<PAGE> 1
DEAN WITTER SHORT-TERM U.S. TREASURY TRUST
LETTER TO THE SHAREHOLDERS November 30, 1997, continued
The Fund maintains a diversified investment strategy across the short-term
maturity spectrum to a maximum of five years. The Fund's average maturity on
November 30, 1997, which had been gradually extended over the period, was
approximately 2.5 years. Given the current economic environment, the state of
the U.S. budget and the lack of inflation, the Fund's average maturity may be
extended in the months ahead as opportunities present themselves. We believe
that 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.
LOOKING AHEAD
For the balance of 1997 and early into 1998, U.S. economic growth should remain
healthy. The Federal Reserve Board is unlikely to raise interest rates in the
first half of 1998; however, the central bank may need to reassess its current
stance on monetary policy during 1998, should inordinately strong economic
growth cause an unacceptable rise in the rate of inflation.
We appreciate your ongoing support of Dean Witter Short-Term U.S. Treasury Trust
and look forward to continuing to serve your investment needs.
Very truly yours,
/S/ 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, 1997 (unaudited)
<TABLE>
<CAPTION>
PRINCIPAL DESCRIPTION
AMOUNT IN AND COUPON
THOUSANDS MATURITY DATE RATE VALUE
- ------------------------------------------------------------------------------------------
<C> <S> <C> <C>
U.S. GOVERNMENT OBLIGATIONS (98.1%)
U.S. Treasury Notes (86.8%)
$ 5,000 10/31/02........................................ 5.75% $ 4,980,100
6,000 10/31/98........................................ 5.875 6,007,620
17,000 09/30/98........................................ 6.00 17,043,010
9,400 06/30/99........................................ 6.00 9,432,148
24,100 07/31/02........................................ 6.00 24,242,431
3,000 05/15/98........................................ 6.125 3,008,340
26,930 09/30/00........................................ 6.125 27,151,365
17,100 12/31/01........................................ 6.125 17,260,398
1,750 07/31/98........................................ 6.25 1,756,790
1,000 03/31/99........................................ 6.25 1,006,350
13,500 04/30/01........................................ 6.25 13,664,160
18,000 10/31/01........................................ 6.25 18,241,920
3,500 02/28/02........................................ 6.25 3,549,315
2,200 06/30/02........................................ 6.25 2,233,462
10,000 05/15/99........................................ 6.375 10,081,800
1,600 01/15/00........................................ 6.375 1,619,040
8,000 04/30/00........................................ 6.75 8,168,160
20,000 02/29/00........................................ 7.125 20,551,200
5,000 02/15/98........................................ 7.25 5,016,150
14,000 01/15/98........................................ 7.875 14,041,580
------------
209,055,339
------------
U.S. Treasury Strips (11.3%)
18,300 05/15/99 (Coupon)............................... 0.00 16,848,261
12,000 08/15/00 (Principal)............................ 0.00 10,274,640
------------
27,122,901
------------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(Identified Cost $234,511,018)............................. 236,178,240
------------
SHORT-TERM INVESTMENT (0.8%)
U.S. GOVERNMENT OBLIGATION
1,900 U.S. Treasury Bill
12/04/97 (Identified Cost $1,899,224).......... 4.90 1,898,707
------------
TOTAL INVESTMENTS
(Identified Cost $236,410,242)(a)............... 98.9% 238,076,947
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES.. 1.1 2,742,006
----- ------------
NET ASSETS...................................... 100.0% $240,818,953
===== ============
</TABLE>
- ---------------------
(a) The aggregate cost for federal income tax purposes approximates identified
cost. The aggregate gross unrealized appreciation is $4,345,503 and the
aggregate gross unrealized depreciation is $2,678,798, resulting in net
unrealized appreciation of $1,666,705.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 3
DEAN WITTER SHORT-TERM U.S. TREASURY TRUST
FINANCIAL STATEMENTS
<TABLE>
<S> <C>
STATEMENT OF ASSETS AND LIABILITIES
November 30, 1997 (unaudited)
ASSETS:
Investments in securities, at value
(identified cost $236,410,242)....................................... $238,076,947
Cash.................................................................. 32,283
Receivable for:
Interest.......................................................... 3,002,452
Shares of beneficial interest sold................................ 156,992
Prepaid expenses and other assets..................................... 62,002
------------
TOTAL ASSETS...................................................... 241,330,676
------------
LIABILITIES:
Payable for:
Shares of beneficial interest repurchased......................... 193,684
Dividends to shareholders......................................... 116,158
Plan of distribution fee.......................................... 69,495
Investment management fee......................................... 69,495
Accrued expenses and other payables................................... 62,891
------------
TOTAL LIABILITIES................................................. 511,723
------------
NET ASSETS........................................................ $240,818,953
============
COMPOSITION OF NET ASSETS:
Paid-in-capital....................................................... $257,123,761
Net unrealized appreciation........................................... 1,666,705
Accumulated undistributed net investment income....................... 476,669
Accumulated net realized loss......................................... (18,448,182)
------------
NET ASSETS........................................................ $240,818,953
============
NET ASSET VALUE PER SHARE,
24,208,664 shares outstanding
(unlimited shares authorized of $.01 par value)...................... $9.95
=====
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 4
DEAN WITTER SHORT-TERM U.S. TREASURY TRUST
FINANCIAL STATEMENTS, continued
<TABLE>
<S> <C>
STATEMENT OF OPERATIONS
For the six months ended November 30, 1997 (unaudited)
NET INVESTMENT INCOME:
INTEREST INCOME......................................................... $7,134,191
----------
EXPENSES
Plan of distribution fee................................................ 404,537
Investment management fee............................................... 404,537
Transfer agent fees and expenses........................................ 54,618
Registration fees....................................................... 34,853
Professional fees....................................................... 20,929
Shareholder reports and notices......................................... 20,554
Trustees' fees and expenses............................................. 7,723
Custodian fees.......................................................... 3,471
Other................................................................... 6,364
----------
TOTAL EXPENSES...................................................... 957,586
----------
NET INVESTMENT INCOME............................................... 6,176,605
----------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized loss....................................................... (234,087)
Net change in unrealized depreciation................................... 2,458,565
----------
NET GAIN............................................................ 2,224,478
----------
NET INCREASE............................................................ $8,401,083
==========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 5
DEAN WITTER SHORT-TERM U.S. TREASURY TRUST
FINANCIAL STATEMENTS, continued
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
FOR THE SIX FOR THE YEAR
MONTHS ENDED ENDED
NOVEMBER 30, 1997 MAY 31, 1997
- -------------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income................................ $ 6,176,605 $ 13,978,300
Net realized loss.................................... (234,087) (293,887)
Net change in unrealized depreciation................ 2,458,565 112,927
------------ ------------
NET INCREASE..................................... 8,401,083 13,797,340
Dividends from net investment income................. (6,094,523) (13,860,110)
Net increase (decrease) from transactions in shares
of beneficial interest.............................. 8,245,204 (28,307,309)
------------ ------------
NET INCREASE (DECREASE).......................... 10,551,764 (28,370,079)
NET ASSETS:
Beginning of period.................................. 230,267,189 258,637,268
------------ ------------
END OF PERIOD
(Including undistributed net investment income of
$476,669 and $394,587, respectively)............. $240,818,953 $230,267,189
============ ============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 6
DEAN WITTER SHORT-TERM U.S. TREASURY TRUST
NOTES TO FINANCIAL STATEMENTS November 30, 1997 (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's investment objective is
current income, preservation of principal and liquidity. The Fund seeks to
achieve its objective by investing its assets in U.S. Treasury securities backed
by the full faith and credit of the U.S. Government. The Fund was organized as a
Massachusetts business trust on June 4, 1991 and commenced operations on August
13, 1991.
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) 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) 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.
<PAGE> 7
DEAN WITTER SHORT-TERM U.S. TREASURY TRUST
NOTES TO FINANCIAL STATEMENTS November 30, 1997 (unaudited) continued
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 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
<PAGE> 8
DEAN WITTER SHORT-TERM U.S. TREASURY TRUST
NOTES TO FINANCIAL STATEMENTS November 30, 1997 (unaudited) continued
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 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, 1997,
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, 1997 aggregated $95,260,715 and
$94,870,277, respectively.
Dean Witter Trust FSB, an affiliate of the Investment Manager and Distributor,
is the Fund's transfer agent. At November 30, 1997, the Fund had transfer agent
fees and expenses payable of approximately $2,800.
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, 1997
included in Trustees' fees and expenses in the Statement of Operations amounted
to $1,455. At November 30, 1997, the Fund had an accrued pension liability of
$37,994 which is included in accrued expenses in the Statement of Assets and
Liabilities.
<PAGE> 9
DEAN WITTER SHORT-TERM U.S. TREASURY TRUST
NOTES TO FINANCIAL STATEMENTS November 30, 1997 (unaudited) continued
5. SHARES OF BENEFICIAL INTEREST
Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
FOR THE SIX FOR THE YEAR
MONTHS ENDED ENDED
NOVEMBER 30, 1997 MAY 31, 1997
----------------------------- -----------------------------
(unaudited)
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold.............................................. 10,589,718 $ 105,073,366 25,650,127 $ 253,738,691
Shares issued in reinvestment of dividends............... 495,098 4,915,059 1,132,124 11,170,571
----------- ------------- ----------- -------------
11,084,816 109,988,425 26,782,251 264,909,262
Shares repurchased....................................... (10,255,990) (101,743,221) (29,680,876) (293,216,571)
----------- ------------- ----------- -------------
Net increase (decrease).................................. 828,826 $ 8,245,204 (2,898,625) $ (28,307,309)
=========== ============= =========== =============
</TABLE>
6. FEDERAL INCOME TAX STATUS
At May 31, 1997, the Fund had a net capital loss carryover of approximately
$18,110,000, which may be used to offset future capital gains to the extent
provided by regulations, which is available through May 31 of the following
years:
<TABLE>
<CAPTION>
AMOUNT IN THOUSANDS
- ---------------------------
2003 2004 2005
- ------- ------ ----
<S> <C> <C>
$11,507 $6,271 $332
</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 $103,000 during fiscal 1997.
As of May 31, 1997, the Fund had temporary book/tax differences primarily
attributable to post-October losses.
<PAGE> 10
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 SIX FOR THE YEAR ENDED MAY 31
MONTHS ENDED ---------------------------------------
NOVEMBER 30, 1997 1997 1996
----------------------------------------------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period...................... $ 9.85 $ 9.84 $ 9.98
------ ------ ------
Net investment income..................................... 0.26 0.54 0.54
Net realized and unrealized gain (loss)................... 0.10 -- (0.14)
------ ------ ------
Total from investment operations.......................... 0.36 0.54 0.40
------ ------ ------
Less dividends and distributions from:
Net investment income.................................. (0.26) (0.53) (0.54)
Net realized gain...................................... -- -- --
------ ------ ------
Total dividends and distributions......................... (0.26) (0.53) (0.54)
------ ------ ------
Net asset value, end of period............................ $ 9.95 $ 9.85 $ 9.84
====== ====== ======
TOTAL INVESTMENT RETURN+.................................. 3.69%(1) 5.63% 4.09%
RATIOS TO AVERAGE NET ASSETS:
Expenses.................................................. 0.83%(2) 0.83% 0.84%
Net investment income..................................... 5.34%(2) 5.42% 5.33%
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands................... $240,819 $230,267 $258,637
Portfolio turnover rate................................... 44%(1) 149% 63%
<CAPTION>
FOR THE YEAR ENDED MAY 31
--------------------------------------------------
1995 1994 1993
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period...................... $ 9.88 $10.34 $10.21
------ ------ ------
Net investment income..................................... 0.49 0.49 0.54
Net realized and unrealized gain (loss)................... 0.10 (0.45) 0.13
------ ------ ------
Total from investment operations.......................... 0.59 0.04 0.67
------ ------ ------
Less dividends and distributions from:
Net investment income.................................. (0.49) (0.50) (0.53)
Net realized gain...................................... -- -- (0.01)
------ ------ ------
Total dividends and distributions......................... (0.49) (0.50) (0.54)
------ ------ ------
Net asset value, end of period............................ $ 9.98 $ 9.88 $10.34
====== ====== ======
TOTAL INVESTMENT RETURN+.................................. 6.22% 0.25% 6.75%
RATIOS TO AVERAGE NET ASSETS:
Expenses.................................................. 0.84% 0.79% 0.80%
Net investment income..................................... 4.93% 4.74% 5.18%
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands................... $273,184 $516,017 $584,206
Portfolio turnover rate................................... 30% 49% 21%
</TABLE>
- ---------------------
+ Calculated based on the net asset value as of the last business day of the
period.
(1) Not annualized.
(2) Annualized.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 11
TRUSTEES
Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn
John R. Haire
Wayne E. Hedien
Dr. Manuel H. Johnson
Michael E. Nugent
Philip J. Purcell
John L. Schroeder
OFFICERS
Charles A. Fiumefreddo
Chairman and Chief Executive Officer
Barry Fink
Vice President, Secretary and General Counsel
Rajesh K. Gupta
Vice President
Thomas F. Caloia
Treasurer
TRANSFER AGENT
Dean Witter Trust FSB
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, 1997
