<PAGE> 1
MORGAN STANLEY DEAN WITTER INSURED MUNICIPAL 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 INSURED MUNICIPAL 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.
<TABLE>
<CAPTION>
[30-YEAR BOND YIELDS 1994-2000 LINE AND BAR GRAPH]
INSURED U.S. Treasury Insured Municipal Yields as a
MUNICIPAL YIELDS 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 97.90
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
</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 Insured Municipal Trust (IMT) increased from $14.91
to $15.09 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 8.26
percent. IMT's value on the New York Stock Exchange (NYSE) increased from
$13.6875 to $14.1875 per share during this period. Based on this change plus
reinvestment of tax-free dividends, IMT's total market return was 10.87 percent.
As of October 31, 2000, IMT's share price was at a 5.98 percent discount to its
NAV.
2
<PAGE> 3
MORGAN STANLEY DEAN WITTER INSURED MUNICIPAL TRUST
LETTER TO THE SHAREHOLDERS October 31, 2000, continued
Monthly dividends for the fourth quarter of 2000, declared in September, were
unchanged at $0.0775 per share. The Trust's level of undistributed net
investment income was $0.114 per share on October 31, 2000, versus $0.124 per
share 12 months earlier.
PORTFOLIO STRUCTURE
The Trust's net assets of $449 million were diversified among 14 long-term
sectors and 61 credits. Issues in the refunded bond category comprised 22
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 16 years. Average duration, a measure of sensitivity to interest
rate changes, was 4.9 years. Generally, bonds with longer durations have greater
volatility. The accompanying charts provide current information on the
portfolios credit enhancements, maturity distribution and sector concentrations.
Optional call provisions by year and their respective cost (book) yields are
also charted by year.
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
Fund'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 $0.10 per
share to common share earnings. The Trust's two ARPS series totaling $130
million represented 29 percent of net assets. The yield on the Trust's weekly
ARPS series ranged between 3.35 and 5.30 percent. The yield on the 12-month ARPS
series, with a January 2001 rollover, is 4.19 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 INSURED MUNICIPAL 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 1,036,733 shares of
common stock at a weighted average market discount of 9.62 percent.
We appreciate your ongoing support of Morgan Stanley Dean Witter Insured
Municipal 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 MUNICIPAL INCOME OPPORTUNITIES TRUST II
LETTER TO THE SHAREHOLDERS October 31, 2000, continued
[LARGEST SECTORS BAR GRAPH]
LARGEST SECTORS AS OF OCTOBER 31, 2000
(% OF NET ASSETS)
<TABLE>
<S> <C>
REFUNDED 22%
IDR/PCR* 14%
WATER & SEWER 13%
ELECTRIC 7%
GENERAL OBLIGATION 6%
EDUCATION 6%
TRANSPORTATION 6%
MORTGAGE 6%
</TABLE>
* INDUSTRIAL DEVELOPMENT/POLLUTION CONTROL REVENUE
PORTFOLIO STRUCTURE IS SUBJECT TO CHANGE.
[CREDIT ENHANCEMENTS PIE CHART]
CREDIT RATINGS AS OF OCTOBER 31, 2000 ENHANCEMENTS
(% OF TOTAL LONG-TERM PORTFOLIO)
<TABLE>
<S> <C>
MBIA 38%
AMBAC 24%
FGIC 20%
FSA 16%
GNMA 2%
</TABLE>
PORTFOLIO STRUCTURE IS SUBJECT TO CHANGE.
[DISTRIBUTTON BY MATURITY BAR CHART]
DISTRIBUTION BY MATURITY
(% OF NET ASSETS)
WEIGHTED AVERAGE
MATURITY: 16 YEARS
<TABLE>
<S> <C>
Under 1 Year 6.1%
1-5 YEARS 17.3%
5-10 YEARS 6.9%
10-20 YEARS 26.9%
20-30 YEARS 30.3%
30+ YEARS 13.2%
</TABLE>
PORTFOLIO STRUCTURE IS SUBJECT TO CHANGE.
5
<PAGE> 6
MORGAN STANLEY DEAN WITTER NEW YORK QUALITY MUNICIPAL SECURITIES
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
<TABLE>
<CAPTION>
YEARS BONDS CALLABLE
<S> <C>
2000 0%
2001 10%
2002 43%
2003 2%
2004 4%
2005 2%
2006 5%
2007 0%
2008 3%
2009 9%
2010+ 22%
</TABLE>
WEIGHTED AVERAGE
BOOK YIELD: 6.4%
COST (BOOK) YIELD*
<TABLE>
<S> <C>
2000
2001 7.0%
2002 6.9%
2003 5.1%
2004 5.8%
2005 6.0%
2006 6.3%
2007
2008 6.1%
2009 5.9%
2010+ 5.8%
</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 7.0% ON 10% 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 INSURED MUNICIPAL TRUST
RESULTS OF ANNUAL MEETING (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......................................................... 17,709,985
Withheld.................................................... 337,973
James F. Higgins
For......................................................... 17,709,101
Withheld.................................................... 338,857
John L. Schroeder
For......................................................... 17,705,801
Withheld.................................................... 342,157
</TABLE>
(2) ELECTION OF TRUSTEE BY PREFERRED SHAREHOLDERS:
<TABLE>
<S> <C>
Dr. Manuel H. Johnson
For......................................................... 1,995
Withheld.................................................... 4
</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......................................................... 17,655,937
Against..................................................... 122,321
Abstain..................................................... 269,700
</TABLE>
7
<PAGE> 8
MORGAN STANLEY DEAN WITTER INSURED MUNICIPAL TRUST
PORTFOLIO OF INVESTMENTS October 31, 2000
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
-----------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
TAX-EXEMPT MUNICIPAL BONDS (94.6%)
General Obligation (5.5%)
$ 10,000 North Slope Borough, Alaska, Ser 2000 B (MBIA).............. 0.00 % 06/30/10 $ 6,111,100
5,000 Hawaii, 1999 Ser CT (FSA)................................... 5.875 09/01/17 5,217,400
8,000 Chicago, Illinois, Refg Ser 1992 (Ambac).................... 6.25 01/01/11 8,849,280
4,000 Clark County, Nevada, Transportation Impr Ltd Tax Ser
06/01/92 B (Ambac)......................................... 6.50 06/01/17 4,525,040
-------- -----------
27,000 24,702,820
-------- -----------
Educational Facilities Revenue (5.7%)
Fulton County Development Authority, Georgia,
900 Morehouse College Project, Ser 2000 (Ambac)................ 6.25 12/01/21 969,192
1,700 Morehouse College Project, Ser 2000 (Ambac)................ 5.875 12/01/30 1,743,554
Massachusetts Health & Educational Facilities Authority,
15,000 Northeastern University Ser E (MBIA)**..................... 6.55 10/01/22 15,745,500
1,745 Stonehill College Ser E (MBIA)............................. 6.60 07/01/20 1,826,544
2,500 University of North Carolina, Pool Ser 2000 (Ambac)......... 5.25 10/01/20 2,427,750
3,000 Utah Board Of Regents, University of Utah - Huntsman Cancer
Institute Building Refg Ser 2000 A (MBIA).................. 5.50 04/01/18 3,002,190
-------- -----------
24,845 25,714,730
-------- -----------
Electric Revenue (7.0%)
10,000 Los Angeles Department of Water & Power, Issue of 1999
(FSA)...................................................... 5.50 06/15/29 10,003,300
7,000 Long Island Power Authority, New York, Ser 2000 A (FSA)
(WI)....................................................... 0.00 06/01/16 3,000,830
10,000 Lower Colorado River Authority, Texas, Refg Ser 1999 A
(FSA)**.................................................... 5.875 05/15/16 10,448,800
8,000 Texas Municipal Power Agency, Refg Ser 1993 (MBIA).......... 5.25 09/01/12 8,030,720
-------- -----------
35,000 31,483,650
-------- -----------
Hospital Revenue (3.6%)
5,000 Montgomery Special Care Facilities Financing Authority,
Alabama, Baptist Health Ser 1998 B (MBIA).................. 5.00 11/15/29 4,401,350
5,000 Brevard County Health Facilities Authority, Florida,
Wuesthoff Memorial Hospital Ser 1992 A (MBIA).............. 6.625 04/01/13 5,218,750
4,000 Fulco Hospital Authority, Georgia, Catholic Health East Ser
1998 A (MBIA).............................................. 5.00 11/15/28 3,571,880
3,000 Missouri Health & Educational Facilities Authority, SSM
Healthcare Ser 1998 A (MBIA)............................... 5.00 06/01/22 2,799,480
-------- -----------
17,000 15,991,460
-------- -----------
Industrial Development/Pollution Control Revenue (14.1%)
6,000 Delaware Economic Development Authority, Delmarva Power &
Light Co Ser 1992 A (AMT) (Ambac).......................... 6.85 05/01/22 6,250,440
5,000 Lawrenceburg, Indiana, Indiana & Michigan Power Co Refg Ser
D (Secondary FGIC)......................................... 7.00 04/01/15 5,233,700
20,000 Burlington, Kansas, Kansas Gas & Electric Co Ser 1991
(MBIA)..................................................... 7.00 06/01/31 20,639,400
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
8
<PAGE> 9
MORGAN STANLEY DEAN WITTER INSURED MUNICIPAL TRUST
PORTFOLIO OF INVESTMENTS October 31, 2000, continued
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
----------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 7,500 Humboldt County, Nevada, Sierra Pacific Power Co Refg Ser
1987 (Ambac)............................................... 6.55 % 10/01/13 $ 7,835,175
5,000 New York State Energy Research & Development Authority,
Brooklyn Union Gas Co 1996 Ser (MBIA)...................... 5.50 01/01/21 4,939,600
Brazos River Authority, Texas,
7,500 Houston Lighting & Power Co 1992 A (Ambac)................. 6.70 03/01/17 7,811,175
10,000 Texas Utilities Electric Co Collateralized Ser 1992 A
(AMT)...................................................... 6.75 04/01/22 10,414,000
-------- -----------
61,000 63,123,490
-------- -----------
Mortgage Revenue - Multi-Family (3.3%)
15,000 New Jersey Housing Mortgage Finance Agency, Home Buyer Ser
-------- 2000 CC
(MBIA) (AMT)............................................... 5.875 10/01/31 14,977,800
-----------
Mortgage Revenue - Single Family (2.5%)
3,000 Alaska Housing Finance Corporation, Governmental 1995 Ser A
(MBIA)..................................................... 5.875 12/01/24 3,002,400
5,800 Nebraska Investment Finance Authority, GNMA-Backed 1990 Ser
A & B (AMT)................................................ 8.50++ 09/15/24 6,061,000
2,200 Ohio Housing Finance Agency, GNMA-Backed 1991 Ser A 1 & 2
(AMT)...................................................... 9.081++ 03/24/31 2,304,500
-------- -----------
11,000 11,367,900
-------- -----------
Public Facilities Revenue (5.3%)
3,000 Denver, Colorado, Civic Center Office Building Ser 2000 B
COPs (Ambac)............................................... 5.50 12/01/21 2,985,030
20,000 Hudson County, New Jersey, Correctional Refg Ser 1992 COPs
(MBIA)..................................................... 6.60 12/01/21 20,847,800
-------- -----------
23,000 23,832,830
-------- -----------
Recreational Facilities Revenue (2.7%)
2,500 College Park Business & Industrial Development Authority,
Georgia, Civic Center Ser 2000 (Ambac)..................... 5.75 09/01/26 2,542,725
10,000 Hamilton County, Ohio, Sales Tax Ser 2000 (Ambac) (WI)...... 5.25 12/01/32 9,466,500
-------- -----------
12,500 12,009,225
-------- -----------
Resource Recovery Revenue (1.9%)
8,325 Detroit Economic Development Corporation, Michigan, Ser 1991
A (AMT) (FSA).............................................. 6.875 05/01/09 8,569,006
-------- -----------
Transportation Facilities Revenue (6.3%)
5,000 Denver City & County, Colorado, Airport Refg Ser 2000 A
(AMT) (Ambac).............................................. 6.00 11/15/18 5,167,350
5,000 Greater Orlando Aviation Authority, Florida, Ser 1992 A
(AMT) (FGIC)............................................... 6.50 10/01/12 5,240,250
5,000 Hillsborough County Port District, Florida, Tampa Port
Authority Refg Ser 1995 (AMT) (FSA)........................ 5.75 06/01/13 5,145,800
2,045 Hawaii, Airports Second Lien Ser 1991 (AMT) (FGIC).......... 6.75 07/01/21 2,107,434
4,000 Regional Transportation Authority, Illinois, Refg Ser 1999
(FSA)...................................................... 5.75 06/01/21 4,162,320
2,000 Minneapolis - St Paul Metropolitan Airports Commission,
Minnesota, Ser 1998 A (Ambac).............................. 5.00 01/01/30 1,817,180
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
9
<PAGE> 10
MORGAN STANLEY DEAN WITTER INSURED MUNICIPAL TRUST
PORTFOLIO OF INVESTMENTS October 31, 2000, continued
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
----------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 7,360 Nevada Department of Business & Industry, Las Vegas Monorail
Project, 1st Tier Ser 2000 (Ambac)......................... 0.00 % 01/01/21 $ 2,273,872
2,500 Port of Seattle, Washington, Ser B (AMT) (MBIA)............. 5.625 02/01/24 2,447,400
-------- -----------
32,905 28,361,606
-------- -----------
Water & Sewer Revenue (13.4%)
7,000 Atlanta, Georgia, Water & Wastewater Ser 1999 A (FGIC)...... 5.00 11/01/29 6,330,800
2,000 Henry County Water & Sewer Authority, Georgia, Ser 2000
(FGIC)..................................................... 5.625 02/01/30 2,003,940
5,000 Honolulu City and County, Hawaii, Wastewater Junior Ser 1998
(FGIC)..................................................... 4.50 07/01/28 4,086,300
7,790 Kenton County Water District #1, Kentucky, Refg Ser 1992
(FGIC)..................................................... 6.375 02/01/17 8,111,026
3,800 Louisville Board of Water Works, Kentucky, Water Ser 2000... 5.50 11/15/25 3,759,150
10,000 Louisville & Jefferson County Metropolitan Sewer District,
Kentucky, Ser 1999 A (FGIC)................................ 5.75 05/15/33 10,105,599
3,375 Massachusetts Water Resources Authority, 2000 Ser A
(FGIC)..................................................... 6.00 08/01/15 3,618,338
Detroit, Michigan,
1,700 Water Supply Refg Ser 1992 (FGIC)........................... 8.106++ 07/01/22 1,821,125
5,000 Water Supply Ser 1999 A (FGIC).............................. 5.75 07/01/26 5,061,200
10,000 Grand Strand Water & Sewer Authority, South Carolina, Refg
Ser 1992 (MBIA)............................................ 6.00 06/01/19 10,089,300
5,000 North Charleston Sewer District, South Carolina, Refg Ser
1992 A (MBIA).............................................. 6.00 07/01/18 5,049,150
-------- -----------
60,665 60,035,928
-------- -----------
Other Revenue (1.3%)
3,000 Philadelphia, Pennsylvania, Gas Works Second Ser 1998
(FSA)...................................................... 5.00 07/01/23 2,763,030
3,000 Alexandria Industrial Development Authority, Virginia,
Institute for Defense Analysis Ser 2000 A (Ambac).......... 5.90 10/01/30 3,051,720
-------- -----------
6,000 5,814,750
-------- -----------
Refunded (22.0%)
15,000 Delaware Health Facilities Authority, Medical Center of
Delaware Ser 1992 (MBIA) (ETM)............................. 6.25 10/01/06 16,260,600
10,000 Orange County, Florida, Tourist Development Tax Ser 1992 B
(Ambac).................................................... 6.00 10/01/02+ 10,294,300
7,300 Louisiana Public Facilities Authority, Our Lady of the Lake
Regional Medical Center Ser 1993 D & E (FSA)............... 5.391 07/12/24+ 7,596,964
4,000 Detroit, Michigan, Water Supply Refg Ser 1992 (FGIC)........ 8.005++ 07/01/02+ 4,375,000
15,000 Harrisburg Authority, Pennsylvania, Water Ser of 1992
(FGIC)..................................................... 6.50 08/15/02+ 15,534,900
15,000 South Carolina Public Service Authority, 1991 Ser D
(Ambac).................................................... 6.50 07/01/02+ 15,786,150
5,000 Shelby County Health, Educational & Housing Facility Board,
Tennessee, LeBonheur Children's Medical Center Inc Ser D
(MBIA) (ETM)............................................... 5.50 08/15/19 5,090,750
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
10
<PAGE> 11
MORGAN STANLEY DEAN WITTER INSURED MUNICIPAL TRUST
PORTFOLIO OF INVESTMENTS October 31, 2000, continued
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
-----------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 7,500 Amarillo Health Facilities Corporation, Texas, High Plains
Baptist Hospital
Ser 1992 A & B (FSA)....................................... 8.277%++ 01/01/02+ $ 8,118,750
15,000 Wisconsin Health & Educational Facilities Authority,
Children's Hospital Inc Ser 1992 B (FGIC).................. 6.50 08/15/02+ 15,793,800
-------- -----------
93,800 98,851,214
-------- -----------
428,040 TOTAL TAX-EXEMPT MUNICIPAL BONDS (Cost $405,481,416)............................ 424,836,409
-------- -----------
SHORT-TERM TAX-EXEMPT MUNICIPAL OBLIGATIONS (6.1%)
10,000 Reedy Creek Improvement District, Florida, Utilities Ser
1991-1 (MBIA).............................................. 6.50 10/01/01+ 10,290,500
3,000 Idaho Health Facilities Authority, St Lukes Regional Medical
Center Ser 2000 (FSA) (Demand 11/01/00).................... 3.00* 11/07/00 3,000,000
2,500 Chattanooga-Hamilton County Hospital Authority, Tennessee,
Erlanger Medical Center 1991 Ser A (FSA)................... 9.165++ 05/01/01+ 2,653,125
11,300 Harris County Health Facilities Development Corporation,
-------- Texas, Methodist Hospital Ser 1994 (Demand 11/01/00)....... 3.00* 11/07/00 11,300,000
-----------
26,800 TOTAL SHORT-TERM TAX-EXEMPT MUNICIPAL OBLIGATIONS (Cost $26,709,984)............ 27,243,625
-------- -----------
$454,840 TOTAL INVESTMENTS (Cost $432,191,400) (a).............................. 100.7% 452,080,034
========
LIABILITIES IN EXCESS OF OTHER ASSETS.................................. (0.7) (3,003,870)
----- -----------
NET ASSETS............................................................. 100.0% $449,076,164
===== ===========
</TABLE>
---------------------
<TABLE>
<C> <S>
AMT Alternative Minimum Tax.
COPs Certificates of Participation.
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 $20,020,423 and the aggregate gross unrealized depreciation is $131,789, resulting in net
unrealized appreciation of $19,888,634.
Bond Insurance:
-------------------------------------------------------------------
Ambac Ambac Assurance Corporation.
FGIC Financial Guaranty Insurance Company.
FSA Financial Security Assurance Inc.
MBIA Municipal Bond Investors Assurance Corporation.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
11
<PAGE> 12
MORGAN STANLEY DEAN WITTER INSURED MUNICIPAL 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>
Alaska..................... 2.0%
Alabama.................... 1.0
California................. 2.2
Colorado................... 1.8
Delaware................... 5.0
Florida.................... 8.1
Georgia.................... 3.8
Hawaii..................... 2.5
Idaho...................... 0.7
Illinois................... 2.9
Indiana.................... 1.2
Kansas..................... 4.6
Kentucky................... 4.9
Louisiana.................. 1.7
Massachusetts.............. 4.7
Michigan................... 4.4
Minnesota.................. 0.4
Missouri................... 0.6
Nebraska................... 1.4
Nevada..................... 3.3
New Jersey................. 8.0
New York................... 1.8
North Carolina............. 0.5
Ohio....................... 2.6
Pennsylvania............... 4.1
South Carolina............. 6.9
Tennessee.................. 1.7
Texas...................... 12.5
Utah....................... 0.7
Virginia................... 0.7
Washington................. 0.5
Wisconsin.................. 3.5
-----
Total...................... 100.7%
=====
</TABLE>
12
<PAGE> 13
MORGAN STANLEY DEAN WITTER INSURED MUNICIPAL TRUST
FINANCIAL STATEMENTS
<TABLE>
<S> <C>
STATEMENT OF ASSETS AND LIABILITIES
October 31, 2000
ASSETS:
Investments in securities, at value
(cost $432,191,400)..................... $452,080,034
Cash..................................... 38,724
Interest receivable...................... 6,820,311
Prepaid expenses......................... 85,963
------------
TOTAL ASSETS......................... 459,025,032
------------
LIABILITIES:
Payable for:
Investments purchased................ 9,464,267
Dividends to preferred
shareholders........................ 137,752
Investment management fee............ 137,646
Shares of beneficial interest
repurchased......................... 98,382
Accrued expenses......................... 110,821
------------
TOTAL LIABILITIES.................... 9,948,868
------------
NET ASSETS........................... 449,076,164
============
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, 21,140,880 shares outstanding)... 294,141,597
Net unrealized appreciation.............. 19,888,634
Accumulated undistributed net investment
income.................................. 2,406,186
Accumulated undistributed net realized
gain.................................... 2,639,747
------------
NET ASSETS APPLICABLE TO COMMON
SHAREHOLDERS......................... 319,076,164
------------
TOTAL NET ASSETS..................... $449,076,164
============
NET ASSET VALUE PER COMMON SHARE
($319,076,164 divided by 21,140,880
common shares outstanding).............. $15.09
============
</TABLE>
<TABLE>
<S> <C>
STATEMENT OF OPERATIONS
For the year ended October 31, 2000
NET INVESTMENT INCOME:
INTEREST INCOME........................... $27,155,548
-----------
EXPENSES
Investment management fee................. 1,583,229
Auction commission fees................... 365,975
Professional fees......................... 97,597
Transfer agent fees and expenses.......... 81,776
Shareholder reports and notices........... 51,134
Registration fees......................... 32,926
Custodian fees............................ 22,875
Trustees' fees and expenses............... 17,327
Auction agent fees........................ 17,189
Other..................................... 19,091
-----------
TOTAL EXPENSES........................ 2,289,119
Less: expense offset...................... (22,833)
-----------
NET EXPENSES.......................... 2,266,286
-----------
NET INVESTMENT INCOME................. 24,889,262
-----------
NET REALIZED AND UNREALIZED GAIN:
Net realized gain......................... 3,913,037
Net change in unrealized appreciation..... (1,337,190)
-----------
NET GAIN.............................. 2,575,847
-----------
NET INCREASE.............................. $27,465,109
===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
13
<PAGE> 14
MORGAN STANLEY DEAN WITTER INSURED MUNICIPAL 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................................ $ 24,889,262 $ 25,671,501
Net realized gain (loss)............................. 3,913,037 (1,273,290)
Net change in unrealized appreciation................ (1,337,190) (24,952,418)
------------ ------------
NET INCREASE (DECREASE).......................... 27,465,109 (554,207)
------------ ------------
Dividends to preferred shareholders from net
investment income................................... (5,231,646) (4,423,314)
------------ ------------
DIVIDENDS AND DISTRIBUTIONS TO COMMON SHAREHOLDERS
FROM:
Net investment income................................ (20,009,677) (20,206,147)
Net realized gain.................................... -- (2,338,083)
------------ ------------
TOTAL DIVIDENDS AND DISTRIBUTIONS................ (20,009,677) (22,544,230)
------------ ------------
Decrease from transactions in common shares of
beneficial interest................................. (13,911,820) (3,344,045)
------------ ------------
NET DECREASE..................................... (11,688,034) (30,865,796)
NET ASSETS:
Beginning of period.................................. 460,764,198 491,629,994
------------ ------------
END OF PERIOD
(Including undistributed net investment income of
$2,406,186 and $2,758,247, respectively)......... $449,076,164 $460,764,198
============ ============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
14
<PAGE> 15
MORGAN STANLEY DEAN WITTER INSURED MUNICIPAL TRUST
NOTES TO FINANCIAL STATEMENTS October 31, 2000
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
15
<PAGE> 16
MORGAN STANLEY DEAN WITTER INSURED MUNICIPAL 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. 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.
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
$114,101,262 and $128,232,996, 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 $1,700.
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
$4,992. At October 31, 2000, the Trust had an accrued pension liability of
$42,274 which is included in accrued expenses in the Statement of Assets and
Liabilities.
16
<PAGE> 17
MORGAN STANLEY DEAN WITTER INSURED MUNICIPAL TRUST
NOTES TO FINANCIAL STATEMENTS October 31, 2000, continued
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 4.19% 01/09/01 3.35% - 4.19%
TH 1,800 90,000 4.13 11/03/00 3.35 - 5.30
</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 TU and TH at rates ranging from 4.05% to 4.19% in the
aggregate amount of $493,990.
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.
17
<PAGE> 18
MORGAN STANLEY DEAN WITTER INSURED MUNICIPAL TRUST
NOTES TO FINANCIAL STATEMENTS October 31, 2000, continued
5. COMMON SHARES OF BENEFICIAL INTEREST
Transactions in common shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
CAPITAL
PAID IN
PAR VALUE EXCESS OF
SHARES OF SHARES PAR VALUE
---------- --------- ------------
<S> <C> <C> <C>
Balance, October 31, 1998................................... 22,416,813 $224,168 $311,173,671
Treasury shares purchased and retired (weighted average
discount 7.47%)*........................................... (239,200) (2,392) (3,342,030)
---------- -------- ------------
Balance, October 31, 1999................................... 22,177,613 221,776 307,831,641
Treasury shares purchased and retired (weighted average
discount 9.62%)*........................................... (1,036,733) (10,367) (13,901,453)
---------- -------- ------------
Balance, October 31, 2000................................... 21,140,880 $211,409 $293,930,188
========== ======== ============
</TABLE>
---------------------
* The Trustees have voted to retire the shares purchased.
6. 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>
7. FEDERAL INCOME TAX STATUS
During the year October 31, 2000, the Trust utilized all of its net capital loss
carryover of approximately $1,273,000.
8. EXPENSE OFFSET
The expense offset represents a reduction of the custodian fees for earnings on
cash balances maintained by the Trust.
18
<PAGE> 19
MORGAN STANLEY DEAN WITTER INSURED MUNICIPAL TRUST
NOTES TO FINANCIAL STATEMENTS October 31, 2000, continued
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 $25,333,500, which represents 5.6% of the Trust's net assets.
19
<PAGE> 20
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 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........................ $ 14.91 $ 16.13 $ 15.96 $ 15.80 $ 15.86
-------- -------- -------- -------- --------
Income (loss) from investment operations:
Net investment income...................................... 1.15 1.15 1.18 1.18 1.27
Net realized and unrealized gain (loss).................... 0.14 (1.18) 0.15 0.23 (0.02)
-------- -------- -------- -------- --------
Total income (loss) from investment operations.............. 1.29 (0.03) 1.33 1.41 1.25
-------- -------- -------- -------- --------
Less dividends and distributions from:
Net investment income...................................... (0.93) (0.90) (0.95) (0.99) (1.02)
Common share equivalent of dividends paid to preferred
shareholders............................................. (0.24) (0.20) (0.21) (0.21) (0.21)
Net realized gain.......................................... -- (0.10) -- (0.05) (0.08)
-------- -------- -------- -------- --------
Total dividends and distributions........................... (1.17) (1.20) (1.16) (1.25) (1.31)
-------- -------- -------- -------- --------
Anti-dilutive effect of acquiring treasury shares........... 0.06 0.01 -- -- --
-------- -------- -------- -------- --------
Net asset value, end of period.............................. $ 15.09 $ 14.91 $ 16.13 $ 15.96 $ 15.80
======== ======== ======== ======== ========
Market value, end of period................................. $ 14.188 $ 13.688 $ 15.625 $ 15.25 $ 15.00
======== ======== ======== ======== ========
TOTAL RETURN+............................................... 10.87% (6.36)% 8.79% 8.80% 10.31%
RATIOS TO AVERAGE NET ASSETS OF COMMON SHAREHOLDERS:
Total expenses.............................................. 0.71%(1) 0.69%(1) 0.68% 0.69%(1) 0.70%(1)
Net investment income before preferred stock dividends...... 7.74% 7.32% 7.33% 7.50% 7.54%
Preferred stock dividends................................... 1.63% 1.26% 1.29% 1.35% 1.35%
Net investment income available to common shareholders...... 6.11% 6.06% 6.04% 6.15% 6.19%
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands..................... $449,076 $460,764 $491,630 $487,886 $485,849
Asset coverage on preferred shares at end of period......... 345% 354% 378% 375% 373%
Portfolio turnover rate..................................... 26% 16% 6% -- 1%
</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 INSURED MUNICIPAL TRUST
INDEPENDENT AUDITORS' REPORT
TO THE SHAREHOLDERS AND BOARD OF TRUSTEES OF
MORGAN STANLEY DEAN WITTER INSURED MUNICIPAL TRUST:
We have audited the accompanying statement of assets and liabilities of Morgan
Stanley Dean Witter Insured Municipal 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 Insured Municipal 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 INSURED MUNICIPAL 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 INSURED MUNICIPAL TRUST
REVISED INVESTMENT POLICY
On January 26, 2000, the Trustees of Morgan Stanley Dean Witter Insured
Municipal 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
INSURED
MUNICIPAL TRUST
Annual Report
October 31, 2000
