DEAN WITTER NATIONAL MUNICIPAL TRUST
LETTER TO THE SHAREHOLDERS March 31, 1996
Two World Trade Center, New York, New York 10048
DEAR SHAREHOLDER:
The bond market rally that began in late 1994 was sustained through 1995.
This favorable environment for bonds was created by proposals to achieve a
balanced federal budget over a five- to seven-year period and continued
easing of monetary policy by the Federal Reserve Board. However, a political
impasse on the budget that partially closed government offices in early 1996
was viewed as a setback for fixed-income investments. The bond market also
recently developed concerns over rising commodity prices and unexpectedly
strong job growth.
MUNICIPAL MARKET CONDITIONS
Long-term municipal revenue bond yields as tracked by The Bond Buyer Revenue
Bond Index * moved from 6.27 percent in September 1995 to a low of 5.63
percent in January 1996. Interest rates subsequently began to rise in
mid-February on signs of stronger economic growth and renewed inflationary
fears and the Index reached 6.15 percent by March. Yields on one-year
municipal notes declined from 3.92 percent to 3.52 percent over the past six
months. The yield pickup for extending maturities from one to thirty years
was at 263 basis points at the end of March 1996.
Municipal market concern over the risk of flat-tax legislation caused the
ratio of Revenue Bond Index yields to 30-year U.S. Treasury bond yields to
rise from 85 to 95 percent between March and September 1995. A rising ratio
means that municipal bond prices have underperformed U.S. Treasury prices. As
the possibility of a flat tax faded, the yield ratio improved to 92 percent
by March 1996. Over an eight-year period prior to the flat tax debate, long
municipal yields averaged 89 percent of U.S. Treasury yields.
Municipal underwriting activity was fueled by the pattern of lower interest
rates seen in 1995 and increased by 33 percent between October 1995 and March
1996. Despite a resurgence in new-issue volume, dealers continued to withdraw
from the municipal business.
- ------------
* The Bond Buyer Revenue Bond Index is an arithmetic average of the yields of
25 selected municipal revenue bonds with 30-year maturities. Credit ratings
of these bonds range from Aa1 to Baa1 by Moody's Investors Service, Inc., and
AA+ to A- by Standard & Poor's Corp.
<PAGE>
DEAN WITTER NATIONAL MUNICIPAL TRUST
LETTER TO THE SHAREHOLDERS March 31, 1996, continued
PERFORMANCE AND PORTFOLIO STRUCTURE
Dean Witter National Municipal Trust's net asset value (NAV) moved from $10.39
to $10.45 per share during the six month period ended March 31, 1996. Based on
this NAV change plus reinvestment of tax-free dividends totaling $0.26 per
share, the Fund's total return was 3.02 percent. As of March 31, 1996 the
Fund's 30-day SEC yield was 4.70 percent and its distribution rate was 4.77
percent.
DEAN WITTER NATIONAL MUNICIPAL TRUST
(The chart below represents information which appears as a graphic in the
printed report)
A pie chart reflecting the credit quality of the portfolio as rated by Moody's
or Standard & Poors Credit Ratings as of March 31, 1996.
CREDIT RATING PERCENT
------------- -------
Aaa or AAA 71%
Aa or AA 20%
A or A 9%
Assets of $80 million were diversified among eleven long-term municipal
sectors and 56 credits. The five largest specific sectors represented
70 percent of the portfolio. The average maturity and call protection of the
Fund's long-term portfolio were 21 and 9 years, respectively. The portfolio
maintained high quality throughout the period with 91 percent of long-term
holdings rated triple or double "A."
LOOKING AHEAD
Tax-reduction proposals may continue to receive publicity. However, the
positive balance in the municipal market should continue between the supply
of new issues and demand for bonds to replace maturities and redemptions.
Overall, long-term municipal securities are likely to move in line with the
Treasury market.
We appreciate your ongoing support of Dean Witter National Municipal Trust
and look forward to continuing to serve your investment needs.
Very truly yours,
/s/ Charles A. Fiumefreddo
CHARLES A. FIUMEFREDDO
Chairman of the Board
<PAGE>
DEAN WITTER NATIONAL MUNICIPAL TRUST
PORTFOLIO OF INVESTMENTS March 31, 1996 (unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ----------- ---------------------------------------------------------------- -------- ---------- ------------
<S> <C> <C> <C> <C>
MUNICIPAL BONDS (95.7%)
General Obligation (23.2%)
$ 1,250 Anchorage, Alaska, 1995 School & Refg (FGIC) ................... 5.00% 10/01/15 $ 1,156,101
3,000 North Slope Borough, Alaska, Ser 1994 B (CGIC) ................. 0.00 06/30/05 1,837,849
1,000 Santa Margarita / Dana Point Authority, California, Impr Dists
#3, 3A, 4 & 4A 1994 Ser B Refg (MBIA) ......................... 5.75 08/01/20 975,626
500 Florida Board of Education, Capital Outlay Ser 1994 A .......... 6.10 06/01/24 507,665
1,000 Atlanta, Georgia, Public Impr Ser 1994 A ....................... 6.125 12/01/23 1,018,321
1,500 Hawaii, 1995 Ser C J ........................................... 6.25 01/01/15 1,563,435
3,000 Chicago, Illinois, Refg Ser 1995 B (FGIC) ...................... 5.125 01/01/25 2,679,706
1,000 Chicago Park District, Illinois, Ser 1995 ...................... 6.60 11/15/14 1,066,530
1,000 Chelsea, Massachusetts, School Act of 1948 (AMBAC) ............. 6.50 06/15/12 1,066,753
1,000 Massachusetts, 1994 Ser C (FGIC) ............................... 6.75 11/01/12 1,087,293
900 Morley - Stanwood Community Schools, Michigan, 1995 Building &
Site (FGIC) ................................................... 5.625 05/01/15 889,067
1,500 New York City, New York, 1995 Ser D (MBIA) ..................... 6.20 02/01/07 1,629,452
1,000 Delaware City School District, Ohio, Constr & Impr dtd 8/15/95
(FGIC) ........................................................ 5.75 12/01/20 993,394
2,000 Washington, 1994 Ser A ......................................... 5.80 09/01/08 2,068,241
- ----------- ------------
19,650 18,539,433
- ----------- ------------
Educational Facilities Revenue (5.8%)
500 Glendale Industrial Development Authority, Arizona, Thunderbird
- The American Graduate School of International Management
(Connie Lee) .................................................. 7.125 07/01/20 556,280
1,000 California Educational Facilities Authority, Claremont Colleges
Ser 1992 ...................................................... 6.375 05/01/22 1,016,651
500 Atlanta Urban Residential Finance Authority, Georgia, Morehouse
College Refg Ser 1995 (MBIA) .................................. 5.75 12/01/14 497,126
2,000 New Jersey Economic Development Authority, Educational Testing
Service Ser 1995 (MBIA) ....................................... 6.125 05/15/15 2,065,847
500 New York State Dormitory Authority, City University 1994 3rd
Resolution Ser 1 (AMBAC) ...................................... 6.30 07/01/24 514,395
- ----------- ------------
4,500 4,650,299
- ----------- ------------
Electric Revenue (7.6%)
900 Sacramento Municipal Utility District, California, Refg 1994 Ser
I (MBIA) ...................................................... 5.75 01/01/15 886,722
1,500 Puerto Rico Electric Power Authority, Power Ser X .............. 6.00 07/01/15 1,491,380
1,000 Austin, Texas, Combined Utilities Refg Ser 1994 (FGIC) ......... 6.25 05/15/16 1,029,652
3,000 Intermountain Power Agency, Utah, Refg 1996 Ser D .............. 5.00 07/01/21 2,641,067
- ----------- ------------
6,400 6,048,821
- ----------- ------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER NATIONAL MUNICIPAL TRUST
PORTFOLIO OF INVESTMENTS March 31, 1996 (unaudited) continued
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ----------- ---------------------------------------------------------------- -------- ---------- ------------
<S> <C> <C> <C> <C>
Hospital Revenue (14.0%)
$ 1,465 Birmingham - Carraway Special Care Facilities Financing
Authority, Alabama, Carraway Methodist Health Ser 1995-A
(Connie Lee) .................................................. 6.25% 08/15/09 $ 1,565,093
500 Rancho Mirage Joint Powers Financing Authority, California,
Eisenhower Memorial Hospital COPs ............................. 7.00 03/01/22 527,901
2,000 Orange County Health Facilities Authority, Florida, Adventist
Health/Sunbelt Obligated Group Ser 1995 (AMBAC) ............... 5.25 11/15/20 1,859,078
1,000 Maryland Health & Higher Educational Facilities Authority,
Kernan Hospital Ser 1994 (Connie Lee) ......................... 6.10 07/01/24 1,005,181
1,300 New Hampshire Higher Educational & Health Facilities Authority,
St Joseph Hospital Ser 1994 (Connie Lee) ...................... 6.35 01/01/07 1,406,786
2,000 University of North Carolina Hospitals at Chapel Hill, Ser 1996 5.25 02/15/19 1,849,588
3,000 Jackson, Tennessee, Jackson-Madison County General Hospital Refg
& Impr Ser 1995 (AMBAC) ....................................... 5.625 04/01/15 2,943,406
- ----------- ------------
11,265 11,157,033
- ----------- ------------
Industrial Development/Pollution Control Revenue (5.2%)
1,500 Hawaii Department of Budget & Finance, Hawaiian Electric Co Ser
1995 A (AMT) (MBIA) ........................................... 6.60 01/01/25 1,588,277
2,500 New York State Energy Research & Development Authority, New York
State Electric & Gas Corp 1987 Ser A (AMT) (MBIA) ............. 6.15 07/01/26 2,523,975
- ----------- ------------
4,000 4,112,252
- ----------- ------------
Mortgage Revenue - Multi-Family (2.0%)
500 Honolulu, Hawaii, Waipahu Towers GNMA Collateralized 1995 Ser A
(AMT) ......................................................... 6.90 06/20/35 517,303
1,000 Massachusetts Housing Finance Agency, Rental 1994 Ser A (AMT)
(AMBAC) ....................................................... 6.65 07/01/19 1,042,130
- ----------- ------------
1,500 1,559,433
- ----------- ------------
Mortgage Revenue - Single Family (6.2%)
2,000 Alaska Housing Finance Corporation, Governmental 1995 Ser A
(MBIA) ........................................................ 5.875 12/01/24 1,947,123
1,000 Pennsylvania Housing Finance Agency, Ser 1995-96 (AMT) ......... 6.30 10/01/27 1,002,430
1,000 Tennessee Housing Development Agency, Finance 1994 Ser B (AMT) . 6.55 07/01/19 1,010,280
960 Utah Housing Finance Agency, Federally Insured/Guaranteed Loans
1994 Issue E (AMT) ............................................ 6.50 07/01/26 977,126
- ----------- ------------
4,960 4,936,959
- ----------- ------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER NATIONAL MUNICIPAL TRUST
PORTFOLIO OF INVESTMENTS March 31, 1996 (unaudited) continued
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ----------- ---------------------------------------------------------------- -------- ---------- ------------
<S> <C> <C> <C> <C>
Public Facilities Revenue (5.2%)
North City West School Facilities Financing Authority,
California, Community Facs Dist #1 Special Tax
$ 1,000 Ser 1995 B (CGIC) ............................................. 5.75% 09/01/15 $ 982,747
2,000 Ser 1995 B (CGIC) ............................................. 6.00 09/01/19 1,999,885
1,000 Essex County Improvement Authority, New Jersey, County Jail &
Youth House Ser 1994 (AMBAC) .................................. 6.90 12/01/14 1,155,291
- ----------- ------------
4,000 4,137,923
- ----------- ------------
Transportation Facilities Revenue (15.1%)
2,500 Dade County, Florida, Seaport Refg Ser 1996 (MBIA) ............. 5.125 10/01/16 2,330,336
1,000 Lee County, Florida, Ser 1995 (MBIA) ........................... 5.75 10/01/22 994,614
850 Regional Transportation Authority, Illinois, Ser 1994 A ........ 6.25 06/01/15 871,125
1,000 Kentucky Turnpike Authority, Economic Development Road
Revitalization Refg Ser 1995 (AMBAC) .......................... 5.625 07/01/15 988,904
2,500 Maine Turnpike Authority, Ser 1994 (MBIA) ...................... 6.00 07/01/18 2,536,057
1,000 New York State Thruway Authority General 1995 Ser C (FGIC) ..... 6.00 01/01/25 1,002,252
1,500 Port Authority of New York & New Jersey, Cons One Hundredth Ser
Second Installment+ ........................................... 5.75 12/15/20 1,486,189
2,000 Texas Turnpike Authority, Dallas North Tollway Refg Ser 1997 ... 5.25 01/01/23 1,838,548
- ----------- ------------
12,350 12,048,025
- ----------- ------------
Water & Sewer Revenue (10.1%)
1,000 Birmingham Waterworks & Sewer Board, Alabama, Ser 1993-A ....... 6.00 01/01/20 1,000,562
1,000 Castaic Lake Water Agency, California, Refg Ser 1994 A COPs
(MBIA) ........................................................ 6.00 08/01/18 999,904
1,000 Dade County, Florida, Water & Sewer Ser 1995 (FGIC) ............ 5.50 10/01/15 978,935
1,000 Chicago, Illinois, Wastewater Ser 1994 (MBIA) .................. 6.375 01/01/24 1,038,122
500 Indiana Bond Bank, Revolving Fund Ser 1994 A ................... 6.00 02/01/16 494,247
2,000 Massachusetts Water Resources Authority, 1992 Ser A ............ 6.50 07/15/07 2,221,611
1,250 Philadelphia, Pennsylvania, Water & Wastewater Ser 1995 (MBIA) . 6.25 08/01/11 1,354,284
- ----------- ------------
7,750 8,087,665
- ----------- ------------
Other Revenue (1.3%)
1,000 New Jersey Economic Development Authority, Market Transition
Sr Lien Ser 1994 A (MBIA) ..................................... 5.875 07/01/11 1,025,455
- ----------- ------------
77,375 TOTAL MUNICIPAL BONDS (Identified Cost $74,287,627) ................................ 76,303,298
- ----------- ------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER NATIONAL MUNICIPAL TRUST
PORTFOLIO OF INVESTMENTS March 31, 1996 (unaudited) continued
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ----------- ---------------------------------------------------------------- -------- ---------- ------------
<S> <C> <C> <C> <C>
SHORT-TERM MUNICIPAL OBLIGATION (2.1%)
$ 1,700 East Baton Rouge Parish, Louisiana, Exxon Corp Ser 1993
(Demand 04/01/96) (Identified Cost $1,700,000) ................ 3.75*% 03/01/22 $ 1,700,000
- ----------- ------------
$79,075 TOTAL INVESTMENTS (Identified Cost $75,987,627) (a) ..................... 97.8% 78,003,298
===========
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES .......................... 2.2 1,741,202
------------
NET ASSETS .............................................................. 100.0% $79,744,500
============
</TABLE>
- ------------
AMT Alternative Minimum Tax.
COPs Certificates of Participation.
+ Joint exemption in New York and New Jersey.
* Current coupon of variable rate security.
(a) The aggregate cost for federal income tax purposes approximates
identified cost. The aggregate gross unrealized appreciation was
$2,541,733 and the aggregate gross unrealized depreciation was
$526,062, resulting in net unrealized appreciation of $2,015,671.
Bond Insurance:
- ---------------
AMBAC AMBAC Indemnity Corporation.
CGIC Capital Guaranty Insurance Company.
Connie Lee Connie Lee Insurance Company.
FGIC Financial Guaranty Insurance Company.
MBIA Municipal Bond Investors Assurance Corporation.
Geographic Summary of Investments
Based on Market Value as a Percent of Net Assets
March 31, 1996
<TABLE>
<S> <C>
Alabama ........ 3.2%
Alaska ......... 6.2
Arizona ........ 0.7
California ..... 9.3
Florida ........ 8.4
Georgia ........ 1.9
Hawaii ......... 4.6
Illinois ....... 7.1%
Indiana ........ 0.6
Kentucky ....... 1.2
Louisiana ...... 2.1
Maine .......... 3.2
Maryland ....... 1.3
Massachusetts . 6.8
Michigan ....... 1.1%
New Hampshire . 1.8
New Jersey ..... 7.1
New York ....... 8.9
North Carolina 2.3
Ohio ........... 1.2
Pennsylvania .. 3.0
Puerto Rico ... 1.9%
Tennessee ...... 5.0
Texas .......... 3.6
Utah ........... 4.5
Washington ..... 2.6
Joint Exemption (1.8)
-------
Total .......... 97.8%
=======
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER NATIONAL MUNICIPAL TRUST
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $75,987,627) ................. $78,003,298
Cash ........................................... 183,791
Receivable for:
Interest ..................................... 1,254,815
Shares of beneficial interest sold ........... 278,428
Deferred organizational expenses ............... 93,788
Prepaid expenses ............................... 25,208
Receivable from affiliate ...................... 19,568
-------------
TOTAL ASSETS ................................. 79,858,896
-------------
LIABILITIES:
Payable for:
Plan of distribution fee ..................... 39,588
Dividends to shareholders .................... 20,544
Investment management fee .................... 13,625
Accrued expenses and other payables ............ 40,639
-------------
TOTAL LIABILITIES ............................ 114,396
-------------
NET ASSETS:
Paid-in-capital ................................ 77,651,098
Net unrealized appreciation .................... 2,015,671
Accumulated undistributed net investment income 20,471
Accumulated undistributed net realized gain ... 57,260
-------------
NET ASSETS ................................... $79,744,500
=============
NET ASSET VALUE PER SHARE,
7,631,870 shares outstanding (unlimited
shares authorized of $.01 par value) .......... $ 10.45
=============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER NATIONAL MUNICIPAL TRUST
FINANCIAL STATEMENTS, continued
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED MARCH 31, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
<S> <C>
NET INVESTMENT INCOME:
INTEREST INCOME ......................... $2,102,835
------------
EXPENSES
Plan of distribution fee ................ 214,652
Investment management fee ............... 130,789
Shareholder reports and notices ........ 22,897
Professional fees ....................... 20,601
Transfer agent fees and expenses ....... 14,488
Organizational expenses ................. 13,324
Registration fees ....................... 12,527
Trustees' fees and expenses ............. 3,589
Custodian fees .......................... 2,229
Other ................................... 5,660
------------
TOTAL EXPENSES BEFORE FEES PAID
INDIRECTLY AND AMOUNTS
WAIVED/REIMBURSED ..................... 440,756
LESS: AMOUNTS WAIVED/REIMBURSED ...... (125,404)
LESS: FEES PAID INDIRECTLY ............ (2,205)
------------
TOTAL EXPENSES AFTER FEES PAID
INDIRECTLY AND AMOUNTS
WAIVED/REIMBURSED ..................... 313,147
------------
NET INVESTMENT INCOME ................. 1,789,688
------------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain ....................... 56,484
Net change in unrealized appreciation .. (72,384)
------------
NET LOSS .............................. (15,900)
------------
NET INCREASE ............................ $1,773,788
============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER NATIONAL MUNICIPAL TRUST
FINANCIAL STATEMENTS, continued
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED FOR THE YEAR ENDED
MARCH 31, 1996 SEPTEMBER 30, 1995
- ------------------------------------------------------ -------------- ------------------
(UNAUDITED)
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income ................................. $ 1,789,688 $ 2,229,414
Net realized gain ..................................... 56,484 776
Net change in unrealized appreciation/depreciation ... (72,384) 2,452,914
-------------- ------------------
NET INCREASE ........................................ 1,773,788 4,683,104
Dividends from net investment income .................. (1,778,289) (2,220,342)
Net increase from transactions in shares of beneficial
interest ............................................. 15,473,326 31,953,161
-------------- ------------------
TOTAL INCREASE ...................................... 15,468,825 34,415,923
NET ASSETS:
Beginning of period ................................... 64,275,675 29,859,752
-------------- ------------------
END OF PERIOD
(Including undistributed net investment income of
$20,471 and $9,072, respectively) ................... $79,744,500 $64,275,675
============== ==================
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER NATIONAL MUNICIPAL TRUST
NOTES TO FINANCIAL STATEMENTS March 31, 1996 (unaudited)
1. ORGANIZATION AND ACCOUNTING POLICIES
Dean Witter National Municipal Trust (the "Fund") is registered under the
Investment Company Act of 1940, as amended (the "Act"), as a diversified,
open-end management investment company. The Fund was organized as a
Massachusetts business trust on March 29, 1994 and commenced operations on
June 2, 1994.
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 Fund 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. Discounts are accreted and premiums are amortized over the life of
the respective securities. Interest income is accrued daily.
C. FEDERAL INCOME TAX STATUS -- It is the Fund'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 Fund records dividends
and distributions to its shareholders on the record date. The amount of
dividends and distributions from net investment income and net realized
capital gains are determined in accordance with federal income tax
regulations which may differ from generally accepted accounting principles.
These "book/tax" differences are either considered temporary or permanent in
nature. To the extent these differences are permanent in nature, such amounts
are reclassified within the capital accounts based on their federal tax-basis
treatment; temporary differences do not require reclassification. Dividends
and distributions which exceed net investment income
<PAGE>
DEAN WITTER NATIONAL MUNICIPAL TRUST
NOTES TO FINANCIAL STATEMENTS March 31, 1996 (unaudited) continued
and net realized capital gains for financial reporting purposes but not for
tax purposes are reported as dividends in excess of net investment income or
distributions in excess of net realized capital gains. To the extent they
exceed net investment income and net realized capital gains for tax purposes,
they are reported as distributions of paid-in-capital.
E. ORGANIZATIONAL EXPENSES -- Dean Witter InterCapital Inc. (the "Investment
Manager") paid the organizational expenses of the Fund in the amount of
approximately $148,000 which were reimbursed exclusive of $46,853 which was
absorbed by the Investment Manager. Such expenses have been deferred and are
being amortized on the straight-line method over a period not to exceed five
years from the commencement of operations.
2. INVESTMENT MANAGEMENT AGREEMENT
Pursuant to an Investment Management Agreement, the Fund pays a management
fee, accrued daily and payable monthly, by applying the annual rate of 0.35%
to the Fund's net assets determined as of the close of each business day.
Under the terms of the Agreement, in addition to managing the Fund's
investments, the Investment Manager maintains certain of the Fund's books and
records and furnishes, at its own expense, office space, facilities,
equipment, clerical, bookkeeping and certain legal services and pays the
salaries of all personnel, including officers of the Fund who are employees
of the Investment Manager. The Investment Manager also bears the cost of
telephone services, heat, light, power and other utilities provided to the
Fund.
The Investment Manager had undertaken to assume all expenses (except for the
plan of distribution fee and brokerage fees) and waive the compensation
provided for in the Agreement until December 31, 1995. For the period January
1, 1996 through December 31, 1996, the Investment Manager will continue to
waive the management fee and reimburse expenses (except for the plan of
distribution fee and brokerage fees) to the extent they exceed 0.50% of daily
net assets. At March 31, 1996, included in the Statement of Assets and
Liabilities, is a receivable from the Investment Manager which represents
expense reimbursements due to the Fund.
3. PLAN OF DISTRIBUTION
Shares of the Fund are distributed by Dean Witter Distributors Inc. (the
"Distributor"), an affiliate of the Investment Manager. The Fund has adopted
a Plan of Distribution (the "Plan") pursuant to Rule 12b-1 under the Act
pursuant to which the Fund pays the Distributor compensation, accrued daily
and payable monthly, at an annual rate of 0.60% of the lesser of: (a) the
average daily aggregate gross sales of the
<PAGE>
DEAN WITTER NATIONAL MUNICIPAL TRUST
NOTES TO FINANCIAL STATEMENTS March 31, 1996 (unaudited) continued
Fund's shares since the Fund's inception (not including reinvestment of
dividend or capital gains distributions) less the average daily aggregate net
asset value of the Fund's shares redeemed since the Fund's inception upon
which a contingent deferred sales charge has been imposed or upon which such
charge has been waived; or (b) the Fund's average daily net assets. Amounts
paid under the Plan are paid to the Distributor to compensate it for the
services provided and the expenses borne by it and others in the distribution
of the Fund's shares, including the payment of commissions for sales of the
Fund's shares and incentive compensation to, and expenses of, account
executives of Dean Witter Reynold Inc., an affiliate of the Investment
Manager and Distributor, and other employees and selected broker-dealers who
engage in or support distribution of the Fund's shares or who service
shareholder accounts, including overhead and telephone expenses, printing and
distribution of prospectuses and reports used in connection with the offering
of the Fund's shares to other than current shareholders and preparation,
printing and distribution of sales literature and advertising materials. In
addition, the Distributor may be compensated under the Plan for its
opportunity costs in advancing such amounts, which compensation would be in
the form of a carrying charge on any unreimbursed expenses incurred by the
Distributor.
Provided that the Plan continues in effect, any cumulative expenses incurred
but not yet recovered may be recovered through future distribution fees from
the Fund and contingent deferred sales charges from the Fund's shareholders.
The Distributor has informed the Fund that for the six months ended March 31,
1996, it received approximately $55,800 in contingent deferred sales charges
from certain redemptions of the Fund's shares.
4. 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 March 31, 1996
aggregated $19,324,371 and $1,996,765, respectively.
Dean Witter Trust Company, an affiliate of the Investment Manager and
Distributor, is the Fund's transfer agent. At March 31, 1996, the Fund had
transfer agent fees and expenses payable of approximately $3,200.
<PAGE>
DEAN WITTER NATIONAL MUNICIPAL TRUST
NOTES TO FINANCIAL STATEMENTS March 31, 1996 (unaudited) continued
5. SHARES OF BENEFICIAL INTEREST
Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED FOR THE YEAR ENDED
MARCH 31, 1996 SEPTEMBER 30, 1995
-------------------------- -----------------------------
(UNAUDITED)
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ------------- --------------
<S> <C> <C> <C> <C>
Sold ...................... 1,998,015 $20,967,591 4,055,681 $ 40,945,963
Reinvestment of dividends 64,736 1,038,248 129,694 1,316,413
----------- ------------- ------------- --------------
2,062,751 22,005,839 4,185,375 42,262,376
Repurchased ............... (614,280) (6,532,513) (1,026,786) (10,309,215)
----------- ------------- ------------- --------------
Net increase .............. 1,448,471 $15,473,326 3,158,589 $ 31,953,161
=========== ============= ============= ==============
</TABLE>
<PAGE>
DEAN WITTER NATIONAL MUNICIPAL TRUST
FINANCIAL HIGHLIGHTS
Selected ratios and per share data for a share of beneficial interest
outstanding throughout each period:
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE SIX JUNE 2, 1994*
MONTHS ENDED FOR THE YEAR ENDED THROUGH SEPTEMBER
MARCH 31, 1996 SEPTEMBER 30, 1995 30, 1994
- --------------------------------------------- -------------- ------------------ ------------------
(UNAUDITED)
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period ........ $10.39 $ 9.87 $ 10.00
-------------- ------------------ ------------------
Net investment income ........................ 0.26 0.50 0.09
Net realized and unrealized gain (loss) ..... 0.06 0.52 (0.13)
-------------- ------------------ ------------------
Total from investment operations ............. 0.32 1.02 (0.04)
Less dividends from net investment income ... (0.26) (0.50) (0.09)
-------------- ------------------ ------------------
Net asset value, end of period ............... $10.45 $10.39 $ 9.87
============== ================== ==================
TOTAL INVESTMENT RETURN + .................... 3.02%(1) 10.54% (0.46)%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses ..................................... 0.84%(2)(5) 0.60%(4) 0.60%(2)(3)
Net investment income ........................ 4.79%(2)(5) 4.93%(4) 3.07%(2)(3)
SUPPLEMENTAL DATA:
Net asset value, end of period, in thousands $79,745 $64,276 $29,860
Portfolio turnover rate ...................... 3% 2% --++%
</TABLE>
- ------------
* Commencement of operations.
+ Does not reflect the deduction of sales charge.
++ Less than 0.5%.
(1) Not annualized.
(2) Annualized.
(3) If the Fund had borne all expenses that were assumed or waived by the
Investment Manager, the above annualized expense and net investment
income ratios would have been 2.08% and 1.59%, respectively.
(4) If the Fund had borne all expenses that were assumed or waived by the
Investment Manager, the above annualized expense and net investment
income ratios would have been 1.34% (which includes 0.01% gross up for
custody cash credits) and 4.20%, respectively.
(5) If the Fund had borne all expenses that were reimbursed or waived by the
Investment Manager, the above annualized expense and net investment
income ratios would have been 1.18% (which includes 0.01% gross up for
custody cash credits) and 4.45%, respectively.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
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<PAGE>
TRUSTEES
Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn
John R. Haire
Dr. Manuel H. Johnson
Paul Kolton
Michael E. Nugent
Philip J. Purcell
John L. Schroeder
OFFICERS
Charles A. Fiumefreddo
Chairman and Chief Executive Officer
Sheldon Curtis
Vice President, Secretary and General Counsel
James F. Willison
Vice President
Thomas F. Caloia
Treasurer
TRANSFER AGENT
Dean Witter Trust Company
Harborside Financial Center - Plaza Two
Jersey City, New Jersey 07311
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
1177 Avenue of the Americas
New York, New York 10036
INVESTMENT MANAGER
Dean Witter InterCapital Inc.
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.
This report is submitted for the general information of shareholders of the
Fund. For more detailed information about the Fund, its officers and
trustees, fees, expenses and other pertinent information, please see the
prospectus of the Fund.
This report is not authorized for distribution to prospective investors in
the Fund unless preceded or accompanied by an effective prospectus.
DEAN WITTER
NATIONAL MUNICIPAL
TRUST
SEMIANNUAL REPORT
MARCH 31, 1996
