<PAGE>
DEAN WITTER U.S. GOVERNMENT SECURITIES TRUST TWO WORLD TRADE CENTER, NEW YORK,
NEW YORK 10048
LETTER TO THE SHAREHOLDERS DECEMBER 31, 1996
DEAR SHAREHOLDER:
During the twelve-months ended December 31, 1996, interest rates on U.S.
Treasury securities were highly volatile. In early 1996, interest rates rose as
economic data supported the perception that the economy had begun to accelerate.
Fueled by consumer demand and reinvigorated by low mortgage rates, rebates and
various incentives by the auto dealers, retail sales and housing starts soared.
Declining inventories, combined with
strong employment data, caused considerable consternation about a quickly
rebounding economy and a possible inflation surge. By September, however,
evidence of a moderating economy and the perception that the Federal Reserve
Board would not take immediate action to slow the economy enabled interest rates
to decline rather sharply and quickly. This sentiment was short-lived as the
economy again displayed signs of strength in December, resulting in sharply
rising interest rates. On December 31, 1996, the 30-year U.S. Treasury bond was
yielding 6.64 percent compared to 5.95 percent twelve-months ago.
PERFORMANCE AND PORTFOLIO COMPOSITION
Against this backdrop, Dean Witter U.S. Government Securities Trust produced a
total return of 3.16 percent for the twelve-month period ended December 31,
1996. During the same period, the Lehman Brothers General U.S. Government Funds
Index returned 2.77 percent, while the Lipper
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
December--1986 10000 10000 10000
<S> <C> <C> <C>
10392 10220 10050
December--1988 11093 10838 10719
12323 12496 12050
December--1990 13370 13595 13016
14898 15666 14920
December--1992 15756 16798 15830
16880 18589 17147
December--1994 16287 17961 16335
19014 21255 19102
December--1996 19614 21844 19486
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RETURNS.
(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 contingent deferred sales charge (CDSC) (1 year--5%,
5 years--2%, 10 years-- 0%). See the Fund's current prospectus for complete
details on fees and sales charges.
(3) Closing value assuming a complete redemption on December 31, 1996.
(4) The Lehman Brothers General U.S. Government Index is a broad-based,
unmanaged measure of all U.S. Government and U.S. Treasury Securities. The
Index does not include any expenses, fees or charges. The Index is unmanaged
and should not be considered an investment.
(5) The Lipper General U.S. Government Funds Index is an equally-weighted
performance index of the largest qualifying funds (based on net assets) in
the Lipper General U.S. Government Funds objective. The Index, which is
adjusted for capital gains distributions and income dividends, is unmanaged
and should not be considered an investment. There are currently 30 funds
represented in this Index.
<PAGE>
DEAN WITTER U.S. GOVERNMENT SECURITIES TRUST
LETTER TO THE SHAREHOLDERS DECEMBER 31, 1996, CONTINUED
U.S. Government Fund Index returned 2.01 percent. During the fiscal year, the
Fund paid income distributions totaling approximately $0.56 per share and its
net asset value declined from $9.21 per share on December 31, 1995, to $8.92 per
share at the end of 1996. The accompanying chart illustrates the growth of a
$10,000 investment in the Fund for the ten-year period beginning December 31,
1986 through the fiscal year ended December 31, 1996, versus a similar
hypothetical investment in the issues that comprise the Lehman Brothers General
U.S. Government Index and the Lipper General U.S. Government Funds Index. (The
Fund's inception date is June 29, 1984.)
On December 31, 1996, the Fund's net assets exceeded $6.4 billion, with 81
percent of the portfolio invested in Government National Mortgage Association
mortgage-backed securities (GNMAs), 15 percent in U.S. Treasury and Resolution
Funding Corporation zero coupon securities (REFCORP) and the remaining 4 percent
in U.S. Treasury securities. On December 31, 1996, the Fund's duration was
approximately 5.5 years. We believe that GNMAs continue to offer significant
long-term value, and, in the current investment environment, offer not only an
incremental yield incentive over U.S. Treasury securities of similar maturity
but also the potential for attractive total return.
LOOKING AHEAD
We expect the U.S. economy to maintain a slow-to-moderate pace for 1997, with
inflation remaining at a level similar to 1996. Before taking action to slow the
economy, the Federal Reserve Board is likely to look for sustained confirmation
of rising inflation and a strong economy.
We appreciate your ongoing support of Dean Witter U.S. Government Securities
Trust and look forward to continuing to serve your investment needs and
objectives.
Very truly yours,
[SIGNATURE]
CHARLES A. FIUMEFREDDO
CHAIRMAN OF THE BOARD
<PAGE>
DEAN WITTER U.S. GOVERNMENT SECURITIES TRUST
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1996
<TABLE>
<CAPTION>
PRINCIPAL DESCRIPTION
AMOUNT IN AND COUPON
THOUSANDS MATURITY DATE RATE VALUE
- -----------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
MORTGAGE-BACKED SECURITIES (80.5%)
Government National Mortgage Assoc. I (79.6%)
$ 348,269 10/15/22-02/15/24....................................... 6.50 % $ 332,053,085
25,000 (a)..................................................... 7.00 24,437,500
2,194,356 04/15/17-04/15/26....................................... 7.00 2,144,983,431
1,098,215 11/15/02-06/15/26....................................... 7.50 1,098,557,782
372,670 10/15/16-07/15/26....................................... 8.00 380,240,075
390,028 07/15/06-04/15/25....................................... 8.50 404,044,832
283,195 10/15/08-08/15/21....................................... 9.00 298,239,454
199,610 10/15/09-12/15/20....................................... 9.50 215,641,679
214,924 11/15/09-11/15/20....................................... 10.00 235,543,142
588 04/15/10-06/15/15....................................... 12.50 676,881
-----------------
5,134,417,861
-----------------
Government National Mortgage Assoc. II (0.7%)
49,127 01/20/24-02/20/24....................................... 6.50 46,624,166
-----------------
Government National Mortgage Assoc. GPM I (0.2%)
9,269 06/15/13-09/15/15....................................... 12.25 10,794,963
-----------------
TOTAL MORTGAGE-BACKED SECURITIES
(IDENTIFIED COST $5,168,329,453)................................... 5,191,836,990
-----------------
U.S. GOVERNMENT OBLIGATIONS (13.4%)
U.S. Treasury Notes (4.1%)
29,000 02/28/97................................................ 6.875 29,073,370
42,500 03/31/97................................................ 6.875 42,660,650
75,000 04/15/97................................................ 8.50 75,653,250
58,000 04/30/97................................................ 6.875 58,294,640
55,000 04/15/99................................................ 7.00 56,235,850
-----------------
261,917,760
-----------------
U.S. Treasury Coupon Strips (9.3%)
123,000 02/15/04................................................ 0.00 78,426,030
380,000 05/15/04................................................ 0.00 238,001,600
385,000 08/15/04................................................ 0.00 237,129,200
75,000 11/15/04................................................ 0.00 45,396,750
-----------------
598,953,580
-----------------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(IDENTIFIED COST $778,502,738)..................................... 860,871,340
-----------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER U.S. GOVERNMENT SECURITIES TRUST
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1996, CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL DESCRIPTION
AMOUNT IN AND COUPON
THOUSANDS MATURITY DATE RATE VALUE
- -----------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
U.S. GOVERNMENT AGENCIES (6.2%)
Resolution Funding Corp Zero Coupon Strips
$ 33,500 07/15/02................................................ 0.00 % $ 23,649,660
10,049 10/15/02................................................ 0.00 6,975,614
109,000 04/15/03................................................ 0.00 72,932,990
55,000 07/15/03................................................ 0.00 36,196,600
69,000 10/15/03................................................ 0.00 44,616,090
123,882 01/15/04................................................ 0.00 78,748,072
104,419 04/15/04................................................ 0.00 65,220,107
80,000 07/15/04................................................ 0.00 49,127,200
40,000 04/15/06................................................ 0.00 21,746,800
5,000 10/15/06................................................ 0.00 2,626,900
-----------------
TOTAL U.S. GOVERNMENT AGENCIES
(IDENTIFIED COST $365,230,502)..................................... 401,840,033
-----------------
TOTAL INVESTMENTS
(IDENTIFIED COST $6,312,062,693) (B)...... 100.1% 6,454,548,363
LIABILITIES IN EXCESS OF CASH AND OTHER
ASSETS.................................... (0.1) (5,010,207)
----- -------------
NET ASSETS................................ 100.0% $6,449,538,156
----- -------------
----- -------------
<FN>
- ---------------------
GPM Graduated Payment Mortgage.
(a) Securities purchased on a forward commitment basis with an approximate
principal amount and no definite maturity date; the actual principal
amount and maturity date will be determined upon settlement.
(b) The aggregate cost for federal income tax purposes approximates identified
cost. The aggregate gross unrealized appreciation is $211,958,662 and the
aggregate gross unrealized depreciation is $69,472,992, resulting in net
unrealized appreciation of $142,485,670.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER U.S. GOVERNMENT SECURITIES TRUST
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $6,312,062,693).......................... $ 6,454,548,363
Cash........................................................ 449,209
Receivable for:
Interest................................................ 37,055,157
Shares of beneficial interest sold...................... 13,471,656
Prepaid expenses and other assets........................... 100,149
---------------
TOTAL ASSETS........................................... 6,505,624,534
---------------
LIABILITIES:
Payable for:
Investments purchased................................... 24,730,035
Dividends to shareholders............................... 18,555,177
Shares of beneficial interest repurchased............... 5,216,188
Plan of distribution fee................................ 4,283,834
Investment management fee............................... 2,404,212
Accrued expenses and other payables......................... 896,932
---------------
TOTAL LIABILITIES...................................... 56,086,378
---------------
NET ASSETS:
Paid-in-capital............................................. 7,598,295,399
Net unrealized appreciation................................. 142,485,670
Dividends in excess of net investment income................ (4,722)
Accumulated net realized loss............................... (1,291,238,191)
---------------
NET ASSETS............................................. $ 6,449,538,156
---------------
---------------
NET ASSET VALUE PER SHARE,
723,414,184 SHARES OUTSTANDING (UNLIMITED SHARES
AUTHORIZED OF $.01 PAR VALUE).............................
$8.92
---------------
---------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER U.S. GOVERNMENT SECURITIES TRUST
FINANCIAL STATEMENTS, CONTINUED
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<S> <C>
NET INVESTMENT INCOME:
INTEREST INCOME............................................. $ 533,679,451
-------------
EXPENSES
Plan of distribution fee.................................... 53,189,389
Investment management fee................................... 29,579,546
Transfer agent fees and expenses............................ 4,382,628
Custodian fees.............................................. 1,025,583
Shareholder reports and notices............................. 177,325
Professional fees........................................... 107,597
Registration fees........................................... 31,140
Trustees' fees and expenses................................. 22,931
Servicing fees.............................................. 19,454
Other....................................................... 68,060
-------------
TOTAL EXPENSES......................................... 88,603,653
LESS EXPENSE OFFSET.................................... (20,817)
-------------
NET EXPENSES........................................... 88,582,836
-------------
NET INVESTMENT INCOME.................................. 445,096,615
-------------
NET REALIZED AND UNREALIZED LOSS:
Net realized loss........................................... (18,950,945)
Net change in unrealized appreciation....................... (237,138,336)
-------------
NET LOSS............................................... (256,089,281)
-------------
NET INCREASE................................................ $ 189,007,334
-------------
-------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER U.S. GOVERNMENT SECURITIES TRUST
FINANCIAL STATEMENTS, CONTINUED
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE YEAR
FOR THE YEAR ENDED
ENDED DECEMBER 31,
DECEMBER 31, 1996 1995
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income....................................... $ 445,096,615 $ 522,928,136
Net realized loss........................................... (18,950,945) (77,736,417)
Net change in unrealized appreciation/depreciation.......... (237,138,336) 811,733,423
----------------- -------------
NET INCREASE........................................... 189,007,334 1,256,925,142
Dividends from net investment income........................ (447,472,130) (522,076,848)
Net decrease from transactions in shares of beneficial
interest.................................................. (1,246,903,069) (990,646,568)
----------------- -------------
NET DECREASE........................................... (1,505,367,865) (255,798,274)
NET ASSETS:
Beginning of period......................................... 7,954,906,021 8,210,704,295
----------------- -------------
END OF PERIOD
(INCLUDING DIVIDENDS IN EXCESS OF NET INVESTMENT INCOME
OF $4,722 AND UNDISTRIBUTED NET INVESTMENT INCOME OF
$2,370,793, RESPECTIVELY)............................... $ 6,449,538,156 $7,954,906,021
----------------- -------------
----------------- -------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER U.S. GOVERNMENT SECURITIES TRUST
NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1996
1. ORGANIZATION AND ACCOUNTING POLICIES
Dean Witter U.S. Government Securities 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 objective is high
current income consistent with safety of principal. The Fund seeks to achieve
its objective by investing in obligations issued or guaranteed by the U.S.
Government or its instrumentalities. The Fund was organized as a Massachusetts
business trust on September 29, 1983 and commenced operations on June 29, 1984.
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 -- (1) all portfolio securities for which
over-the-counter market quotations are readily available are valued at the
latest available bid price prior to the time of valuation; (2) when market
quotations are not readily available, including circumstances under which it is
determined by Dean Witter InterCapital Inc. (the "Investment Manager") that sale
or bid prices are not reflective of a security's market value, portfolio
securities are valued at their fair value as determined in good faith under
procedures established by and under the general supervision of the Trustees
(valuation of debt securities for which market quotations are not readily
available may be based upon current market prices of securities which are
comparable in coupon, rating and maturity or an appropriate matrix utilizing
similar factors); and (3) certain portfolio securities may be valued by an
outside pricing service approved by the Trustees. The pricing service may
utilize a matrix system incorporating security quality, maturity and coupon as
the evaluation model parameters, and/ or research and evaluations by its staff,
including review of broker-dealer market price quotations, if available, in
determining what it believes is the fair valuation of the securities valued by
such pricing service; (4) 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 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 over the life of the respective securities. Interest
income is accrued daily.
<PAGE>
DEAN WITTER U.S. GOVERNMENT SECURITIES TRUST
NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1996, CONTINUED
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 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.
2. INVESTMENT MANAGEMENT AGREEMENT
Pursuant to an Investment Management Agreement with 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 Fund's net assets
determined at the close of each business day: 0.50% to the portion of daily net
assets not exceeding $1 billion; 0.475% to the portion of daily net assets
exceeding $1 billion but not exceeding $1.5 billion; 0.45% to the portion of
daily net assets exceeding $1.5 billion but not exceeding $2 billion; 0.425% to
the portion of daily net assets exceeding $2 billion but not exceeding $2.5
billion; 0.40% to the portion of daily net assets exceeding $2.5 billion but not
exceeding $5 billion; 0.375% to the portion of daily net assets exceeding $5
billion but not exceeding $7.5 billion; 0.35% to the portion of daily net assets
exceeding $7.5 billion but not exceeding $10 billion; 0.325% to the portion of
daily net assets exceeding $10 billion but not exceeding $12.5 billion; and
0.30% to the portion of daily net assets exceeding $12.5 billion.
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
<PAGE>
DEAN WITTER U.S. GOVERNMENT SECURITIES TRUST
NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1996, CONTINUED
all 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.
3. PLAN OF DISTRIBUTION
Shares of the Fund are distributed by Dean Witter Distributors Inc. (the
"Distributor"), an affiliate of the Investment Manager. The Fund has adopted a
Plan of Distribution (the "Plan") pursuant to Rule 12b-1 under the Act pursuant
to which the Fund pays the Distributor compensation, accrued daily and payable
monthly, at an annual rate of 0.75% (0.65% on amounts over $10 billion) of the
lesser of: (a) the average daily aggregate gross sales of the Fund's shares
since the Fund's inception (not including reinvestment of dividend or capital
gain distributions) less the average daily aggregate net asset value of the
Fund's shares redeemed since the Fund's inception upon which a contingent
deferred sales charge has been imposed or upon which such charge has been
waived; or (b) the Fund's average daily net assets. Amounts paid under the Plan
are paid to the Distributor to compensate it for the services provided and the
expenses borne by it and others in the distribution of the Fund's shares,
including the payment of commissions for sales of the Fund's shares and
incentive compensation to, and expenses of, the account executives of Dean
Witter Reynolds Inc., an affiliate of the Investment Manager and Distributor,
and other employees or selected broker-dealers who engage in or support
distribution of the Fund's shares or who service shareholder accounts, including
overhead and telephone expenses, printing and distribution of prospectuses and
reports used in connection with the offering of the Fund's shares to other than
current shareholders and preparation, printing and distribution of sales
literature and advertising materials. In addition, the Distributor may be
compensated under the Plan for its opportunity costs in advancing such amounts
which compensation would be in the form of a carrying charge on any unreimbursed
expenses incurred by the Distributor.
Provided that the Plan continues in effect, any cumulative expenses incurred by
the Distributor but not yet recovered, may be recovered through future
distribution fees from the Fund and contingent deferred sales charges from the
Fund's shareholders.
Although there is no legal obligation for the Fund to pay expenses incurred in
excess of payments made to the Distributor under the Plan and the proceeds of
contingent deferred sales charges paid by investors upon redemption of shares,
if for any reason the Plan is terminated, the Trustees will consider at that
time the manner in which to treat such expenses. The Distributor has advised the
Fund that such excess amounts, including carrying charges, total $68,120,003 at
December 31, 1996.
<PAGE>
DEAN WITTER U.S. GOVERNMENT SECURITIES TRUST
NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1996, CONTINUED
The Distributor has informed the Fund that for the year ended December 31, 1996,
it received approximately $8,964,000 in contingent deferred sales charges from
certain redemptions of the Fund's shares.
4. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES
The costs of purchases and sales/prepayments of portfolio securities, excluding
short-term investments, for the year ended December 31, 1996 were $541,075,742
and $1,760,020,882, respectively.
Dean Witter Trust Company, an affiliate of the Investment Manager and
Distributor, is the Fund's transfer agent. At December 31, 1996, the Fund had
transfer agent fees and expenses payable of approximately $546,000.
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 year ended December 31, 1996
included in Trustees' fees and expenses in the Statement of Operations amounted
to $1,285. At December 31, 1996, the Fund had an accrued pension liability of
$50,453 included in accrued expenses in the Statement of Assets and Liabilities.
5. SHARES OF BENEFICIAL INTEREST
Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED FOR THE YEAR ENDED
DECEMBER 31, 1996 DECEMBER 31, 1995
---------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
----------- -------------- ----------- ------------
<S> <C> <C> <C> <C>
Sold............................................................. 44,291,927 $ 394,473,930 48,336,027 $429,525,036
Reinvestment of dividends........................................ 25,980,320 230,960,458 30,293,874 269,738,501
----------- -------------- ----------- ------------
70,272,247 625,434,388 78,629,901 699,263,537
Repurchased...................................................... (210,573,457) (1,872,337,457) (190,805,203) (1,689,910,105)
----------- -------------- ----------- ------------
Net decrease..................................................... (140,301,210) $(1,246,903,069) (112,175,302) $(990,646,568)
----------- -------------- ----------- ------------
----------- -------------- ----------- ------------
</TABLE>
<PAGE>
DEAN WITTER U.S. GOVERNMENT SECURITIES TRUST
NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1996, CONTINUED
6. FEDERAL INCOME TAX STATUS
At December 31, 1996, the Fund had a net capital loss carryover which may be
used to offset future capital gains to the extent provided by regulations which
is available through December 31 of the following years:
<TABLE>
<CAPTION>
IN THOUSANDS
---------------------------------------------------------------------------------------------------------
1997 1998 1999 2000 2001 2002 2003 2004 Total
--------- --------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 270,987 $ 108,731 $ 261,525 $ 154,964 $ 263,492 $ 118,056 $ 63,667 $ 49,143 $1,290,565
--------- --------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- --------- ---------
</TABLE>
Capital losses incurred after October 31 ("post-October" losses) within the
taxable year are deemed to arise on the first business day of the Fund's next
taxable year. The Fund incurred and will elect to defer net capital losses of
approximately $673,000 during fiscal 1996.
At December 31, 1996, the Fund had temporary book/tax differences primarily
attributable to post-October losses and a permanent book/tax difference
attributable to an expired capital loss carryover. To reflect reclassifications
arising from permanent book/tax differences for the year ended December 31,
1996, accumulated net realized loss was credited and paid-in-capital was charged
$277,199,313.
<PAGE>
DEAN WITTER U.S. GOVERNMENT SECURITIES TRUST
FINANCIAL HIGHLIGHTS
Selected ratios and per share data for a share of beneficial interest
outstanding throughout each period:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31
----------------------------------------------------------------------------------------------------------------
1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net asset value,
beginning of
period.......... $ 9.21 $ 8.41 $ 9.31 $ 9.30 $ 9.52 $ 9.37 $ 9.51 $ 9.42 $ 9.75 $ 10.33
---------- --------- --------- ---------- --------- --------- ---------- --------- --------- ----------
Net investment
income.......... 0.56 0.57 0.58 0.64 0.74 0.87 0.90 0.91 0.97 0.96
Net realized and
unrealized gain
(loss).......... (0.29) 0.80 (0.90) 0.01 (0.22) 0.15 (0.14) 0.09 (0.33) (0.58)
---------- --------- --------- ---------- --------- --------- ---------- --------- --------- ----------
Total from
investment
operations...... 0.27 1.37 (0.32) 0.65 0.52 1.02 0.76 1.00 0.64 0.38
---------- --------- --------- ---------- --------- --------- ---------- --------- --------- ----------
Less dividends
from net
investment
income.......... (0.56) (0.57) (0.58) (0.64) (0.74) (0.87) (0.90) (0.91) (0.97) (0.96)
---------- --------- --------- ---------- --------- --------- ---------- --------- --------- ----------
Net asset value,
end of period... $ 8.92 $ 9.21 $ 8.41 $ 9.31 $ 9.30 $ 9.52 $ 9.37 $ 9.51 $ 9.42 $ 9.75
---------- --------- --------- ---------- --------- --------- ---------- --------- --------- ----------
---------- --------- --------- ---------- --------- --------- ---------- --------- --------- ----------
TOTAL INVESTMENT
RETURN+.......... 3.16% 16.74% (3.51)% 7.13% 5.76% 11.43% 8.49% 11.10% 6.74% 3.92%
RATIOS TO AVERAGE
NET ASSETS:
Expenses......... 1.25% 1.24% 1.22% 1.18% 1.20% 1.17% 1.23% 1.19% 1.21% 1.18%
Net investment
income.......... 6.28% 6.44% 6.57% 6.78% 7.91% 9.23% 9.60% 9.62% 10.01% 9.63%
SUPPLEMENTAL DATA:
Net assets, end
of period, in
millions........ $6,450 $7,955 $8,211 $12,235 $12,484 $11,736 $9,829 $10,167 $10,366 $10,418
Portfolio
turnover rate... 8% 14% 26% 32% 40% 104% 54% 44% 15% 51%
</TABLE>
- ------------------------
+ Does not reflect the deduction of sales charge. Calculated based on the net
asset value as of the last business day of the period.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER U.S. GOVERNMENT SECURITIES TRUST
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE SHAREHOLDERS AND TRUSTEES
OF DEAN WITTER U.S. GOVERNMENT SECURITIES TRUST
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Dean Witter U.S. Government
Securities Trust (the "Fund") at December 31, 1996, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended and the financial highlights for each of
the ten years in the period then ended, in conformity with generally accepted
accounting principles. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the responsibility of the
Fund's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
financial statements in accordance with generally accepted auditing standards
which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at December 31, 1996 by correspondence with the
custodian and a broker, provide a reasonable basis for the opinion expressed
above.
PRICE WATERHOUSE LLP
1177 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10036
FEBRUARY 18, 1997
<PAGE>
(This page has been left blank intentionally.)
<PAGE>
DEAN WITTER U.S. GOVERNMENT SECURITIES TRUST
GROWTH OF $10,000
DATE TOTAL LEHMAN IX LIPPER IX
- --------------------------------------------------------------------------------
December 31, 1986 $10,000 $10,000 $10,000
December 31, 1987 $10,392 $10,220 $10,050
December 31, 1988 $11,093 $10,938 $10,719
December 31, 1989 $12,323 $12,495 $12,050
December 31, 1990 $13,370 $13,585 $13,016
December 31, 1991 $14,898 $15,666 $14,920
December 31, 1992 $15,756 $16,798 $15,830
December 31, 1993 $16,880 $18,589 $17,147
December 31, 1994 $16,287 $17,961 $16,335
December 31, 1995 $19,014 $21,255 $19,102
December 31, 1996 $19,614(3) $21,844 $19,486
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
1 YEAR 5 YEARS 10 YEARS
------------------------------------------------
3.16(1) 5.65(1) 6.97(1)
------------------------------------------------
-1.69(2) 5.35(2) 6.97(2)
------------------------------------------------
------------------------------------------------------------
Fund Lehman (4) Lipper IX (5)
------- ------- -------
------------------------------------------------------------
Past performance is not predictive of future returns.
- ---------------------------------------
(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 contingent deferred sales charge (CDSC) (1 year-5%,
5 years-2%, 10 years-0). See the Fund's current prospectus for complete
details on fees and sales charges.
(3) Closing value, assuming a complete redemption on December 31, 1996.
(4) The Lehman Brothers General U.S. Government Index is a broad-based,
unmanaged measure of all U.S. Government and U.S. Treasury Securities. The
Index does not include any expenses, fees or charges. The Index is
unmanaged and should not be considered an investment.
(5) The Lipper General U.S. Government Funds Index is an equally-weighted
performance index of the largest qualifying funds (based on net assets) in
the Lipper General U.S. Government Funds objective. The Index, which is
adjusted for capital gains distributions and income dividends, is unmanaged
and should not be considered an investment. There are currently 30 funds
represented in this index.
