<PAGE> 1
ACTIVE ASSETS GOVERNMENT SECURITIES TRUST
Two World Trade Center
New York, New York 10048
DEAR SHAREHOLDER:
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As of December 31, 1993, Active Assets Government Securities Trust had assets in
excess of $494 million with an average maturity of 71 days. The Trust's yield
for the trailing 12 months ended December 31, 1993 was 2.57 percent.
CHARACTERIZED BY STABILITY
Stability is the word that best characterizes the money markets during the
second half of 1993. In fact, the Federal Reserve Board's discount rate (the
rate the Fed charges member banks for loans) has remained at 3 percent for more
than 18 months. While economic statistics during the period suggested
significant improvement in the pace of activity, there was no indication that
the economy was in danger of overheating. The U.S. economy currently is enjoying
a moderate, sustainable expansion.
On December 31, 1993, approximately 91 percent of the Trust's portfolio
consisted of federal agency obligations, with another 5 percent invested in U.S.
Treasury bills. The remaining 4 percent was committed to repurchase agreements
collateralized by obligations of the U.S. Treasury or by federal agency
securities.
LOOKING AHEAD
We believe the Federal Reserve Board should be pleased with overall economic
conditions and the behavior of the financial markets for 1993 and early 1994. Of
course, the Federal Reserve Board's Governors must always be alert to
inflationary dangers, currency realignments and a host of other constantly
changing variables. We expect the Fed may register its concerns at some point in
1994 by raising short-term rates modestly. Nonetheless, we do not anticipate
dramatic changes in monetary conditions since we expect both inflation and the
pace of economic recovery to remain moderate during 1994. As always, we continue
to emphasize liquidity and preservation of capital in all our investment
decisions.
We appreciate your support of Active Assets Government Securities Trust and look
forward to continuing to serve your investment needs and objectives.
Very truly yours,
/s/ Charles A. Fiumefreddo
Charles A. Fiumefreddo
Chairman of the Board
<PAGE> 2
ACTIVE ASSETS GOVERNMENT SECURITIES TRUST
PORTFOLIO OF INVESTMENTS December 31, 1993 (unaudited)
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<TABLE>
<CAPTION>
Annualized
Principal Description Yield on
Amount (in and Date of
thousands) Maturity Date Purchase Value
- ---------- ------------------------------------------------------------- ------------- ------------
<S> <C> <C>
U.S. GOVERNMENT OBLIGATION (5.0%)
$ 25,000 U.S. Treasury Bills (Amortized Cost $24,689,979)
5/19/94...................................................... 3.29% $ 24,689,979
------------
U.S. GOVERNMENT AGENCIES (91.2%)
115,000 Federal Farm Credit Bank
1/4/94 to 3/15/94............................................ 3.14 to 3.22 114,697,341
154,335 Federal Home Loan Banks
1/11/94 to 5/26/94........................................... 3.14 to 3.39 153,662,760
43,000 Federal Home Loan Mortgage Corp.
1/7/94 to 2/22/94............................................ 3.10 to 3.27 42,912,089
141,210 Federal National Mortgage Association
1/7/94 to 9/19/94............................................ 3.16 to 3.50 139,433,890
------------
TOTAL U.S. GOVERNMENT AGENCIES (AMORTIZED COST $450,706,080).............. 450,706,080
------------
REPURCHASE AGREEMENT (3.9%)
19,220 Dillon Read & Co. (Amortized Cost $19,220,000)
1/3/94....................................................... 3.20 19,220,000
------------
(dated 12/31/93; proceeds $19,225,125 collateralized by
$17,650,000 United States Treasury Note 7 7/8% due 7/31/96
valued at $19,701,813)
TOTAL INVESTMENTS (AMORTIZED COST $494,616,059)(a)........................ 100.1% 494,616,059
LIABILITIES IN EXCESS OF CASH AND OTHER ASSETS............................ (0.1) (311,281)
----- ------------
NET ASSETS................................................................ 100.0% $494,304,778
----- ------------
----- ------------
</TABLE>
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(a) Cost is the same for federal income tax purposes.
See Notes to Financial Statements
<PAGE> 3
ACTIVE ASSETS GOVERNMENT SECURITIES TRUST
FINANCIAL STATEMENTS
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<TABLE>
<S> <C>
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1993 (unaudited)
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ASSETS:
Investments in securities, at value
(Amortized Cost $494,616,059) (Note 1)... $ 494,616,059
Cash....................................... 2,362
Interest receivable........................ 1,708
Prepaid expenses........................... 93,505
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TOTAL ASSETS....................... 494,713,634
-------------
LIABILITIES:
Payable for:
Shares of beneficial interest
repurchased............................ 13,356
Investment management fee (Note 2)....... 224,207
Plan of distribution fee (Note 3)........ 45,261
Accrued expenses (Note 4).................. 126,032
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TOTAL LIABILITIES.................. 408,856
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NET ASSETS:
Paid in capital............................ 494,304,889
Distribution in excess of net
investment income........................ (111)
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NET ASSETS......................... $ 494,304,778
-------------
-------------
NET ASSET VALUE PER SHARE,
494,304,889 shares outstanding (unlimited
shares authorized of $.01 par value)..... $1.00
-----
-----
STATEMENT OF OPERATIONS
For the six months ended December 31, 1993
(unaudited)
- -------------------------------------------
INVESTMENT INCOME:
INTEREST INCOME............................ $ 8,523,688
-------------
EXPENSES
Investment management fee (Note 2)....... 1,317,969
Plan of distribution fee (Note 3)........ 265,630
Transfer agent fees and expenses (Note
4)..................................... 52,520
Registration fees........................ 40,926
Professional fees........................ 27,468
Trustees' fees and expenses (Note 4)..... 17,205
Shareholder reports and notices.......... 16,200
Custodian fees........................... 10,465
Other.................................... 6,098
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TOTAL EXPENSES......................... 1,754,481
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NET INVESTMENT INCOME AND NET
INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS.................... $ 6,769,207
-------------
-------------
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
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<TABLE>
<CAPTION>
For the six
months ended For the
December 31, 1993 year ended
(unaudited) June 30, 1993
------------------- -------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income and net increase in net assets
resulting from operations........................................... $ 6,769,207 $ 14,662,140
Dividends to shareholders from net investment income.................... (6,769,633) (14,661,925)
Net decrease from transactions in shares of beneficial interest (Note
5).................................................................... (14,276,954) (24,855,698)
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Total decrease.................................................... (14,277,380) (24,855,483)
NET ASSETS:
Beginning of period..................................................... 508,582,158 533,437,641
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END OF PERIOD (including distribution in excess of net investment income
of $111 and undistributed net investment income of $315,
respectively).......................................................... $ 494,304,778 $ 508,582,158
------------- -------------
------------- -------------
</TABLE>
See Notes to Financial Statements
<PAGE> 4
ACTIVE ASSETS GOVERNMENT SECURITIES TRUST
NOTES TO FINANCIAL STATEMENTS (unaudited)
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1. ORGANIZATION AND ACCOUNTING POLICIES -- Active Assets Government Securities
Trust (the "Trust") was organized as a Massachusetts business trust on March 30,
1981 and is registered under the Investment Company Act of 1940, as amended (the
"Act"), as a diversified, open-end management investment company. The Trust
commenced operations on July 7, 1981.
The following is a summary of significant accounting policies:
A. Valuation of Investments -- Portfolio securities are valued at amortized
cost, which approximates market value.
B. Accounting for Investments -- Security transactions are accounted for on
the trade date (date the order to buy or sell is executed). In computing
net investment income, the Trust amortizes any premiums and discounts on
securities owned. Realized gains and losses on security transactions are
determined on the identified cost method.
C. Federal Income Tax Status -- It is the Trust's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute all of its taxable income to its
shareholders. Accordingly no federal income tax provision is required.
D. Dividends to Shareholders -- Dividends to shareholders are recorded by
the Trust as of the close of the Trust's business day.
E. Repurchase Agreements -- The Trust's custodian takes possession on
behalf of the Trust of the collateral pledged for investments in repurchase
agreements. It is the policy of the Trust to value the underlying
collateral daily on a mark-to-market basis to determine that the value,
including accrued interest, is at least equal to the repurchase price plus
accrued interest. In the event of default of the obligation to repurchase,
the Trust has the right to liquidate the collateral and apply the proceeds
in satisfaction of the obligation.
2. INVESTMENT MANAGEMENT AGREEMENT -- Pursuant to an Investment Management
Agreement (the "Agreement") with Dean Witter InterCapital Inc. (the "Investment
Manager"), the Trust pays its Investment Manager a management fee, calculated
daily and payable monthly, by applying the following annual rates to the net
assets of the Trust determined as of the close of the Trust's business day:
0.50% of the portion of the daily net assets not exceeding $500 million; 0.425%
of the portion of the daily net assets exceeding $500 million but not exceeding
$750 million; 0.375% of the portion of the daily net assets exceeding $750
million but not exceeding $1 billion; 0.35% of the portion of the daily net
assets exceeding $1 billion but not exceeding $1.5 billion; 0.325% of the
portion of the daily net assets exceeding $1.5 billion but not exceeding $2
billion; 0.30% of the portion of the daily net assets exceeding $2 billion but
not exceeding $2.5 billion; and 0.275% of the portion of the daily net assets
exceeding $2.5 billion but not exceeding $3 billion; and 0.25% of the portion of
the daily net assets exceeding $3 billion. Under the terms of the Agreement, in
addition to managing the Trust's investments, the Investment Manager maintains
certain of the Trust's books and records and furnishes office space and
facilities, equipment, clerical, bookkeeping and certain legal services, and
pays the salaries of all personnel, including officers of the Trust 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
Trust.
<PAGE> 5
ACTIVE ASSETS GOVERNMENT SECURITIES TRUST
NOTES TO FINANCIAL STATEMENTS (unaudited) (continued)
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3. PLAN OF DISTRIBUTION -- Shares of beneficial interest of the Trust are
distributed by Dean Witter Distributors Inc. (the "Distributor"), an affiliate
of the Investment Manager. The Trust has entered into a Plan of Distribution
(the "Plan"), pursuant to Rule 12b-1 under the Act, with the Distributor whereby
the Distributor finances certain activities in connection with the distribution
of shares of the Trust.
Under the Plan, the Distributor bears the expense of all promotional and
distribution related activities on behalf of the Trust, except for expenses that
the Trustees determine to reimburse, as described below. The following
activities and services may be provided by the Distributor under the Plan: (1)
compensation to sales representatives of the Distributor and other
broker-dealers; (2) sales incentives and bonuses to sales representatives and to
marketing personnel in connection with promoting sales of shares; (3) expenses
incurred in connection with promoting sales of shares; (4) preparing and
distributing sales literature; and (5) providing advertising and promotional
activities, including direct mail solicitation and television, radio, newspaper,
magazine and other media advertisements.
The Trust is authorized to reimburse the Distributor for specific expenses
the Distributor incurs or plans to incur in promoting the distribution of the
Trust's shares. The amount of each monthly reimbursement payment may in no event
exceed an amount equal to a payment at the average annual rate of .15 of 1% of
the Trust's average daily net assets during the month. For the six months ended
December 31, 1993 the distribution fee established by the Trustees and accrued
was at the average annual rate of .10 of 1%.
4. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES -- The cost of
purchases and the proceeds from sales/maturities of portfolio securities for the
six months ended December 31, 1993 aggregated $2,564,746,177 and $2,587,233,125,
respectively.
On April 1, 1991 the Trust established an unfunded noncontributory defined
benefit pension plan covering all independent Trustees of the Trust who will
have served as an independent Trustee for at least five years at the time of
retirement. Benefits under this Plan are based on years of service and
compensation during the last five years of service. Aggregate pension cost for
the six months ended December 31, 1993 included in Trustees' fees and expenses
in the Statement of Operations, amounted to $5,211. At December 31, 1993, the
Trust had an accrued pension liability of $38,394 which is included in accrued
expenses in the Statement of Assets and Liabilities.
Dean Witter Trust Company ("DWTC"), an affiliate of the Investment Manager
and the Distributor, is the Trust's transfer agent. During the six months ended
December 31, 1993, the Trust incurred transfer agent fees and expenses of
$52,520 with DWTC, of which $36,690 was payable at December 31, 1993.
<PAGE> 6
ACTIVE ASSETS GOVERNMENT SECURITIES TRUST
NOTES TO FINANCIAL STATEMENTS (unaudited) (continued)
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5. SHARES OF BENEFICIAL INTEREST -- Transactions in shares of beneficial
interest, at $1.00 per share, were as follows:
<TABLE>
<CAPTION>
For the six
months For the year
ended ended
December 31, 1993 June 30, 1993
----------------- --------------
<S> <C> <C>
Shares sold............................................... 963,788,067 1,936,859,703
Shares issued in reinvestment of dividends................ 6,763,069 14,650,953
------------ --------------
970,551,136 1,951,510,656
Shares repurchased........................................ (984,828,090) (1,976,366,354)
------------ --------------
Net decrease in shares outstanding........................ (14,276,954) (24,855,698)
------------ --------------
------------ --------------
</TABLE>
<PAGE> 7
ACTIVE ASSETS GOVERNMENT SECURITIES TRUST
FINANCIAL HIGHLIGHTS (unaudited)
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Selected data and ratios for a share of beneficial interest outstanding
throughout each period:
<TABLE>
<CAPTION>
For the six For the year ended June 30,
months ended ---------------------------------------------------------
December 31, 1993 1993 1992 1991 1990 1989
----------------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning
of period........................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
--------- --------- --------- --------- --------- ---------
Net investment income.............. 0.013 0.027 0.043 0.065 0.077 0.079
Less dividends from net
investment income................ (0.013) (0.027) (0.043) (0.065) (0.077) (0.079)
--------- --------- --------- --------- --------- ---------
Net asset value,
end of period.................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
TOTAL INVESTMENT RETURN............ 1.30%(1) 2.71% 4.37% 6.72% 8.03% 8.20%
RATIOS/SUPPLEMENTAL DATA:
Net asset, end of period
(in thousands)................... $ 494,305 $ 508,581 $ 533,438 $ 597,098 $ 300,213 $ 243,631
Ratio of expenses to average net
assets........................... 0.66%(2) 0.66% 0.68% 0.70% 0.68% 0.70%
Ratio of net investment
income to average net assets..... 2.55%(2) 2.68% 4.28% 6.39% 7.74% 7.94%
</TABLE>
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(1) Not annualized.
(2) Annualized.
See Notes to Financial Statements
<PAGE> 8
TRUSTEES
Jack F. Bennett
Charles A. Fiumefreddo
Edwin J. Garn
John R. Haire
Dr. John E. Jeuck
Dr. Manuel H. Johnson
Paul Kolton
Michael E. Nugent
Albert T. Sommers
Edward R. Telling
OFFICERS
Charles A. Fiumefreddo
Chairman and Chief Executive Officer
Sheldon Curtis
Vice President, Secretary and General Counsel
Johnathan R. Page
Vice President
Thomas F. Caloia
Treasurer
TRANSFER AGENT
Dean Witter Trust Company
Harborside Financial Center -- Plaza Two
Jersey City, New Jersey 07311
LEGAL COUNSEL
Sheldon Curtis
Two World Trade Center
New York, New York 10048
INDEPENDENT ACCOUNTANTS
Price Waterhouse
1177 Avenue of the Americas
New York, New York 10036
INVESTMENT MANAGER
Dean Witter InterCapital Inc.
Two World Trade Center
New York, New York 10048
The financial statements included herein have been taken from the records of
the Trust 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
Trust. For more detailed information about the Trust, its officers and
trustees, fees, expenses and other pertinent information, please see the
prospectus of the Trust.
This report is not authorized for distribution to prospective investors in the
Trust unless preceded or accompanied by an effective prospectus.
ACTIVE
ASSETS(R)
ACCOUNT
ACTIVE ASSETS
GOVERNMENT
SECURITIES TRUST
Semiannual Report
December 31, 1993
