<PAGE> 1
MORGAN STANLEY DEAN WITTER U.S. GOVERNMENT MONEY MARKET TRUST
Two World Trade Center
LETTER TO THE SHAREHOLDERS July 31, 2000 New York, New York 10048
DEAR SHAREHOLDER:
Over the six-month period ended July 31, 2000, the Federal Reserve Board
continued on its course of trying to slow economic growth to a more sustainable,
noninflationary pace. The Fed increased its target federal funds rate on three
separate occasions during the first half of this year. As of July 31, the
federal funds rate stood at 6.50 percent, an increase of 100 basis points since
year-end 1999. As a result of higher rates offered on money market securities,
net yields on Morgan Stanley Dean Witter U.S. Government Money Market Trust's
portfolio continued on an upward trend throughout the period.
PERFORMANCE AND PORTFOLIO
As of July 31, 2000, the Fund had assets in excess of $1.1 billion, up 8.2
percent from one year earlier. The Fund's average life was 57 days and its
annualized net investment income for the six-month period ended July 31, 2000,
was 5.37 percent. Its 30-day annualized yield for July was 5.78 percent.
On July 31, 2000, approximately 90 percent of the Fund's portfolio consisted of
federal agency obligations, with 9 percent in repurchase agreements and the
remaining 1 percent in U.S. Treasury bills. At the end of the period,
approximately 93 percent of the Fund's holdings were due to mature in less than
four months. Consequently, the portfolio is well positioned for stability of
value with a very high degree of liquidity. As always, we attempt to operate the
Fund in a conservative style without the use of derivatives or structured notes
that might fluctuate excessively with changing interest rates. The Fund
continues to serve as a useful investment for liquidity, preservation of capital
and a yield that reflects prevailing money market conditions.
LOOKING AHEAD
While we anticipate some moderation in the pace of economic activity during the
year ahead, we believe that the economy's growth rate could remain stronger than
the Fed believes desirable over the long run.
<PAGE> 2
MORGAN STANLEY DEAN WITTER U.S. GOVERNMENT MONEY MARKET TRUST
LETTER TO THE SHAREHOLDERS July 31, 2000, continued
Should this prove true, future meetings of the Federal Open Market Committee may
result in further upward adjustments for short-term interest rates.
We appreciate your ongoing support of Morgan Stanley Dean Witter U.S. Government
Money Market Trust and look forward to continuing to serve your investment
needs.
<TABLE>
<S> <C>
Very truly yours,
/s/ CHARLES A. FIUMEFREDDO /s/ MITCHELL M. MERIN
CHARLES A. FIUMEFREDDO MITCHELL M. MERIN
Chairman of the Board President
</TABLE>
2
<PAGE> 3
MORGAN STANLEY DEAN WITTER U.S. GOVERNMENT MONEY MARKET TRUST
PORTFOLIO OF INVESTMENTS July 31, 2000 (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 (90.6%)
$ 53,465 Federal Farm Credit Banks
08/28/00 - 09/26/00..................... 5.87 - 6.36% $ 53,086,341
589,836 Federal Home Loan Banks
08/09/00 - 04/12/01..................... 6.03 - 7.12 582,439,126
157,693 Federal Home Loan Mortgage Corp.
08/01/00 - 05/24/01..................... 6.02 - 7.20 156,208,383
225,000 Federal National Mortgage Assoc.
08/10/00 - 11/16/00..................... 6.20 - 6.91 223,029,431
--------------
TOTAL U.S. GOVERNMENT AGENCIES
(Cost $1,014,763,281)................................... 1,014,763,281
--------------
U.S. GOVERNMENT OBLIGATION (1.0%)
11,000 U.S. Treasury Bill 09/07/00
(Cost $10,934,202)...................... 6.00 10,934,202
--------------
REPURCHASE AGREEMENTS (9.2%)
101,500 Banc of America Securities LLC due 08/01/00 (dated
07/31/00; proceeds $101,518,665) (a)
(Cost $101,500,000)..................... 6.62 101,500,000
1,409 The Bank of New York due 08/01/00 (dated
07/31/00; proceeds $1,409,713) (b)
(Cost $1,409,460)....................... 6.50 1,409,460
--------------
TOTAL REPURCHASE AGREEMENTS
(Cost $102,909,460)..................................... 102,909,460
--------------
TOTAL INVESTMENTS
(Cost $1,128,606,943) (c)................ 100.8% 1,128,606,943
LIABILITIES IN EXCESS OF OTHER ASSETS.... (0.8) (9,200,345)
---- --------------
NET ASSETS............................... 100.0% $1,119,406,598
===== ==============
</TABLE>
---------------------
(a) Collateralized by $66,209,209 Federal Home Loan Mortgage Corp.
5.50% - 6.50% due 09/01/06 - 07/01/29 valued at $74,789,879 and $34,604,535
Federal National Mortgage Assoc. 6.50% - 8.50% due 05/01/15 - 02/01/29
valued at $28,740,122.
(b) Collateralized by $1,397,910 U.S. Treasury Note 6.50% due 02/28/02 valued at
$1,437,653.
(c) Cost is the same for federal income tax purposes.
SEE NOTES TO FINANCIAL STATEMENTS
3
<PAGE> 4
MORGAN STANLEY DEAN WITTER U.S. GOVERNMENT MONEY MARKET TRUST
FINANCIAL STATEMENTS
<TABLE>
<S> <C>
STATEMENT OF ASSETS AND LIABILITIES
July 31, 2000 (unaudited)
ASSETS:
Investments in securities, at value
(cost $1,128,606,943)...................................... $1,128,606,943
Cash........................................................ 90,000
Receivable for:
Shares of beneficial interest sold...................... 231,238
Interest................................................ 18,919
Prepaid expenses and other assets........................... 104,131
--------------
TOTAL ASSETS............................................ 1,129,051,231
--------------
LIABILITIES:
Payable for:
Shares of beneficial interest repurchased............... 8,663,577
Investment management fee............................... 407,377
Plan of distribution fee................................ 93,899
Accrued expenses and other payables......................... 479,780
--------------
TOTAL LIABILITIES....................................... 9,644,633
--------------
NET ASSETS.............................................. $1,119,406,598
==============
COMPOSITION OF NET ASSETS:
Paid-in-capital............................................. $1,119,404,290
Accumulated undistributed net investment income............. 2,308
--------------
NET ASSETS.............................................. $1,119,406,598
==============
NET ASSET VALUE PER SHARE,
1,119,404,290 shares outstanding
(unlimited shares authorized of $.01 par value)............ $1.00
==============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
4
<PAGE> 5
MORGAN STANLEY DEAN WITTER U.S. GOVERNMENT MONEY MARKET TRUST
FINANCIAL STATEMENTS, continued
<TABLE>
<S> <C>
STATEMENT OF OPERATIONS
For the six months ended July 31, 2000 (unaudited)
NET INVESTMENT INCOME:
INTEREST INCOME............................................. $34,459,322
-----------
EXPENSES
Investment management fee................................... 2,446,412
Transfer agent fees and expenses............................ 1,377,559
Plan of distribution fee.................................... 480,705
Shareholder reports and notices............................. 78,773
Registration fees........................................... 76,871
Professional fees........................................... 38,730
Custodian fees.............................................. 28,539
Trustees' fees and expenses................................. 9,158
Other....................................................... 6,285
-----------
TOTAL EXPENSES.......................................... 4,543,032
Less: amounts waived/reimbursed............................. (15,074)
-----------
NET EXPENSES............................................ 4,527,958
-----------
NET INVESTMENT INCOME....................................... $29,931,364
===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
5
<PAGE> 6
MORGAN STANLEY DEAN WITTER U.S. GOVERNMENT MONEY MARKET TRUST
FINANCIAL STATEMENTS, continued
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
FOR THE SIX FOR THE YEAR
MONTHS ENDED ENDED
JULY 31, 2000 JANUARY 31, 2000
---------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income............................... $ 29,931,364 $ 45,644,284
Dividends to shareholders from net investment
income............................................. (29,931,056) (45,643,923)
Net increase from transactions in shares of
beneficial interest................................ 38,826,518 63,114,648
-------------- --------------
NET INCREASE.................................... 38,826,826 63,115,009
NET ASSETS:
Beginning of period................................. 1,080,579,772 1,017,464,763
-------------- --------------
END OF PERIOD
(Including undistributed net investment income
of $2,308 and $2,000, respectively)............. $1,119,406,598 $1,080,579,772
============== ==============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
6
<PAGE> 7
MORGAN STANLEY DEAN WITTER U.S. GOVERNMENT MONEY MARKET TRUST
NOTES TO FINANCIAL STATEMENTS July 31, 2000 (unaudited)
1. ORGANIZATION AND ACCOUNTING POLICIES
Morgan Stanley Dean Witter U.S. Government Money Market Trust (the "Fund"), is
registered under the Investment Company Act of 1940, as amended (the "Act"), as
a diversified, open-end management investment company. The Fund's investment
objectives are security of principal, high current income and liquidity. The
Fund 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 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 income to its shareholders.
Accordingly, no federal income tax provision is required.
D. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- The Fund records dividends and
distributions as of the close of each business day.
2. INVESTMENT MANAGEMENT AGREEMENT
Pursuant to an Investment Management Agreement with Morgan Stanley Dean Witter
Advisors Inc. (the "Investment Manager"), the Fund pays the Investment Manager a
management fee, accrued daily and payable monthly, by applying the following
annual rates to the net assets of the Fund 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
7
<PAGE> 8
MORGAN STANLEY DEAN WITTER U.S. GOVERNMENT MONEY MARKET TRUST
NOTES TO FINANCIAL STATEMENTS July 31, 2000 (unaudited), continued
$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 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.
For the period May 1, 2000 through December 31, 2000, the Investment Manager has
agreed to waive its fee and reimburse expenses to the extent they exceed 0.80%
of the daily net assets of 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.
The Fund is authorized to reimburse the Distributor for specific expenses the
Distributor incurs or plans to incur in promoting the distribution of the Fund'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 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 July
31, 2000, the distribution fee was accrued at the annual rate of 0.08%.
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, 2000 aggregated $11,269,275,952 and
$11,264,516,965, respectively.
Morgan Stanley Dean Witter Trust FSB, an affiliate of the Investment Manager and
Distributor, is the Fund's transfer agent. At July 31, 2000, the Fund had
transfer agent fees and expenses payable of approximately $271,000.
The Fund has an unfunded noncontributory defined benefit pension plan covering
all independent Trustees of the Fund 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, 2000
included in
8
<PAGE> 9
MORGAN STANLEY DEAN WITTER U.S. GOVERNMENT MONEY MARKET TRUST
NOTES TO FINANCIAL STATEMENTS July 31, 2000 (unaudited), continued
Trustees' fees and expenses in the Statement of Operations amounted to $2,970.
At July 31, 2000, the Fund had an accrued pension liability of $52,345 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, 2000 JANUARY 31, 2000
-------------- ----------------
(unaudited)
<S> <C> <C>
Shares sold................................................. 1,715,427,883 2,203,424,057
Shares issued in reinvestment of dividends.................. 29,822,399 45,490,746
-------------- --------------
1,745,250,282 2,248,914,803
Shares repurchased.......................................... (1,706,423,764) (2,185,800,155)
-------------- --------------
Net increase................................................ 38,826,518 63,114,648
============== ==============
</TABLE>
9
<PAGE> 10
MORGAN STANLEY 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 FOR THE YEAR ENDED JANUARY 31,
MONTHS ENDED --------------------------------------------------------------------
JULY 31, 2000 2000 1999 1998 1997 1996
--------------------------------------------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C> <C> <C> <C> <C>
SELECTED PER SHARE DATA:
Net asset value, beginning period... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------ ------ ------ ------ ------ ------
Net investment income............... 0.027 0.044 0.045 0.046 0.043 0.049
Less dividends from net investment
income............................ (0.027) (0.044) (0.045) (0.046) (0.043) (0.049)
------ ------ ------ ------ ------ ------
Net asset value, end of period...... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
====== ====== ====== ====== ====== ======
TOTAL RETURN........................ 2.72%(1) 4.48% 4.63% 4.67% 4.41% 5.00%
RATIOS TO AVERAGE NET ASSETS:
Expenses............................ 0.81%(2)(3) 0.84% 0.94% 1.02% 1.11% 1.09%
Net investment income............... 5.37%(2)(3) 4.34% 4.50% 4.53% 4.29% 4.86%
SUPPLEMENTAL DATA:
Net assets, end of period, in
millions........................... $1,119 $1,081 $1,017 $891 $927 $903
</TABLE>
---------------------
(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
0.82% and 5.36%, respectively.
SEE NOTES TO FINANCIAL STATEMENTS
10
<PAGE> 11
MORGAN STANLEY DEAN WITTER U.S. GOVERNMENT MONEY MARKET 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.
11
<PAGE> 12
TRUSTEES
----------------------------------
Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn
Wayne E. Hedien
James F. Higgins
Dr. Manuel 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
Jonathan R. Page
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
----------------------------------
Deloitte & Touche LLP
Two World Financial Center
New York, New York 10281
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 according-
ly 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
U.S. GOVERNMENT
MONEY MARKET
TRUST
[PHOTO]
Semiannual Report
July 31, 2000
