<PAGE>
DEAN WITTER SHORT-TERM U.S. TREASURY TRUST
Two World Trade Center, New York, New York 10048
LETTER TO THE SHAREHOLDERS November 30, 1995
DEAR SHAREHOLDER:
During the six months ended November 30, 1995, interest rates continued to
decline. By the end of November, yields on intermediate- and long-term bonds
declined to levels last seen before the Federal Reserve Board started to
raise interest rates in February 1994. On November 30, the 30-year U.S.
Treasury bond was yielding 6.14 percent, compared to 6.67 percent, six months
ago. Short-term interest rates also declined during the reporting period. At
the end of the period, the 2-year U.S. Treasury note was yielding 5.36
percent, compared to 5.89 percent, six months ago.
Much of the bond market's strength during the past six months can be
attributed to the continued slowdown in economic activity, particularly in
the housing, automobile and retail sectors. In addition, despite today's
relatively low unemployment level and the volatility of the commodities
markets, inflation has stabilized below three percent. Recent economic data
support the perception that the central bank has successfully orchestrated a
soft landing whereby the U.S. economy is growing quickly enough to avoid
recession, yet not so rapidly that inflationary pressure becomes a major
issue.
PERFORMANCE AND PORTFOLIO STRUCTURE
Against this backdrop, Dean Witter Short-Term U.S. Treasury Trust produced a
total return of 3.45 percent for the six months ended November 30, 1995,
compared to a return of 3.76 percent for the Lehman Brothers Government Bond
(1-3 year) Index over the same period. On November 30, the Fund's net assets
totaled $287.8 million. During the six-month period under review, the Fund
paid income distributions totalling approximately $0.27 per share. The Fund,
whose income is free from state and local taxes in all 50 states and the
District of Columbia, continues to offer investors an attractive alternative
to other short-term investments.
The Fund maintains a diversified investment strategy across the maturity
spectrum, often out to a maximum of five years. The Fund's performance
<PAGE>
DEAN WITTER SHORT-TERM U.S. TREASURY TRUST
LETTER TO THE SHAREHOLDERS November 30, 1995, continued
during the semiannual period was reflective of the sharply lower interest
rate environment. In response to 1995's market rally, the Fund's average
maturity was gradually extended as attractive investment opportunities became
available. This enabled the Fund to continue to provide a competitive level
of income as well as capital appreciation. On November 30, 1995, the Fund's
average maturity was approximately 2.0 years.
LOOKING AHEAD
We believe the U.S. economy will maintain a slow to moderate pace into the
first quarter of 1996. Despite a 25 basis point cut in the federal-funds rate
in July 1995 and again in December, we believe that the Federal Reserve Board
will want to see a sustained confirmation of weak economic trends before
taking significant further action, unless the legislators in Washington put
together a credible deficit-reduction package. Inflation should remain
subdued in the months ahead.
We appreciate your ongoing support of Dean Witter Short-Term U.S. Treasury
Trust and look forward to continuing to serve your investment objectives.
Very truly yours,
/s/ Charles A. Fiumefreddo
CHARLES A. FIUMEFREDDO
Chairman of the Board
<PAGE>
DEAN WITTER SHORT-TERM U.S. TREASURY TRUST
PORTFOLIO OF INVESTMENTS November 30, 1995 (unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS DESCRIPTION AND MATURITY DATE COUPON RATE VALUE
- ----------- ---------------------------------------------------------------- ------------- -------------
<S> <C> <C> <C>
U.S. GOVERNMENT OBLIGATIONS (98.5%)
U.S. Treasury Notes (91.8%)
$20,000 07/31/97 ....................................................... 5.50% $ 20,034,375
10,000 09/30/97 ....................................................... 5.50 10,018,750
8,500 01/31/98 ....................................................... 5.625 8,534,531
7,500 10/31/00 ....................................................... 5.75 7,562,109
5,000 06/30/00 ....................................................... 5.875 5,067,188
18,500 06/30/96 ....................................................... 6.00 18,554,922
2,500 10/15/99 ....................................................... 6.00 2,544,141
40,000 12/31/96 ....................................................... 6.125 40,325,000
3,000 05/31/00 ....................................................... 6.25 3,082,969
10,000 06/30/97 ....................................................... 6.375 10,148,438
20,000 01/15/00 ....................................................... 6.375 20,625,000
25,000 11/30/96 ....................................................... 6.50 25,253,906
10,000 04/30/00 ....................................................... 6.75 10,464,062
15,000 10/31/96 ....................................................... 6.875 15,185,156
40,000 09/30/96 ....................................................... 7.00 40,487,500
20,000 02/29/00 ....................................................... 7.125 21,178,125
5,000 02/15/98 ....................................................... 7.25 5,184,375
-------------
264,250,547
-------------
U.S. Treasury Strips (5.9%)
10,000 05/15/96 (Principal) ........................................... 0.00 9,753,003
5,000 02/15/00 (Principal) ........................................... 0.00 3,964,460
4,000 02/15/00 (Coupon) .............................................. 0.00 3,178,069
-------------
16,895,532
-------------
U.S. Treasury Bills (a) (0.8%)
2,300 12/07/95 - 12/14/95 ............................................ 5.38 - 5.86 2,296,133
-------------
TOTAL INVESTMENTS (Identified Cost $278,795,355) (b) ........... 98.5% 283,442,212
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES ................. 1.5 4,331,874
-------------
NET ASSETS ..................................................... 100.0% $287,774,086
=============
</TABLE>
- ------------
(a) Securities were purchased on a discount basis. The interest rates shown
have been adjusted to reflect a money market equivalent yield.
(b) The aggregate cost for federal income tax purposes is $278,795,355; the
aggregate gross unrealized appreciation is $4,842,969 and the aggregate
gross unrealized depreciation is $196,112, resulting in net unrealized
appreciation of $4,646,857.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER SHORT-TERM U.S. TREASURY TRUST
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $278,795,355) ...................................... $283,442,212
Cash ................................................................. 54,712
Receivable for:
Interest ........................................................... 4,128,843
Shares of beneficial interest sold ................................. 879,984
Deferred organizational expenses ..................................... 20,116
Prepaid expenses ..................................................... 54,940
--------------
TOTAL ASSETS ....................................................... 288,580,807
--------------
LIABILITIES:
Payable for:
Shares of beneficial interest repurchased .......................... 475,035
Plan of distribution fee ........................................... 83,108
Investment management fee .......................................... 83,108
Dividends to shareholders .......................................... 82,990
Accrued expenses ..................................................... 82,480
--------------
TOTAL LIABILITIES .................................................. 806,721
--------------
NET ASSETS:
Paid-in-capital ...................................................... 300,449,845
Net unrealized appreciation .......................................... 4,646,857
Accumulated undistributed net investment income ...................... 444,400
Accumulated net realized loss ........................................ (17,767,016)
--------------
NET ASSETS ......................................................... $287,774,086
==============
NET ASSET VALUE PER SHARE,
28,644,531 shares outstanding (unlimited shares authorized of $.01
par value) .......................................................... $10.05
======
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER SHORT-TERM U.S. TREASURY TRUST
FINANCIAL STATEMENTS, continued
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED NOVEMBER 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
<S> <C>
NET INVESTMENT INCOME:
INTEREST INCOME ....................... $8,434,626
------------
EXPENSES
Plan of distribution fee .............. 477,209
Investment management fee ............. 477,209
Transfer agent fees and expenses ..... 68,657
Registration fees ..................... 50,555
Trustees' fees and expenses ........... 29,870
Professional fees ..................... 26,902
Shareholder reports and notices ...... 16,180
Organizational expenses ............... 13,505
Custodian fees ........................ 8,991
Other ................................. 8,465
------------
TOTAL EXPENSES ...................... 1,177,543
------------
NET INVESTMENT INCOME ............... 7,257,083
------------
NET REALIZED AND UNREALIZED GAIN:
Net realized gain ..................... 65,643
Net change in unrealized appreciation 1,809,454
------------
NET GAIN ............................ 1,875,097
------------
NET INCREASE .......................... $9,132,180
============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER SHORT-TERM U.S. TREASURY TRUST
FINANCIAL STATEMENTS, continued
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE SIX MONTHS FOR THE YEAR
ENDED NOVEMBER 30, ENDED
1995 MAY 31, 1995
- ------------------------------------------------------ ------------------ ------------------
<S> <C> <C>
(unaudited)
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income ................................. $ 7,257,083 $ 18,848,815
Net realized gain (loss) .............................. 65,643 (15,967,802)
Net change in unrealized appreciation/depreciation ... 1,809,454 16,077,178
------------------ ------------------
NET INCREASE ........................................ 9,132,180 18,958,191
Dividends from net investment income .................. (7,253,247) (18,580,804)
Net increase (decrease) from transactions in shares of
beneficial interest .................................. 12,710,954 (243,210,264)
------------------ ------------------
TOTAL INCREASE (DECREASE) ........................... 14,589,887 (242,832,877)
NET ASSETS:
Beginning of period ................................... 273,184,199 516,017,076
------------------ ------------------
END OF PERIOD
(Including undistributed net investment income of
$444,400 and $440,564, respectively) ................ $287,774,086 $ 273,184,199
================== ==================
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER SHORT-TERM U.S. TREASURY TRUST
NOTES TO FINANCIAL STATEMENTS November 30, 1995 (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) 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 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 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 by the identified cost
method. Discounts are accreted over the life of the respective securities.
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 ex-dividend 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;
<PAGE>
DEAN WITTER SHORT-TERM U.S. TREASURY TRUST
NOTES TO FINANCIAL STATEMENTS November 30, 1995 (unaudited) continued
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 which have been reimbursed for the full amount
thereof. Such expenses have been deferred and are being amortized on the
straight-line method over a period not to exceed five years from the
commencement of operations.
2. INVESTMENT MANAGEMENT AGREEMENT
Pursuant to an Investment Management Agreement with the Investment Manager,
the Fund pays 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 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 with the distribution
of shares of the Fund.
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 under the Plan:
(1) compensation to, and expenses of, account executives of Dean Witter
Reynolds Inc., an affiliate of the Investment Manager and Distributor, other
employees and selected broker-dealers; (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
<PAGE>
DEAN WITTER SHORT-TERM U.S. TREASURY TRUST
NOTES TO FINANCIAL STATEMENTS November 30, 1995 (unaudited) continued
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 during the month. For the six months ended
November 30, 1995, the distribution fee was accrued at the annual rate of
0.35%.
4. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES
The cost of purchases and proceeds from sales/maturities of portfolio
securities for the six months ended November 30, 1995 aggregated $33,394,094
and 24,011,355, respectively.
Dean Witter Trust Company, an affiliate of the Investment Manager and
Distributor, is the Fund's transfer agent. At November 30, 1995, the Fund had
transfer agent fees and expenses payable of approximately $13,700.
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 November 30, 1995 included in Trustees' fees and expenses in the
Statement of Operations amounted to $20,277. At November 30, 1995, the Fund
had an accrued pension liability of $31,475 which is included in accrued
expenses in the Statement of Assets and Liabilities.
5. FEDERAL INCOME TAX STATUS
At May 31, 1995, the Fund had a net capital loss carryover of approximately
$11,507,000 which will be available through May 31, 2003 to offset future
capital gains to the extent provided by regulations.
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 $6,325,000 during fiscal 1995. As of May 31, 1995,
the Fund had temporary book/tax differences primarily attributable to
post-October losses.
<PAGE>
DEAN WITTER SHORT-TERM U.S. TREASURY TRUST
NOTES TO FINANCIAL STATEMENTS November 30, 1995 (unaudited) continued
6. 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, 1995 MAY 31, 1995
----------------------------- ------------------------------
SHARES AMOUNT SHARES AMOUNT
------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Shares sold ............................... 8,018,800 $ 80,145,427 13,555,042 $ 133,430,704
Shares issued in reinvestment of dividends 595,809 5,952,960 1,536,708 15,079,568
------------- -------------- -------------- --------------
8,614,609 86,098,387 15,091,750 148,510,272
Shares repurchased ........................ (7,342,406) (73,387,433) (39,933,119) (391,720,536)
------------- -------------- -------------- --------------
Net increase (decrease) ................... 1,272,203 $ 12,710,954 (24,841,369) $(243,210,264)
============= ============== ============== ==============
</TABLE>
<PAGE>
DEAN WITTER SHORT-TERM U.S. TREASURY TRUST
FINANCIAL HIGHLIGHTS
Selected ratios and per share data for a share of beneficial interest
outstanding throughout each period:
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE SIX FOR THE YEAR ENDED MAY 31 AUGUST 13, 1991*
MONTHS ENDED ----------------------------- THROUGH
NOVEMBER 30, 1995 1995 1994 1993 MAY 31, 1992
- ---------------------------------------- ----------------- ------- ------- ------ --------------
<S> <C> <C> <C> <C> <C>
(unaudited)
PER SHARE OPERATING PERFORMANCE:
Net asset value,
beginning of period ................... $9.98 $ 9.88 $10.34 $10.21 $10.00
----------------- ------- ------- ------- -------
Net investment income ................... 0.27 0.49 0.49 0.54 0.44
Net realized and unrealized gain (loss) 0.07 0.10 (0.45) 0.13 0.20
----------------- ------- ------- ------- -------
Total from investment operations ....... 0.34 0.59 0.04 0.67 0.64
----------------- ------- ------- ------- -------
Less dividends and distributions from:
Net investment income .................. (0.27) (0.49) (0.50) (0.53) (0.43)
Net realized gain ...................... -- -- -- (0.01) --
----------------- ------- ------- ------- -------
Total dividends and distributions ...... (0.27) (0.49) (0.50) (0.54) (0.43)
----------------- ------- ------- ------- -------
Net asset value, end of period .......... $10.05 $ 9.98 $ 9.88 $10.34 $10.21
================= ======= ======= ======= =======
TOTAL INVESTMENT RETURN ................. 3.45%(1) 6.22% 0.25% 6.75% 6.55%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses ................................ 0.86%(2) 0.84% 0.79% 0.80% 0.79%(2)(3)
Net investment income ................... 5.31%(2) 4.93% 4.74% 5.18% 5.49%(2)(3)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands $287,774 $273,184 $516,017 $584,206 $523,555
Portfolio turnover rate ................. 9%(1) 30% 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
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 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 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
SEMIANNUAL REPORT
NOVEMBER 30, 1995
