<PAGE> 1
MORGAN STANLEY DEAN WITTER QUALITY MUNICIPAL INCOME TRUST Two World Trade Center
LETTER TO THE SHAREHOLDERS April 30, 2000 New York, New York 10048
DEAR SHAREHOLDER:
The U.S. economy continued its unprecedented expansion into the new year. Strong
growth pushed the unemployment rate to a 30-year low. Rising commodity prices
heightened concern about inflation. The price of oil moved above $30 per barrel
prior to ending April at $25 per barrel. Between June 1999 and March 2000, the
Federal Reserve Board raised the federal funds rate in five, 25 basis-point
moves to reach 6.00 percent. The Fed subsequently demonstrated its resistance to
inflation by raising the federal funds rate another 50 basis points to 6.50
percent in May. Economic growth and a less accommodative monetary policy caused
long-term interest rates to increase throughout 1999. In February, the U.S.
Treasury announced plans to retire debt with the federal budget surplus. This
precipitated a 50-75 basis-point rally in longer Treasury maturities.
MUNICIPAL MARKET CONDITIONS
The long-term insured municipal index began 1999 near a record low yield of 5.05
percent but increased to 5.97 percent by calendar year-end. This index reached a
high of 6.18 percent in January 2000 before ending April at 5.93 percent.
Because bond prices move inversely to changes in interest rates, higher yields
caused bond prices to decline significantly last year and improve modestly in
the first four months of 2000.
The ratio of municipal yields as a percentage of Treasury yields has been used
historically as a measure of relative value. Over the past five years the ratio
has ranged between an average high of 93 percent and an average low of 85
percent. The increase in the ratio from 92 percent at the end of 1999 to 99
percent at the end of April 2000 was primarily the result of the magnitude of
the rally in long-term Treasuries. A rising yield ratio indicates weaker
relative performance by municipals.
<PAGE> 2
MORGAN STANLEY DEAN WITTER QUALITY MUNICIPAL INCOME TRUST
LETTER TO THE SHAREHOLDERS April 30, 2000, continued
Higher interest rates reduced municipal market underwriting in 1999. New-issue
volume declined 20 percent last year. Refunding activity, the most
interest-rate-sensitive component of supply, was down more than 50 percent. In
the first four months of this year, volume was 30 percent lower than in the same
period last year.
[30-YEAR BOND YIELDS 1994-2000 CHART]
<TABLE>
<CAPTION>
30-YEAR INSURED 30-Year U.S. Insured Municipal Yields as a
MUNICIPAL YIELDS Treasury Yields Percentage of U.S. Treasury Yields
<S> <C> <C> <C>
1994 5.40 6.34 85.17
5.40 6.24 86.54
5.80 6.66 87.09
6.40 7.09 90.27
6.35 7.32 86.75
6.25 7.43 84.12
6.50 7.61 85.41
6.25 7.39 84.57
6.30 7.45 84.56
6.55 7.81 83.87
6.75 7.96 84.80
7.00 8.00 87.50
6.75 7.88 85.66
1995 6.40 7.70 83.12
6.15 7.44 82.66
6.15 7.43 82.77
6.20 7.34 84.47
5.80 6.66 87.09
6.10 6.62 92.15
6.10 6.86 88.92
6.00 6.66 90.09
5.95 6.48 91.82
5.75 6.33 90.84
5.50 6.14 89.58
5.35 5.94 90.07
1996 5.40 6.03 89.55
5.60 6.46 86.69
5.85 6.66 87.84
5.95 6.89 86.36
6.05 6.99 86.55
5.90 6.89 85.63
5.85 6.97 83.93
5.90 7.11 82.98
5.70 6.93 82.25
5.65 6.64 85.09
5.50 6.35 86.61
5.60 6.63 84.46
1997 5.70 6.79 83.95
5.65 6.80 83.09
5.90 7.10 83.10
5.75 6.94 82.85
5.65 6.91 81.77
5.60 6.78 82.60
5.30 6.30 84.13
5.50 6.61 83.21
5.40 6.40 84.38
5.35 6.15 86.99
5.30 6.05 87.60
5.15 5.92 86.99
1998 5.15 5.80 88.79
5.20 5.92 87.84
5.25 5.93 88.53
5.35 5.95 89.92
5.20 5.80 89.66
5.20 5.65 92.04
5.18 5.71 90.72
5.03 5.27 95.45
4.95 5.00 99.00
5.05 5.16 97.87
5.00 5.06 98.81
5.05 5.10 99.02
1999 5.00 5.09 98.23
5.10 5.58 91.40
5.15 5.63 91.47
5.20 5.66 91.87
5.30 5.83 90.91
5.47 5.96 91.78
5.55 6.10 90.98
5.75 6.06 94.88
5.85 6.05 96.69
6.03 6.16 97.90
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
</TABLE>
Source: Municipal Market Data - Division of Thomson Financial Municipal Group
and Bloomberg L.P.
PERFORMANCE
During the six-month period ended April 30, 2000, the net asset value (NAV) of
Morgan Stanley Dean Witter Quality Municipal Income Trust (IQI) decreased from
$14.88 to $14.86 per share. Based on this change, plus a reinvestment of
tax-free dividends totaling $0.465 per share, the Trust's total NAV return was
3.41 percent. IQI's value on the New York Stock Exchange (NYSE) increased from
$13.25 to $13.5625 per share during this period. Based on this change plus
reinvestment of tax-free dividends, IQI's total market return was 5.99 percent.
On April 30, 2000, IQI's share price was at a 8.73 percent discount to its NAV.
2
<PAGE> 3
MORGAN STANLEY DEAN WITTER QUALITY MUNICIPAL INCOME TRUST
LETTER TO THE SHAREHOLDERS April 30, 2000, continued
Monthly dividends for the second quarter of 2000, declared in March, were
unchanged at $0.0775 per share. The Trust's level of undistributed net
investment income was $0.088 per share on April 30, 2000, versus $0.090 per
share six months earlier.
PORTFOLIO STRUCTURE
The Trust's investments were diversified among 15 long-term sectors and 74
credits. At the end of April, the portfolio's average maturity was 15 years.
Average duration, a measure of sensitivity to interest rate changes, was 5.4
years. Issues in the refunded bond category comprised 24 percent of net assets
and will be redeemed on the dates shown in the portfolio. Current information on
the portfolio's credit ratings, sector distribution and geographic
diversification is provided in the accompanying charts and tables. Optional call
provisions, by year, with their respective cost (book) yields are also shown.
THE IMPACT OF LEVERAGING
As discussed in previous shareholder reports, the total income available for
distribution to common shareholders includes incremental income provided by the
Trust's outstanding Auction Rate Preferred shares (ARPS). ARPS dividends reflect
prevailing short-term interest rates on maturities normally ranging from one
week to one year. Incremental income to common shareholders depends on two
factors. The first factor is the amount of ARPS outstanding, while the second is
the spread between the portfolio's cost yield and ARPS expenses (ARPS auction
rate and expenses). The greater the spread and amount of ARPS outstanding, the
greater the amount of incremental income available for distribution to common
shareholders. The level of net investment income available for distribution to
common shareholders varies with the level of short-term interest rates. ARPS
leverage also increases the price volatility of common shares and has the effect
of extending portfolio duration.
During the six-month period, ARPS leverage contributed approximately $0.06 per
share to common share earnings. Weekly ARPS yields ranged between 3.20 percent
and 5.30 percent. In comparison, the yield on 1-year municipal notes increased
from 3.77 percent at the end of October 1999 to 4.23 percent at the end of
April. The Trust's five ARPS series totaling $208 million represented 31 percent
of net assets.
LOOKING AHEAD
The Federal Reserve Board has expressed concern about consumer wealth and rising
prices. We anticipate that the central bank will continue to increase short-term
interest rates in an effort to slow
3
<PAGE> 4
MORGAN STANLEY DEAN WITTER QUALITY MUNICIPAL INCOME TRUST
LETTER TO THE SHAREHOLDERS April 30, 2000, continued
the economy. We believe municipal bonds continue to offer tax-conscious
investors good long-term value.
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 six-month period
ended April 30, 2000, the Trust purchased and retired 4.25 percent of its common
stock (1,390,400 shares) at a weighted average market discount of 10.98 percent.
The anti-dilutive effect of acquiring treasury shares is reported in the table
of Financial Highlights on page 18.
We appreciate your ongoing support of Morgan Stanley Dean Witter Quality
Municipal Income Trust and look forward to continuing to serve your investment
needs.
<TABLE>
<S> <C>
Very truly yours,
/s/ CHARLES A. FIUMEFREDDO /s/ MITCHELL M. MERIN
CHARLES A. FIUMEFREDDO MITCHELL M. MERIN
Chairman of the Board President
</TABLE>
4
<PAGE> 5
MORGAN STANLEY DEAN WITTER QUALITY MUNICIPAL INCOME TRUST
LETTER TO THE SHAREHOLDERS April 30, 2000, continued
[LARGEST SECTORS CHART]
LARGEST SECTORS AS OF APRIL 30, 2000
(% OF NET ASSETS)
<TABLE>
<S> <C>
REFUNDED 24%
WATER & SEWER 12%
GENERAL OBLIGATION 11%
MORTGAGE 10%
TRANSPORTATION 8%
HOSPITAL 8%
IDR/PCR* 8%
ELECTRIC REVENUE 8%
</TABLE>
* INDUSTRIAL DEVELOPMENT/POLLUTION CONTROL REVENUE
PORTFOLIO STRUCTURE IS SUBJECT TO CHANGE.
[CREDIT RATINGS PIE CHART]
<TABLE>
<CAPTION>
CREDIT RATINGS AS OF APRIL 30,
2000 (% OF TOTAL LONG-TERM
PORTFOLIO)
----------
<S> <C>
Aaa or AAA 51%
Aa or AA 32%
A or A 13%
Baa or BBB 3%
Ba or BB 1%
</TABLE>
AS MEASURED BY MOODY'S INVESTORS SERVICE, INC. OR
STANDARD & POOR'S CORP.
PORTFOLIO STRUCTURE IS SUBJECT TO CHANGE.
<TABLE>
<CAPTION>
GEOGRAPHIC SUMMARY OF INVESTMENTS
---------------------------------
<S> <C>
BASED ON MARKET VALUE AS A PERCENT OF NET ASSETS
APRIL 30, 2000
ALABAMA 1.2%
ALASKA 1.1
CALIFORNIA 2.9
COLORADO 3.6
CONNECTICUT 2.6
DISTRICT OF COLUMBIA 1.6
FLORIDA 7.4
GEORGIA 5.2
HAWAII 2.0
IDAHO 0.2
ILLINOIS 8.3
INDIANA 1.2
KENTUCKY 0.7
MAINE 0.5
MASSACHUSETTS 8.1
MICHIGAN 2.4
MINNESOTA 3.0
MISSOURI 6.2
NEBRASKA 0.8
NEVADA 3.8
NEW JERSEY 2.1
NEW MEXICO 0.9
NEW YORK 5.2
OHIO 2.2
PENNSYLVANIA 4.0
PUERTO RICO 0.9
SOUTH CAROLINA 5.4
SOUTH DAKOTA 0.8
TEXAS 5.8
VIRGINIA 2.6
WASHINGTON 3.5
WEST VIRGINIA 2.9
TOTAL 99.1%
PORTFOLIO STRUCTURE IS SUBJECT TO CHANGE.
</TABLE>
5
<PAGE> 6
MORGAN STANLEY DEAN WITTER QUALITY MUNICIPAL INCOME TRUST
LETTER TO THE SHAREHOLDERS April 30, 2000, continued
<TABLE>
<CAPTION>
CALL AND COST (BOOK) YIELD STRUCTURE APRIL 30, 2000
WEIGHTED AVERAGE
CALL PROTECTION: 4 YEARS
YEARS BOND CALLABLE PERCENT CALLABLE *
<S> <C>
2000 3%
2001 7%
2002 56%
2003 13%
2004 0%
2005 1%
2006 0%
2007 0%
2008 4%
2009 7%
2010+ 9%
</TABLE>
<TABLE>
<CAPTION>
COST (BOOK) YIELD**
WEIGHTED AVERAGE
BOOK YIELD: 6.4%
<S> <C>
2000 6.7%
2001 6.6%
2002 6.6%
2003 6.5%
2004
2005 6%
2006
2007 6.3%
2008 6%
2009 5.4%
2010+ 6%
</TABLE>
* % BASED ON LONG-TERM PORTFOLIO.
** COST OR "BOOK" YIELD IS THE ANNUAL INCOME EARNED ON A PORTFOLIO INVESTMENT
BASED ON ITS ORIGINAL PURCHASE PRICE BEFORE TRUST OPERATING EXPENSES. FOR
EXAMPLE, THE TRUST EARNED A BOOK YIELD OF 6.6% ON 7% OF THE BONDS IN THE
LONG-TERM PORTFOLIO THAT ARE CALLABLE IN 2001.
PORTFOLIO STRUCTURE IS SUBJECT TO CHANGE.
6
<PAGE> 7
MORGAN STANLEY DEAN WITTER QUALITY MUNICIPAL INCOME TRUST
PORTFOLIO OF INVESTMENTS April 30, 2000 (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 (10.7%)
$ 4,000 Denver City & County School Dist No 1, Colorado, Ser 1999
(FGIC)..................................................... 5.25% 12/01/16 $ 3,808,280
Hawaii,
5,000 1992 Ser BZ................................................ 6.00 10/01/10 5,228,400
8,000 1992 Ser BZ................................................ 6.00 10/01/11 8,418,880
4,000 Cook County, Illinois, Ser 1992 C (FGIC).................... 6.00 11/15/09 4,216,760
1,275 New York City, New York, 1992 Ser B......................... 7.00 02/01/20 1,330,858
South Carolina,
14,000 Highway Ser 1999 A......................................... 4.60 05/01/18 12,022,780
10,000 Highway Ser 1999 A......................................... 4.60 05/01/19 8,503,800
5,000 Houston Independent School District, PSF Gtd School & Refg
Ser 1999 A................................................. 5.25 02/15/18 4,670,500
9,035 San Antonio, Texas, Refg Ser 1992........................... 5.75 08/01/13 9,081,440
15,000 Washington, Ser 1993 A...................................... 5.75 10/01/17 15,004,950
-------- ------------
75,310 72,286,648
-------- ------------
Educational Facilities Revenue (1.9%)
2,500 University of Illinois, Auxilliary Ser 1991................. 5.75 04/01/22 2,451,050
5,000 Massachusetts Health & Educational Facilities Authority,
Brandeis University, 1998 Ser I (MBIA)..................... 4.75 10/01/28 4,089,700
Scranton-Lackawanna Health & Welfare Authority,
Pennsylvania,
3,000 University of Scranton 1992 Ser A.......................... 6.40 03/01/07 3,100,470
3,300 University of Scranton 1992 Ser A.......................... 6.50 03/01/13 3,425,301
-------- ------------
13,800 13,066,521
-------- ------------
Electric Revenue (7.7%)
3,000 Los Angeles Department of Water & Power, California, Issue
of 1992.................................................... 6.375 02/01/20 3,121,740
9,500 Orlando Utilities Commission, Florida, Ser 1991 A........... 5.50 10/01/26 8,981,870
10,000 Municipal Electric Authority of Georgia, Power 1992 Ser B
(Secondary MBIA)........................................... 6.375 01/01/16 10,437,800
5,000 Hastings, Nebraska, Refg Ser 1992........................... 6.30 01/01/19 5,107,400
10,000 Long Island Power Authority, New York, Ser 2000 A (FSA)
(WI)....................................................... 0.00 06/01/16 3,947,800
10,000 Hamilton!, Ohio, Refg 1992 Ser A (FGIC)..................... 6.00 10/15/23 10,050,100
Grant County Public Utility District #2, Washington,
8,220 Priest Rapids Hydro Second Ser 1992 A...................... 5.00 01/01/23 7,107,423
2,645 Wanapum Hydro Second Ser 1992 B (AMT)...................... 6.75 01/01/23 2,756,064
-------- ------------
58,365 51,510,197
-------- ------------
Hospital Revenue (7.7%)
5,000 Birmingham-Carraway Special Care Facilities Financing
Authority, Alabama, Carraway Methodist Health Ser 1995 A
(Connie Lee)............................................... 5.875 08/15/15 5,021,550
9,250 Massachusetts Health & Educational Facilities Authority,
Massachusetts General Hospital Ser F (AMBAC)............... 6.00 07/01/15 9,425,843
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
7
<PAGE> 8
MORGAN STANLEY DEAN WITTER QUALITY MUNICIPAL INCOME TRUST
PORTFOLIO OF INVESTMENTS April 30, 2000 (unaudited) continued
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
-----------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 10,000 Missouri Health & Educational Facilities Authority, Health
Midwest
Ser 1992 B (MBIA).......................................... 6.25% 02/15/22 $ 10,092,800
10,000 New York State Medical Care Facilities Agency, The Mount
Sinai Hospital - FHA Insured Mortgage 1992 Ser C........... 5.75 08/15/19 9,771,300
4,500 Cuyahoga County, Ohio, Cleveland Clinic Foundation Refg Ser
1992....................................................... 5.50 11/15/11 4,428,180
5,000 Dauphin County General Authority, Pennsylvania, HAPSO Group
Inc/ The Western Pennsylvania Hospital Refg 1992 Ser A
(MBIA)..................................................... 6.25 07/01/16 5,085,550
3,000 Philadelphia Hospitals & Higher Education Facilities
Authority, Pennsylvania, Chestnut Hill Hospital Ser of
1992....................................................... 6.375 11/15/11 2,888,580
5,000 South Dakota Health & Educational Facilities Authority,
Queen of Peace Hospital Ser 1992 (MBIA).................... 6.70 07/01/17 5,236,350
-------- ------------
51,750 51,950,153
-------- ------------
Industrial Development/Pollution Control Revenue (7.7%)
6,000 California Pollution Control Financing Authority, Keller
Cannon Landfill Co/Browning-Ferris Industries Inc Ser 1992
(AMT)...................................................... 6.875 11/01/27 5,638,620
5,000 Citrus County, Florida, Florida Power Corp Refg Ser 1992
B.......................................................... 6.35 02/01/22 5,060,600
5,000 Washoe County, Nevada, Sierra Pacific Power Co Ser
1987 (AMT) (MBIA).......................................... 6.65 06/01/17 5,254,700
15,000 Berkeley County, South Carolina, South Carolina Electric &
Gas Co Ser 1984............................................ 6.50 10/01/14 15,677,400
10,000 Brazos River Authority, Texas, Houston Lighting & Power Co
Ser 1992 B (MBIA).......................................... 6.375 04/01/12 10,459,700
10,000 Mason County, West Virginia, Appalachian Power Co Ser J..... 6.60 10/01/22 9,948,400
-------- ------------
51,000 52,039,420
-------- ------------
Mortgage Revenue -- Multi-Family (5.3%)
7,000 Illinois Housing Development Authority, Ser I............... 6.625 09/01/12 7,192,570
15,705 Michigan Housing Development Authority, Rental 1992 Ser A
(Bifurcated FSA)........................................... 6.50 04/01/23 16,201,749
Missouri Housing Development Commission,
5,405 Federally Insured Mortgage Loans Refg Ser 11/15/92......... 6.50 07/01/16 5,439,862
6,865 Federally Insured Mortgage Loans Refg Ser 11/15/92......... 6.60 07/01/24 6,909,142
-------- ------------
34,975 35,743,323
-------- ------------
Mortgage Revenue -- Single Family (4.9%)
16,495 Connecticut Housing Finance Authority, 1992 Ser B........... 6.70 11/15/12 17,250,306
5,315 Georgia Housing & Finance Authority, Home Ownership 1992 Ser
C.......................................................... 6.50 12/01/11 5,400,784
1,100 Idaho Housing Agency, 1992 Ser E (AMT)...................... 6.75 07/01/12 1,122,319
Minnesota Housing Finance Agency,
2,780 Ser 1992 D-1............................................... 6.50 01/01/17 2,824,341
6,020 Ser 1992 CD-1 (AMT)........................................ 6.75 07/01/23 6,103,257
-------- ------------
31,710 32,701,007
-------- ------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
8
<PAGE> 9
MORGAN STANLEY DEAN WITTER QUALITY MUNICIPAL INCOME TRUST
PORTFOLIO OF INVESTMENTS April 30, 2000 (unaudited) continued
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
-----------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Nursing & Health Related Facilities Revenue (1.6%)
$ 11,250 Minneapolis & Saint Paul Housing & Redevelopment Authority,
-------- Minnesota, Group Health Plan Inc Ser 1992.................. 6.90% 10/15/22 $ 10,980,338
------------
Public Facilities Revenue (1.7%)
3,645 Illinois, Civic Center Ser 1990 A (AMBAC)................... 6.00 12/15/15 3,650,504
7,370 Indianapolis Local Public Improvement Bond Bank, Indiana,
Ser 1992 D................................................. 6.75 02/01/20 7,748,302
-------- ------------
11,015 11,398,806
-------- ------------
Recreational Facilities Revenue (1.5%)
10,000 Atlanta Downtown Development Authority, Georgia, Underground
-------- Atlanta Refg Ser 1992...................................... 6.25 10/01/16 10,251,100
------------
Resource Recovery Revenue (1.9%)
12,185 Broward County, Florida, Broward Waste Energy Co North Ser
1984....................................................... 7.95 12/01/08 12,574,554
-------- ------------
Transportation Facilities Revenue (8.4%)
Dade County, Florida,
3,000 Aviation 1992 Ser B (AMT) (MBIA)........................... 6.55 10/01/13 3,141,180
5,000 Aviation 1992 Ser B (AMT) (MBIA)........................... 6.60 10/01/22 5,196,850
5,000 Atlanta, Georgia, Airport Ser 2000 A (FGIC)................. 5.50 01/01/26 4,743,050
13,000 Chicago, Illinois, Chicago - O'Hare Int'l Terminal Ser 1992
(AMT) (MBIA)............................................... 6.75 01/01/12 13,511,810
4,000 Regional Transportation Authority, Illinois, Refg Ser 1999
(FSA)...................................................... 5.75 06/01/21 3,980,400
3,400 Maine Turnpike Authority, Ser 2000 (FGIC)................... 5.50 07/01/30 3,213,612
2,390 St Louis, Missouri, Lambert - St Louis Int'l Airport Ser
1992 (AMT) (FGIC).......................................... 6.00 07/01/08 2,447,217
New Jersey Transportation Trust Fund Authority,
5,000 1998 Ser A (FSA)........................................... 4.50 06/15/19 4,143,150
5,000 1999 Ser A................................................. 5.75 06/15/20 5,071,350
5,000 New Jersey Turnpike Authority, Ser 2000 A (MBIA)............ 5.75 01/01/19 5,010,550
6,000 Puerto Rico Highway & Transportation Authority, Refg Ser V.. 6.625 07/01/12 6,272,520
-------- ------------
56,790 56,731,689
-------- ------------
Water & Sewer Revenue (11.6%)
4,000 Birmingham, Alabama, Water & Sewer Ser 1998 A............... 4.75 01/01/21 3,370,000
6,000 Tampa Bay Water, Florida, Utility Ser 1998 B (FGIC)......... 4.75 10/01/27 4,980,000
5,000 Douglasville - Douglas County Water & Sewer Authority,
Georgia, Ser 1998 (FGIC)................................... 4.50 06/01/23 4,015,750
5,000 Louisville & Jefferson County Metropolitan Sewer District,
Kentucky, Ser 1999 A (FGIC)................................ 5.75 05/15/33 4,884,200
715 Massachusetts Water Pollution Abatement Trust, MWRA Loan Ser
1998 A..................................................... 4.75 08/01/18 617,309
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
9
<PAGE> 10
MORGAN STANLEY DEAN WITTER QUALITY MUNICIPAL INCOME TRUST
PORTFOLIO OF INVESTMENTS April 30, 2000 (unaudited) continued
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
-----------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Massachusetts Water Resources Authority,
$ 10,000 Refg 1992 Ser B............................................ 5.50% 11/01/15 $ 9,805,900
10,000 1998 Ser A (FSA)........................................... 4.50 08/01/22 8,013,000
10,000 2000 Ser A (FGIC).......................................... 5.75 08/01/39 9,681,700
3,335 Rio Rancho, New Mexico, Water & Wastewater Refg Ser 1999
(AMBAC).................................................... 5.25 05/15/19 3,096,047
20,000 New York City Municipal Water Finance Authority, New York,
Ser 1993 A................................................. 6.00 06/15/17 20,179,800
7,045 Houston, Texas, Water & Sewer Jr Lien Refg Ser 1991 C
(AMBAC).................................................... 6.375 12/01/17 7,321,375
2,000 Fairfax County Water Authority, Virginia, Refg Ser 1992..... 6.00 04/01/22 2,027,460
-------- ------------
83,095 77,992,541
-------- ------------
Other Revenue (0.8%)
3,360 Albuquerque, New Mexico, Gross Receipts Refg Ser 1999 C..... 5.25 07/01/17 3,160,450
2,500 Philadelphia, Pennsylvania, Gas Works First Ser 1998 B
(FSA)...................................................... 5.00 07/01/28 2,133,400
-------- ------------
5,860 5,293,850
-------- ------------
Refunded (24.0%)
7,500 Alaska Housing Finance Corporation, Gen Hsg 1992 Ser A...... 6.60 12/01/02+ 7,692,825
10,000 Central Coast Water Authority, California, Ser 1992
(AMBAC).................................................... 6.50 10/01/02+ 10,626,600
20,000 Jefferson County School District #R-1, Colorado, Ser 1992
(AMBAC)**.................................................. 6.00 12/15/02+ 20,741,600
10,000 District of Columbia, Howard University Refg Ser 1992 A..... 6.75 10/01/02+ 10,609,700
9,800 Orlando, Florida, Cap Impr Refg Ser 1992.................... 6.00 10/01/01+ 10,164,952
20,000 Illinois Toll Highway Authority, Priority 1992 Ser A........ 6.375 01/01/03+ 21,026,799
14,285 Massachusetts Water Pollution Abatement Trust, MWRA Loan
Ser 1998 A (ETM)........................................... 4.75 08/01/18 12,681,937
12,610 St Louis, Missouri, Lambert - St Louis Int'l Airport Ser
1992 (AMT) (FGIC).......................................... 6.00 07/01/02+ 13,124,236
19,700 Clark County, Nevada, Las Vegas - McCaran Int'l Airport
Passenger Facility Charge 1992 Ser B (AMT)................. 6.25 07/01/02+ 20,537,053
10,000 Allegheny County Hospital Development Authority,
Pennsylvania, Presbyterian University Health Ser 1992 A
(MBIA)..................................................... 6.25 11/01/02+ 10,329,300
15,000 Fredericksburg Industrial Development Authority, Virginia,
MWH Medicorp Ser 1991 A & B (FGIC)......................... 6.60 08/15/23 15,657,000
8,000 Grant County Public Utility District #2, Washington, Wanapum
Hydro Second Ser 1992 A.................................... 6.375 01/01/02+ 8,341,680
-------- ------------
156,895 161,533,682
-------- ------------
664,000 TOTAL TAX-EXEMPT MUNICIPAL BONDS (Identified Cost $632,652,616)................. 656,053,829
--------
------------
SHORT-TERM TAX-EXEMPT MUNICIPAL OBLIGATIONS (1.7%)
4,000 Missouri Health & Educational Facilities Authority,
Washington University Ser 1996 D (Demand 05/01/00)......... 5.80* 09/01/30 4,000,000
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
10
<PAGE> 11
MORGAN STANLEY DEAN WITTER QUALITY MUNICIPAL INCOME TRUST
PORTFOLIO OF INVESTMENTS April 30, 2000 (unaudited) continued
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
-----------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Harris County Health Facilities Development Corporation,
Texas,
$ 400 Methodist Hospital Ser 1994 (Demand 05/01/00).............. 5.80*% 12/01/25 $ 400,000
7,000 St Luke's Episcopal Hospital Ser 1997 A (Demand
05/01/00).................................................. 6.00* 02/15/27 7,000,000
-------- ------------
11,400 TOTAL SHORT-TERM TAX-EXEMPT MUNICIPAL OBLIGATIONS
--------
(Identified Cost $11,400,000)................................................... 11,400,000
------------
$675,400 TOTAL INVESTMENTS (Identified Cost $644,052,616) (a).................. 99.1% 667,453,829
========
OTHER ASSETS IN EXCESS OF LIABILITIES................................... 0.9 6,309,982
----- ------------
NET ASSETS............................................................. 100.0% $673,763,811
===== ============
</TABLE>
---------------------
<TABLE>
<C> <S>
AMT Alternative Minimum Tax.
ETM Escrowed to maturity.
WI Security purchased on a "when-issued" basis.
+ Prerefunded to call date shown.
* Current coupon of variable rate demand obligation.
** A portion of this security is segregated in connection with
the purchase of a "when-issued" security.
(a) The aggregate cost for federal income tax purposes
approximates identified cost. The aggregate gross unrealized
appreciation is $28,193,376 and the aggregate gross
unrealized depreciation is $4,792,163, resulting in net
unrealized appreciation of $23,401,213.
Bond Insurance:
---------------
AMBAC AMBAC Assurance Corporation.
Connie Lee Connie Lee Insurance Company -- A wholly owned subsidiary of
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 QUALITY MUNICIPAL INCOME TRUST
FINANCIAL STATEMENTS
<TABLE>
<S> <C>
STATEMENT OF ASSETS AND LIABILITIES
April 30, 2000 (unaudited)
ASSETS:
Investments in securities, at value
(identified cost $644,052,616).......... $667,453,829
Cash..................................... 121,862
Interest receivable...................... 10,860,749
Prepaid expenses......................... 158,256
-----------
TOTAL ASSETS......................... 678,594,696
-----------
LIABILITIES:
Payable for:
Investments purchased................ 4,038,300
Dividends to preferred
shareholders........................ 325,416
Investment management fee............ 195,724
Shares of beneficial interest
repurchased......................... 156,514
Accrued expenses......................... 114,931
-----------
TOTAL LIABILITIES.................... 4,830,885
-----------
NET ASSETS........................... $673,763,811
============
COMPOSITION OF NET ASSETS:
Preferred shares of beneficial interest
(1,000,000 shares authorized of non-
participating $.01 par value, 4,160
shares outstanding)..................... $208,000,000
------------
Common shares of beneficial interest
(unlimited shares authorized of $.01 par
value, 31,340,013 shares outstanding)... 438,762,376
Net unrealized appreciation.............. 23,401,213
Accumulated undistributed net investment
income.................................. 2,761,912
Accumulated undistributed net realized
gain.................................... 838,310
-----------
NET ASSETS APPLICABLE TO COMMON
SHAREHOLDERS........................ 465,763,811
-----------
TOTAL NET ASSETS..................... $673,763,811
============
NET ASSET VALUE PER COMMON SHARE
($465,763,811 divided by 31,340,013
common shares outstanding).............. $14.86
============
</TABLE>
<TABLE>
<S> <C>
STATEMENT OF OPERATIONS
For the six months ended April 30, 2000 (unaudited)
NET INVESTMENT INCOME:
INTEREST INCOME........................... $20,345,195
-----------
EXPENSES
Investment management fee................. 1,192,541
Auction commission fees................... 349,620
Professional fees......................... 79,469
Transfer agent fees and expenses.......... 62,871
Shareholder reports and notices........... 29,606
Auction agent fees........................ 18,892
Registration fees......................... 16,722
Custodian fees............................ 15,750
Trustees' fees and expenses............... 8,224
Other..................................... 23,892
----------
TOTAL EXPENSES........................ 1,797,587
Less: expense offset...................... (15,709)
----------
NET EXPENSES.......................... 1,781,878
----------
NET INVESTMENT INCOME................. 18,563,317
----------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain......................... 1,960,490
Net change in unrealized appreciation..... (4,865,200)
----------
NET LOSS.............................. (2,904,710)
----------
NET INCREASE.............................. $15,658,607
==========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
12
<PAGE> 13
MORGAN STANLEY DEAN WITTER QUALITY MUNICIPAL INCOME TRUST
FINANCIAL STATEMENTS, continued
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
FOR THE SIX
MONTHS ENDED FOR THE YEAR
APRIL 30, ENDED
2000 OCTOBER 31, 1999
--------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income................................ $18,563,317 $ 38,468,411
Net realized gain (loss)............................. 1,960,490 (1,122,180)
Net change in unrealized appreciation................ (4,865,200) (43,771,021)
------------ ------------
NET INCREASE (DECREASE).......................... 15,658,607 (6,424,790)
------------ ------------
Dividends to preferred shareholders from net
investment income................................... (3,854,994) (7,437,084)
------------ ------------
DIVIDENDS AND DISTRIBUTIONS TO COMMON SHAREHOLDERS
FROM:
Net investment income................................ (14,878,264) (30,960,584)
Net realized gain.................................... -- (1,575,210)
------------ ------------
TOTAL DIVIDENDS AND DISTRIBUTIONS................ (14,878,264) (32,535,794)
------------ ------------
Decrease from transactions in common shares of
beneficial interest................................. (18,340,630) (8,751,946)
------------ ------------
NET DECREASE..................................... (21,415,281) (55,149,614)
NET ASSETS:
Beginning of period.................................. 695,179,092 750,328,706
------------ ------------
END OF PERIOD
(Including undistributed net investment income of
$2,761,912 and $2,931,853, respectively)......... $673,763,811 $695,179,092
============ ============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
13
<PAGE> 14
MORGAN STANLEY DEAN WITTER QUALITY MUNICIPAL INCOME TRUST
NOTES TO FINANCIAL STATEMENTS April 30, 2000 (unaudited)
1. ORGANIZATION AND ACCOUNTING POLICIES
Morgan Stanley Dean Witter Quality Municipal Income 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 March 12, 1992 and
commenced operations on September 29, 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
14
<PAGE> 15
MORGAN STANLEY DEAN WITTER QUALITY MUNICIPAL INCOME TRUST
NOTES TO FINANCIAL STATEMENTS April 30, 2000 (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 the Investment Manager
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 six months ended April 30, 2000 aggregated
$31,357,092 and $47,225,911, respectively.
Morgan Stanley Dean Witter Trust FSB, an affiliate of the Investment Manager, is
the Trust's transfer agent. At April 30, 2000, the Trust had transfer agent fees
and expenses payable of approximately $3,100.
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, 2000
included in Trustees' fees and expenses in the Statement of Operations amounted
to $2,484. At April 30, 2000, the Trust had an accrued pension liability of
$39,794 which is included in accrued expenses in the Statement of Assets and
Liabilities.
15
<PAGE> 16
MORGAN STANLEY DEAN WITTER QUALITY MUNICIPAL INCOME TRUST
NOTES TO FINANCIAL STATEMENTS April 30, 2000 (unaudited) 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 1 through 5 Auction Rate
Preferred Shares ("Preferred Shares") which have a liquidation value of $50,000
per share plus the redemption premium, if any, plus accumulated but unpaid
dividends, whether or not declared, thereon to the date of distribution. The
Trust may redeem such shares, in whole or in part, at the original purchase
price of $50,000 per share plus accumulated but unpaid dividends, whether or not
declared, thereon to the date of redemption.
Dividends, which are cumulative, are reset through auction procedures.
<TABLE>
<CAPTION>
AMOUNT RESET RANGE OF
SERIES SHARES* IN THOUSANDS* RATE* DATE DIVIDEND RATES**
------ ------- ------------- ----- -------- ----------------
<S> <C> <C> <C> <C> <C>
1 1,120 $56,000 3.925% 09/06/00 3.925%
2 400 20,000 4.20 05/04/00 3.20 - 4.20
3 1,120 56,000 3.65 07/06/00 3.65
4 1,120 56,000 4.40 05/04/00 3.349 - 4.55
5 400 20,000 4.67 05/05/00 3.25 - 5.30
</TABLE>
---------------------
* As of April 30, 2000.
** For the six months ended April 30, 2000.
Subsequent to April 30, 2000 and up through June 2, 2000, the Trust paid
dividends to each of the Series 1 through 5 at rates ranging from 3.65% to 5.00%
in the aggregate amount of $1,099,314.
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.
16
<PAGE> 17
MORGAN STANLEY DEAN WITTER QUALITY MUNICIPAL INCOME TRUST
NOTES TO FINANCIAL STATEMENTS April 30, 2000 (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, 1998................................... 33,362,113 $333,621 $465,521,331
Treasury shares purchased and retired (weighted average
discount 8.66%)*........................................... (631,700) (6,317) (8,745,629)
---------- -------- ------------
Balance, October 31, 1999................................... 32,730,413 327,304 456,775,702
Treasury shares purchased and retired (weighted average
discount 10.98%)*.......................................... (1,390,400) (13,904) (18,326,726)
---------- -------- ------------
Balance, April 30, 2000..................................... 31,340,013 $313,400 $438,448,976
========== ======== ============
</TABLE>
---------------------
* The Trustees have voted to retire the shares purchased.
6. FEDERAL INCOME TAX STATUS
At October 31, 1999, the Trust had a net capital loss carryover of approximately
$1,122,000, all of which will be available through October 31, 2007 to offset
future capital gains to the extent provided by regulations.
7. DIVIDENDS TO COMMON SHAREHOLDERS
On March 28, 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 May 5, 2000 May 19, 2000
$0.0775 June 9, 2000 June 23, 2000
</TABLE>
17
<PAGE> 18
MORGAN STANLEY DEAN WITTER QUALITY MUNICIPAL INCOME 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, 2000* 1999 1998 1997 1996 1995
--------------------------------------------------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C> <C> <C> <C> <C>
SELECTED PER SHARE DATA:
Net asset value, beginning of period.................. $ 14.88 $16.26 $15.91 $ 15.44 $ 15.33 $13.62
------- ------ ------ ------- ------- ------
Income (loss) from investment operations:
Net investment income................................ 0.58 1.16 1.19 1.20 1.19 1.18
Net realized and unrealized gain (loss).............. (0.08) (1.36) 0.34 0.51 0.13 1.66
------- ------ ------ ------- ------- ------
Total income (loss) from investment operations........ 0.50 (0.20) 1.53 1.71 1.32 2.84
------- ------ ------ ------- ------- ------
Less dividends and distributions from:
Net investment income................................ (0.47) (0.93) (0.93) (0.99) (0.99) (0.99)
Common share equivalent of dividends paid to
preferred shareholders............................. (0.12) (0.22) (0.23) (0.23) (0.22) (0.22)
Net realized gain.................................... -- (0.05) (0.03) (0.03) (0.04) --
------- ------ ------ ------- ------- ------
Total dividends and distributions..................... (0.59) (1.20) (1.19) (1.25) (1.25) (1.21)
------- ------ ------ ------- ------- ------
Anti-dilutive effect of acquiring treasury shares..... 0.07 0.02 0.01 0.01 0.04 0.08
------- ------ ------ ------- ------- ------
Net asset value, end of period........................ $ 14.86 $14.88 $16.26 $ 15.91 $ 15.44 $15.33
======= ====== ====== ======= ======= ======
Market value, end of period........................... $13.563 $13.25 $15.75 $14.875 $14.625 $13.75
======= ====== ====== ======= ======= ======
TOTAL RETURN+......................................... 5.99%(1) (10.21)% 12.66% 8.84% 14.27% 24.77%
RATIOS TO AVERAGE NET ASSETS OF COMMON SHAREHOLDERS:
Total expenses........................................ 0.76%(2)(3) 0.73% 0.71%(3) 0.70%(3) 0.69%(3) 0.72%(3)
Net investment income before preferred stock
dividends............................................ 7.84%(2) 7.32% 7.35% 7.68% 7.73% 8.05%
Preferred stock dividends............................. 1.63%(2) 1.42% 1.45% 1.47% 1.41% 1.53%
Net investment income available to common
shareholders......................................... 6.21%(2) 5.90% 5.90% 6.21% 6.32% 6.52%
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands............... $673,764 $695,179 $750,329 $742,504 $734,799 $752,840
Asset coverage on preferred shares at end of period... 323% 333% 360% 356% 353% 361%
Portfolio turnover rate............................... 5%(1) 21% 2% 2% -- 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
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
18
<PAGE> 19
MORGAN STANLEY DEAN WITTER QUALITY MUNICIPAL INCOME TRUST
REVISED INVESTMENT POLICY (unaudited)
On January 26, 2000, the Trustees of Morgan Stanley Dean Witter Quality
Municipal Income 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.
19
<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
Fund without examination by the independent accountants and accordingly they
do not express an opinion thereon.
MORGAN STANLEY
DEAN WITTER
QUALITY
MUNICIPAL
INCOME TRUST
Semiannual Report
April 30, 2000
