<PAGE> 1
MORGAN STANLEY DEAN WITTER INSURED MUNICIPAL TRUST Two World Trade Center
LETTER TO THE SHAREHOLDERS April 30, 1999 New York, New York 10048
DEAR SHAREHOLDER:
We are pleased to present the semiannual report on the operations of Morgan
Stanley Dean Witter Insured Municipal Trust (IMT) for the period ended April 30,
1999.
The financial markets have begun to recover from last year's global economic
difficulties. The turmoil which included the Asian crisis, the Russian debt
default and the rescue of a major U.S. hedge fund has given way to more normal
financial conditions. The major catalyst for this return to stability was the
liquidity provided by the Federal Reserve Board's 75 basis point reduction in
the federal-funds rate during the fourth quarter of 1998.
International economic problems precipitated a "flight to quality" rally in
fixed income securities and U.S. Treasury yields reached 30-year lows in October
1998. As the world markets recovered, foreign investors repatriated funds and
Treasury yields began to rise. Interest rates also rose in response to the
surprisingly robust domestic economic growth reported over the second half of
1998. The bond market became concerned that the central bank might become more
restrictive by taking back some of the liquidity provided during the crisis.
MUNICIPAL MARKET CONDITIONS
During 1998, municipal yields were less volatile than Treasury yields. This
pattern of stability continued into 1999. Long-term insured index yields stood
at 5.25 percent at the end of April, only 20 basis points higher than their
October 1998 levels. In contrast, Treasury bond yields rose 50 basis points from
5.15 to 5.65 percent. During the past six months, the yield pick up for
extending tax-exempt maturities from one to 30 years averaged 225 basis points.
The modest rally of municipals during 1998 created a favorable relative value
relationship to Treasuries. Municipals underperformed Treasuries and the ratio
of municipal yields to Treasury yields climbed to 99 percent by December. The
higher the ratio, the more attractive municipals are
<PAGE> 2
MORGAN STANLEY DEAN WITTER INSURED MUNICIPAL TRUST
LETTER TO THE SHAREHOLDERS April 30, 1999, continued
relative to Treasuries. Municipals have outperformed Treasuries this year and
the ratio declined to 92 percent by April. The high-to-low annual range of
municipal/treasury yields for the past five years has averaged 93 to 84 percent.
In addition to lagging 1998's Treasury rally, municipals also experienced a glut
of new-issue supply. Underwriting volume of $284 billion was up 28 percent from
the prior year and approached 1993's record. Issuers actively refinanced at
lower interest rates and refundings were 29 percent of the total volume. This
year's rise in interest rates has reduced the amount of refunding activity.
Refunding volume was down 42 percent in the first four months of 1999 while
total underwriting declined 22 percent.
PERFORMANCE
The Trust's net asset value (NAV) decreased from $16.13 per share to $15.82 per
share for the six-month period ended April 30, 1999. Based on this change plus
reinvestment of tax-free dividends totaling $0.45 per share and a long-term
capital gain distribution of $0.1043 per share, paid on December 18, 1998, the
Trust's total NAV return was 1.58 percent. IMT's value on the
30-YEAR BOND YIELDS 1994-1999
<TABLE>
<CAPTION>
Insured
Municipal Yields
as a
30-Year Insured 30-Year U.S. Percentage of U.S.
Municipal Yields Treasury Yields 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
</TABLE>
Source: Municipal Market Data -- A Division of Thomas Financial Municipal Group
2
<PAGE> 3
MORGAN STANLEY DEAN WITTER INSURED MUNICIPAL TRUST
LETTER TO THE SHAREHOLDERS April 30, 1999, continued
LARGEST SECTORS as of April 30, 1999
(% of Net Assets)
[LARGEST SECTORS BAR CHART]
<TABLE>
<S> <C>
Refunded 40%
IDR/PCR* 15%
Water & Sewer 11%
Hospital 5%
Mortgage 5%
Public Facilities 5%
Transportation 5%
</TABLE>
CREDIT ENHANCEMENTS as of April 30, 1999
(% of Net Assets)
[CREDIT ENHANCEMENTS PIE CHART]
<TABLE>
<CAPTION>
<S> <C>
MBIA 34%
FGIC 28%
AMBAC 23%
FSA 10%
GNMA 5%
</TABLE>
Portfolio structure is subject to change.
CALL STRUCTURE as of April 30, 1999
(% of Total Long-Term Portfolio)
WEIGHTED AVERAGE
CALL PROTECTION: 4 YEARS
[CALL STRUCTURE BAR CHART]
<TABLE>
<CAPTION>
Percent Years Bonds
Callable Callable
<S> <C>
1999 0%
2000 0%
2001 19%
2002 59%
2003 0%
2004 0%
2005 2%
2006 5%
2007 0%
2008 4%
2009 5%
2010+ 6%
</TABLE>
Portfolio structure is subject to change.
<PAGE> 4
MORGAN STANLEY DEAN WITTER INSURED MUNICIPAL TRUST
LETTER TO THE SHAREHOLDERS April 30, 1999, continued
New York Stock Exchange decreased from $15.625 to $15.1875 per share during the
same period. Based on this change plus reinvestment of tax-free dividends and
long-term capital gain distribution, IMT 's total market return was 0.67
percent. As of April 30, 1999, IMT 's share price was a 4.00 percent discount to
its NAV.
Monthly dividends for the second quarter of 1999 remained $0.075 per share. The
Trust's level of undistributed net investment income was $0.095 per share on
April 30, 1999, versus $0.077 per share on October 31, 1998.
PORTFOLIO STRUCTURE
The Trust's investments were diversified among 12 long-term sectors and 57
credits. At the end of April, the portfolio's average maturity was 14 years.
Portfolio duration, a measure of sensitivity to interest-rate changes, was 4.2
years. Issues in the refunded bond category comprised 40 percent of net assets.
These bonds have been refinanced and will be redeemed on the dates shown in the
portfolio. The accompanying charts provide current information on the
portfolio's call structure, largest sectors and mix of credit enhancements.
THE IMPACT OF LEVERAGING
As discussed in previous 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 the ARPS expenses (ARPS
auction rate and expenses). The greater the spread and the larger the 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.
During this six month period, ARPS leverage contributed approximately $0.06 per
share to common share earnings. Weekly ARPS yields ranged between 2.75 and 5.125
percent. Two ARPS series totaling $130 million represented 27 percent of net
assets.
ARPS leverage also increases the price volatility of common shares and has the
effect of extending portfolio duration.
4
<PAGE> 5
MORGAN STANLEY DEAN WITTER INSURED MUNICIPAL TRUST
LETTER TO THE SHAREHOLDERS April 30, 1999, continued
LOOKING AHEAD
The combination of a flight to quality and the flood of new municipal issues
made the municipal-to-Treasury yield relationship more favorable late last year
than it had been in the previous 10 years. Although municipals have thus far
outperformed Treasuries in 1999, we believe that municipals still offer
investors considerable value versus their historical relationship to Treasuries.
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.
On May 1, 1999, Mitchell M. Merin was named President of the Morgan Stanley Dean
Witter Funds. Mr. Merin is also the President and Chief Operating Officer of
Asset Management of Morgan Stanley Dean Witter & Co. and President, Chief
Executive Officer and Director of Morgan Stanley Dean Witter Advisors Inc., the
Trust's Investment Manager. He also serves as Chairman, Chief Executive Officer
and Director of Morgan Stanley Dean Witter Distributors Inc. and Morgan Stanley
Dean Witter Trust FSB.
We appreciate your ongoing support of Morgan Stanley Dean Witter Insured
Municipal Trust and look forward to continuing to serve your investment needs.
Very truly yours,
/S/ CHARLES A. FIUMEFREDDO /S/ MITCHELL M. MERIN
CHARLES A. FIUMEFREDDO MITCHELL M. MERIN
Chairman of the Board President
5
<PAGE> 6
MORGAN STANLEY DEAN WITTER INSURED MUNICIPAL TRUST
PORTFOLIO OF INVESTMENTS April 30, 1999 (unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- -----------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
TAX-EXEMPT MUNICIPAL BONDS (97.4%)
General Obligation (3.6%)
$ 3,500 Denver City & County School District No 1, Colorado, Ser
1999 (FGIC)................................................ 5.25% 12/01/17 $ 3,577,560
8,000 Chicago, Illinois, Refg Ser 1992 (AMBAC).................... 6.25 01/01/11 9,118,880
4,000 Clark County, Nevada, Transportation Impr Ltd Tax Ser
06/01/92 B (AMBAC)......................................... 6.50 06/01/17 4,761,720
- -------- -----------
15,500 17,458,160
- -------- -----------
Educational Facilities Revenue (3.8%)
Massachusetts Health & Educational Facilities Authority,
15,000 Northeastern University Ser E (MBIA)....................... 6.55 10/01/22 16,482,600
1,745 Stonehill College Ser E (MBIA)............................. 6.60 07/01/20 1,910,548
- -------- -----------
16,745 18,393,148
- -------- -----------
Electric Revenue (2.5%)
10,000 Piedmont Municipal Power Agency, South Carolina, 1991 Refg
Ser (FGIC)................................................. 6.25 01/01/18 10,573,200
1,630 Lower Colorado Authority, Texas, Jr Lien Refg Ser 1992
(AMBAC).................................................... 6.00 01/01/17 1,708,289
- -------- -----------
11,630 12,281,489
- -------- -----------
Hospital Revenue (4.9%)
5,000 Brevard County Health Facilities Authority, Florida,
Wuesthoff Memorial Hospital Ser 1992 A (MBIA).............. 6.625 04/01/13 5,442,800
3,000 South Miami Health Authority, Florida, Baptist Health Ser
1998 (MBIA)................................................ 5.00 11/15/28 2,918,700
3,000 Missouri Health & Educational Facilities Authority, SSM
Healthcare Ser 1998 A (MBIA)............................... 5.00 06/01/22 2,931,570
10,000 New Jersey Health Care Authority, St Barnabas Hospital Ser
1998 B (MBIA).............................................. 4.75 07/01/28 9,442,100
3,020 Amarillio Health Facilities Corporation, Texas, Baptist St
Anthony's Hospital Ser 1998 (FSA).......................... 5.50 01/01/16 3,196,217
- -------- -----------
24,020 23,931,387
- -------- -----------
Industrial Development/Pollution Control Revenue (15.2%)
6,000 Delaware Economic Development Authority, Delmarva Power &
Light Co
Ser 1992 A (AMT) (AMBAC)................................... 6.85 05/01/22 6,553,680
5,000 Lawrenceburg, Indiana, Indiana & Michigan Power Co Refg Ser
D (Secondary FGIC)......................................... 7.00 04/01/15 5,479,400
20,000 Burlington, Kansas, Kansas Gas & Electric Co Ser 1991
(MBIA)..................................................... 7.00 06/01/31 21,564,800
7,500 Humboldt County, Nevada, Sierra Pacific Power Co Refg Ser
1987 (AMBAC)............................................... 6.55 10/01/13 8,165,175
5,000 New York State Energy Research & Development Authority,
Brooklyn Union Gas Co 1996 Ser (MBIA)...................... 5.50 01/01/21 5,213,050
7,000 Montgomery County Industrial Development Authority,
Pennsylvania, Philadelphia Electric Co Refg 1991 Ser B
(MBIA)..................................................... 6.70 12/01/21 7,562,240
Brazos River Authority, Texas,
7,500 Houston Lighting & Power Co 1992 A (AMBAC)................. 6.70 03/01/17 8,154,450
10,000 Texas Utilities Electric Co Collateralized Ser 1992 A (AMT)
(AMBAC).................................................. 6.75 04/01/22 10,876,300
- -------- -----------
68,000 73,569,095
- -------- -----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
6
<PAGE> 7
MORGAN STANLEY DEAN WITTER INSURED MUNICIPAL TRUST
PORTFOLIO OF INVESTMENTS April 30, 1999 (unaudited) continued
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- -----------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Mortgage Revenue - Single Family (5.2%)
$ 3,000 Alaska Housing Finance Corporation, Governmental 1995 Ser A
(MBIA)..................................................... 5.875% 12/01/24 $ 3,144,990
14,300 Nebraska Investment Finance Authority, GNMA-Backed 1992 Ser
A & B (AMT)................................................ 6.70 09/15/24 15,115,958
6,600 Ohio Housing Finance Agency, GNMA-Backed Ser A 1 & 2
(AMT)...................................................... 6.903 03/24/31 6,949,008
- -------- -----------
23,900 25,209,956
- -------- -----------
Nursing & Health Related Facilities Revenue (0.0%)
60 New York State Medical Care Facilities Finance Agency,
- -------- Mental Health
1992 Ser A (FGIC).......................................... 6.375 08/15/17 64,915
-----------
Public Facilities Revenue (4.5%)
20,000 Hudson County, New Jersey, Correctional Refg Ser 1992 COPs
(MBIA)..................................................... 6.60 12/01/21 21,711,600
- -------- -----------
Resource Recovery Revenue (1.8%)
8,325 Detroit Economic Development Corporation, Michigan, Ser 1991
- -------- A (AMT) (FSA).............................................. 6.875 05/01/09 8,913,328
-----------
Transportation Facilities Revenue (4.6%)
5,000 Greater Orlando Aviation Authority, Florida, Ser 1992 A
(AMT) (FGIC)............................................... 6.50 10/01/12 5,460,700
5,000 Hillsborough County Port District, Florida, Tampa Port
Authority Refg Ser 1995 (AMT) (FSA)........................ 5.75 06/01/13 5,325,350
2,500 Hawaii, Airports Second Lien Ser 1991 (AMT) (MBIA).......... 6.75 07/01/21 2,682,325
4,000 Illinois Toll Highway Authority, Priority Refg 1998 Ser A
(FSA)...................................................... 5.50 01/01/15 4,296,480
4,500 Port of Portland, Oregon, Portland Int'l Airport Ser 12 C
(AMT) (FGIC)............................................... 5.00 07/01/28 4,385,115
- -------- -----------
21,000 22,149,970
- -------- -----------
Water & Sewer Revenue (11.1%)
7,500 Tampa Bay Water, Florida, Utility Ser 1998 B (FGIC)......... 4.75 10/01/27 7,054,500
3,000 Atlanta, Georgia, Water & Wastewater Ser 1999 A (FGIC)...... 5.00 11/01/29 2,913,180
5,000 Douglasville-Douglas County Water Sewer Authority, Georgia,
Ser 1998 (FGIC)............................................ 4.50 06/01/23 4,560,600
7,790 Kenton County Water District #1, Kentucky, Refg Ser 1992
(FGIC)..................................................... 6.375 02/01/17 8,470,301
3,000 Detroit, Michigan, Water Supply Refg Ser 1992 (FGIC)........ 6.375 07/01/22 3,257,340
3,335 Rio Rancho, New Mexico, Water & Wastewater Refg Ser 1998
(AMBAC).................................................... 5.25 05/15/19 3,384,325
2,700 Mahoning Valley Sanitary District, Ohio, Refg Ser 1998
(FSA)...................................................... 5.125 12/15/16 2,748,654
5,000 Philadelphia, Pennsylvania, Water & Wastewater Ser 1998
(AMBAC).................................................... 5.25 12/15/14 5,267,600
10,000 Grand Strand Water & Sewer Authority, South Carolina, Refg
Ser 1992 (MBIA)............................................ 6.00 06/01/19 10,551,099
5,000 North Charleston Sewer District, South Carolina, Refg Ser
1992 A (MBIA).............................................. 6.00 07/01/18 5,282,400
- -------- -----------
52,325 53,489,999
- -------- -----------
Refunded (40.2%)
15,000 Delaware Health Facilities Authority, Medical Center of
Delaware Ser 1992 (MBIA) (ETM)............................. 6.25 10/01/06 17,054,850
10,000 Orange County, Florida, Tourist Development Tax Ser 1992 B
(AMBAC).................................................... 6.00 10/01/02+ 10,755,300
10,000 Reedy Creek Improvement District, Florida, Utilities Ser
1991-1 (MBIA).............................................. 6.50 10/01/01+ 10,769,600
15,000 Cook County, Illinois, Ser 1992 A (MBIA).................... 6.60 11/15/02+ 16,716,000
6,000 Louisiana, Ser 1992 A (AMBAC)............................... 6.50 05/01/02+ 6,586,200
9,300 New Orleans, Louisiana, Issue of 1992 (FGIC)................ 7.50 09/01/02+ 10,401,957
3,700 Massachusetts Health & Educational Facilities Authority,
McLean Hospital Ser C (FGIC)............................... 6.625 07/01/02+ 4,088,870
7,000 Detroit, Michigan, Water Supply Refg Ser 1992 (FGIC)........ 6.375 07/01/02+ 7,644,140
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
7
<PAGE> 8
MORGAN STANLEY DEAN WITTER INSURED MUNICIPAL TRUST
PORTFOLIO OF INVESTMENTS April 30, 1999 (unaudited) continued
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- -----------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 6,400 Bergen County Utilities Authority, New Jersey, Water
Pollution 1992 Ser A (FGIC)................................ 6.50% 06/15/02+ $ 7,050,048
4,950 Cleveland, Ohio, Waterworks Ser F 1992 B (AMBAC)............ 6.50 01/01/02+ 5,395,302
15,000 Harrisburg Authority, Pennsylvania, Water Ser of 1992
(FGIC)..................................................... 6.50 08/15/02+ 16,308,750
15,000 South Carolina Public Service Authority, 1991 Ser D
(AMBAC).................................................... 6.50 07/01/02+ 16,535,100
5,000 Chattanooga-Hamilton County Hospital Authority, Tennessee,
Erlanger Medical Center 1991 Ser A (FSA)................... 6.854 05/01/01+ 5,385,250
15,000 Amarillo Health Facilities Corporation, Texas, High Plains
Baptist Hospital Ser 1992 A & B (FSA)...................... 6.562 01/01/02+ 16,287,750
10,000 Harris County, Texas, Sr Lien Toll Road Refg Ser 1992 A
(AMBAC).................................................... 6.50 08/15/02+ 11,050,000
15,000 Metropolitan Seattle, Washington, Sewer Ser U (FGIC)........ 6.60 01/01/01+ 16,012,050
15,000 Wisconsin Health & Educational Facilities Authority,
Children's Hospital Inc Ser 1992 B (FGIC).................. 6.50 08/15/02+ 16,555,200
- -------- -----------
177,350 194,596,367
- -------- -----------
438,855 TOTAL TAX-EXEMPT MUNICIPAL BONDS (Identified Cost $433,794,226)................. 471,769,414
- -------- -----------
SHORT-TERM TAX-EXEMPT MUNICIPAL OBLIGATIONS (1.1%)
2,500 East Baton Rouge Parish, Louisiana, Exxon Corp Ser 1989
(Demand 05/03/99).......................................... 4.25* 03/01/22 2,500,000
3,000 Missouri Health & Education Facilities Authority, Cox Health
Ser 1997 (Demand 05/03/99)................................. 4.25* 06/01/15 3,000,000
- -------- -----------
5,500 TOTAL SHORT-TERM TAX-EXEMPT MUNICIPAL OBLIGATIONS
- -------- (Identified Cost $5,500,000).................................................... 5,500,000
-----------
$444,355 TOTAL INVESTMENTS (Identified Cost $439,294,226)(a).................... 98.5% 477,269,414
========
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES........................... 1.5 7,236,681
----- ------------
NET ASSETS.............................................................. 100.0% $484,506,095
===== ============
</TABLE>
- ---------------------
<TABLE>
<C> <S>
AMT Alternative Minimum Tax.
COPs Certificates of Participation.
ETM Escrowed to maturity.
+ Prerefunded to call date shown.
* Current coupon of variable rate demand obligation.
(a) The aggregate cost for federal income tax purposes approximates identified cost. The aggregate gross unrealized
appreciation is $38,530,761 and the aggregate gross unrealized depreciation is $555,573, resulting in net
unrealized appreciation of $37,975,188.
Bond Insurance:
- ------------------------------------------------------------------------
AMBAC AMBAC Indemnity Corporation.
Connie Lee Connie Lee Insurance Company.
FGIC Financial Guaranty Insurance Company.
FSA Financial Security Assurance Inc.
MBIA Municipal Bond Investors Assurance Corporation.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
8
<PAGE> 9
MORGAN STANLEY DEAN WITTER INSURED MUNICIPAL TRUST
PORTFOLIO OF INVESTMENTS April 30, 1999 (unaudited) continued
GEOGRAPHIC SUMMARY OF INVESTMENTS
Based on Market Value as a Percent of Net Assets
April 30, 1999
<TABLE>
<S> <C>
Alaska................... 0.7%
Colorado................. 0.7
Delaware................. 4.9
Florida.................. 9.9
Georgia.................. 1.5
Hawaii................... 0.6
Illinois................. 6.2
Indiana.................. 1.1
Kansas................... 4.5
Kentucky................. 1.7
Louisiana................ 4.0
Massachusetts............ 4.6
Michigan................. 4.1
Missouri................. 1.2
Nebraska................. 3.1
Nevada................... 2.7
New Jersey............... 7.9
New Mexico............... 0.7
New York................. 1.1
Ohio..................... 3.1
Oregon................... 0.9
Pennsylvania............. 6.0
South Carolina........... 8.9
Tennessee................ 1.1
Texas.................... 10.6
Washington............... 3.3
Wisconsin................ 3.4
----
Total.................... 98.5%
====
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
9
<PAGE> 10
MORGAN STANLEY DEAN WITTER INSURED MUNICIPAL TRUST
FINANCIAL STATEMENTS
<TABLE>
<S> <C>
STATEMENT OF ASSETS AND LIABILITIES
April 30, 1999 (unaudited)
ASSETS:
Investments in securities, at value
(identified cost $439,294,226)............................. $477,269,414
Cash........................................................ 46,437
Interest receivable......................................... 7,432,668
Prepaid expenses............................................ 156,824
------------
TOTAL ASSETS............................................ 484,905,343
------------
LIABILITIES:
Payable for:
Investment management fee............................... 163,157
Dividends to preferred shareholders..................... 111,664
Accrued expenses............................................ 124,427
------------
TOTAL LIABILITIES....................................... 399,248
------------
NET ASSETS.............................................. $484,506,095
============
COMPOSITION OF NET ASSETS:
Preferred shares of beneficial interest (1,000,000 shares
authorized of non-participating $.01 par value, 2,600
shares outstanding)........................................ $130,000,000
------------
Common shares of beneficial interest (unlimited shares
authorized of $.01 par value, 22,412,813 shares
outstanding)............................................... 311,334,969
Net unrealized appreciation................................. 37,975,188
Accumulated undistributed net investment income............. 2,136,634
Accumulated undistributed net realized gain................. 3,059,304
------------
NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS............ 354,506,095
------------
TOTAL NET ASSETS........................................ $484,506,095
============
NET ASSET VALUE PER COMMON SHARE
($354,506,095 divided by 22,412,813 common shares
outstanding)............................................... $15.82
============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
10
<PAGE> 11
MORGAN STANLEY DEAN WITTER INSURED MUNICIPAL TRUST
FINANCIAL STATEMENTS, continued
<TABLE>
<S> <C>
STATEMENT OF OPERATIONS
For the six months ended April 30, 1999 (unaudited)
NET INVESTMENT INCOME:
INTEREST INCOME............................................. $13,990,929
-----------
EXPENSES
Investment management fee................................... 847,783
Auction commission fees..................................... 176,511
Transfer agent fees and expenses............................ 49,599
Professional fees........................................... 46,351
Shareholder reports and notices............................. 21,285
Registration fees........................................... 16,075
Auction agent fees.......................................... 9,156
Trustees' fees and expenses................................. 8,975
Custodian fees.............................................. 8,357
Other....................................................... 17,224
-----------
TOTAL EXPENSES.......................................... 1,201,316
Less: expense offset........................................ (8,317)
-----------
NET EXPENSES............................................ 1,192,999
-----------
NET INVESTMENT INCOME................................... 12,797,930
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain........................................... 3,059,309
Net change in unrealized appreciation....................... (8,203,054)
-----------
NET LOSS................................................ (5,143,745)
-----------
NET INCREASE................................................ $ 7,654,185
===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
11
<PAGE> 12
MORGAN STANLEY DEAN WITTER INSURED MUNICIPAL TRUST
FINANCIAL STATEMENTS, continued
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
FOR THE SIX
MONTHS ENDED FOR THE YEAR
APRIL 30, ENDED
1999 OCTOBER 31, 1998
- --------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income................................ $12,797,930 $ 26,364,849
Net realized gain.................................... 3,059,309 2,338,083
Net change in unrealized appreciation................ (8,203,054) 1,110,562
------------ ------------
NET INCREASE..................................... 7,654,185 29,813,494
------------ ------------
Dividends to preferred shareholders from net
investment income................................... (2,290,595) (4,623,746)
------------ ------------
DIVIDENDS AND DISTRIBUTIONS TO COMMON SHAREHOLDERS
FROM:
Net investment income................................ (10,086,523) (21,408,649)
Net realized gain.................................... (2,338,096) --
------------ ------------
TOTAL DIVIDENDS AND DISTRIBUTIONS................ (12,424,619) (21,408,649)
------------ ------------
Decrease from transactions in common shares of
beneficial interest................................. (62,870) (37,122)
------------ ------------
NET INCREASE (DECREASE).......................... (7,123,899) 3,743,977
NET ASSETS:
Beginning of period.................................. 491,629,994 487,886,017
------------ ------------
END OF PERIOD
(Including undistributed net investment income of
$2,136,634 and $1,715,822, respectively)......... $484,506,095 $491,629,994
============ ============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
12
<PAGE> 13
MORGAN STANLEY DEAN WITTER INSURED MUNICIPAL TRUST
NOTES TO FINANCIAL STATEMENTS April 30, 1999 (unaudited)
1. ORGANIZATION AND ACCOUNTING POLICIES
Morgan Stanley Dean Witter Insured Municipal 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 October 3, 1991 and commenced
operations on February 28, 1992.
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
13
<PAGE> 14
MORGAN STANLEY DEAN WITTER INSURED MUNICIPAL TRUST
NOTES TO FINANCIAL STATEMENTS April 30, 1999 (unaudited) 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 financial reporting purposes but not for tax
purposes are reported as dividends in excess of net investment income or
distributions in excess of net realized capital gains. To the extent they exceed
net investment income and net realized capital gains for tax purposes, they are
reported as distributions of paid-in-capital.
2. INVESTMENT MANAGEMENT AGREEMENT
Pursuant to an Investment Management Agreement 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.
Under the terms of the Agreement, the Investment Manager maintains certain of
the Trust's books and records and furnishes, at its own expense, office space,
facilities, equipment, clerical, bookkeeping and certain legal services and pays
the salaries of all personnel, including officers of the Trust who are employees
of the Investment Manager. The Investment Manager also bears the cost of
telephone services, heat, light, power and other utilities provided to the
Trust.
3. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES
The cost of purchases and proceeds from sales of portfolio securities, excluding
short-term investments, for the six months ended April 30, 1999 aggregated
$33,568,825 and $37,309,136, respectively.
Morgan Stanley Dean Witter Trust FSB, an affiliate of the Investment Manager, is
the Trust's transfer agent.
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 six months ended April 30, 1999
included in
14
<PAGE> 15
MORGAN STANLEY DEAN WITTER INSURED MUNICIPAL TRUST
NOTES TO FINANCIAL STATEMENTS April 30, 1999 (unaudited) continued
Trustees' fees and expenses in the Statement of Operations amounted to $2,848.
At April 30, 1999, the Trust had an accrued pension liability of $40,307 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, without approval of the
common shareholders. The Trust has issued Series TU and TH 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 IN RESET RANGE OF
SERIES SHARES* THOUSANDS* RATE* DATE DIVIDEND RATES**
- ------ ------- ---------- ----- -------- ----------------
<S> <C> <C> <C> <C> <C>
TU 800 $40,000 3.35% 01/11/00 3.35% - 3.69%
TH 1,800 90,000 3.31 05/07/99 2.75 - 5.125
</TABLE>
- ---------------------
* As of April 30, 1999.
** For the six months ended April 30, 1999.
Subsequent to April 30, 1999 and up through June 4, 1999 the Trust paid
dividends to Series TU and TH at rates ranging from 3.21% to 3.35% in the
aggregate amount of $393,346.
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.
15
<PAGE> 16
MORGAN STANLEY DEAN WITTER INSURED MUNICIPAL TRUST
NOTES TO FINANCIAL STATEMENTS April 30, 1999 (unaudited) continued
5. 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, 1997................................... 22,419,213 $224,192 $311,210,769
Treasury shares purchased and retired (weighted average
discount 3.27%)*........................................... (2,400) (24) (37,098)
---------- -------- ------------
Balance, October 31, 1998................................... 22,416,813 224,168 311,173,671
Treasury shares purchased and retired (weighted average
discount 1.89%)*........................................... (4,000) (40) (62,830)
---------- -------- ------------
Balance April 30, 1999...................................... 22,412,813 $224,128 $311,110,841
========== ======== ============
</TABLE>
- ---------------------
* The Trustees have voted to retire the shares purchased.
6. DIVIDENDS TO COMMON SHAREHOLDERS
On March 30, 1999, the Trust declared the following dividends from net
investment income:
<TABLE>
<CAPTION>
AMOUNT RECORD PAYABLE
PER SHARE DATE DATE
- --------- ------------ -------------
<S> <C> <C>
$0.075 May 7, 1999 May 21, 1999
$0.075 June 4, 1999 June 18, 1999
</TABLE>
16
<PAGE> 17
MORGAN STANLEY DEAN WITTER INSURED MUNICIPAL TRUST
FINANCIAL HIGHLIGHTS
Selected ratios and per share data for a common share of beneficial interest
outstanding throughout each period:
<TABLE>
<CAPTION>
FOR THE SIX FOR THE YEAR ENDED OCTOBER 31*
MONTHS ENDED ----------------------------------------------------
APRIL 30, 1999* 1998 1997 1996 1995 1994
- ---------------------------------------------------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C> <C> <C> <C> <C>
SELECTED PER SHARE DATA:
Net asset value, beginning of period..................... $ 16.13 $ 15.96 $15.80 $ 15.86 $ 14.27 $ 16.95
------- ------- ------ ------- ------- -------
Income (loss) from investment operations:
Net investment income................................... 0.57 1.18 1.18 1.27 1.21 1.33
Net realized and unrealized gain (loss)................. (0.23) 0.15 0.23 (0.02) 1.65 (2.67)
------- ------- ------ ------- ------- -------
Total income (loss) from investment operations........... 0.34 1.33 1.41 1.25 2.86 (1.34)
------- ------- ------ ------- ------- -------
Less dividends and distributions from:
Net investment income................................... (0.45) (0.95) (0.99) (1.02) (1.02) (1.12)
Common share equivalent of dividends paid to preferred
shareholders.......................................... (0.10) (0.21) (0.21) (0.21) (0.23) (0.22)
Net realized gain....................................... (0.10) -- (0.05) (0.08) (0.02) --
------- ------- ------ ------- ------- -------
Total dividends and distributions........................ (0.65) (1.16) (1.25) (1.31) (1.27) (1.34)
------- ------- ------ ------- ------- -------
Net asset value, end of period........................... $ 15.82 $ 16.13 $15.96 $ 15.80 $ 15.86 $ 14.27
======= ======= ====== ======= ======= =======
Market value, end of period.............................. $15.188 $15.625 $15.25 $ 15.00 $14.625 $12.625
======= ======= ====== ======= ======= =======
TOTAL RETURN+............................................ 0.67%(1) 8.79% 8.80% 10.31% 24.59% (18.84)%
RATIOS TO AVERAGE NET ASSETS OF COMMON SHAREHOLDERS:
Total expenses........................................... 0.68%(2)(3) 0.66% 0.69%(3) 0.70%(3) 0.72%(3) 0.77%
Net investment income before preferred stock dividends... 7.21%(2) 7.33% 7.50% 7.54% 7.88% 8.45%
Preferred stock dividends................................ 1.29%(2) 1.29% 1.35% 1.35% 1.50% 1.38%
Net investment income available to common shareholders... 5.92%(2) 6.04% 6.15% 6.19% 6.38% 7.07%
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands.................. $484,506 $491,630 $487,886 $485,849 $490,116 $491,360
Asset coverage on preferred shares at end of period...... 372% 378% 375% 373% 377% 307%
Portfolio turnover rate.................................. 7%(1) 6% -- 1% 3% 6%
</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
investment return does not reflect brokerage commissions.
(1) Not annualized.
(2) Annualized.
(3) Does not reflect the effect of expense offset of 0.01%.
SEE NOTES TO FINANCIAL STATEMENTS
17
<PAGE> 18
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<PAGE> 19
(This Page Intentionally Left Blank)
<PAGE> 20
TRUSTEES
- ----------------------------------
Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn
Wayne E. Hedien
Dr. Manuel H. Johnson
Michael E. Nugent
Philip J. Purcell
John L. Schroeder
OFFICERS
- ----------------------------------
Charles A. Fiumefreddo
Chairman and Chief Executive Officer
Mitchell M. Merin
President
Barry Fink
Vice President, Secretary and General Counsel
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 ACCOUNTANTS
- ----------------------------------
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York 10036
INVESTMENT MANAGER
- ----------------------------------
Morgan Stanley Dean Witter Advisors Inc.
Two World Trade Center
New York, New York 10048
The financial statements included herein have been taken from the records of the
Trust without examination by the independent accountants and accordingly they
do not express an opinion thereon.
MORGAN STANLEY
DEAN WITTER
INSURED
MUNICIPAL TRUST
Semiannual Report
April 30, 1999
