<PAGE> 1
DEAN WITTER U.S. GOVERNMENT MONEY MARKET TRUST Two World Trade Center,
New York, New York 10048
LETTER TO THE SHAREHOLDERS July 31, 1996
DEAR SHAREHOLDER:
Although the Federal Reserve's monetary policy has been unchanged since January
31, 1996, short-term interest rates trended upward based on strengthening
economic indicators. Payroll employment data was quite strong in both job gains
and average hourly earnings throughout the first half of the year. However, the
July data released in early August, showed a tempering of job growth, a small
reduction in average hourly earnings and an increase in the unemployment rate
from 5.3 percent to 5.4 percent. In addition, the National Association of
Purchasing Managers Index showed a slowdown in the manufacturing segment of the
economy. With these announcements, market psychology changed significantly and
short-term rates returned to early 1996 levels. Where an imminent increase in
the federal-funds rate had been anticipated by investors, more recent economic
indicators have given the Federal Reserve Board the leeway to postpone any
monetary action.
PORTFOLIO COMPOSITION
As of July 31, 1996, the U.S. Government Money Market Trust had net assets of
$902 million with an average life of 58 days. The Trust's annualized net yield
for the six-month period ended July 31, 1996 was 4.26 percent and its annualized
yield for July was 4.28 percent.
On July 31, 1996, approximately 95 percent of the Trust's portfolio was invested
in the obligations of six Federal agencies, one percent in direct Treasuries and
four percent in repurchase agreements. More than 73 percent of the Trust's
assets were due to mature in less than three months. Therefore, the portfolio is
well positioned for stability of value with a high degree of liquidity.
LOOKING AHEAD
At this time, we anticipate a moderate pace for economic activity during the
second half of 1996, with no major adverse surprises in the rate of inflation.
Investment yields available to the Trust during the second half of 1996 could be
slightly higher than those achieved during the first half of 1996.
<PAGE> 2
DEAN WITTER U.S. GOVERNMENT MONEY MARKET TRUST
LETTER TO THE SHAREHOLDERS July 31, 1996, continued
The future direction in interest rates will be dependent upon a variety of
factors, including the trend in unemployment. It is questionable whether further
sustained growth in this sector can be achieved without a commensurate increase
in wage inflation. Also, it is yet to be seen if the current pace of economic
growth will be sustained, given anticipated slowing in the housing and
manufacturing sectors. For the Federal Reserve, maintaining the current low
level of inflation continues to be of the utmost importance and any sustained
increase would likely prompt future monetary policy action.
The Trust continues to serve as a useful investment for liquidity, preservation
of capital and a yield which reflects prevailing money market conditions. We
appreciate your ongoing support of Dean Witter U.S. Government Money Market
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> 3
DEAN WITTER U.S. GOVERNMENT MONEY MARKET TRUST
PORTFOLIO OF INVESTMENTS July 31, 1996 (unaudited)
<TABLE>
<CAPTION>
ANNUALIZED
PRINCIPAL DESCRIPTION YIELD
AMOUNT IN AND ON DATE OF
THOUSANDS MATURITY DATE PURCHASE VALUE
- -------------------------------------------------------------------------------------------
<C> <S> <C> <C>
U.S. GOVERNMENT AGENCIES (95.8%)
$152,205 Federal Farm Credit Bank
08/08/96 - 01/27/97.......................... 4.86 - 5.54% $151,044,629
362,740 Federal Home Loan Banks
08/01/96 - 01/14/97.......................... 5.02 - 5.67 358,703,141
106,385 Federal Home Loan Mortgage Corp.
08/08/96 - 11/19/96.......................... 5.29 - 5.41 105,798,729
149,320 Federal National Mortgage Assoc.
08/09/96 - 12/27/96.......................... 4.94 - 5.56 148,046,548
50,000 Student Loan Marketing Assoc.
09/09/96 - 09/30/96.......................... 5.36 - 5.44 49,609,625
51,000 Tennessee Valley Authority
08/16/96 - 08/29/96.......................... 5.29 - 5.37 50,841,940
----------
TOTAL U.S. GOVERNMENT AGENCIES
(Amortized Cost $864,044,612)............................... 864,044,612
----------
U.S. GOVERNMENT OBLIGATION (0.5%)
5,000 U.S. Treasury Bill (Amortized Cost
$4,859,169) 02/06/97......................... 5.52 4,859,169
----------
REPURCHASE AGREEMENTS (4.3%)
38,000 Dillon Read & Co., Inc. due 08/01/96 (dated
07/31/96; proceeds $38,005,911;
collateralized by $39,460,000 U.S. Treasury
Note 5.875% due 06/30/00 valued at
$38,769,450)................................. 5.60 38,000,000
----------
443 The Bank of New York due 08/01/96 (dated
07/31/96; proceeds $443,380; collateralized
by $456,407 Federal Home Loan Mortgage Corp.
7.00% due 04/01/24 valued at $392,589 and
$69,663 Federal Home Loan Mortgage Corp.
6.50% due 12/15/23 valued at $59,586)........ 5.75 443,309
----------
TOTAL REPURCHASE AGREEMENTS
(Identified Cost $38,443,309)............................... 38,443,309
----------
TOTAL INVESTMENTS
(Amortized Cost $907,347,090) (a).................... 100.6% 907,347,090
LIABILITIES IN EXCESS OF CASH AND
OTHER ASSETS......................................... (0.6) (5,741,152)
----- ----------
NET ASSETS........................................... 100.0% $901,605,938
===== ==========
</TABLE>
- ---------------------
<TABLE>
<S> <C>
(a) Cost is the same for federal income tax purposes.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 4
DEAN WITTER U.S. GOVERNMENT MONEY MARKET TRUST
FINANCIAL STATEMENTS
<TABLE>
<S> <C>
STATEMENT OF ASSETS AND LIABILITIES
July 31, 1996 (unaudited)
ASSETS:
Investments in securities, at value
(amortized cost $907,347,090)........................................ $907,347,090
Cash.................................................................. 90,001
Receivable for:
Shares of beneficial interest sold................................ 243,448
Interest.......................................................... 5,982
Prepaid expenses and other assets..................................... 138,039
----------
TOTAL ASSETS...................................................... 907,824,560
----------
LIABILITIES:
Payable for:
Shares of beneficial interest repurchased......................... 5,280,315
Investment management fee......................................... 370,492
Plan of distribution fee.......................................... 80,765
Accrued expenses and other payables................................... 487,050
----------
TOTAL LIABILITIES................................................. 6,218,622
----------
NET ASSETS:
Paid-in-capital....................................................... 901,604,918
Accumulated undistributed net investment income....................... 1,020
-----------
NET ASSETS........................................................ $901,605,938
===========
NET ASSET VALUE PER SHARE,
901,604,918 shares outstanding
(unlimited shares authorized of $.01 par value)...................... $1.00
====
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 5
DEAN WITTER U.S. GOVERNMENT MONEY MARKET TRUST
FINANCIAL STATEMENTS, continued
<TABLE>
<S> <C>
STATEMENT OF OPERATIONS
For the six months ended July 31, 1996 (unaudited)
NET INVESTMENT INCOME:
INTEREST INCOME........................................................ $24,479,984
---------
EXPENSES
Transfer agent fees and expenses....................................... 2,261,083
Investment management fee.............................................. 2,087,802
Plan of distribution fee............................................... 419,683
Shareholder reports and notices........................................ 85,361
Registration fees...................................................... 35,705
Custodian fees......................................................... 31,274
Professional fees...................................................... 24,314
Trustees' fees and expenses............................................ 8,460
Other.................................................................. 1,200
---------
TOTAL EXPENSES..................................................... 4,954,882
---------
NET INVESTMENT INCOME AND NET INCREASE............................. $19,525,102
=========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 6
DEAN WITTER U.S. GOVERNMENT MONEY MARKET TRUST
FINANCIAL STATEMENTS, continued
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR
FOR THE SIX ENDED
MONTHS ENDED JANUARY 31,
JULY 31, 1996 1996
------------------------------------------------------------------------------
(unaudited)
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income and net increase.............. $ 19,525,102 $ 42,906,083
Dividends from net investment income................ (19,525,311) (42,906,345)
Net increase (decrease) from transactions in shares
of beneficial interest............................. (1,112,897) 93,226,032
----------- -----------
TOTAL INCREASE (DECREASE)....................... (1,113,106) 93,225,770
NET ASSETS:
Beginning of period................................. 902,719,044 809,493,274
----------- -----------
END OF PERIOD
(Including undistributed net investment income
of $1,020 and $1,229, respectively)............. $901,605,938 $902,719,044
=========== ===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 7
DEAN WITTER U.S. GOVERNMENT MONEY MARKET TRUST
NOTES TO FINANCIAL STATEMENTS July 31, 1996 (unaudited)
1. ORGANIZATION AND ACCOUNTING POLICIES
Dean Witter U.S. Government Money Market Trust (the " Trust") is registered
under the Investment Company Act of 1940, as amended (the "Act"), as a
diversified, open-end management investment company. The Trust's investment
objectives are security of principal, high current income and liquidity. The
Trust was organized as a Massachusetts business trust on November 18, 1981 and
commenced operations on February 17, 1982.
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 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). Realized gains and
losses on security transactions are determined by the identified cost method.
Premiums are amortized and discounts are accreted over the life of the
respective securities.
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 AND DISTRIBUTIONS TO SHAREHOLDERS -- The Trust records dividends
and distributions as of the close of each business day.
2. INVESTMENT MANAGEMENT AGREEMENT
Pursuant to an Investment Management Agreement with Dean Witter InterCapital
Inc. (the "Investment Manager"), the Trust pays the Investment Manager a
management fee, accrued daily and payable monthly, by applying the following
annual rates to the net assets of the Trust determined as of the close of each
business day: 0.50% to the portion of the daily net assets not exceeding $500
million; 0.425% to the portion of the daily net assets exceeding $500 million
but not exceeding $750 million; 0.375% to the portion of the daily net assets
exceeding $750 million but not exceeding $1 billion; 0.35% to the portion of the
daily net assets exceeding $1 billion but not exceeding $1.5 billion; 0.325% to
the portion of the daily net assets exceeding $1.5 billion but not exceeding $2
billion; 0.30% to the portion
<PAGE> 8
DEAN WITTER U.S. GOVERNMENT MONEY MARKET TRUST
NOTES TO FINANCIAL STATEMENTS July 31, 1996 (unaudited) continued
of the daily net assets exceeding $2 billion but not exceeding $2.5 billion;
0.275% to the portion of the daily net assets exceeding $2.5 billion but not
exceeding $3 billion; and 0.25% to the portion of the daily net assets exceeding
$3 billion.
Under the terms of the Agreement, the Investment Manager maintains certain of
the Trust'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 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.
3. PLAN OF DISTRIBUTION
Dean Witter Distributors Inc. (the "Distributor"), an affiliate of the
Investment Manager, is the distributor of the Trust'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 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, Dean Witter Reynolds
Inc. ("DWR"), an affiliate of the Investment Manager and Distributor, its
affiliates and other selected broker-dealers under the Plan: (1) compensation
to, and expenses of, account executives of DWR's and other selected
broker-dealers and other employees, including overhead and telephone expenses;
(2) sales incentives and bonuses to sales representatives and to marketing
personnel in connection with promoting sales of the Trust's shares; (3) expenses
incurred in connection with promoting sales of the Trust's 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 annual rate of 0.15% of the Trust'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 Trust
through payments accrued in any subsequent fiscal year. For the six months ended
July 31, 1996, the distribution fee was accrued at the annual rate of 0.09%.
<PAGE> 9
DEAN WITTER U.S. GOVERNMENT MONEY MARKET TRUST
NOTES TO FINANCIAL STATEMENTS July 31, 1996 (unaudited) continued
4. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES
The cost of purchases and proceeds from sales/maturities of portfolio securities
for the six months ended July 31, 1996 aggregated $6,529,431,260 and
$6,554,596,670, respectively.
Dean Witter Trust Company, an affiliate of the Investment Manager and
Distributor, is the Trust's transfer agent. At July 31, 1996, the Trust had
transfer agent fees and expenses payable of approximately $378,000.
The Trust has an unfunded noncontributory defined benefit pension plan covering
all independent Trustees of the Trust who will have served as independent
Trustees 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 costs for the six months ended July 31, 1996
included in Trustees' fees and expenses in the Statement of Operations amounted
to $422. At July 31, 1996, the Trust had an accrued pension liability of $49,023
which is included in accrued expenses in the Statement of Assets and
Liabilities.
5. SHARES OF BENEFICIAL INTEREST
Transactions in shares of beneficial interest, at $1.00 per share, were as
follows:
<TABLE>
<CAPTION>
FOR THE SIX FOR THE YEAR
MONTHS ENDED ENDED
JULY 31, 1996 JANUARY 31, 1996
-------------- ----------------
(unaudited)
<S> <C> <C>
Shares sold............................................................................ 1,007,089,225 1,866,242,509
Shares issued in reinvestment of dividends............................................. 19,452,580 42,762,335
----------- -----------
1,026,541,805 1,909,004,844
Shares repurchased..................................................................... (1,027,654,702) (1,815,778,812)
----------- -----------
Net increase (decrease)................................................................ (1,112,897) 93,226,032
=========== ===========
</TABLE>
<PAGE> 10
DEAN WITTER U.S. GOVERNMENT MONEY MARKET TRUST
FINANCIAL HIGHLIGHTS
Selected ratios and per share data for a share of beneficial interest
outstanding throughout each period:
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED FOR THE YEAR ENDED JANUARY 31
JULY 31, -----------------------------
1996 1996 1995
- ----------------------------------------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period................................ $ 1.00 $ 1.00 $ 1.00
------- ----- -----
Net investment income............................................... 0.021 0.049 0.034
Less dividends from net investment income........................... (0.021) (0.049) (0.034)
------- ----- -----
Net asset value, end of period...................................... $ 1.00 $ 1.00 $ 1.00
======= ===== =====
TOTAL INVESTMENT RETURN+............................................ 2.16%(1) 5.00% 3.47%
RATIOS TO AVERAGE NET ASSETS:
Expenses............................................................ 1.08%(2) 1.09% 1.08%
Net investment income............................................... 4.26%(2) 4.86% 3.38%
SUPPLEMENTAL DATA:
Net assets, end of period, in millions.............................. $902 $903 $809
<CAPTION>
FOR THE YEAR ENDED JANUARY 31
--------------------------------------------
1994 1993 1992
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period................................ $ 1.00 $ 1.00 $ 1.00
----- ----- -----
Net investment income............................................... 0.023 0.029 0.050
Less dividends from net investment income........................... (0.023) (0.029) (0.050)
----- ----- -----
Net asset value, end of period...................................... $ 1.00 $ 1.00 $ 1.00
===== ===== =====
TOTAL INVESTMENT RETURN+............................................ 2.28% 2.89% 5.14%
RATIOS TO AVERAGE NET ASSETS:
Expenses............................................................ 1.00% 0.93% 0.89%
Net investment income............................................... 2.23% 2.87% 5.02%
SUPPLEMENTAL DATA:
Net assets, end of period, in millions.............................. $818 $1,027 $1,115
</TABLE>
- ---------------------
+ Calculated based on the net asset value as of the last business day of the
period.
(1) Not annualized.
(2) Annualized.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 11
(This Page Intentionally Left Blank)
<PAGE> 12
BOARD OF DIRECTORS
- ------------------------------------------------------
Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn
John R. Haire
Dr. Manuel H. Johnson
Michael E. Nugent
Philip J. Purcell
John L. Schroeder
OFFICERS
- ------------------------------------------------------
Charles A. Fiumefreddo
Chairman and Chief Executive Officer
Sheldon Curtis
Vice President, Secretary and General Counsel
Jonathan R. Page
Vice President
Thomas F. Caloia
Treasurer
TRANSFER AGENT
- ------------------------------------------------------
Dean Witter Trust Company
Harborside Financial Center - Plaza Two
Jersey City, New Jersey 07311
INDEPENDENT ACCOUNTANTS
- ------------------------------------------------------
Price Waterhouse LLP
1177 Avenue of the Americas
New York, New York 10036
INVESTMENT MANAGER
- ------------------------------------------------------
Dean Witter InterCapital Inc.
Two World Trade Center
New York, New York 10048
The financial statements included herein have been taken from the records of
the Fund without examination by the independent accountants and accordingly
they do not express an opinion thereon.
This report is submitted for the general information of shareholders of the
Fund. For more detailed information about the Fund, its officers and directors,
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
U.S. GOVERNMENT
MONEY MARKET
TRUST
[DEAN WITTER LOGO]
Semiannual Report
July 31, 1996
