<PAGE>
Morgan Stanley Dean Witter Hawaii Municipal Trust
Letter to the Shareholders May 31, 2000
Two World Trade Center, New York, New York 10048
DEAR SHAREHOLDER:
During the six-month period ended May 31, 2000, the U.S. economy continued its
unprecedented expansion. Real personal consumption accelerated and unemployment
reached a 30-year low. At the same time, a surge in oil prices heightened the
risk of inflation. In response, the Federal Reserve Board continued to raise
the federal funds rate. Three increases totaling 100 basis points have occurred
since February 2000, bringing the federal funds rate to a nine-year high of
6.50 percent.
Economic growth and a less accommodative monetary policy caused long-term
interest rates to increase throughout 1999. In February, however, the U.S.
Treasury announced plans to use the federal budget surplus to reduce its debt.
This announcement precipitated a 50- to 75-basis-point drop in yields of
longer-maturity Treasuries. Municipal bond yields also declined but not as
dramatically as Treasury yields. Long-term interest rates rose in April based
on economic strength but began to decline in May on signs of an economic
slowdown.
MUNICIPAL MARKET CONDITIONS
The long-term insured municipal index began 1999 near a record low yield of
5.05 percent but increased to 5.97 percent by year-end. This index reached a
high of 6.18 percent in January 2000 but ended May at 5.91 percent. Because
bond prices move inversely to changes in interest rates, municipal bond prices
declined significantly last year and improved marginally in the first five
months of 2000.
The ratio of municipal yields as a percentage of Treasury yields has
historically been used as a measure of relative value. Over the past five years
this ratio has ranged between an average high of 93 percent and an average low
of 85 percent. The increase in the ratio from 92 percent to 99 percent during
the first five months of this year was primarily attributed to the magnitude of
a rally in long-term Treasuries. A rising yield ratio indicates weaker relative
performance by municipals.
<PAGE>
Morgan Stanley Dean Witter Hawaii Municipal Trust
Letter to the Shareholders May 31, 2000, continued
During the first five months of 2000, municipal underwriting volume dropped 25
percent versus the same period last year. Refunding activity, the most
interest-rate-sensitive component of new-issue supply, fell more than 75
percent.
[GRAPHIC OMITTED]
PERFORMANCE
The net asset value (NAV) of Morgan Stanley Dean Witter Hawaii Municipal Trust
declined from $9.47 to $9.30 per share during the six-month period ended May
31, 2000. Based on this change plus reinvestment of tax-free dividends totaling
$0.23 per share, the Fund's total return was 0.60 percent. Over the same period
the Lehman Brothers Municipal Bond Index registered a total return of 1.02
percent.*
------------
* 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 Investor 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.
2
<PAGE>
Morgan Stanley Dean Witter Hawaii Municipal Trust
Letter to the Shareholders May 31, 2000, continued
Please note that the investment manager has agreed to continue to assume all
operating expenses (except for brokerage fees) and to waive the management fee
to the extent that such expenses exceed 55 basis points (0.55 percent) of the
Fund's daily average net assets on an annualized basis.
PORTFOLIO STRUCTURE
The Fund's net assets of $7 million were diversified among nine long-term
sectors and 22 credits. In-state credits accounted for 95 percent of the
portfolio. At the end of May, the portfolio's average maturity was 20 years.
Average duration, a measure of sensitivity to interest rate changes, was 9.9
years. Current information on the Fund's largest sectors and distribution of
credit ratings is provided in the accompanying charts. Optional call provisions
shown by year, and their respective cost (book) yields are also reported.
LOOKING AHEAD
The Federal Reserve Board has expressed concern about consumer wealth and
rising prices. We anticipate that the central bank will continue to focus on
inflation and may increase short-term interest rates if it feels that economic
momentum is not slowing sufficiently. We believe municipal bonds continue to
offer tax-conscious investors good long-term value.
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/ C Fiumefreddo /s/ Mitchell M. Merin
CHARLES A. FIUMEFREDDO MITCHELL M. MERIN
Chairman of the Board President
3
<PAGE>
Morgan Stanley Dean Witter Hawaii Municipal Trust
Letter to the Shareholders May 31, 2000, continued
LARGEST SECTORS AS OF MAY 31, 2000
(% OF NET ASSETS)
GENERAL OBLIGATION 21%
HOSPITAL 14%
MORTGAGE 13%
TRANSPORTATION 12%
IDR/PCR* 11%
WATER & SEWER 7%
* INDUSTRIAL DEVELOPMENT/POLLUTION CONTROL REVENUE
PORTFOLIO STRUCTURE IS SUBJECT TO CHANGE
CREDIT RATINGS AS OF MAY 31, 2000
(% OF TOTAL LONG-TERM PORTFOLIO)
Aaa OR AAA 75%
Aa OR AA 3%
A OR A 14%
Baa OR BBB 8%
AS MEASURED BY MOODY'S INVESTORS SERVICE, INC.
OR STANDARD & POOR'S CORP.
PORTFOLIO STRUCTURE IS SUBJECT TO CHANGE.
4
<PAGE>
Morgan Stanley Dean Witter Hawaii Municipal Trust
Letter to the Shareholders May 31, 2000, continued
CALL AND COST (BOOK) YIELD STRUCTURE
MAY 31, 2000
WEIGHTED AVERAGE
CALL PROTECTION: 7 YEARS
PERCENT CALLABLE*
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0% 5% 0% 0% 8% 14% 10% 6% 23% 26% 8%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010+
</TABLE>
WEIGHTED AVERAGE
BOOK YIELD: 5.5%
COST (BOOK) YIELD**
4.5% 5.7% 5.7% 6.1% 5.5% 5.3% 5.3% 5.8%
2001 2004 2005 2006 2007 2008 2009 2010+
* % BASED ON LONG-TERM PORTFOLIO
** COST OF "BOOK" YIELD IS THE ANNUAL INCOME EARNED ON A PORTFOLIO INVESTMENT
BASED ON ITS ORIGINAL PURCHASE PRICE BEFORE FUND OPERATING EXPENSES. FOR
EXAMPLE, THE FUND EARNED A BOOK YIELD OF 4.5% ON THE 5% OF THE BONDS IN THE
LONG-TERM PORTFOLIO THAT ARE CALLABLE IN 2001.
PORTFOLIO STRUCTURE IS SUBJECT TO CHANGE.
5
<PAGE>
Morgan Stanley Dean Witter Hawaii Municipal Trust
Fund Performance May 31, 2000
AVERAGE ANNUAL TOTAL RETURNS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERIOD ENDED 5/31/00
---------------------------
<S> <C> <C>
1 Year (3.60)%(1) (6.49)%(2)
Since Inception (6/16/95) 4.16 %(1) 3.52 %(2)
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RETURNS. INVESTMENT RETURN AND
PRINCIPAL VALUE WILL FLUCTUATE. WHEN YOU SELL FUND SHARES, THEY MAY BE WORTH
MORE OR LESS THAN THEIR ORIGINAL COST.
---------------
(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 sales charge. See the Fund's current prospectus
for complete details on fees and sales charges.
6
<PAGE>
Morgan Stanley Dean Witter Hawaii Municipal Trust
Portfolio of Investments May 31, 2000 (unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
----------- ---------- ----------- -------------
<S> <C> <C> <C> <C>
HAWAII TAX-EXEMPT MUNICIPAL BONDS (90.3%)
General Obligation (21.2%)
Hawaii,
$ 200 1996 Ser CM (FGIC) ..................................................... 6.00 % 12/01/12 $ 208,402
200 1997 Ser CN (FGIC) ..................................................... 5.25 03/01/17 184,666
300 Hawaii County, 1999 Ser A (FSA) ........................................ 5.50 05/15/17 286,929
300 Honolulu City & County, Ser 1999 B (FGIC) .............................. 5.00 07/01/22 259,260
300 Kauai County, Ser 2000 A (FGIC) ........................................ 6.25 08/01/21 305,388
250 Maui County, 1998 Ser A (FGIC) ......................................... 5.375 03/01/17 234,613
------ ----------
1,550 1,479,258
------ ----------
Educational Facilities Revenue (2.5%)
200 Puerto Rico Industrial Tourist, Educational, Medical & Environmental
------ Control Facilities Financing Authority, Inter American University of
Puerto Rico 1998 Ser A (MBIA) ......................................... 5.00 10/01/22 175,330
----------
Electric Revenue (2.0%)
150 Puerto Rico Electric Power Authority, Power Ser X ...................... 5.50 07/01/25 139,413
------ ----------
Hospital Revenue (13.9%)
Hawaii Department of Budget & Finance,
300 Kaiser Permanente Refg Ser 1991 A ..................................... 6.25 03/01/21 285,591
200 Kapiolani Health Care Ser 1996 ........................................ 6.25 07/01/21 191,640
100 Queens Health 1996 Ser A .............................................. 5.875 07/01/11 98,004
500 Wilcox Memorial Hospital Ser 1998 ..................................... 5.35 07/01/18 393,865
------ ----------
1,100 969,100
------ ----------
Industrial Development/Pollution Control Revenue (11.2%)
Hawaii Department of Budget & Finance,
500 Hawaiian Electric Co Ser 1999 B (AMT) (AMBAC) ......................... 5.75 12/01/18 478,615
100 Hawaiian Electric Co Ser 1995 A (AMT) (MBIA) .......................... 6.60 01/01/25 102,581
200 Hawaiian Electric Co Ser 1996 A (AMT) (MBIA) .......................... 6.20 05/01/26 199,476
------ ----------
800 780,672
------ ----------
Mortgage Revenue - Multi-Family (9.1%)
125 Hawaii Housing Finance & Development Corporation, University of
Hawaii Faculty Ser 1995 (AMBAC) ....................................... 5.65 10/01/16 122,125
500 Honolulu, Waipahu Towers GNMA Collateralized 1995 Ser A (AMT) .......... 6.90 06/20/35 510,295
------ ----------
625 632,420
------ ----------
Mortgage Revenue - Single Family (4.1%)
300 Hawaii Housing Finance & Development Corporation, Purchase
------ 1994 Ser B (MBIA) ..................................................... 5.90 07/01/27 288,318
----------
Public Facilities Revenue (3.1%)
250 Hawaii, Kapolei State Office Building 1998 Ser A COPs (AMBAC) .......... 5.00 05/01/18 214,897
------ ----------
</TABLE>
See Notes to Financial Statements
7
<PAGE>
Morgan Stanley Dean Witter Hawaii Municipal Trust
Portfolio of Investments May 31, 2000 (unaudited) continued
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
----------- ---------- ------------- -------------
<S> <C> <C> <C> <C>
Transportation Facilities Revenue (12.1%)
Hawaii,
$ 200 Airports Third Refg Ser 1994 (AMT) (AMBAC) .......................... 5.75% 07/01/09 $ 201,314
200 Harbor Ser 1997 (AMT) (MBIA) ........................................ 5.75 07/01/17 192,624
500 Highway Ser 1998 (FGIC) ............................................. 5.00 07/01/16 448,845
------- ----------
900 842,783
------- ----------
Water & Sewer Revenue (6.8%)
150 Honolulu Board of Water Supply, Ser 1996 ............................. 5.80 07/01/16 148,908
Honolulu City & County,
260 Wastewater Jr Ser 1998 (FGIC) ....................................... 5.25 07/01/17 239,585
100 Wastewater Sr Ser 1998 (FGIC) ....................................... 4.75 07/01/18 84,361
------- ----------
510 472,854
------- ----------
Other Revenue (4.3%)
350 Hawaiian Department of Home Lands, Refg Ser 1999 ..................... 4.45 07/01/11 296,394
------- ----------
$ 6,735 TOTAL HAWAII TAX-EXEMPT MUNICIPAL BONDS (Identified Cost $6,754,952) (a) ......... 90.3% 6,291,439
======= OTHER ASSETS IN EXCESS OF LIABILITIES ............................................ 9.7 678,570
----- ----------
NET ASSETS ....................................................................... 100.0% $6,970,009
===== ==========
</TABLE>
---------------
AMT Alternative Minimum Tax.
COPs Certificates of Participation.
(a) The aggregate cost for federal income tax purposes approximates
identified cost. The aggregate gross unrealized appreciation is
$3,677 and the aggregate gross unrealized depreciation is
$467,190, resulting in net unrealized depreciation of $463,513.
Bond Insurance:
---------------
AMBAC AMBAC Assurance Corporation.
FGIC Financial Guaranty Insurance Company.
FSA Financial Security Assurance Inc.
MBIA Municipal Bond Investors Assurance Corporation.
See Notes to Financial Statements
8
<PAGE>
Morgan Stanley Dean Witter Hawaii Municipal Trust
Financial Statements
STATEMENT OF ASSETS AND LIABILITIES
May 31, 2000 (unaudited)
<TABLE>
<CAPTION>
ASSETS:
<S> <C>
Investments in securities, at value
(identified cost $6,754,952) ............. $6,291,439
Cash ........................................ 526,592
Interest receivable ......................... 136,583
Deferred organizational expenses ............ 499
Receivable from affiliate ................... 10,011
Prepaid expenses ............................ 31,199
----------
TOTAL ASSETS ........................... 6,996,323
----------
LIABILITIES:
Payable for:
Dividends to shareholders .............. 4,532
Plan of distribution fee ............... 1,249
Accrued expenses and other payables ......... 20,533
----------
TOTAL LIABILITIES ...................... 26,314
----------
NET ASSETS .................................. $6,970,009
==========
COMPOSITION OF NET ASSETS:
Paid-in-capital ............................. $7,491,951
Net unrealized depreciation ................. (463,513)
Accumulated net realized loss ............... (58,429)
----------
NET ASSETS ............................. $6,970,009
==========
NET ASSET VALUE PER SHARE,
749,318 shares outstanding
(unlimited shares authorized of $.01 par
value) ................................... $ 9.30
==========
MAXIMUM OFFERING PRICE PER SHARE,
(net asset value plus 3.09% of net asset
value)* .................................. $ 9.59
==========
</TABLE>
-----------------------
* On sales of $100,000 or more the offering price is reduced.
STATEMENT OF OPERATIONS
For the six months ended May 31, 2000 (unaudited)
<TABLE>
<CAPTION>
NET INVESTMENT INCOME:
<S> <C>
INTEREST INCOME ............................... $189,302
--------
EXPENSES
Professional fees ............................. 28,723
Shareholder reports and notices ............... 23,938
Investment management fee ..................... 12,269
Plan of distribution fee ...................... 6,916
Organizational expenses ....................... 6,015
Trustees' fees and expenses ................... 5,832
Transfer agent fees and expenses .............. 1,589
Custodian fees ................................ 356
Other ......................................... 2,903
--------
TOTAL EXPENSES ........................... 88,541
Less: amounts waived/reimbursed ............... (68,906)
Less: expense offset .......................... (355)
--------
NET EXPENSES ............................. 19,280
--------
NET INVESTMENT INCOME .................... 170,022
--------
NET REALIZED AND UNREALIZED LOSS:
Net realized loss ............................. (29,141)
Net change in unrealized depreciation ......... (99,744)
--------
NET LOSS ................................. (128,885)
--------
NET INCREASE .................................. $ 41,137
========
</TABLE>
See Notes to Financial Statements
9
<PAGE>
Morgan Stanley Dean Witter Hawaii Municipal Trust
Financial Statements, continued
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE SIX FOR THE YEAR
MONTHS ENDED ENDED
MAY 31, 2000 NOVEMBER 30, 1999
-------------- ------------------
<S> <C> <C>
(unaudited)
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income ................................ $ 170,022 $ 339,521
Net realized loss .................................... (29,141) (29,288)
Net change in unrealized depreciation ................ (99,744) (644,986)
------------ ----------
NET INCREASE (DECREASE) ........................... 41,137 (334,753)
------------ ----------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income ................................ (170,022) (339,521)
Net realized gain .................................... - (42,705)
------------ ----------
TOTAL DIVIDENDS AND DISTRIBUTIONS ................. (170,022) (382,226)
------------ ----------
Net increase (decrease) from transactions in shares of
beneficial interest ................................ (158,484) 976,817
------------ ----------
NET INCREASE (DECREASE) ........................... (287,369) 259,838
NET ASSETS:
Beginning of period .................................. 7,257,378 6,997,540
------------ ----------
END OF PERIOD ..................................... $ 6,970,009 $7,257,378
============ ==========
</TABLE>
See Notes to Financial Statements
10
<PAGE>
Morgan Stanley Dean Witter Hawaii Municipal Trust
Notes to Financial Statements May 31, 2000 (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.
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
11
<PAGE>
Morgan Stanley Dean Witter Hawaii Municipal Trust
Notes to Financial Statements May 31, 2000 (unaudited) 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 - Morgan Stanley Dean Witter Advisors Inc. (the
"Investment Manager"), paid the organizational expenses of the Fund in the
amount of approximately $60,000 of which $17,479 have been reimbursed. The
balance 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 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.
Effective January 1, 1999 through December 31, 2000, the Investment Manager has
agreed to assume all operating expenses to the extent that such expenses on an
annualized basis exceed 0.55% of the daily net assets of the Fund. At May 31,
2000, included in the Statement of Assets and Liabilities is a receivable from
affiliate which represents expense reimbursements due to the Fund.
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.
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, 2000, the distribution
fee was accrued at the annual rate of 20%.
12
<PAGE>
Morgan Stanley Dean Witter Hawaii Municipal Trust
Notes to Financial Statements May 31, 2000 (unaudited) continued
The Distributor has informed the Fund that for the six months ended May 31,
2000, it received approximately $14,100 in commissions from the sale of the
Fund's shares of 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 six months ended May 31, 2000
aggregated $302,289 and $537,199, respectively.
Morgan Stanley Dean Witter Trust FSB, an affiliate of the Investment Manager
and Distributor, is the Fund's transfer agent.
5. FEDERAL INCOME TAX STATUS
At November 30, 1999, the Fund had a net capital loss carryover of
approximately $29,000 which will be available through November 30, 2007 to
offset future capital gains to the extent provided by regulations.
6. 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, 2000 NOVEMBER 30, 1999
---------------------------- ----------------------------
(unaudited)
SHARES AMOUNT SHARES AMOUNT
------------ ------------- ------------ -------------
<S> <C> <C> <C> <C>
Sold ................................................ 55,833 $ 526,298 150,939 $1,528,240
Reinvestment of dividends and distributions ......... 7,788 72,835 18,874 189,061
------ ---------- ------- ----------
63,621 599,133 169,813 1,717,301
Repurchased ......................................... (81,007) (757,617) (75,142) (740,484)
------- ---------- ------- ----------
Net increase ........................................ (17,386) $ (158,484) 94,671 $ 976,817
======= ========== ======= ==========
</TABLE>
13
<PAGE>
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 SIX FOR THE PERIOD ENDED NOVEMBER 30,
MONTHS ENDED -----------------------------------------------
MAY 31, 2000 1999 1998 1997 1996
------------------ ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
(unaudited)
SELECTED PER SHARE DATA:
Net asset value, beginning of period ............... $ 9.47 $ 10.41 $ 10.12 $ 9.95 $ 9.91
----------- -------- ------- ------- -------
Income (loss) from investments operations:
Net investment income ............................. 0.23 0.46 0.49 0.50 0.50
Net realized and unrealized gain (loss) ........... ( 0.17) ( 0.88) 0.29 0.17 0.04
----------- -------- ------- ------- -------
Total income (loss) from investment operations ..... 0.06 ( 0.42) 0.78 0.67 0.54
----------- -------- ------- ------- -------
Less dividends and distributions from:
Net investment income ............................. ( 0.23) ( 0.46) ( 0.49) ( 0.50) ( 0.50)
Net realized gain ................................. - ( 0.06) - - -
----------- -------- -------- -------- --------
Total dividends and distributions .................. ( 0.23) ( 0.52) ( 0.49) ( 0.50) ( 0.50)
----------- -------- -------- -------- --------
Net asset value, end of period ..................... $ 9.30 $ 9.47 $ 10.41 $ 10.12 $ 9.95
=========== ======== ======== ======== ========
TOTAL RETURN+ ...................................... 0.60%(1) ( 4.20)% 7.87% 6.93% 5.64%
RATIOS TO AVERAGE NET ASSETS (3):
Expenses ........................................... 0.56%(2) 0.52% 0.20% 0.19% 0.19%
Net investment income .............................. 4.85%(2) 4.54% 4.72% 5.00% 5.09%
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands ............ $ 6,970 $ 7,257 $ 6,998 $ 4,752 $ 3,225
Portfolio turnover rate ............................ 5%(1) 18% 26% 13% 51%
<CAPTION>
FOR THE PERIOD
JUNE 16, 1995*
THROUGH
NOVEMBER 30, 1995
------------------
<S> <C>
SELECTED PER SHARE DATA:
Net asset value, beginning of period ............... $ 9.70
---------
Income (loss) from investments operations:
Net investment income ............................. 0.19
Net realized and unrealized gain (loss) ........... 0.21
---------
Total income (loss) from investment operations ..... 0.40
---------
Less dividends and distributions from:
Net investment income ............................. ( 0.19)
Net realized gain ................................. -
---------
Total dividends and distributions .................. ( 0.19)
---------
Net asset value, end of period ..................... $ 9.91
=========
TOTAL RETURN+ ...................................... 4.21%(1)
RATIOS TO AVERAGE NET ASSETS (3):
Expenses ........................................... 0.20%(2)
Net investment income .............................. 4.69%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands ............ $ 1,510
Portfolio turnover rate ............................ 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 its
investment management fee, the expense and net investment income ratios
would have been as follows, which reflect the effect of expense offsets
as follows:
<TABLE>
<CAPTION>
EXPENSE NET INVESTMENT EXPENSE
PERIOD ENDED: RATIO INCOME RATIO OFFSET
------------------------------ --------- ---------------- ----------
<S> <C> <C> <C>
May 31, 2000 ............... 2.53% 2.88% 0.01%
November 30, 1999 .......... 2.45% 2.61% 0.01%
November 30, 1998 .......... 2.42% 2.50% 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%
</TABLE>
-------------
* After application of the Fund's state expense limitation.
See Notes to Financial Statements
14
<PAGE>
Morgan Stanley Dean Witter Hawaii Municipal Trust
Change in Independent Accountants
On July 1, 2000 PricewaterhouseCoopers LLP resigned as independent accountants
of the Fund.
The reports of PricewaterhouseCoopers LLP on the financial statements of the
Fund for the past two fiscal years contained no adverse opinion or disclaimer
of opinion and were not qualified or modified as to uncertainty, audit scope or
accounting principle.
In connection with its audits for the two most recent fiscal years and through
July 1, 2000, there have been no disagreements with PricewaterhouseCoopers LLP
on any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which disagreements if not resolved
to the satisfaction of PricewaterhouseCoopers LLP would have caused them to
make reference thereto in their report on the financial statements for such
years.
The Fund, with the approval of its Board of Trustees and its Audit Committee,
engaged
Deloitte & Touche LLP as its new independent accountants as of July 1, 2000.
15
<PAGE>
TRUSTEES
Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn
Wayne E. Hedien
James F. Higgins
Dr. Manual H. Johnson
Michael E. Nugent
Philip J. Purcell
John L. Schroeder
OFFICERS
Charles A. Fiumefreddo
Chairman and Chief Executive Officer
Mitchell M. Merin
President
Barry Fink
Vice President, Secretary and General Counsel
James F. Willison
Vice President
Thomas F. Caloia
Treasurer
TRANSFER AGENT
Morgan Stanley Dean Witter Trust FSB
Harborside Financial Center -- Plaza Two
Jersey City, New Jersey 07311
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York 10036
INVESTMENT MANAGER
Morgan Stanley Dean Witter Advisors Inc.
Two World Trade Center
New York, New York 10048
The financial statements included herein have been taken from the records of the
Fund without examination by the independent accountants and accordingly they do
not express an opinion thereon.
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. Read the
prospectus carefully before investing.
Morgan Stanley Dean Witter Distributors Inc., member NASD.
MORGAN STANLEY
DEAN WITTER
HAWAII MUNICIPAL
TRUST
[GRAPHIC OMITTED]
SEMIANNUAL REPORT
MAY 31, 2000
