<PAGE> 1
MORGAN STANLEY DEAN WITTER QUALITY MUNICIPAL INVESTMENT TRUST
Two World Trade Center
LETTER TO THE SHAREHOLDERS October 31, 2000 New York, New York 10048
DEAR SHAREHOLDER:
The U.S. economy continued to register solid economic growth over the 12-month
period ended October 31, 2000. Unemployment reached a 30-year low and real
personal consumption accelerated. The tightening labor market and rising oil
prices led to increased concern that inflationary pressures would surface. In
response, the Federal Reserve Board increased the federal funds rate 100 basis
points in three moves between February and May. The federal funds rate currently
stands at a nine-year high of 6.50 percent. The Fed's shift toward a tighter
monetary policy, which began last year, caused long-term interest rates to
increase in 1999. Early this year, however, the U.S. Treasury announced its
plans to utilize a growing federal budget surplus to reduce its debt. This
announcement precipitated a rally in the bond market. By the end of October
2000, long-term interest rates had declined significantly. Vigilance by the
Federal Reserve in controlling inflation and signs of moderating economic
activity also contributed to more favorable bond market conditions.
MUNICIPAL MARKET CONDITIONS
The long-term insured municipal index, which stood at 6.03 percent at the end of
October 1999, reached a high of 6.19 percent in mid January before declining to
5.65 percent at the end of October 2000. Because bond prices move inversely to
changes in interest rates, bond prices declined in 1999 but improved this year.
The municipal yield curve flattened 79 basis points during the year and the
pickup for extending maturities from one to 30 years declined from 225 basis
points in October 1999 to 146 basis points at the end of this October.
The ratio of municipal yields as a percentage of Treasury yields has
historically been used as a measure of relative value. A rising yield ratio
indicates weaker relative performance by municipals, a declining ratio stronger
performance. Over the past 12 months, this ratio has averaged 98 percent.
Long-term municipal yields have generally followed the trend
<PAGE> 2
MORGAN STANLEY DEAN WITTER QUALITY MUNICIPAL INVESTMENT TRUST
LETTER TO THE SHAREHOLDERS October 31, 2000, continued
of U.S. Treasury yields. For the past three years the high and low ratios have
been 100 percent and 83 percent, respectively.
During the first 10 months of 2000, municipal underwriting was 17 percent below
the same period last year. Refunding activity, the most interest-rate-sensitive
component of supply, dropped nearly 60 percent. Approximately 40 percent of the
underwritings were enhanced with bond insurance, versus an average of 50 percent
in the previous three years.
30-YEAR BOND YIELDS 1994 - 2000
<TABLE>
<CAPTION>
Insured U.S. Insured Municipal Yields as a
Municipal Yields Treasury Yields Percentage of U.S. Treasury Yields
<S> <C> <C> <C>
1994 5.40% 6.34% 85.17%
5.40 6.24 86.54
5.80 6.66 87.09
6.40 7.09 90.27
6.35 7.32 86.75
6.25 7.43 84.12
6.50 7.61 85.41
6.25 7.39 84.57
6.30 7.45 84.56
6.55 7.81 83.87
6.75 7.96 84.80
7.00 8.00 87.50
6.75 7.88 85.66
1995 6.40 7.70 83.12
6.15 7.44 82.66
6.15 7.43 82.77
6.20 7.34 84.47
5.80 6.66 87.09
6.10 6.62 92.15
6.10 6.86 88.92
6.00 6.66 90.09
5.95 6.48 91.82
5.75 6.33 90.84
5.50 6.14 89.58
5.35 5.94 90.07
1996 5.40 6.03 89.55
5.60 6.46 86.69
5.85 6.66 87.84
5.95 6.89 86.36
6.05 6.99 86.55
5.90 6.89 85.63
5.85 6.97 83.93
5.90 7.11 82.98
5.70 6.93 82.25
5.65 6.64 85.09
5.50 6.35 86.61
5.60 6.63 84.46
1997 5.70 6.79 83.95
5.65 6.80 83.09
5.90 7.10 83.10
5.75 6.94 82.85
5.65 6.91 81.77
5.60 6.78 82.60
5.30 6.30 84.13
5.50 6.61 83.21
5.40 6.40 84.38
5.35 6.15 86.99
5.30 6.05 87.60
5.15 5.92 86.99
1998 5.15 5.80 88.79
5.20 5.92 87.84
5.25 5.93 88.53
5.35 5.95 89.92
5.20 5.80 89.66
5.20 5.65 92.04
5.18 5.71 90.72
5.03 5.27 95.45
4.95 5.00 99.00
5.05 5.16 97.87
5.00 5.06 98.81
5.05 5.10 99.02
1999 5.00 5.09 98.23
5.10 5.58 91.40
5.15 5.63 91.47
5.20 5.66 91.87
5.30 5.83 90.91
5.47 5.96 91.78
5.55 6.10 90.98
5.75 6.06 94.88
5.85 6.05 96.69
6.03 6.16 97.89
6.00 6.29 95.39
5.97 6.48 92.13
2000 6.18 6.49 95.22
6.04 6.14 98.37
5.82 5.83 99.83
5.91 5.96 99.16
5.91 6.01 98.34
5.84 5.90 98.98
5.73 5.78 99.13
5.62 5.67 99.12
5.74 5.89 97.45
5.65 5.79 97.58
5.55 5.61 98.93
</TABLE>
Source: Municipal Market Data - A Division of Thomson Financial Municipal Group
and Bloomberg L.P.
PERFORMANCE
During the 12-month period ended October 31, 2000, the net asset value (NAV) of
Morgan Stanley Dean Witter Quality Municipal Investment Trust (IQT) increased
from $14.35 to $14.64 per share. Based on this change, plus a reinvestment of
tax-free dividends totaling $0.93 per share, the Trust's total NAV return was
9.42 percent. IQT's value on the New York Stock Exchange (NYSE) increased from
$13.00 to $13.6875 per share during this period. IQT's total market return,
which includes the reinvestment of tax-free dividends, was 12.84 percent. As of
October 31, 2000, IQT's share price was at a 6.51 percent discount to its NAV.
2
<PAGE> 3
MORGAN STANLEY DEAN WITTER QUALITY MUNICIPAL INVESTMENT TRUST
LETTER TO THE SHAREHOLDERS October 31, 2000, continued
Monthly dividends for the fourth quarter of 2000, declared in September, were
unchanged at $0.0755 per share. The Trust's level of undistributed net
investment income was $0.149 per share on October 31, 2000, versus $0.143 per
share 12 months earlier.
PORTFOLIO STRUCTURE
The Trust's investments were diversified among 15 long-term sectors and 66
credits. Issues in the refunded bond category comprised 7 percent of net assets.
These bonds have been refinanced and will be redeemed on the dates shown in the
portfolio. At the end of October, the portfolio's average maturity was 21 years.
Average duration, a measure of portfolio sensitivity to interest rates, was 6
years. Generally, bonds with longer durations have greater volatility. The
accompanying charts and tables provide current information on the portfolio's
credit quality, maturity distribution and sector diversification. Optional call
provisions and their respective cost (book) yields by year are also shown.
THE IMPACT OF LEVERAGING
As discussed in previous shareholder reports, the total income available for
distribution to common shareholders includes incremental income provided by the
Trust's outstanding Auction Rate Preferred shares (ARPS). ARPS dividends reflect
prevailing short-term interest rates on maturities normally ranging from one
week to one year. Incremental income to common shareholders depends on two
factors. The first factor is the amount of ARPS outstanding, while the second is
the spread between the portfolio's cost yield and ARPS expenses (ARPS auction
rate and expenses). The greater the spread and amount of ARPS outstanding, the
greater the amount of incremental income available for distribution to common
shareholders. The level of net investment income available for distribution to
common shareholders varies with the level of short-term interest rates. ARPS
leverage also increases the price volatility of common shares and has the effect
of extending portfolio duration.
During the 12-month period, ARPS leverage contributed approximately $0.11 per
share to common share earnings. The Trust's two ARPS series totaling $105
million represented 30 percent of net assets. The yield on the IQT's weekly ARPS
series ranged between 3.30 and 5.50 percent. The yield on the 12-month ARPS
series, with a July 2001 rollover, is 4.32 percent. In comparison, the yield on
1-year municipal notes increased from 3.77 percent at the end of October 1999 to
4.19 percent at the end of this October.
3
<PAGE> 4
MORGAN STANLEY DEAN WITTER QUALITY MUNICIPAL INVESTMENT TRUST
LETTER TO THE SHAREHOLDERS October 31, 2000, continued
LOOKING AHEAD
The slower pace of economic growth and moderate inflation have caused the bond
market to anticipate a shift by the Federal Reserve Board to a neutral bias in
its monetary policy and the possibility of easing in 2001. This should create a
favorable environment for municipal bonds.
The Trust's procedure for reinvestment of all dividends and distributions on
common shares is through purchases in the open market. This method helps support
the market value of the Trust's shares. In addition, we would like to remind you
that the Trustees have approved a procedure whereby the Trust may, when
appropriate, purchase shares in the open market or in privately negotiated
transactions at a price not above market value or net asset value, whichever is
lower at the time of purchase. The Trust may also utilize procedures to reduce
or eliminate the amount of outstanding ARPS, including their purchase in the
open market or in privately negotiated transactions. During the fiscal period
ended October 31, 2000, the Trust purchased and retired 776,800 shares of common
stock at a weighted average market discount of 8.95 percent.
We appreciate your ongoing support of Morgan Stanley Dean Witter Quality
Municipal Investment Trust and look forward to continuing to serve your
investment needs.
<TABLE>
<S> <C>
Very truly yours,
/s/ CHARLES A. FIUMEFREDDO /s/ MITCHELL M. MERIN
CHARLES A. FIUMEFREDDO MITCHELL M. MERIN
Chairman of the Board President
</TABLE>
4
<PAGE> 5
MORGAN STANLEY DEAN WITTER QUALITY MUNICIPAL INVESTMENT TRUST
LETTER TO THE SHAREHOLDERS October 31, 2000, continued
LARGEST SECTORS AS OF OCTOBER 31, 2000
(% OF NET ASSETS)
[LARGEST SECTORS BAR GRAPH]
<TABLE>
<S> <C>
MORTGAGE 21%
WATER & SEWER 13%
GENERAL OBLIGATION 10%
TRANSPORTATION 9%
IDR/PCR* 8%
REFUNDED 7%
HOSPITAL 6%
RESOURCE RECOVERY 6%
</TABLE>
* INDUSTRIAL DEVELOPMENT/POLLUTION REVENUE
PORTFOLIO STRUCTURE IS SUBJECT TO CHANGE.
CREDIT RATINGS AS OF OCTOBER 31, 2000
(% OF TOTAL LONG-TERM PORTFOLIO)
[CREDIT RATINGS PIE CHART]
<TABLE>
<S> <C>
Aaa or AAA 55%
Aa or AA 22%
A or A 16%
Baa or BBB 4%
NR 3%
</TABLE>
AS MEASURED BY MOODY'S INVESTORS SERVICE, INC. OR STANDARD & POOR'S CORP.
PORTFOLIO STRUCTURE IS SUBJECT TO CHANGE.
DISTRIBUTION BY MATURITY
(% OF NET ASSETS)
[DISTRIBUTION BY MATURITY BAR CHART]
WEIGHTED AVERAGE
MATURITY: 21 YEARS
<TABLE>
<S> <C>
UNDER 1 YEAR 1.0%
1-5 YEARS 3.0%
5-10 YEARS 2.3%
10-20 YEARS 40.7%
20-30 YEARS 41.2%
30+ YEARS 10.1%
</TABLE>
PORTFOLIO STRUCTURE IS SUBJECT TO CHANGE.
5
<PAGE> 6
MORGAN STANLEY DEAN WITTER QUALITY MUNICIPAL INVESTMENT TRUST
LETTER TO THE SHAREHOLDERS October 31, 2000, continued
CALL AND COST (BOOK) YIELD STRUCTURE
(BASED ON LONG-TERM PORTFOLIO)
OCTOBER 31, 2000
WEIGHTED AVERAGE
CALL PROTECTION: 5 YEARS
BONDS CALLABLE
[BONDS CALLABLE BAR CHART]
<TABLE>
<CAPTION>
YEARS BONDS CALLABLE
<S> <C>
2000 0%
2001 37%
2002 2%
2003 5%
2004 1%
2005 10%
2006 2%
2007 4%
2008 8%
2009 10%
2010+ 20%
</TABLE>
WEIGHTED AVERAGE
BOOK YIELD: 6.5%
COST (BOOK) YIELD*
[COST (BOOK) YIELD* BAR CHART]
<TABLE>
<S> <C>
2000 0%
2001 7.4%
2002 7.0%
2003 6.8%
2004 5.3%
2005 6.1%
2006 6.4%
2007 6.1%
2008 5.3%
2009 5.7%
2010+ 6.1%
</TABLE>
* COST OR "BOOK" YIELD IS THE ANNUAL INCOME EARNED ON A PORTFOLIO INVESTMENT
BASED ON ITS ORIGINAL PURCHASE PRICE BEFORE FUND OPERATING EXPENSES. FOR
EXAMPLE, THE TRUST IS EARNING A BOOK YIELD OF 7.4% ON 37% OF THE BONDS IN THE
LONG-TERM PORTFOLIO THAT IS CALLABLE IN 2001.
PORTFOLIO STRUCTURE IS SUBJECT TO CHANGE.
6
<PAGE> 7
MORGAN STANLEY DEAN WITTER QUALITY MUNICIPAL INVESTMENT TRUST
RESULTS OF ANNUAL MEETING October 31, 2000 (unaudited)
* * *
On October 24, 2000, an annual meeting of the Trust's shareholders was held for
the purpose of voting on three separate matters, the results of which were as
follows:
(1) ELECTION OF TRUSTEES BY ALL SHAREHOLDERS:
<TABLE>
<S> <C>
Wayne E. Hedien
For......................................................... 13,189,416
Withheld.................................................... 458,391
James F. Higgins
For......................................................... 13,190,433
Withheld.................................................... 457,374
John L. Schroeder
For......................................................... 13,183,404
Withheld.................................................... 464,403
</TABLE>
(2) ELECTION OF TRUSTEE BY PREFERRED SHAREHOLDERS:
<TABLE>
<S> <C>
Dr. Manuel H. Johnson
For......................................................... 1,866
Withheld.................................................... 11
</TABLE>
The following Trustees were not standing for reelection at this meeting:
Michael Bozic, Charles A. Fiumefreddo, Edwin J. Garn, Michael E. Nugent and
Philip J. Purcell.
(3) RATIFICATION OF THE SELECTION OF DELOITTE & TOUCHE LLP AS INDEPENDENT
AUDITORS:
<TABLE>
<S> <C>
For......................................................... 13,209,528
Against..................................................... 57,913
Abstain..................................................... 380,366
</TABLE>
7
<PAGE> 8
MORGAN STANLEY DEAN WITTER QUALITY MUNICIPAL INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS October 31, 2000
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
TAX-EXEMPT MUNICIPAL BONDS (97.3%)
General Obligation (10.2%)
$ 5,000 North Slope Borough, Alaska, Ser 2000 B (MBIA).............. 0.00% 06/30/09 $ 3,228,600
4,000 Florida Board of Education, Capital Outlay Refg 1998 Ser D.. 4.50 06/01/24 3,360,480
10,000 Chicago School Reform Board, Illinois, Dedicated Tax Ser
1997 (Ambac)............................................... 5.75 12/01/27 10,049,300
10,000 Massachusetts, Ser 2000 C (WI).............................. 5.75 10/01/15 10,492,600
5,000 North Carolina, Public School Building Ser 1999............. 4.60 04/01/17 4,504,300
1,825 Oregon, Veterans' Welfare Ser 75............................ 6.00 04/01/27 1,879,768
2,500 Mission Consolidated Independent School District, Texas,
Building Ser 2000.......................................... 5.50 02/15/25 2,450,550
-------- -----------
38,325 35,965,598
-------- -----------
Educational Facilities Revenue (3.0%)
3,480 Indiana University, Student Fee Ser K (MBIA)................ 5.875 08/01/20 3,546,538
2,200 University of North Carolina, Pool Ser 1998 B (MBIA)........ 4.50 10/01/18 1,931,358
5,000 Texas State University, Board of Regents, Ser 2000.......... 5.50 03/15/20 4,970,200
-------- -----------
10,680 10,448,096
-------- -----------
Electric Revenue (4.4%)
5,000 Long Island Power Authority, New York, Ser 2000 A (FSA)..... 0.00 06/01/16 2,143,450
3,190 North Carolina Municipal Power Agency #1, Catawba Ser
1992....................................................... 6.25 01/01/17 3,207,035
5,000 South Carolina Public Service Authority, 1997 Refg Ser A
(MBIA)..................................................... 5.00 01/01/29 4,482,750
4,965 San Antonio, Texas, Electric & Gas Refg Ser 1994-A.......... 5.00 02/01/14 4,842,513
1,000 Intermountain Power Agency, Utah, Refg 1996 Ser D (Secondary
FSA)....................................................... 5.00 07/01/21 923,540
-------- -----------
19,155 15,599,288
-------- -----------
Hospital Revenue (5.5%)
5,000 Massachusetts Health & Educational Facilities Authority, St
Elizabeth Hospital of Boston Ser D & E (FSA)............... 8.78++ 08/15/21 5,331,250
3,000 Missouri Health & Educational Facilities Authority, SSM
Healthcare Ser 1998 A (MBIA)............................... 5.00 06/01/22 2,799,480
5,000 New Jersey Health Care Authority, St Barnabas Medical Center
Ser 1998 B (MBIA).......................................... 4.75 07/01/28 4,331,700
5,000 New York State Dormitory Authority, Long Island Jewish
Medical Center Ser 1998 (MBIA)............................. 5.00 07/01/18 4,681,800
2,180 Charlotte-Mecklenburg Hospital Authority, North Carolina,
Ser 1992................................................... 6.25 01/01/20 2,222,924
-------- -----------
20,180 19,367,154
-------- -----------
Industrial Development/Pollution Control Revenue (7.5%)
4,500 Hawaii Department Budget & Finance, Citizens Utilities Co
1991 Ser A & B (AMT)....................................... 8.473++ 11/01/21 4,601,250
Chicago, Illinois,
5,000 Chicago-O'Hare Int'l Airport/Lufthansa German Airlines Inc
Ser 1990
(AMT)...................................................... 7.125 05/01/18 5,143 450
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
8
<PAGE> 9
MORGAN STANLEY DEAN WITTER QUALITY MUNICIPAL INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS October 31, 2000, continued
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 2,000 Peoples Gas Light & Coke Co Refg 1995 Ser A................. 6.10% 06/01/25 $ 2,039,560
2,000 New York State Energy Research & Development Authority,
Brooklyn Union Gas Co 1991 Ser A & B (AMT) (MBIA).......... 9.057++ 07/01/26 2,297,500
12,000 Richland County, South Carolina, Union Camp Corp Ser 1991 B
(AMT)...................................................... 7.125 09/01/21 12,295,200
-------- -----------
25,500 26,376,960
-------- -----------
Mortgage Revenue - Multi-Family (7.9%)
10,000 Illinois Housing Development Authority, 1991 Ser A.......... 8.25 07/01/16 10,384,700
15,000 New Jersey Housing & Mortgage Finance Agency, Presidential
Plaza at Newport - FHA Insured Mtgs Refg 1991 Ser 1........ 7.00 05/01/30 15,582,150
1,970 New York State Housing Finance Agency, 1996 Ser A Refg
(FSA)...................................................... 6.10 11/01/15 2,029,652
-------- -----------
26,970 27,996,502
-------- -----------
Mortgage Revenue - Single Family (13.3%)
3,940 California Housing Finance Agency, Home 1991 Ser G (AMT).... 7.05 08/01/27 4,023,961
1,550 Colorado Housing and Finance Authority, 2000 Ser D-2
(AMT)...................................................... 6.90 04/01/29 1,708,240
5,360 Colorado Housing Finance Authority, Refg 1991 Ser A......... 7.25 11/01/31 5,492,821
10,000 Connecticut Housing Finance Authority, Housing Mortgage 2000
Ser B-2 (AMT).............................................. 5.85 05/15/31 9,993,999
1,420 District of Columbia Housing Finance Agency, GNMA
Collateralized Ser 1990 B (AMT)............................ 7.10 12/01/24 1,460,868
4,635 Maine Housing Authority, Purchase 1988 Ser D-6 (AMT)........ 7.25 11/15/19 4,736,970
945 Michigan Housing Development Authority, 1991 Ser B.......... 6.95 12/01/20 967,444
2,700 Nebraska Investment Finance Authority, GNMA-Backed 1990 Ser
A & B (AMT)................................................ 9.305++ 10/17/23 2,848,500
2,705 New Hampshire Housing Finance Authority, Residential 1991
Ser D (AMT)................................................ 7.25 07/01/15 2,826,941
Ohio Housing Finance Agency,
1,990 Residential 1996 Ser B-2 (AMT).............................. 6.10 09/01/28 2,015,711
1,600 GNMA - Backed Ser A 1&2 (AMT)............................... 9.081++ 03/24/31 1,676,000
4,440 Tennessee Housing Development Agency, Homeownership Issue T
(AMT)...................................................... 7.375 07/01/23 4,504,602
3,820 Virginia Housing Development Authority, 1992 Ser A.......... 7.15 01/01/33 3,935,670
690 Wyoming Community Development Authority, Federally
Insured/Gtd Loans 1988 Ser G (AMT)......................... 7.25 06/01/21 712,170
-------- -----------
45,795 46,903,897
-------- -----------
Nursing & Health Related Facilities Revenue (0.3%)
940 New York State Medical Care Facilities Finance Agency,
-------- Mental Health 1991 Ser C................................... 7.30 02/15/21 974,930
-----------
Recreational Facilities Revenue (1.2%)
4,000 Houston, Texas, Sr Lien Hotel Occupancy Tax Refg Ser 1995
(FSA)...................................................... 5.50 07/01/15 4,024,800
-------- -----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
9
<PAGE> 10
MORGAN STANLEY DEAN WITTER QUALITY MUNICIPAL INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS October 31, 2000, continued
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Resource Recovery Revenue (5.7%)
$ 5,000 Northeast Maryland Waste Disposal Authority, Montgomery
County Ser 1993 A (AMT).................................... 6.30% 07/01/16 $ 5,140,300
4,610 Detroit Economic Development Corporation, Michigan, Ser 1991
A (AMT) (FSA).............................................. 6.875 05/01/09 4,745,119
10,000 Montgomery County Industrial Development Authority,
Pennsylvania, Ser 1989..................................... 7.50 01/01/12 10,249,400
-------- -----------
19,610 20,134,819
-------- -----------
Student Loan Revenue (2.2%)
6,500 Pennsylvania Higher Education Assistance Agency, 1991 Ser A
-------- & B (AMT) (Ambac).......................................... 8.963++ 09/01/26 7,905,625
-----------
Transportation Facilities Revenue (9.1%)
10,000 Hillsborough County Port District, Florida, Tampa Port
Authority Spl & Refg Ser 1995 (AMT) (FSA)**................ 6.00 06/01/20 10,300,300
2,000 Lee County, Florida, Ser 1995 (MBIA)........................ 5.75 10/01/22 2,034,080
7,000 Hawaii, Airports Second Ser of 1991 (AMT)................... 6.90 07/01/12 7,896,490
7,000 Massachusetts Bay Transportation Authority, Assessment 2000
Ser A...................................................... 5.25 07/01/30 6,637,260
5,000 Houston, Texas, Airport Sub Lien Ser 1991 A (AMT) (FGIC).... 6.75 07/01/21 5,152,650
-------- -----------
31,000 32,020,780
-------- -----------
Water & Sewer Revenue (13.2%)
2,000 Birmingham, Alabama, Water & Sewer Ser 1998 A............... 4.75 01/01/21 1,765,960
5,470 California Department Water Resources, Central Valley Ser
U.......................................................... 5.00 12/01/29 5,112,645
2,000 Henry County Water & Sewer Authority, Georgia, Ser 2000
(FGIC)..................................................... 5.625 02/01/30 2,003,940
5,000 Louisville & Jefferson County Metropolitan Sewer District,
Kentucky, Ser 1999 A (FGIC)................................ 5.75 05/15/33 5,052,800
Massachusetts Water Resources Authority,
1,585 2000 Ser A (FGIC).......................................... 6.00 08/01/13 1,715,794
700 2000 Ser A (FGIC).......................................... 6.00 08/01/14 755,510
5,000 New York City Water Finance Authority, New York 1998 Ser D
(MBIA)..................................................... 4.75 06/15/25 4,375,200
7,500 Portland, Oregon Sewer 2000 Ser A (FGIC).................... 5.75 08/01/19 7,719,150
7,000 Charleston, South Carolina, Refg Cap Impr Ser 1998 (FGIC)... 4.50 01/01/24 5,900,440
10,000 Houston, Texas, Water & Sewer Jr Lien Refg Ser 2000 B
(FGIC)..................................................... 5.25 12/01/30 9,437,800
3,000 Loudoun County Sanitation Authority, Virginia, Ser 1998
(MBIA)..................................................... 4.75 01/01/30 2,576,400
-------- -----------
49,255 46,415,639
-------- -----------
Other Revenue (7.3%)
10,000 New York Local Government Assistance Corporation, Ser 1995
A.......................................................... 6.00 04/01/24 10,261,300
15,000 Emmaus General Authority, Pennsylvania, Local Government Ser
1988 H (FGIC).............................................. 7.00 05/15/18 15,297,600
-------- -----------
25,000 25,558,900
-------- -----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
10
<PAGE> 11
MORGAN STANLEY DEAN WITTER QUALITY MUNICIPAL INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS October 31, 2000, continued
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Refunded (6.5%)
$ 10,000 Wichita, Kansas, CSJ Health System of Wichita Inc Ser
1991....................................................... 7.00% 11/15/01+ $10,453,700
9,000 Lorain County, Ohio, Humility of Mary Health Care Corp Ser
1991 B (ETM)............................................... 7.20 12/15/11 9,444,780
3,000 Salt Lake City, Utah, IHC Hospitals Inc Refg Ser 1991
(Ambac) (ETM).............................................. 8.907++ 05/15/20 3,198,750
-------- -----------
22,000 23,097,230
-------- -----------
344,910 TOTAL TAX-EXEMPT MUNICIPAL BONDS (Cost $334,152,627)............................ 342,790,218
-------- -----------
SHORT-TERM TAX-EXEMPT MUNICIPAL OBLIGATIONS (1.0%)
1,200 Missouri Health & Educational Facilities Authority, Cox
Health System Ser 1997 (MBIA) (Demand 11/01/00)............ 4.60* 06/01/15 1,200,000
2,000 New York State Energy Research & Development Authority,
Brooklyn Union Gas Co 1991 Ser A & B (AMT) (MBIA) (Aucton
Reset 11/07/00)............................................ 4.78* 07/01/26 2,000,000
100 Harris County Health Facilities Development Corporation,
Texas, Methodist Hospital Ser 1994 (Demand 11/01/00)....... 4.60* 12/01/25 100,000
400 Washington Health Care Facilities Authority, Virginia Mason
Med Ctr Ser 1997
-------- B (MBIA) (Demand 11/01/00).................................. 4.65* 02/15/27 400,000
-----------
3,700 TOTAL SHORT-TERM TAX-EXEMPT MUNICIPAL OBLIGATIONS (Cost $3,700,000)............. 3,700,000
-------- -----------
$348,610 TOTAL INVESTMENTS (Cost $337,852,627) (a)............................. 98.3% 346,490,218
========
OTHER ASSETS IN EXCESS OF LIABILITIES.................................. 1.7%
5,898,554
----- -----------
NET ASSETS............................................................. 100.0%
$352,388,772
===== ===========
</TABLE>
---------------------
AMT Alternative Minimum Tax.
ETM Escrowed to maturity.
WI Security purchased on a "when-issued" basis.
++ Current coupon rate for residual interest bonds. This rate resets
periodically as the auction rate on the related short-term
securities fluctuates.
+ Prerefunded to call date shown.
* Current coupon of variable rate demand obligation.
** This security is segregated in connection with the purchase of a
"when-issued" security.
(a) The aggregate cost for federal income tax purposes approximates
the aggregate cost for book purposes. The aggregate gross
unrealized appreciation is $10,969,758 and the aggregate gross
unrealized depreciation is $2,332,167, resulting in net unrealized
appreciation of $8,637,591.
Bond Insurance:
---------------
Ambac Ambac Assurance Corporation.
FGIC Financial Guaranty Insurance Company.
FSA Financial Security Assurance Inc.
MBIA Municipal Bond Investors Assurance Corporation.
SEE NOTES TO FINANCIAL STATEMENTS
11
<PAGE> 12
MORGAN STANLEY DEAN WITTER QUALITY MUNICIPAL INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS October 31, 2000, continued
Geographic Summary of Investments
Based on Market Value as a Percent of Net Assets
<TABLE>
<S> <C>
Alabama..................... 0.5%
Alaska...................... 0.9
California.................. 2.6
Colorado.................... 2.0
District of Columbia........ 0.4
Connecticut................. 2.8
Florida..................... 4.5
Georgia..................... 0.6
Hawaii...................... 3.6
Illinois.................... 7.8
Indiana..................... 1.0
Kansas...................... 3.0
Kentucky.................... 1.4
Maine....................... 1.3
Maryland.................... 1.5
Massachusetts............... 7.1
Michigan.................... 1.6
Missouri.................... 1.1
Nebraska.................... 0.8
New Hampshire............... 0.8
New Jersey.................. 5.7
New York.................... 8.2
North Carolina.............. 3.4
Ohio........................ 3.7
Oregon...................... 2.7
Pennsylvania................ 9.5
South Carolina.............. 6.4
Tennessee................... 1.3
Texas....................... 8.8
Utah........................ 1.2
Virginia.................... 1.8
Washington.................. 0.1
Wyoming..................... 0.2
----
Total....................... 98.3%
====
</TABLE>
12
<PAGE> 13
MORGAN STANLEY DEAN WITTER QUALITY MUNICIPAL INVESTMENT TRUST
FINANCIAL STATEMENTS
<TABLE>
<S> <C>
STATEMENT OF ASSETS AND LIABILITIES
October 31, 2000
ASSETS:
Investments in securities, at value
(cost $337,852,627)........................................ $346,490,218
Cash........................................................ 10,527,600
Interest receivable......................................... 6,103,706
Prepaid expenses and other assets........................... 103,648
-----------
TOTAL ASSETS............................................ 363,225,172
-----------
LIABILITIES:
Payable for:
Investments purchased................................... 10,432,753
Dividends to preferred shareholders..................... 181,440
Investment management fee............................... 107,897
Shares of beneficial interest repurchased............... 15,227
Accrued expenses............................................ 99,083
-----------
TOTAL LIABILITIES....................................... 10,836,400
-----------
NET ASSETS.............................................. $352,388,772
===========
COMPOSITION OF NET ASSETS:
Preferred shares of beneficial interest (1,000,000 shares
authorized of non-participating $.01 par value, 2,100 shares
outstanding)............................................... $105,000,000
-----------
Common shares of beneficial interest (unlimited shares
authorized of $.01 par value, 16,899,913 shares
outstanding)............................................... 235,995,494
Net unrealized appreciation................................. 8,637,591
Accumulated undistributed net investment income............. 2,517,805
Accumulated undistributed net realized gain................. 237,882
-----------
NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS............ 247,388,772
-----------
TOTAL NET ASSETS........................................ $352,388,772
===========
NET ASSET VALUE PER COMMON SHARE
($247,388,772 divided by 16,899,913 common shares
outstanding)............................................... $14.64
===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
13
<PAGE> 14
MORGAN STANLEY DEAN WITTER QUALITY MUNICIPAL INVESTMENT TRUST
FINANCIAL STATEMENTS, continued
<TABLE>
<S> <C>
STATEMENT OF OPERATIONS
For the year ended October 31, 2000
NET INVESTMENT INCOME:
INTEREST INCOME............................................. $22,032,345
----------
EXPENSES
Investment management fee................................... 1,234,426
Auction commission fees..................................... 307,737
Professional fees........................................... 84,551
Transfer agent fees and expenses............................ 61,790
Shareholder reports and notices............................. 53,562
Registration fees........................................... 24,760
Custodian fees.............................................. 18,433
Auction agent fees.......................................... 17,692
Trustees' fees and expenses................................. 16,621
Other....................................................... 22,395
----------
TOTAL EXPENSES.......................................... 1,841,967
Less: expense offset........................................ (18,399)
----------
NET EXPENSES............................................ 1,823,568
----------
NET INVESTMENT INCOME:.................................. 20,208,777
----------
NET REALIZED AND UNREALIZED GAIN:
Net realized gain........................................... 730,570
Net change in unrealized appreciation....................... 3,145,492
----------
NET GAIN................................................ 3,876,062
----------
NET INCREASE................................................ $24,084,839
==========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
14
<PAGE> 15
MORGAN STANLEY DEAN WITTER QUALITY MUNICIPAL INVESTMENT TRUST
FINANCIAL STATEMENTS, continued
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR FOR THE YEAR
ENDED ENDED
OCTOBER 31, 2000 OCTOBER 31, 1999
------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income................................ $20,208,777 $20,944,882
Net realized gain (loss)............................. 730,570 (492,688)
Net change in unrealized appreciation................ 3,145,492 (22,589,745)
----------- -----------
NET INCREASE (DECREASE).......................... 24,084,839 (2,137,551)
----------- -----------
Dividends to preferred shareholders from net
investment income................................... (4,289,019) (3,671,318)
----------- -----------
DIVIDENDS AND DISTRIBUTIONS TO COMMON SHAREHOLDERS
FROM:
Net investment income................................ (15,929,765) (16,262,280)
Net realized gain.................................... -- (2,019,364)
----------- -----------
TOTAL DIVIDENDS AND DISTRIBUTIONS................ (15,929,765) (18,281,644)
----------- -----------
Decrease from transactions in common shares of
beneficial interest................................. (10,110,685) (4,888,397)
----------- -----------
NET DECREASE..................................... (6,244,630) (28,978,910)
NET ASSETS:
Beginning of period.................................. 358,633,402 387,612,312
----------- -----------
END OF PERIOD
(Including undistributed net investment income of
$2,517,805 and $2,527,812, respectively)......... $352,388,772 $358,633,402
=========== ===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
15
<PAGE> 16
MORGAN STANLEY DEAN WITTER QUALITY MUNICIPAL INVESTMENT TRUST
NOTES TO FINANCIAL STATEMENTS October 31, 2000
1. ORGANIZATION AND ACCOUNTING POLICIES
Morgan Stanley Dean Witter Quality Municipal Investment Trust (the "Trust") is
registered under the Investment Company Act of 1940, as amended, as a
diversified, closed-end management investment company. The Trust's investment
objective is to provide current income which is exempt from federal income tax.
The Trust was organized as a Massachusetts business trust on July 2, 1991 and
commenced operations on September 27, 1991.
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures. Actual results could differ from
those estimates.
The following is a summary of significant accounting policies:
A. VALUATION OF INVESTMENTS -- Portfolio securities are valued by an outside
independent pricing service approved by the Trustees. The pricing service has
informed the Trust that in valuing the portfolio securities, it uses both a
computerized matrix of tax-exempt securities and evaluations by its staff, in
each case based on information concerning market transactions and quotations
from dealers which reflect the bid side of the market each day. The portfolio
securities are thus valued by reference to a combination of transactions and
quotations for the same or other securities believed to be comparable in
quality, coupon, maturity, type of issue, call provisions, trading
characteristics and other features deemed to be relevant. Short-term debt
securities having a maturity date of more than sixty days at time of purchase
are valued on a mark-to-market basis until sixty days prior to maturity and
thereafter at amortized cost based on their value on the 61st day. Short-term
debt securities having a maturity date of sixty days or less at the time of
purchase are valued at amortized cost.
B. ACCOUNTING FOR INVESTMENTS -- Security transactions are accounted for on the
trade date (date the order to buy or sell is executed). Realized gains and
losses on security transactions are determined by the identified cost method.
The Trust amortizes premiums and accretes discounts over the life of the
respective securities. Interest income is accrued daily.
C. FEDERAL INCOME TAX STATUS -- It is the Trust's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its taxable and nontaxable income to its
shareholders. Accordingly, no federal income tax provision is required.
D. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- The Trust records dividends
and distributions to its shareholders on the ex-dividend date. The amount of
dividends and distributions from net
16
<PAGE> 17
MORGAN STANLEY DEAN WITTER QUALITY MUNICIPAL INVESTMENT TRUST
NOTES TO FINANCIAL STATEMENTS October 31, 2000, continued
investment income and net realized capital gains are determined in accordance
with federal income tax regulations which may differ from generally accepted
accounting principles. These "book/tax" differences are either considered
temporary or permanent in nature. To the extent these differences are permanent
in nature, such amounts are reclassified within the capital accounts based on
their federal tax-basis treatment; temporary differences do not require
reclassification. Dividends and distributions which exceed net investment income
and net realized capital gains for tax purposes are reported as distributions of
paid-in-capital.
2. INVESTMENT MANAGEMENT AGREEMENT
Pursuant to an Investment Management Agreement with Morgan Stanley Dean Witter
Advisors Inc. (the "Investment Manager"), the Trust pays a management fee,
calculated weekly and payable monthly, by applying the annual rate of 0.35% to
the Trust's weekly net assets.
3. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES
The cost of purchases and proceeds from sales of portfolio securities, excluding
short-term investments, for the year ended October 31, 2000 aggregated
$82,784,199 and $66,674,571, respectively.
Morgan Stanley Dean Witter Trust FSB, an affiliate of the Investment Manager, is
the Trust's transfer agent. At October 31, 2000, the Trust had transfer agent
fees and expenses payable of approximately $2,000.
The Trust has an unfunded noncontributory defined benefit pension plan covering
all independent Trustees of the Trust who will have served as independent
Trustees for at least five years at the time of retirement. Benefits under this
plan are based on years of service and compensation during the last five years
of service. Aggregate pension costs for the year ended October 31, 2000 included
in Trustees' fees and expenses in the Statement of Operations amounted to
$5,109. At October 31, 2000, the Trust had an accrued pension liability of
$43,315 which is included in accrued expenses in the Statement of Assets and
Liabilities.
4. PREFERRED SHARES OF BENEFICIAL INTEREST
The Trust is authorized to issue up to 1,000,000 non-participating preferred
shares of beneficial interest having a par value of $.01 per share, in one or
more series, with rights as determined by the Trustees,
17
<PAGE> 18
MORGAN STANLEY DEAN WITTER QUALITY MUNICIPAL INVESTMENT TRUST
NOTES TO FINANCIAL STATEMENTS October 31, 2000, continued
without approval of the common shareholders. The Trust has issued Series A and
Series B Auction Rate Preferred Shares ("Preferred Shares") which have a
liquidation value of $50,000 per share plus the redemption premium, if any, plus
accumulated but unpaid dividends, whether or not declared, thereon to the date
of distribution. The Trust may redeem such shares, in whole or in part, at the
original purchase price of $50,000 per share plus accumulated but unpaid
dividends, whether or not declared, thereon to the date of redemption.
Dividends, which are cumulative, are reset through auction procedures.
<TABLE>
<CAPTION>
AMOUNT RESET RANGE OF
SERIES SHARES* IN THOUSANDS* RATE* DATE DIVIDEND RATES**
------ ------- ------------- ----- -------- ----------------
<S> <C> <C> <C> <C> <C>
A 1,400 $70,000 4.13% 11/01/00 3.30%-5.50%
B 700 35,000 4.32 09/07/01 3.80 -4.32
</TABLE>
---------------------
* As of October 31, 2000.
** For the year ended October 31, 2000.
Subsequent to October 31, 2000 and up through December 4, 2000 the Trust paid
dividends to Series A and B at rates ranging from 4.13% to 4.32% in the
aggregate amount of $347,760.
The Trust is subject to certain restrictions relating to the preferred shares.
Failure to comply with these restrictions could preclude the Trust from
declaring any distributions to common shareholders or purchasing common shares
and/or could trigger the mandatory redemption of preferred shares at liquidation
value.
The preferred shares, which are entitled to one vote per share, generally vote
with the common shares but vote separately as a class to elect two Trustees and
on any matters affecting the rights of the preferred shares.
5. FEDERAL INCOME TAX STATUS
During the year ended October 31, 2000, the Trust utilized its net capital loss
carryover of approximately $493,000.
18
<PAGE> 19
MORGAN STANLEY DEAN WITTER QUALITY MUNICIPAL INVESTMENT TRUST
NOTES TO FINANCIAL STATEMENTS October 31, 2000, continued
6. COMMON SHARES OF BENEFICIAL INTEREST
Transactions in common shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
CAPITAL
PAID IN
EXCESS OF
SHARES PAR VALUE PAR VALUE
---------- --------- ------------
<S> <C> <C> <C>
Balance, October 31, 1998................................... 18,047,013 $180,470 $250,814,643
Treasury shares purchased and retired (weighted average
discount 8.80%)*........................................... (370,300) (3,703) (4,885,231)
---------- -------- ------------
Balance, October 31, 1999................................... 17,676,713 176,767 245,929,412
Treasury shares purchased and retired (weighted average
discount 8.95%)*........................................... (776,800) (7,768) (10,102,917)
---------- -------- ------------
Balance, October 31, 2000................................... 16,899,913 $168,999 $235,826,495
========== ======== ============
</TABLE>
---------------------
* The Trustees have voted to retire the shares purchased.
7. DIVIDENDS TO COMMON SHAREHOLDERS
On September 26, 2000, the Trust declared the following dividends from net
investment income:
<TABLE>
<CAPTION>
AMOUNT RECORD PAYABLE
PER SHARE DATE DATE
--------- ---------------- -----------------
<S> <C> <C>
$0.0775 November 3, 2000 November 17, 2000
$0.0775 December 8, 2000 December 22, 2000
</TABLE>
8. EXPENSE OFFSET
The expense offset represents a reduction of the custodian fees for earnings on
cash balances maintained by the Trust.
9. RISKS RELATING TO CERTAIN FINANCIAL INSTRUMENTS
The Trust may invest a portion of its assets in residual interest bonds, which
are inverse floating rate municipal obligations. The prices of these securities
are subject to greater market fluctuations during periods of changing prevailing
interest rates than are comparable fixed rate obligations.
At October 31, 2000, the Trust held positions in residual interest bonds having
a total value of $27,858,875, which represents 7.9% of the Trust's net assets.
19
<PAGE> 20
MORGAN STANLEY DEAN WITTER QUALITY MUNICIPAL INVESTMENT TRUST
FINANCIAL HIGHLIGHTS
Selected ratios and per share data for a common share of beneficial interest
outstanding throughout each period:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED OCTOBER 31*
----------------------------------------------------
2000 1999 1998 1997 1996
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
SELECTED PER SHARE DATA:
Net asset value, beginning of period........................ $ 14.35 $ 15.66 $ 15.50 $ 15.18 $ 15.31
-------- -------- -------- -------- --------
Income (loss) from investment operations:
Net investment income...................................... 1.18 1.16 1.19 1.20 1.21
Net realized and unrealized gain (loss).................... 0.23 (1.28) 0.15 0.34 0.06
-------- -------- -------- -------- --------
Total income (loss) from investment operations.............. 1.41 (0.12) 1.34 1.54 1.27
-------- -------- -------- -------- --------
Less dividends and distributions from:
Net investment income...................................... (0.93) (0.90) (0.96) (0.96) (1.02)
Common share equivalent of dividends paid to preferred
shareholders............................................. (0.25) (0.20) (0.21) (0.22) (0.22)
Net realized gain.......................................... -- (0.11) (0.01) (0.05) (0.16)
-------- -------- -------- -------- --------
Total dividends and distributions........................... (1.18) (1.21) (1.18) (1.23) (1.40)
-------- -------- -------- -------- --------
Anti-dilutive effect of acquiring treasury shares........... 0.06 0.02 -- 0.01 --
-------- -------- -------- -------- --------
Net asset value, end of period.............................. $ 14.64 $ 14.35 $ 15.66 $ 15.50 $ 15.18
======== ======== ======== ======== ========
Market value, end of period................................. $ 13.688 $ 13.00 $ 15.50 $ 15.313 $ 14.625
======== ======== ======== ======== ========
TOTAL RETURN+............................................... 12.84% (10.12)% 7.71% 12.16% 8.44%
RATIOS TO AVERAGE NET ASSETS OF COMMON SHAREHOLDERS:
Total expenses.............................................. 0.75% 0.71% 0.71%(1) 0.71% 0.72%
Net investment income before preferred stock dividends...... 8.18% 7.66% 7.65% 7.93% 8.02%
Preferred stock dividends................................... 1.74% 1.34% 1.37% 1.44% 1.45%
Net investment income available to common shareholders...... 6.44% 6.32% 6.28% 6.49% 6.57%
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands..................... $352,389 $358,633 $387,612 $384,773 $380,488
Asset coverage on preferred shares at end of period......... 335% 341% 369% 366% 362%
Portfolio turnover rate..................................... 20% 8% 9% 5% 7%
</TABLE>
---------------------
* The per share amounts were computed using an average number of shares
outstanding during the period.
+ Total return is based upon the current market value on the last day of each
period reported. Dividends and distributions are assumed to be reinvested at
the prices obtained under the Trust's dividend reinvestment plan. Total
return does not reflect brokerage commissions.
(1) Does not reflect the effect of expense offset of 0.01%.
SEE NOTES TO FINANCIAL STATEMENTS
20
<PAGE> 21
MORGAN STANLEY DEAN WITTER QUALITY MUNICIPAL INVESTMENT TRUST
INDEPENDENT AUDITORS' REPORT
TO THE SHAREHOLDERS AND BOARD OF TRUSTEES OF
MORGAN STANLEY DEAN WITTER QUALITY MUNICIPAL INVESTMENT TRUST:
We have audited the accompanying statement of assets and liabilities of Morgan
Stanley Dean Witter Quality Municipal Investment Trust (the "Trust"), including
the portfolio of investments, as of October 31, 2000, and the related statements
of operations and changes in net assets, and the financial highlights for the
year then ended. These financial statements and financial highlights are the
responsibility of the Trust's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audit. The statement of changes in net assets for the year ended October 31,
1999 and the financial highlights for each of the respective stated periods
ended October 31, 1999 were audited by other independent accountants whose
report, dated December 9, 1999, expressed an unqualified opinion on that
statement and financial highlights.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
securities owned as of October 31, 2000, by correspondence with the custodian
and brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of Morgan
Stanley Dean Witter Quality Municipal Investment Trust as of October 31, 2000,
the results of its operations, the changes in its net assets, and the financial
highlights for the year then ended, in conformity with accounting principles
generally accepted in the United States of America.
Deloitte & Touche LLP
New York, New York
December 8, 2000
2000 FEDERAL TAX NOTICE (unaudited)
For the year ended October 31, 2000, all of the Trust's
dividends from net investment income received by both common
and preferred shareholder classes were exempt interest
dividends, excludable from gross income for Federal income tax
purposes.
21
<PAGE> 22
MORGAN STANLEY DEAN WITTER QUALITY MUNICIPAL INVESTMENT TRUST
CHANGE IN INDEPENDENT ACCOUNTANTS
On July 1, 2000 PricewaterhouseCoopers LLP resigned as independent accountants
of the Trust.
The reports of PricewaterhouseCoopers LLP on the financial statements of the
Trust for the past two fiscal years contained no adverse opinion or disclaimer
of opinion and were not qualified or modified as to uncertainty, audit scope or
accounting principle.
In connection with its audits for the two most recent fiscal years and through
July 1, 2000, there have been no disagreements with PricewaterhouseCoopers LLP
on any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which disagreements if not resolved
to the satisfaction of PricewaterhouseCoopers LLP would have caused them to make
reference thereto in their report on the financial statements for such years.
The Trust, with the approval of its Board of Trustees and its Audit Committee,
engaged Deloitte & Touche LLP as its new independent auditors as of July 1,
2000.
22
<PAGE> 23
MORGAN STANLEY DEAN WITTER QUALITY MUNICIPAL INVESTMENT TRUST
REVISED INVESTMENT POLICY
On January 26, 2000, the Trustees of Morgan Stanley Dean Witter Quality
Municipal Investment Trust (the "Trust") approved an investment policy whereby
the Trust would be permitted to invest up to 10% of its assets in inverse
floating rate municipal obligations. The inverse floating rate municipal
obligations in which the Trust will invest are typically created through a
division of a fixed rate municipal obligation into two separate instruments, a
short-term obligation and a long-term obligation. The interest rate on the
short-term obligation is set at periodic auctions. The interest rate on the
long-term obligation is the rate the issuer would have paid on the fixed income
obligation: (i) plus the difference between such fixed rate and the rate on the
short-term obligation, if the short-term rate is lower than the fixed rate; or
(ii) minus such difference if the interest rate on the short-term obligation is
higher than the fixed rate. The interest rates on these obligations generally
move in the reverse direction of market interest rates. If market interest rates
fall, the interest rate on the obligation will increase and if market interest
rates increase, the interest rate on the obligation will fall. Inverse floating
rate municipal obligations offer the potential for higher income than is
available from fixed rate obligations of comparable maturity and credit rating.
They also carry greater risks. In particular, the prices of inverse floating
rate municipal obligations are more volatile, i.e., they increase and decrease
in response to changes in interest rates to a greater extent than comparable
fixed rate obligations.
23
<PAGE> 24
TRUSTEES
----------------------------------
Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn
Wayne E. Hedien
James F. Higgins
Dr. Manuel H. Johnson
Michael E. Nugent
Philip J. Purcell
John L. Schroeder
OFFICERS
----------------------------------
Charles A. Fiumefreddo
Chairman and Chief Executive Officer
Mitchell M. Merin
President
Barry Fink
Vice President, Secretary and General Counsel
James F. Willison
Vice President
Thomas F. Caloia
Treasurer
TRANSFER AGENT
----------------------------------
Morgan Stanley Dean Witter Trust FSB
Harborside Financial Center -- Plaza Two
Jersey City, New Jersey 07311
INDEPENDENT AUDITORS
----------------------------------
Deloitte & Touche LLP
Two World Financial Center
New York, New York 10281
INVESTMENT MANAGER
----------------------------------
Morgan Stanley Dean Witter Advisors Inc.
Two World Trade Center
New York, New York 10048
MORGAN STANLEY
DEAN WITTER
QUALITY
MUNICIPAL
INVESTMENT TRUST
Annual Report
October 31, 2000
