<PAGE> 1
DEAN WITTER SHORT-TERM U.S. TREASURY TRUST
Two World Trade Center
New York, New York 10048
DEAR SHAREHOLDER:
- --------------------------------------------------------------------------------
During the six months ended November 30, 1994, continued economic growth
fueled improving consumer sentiment and spending, with retail, home and auto
sales rising rapidly in conjunction with higher levels of employment. This
continuing scenario of strong economic growth induced the Federal Reserve Board
to maintain its anti-inflation initiative begun in early February, 1994. At that
time the central bank initiated a series of interest rate increases that brought
the federal-funds rate - the interest rate banks charge each other for overnight
loans - from 3.00 percent to 5.50 percent by November 30, 1994. In addition, the
Federal Reserve Board also increased the discount rate - the rate the Federal
Reserve charges member banks for loans - from 3.00 percent to 4.75 percent.
These increases signaled the end of the central bank's five-year accommodative
monetary policy.
As a result of the Federal Reserve's actions, interest rates on short- and
intermediate-term U.S. Treasury securities were more than 2.75 percentage points
higher on November 30, 1994, than 12 months ago. Consequently, the U.S. Treasury
market recorded its worst 12-month performance in 67 years. On November 30,
1994, the 3-year U.S. Treasury note was yielding 7.61 percent compared to 6.33
percent, six months ago and 4.54 percent, twelve months ago.
PERFORMANCE AND PORTFOLIO STRUCTURE
The Fund's performance for the fiscal year was reflective of the sharply
higher interest rate environment and difficult investment conditions in general,
despite a relatively conservative portfolio maturity structure. For the
six-month period ended November 30, 1994, the Fund posted a total return of 0.53
percent, compared to a return of 1.07 percent for the Lehman Brothers Government
Bond (1-3 Year) Index. The Fund's total return includes income distributions of
$0.24 per share and a change in net asset value from $9.89 on June 1, 1994 to
$9.69 per share on November 30, 1994.
The Fund's distribution rate as of November 30, 1994, was 4.95 percent and
the 30-day SEC yield was 6.14 percent. The Fund, which continues to offer
investors an attractive alternative to other short-term investments, is free
from state and local taxes in all 50 states and the District of Columbia.
The Fund maintains a diversified investment strategy across the maturity
spectrum, often out to a maximum of five years. As interest rates continued to
rise subsequent to the Fund's fiscal year-end (May 31, 1994), the average
maturity was reduced from slightly more than 2 years to its present very
defensive level of 1.4 years.
LOOKING AHEAD
By mid-1995, we expect the economy to slow vis-a-vis the rapid pace
experienced in 1994. This should occur as higher interest rates take their toll.
Although the markets have reacted negatively to concerns regarding anticipated
inflationary pressure, we believe inflation will stabilize in the three to three
and one-half percent range in 1995. If this scenario unfolds in the coming year,
the Fund's average maturity may be gradually extended as attractive investment
opportunities become available. This would enable the Fund to provide an
attractive income stream and a competitive total return.
We appreciate your support of Dean Witter Short-Term U.S. Treasury Trust and
look forward to continuing to serve your investment objectives in the months and
years to come.
Very truly yours,
CHARLES A. FIUMEFREDDO
Charles A. Fiumefreddo
Chairman of the Board
<PAGE> 2
DEAN WITTER SHORT-TERM U.S. TREASURY TRUST
PORTFOLIO OF INVESTMENTS November 30, 1994 (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount (in Coupon Maturity
thousands) Rate Date Value
- ---------- ------ -------- ------------
<C> <S> <C> <C> <C>
U.S. GOVERNMENT OBLIGATIONS (98.9%)
U.S. TREASURY PRINCIPAL STRIPS (7.0%)
$ 10,000 ....................................................... 0.000% 5/15/96 $ 9,019,732
20,000 ....................................................... 0.000 11/15/97 16,007,438
------------
TOTAL U.S. TREASURY PRINCIPAL STRIPS
(IDENTIFIED COST $26,544,042)................................................. 25,027,170
------------
U.S. TREASURY NOTES (83.5%)
4,000 ....................................................... 4.625 8/15/95 3,943,750
5,000 ....................................................... 4.625 2/15/96 4,854,688
30,000 ....................................................... 4.625 2/29/96 29,104,688
5,000 ....................................................... 5.125 2/28/98 4,634,375
5,000 ....................................................... 5.125 3/31/98 4,623,438
7,900 ....................................................... 5.125 6/30/98 7,261,828
5,000 ....................................................... 5.375 5/31/98 4,642,969
30,000 ....................................................... 5.500 2/15/95 29,976,562
25,000 ....................................................... 5.500 7/31/97 23,757,812
10,000 ....................................................... 5.500 9/30/97 9,462,500
10,000 ....................................................... 5.875 5/15/95 9,981,250
40,000 ....................................................... 6.000 6/30/96 39,193,750
40,000 ....................................................... 6.125 12/31/96 39,031,250
10,000 ....................................................... 6.375 6/30/97 9,729,687
25,000 ....................................................... 6.500 11/30/96 24,582,031
15,000 ....................................................... 6.875 10/31/96 14,861,719
40,000 ....................................................... 7.000 9/30/96 39,743,750
------------
TOTAL U.S. TREASURY NOTES
(IDENTIFIED COST $306,738,970)................................................ 299,386,047
------------
U.S. TREASURY BILLS(a) (8.4%)
2,100 ....................................................... 5.070 6/29/95 2,026,376
3,000 ....................................................... 5.120 6/29/95 2,894,823
1,300 ....................................................... 5.165 6/29/95 1,254,423
1,200 ....................................................... 5.250 8/24/95 1,144,760
1,300 ....................................................... 5.255 8/24/95 1,240,157
1,100 ....................................................... 5.258 8/24/95 1,049,364
4,300 ....................................................... 5.260 8/24/95 4,102,058
3,900 ....................................................... 5.270 6/29/95 3,763,270
1,000 ....................................................... 5.610 9/21/95 948,631
</TABLE>
<PAGE> 3
DEAN WITTER SHORT-TERM U.S. TREASURY TRUST
PORTFOLIO OF INVESTMENTS November 30, 1994 (unaudited) (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount (in Coupon Maturity
thousands) Rate Date Value
- ---------- ------ -------- ------------
<C> <S> <C> <C> <C>
$ 1,800 ....................................................... 5.675% 9/21/95 $ 1,707,536
9,500 ....................................................... 6.205 11/16/95 8,901,500
1,200 ....................................................... 6.270 11/16/95 1,124,400
------------
TOTAL U.S. TREASURY BILLS
(IDENTIFIED COST $30,306,863)................................................. 30,157,298
------------
TOTAL INVESTMENTS
(IDENTIFIED COST $363,589,875)(B).............................. 98.9% 354,570,515
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES................... 1.1 3,789,159
----- ------------
NET ASSETS....................................................... 100.0% $358,359,674
----- ------------
----- ------------
</TABLE>
- ---------------
(a) U.S. Treasury bills were purchased on a discount basis. The rate shown
reflects the bond equivalent interest rate.
(b) The aggregate cost of investments for federal income tax purposes is
$363,589,875; the aggregate gross unrealized appreciation is $264,625 and
the aggregate gross unrealized depreciation is $9,283,985, resulting in net
unrealized depreciation of $9,019,360.
See Notes to Financial Statements
<PAGE> 4
DEAN WITTER SHORT-TERM U.S. TREASURY TRUST
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
STATEMENT OF ASSETS AND LIABILITIES
November 30, 1994 (unaudited)
- -----------------------------------------
ASSETS:
Investments in securities, at value
(identified cost $363,589,875) (Note
1)..................................... $ 354,570,515
Cash..................................... 227,068
Receivable for:
Interest............................... 4,683,290
Shares of beneficial interest sold..... 166,107
Deferred organizational expenses (Note
1)..................................... 47,053
Prepaid expenses and other assets........ 121,771
-------------
TOTAL ASSETS..................... 359,815,804
-------------
LIABILITIES:
Payable for:
Shares of beneficial interest
repurchased.......................... 1,029,194
Plan of distribution fee (Note 3)...... 107,811
Investment management fee (Note 2)..... 107,811
Dividends to shareholders.............. 97,755
Accrued expenses and other payables (Note
4)..................................... 113,559
-------------
TOTAL LIABILITIES................ 1,456,130
-------------
NET ASSETS:
Paid-in-capital.......................... 381,295,559
Net unrealized depreciation on
investments............................ (9,019,360)
Accumulated undistributed net investment
income................................. 106,458
Accumulated net realized loss on
investments............................ (14,022,983)
-------------
NET ASSETS....................... $ 358,359,674
=============
NET ASSET VALUE PER SHARE,
36,976,680 shares outstanding
(unlimited shares authorized of $.01
par value)............................. $9.69
-----
-----
STATEMENT OF OPERATIONS For the six months
ended November 30, 1994 (unaudited)
- -----------------------------------------
INVESTMENT INCOME:
INTEREST INCOME......................... $ 12,525,489
-------------
EXPENSES
Plan of distribution fee (Note 3)...... 778,160
Investment management fee (Note 2)..... 778,160
Transfer agent fees and expenses (Note
4)................................... 133,413
Shareholder reports and notices........ 52,486
Registration fees...................... 31,744
Professional fees...................... 25,549
Trustees' fees and expenses (Note 4)... 20,998
Custodian fees......................... 14,168
Organizational expenses (Note 1)....... 13,505
Other.................................. 6,663
-------------
TOTAL EXPENSES....................... 1,854,846
-------------
NET INVESTMENT INCOME.............. 10,670,643
-------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (NOTE 1):
Net realized loss on investments....... (12,158,009)
Net change in unrealized depreciation
on investments....................... 4,220,415
-------------
NET LOSS ON INVESTMENTS.............. (7,937,594)
-------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS........ $ 2,733,049
=============
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the six
months ended
November 30, For the
1994 year ended
(unaudited) May 31, 1994
-------------- -------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income...................................................... $ 10,670,643 $ 30,514,814
Net realized loss on investments........................................... (12,158,009) (1,832,563)
Net change in unrealized appreciation (depreciation) on investments........ 4,220,415 (26,597,480)
-------------- -------------
Net increase in net assets resulting from operations................... 2,733,049 2,084,771
-------------- -------------
Dividends and distributions to shareholders from:
Net investment income...................................................... (10,736,855) (30,758,353)
Net realized gain on investments........................................... -- (298,412)
-------------- -------------
Total dividends and distributions...................................... (10,736,855) (31,056,765)
-------------- -------------
Net decrease from transactions in shares of beneficial interest (Note 5)..... (149,653,596) (39,217,191)
-------------- -------------
Total decrease......................................................... (157,657,402) (68,189,185)
NET ASSETS:
Beginning of period.......................................................... 516,017,076 584,206,261
-------------- -------------
END OF PERIOD (including undistributed net investment income of $106,458 and
$172,670, respectively)..................................................... $ 358,359,674 $ 516,017,076
============== =============
</TABLE>
See Notes to Financial Statements
<PAGE> 5
DEAN WITTER SHORT-TERM U.S. TREASURY TRUST
NOTES TO FINANCIAL STATEMENTS (unaudited)
- --------------------------------------------------------------------------------
1. ORGANIZATION AND ACCOUNTING POLICIES -- Dean Witter Short-Term U.S. Treasury
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 was organized as a Massachusetts business trust on June 4, 1991 and
commenced operations on August 13, 1991.
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, 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) short-term debt securities having maturity date of more
than sixty days at time of purchase are valued on a mark-to-market basis
until sixty days prior to maturity and thereafter at amortized cost based
on their value on the 61st day. Short-term debt securities having a
maturity date of sixty days or less at the time of purchase are valued at
amortized cost.
B. Accounting for Investments -- Security transactions are accounted for on
the trade date (date the order to buy or sell is executed). Realized gains
and losses on security transactions are determined on the identified cost
method. Discounts on securities purchased are amortized over the life of
the respective securities. The Fund does not amortize premiums on
securities purchased. Interest income is accrued daily.
C. Federal Income Tax Status -- It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute all of its taxable 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.
E. Organizational Expenses -- Dean Witter InterCapital Inc. (the
"Investment Manager") paid the organizational expenses of the Fund in the
amount of approximately $135,000. The Fund has reimbursed the Investment
Manager for the full amount thereof which has been deferred and is being
amortized on the straight-line method over a period not to exceed five
years from the commencement of operations.
<PAGE> 6
DEAN WITTER SHORT-TERM U.S. TREASURY TRUST
NOTES TO FINANCIAL STATEMENTS (unaudited) (continued)
- --------------------------------------------------------------------------------
2. INVESTMENT MANAGEMENT AGREEMENT -- Pursuant to an Investment Management
Agreement, the Fund pays its Investment Manager a management fee, accrued daily
and payable monthly, by applying the annual rate of 0.35% to the net assets of
the Fund determined as of the close of each business day.
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 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 -- 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.
Under the Plan, the Distributor bears the expense of all promotional and
distribution related activities on behalf of the Fund, 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 dealers who have entered into selected dealer agreements
with the Distributor under the Plan: (1) compensation to and expenses of DWR's
and other selected broker-dealers' account executives 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 Fund's shares; (3) expenses incurred in connection with promoting
sales of the Fund'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 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 0.35% of the Fund's
average daily net assets. For the six months ended November 30, 1994, the
distribution fee was accrued at the annual rate of 0.35%.
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 November 30, 1994 aggregated $49,954,269 and $226,249,730,
respectively.
Dean Witter Trust Company, an affiliate of the Manager and Distributor, is
the Fund's transfer agent. At November 30, 1994, the Fund had transfer agent
fees and expenses payable of approximately $51,900.
On January 1, 1994, the Fund adopted an unfunded noncontributory defined
benefit pension plan covering all independent Trustees of the Fund 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 costs for
the six months ended November 30, 1994, included in Trustees' fees and expenses
in the Statement of Operations amounted to $10,981. At November 30, 1994, the
Fund had an accrued pension liability of $10,981 which is included in accrued
expenses in the Statement of Assets and Liabilities.
<PAGE> 7
DEAN WITTER SHORT-TERM U.S. TREASURY TRUST
NOTES TO FINANCIAL STATEMENTS (unaudited) (continued)
- --------------------------------------------------------------------------------
5. SHARES OF BENEFICIAL INTEREST -- Transactions in shares of beneficial
interest were as follows:
<TABLE>
<CAPTION>
For the six
months ended For the year ended
November 30, 1994 May 31, 1994
------------------------------ ------------------------------
Shares Amount Shares Amount
------------ -------------- ------------ --------------
<S> <C> <C> <C> <C>
Sold..................................... 10,384,499 $ 102,448,382 81,445,102 $ 837,411,660
Shares issued in reinvestment of
dividends and distributions............ 905,204 8,891,796 2,575,965 26,371,210
------------ -------------- ------------ --------------
11,289,703 111,340,178 84,021,067 863,782,870
Repurchased.............................. (26,526,719) (260,993,774) (88,298,619) (903,000,061)
------------ -------------- ------------ --------------
Net decrease............................. (15,237,016) $ (149,653,596) (4,277,552) $ (39,217,191)
========== ============ ========== ============
</TABLE>
6. FEDERAL INCOME TAX STATUS -- Any net 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 such net capital losses of approximately $1,865,000 during fiscal
1994. As of May 31, 1994, the Fund had temporary book/tax differences primarily
attributable to post-October loss deferrals.
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Selected ratios and per share data for a share of beneficial interest
outstanding throughout each period:
<TABLE>
<CAPTION>
For the For the
six period
months For the For the August
ended year year 13, 1991*
November ended ended through
30, 1994 May 31, May 31, May 31,
(unaudited) 1994 1993 1992
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period... $ 9.88 $ 10.34 $ 10.21 $ 10.00
--------- --------- --------- ---------
Net investment income.................. 0.24 0.49 0.54 0.44
Net realized and unrealized gain (loss)
on investments....................... (0.19) (0.45) 0.13 0.20
--------- --------- --------- ---------
Total from investment operations....... 0.05 0.04 0.67 0.64
--------- --------- --------- ---------
Less dividends and distributions from:
Net investment income................ (0.24) (0.50) (0.53) (0.43)
Net realized gain.................... -- -- (0.01) --
--------- --------- --------- ---------
Total dividends and distributions...... (0.24) (0.50) (0.54) (0.43)
--------- --------- --------- ---------
Net asset value, end of period......... $ 9.69 $ 9.88 $ 10.34 $ 10.21
======== ======== ======== ========
TOTAL INVESTMENT RETURN................ 0.53%(1) 0.25% 6.75% 6.55%(1)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands)........................... $ 358,360 $ 516,017 $ 584,206 $ 523,555
Ratios to average net assets:
Expenses............................. 0.42%(2) 0.79% 0.80% 0.79%(2)(3)
Net investment income................ 2.41%(2) 4.74% 5.18% 5.49%(2)(3)
Portfolio turnover rate................ 12%(1) 49% 21% 12%(1)
</TABLE>
- ---------------
* Commencement of operations.
(1) Not annualized.
(2) Annualized.
(3) If the Fund had borne all expenses that were assumed or waived by the
Investment Manager, the above annualized expense and net investment income
ratios would have been 0.81% and 5.47%, respectively.
See Notes to Financial Statements
<PAGE> 8
TRUSTEES
- -----------------------------
Jack F. Bennett
Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn
John R. Haire
Dr. Manuel H. Johnson
Paul Kolton
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
Rajesh K. Gupta
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 ADVISER
- -----------------------------
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
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.
DEAN WITTER
SHORT-TERM
U.S. TREASURY
TRUST
[GRAPHIC IMAGE #1: PICTURE OF AN AMERICAN FLAG]
SEMIANNUAL REPORT
NOVEMBER 30, 1994
