<PAGE> 1
MORGAN STANLEY DEAN WITTER HAWAII MUNICIPAL TRUST Two World Trade Center,
LETTER TO THE SHAREHOLDERS May 31, 1998 New York, New York 10048
DEAR SHAREHOLDER:
We are pleased to present the semiannual report of Morgan Stanley Dean Witter
Hawaii Municipal Trust for the six-month period ended May 31, 1998.
The deflationary impact of the Asian financial crisis has begun to temper U.S.
economic growth. Although employment conditions in the United States
strengthened and unemployment declined to its lowest level since 1970, inflation
remained subdued. This was primarily the result of improved productivity, lower
oil costs and cheaper imports.
Foreign currency turmoil strengthened the value of the U.S. dollar and spurred
demand for U.S. Treasury securities. Municipal bonds followed the trend of
Treasuries with yields declining to a range not seen in over 20 years. The bond
market rally was also aided by prospects of the first federal budget surplus in
more than two decades.
MUNICIPAL MARKET CONDITIONS
Long-term insured municipal yields stood at 5.20 percent at the end of May 1998.
Since the beginning of the year municipal yields have ranged
<TABLE>
<CAPTION>
Insured Municipal
30-Year 30-Year Revenue Yields
Insured Municipal U.S. Treasury as Percentage of
Yields Yields U.S. Treasury Yields
<S> <C> <C> <C>
Dec '93 5.4% 6.34% 85.17%
5.4 6.24 86.54%
5.8 6.66 87.09%
6.4 7.09 90.27%
6.35 7.32 86.75%
6.25 7.43 84.12%
Jun '94 6.5 7.61 85.41%
6.25 7.39 84.57%
6.3 7.45 84.56%
6.55 7.81 83.87%
6.75 7.96 84.80%
7 8 87.50%
Dec '94 6.75 7.88 85.66%
6.4 7.7 83.12%
6.15 7.44 82.66%
6.15 7.43 82.77%
6.2 7.34 84.47%
5.8 6.66 87.09%
Jun '95 6.1 6.62 92.15%
6.1 6.86 88.92%
6 6.66 90.08%
5.95 6.48 91.82%
5.75 6.33 90.84%
5.5 6.14 89.56%
Dec '95 5.35 5.94 90.07%
5.4 6.03 89.55%
5.8 6.46 86.69%
5.85 6.66 87.84%
5.95 6.89 86.36%
6.05 6.99 86.55%
Jun '96 5.9 6.89 85.63%
5.85 6.97 83.93%
5.9 7.11 82.98%
5.7 6.93 82.25%
5.65 6.64 85.09%
5.5 6.35 86.61%
Dec '96 5.6 6.63 84.46%
5.7 6.79 83.95%
5.65 6.8 83.08%
5.9 7.1 83.10%
5.75 6.94 82.85%
5.65 6.91 81.77%
Jun '97 5.6 6.78 82.60%
5.3 6.3 84.00%
5.5 6.61 83.00%
5.4 6.4 84.40%
5.35 6.15 86.90%
5.3 6.05 87.60%
Dec '97 5.15 5.92 86.90%
Jan '98 5.15 5.8 88.80%
Feb '98 5.2 5.92 87.80%
Mar '98 5.25 5.93 88.50%
Apr '98 5.35 5.95 89.90%
</TABLE>
<PAGE> 2
MORGAN STANLEY DEAN WITTER HAWAII MUNICIPAL TRUST
LETTER TO THE SHAREHOLDERS May 31, 1998, continued
from a low of 5.15 percent in January to 5.35 percent in April. Over the past
12-months insured yields have declined from a high of 5.65 percent.
The overall decline in interest rates led to an increase in new issue municipal
volume. In contrast, U.S. Treasury borrowing needs have declined with the
reduction in the budget deficit. Under these conditions the municipal rally
lagged the rally in Treasuries. The ratio of municipal yields to Treasury yields
improved during this period, from 82 percent of Treasuries in May 1997 to almost
90 percent a year later. A rising ratio means that municipals have
underperformed Treasuries and have become more attractive on a relative basis.
Total municipal volume increased 20 percent and totaled $220 billion last year.
Half the underwritings were enhanced with bond insurance. Refundings represented
one-quarter of total new issues. For the year-to-date, underwriting is up 60
percent with refunding issues comprising nearly one-third of total issuance.
PERFORMANCE
The net asset value (NAV) of Morgan Stanley Dean Witter Hawaii Municipal Trust
improved from $10.12 to $10.26 per share during the six-month period ended May
31, 1998. Based on this NAV change plus reinvestment of tax-free dividends of
$0.25 per share, the Fund's total return was 3.80 percent. Over the same period
the Lehman Brothers Municipal Bond Index and the Lipper Analytical Services,
Inc. Hawaii Municipal Debt Funds Average registered total returns of 3.78
percent and 3.36 percent, respectively.
PORTFOLIO STRUCTURE
The Fund's net assets of $5.7 million, remained fully invested in long-term
municipal bonds during the period. Investments were diversified among 11
long-term sectors and 19 credits. In-state credits accounted for 80 percent of
the portfolio. As illustrated in the accompanying chart, credit quality remained
a major focus with 75 percent of long-term holdings rated double or triple "A."
The Fund's weighted average maturity and call protection were 22 and 9 years,
respectively. The Fund's investment manager, Morgan Stanley Dean Witter Advisors
Inc., will continue to assume all expenses (except for brokerage and 12b-1 fees)
and to waive its management fee until December 31, 1998.
2
<PAGE> 3
MORGAN STANLEY DEAN WITTER HAWAII MUNICIPAL TRUST
LETTER TO THE SHAREHOLDERS May 31, 1998, continued
<TABLE>
<CAPTION>
LARGEST SECTORS as of May 31, 1998 CREDIT RATINGS as of May 31, 1998
(% of Net Assets) (% of Total Long-Term Portfollo)
<S> <C> <C> <C>
General Obligation 24% Aaaa or AAA 64%
Hospital 15% Aa or AA 11%
Mortgage 12% A or A 11%
Tranportation 12% Baa or BBB 14%
IDR/PCR* 11%
All Others 26%
* Industrial Development/Pollution Control Revenue As measured by Moody's Investors Service, Inc. or
Portfolio structure is subject to changes. Standard & Poor's Corp.
Portfolio structure is subject to change.
</TABLE>
<TABLE>
<CAPTION>
CALL STRUCTURE as of May 31, 1998 WEIGHTED AVERAGE
(% of Total Long-Term Portfolio) CALL PROTECTION: 9 YEARS
Percent Callable
Years Bonds Callable
<S> <C>
1998 0%
1999 0%
2000 0%
2001 0%
2002 2%
2003 0%
2004 10%
2005 10%
2006 24%
2007 23%
2008 23%
2009+ 8%
Portfolio structure is subject to change.
</TABLE>
3
<PAGE> 4
MORGAN STANLEY DEAN WITTER HAWAII MUNICIPAL TRUST
LETTER TO THE SHAREHOLDERS May 31, 1998, continued
LOOKING AHEAD
The economic fundamentals remain in place for another year of solid economic
growth in the United States. Events in Asia have strengthened the U.S. dollar
and contributed to lower interest rates. Furthermore, the Asian crisis seems
likely to continue to moderate inflationary pressures and provide a favorable
outlook for municipal bonds. However, if labor cost pressures accelerate, it is
possible that the Federal Reserve Board may tighten monetary policy.
We appreciate your ongoing support of Morgan Stanley 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
4
<PAGE> 5
MORGAN STANLEY DEAN WITTER HAWAII MUNICIPAL TRUST
PORTFOLIO OF INVESTMENTS May 31, 1998 (unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ---------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
HAWAII TAX-EXEMPT MUNICIPAL BONDS* (89.8%)
General Obligation (23.6%)
Hawaii,
$ 100 1993 Ser CH................................................. 6.00 % 11/01/10 $ 112,626
200 1996 Ser CM (FGIC).......................................... 6.00 12/01/12 225,992
300 1997 Ser CP (FGIC).......................................... 5.00 10/01/17 295,955
150 Honolulu City & County, Ser 1996 A (FGIC)................... 5.50 09/01/15 156,438
180 Kauai County, Public Improvement 1997 Ser B (MBIA).......... 5.25 08/01/16 182,570
250 Maui County, 1996 Ser A (MBIA).............................. 5.375 03/01/17 256,448
100 Puerto Rico, Public Improvement Ser 1996.................... 5.50 07/01/17 102,485
------ ----------
1,280 1,332,514
------ ----------
Educational Facilities Revenue (3.5%)
200 Puerto Rico Industrial Tourist, Educational, Medical &
------ Environmental Control Facilities Financing Authority, Inter
American University of Puerto Rico 1998 Ser A (MBIA)....... 5.00 10/01/22 197,216
----------
Electric Revenue (2.7%)
150 Puerto Rico Electric Power Authority, Power Ser X........... 5.50 07/01/25 152,100
------ ----------
Hospital Revenue (14.5%)
Hawaii Department of Budget & Finance,
200 Kapiolani Health Care Ser 1996.............................. 6.25 07/01/21 216,150
100 Queens Health Systems 1996 Ser A............................ 5.875 07/01/11 107,683
500 Wilcox Memorial Hospital Ser 1998........................... 5.35 07/01/18 495,720
------ ----------
800 819,553
------ ----------
Industrial Development/Pollution Control Revenue (11.4%)
Hawaii Department of Budget & Finance,
100 Hawaiian Electric Co Ser 1992 (AMT) (MBIA).................. 6.55 12/01/22 109,355
100 Hawaiian Electric Co Ser 1995 A (AMT) (MBIA)................ 6.60 01/01/25 110,672
200 Hawaiian Electric Co Ser 1996 A (AMT) (MBIA)................ 6.20 05/01/26 215,660
100 Hawaiian Electric Co Ser 1997 A (AMT) (MBIA)................ 5.65 10/01/27 103,529
100 Puerto Rico Ports Authority, American Airlines Inc 1996 Ser
A (AMT).................................................... 6.25 06/01/26 108,070
------ ----------
600 647,286
------ ----------
Mortgage Revenue - Multi-Family (4.1%)
Hawaii Housing Finance & Development Corporation,
100 Affordable Rental 1995 Ser A................................ 6.10 07/01/30 103,518
125 University of Hawaii Faculty Ser 1995 (AMBAC)............... 5.65 10/01/16 130,974
------ ----------
225 234,492
------ ----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
5
<PAGE> 6
MORGAN STANLEY DEAN WITTER HAWAII MUNICIPAL TRUST
PORTFOLIO OF INVESTMENTS May 31, 1998 (unaudited) continued
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ---------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Mortgage Revenue - Single Family (8.2%)
Hawaii Housing Finance & Development Corporation,
$ 300 Purchase 1994 Ser B (MBIA).................................. 5.90 % 07/01/27 $ 313,305
150 1997 Ser A (AMT)............................................ 5.75 07/01/30 153,449
------ ----------
450 466,754
------ ----------
Public Facilities Revenue (3.5%)
Puerto Rico Infrastructure Financing Authority, Ser A
200 (AMBAC).................................................... 5.00 07/01/28 196,328
------ ----------
Transportation Facilities Revenue (12.0%)
Hawaii,
200 Airports Third Refg Ser of 1994 (AMT) (AMBAC)............... 5.75 07/01/09 211,778
300 Harbor Ser 1997 (AMT) (MBIA)................................ 5.75 07/01/17 315,048
150 Highway Ser 1996............................................ 5.25 07/01/16 150,927
------ ----------
650 677,753
------ ----------
Water & Sewer Revenue (2.8%)
150 Honolulu Board of Water Supply, Ser 1996.................... 5.80 07/01/16 159,519
------ ----------
Other Revenue (3.5%)
200 Guam, Infrastructure Improvement 1997 Ser A (AMBAC)......... 5.00 11/01/17 199,992
------ ----------
$4,905 TOTAL HAWAII TAX-EXEMPT MUNICIPAL BONDS (Identified Cost $4,868,418) (a).. 89.8% 5,083,507
======
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES.......................... 10.2 576,061
----- ----------
NET ASSETS.............................................................. 100.0% $5,659,568
====== ==========
</TABLE>
- ---------------------
<TABLE>
<C> <S>
AMT Alternative Minimum Tax.
* Puerto Rico issues represent 13% of net assets.
(a) The aggregate cost for federal income tax purposes
approximates identified cost. The aggregate gross and net
unrealized appreciation is $215,089.
Bond Insurance:
AMBAC AMBAC Indemnity Corporation.
FGIC Financial Guaranty Insurance Company.
MBIA Municipal Bond Investors Assurance Corporation.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
6
<PAGE> 7
MORGAN STANLEY DEAN WITTER HAWAII MUNICIPAL TRUST
FINANCIAL STATEMENTS
<TABLE>
<S> <C>
STATEMENT OF ASSETS AND LIABILITIES
May 31, 1998 (unaudited)
ASSETS:
Investments in securities, at value
(identified cost $4,868,418)............................... $5,083,507
Cash........................................................ 418,965
Receivable for:
Interest................................................ 86,337
Shares of beneficial interest sold...................... 72,727
Deferred organizational expenses............................ 24,527
Prepaid expenses and other assets........................... 24,774
----------
TOTAL ASSETS............................................ 5,710,837
----------
LIABILITIES:
Payable for:
Dividends to shareholders............................... 1,447
Plan of distribution fee................................ 928
Organizational expenses..................................... 24,527
Accrued expenses and other payables......................... 24,367
----------
TOTAL LIABILITIES....................................... 51,269
----------
NET ASSETS.............................................. $5,659,568
==========
COMPOSITION OF NET ASSETS:
Paid-in-capital............................................. $5,430,305
Net unrealized appreciation................................. 215,089
Accumulated undistributed net investment income............. 1,446
Accumulated undistributed net realized gain................. 12,728
----------
NET ASSETS.............................................. $5,659,568
==========
NET ASSET VALUE PER SHARE,
551,773 shares outstanding (unlimited shares authorized of
$.01 par value)............................................ $10.26
==========
MAXIMUM OFFERING PRICE PER SHARE,
(net asset value plus 3.09% of net asset value)*........... $10.58
==========
</TABLE>
- ---------------------
* On sales of $100,000 or more the offering price is reduced.
SEE NOTES TO FINANCIAL STATEMENTS
7
<PAGE> 8
MORGAN STANLEY DEAN WITTER HAWAII MUNICIPAL TRUST
FINANCIAL STATEMENTS, continued
<TABLE>
<S> <C>
STATEMENT OF OPERATIONS
For the six months ended May 31, 1998 (unaudited)
NET INVESTMENT INCOME:
INTEREST INCOME............................................. $126,676
--------
EXPENSES
Professional fees........................................... 23,257
Shareholder reports and notices............................. 14,787
Investment management fee................................... 8,772
Organizational expenses..................................... 5,982
Plan of distribution fee.................................... 4,766
Transfer agent fees and expenses............................ 2,556
Registration fees........................................... 666
Custodian fees.............................................. 315
Other....................................................... 2,448
--------
TOTAL EXPENSES.......................................... 63,549
Less: amounts waived/reimbursed............................. (58,470)
Less: expense offset........................................ (313)
--------
NET EXPENSES............................................ 4,766
--------
NET INVESTMENT INCOME................................... 121,910
--------
NET REALIZED AND UNREALIZED GAIN:
Net realized gain........................................... 32,889
Net change in unrealized apppreciation...................... 36,555
--------
NET GAIN................................................ 69,444
--------
NET INCREASE................................................ $191,354
========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
8
<PAGE> 9
MORGAN STANLEY DEAN WITTER HAWAII MUNICIPAL TRUST
FINANCIAL STATEMENTS, continued
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
FOR THE SIX FOR THE YEAR
MONTHS ENDED ENDED
MAY 31, 1998 NOVEMBER 30, 1997
- --------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income............................... $ 121,910 $ 195,839
Net realized gain (loss)............................ 32,889 (2,033)
Net change in unrealized appreciation............... 36,555 87,760
---------- ----------
NET INCREASE.................................... 191,354 281,566
Dividends from net investment income................ (122,103) (194,952)
Net increase from transactions in shares of
beneficial interest................................ 838,524 1,440,194
---------- ----------
NET INCREASE.................................... 907,775 1,526,808
NET ASSETS:
Beginning of period................................. 4,751,793 3,224,985
---------- ----------
END OF PERIOD
(Including undistributed net investment income
of $1,446 and $1,639, respectively)............. $5,659,568 $4,751,793
========== ==========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
9
<PAGE> 10
MORGAN STANLEY DEAN WITTER HAWAII MUNICIPAL TRUST
NOTES TO FINANCIAL STATEMENTS May 31, 1998 (unaudited)
1. ORGANIZATION AND ACCOUNTING POLICIES
Morgan Stanley 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.
Effective June 22, 1998, the following entities have changed their name:
<TABLE>
<CAPTION>
OLD NAME NEW NAME
- ---------------------------------- -------------------------------------------------
<S> <C>
Dean Witter Hawaii Municipal Trust Morgan Stanley Dean Witter Hawaii Municipal Trust
Dean Witter InterCapital Inc. Morgan Stanley Dean Witter Advisors Inc.
Dean Witter Distributors Inc. Morgan Stanley Dean Witter Distributors Inc.
</TABLE>
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.
10
<PAGE> 11
MORGAN STANLEY DEAN WITTER HAWAII MUNICIPAL TRUST
NOTES TO FINANCIAL STATEMENTS May 31, 1998 (unaudited) continued
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 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 -- Morgan Stanley Dean Witter Advisors 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
11
<PAGE> 12
MORGAN STANLEY DEAN WITTER HAWAII MUNICIPAL TRUST
NOTES TO FINANCIAL STATEMENTS May 31, 1998 (unaudited) continued
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
Morgan Stanley 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.
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 six months ended May 31, 1998, the distribution
fee was accrued at the annual rate of 0.19%.
The Distributor has informed the Fund that for the six months ended May 31,
1998, it received approximately $23,592 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.
12
<PAGE> 13
MORGAN STANLEY DEAN WITTER HAWAII MUNICIPAL TRUST
NOTES TO FINANCIAL STATEMENTS May 31, 1998 (unaudited) continued
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 May 31, 1998 aggregated
$1,160,414 and $682,921, respectively.
Morgan Stanley Dean Witter Trust FSB, an affiliate of the Investment Manager and
Distributor, is the Fund's transfer agent.
5. SHARES OF BENEFICIAL INTEREST
Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
FOR THE SIX FOR THE YEAR
MONTHS ENDED ENDED
MAY 31, 1998 NOVEMBER 30, 1997
------------------- ---------------------
(unaudited)
SHARES AMOUNT SHARES AMOUNT
-------- -------- -------- ----------
<S> <C> <C> <C> <C>
Sold........................................................ 81,141 $825,436 157,613 $1,563,409
Reinvestment of dividends................................... 6,517 66,611 10,917 108,219
------ -------- ------- ----------
87,658 892,047 168,530 1,671,628
Repurchased................................................. (5,224) (53,523) (23,316) (231,434)
------ -------- ------- ----------
Net increase................................................ 82,434 $838,524 145,214 $1,440,194
====== ======== ======= ==========
</TABLE>
6. 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.
13
<PAGE> 14
MORGAN STANLEY 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 SIX FOR THE YEAR FOR THE YEAR JUNE 16, 1995*
MONTHS ENDED ENDED ENDED THROUGH
MAY 31, 1998 NOVEMBER 30, 1997 NOVEMBER 30, 1996 NOVEMBER 30, 1995
- ---------------------------------------------------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of
period............................ $10.12 $ 9.95 $ 9.91 $ 9.70
------ ------ ------ ------
Net investment income.............. 0.25 0.50 0.50 0.19
Net realized and unrealized gain... 0.14 0.17 0.04 0.21
------ ------ ------ ------
Total from investment operations... 0.39 0.67 0.54 0.40
------ ------ ------ ------
Less dividends from net investment
income............................ (0.25) (0.50) (0.50) (0.19)
------ ------ ------ ------
Net asset value, end of period..... $10.26 $10.12 $ 9.95 $ 9.91
====== ====== ====== ======
TOTAL INVESTMENT RETURN+........... 3.80%(1) 6.93% 5.64% 4.21%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses........................... 0.19%(2)(3) 0.19%(3) 0.19%(3) 0.20%(2)(3)
Net investment income.............. 4.86%(2)(3) 5.00%(3) 5.09%(3) 4.69%(2)(3)
SUPPLEMENTAL DATA:
Net assets, end of period, in
thousands......................... $5,660 $4,752 $3,225 $1,510
Portfolio turnover rate............ 14%(1) 13% 51% 14%(1)
</TABLE>
- ---------------------
<TABLE>
<C> <S>
* 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 would have been as follows, which reflect the
effect of expense offset as follows:
</TABLE>
<TABLE>
<CAPTION>
EXPENSE NET INVESTMENT EXPENSE
PERIOD ENDED: RATIO INCOME RATIO OFFSET
------------- ------- -------------- -------
<S> <C> <C> <C>
May 31, 1998................................................ 2.54% 2.52% 0.01%
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%
---------------
* After application of the Fund's state expense limitation.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
14
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<PAGE> 16
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
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.
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.
MORGAN STANLEY
DEAN WITTER
HAWAII MUNICIPAL
TRUST
[PHOTO]
SEMIANNUAL REPORT
MAY 31, 1998
