapital California Insured Municipal Securities
69. InterCapital Insured Municipal Securities
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that JOHN L. SCHROEDER, whose signature
appears below, constitues and appoints David M. Butowsky, Ronald Feiman and
Stuart Strauss, or any of them, his true and lawful attorneys-in-fact and
agents, with full power of substitution among himself and each of the persons
appointed herein, for him and in his name, place and stead, in any and all
capacities, to sign any amendments to any registration statement of ANY OF THE
DEAN WITTER FUNDS SET FORTH ON SCHEDULE A ATTACHED HERETO, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, may lawfully do or cause to be
done by virtue hereof.
Dated: April 13, 1994
/s/ John L. Schroeder
John L. Schroeder
DEAN WITTER FUNDS
MONEY MARKET
1. Dean Witter Liquid Asset Fund Inc.
2. Active Assets Money Trust
3. Active Assets Tax-Free Trust
4. Active Assets California Tax-Free Trust
5. Active Assets Government Securities Trust
6. Dean Witter Tax-Free Daily Income Trust
7. Dean Witter U.S. Government Money Market Trust
8. Dean Witter California Tax-Free Daily Income Trust
9. Dean Witter New York Municipal Money Market Trust
EQUITY FUNDS
10. Dean Witter American Value Fund
11. Dean Witter Dividend Growth Securities Inc.
12. Dean Witter Capital Growth Securities
13. Dean Witter Natural Resource Development Securities Inc.
14. Dean Witter Precious Metals & Minerals Trust
15. Dean Witter Developing Growth Securities Trust
16. Dean Witter World Wide Investment Trust
17. Dean Witter Value-Added Market Series
18. Dean Witter European Growth Fund Inc.
19. Dean Witter Pacific Growth Fund Inc.
20. Dean Witter Equity Income Trust
21. Dean Witter Utilities Fund
22. Dean Witter Health Sciences Trust
23. Dean Witter Global Dividend Growth Securities
24. Dean Witter Global Utilities Fund
ASSET ALLOCATION FUNDS
25. Dean Witter Managed Assets Trust
26. Dean Witter Strategist Fund
FIXED-INCOME FUNDS
27. Dean Witter High Yield Securities Inc.
28. Dean Witter Convertible Securities Trust
29. Dean Witter Intermediate Income Securities
30. Dean Witter World Wide Income Trust
31. Dean Witter Global Short-Term Income Fund Inc.
32. Dean Witter Diversified Income Trust
33. Dean Witter Premier Income Trust
34. Dean Witter U.S. Government Securities Trust
35. Dean Witter Federal Securities Trust
36. Dean Witter Short-Term U.S. Treasury Trust
37. Dean Witter Tax-Exempt Securities Trust
38. Dean Witter California Tax-Free Income Fund
39. Dean Witter New York Tax-Free Income Fund
40. Dean Witter Multi-State Municipal Series Trust
Arizona Series
California Series
Florida Series
Massachusetts Series
Michigan Series
Minnesota Series
New Jersey Series
New York Series
Ohio Series
Pennsylvania Series
41. Dean Witter Select Municipal Reinvestment Fund
42. Dean Witter Limited Term Municipal Trust
43. Dean Witter Short-Term Bond Fund
SPECIAL PURPOSE FUNDS
44. Dean Witter Variable Investment Series
Money Market Portfolio
Quality Income Plus Portfolio
High Yield Portfolio
Utilities Portfolio
Dividend Growth Portfolio
Capital Growth Portfolio
European Growth Portfolio
Equity Portfolio
Managed Assets Portfolio
45. 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
Value-Added Market Series
Global Equity Series
CLOSED-END FUNDS
46. High Income Advantage Trust
47. High Income Advantage Trust II
48. High Income Advantage Trust III
49. InterCapital Income Securities Inc.
50. Dean Witter Government Income Trust
51. InterCapital Insured Municipal Bond Trust
52. InterCapital Insured Municipal Trust
53. InterCapital Quality Municipal Investment Trust
54. InterCapital Quality Municipal Income Trust
55. Municipal Income Trust
56. Municipal Income Trust II
57. Municipal Income Trust III
58. Municipal Income Opportunities Trust
59. Municipal Income Opportunities Trust II
60. Municipal Income Opportunities Trust III
61. Municipal Premium Income Trust
62. Prime Income Trust
63. InterCapital Insured Municipal Income Trust
64. InterCapital California Insured Municipal Income Trust
65. InterCapital Quality Municipal Securities
66. InterCapital California Quality Municipal Securities
67. InterCapital New York Quality Municipal Securities
68. InterCapital California Insured Municipal Securities
69. InterCapital Insured Municipal Securities
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that MICHAEL BOZIC, whose signature appears
below, constitues and appoints David M. Butowsky, Ronald Feiman and Stuart
Strauss, or any of them, his true and lawful attorneys-in-fact and agents, with
full power of substitution among himself and each of the persons appointed
herein, for him and in his name, place and stead, in any and all capacities, to
sign any amendments to any registration statement of ANY OF THE DEAN WITTER
FUNDS SET FORTH ON SCHEDULE A ATTACHED HERETO, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, may lawfully do or cause to be
done by virtue hereof.
Dated: April 15, 1994
/s/ Michael Bozic
Michael Bozic
DEAN WITTER FUNDS
MONEY MARKET
1. Dean Witter Liquid Asset Fund Inc.
2. Active Assets Money Trust
3. Active Assets Tax-Free Trust
4. Active Assets California Tax-Free Trust
5. Active Assets Government Securities Trust
6. Dean Witter Tax-Free Daily Income Trust
7. Dean Witter U.S. Government Money Market Trust
8. Dean Witter California Tax-Free Daily Income Trust
9. Dean Witter New York Municipal Money Market Trust
EQUITY FUNDS
10. Dean Witter American Value Fund
11. Dean Witter Dividend Growth Securities Inc.
12. Dean Witter Capital Growth Securities
13. Dean Witter Natural Resource Development Securities Inc.
14. Dean Witter Precious Metals & Minerals Trust
15. Dean Witter Developing Growth Securities Trust
16. Dean Witter World Wide Investment Trust
17. Dean Witter Value-Added Market Series
18. Dean Witter European Growth Fund Inc.
19. Dean Witter Pacific Growth Fund Inc.
20. Dean Witter Equity Income Trust
21. Dean Witter Utilities Fund
22. Dean Witter Health Sciences Trust
23. Dean Witter Global Dividend Growth Securities
24. Dean Witter Global Utilities Fund
ASSET ALLOCATION FUNDS
25. Dean Witter Managed Assets Trust
26. Dean Witter Strategist Fund
FIXED-INCOME FUNDS
27. Dean Witter High Yield Securities Inc.
28. Dean Witter Convertible Securities Trust
29. Dean Witter Intermediate Income Securities
30. Dean Witter World Wide Income Trust
31. Dean Witter Global Short-Term Income Fund Inc.
32. Dean Witter Diversified Income Trust
33. Dean Witter Premier Income Trust
34. Dean Witter U.S. Government Securities Trust
35. Dean Witter Federal Securities Trust
36. Dean Witter Short-Term U.S. Treasury Trust
37. Dean Witter Tax-Exempt Securities Trust
38. Dean Witter California Tax-Free Income Fund
39. Dean Witter New York Tax-Free Income Fund
40. Dean Witter Multi-State Municipal Series Trust
Arizona Series
California Series
Florida Series
Massachusetts Series
Michigan Series
Minnesota Series
New Jersey Series
New York Series
Ohio Series
Pennsylvania Series
41. Dean Witter Select Municipal Reinvestment Fund
42. Dean Witter Limited Term Municipal Trust
43. Dean Witter Short-Term Bond Fund
SPECIAL PURPOSE FUNDS
44. Dean Witter Variable Investment Series
Money Market Portfolio
Quality Income Plus Portfolio
High Yield Portfolio
Utilities Portfolio
Dividend Growth Portfolio
Capital Growth Portfolio
European Growth Portfolio
Equity Portfolio
Managed Assets Portfolio
45. 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
Value-Added Market Series
Global Equity Series
CLOSED-END FUNDS
46. High Income Advantage Trust
47. High Income Advantage Trust II
48. High Income Advantage Trust III
49. InterCapital Income Securities Inc.
50. Dean Witter Government Income Trust
51. InterCapital Insured Municipal Bond Trust
52. InterCapital Insured Municipal Trust
53. InterCapital Quality Municipal Investment Trust
54. InterCapital Quality Municipal Income Trust
55. Municipal Income Trust
56. Municipal Income Trust II
57. Municipal Income Trust III
58. Municipal Income Opportunities Trust
59. Municipal Income Opportunities Trust II
60. Municipal Income Opportunities Trust III
61. Municipal Premium Income Trust
62. Prime Income Trust
63. InterCapital Insured Municipal Income Trust
64. InterCapital California Insured Municipal Income Trust
65. InterCapital Quality Municipal Securities
66. InterCapital California Quality Municipal Securities
67. InterCapital New York Quality Municipal Securities
68. InterCapital California Insured Municipal Securities
69. InterCapital Insured Municipal Securities
