<PAGE>
DEAN WITTER HAWAII MUNICIPAL TRUST Two World Trade Center,
LETTER TO THE SHAREHOLDERS November 30, 1997 New York, New York 10048
DEAR SHAREHOLDER:
We are pleased to present the annual report on the operations of
Dean Witter Hawaii Municipal Trust for the fiscal year ended
November 30, 1997.
Stimulated by a resurgence of consumer spending in late 1996, the economy
grew at a rapid pace in the first quarter of 1997. This prompted the Federal
Reserve Board to tighten its monetary policy in March in a preemptive move
against a possible increase in the rate of inflation. Economic growth slowed
in the second quarter and the bond market rallied. In addition to more
moderate economic growth, low inflation and stable monetary policy, the bond
rally through July was supported by a shrinking federal budget deficit and a
stronger dollar. However, by August the bond market softened on fears that
stronger employment conditions might prompt the Federal Reserve Board to
tighten further. Yields resumed their decline in October and November. The
spreading Asian currency crisis created turmoil in the international markets
and precipitated "flight-to-quality" demand for U.S. Treasuries.
[THE NARRATIVE AND/OR TABULAR INFORMATION BELOW IS A FAIR AND ACCURATE
DESCRIPTION OF GRAPHIC OR IMAGE MATERIAL OMITTED FOR THE PURPOSE OF EDGAR
FILING.]
MMD 30 Year AAA Insured and Treasury Yields:
Monthly from 12/92 - Present
Date AAA Ins Tay % Relationship
---- ------- --- --------------
12/31/93 5.40 6.34 86.17%
1/31/94 5.40 6.24 86.54%
2/28/94 5.80 6.86 87.09%
3/31/94 6.40 7.09 90.27%
4/29/94 6.35 7.32 86.75%
5/31/94 6.25 7.43 84.12%
6/30/94 6.50 7.61 85.41%
7/29/94 6.25 7.39 84.57%
8/31/94 6.30 7.45 84.56%
9/30/94 6.55 7.81 83.87%
10/31/94 6.75 7.96 84.80%
11/30/94 7.00 8.00 87.50%
12/30/94 6.75 7.88 85.66%
1/31/95 6.40 7.70 83.12%
2/28/95 6.15 7.44 82.66%
3/31/95 6.15 7.43 82.77%
4/28/95 6.20 7.34 84.47%
5/31/95 5.80 6.66 87.09%
6/30/95 6.10 6.62 92.15%
7/31/95 6.10 6.86 88.92%
8/31/95 6.00 6.66 90.09%
9/29/95 5.95 6.48 91.82%
10/31/95 5.75 6.33 90.84%
11/30/95 5.50 6.14 89.58%
12/29/95 5.35 5.94 90.07%
1/31/96 5.40 6.03 89.55%
2/29/96 5.80 6.46 86.89%
3/29/96 5.85 6.66 87.84%
4/30/96 5.95 6.89 86.36%
5/31/96 6.05 6.99 86.55%
6/28/96 6.90 6.89 85.63%
7/31/96 5.85 6.97 83.83%
8/30/96 5.90 7.11 82.98%
9/30/96 5.70 6.93 82.25%
10/31/96 5.65 6.64 85.09%
11/29/96 5.60 6.35 86.61%
12/31/96 5.60 6.63 84.46%
1/31/97 5.70 6.79 83.95%
2/28/97 5.85 6.80 83.09%
3/31/97 5.90 7.10 83.10%
4/30/97 5.75 6.94 82.85%
5/30/97 5.55 6.91 81.77%
6/30/97 5.60 6.78 82.60%
7/30/97 5.30 6.30 84.00%
8/31/97 5.50 6.61 83.00%
9/30/97 5.40 6.40 84.40%
10/31/97 5.35 6.15 86.90%
11/30/97 5.30 6.05 87.60%
<PAGE>
DEAN WITTER HAWAII MUNICIPAL TRUST
LETTER TO THE SHAREHOLDERS November 30, 1997, continued
MUNICIPAL MARKET CONDITIONS
Municipal yields followed the trend of Treasury yields but with less
volatility. Long-term insured revenue index yields increased from 5.60
percent to 5.90 percent between November 1996 and March 1997. The bond rally
over the past seven months pushed 30-year yields down to 5.30 percent by the
end of November 1997. Yields on 1-year notes moved from 3.60 percent to 3.80
percent over the period. Consequently, the yield pickup for extending
maturities from 1 to 30 years narrowed from 200 basis points to 150 basis
points.
The ratio of 30-year insured revenue bond yields to 30-year U.S. Treasury
yields rose from 83 percent at the end of March 1997 to 88 percent in November.
A rising ratio means that municipals have underperformed Treasuries and have
become relatively more attractive. Over the past four years, this ratio has
annually ranged from an average low of 83 percent to an average high of 90
percent.
New-issue underwriting volume was slightly ahead in the first half of 1997. The
decline in interest rates led to a surge in refunding activity in the third
quarter. As a result, new-issue municipal volume was up 17 percent during the
first 11 months of 1997. Refundings accounted for one-quarter of total volume.
PERFORMANCE
The net asset value (NAV) of Dean Witter Hawaii Municipal Trust increased
from $9.95 to $10.12 per share during the fiscal year ended November 30,
1997. Based on this change plus reinvestment of tax-free dividends totaling
approximately $0.50 per share, the Fund's total return was 6.93 percent.
The accompanying chart illustrates the growth of a $10,000 investment in the
Fund from inception (June 16, 1995) through the fiscal year ended November 30,
1997, versus similar hypothetical investments in the
[THE NARRATIVE AND/OR TABULAR INFORMATION BELOW IS A FAIR AND ACCURATE
DESCRIPTION OF GRAPHIC OR IMAGE MATERIAL OMITTED FOR THE PURPOSE OF EDGAR
FILING.]
DEAN WITTER HAWAII MUNICIPAL TRUST
GROWTH OF $10,000
Lehman Brothers
Date Total Muni Bond Index Lipper
-----------------------------------------------------------
June 16, 1995 $9,700 $10,000 $10,000
November 30, 1995 $10,108 $10,610 $10,551
November 30, 1996 $10,678 $11,234 $11,121
November 30, 1997 $11,418(3) $12,039 $11,824
Average Annual Total Returns
1 Year Life of Fund
------------------------
6.93(1) 6.86(1)
3.72(2) 5.54(2)
Past performance is not predictive of future returns
- ---------------
1) Figure shown assumes reinvestment of all distributions and does not reflect
the deduction of any sales charges.
2) Figure shown assumes reinvestment of all distributions and the deduction of
the maximum applicable front-end sales charge (3%). See the Fund's current
prospectus for complete details on fees and sales charges.
3) Closing value including the deduction of a 3% front-end sales charge,
assuming a complete redemption on November 30, 1997.
4) The Lehman Brothers Municipal Bond Index tracks the performance of municipal
bonds with maturities of 2 years or greater and a minimum credit rating of
Baa or BBB, as rated by Moody's Investors Service, Inc. or Standard & Poor's
Corp., respectively. The Index does not include any expenses, fees or
charges. The Index is unmanaged and should not be considered an investment.
5) The Lipper HI Municipal Debt Funds Average tracks the performance of the
funds that limit assets to those securities which are exempt from taxation
in HI state (double tax exempt) or a specified city in HI (triple
tax-exempt) as reported by Lipper Analytical Services.
<PAGE>
DEAN WITTER HAWAII MUNICIPAL TRUST
LETTER TO THE SHAREHOLDERS November 30, 1997, continued
issues that comprise the Lehman Brothers Municipal Bond Index and the funds
that comprise the Lipper Analytical Services, Inc. Hawaii Municipal Debt
Funds Average.
PORTFOLIO STRUCTURE
The Fund's net assets, currently in excess of $4.7 million, were diversified
among 11 long-term sectors and 23 credits at the end of the fiscal year.
In-state credits represented over 78 percent of the portfolio. The average
maturity and call protection of the portfolio were 22 and 9 years,
respectively. Credit quality remained a major focus with nearly 68 percent of
long-term holdings rated triple "A."
LOOKING AHEAD
So far this year, long-term municipal bonds have followed the trend of
Treasuries toward lower yields. The recent enactment of the Taxpayer Relief
Act of 1997 preserved the traditional tax-exempt benefits of municipal bond
income.
We appreciate your ongoing support of Dean Witter Hawaii 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
[THE NARRATIVE AND/OR TABULAR INFORMATION BELOW IS A FAIR AND ACCURATE
DESCRIPTION OF GRAPHIC OR IMAGE MATERIAL OMITTED FOR THE PURPOSE OF EDGAR
FILING.]
LARGEST SECTORS as of November 30, 1997
(% of Net Assets)
General Obligations
27%
Transportation
16%
Mortgage
15%
IDR/PCR*
14%
Hospital
8%
All Others
20%
* Industrial Development/Pollution Control Revenue.
Protfolio structure is subject to change.
CREDIT RATINGS as of November 30, 1997
(% of Total Long-Term Portfolio)
AAA or Aaa
68%
AA or Aa
15%
A or A
11%
BBB or Baa
6%
As measured by Standard & Poor's Corp. or
Moody's Investor Services, Inc.
Portfolio structure is subject to change.
<PAGE>
DEAN WITTER HAWAII MUNICIPAL TRUST
PORTFOLIO OF INVESTMENTS November 30, 1997
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
HAWAII TAX-EXEMPT MUNICIPAL BONDS + (95.5%)
General Obligation (26.6%)
Hawaii,
$100 1993 Ser CH** .................................................. 6.00 % 11/01/10 $110,740
200 1996 Ser CM (FGIC) ............................................. 6.00 12/01/12 222,282
300 1997 Ser CP (FGIC) ............................................. 5.00 10/01/17 291,885
Honolulu City & County,
150 Ser 1996 A (FGIC) .............................................. 5.50 09/01/15 154,032
100 Ser 1997 B (FGIC) .............................................. 5.00 11/01/16 97,723
180 Kauai County, Public Improvement 1997 Ser B (MBIA) .............. 5.25 08/01/16 180,767
100 Maui County, 1996 Ser A (MBIA) .................................. 5.75 06/01/13 105,305
100 Puerto Rico, Public Improvement Ser 1996 ........................ 5.50 07/01/17 100,873
- ----------- ------------
1,230 1,263,607
- ----------- ------------
Educational Facilities Revenue (3.1%)
150 University of Puerto Rico, Ser M (MBIA) ......................... 5.25 06/01/25 149,566
- ----------- ------------
Electric Revenue (3.2%)
150 Puerto Rico Electric Power Authority, Power Ser X ............... 5.50 07/01/25 150,084
- ----------- ------------
Hospital Revenue (8.4%)
Hawaii Department of Budget & Finance,
200 Kapiolani Health Care Ser 1996 ................................. 6.25 07/01/21 212,734
100 Queens Health Systems 1996 Ser A ............................... 5.875 07/01/11 104,527
75 Puerto Rico Industrial, Tourist, Educational, Medical &
Enviromental Control Facilities Financing Authority, Hospital
Auxilio Mutuo
1995 Ser A (MBIA) .............................................. 6.25 07/01/24 81,451
- ----------- ------------
375 398,712
- ----------- ------------
Industrial Development/Pollution Control Revenue (13.5%)
Hawaii Department of Budget & Finance,
100 Hawaiian Electric Co Ser 1992 (AMT)(MBIA) ...................... 6.55 12/01/22 108,772
100 Hawaiian Electric Co Ser 1995 A (AMT)(MBIA)** .................. 6.60 01/01/25 108,842
200 Hawaiian Electric Co Ser 1996 A (AMT)(MBIA) .................... 6.20 05/01/26 213,056
100 Hawaiian Electric Co Ser 1997 A (AMT)(MBIA) .................... 5.65 10/01/27 102,481
100 Puerto Rico Ports Authority, American Airlines Inc 1996 Ser A
(AMT) ......................................................... 6.25 06/01/26 107,704
- ----------- ------------
600 640,855
- ----------- ------------
Mortgage Revenue -Multi-Family (4.9%)
Hawaii Housing Finance & Development Corporation,
100 Affordable Rental 1995 Ser A .................................. 6.10 07/01/30 102,695
125 University of Hawaii Faculty Ser 1995 (AMBAC) .................. 5.65 10/01/16 129,222
- ----------- ------------
225 231,917
- ----------- ------------
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER HAWAII MUNICIPAL TRUST
PORTFOLIO OF INVESTMENTS November 30, 1997, continued
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- -------------------------------------------------------------------------------------------------------------
Mortgage Revenue - Single Family (10.5%)
Hawaii Housing Finance & Development Corporation,
$300 Purchase 1994 Ser B (MBIA) ..................................... 5.90% 07/01/27 $309,147
150 1997 Ser A (AMT) ............................................... 5.75 07/01/30 150,747
40 Puerto Rico Housing Bank & Finance Agency, GNMA/FNMA
Collateralized Portfolio I (AMT) ............................... 6.10 10/01/15 41,377
- ----------- ------------
490 501,271
- ----------- ------------
Public Facilities Revenue (3.6%)
175 Puerto Rico Infrastructure Financing Authority, Ser A (AMBAC)
- ----------- (WI) ........................................................... 5.00 07/01/28 169,661
------------
Transportation Facilities Revenue (16.2%)
Hawaii,
200 Airports Third Refg Ser of 1994 (AMT)(AMBAC) ................... 5.75 07/01/09 210,506
300 Harbor Ser 1997 (AMT)(MBIA) .................................... 5.75 07/01/17 309,204
150 Highway Ser 1996 ............................................... 5.25 07/01/16 149,993
100 Puerto Rico Highway & Transportation Authority, Refg Ser V** .... 5.75 07/01/18 101,482
- ----------- ------------
750 771,185
- ----------- ------------
Water & Sewer Revenue (3.3%)
150 Honolulu Board of Water Supply, Ser 1996 ........................ 5.80 07/01/16 157,130
- ----------- ------------
Other Revenue (2.2%)
100 Puerto Rico Industrial, Tourist, Educational, Medical &
- ----------- Environmental
Control Facilities Financing Authority, Teachers Retirement
1996 Ser B ..................................................... 5.50 07/01/16 102,825
------------
$4,395 TOTAL HAWAII TAX-EXEMPT MUNICIPAL BONDS (Identified Cost $4,358,279)(a) .. 95.5% 4,536,813
===========
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES .......................... 4.5 214,980
---------- ------------
NET ASSETS .............................................................. 100.0% $4,751,793
========== ============
</TABLE>
- ------------
AMT Alternative Minimum Tax.
WI Security purchased on a when issued basis.
+ Puerto Rico issues represent 21% of net assets.
** All or a portion of these securities are segregated in connection
with the purchase of when issued securities.
(a) The aggregate cost for federal income tax purposes approximates
identified cost. The aggregate gross and net unrealized
appreciation is $178,534.
Bond Insurance:
- ---------------
AMBAC AMBAC Indemnity Corporation.
FGIC Financial Guaranty Insurance Company.
MBIA Municipal Bond Investors Assurance Corporation.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER HAWAII MUNICIPAL TRUST
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
November 30, 1997
ASSETS:
Investments in securities, at value
(identified cost $4,358,279) ................................ $4,536,813
Cash.......................................................... 132,041
Receivable for:
Investments sold ........................................... 161,379
Interest.................................................... 86,548
Shares of beneficial interest sold.......................... 5,046
Deferred organizational expenses ............................. 30,509
Receivable from affiliate .................................... 27,066
Prepaid expenses and other assets ............................ 3,150
------------
TOTAL ASSETS ............................................... 4,982,552
------------
LIABILITIES:
Payable for:
Investments purchased ...................................... 167,670
Dividends to shareholders .................................. 2,000
Plan of distribution fee ................................... 771
Organizational expenses ...................................... 30,509
Accrued expenses and other payables .......................... 29,809
------------
TOTAL LIABILITIES........................................... 230,759
------------
NET ASSETS ................................................. $4,751,793
============
COMPOSITION OF NET ASSETS:
Paid-in-capital............................................... $4,591,781
Net unrealized appreciation .................................. 178,534
Accumulated undistributed net investment income............... 1,639
Accumulated net realized loss ................................ (20,161)
------------
NET ASSETS.................................................. $4,751,793
============
NET ASSET VALUE PER SHARE,
469,339 shares outstanding (unlimited shares authorized
$.01 par value) ........................................... $10.12
============
MAXIMUM OFFERING PRICE PER SHARE,
(net asset value plus 3.09% of net asset value)* ............ $10.43
============
- ------------
* On sales of $100,000 or more the offering price is reduced.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER HAWAII MUNICIPAL TRUST
FINANCIAL STATEMENTS, continued
STATEMENT OF OPERATIONS
For the year ended November 30, 1997
NET INVESTMENT INCOME:
INTEREST INCOME ........................ $ 203,435
-----------
EXPENSES
Professional fees ...................... 41,138
Shareholder reports and notices ....... 33,744
Investment management fee .............. 13,705
Organizational expenses ................ 11,996
Plan of distribution fee ............... 7,596
Transfer agent fees and expenses ...... 1,947
Registration fees ...................... 1,318
Custodian fees ......................... 387
Other .................................. 3,872
-----------
TOTAL EXPENSES ....................... 115,703
Less: amounts waived/reimbursed ....... (107,722)
Less: expense offset ................... (385)
-----------
NET EXPENSES ......................... 7,596
-----------
NET INVESTMENT INCOME ................ 195,839
-----------
NET REALIZED AND UNREALIZED GAIN
(LOSS):
Net realized loss ...................... (2,033)
Net change in unrealized appreciation . 87,760
-----------
NET GAIN ............................. 85,727
-----------
NET INCREASE ........................... $ 281,566
===========
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER HAWAII MUNICIPAL TRUST
FINANCIAL STATEMENTS, continued
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR
ENDED ENDED
NOVEMBER 30, 1997 NOVEMBER 30, 1996
- --------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income ................................. $ 195,839 $ 120,514
Net realized loss ..................................... (2,033) (18,128)
Net change in unrealized appreciation ................. 87,760 55,522
---------- ----------
NET INCREASE ........................................ 281,566 157,908
Dividends from net investment income................... (194,952) (120,065)
Net increase from transactions in shares of beneficial
interest.............................................. 1,440,194 1,676,974
---------- ----------
NET INCREASE ........................................ 1,526,808 1,714,817
NET ASSETS:
Beginning of period.................................... 3,224,985 1,510,168
---------- ----------
END OF PERIOD
(Including undistributed net investment income of
$1,639 and $919, respectively) ..................... $4,751,793 $3,224,985
========== ==========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER HAWAII MUNICIPAL TRUST
NOTES TO FINANCIAL STATEMENTS November 30, 1997
1. ORGANIZATION AND ACCOUNTING POLICIES
Dean Witter Hawaii Municipal Trust (the "Fund") is registered under the
Investment Company Act of 1940, as amended (the "Act"), as a non-diversified,
open-end management investment company. The Fund's investment objective is to
provide a high level of current income which is exempt from both federal and
State of Hawaii income taxes consistent with the preservation of capital. The
Fund was organized as a Massachusetts business trust on March 14, 1995 and
commenced operations on June 16, 1995.
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 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
<PAGE>
DEAN WITTER HAWAII MUNICIPAL TRUST
NOTES TO FINANCIAL STATEMENTS November 30, 1997, continued
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.
E. ORGANIZATIONAL EXPENSES -- Dean Witter InterCapital Inc. (the "Investment
Manager") paid the organizational expenses of the Fund in the amount of
approximately $60,000 which will be reimbursed for the full amount thereof,
exclusive of amounts assumed of $29,491. 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 the Investment
Manager a management fee, calculated daily and payable monthly, by applying
the annual rate of 0.35% to the Fund's daily net assets.
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 has undertaken to assume all operating expenses
(excluding plan of distribution fees) and waive the compensation provided for
in its Investment Management Agreement until December 31, 1998.
3. PLAN OF DISTRIBUTION
Dean Witter Distributors Inc. (the "Distributor"), an affiliate of the
Investment Manager, is the distributor of the Fund's shares and in accordance
with a Plan of Distribution (the "Plan") pursuant to Rule 12b-1 under the Act
finances certain expenses in connection therewith.
<PAGE>
DEAN WITTER HAWAII MUNICIPAL TRUST
NOTES TO FINANCIAL STATEMENTS November 30, 1997, continued
Under the Plan, the expenses of certain activities and services provided by
Dean Witter Reynolds Inc. ("DWR"), an affiliate of the Investment Manager and
Distributor, and others who engage in or support distribution of the Fund's
shares or who service shareholder accounts, including overhead and telephone
expenses incurred in connection with the distribution of the Fund's shares,
are reimbursed.
Reimbursements for these expenses will be made in monthly payments by the
Fund to the Distributor, which will in no event exceed an amount equal to a
payment at the annual rate of 0.20% of the Fund's average daily net assets
during the month. Expenses incurred by the Distributor pursuant to the Plan
in any fiscal year will not be reimbursed by the Fund through payments
accrued in any subsequent fiscal year. For the year ended November 30, 1997,
the distribution fee was accrued at the annual rate of 0.19%.
The Distributor has informed the Fund that for the year ended November 30,
1997, it received approximately $43,800 in commissions from the sale of
shares of the Fund's beneficial interest. Such commissions are deducted from
the proceeds of the shares and are not an expense of the Fund.
4. 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 November 30, 1997
aggregated $1,901,126 and $475,404, respectively.
Dean Witter Trust FSB, an affiliate of the Investment Manager and
Distributor, is the Fund's transfer agent. At November 30, 1997, the Fund had
transfer agent fees and expenses payable of approximately $45.
5. FEDERAL INCOME TAX STATUS
At November 30, 1997, the Fund had a net capital loss carryover of
approximately $20,200 of which $18,200 will be available through November 30,
2004 and $2,000 will be available through November 30, 2005 to offset future
capital gains to the extent provided by regulations.
<PAGE>
DEAN WITTER HAWAII MUNICIPAL TRUST
NOTES TO FINANCIAL STATEMENTS November 30, 1997, continued
6. SHARES OF BENEFICIAL INTEREST
Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR
ENDED ENDED
NOVEMBER 30, 1997 NOVEMBER 30, 1996
------------------------ ------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Sold ...................... 157,613 $1,563,409 221,179 $2,156,449
Reinvestment of dividends 10,917 108,219 7,541 73,494
---------- ------------ ---------- ------------
168,530 1,671,628 228,720 2,229,943
Repurchased ............... (23,316) (231,434) (57,016) (552,969)
---------- ------------ ---------- ------------
Net increase .............. 145,214 $1,440,194 171,704 $1,676,974
========== ============ ========== ============
</TABLE>
<PAGE>
DEAN WITTER HAWAII 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 YEAR FOR THE YEAR JUNE 16, 1995*
ENDED ENDED THROUGH
NOVEMBER 30, 1997 NOVEMBER 30, 1996 NOVEMBER 30, 1995
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period ..... $ 9.95 $ 9.91 $ 9.70
------ ------ ------
Net investment income ..................... 0.50 0.50 0.19
Net realized and unrealized gain .......... 0.17 0.04 0.21
------ ------ ------
Total from investment operations .......... 0.67 0.54 0.40
------ ------ ------
Less dividends from net investment income (0.50) (0.50) (0.19)
------ ------ ------
Net asset value, end of period ............ $10.12 $ 9.95 $ 9.91
====== ====== ======
TOTAL INVESTMENT RETURN+................... 6.93% 5.64% 4.21%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses .................................. 0.19%(3) 0.19%(3) 0.20%(2)(3)
Net investment income ..................... 5.00%(3) 5.09%(3) 4.69%(2)(3)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands .. $4,752 $3,225 $1,510
Portfolio turnover rate ................... 13% 51% 14%(1)
</TABLE>
- ------------
* Commencement of operations.
+ Does not reflect the deduction of sales charge. Calculated based on the
net asset value as of the last business day of the period.
(1) Not annualized.
(2) Annualized.
(3) If the Investment Manager had not assumed expenses and waived the
management fee, the expense and net investment income ratios, which
reflect the effect of expense offsets, would have been as follows:
<TABLE>
<CAPTION>
EXPENSE NET INVESTMENT EXPENSE
PERIOD ENDED: RATIO INCOME RATIO OFFSET
- ------------- ----- ------------ ------
<S> <C> <C> <C>
November 30, 1997 .. 2.95% 2.24% 0.01%
November 30, 1996* .. 2.69% 2.59% 0.03%
November 30, 1995* .. 2.70% 2.19% 0.10%
</TABLE>
- ------------
* After application of the Fund's state expense limitation.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER HAWAII MUNICIPAL TRUST
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE SHAREHOLDERS AND TRUSTEES
OF DEAN WITTER HAWAII MUNICIPAL TRUST
In our opinion, the accompanying statement of assets and liabilities,
including the portfolio of investments, and the related statements of
operations and of changes in net assets and the financial highlights present
fairly, in all material respects, the financial position of Dean Witter
Hawaii Municipal Trust (the "Fund") at November 30, 1997, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended and the financial highlights for each
of the two years in the period then ended and for the period June 16, 1995
(commencement of operations) through November 30, 1995, in conformity with
generally accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial statements") are
the responsibility of the Fund's management; our responsibility is to express
an opinion on these financial statements based on our audits. We conducted
our audits of these financial statements in accordance with generally
accepted auditing standards which require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits, which included confirmation of securities at
November 30, 1997 by correspondence with the custodian and brokers, provide a
reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York 10036
January 9, 1998
1997 FEDERAL TAX NOTICE (unaudited)
During the period ended November 30, 1997, the Fund paid to shareholders
$0.50 per share from net investment income. All of the Fund's dividends
from net investment income were exempt interest dividends, excludable
from gross income for Federal income tax purposes.
<PAGE>
(This page has been left blank intentionally.)
<PAGE>
TRUSTEES
Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn
John R. Haire
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
Barry Fink
Vice President, Secretary and
General Counsel
James F. Willison
Vice President
Thomas F. Caloia
Treasurer
TRANSFER AGENT
Dean Witter Trust FSB
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
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
HAWAII MUNICIPAL
TRUST
ANNUAL REPORT
NOVEMBER 30, 1997
