DEAN WITTER LIMITED TERM MUNICIPAL TRUST, N-30D, 1995-05-24

DEAN WITTER LIMITED TERM MUNICIPAL TRUST
N-30D, 1995-05-24

Previous: DEAN WITTER LIMITED TERM MUNICIPAL TRUST, 485BPOS, 1995-05-24

Next: ALLIANCE WORLD DOLLAR GOVERNMENT FUND II INC, NSAR-B, 1995-05-24

<PAGE>

DEAN WITTER LIMITED TERM MUNICIPAL TRUST
Two World Trade Center
New York, New York 10048

DEAR SHAREHOLDER:
-----------------------------------------------------------------------------

Interest rates moved higher throughout most of 1994 as the fixed-income
markets focused on the strong pace of economic growth and the risk of higher
inflation. Convinced that growth would be sustained, the Federal Reserve
Board progressively tightened its monetary policy. This led to one of the
most severe bear markets for bonds in recent history. Signs of a slower pace
of economic activity and investor perception that the central bank's tighter
monetary policy was taking effect caused the bond market to rally between
November 1994 and March 1995.

GROWTH OF $10,000

DATE TOTAL LEHMAN
---- ----- ------
July 12, 1993 $10000 $10000
September 30, 1993 $10290 $10358
December 31, 1993 $10466 $10509
March 31, 1994 $ 9891 $ 9952
June 30, 1994 $ 9927 $10098
September 30, 1994 $ 9921 $10168
December 31, 1994 $ 9634 $10007
March 31, 1995 $10287 (2) $10700

AVERAGE ANNUAL TOTAL RETURNS
1 year LIFE OF FUND
------ ------------
4.01 (1) 1.66 (1)

____ Fund ____ Lehman (3)

Past performance is not predictive of future returns.

________________________________________

(1) Figure shown assumes reinvestment of all distributions. There is no
sales charge.

(2) Closing value assuming a complete redemption on March 31, 1995.

(3) The Lehman Brothers 10-Year Muni Bond Index measures the performance
of municipal bonds rated at least Baa + by Moody's Investors Service, Inc.
with maturities ranging between 9 and 12 years.

MUNICIPAL MARKET CONDITIONS

Intermediate municipal bond yields, as measured by 10-year AA-rated
general obligation bond, moved 175 basis points higher over a 10-month period
from a low of 4.45 percent prior to the Federal Reserve Board's first rate
increase in February 1994 to a high of 6.20 percent in November. The
municipal market rallied over the next four months and intermediate yields
declined 85 basis points to 5.35 percent by the end of March 1995.

The balance between supply and demand for municipal securities shifted
along with market conditions during the fiscal year. In the spring of 1994,
dealer inventories reached near-record levels as investors sold long-term
bonds to pay taxes and raise cash. A semblance of stability returned to the
market during the summer. However, after Labor Day the market was subjected
to another bout of weakness caused by tax-loss selling. Conditions improved
in December as the market anticipated the reinvestment of coupons, bond calls
and maturities in January at a time of scarce supply. This seasonal pattern
more than offset the uncertainty caused by the Orange County, California,
bankruptcy filing in December. The market rebound continued through March
1995 with substantial investor demand and thin supply.

Intermediate-term municipal bonds have outperformed U.S. Treasury bonds
since November. The ratio of 10-year AA-rated general obligation bond yields
to 10-year Treasury yields over the past 12 months began at 80 percent, fell
as low as 72 percent in October before rising again to 80 percent during the
November sell-off in the market and ended March 1995 at 74 percent. A
declining ratio means that municipal bond prices have been strong relative to
U.S. Treasury bond prices.

<PAGE>

The rise in interest rates in 1994 also took its toll on the level of
state and local government debt issuance. For the year, new-issue volume
declined 44 percent to $163 billion. The driving force behind this sharp
decline was the virtual halt in refunding issues, which plummeted 74 percent.
Last year, municipal maturities and bond calls reached $191 billion and
exceeded the supply of new issues coming to market. This marked the first
decline in the outstanding supply of municipal securities. A continuation of
this pattern is expected in 1995 and should help strengthen municipal market
conditions. In the first three months of 1995, municipal volume was down
approximately 46 percent compared to the same period last year.

FUND PERFORMANCE

Dean Witter Limited Term Municipal Trust's net asset value (NAV) declined
from $9.61 to $9.56 per share during the fiscal year ended March 31, 1995.
Based on this change and including reinvestment of tax-free dividends
totaling $0.42 per share, the Fund's total return for the fiscal year was
4.01 percent. The Lehman Brothers 10-Year Municipal Bond Index recorded a
total return of 7.52 percent. As of March 31, 1995, the Fund's 30-day SEC
yield was 4.46 percent and its distribution rate was 4.34 percent.

The accompanying chart illustrates the growth of a $10,000 investment in
the Fund from inception (July 12, 1993) through March 31, 1995, versus the
performance of a similar hypothetical investment in the issues that comprise
the Lehman Brothers 10-Year Municipal Bond Index.

The Fund's underperformance of the Index can be attributed to a
significant drop in NAV during the first eight months of the fiscal year as
interest rates rose steadily and sharply. During this time, NAV reached a low
of $8.76 per share in November 1994. Performance was also negatively impacted
by a tax-law change in 1993 that altered the treatment of municipal market
discounts so that they are now taxed at a higher rate. As a result,
current-coupon bonds purchased prior to the increase in interest rates
quickly moved to market discounts and began to trade at a concession to the
market, reflecting the adverse tax treatment of the discount. With the market
improvement, which began in late November and continued through the first
quarter of 1995, the Fund's NAV improved as discount bonds moved up in price
more quickly than the general market. By the end of March, the Fund had
recouped most of the price erosion seen earlier in the fiscal year.

PORTFOLIO STRUCTURE

At the end of the fiscal year, the portfolio was diversified among 15
municipal sectors and 47 separate issuers. The three largest municipal
sectors at the end of the period were: general obligation, education and
water & sewer. These sectors represented 34 percent of the portfolio. The
portfolio maintained high quality during the year with an average rating of
"AA". The weighted average maturity of the Fund's intermediate-term holdings
was 8.9 years. Bonds subject to the alternative minimum tax accounted for 15
percent of net assets. None of the Fund's holdings have been identified as
participants in the Orange County investment pool. At the end of the fiscal
year, the Fund had net assets totaling $85 million.

LOOKING AHEAD

Slower economic growth in 1995 and the extent of the Federal Reserve
Board's previous interest rate moves have improved bond market expectations.
Investor demand for municipal securities should

<PAGE>

be sustained by significant bond maturities, calls for redemption and
diminished new-issue supply. New investments will stress credit quality and
essential service sectors. The Fund's weighted average maturity is expected
to remain in the 8 to 10 year range.

We appreciate your support of Dean Witter Limited Term Municipal 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>

DEAN WITTER LIMITED TERM MUNICIPAL TRUST
PORTFOLIO OF INVESTMENTS March 31, 1995
-------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATE VALUE
----------- -------- ---------- -------------
<S> <C> <C> <C> <C>
MUNICIPAL BONDS (92.5%)
GENERAL OBLIGATION (14.5%)
$ 2,000 Wilmington, Delaware, Refg Ser 1993 B (FGIC) .................... 4.60 % 07/01/04 $ 1,846,060
2,000 District of Columbia, Refg Ser 1994 A (MBIA) .................... 4.95 06/01/05 1,838,860
1,000 Honolulu, Hawaii, Refg Ser 1993 B ............................... 5.00 10/01/03 979,010
2,000 Rosemont, Illinois, Ser 1993 B .................................. 5.30 12/01/04 1,948,240
2,000 Massachusetts, Refg Ser 1993 C .................................. 4.80 08/01/03 1,917,560
3,000 New York City, New York, Ser 1992 A ............................. 6.10 08/01/02 2,985,690
1,000 Massillon City School District, Ohio, Refg Ser 1994 (AMBAC) .... 4.70 12/01/05 912,580
----------- -------------
13,000 12,428,000
----------- -------------
EDUCATIONAL FACILITIES REVENUE (9.9%)
1,500 University of Delaware, Ser 1993 ................................ 4.90 11/01/02 1,456,485
2,000 Massachusetts Health & Educational Facilities Authority, Boston
College Ser K ................................................... 4.80 06/01/04 1,900,100
3,400 University of Minnesota, Ser 1993 A ............................. 4.80 08/15/03 3,261,824
2,000 New York State Dormitory Authority, State University Ser 1993 B 5.25 05/15/05 1,845,820
----------- -------------
8,900 8,464,229
----------- -------------
ELECTRIC REVENUE (7.0%)
1,000 Salt River Project Agricultural Improvement & Power District,
Arizona, Refg Ser 1993 B ........................................ 4.75 01/01/03 955,530
3,000 San Antonio, Texas, Electric & Gas Refg Ser 1994 ................ 4.70 02/01/05 2,780,580
2,320 Snohomish County Public Utility District #1, Washington,
Generation Ser 1993 B (AMT) ..................................... 5.35 01/01/05 2,208,013
----------- -------------
6,320 5,944,123
----------- -------------
HOSPITAL REVENUE (7.0%)
2,000 California Statewide Communities Development Authority,
Cedars-Sinai Medical Center Ser 1993 ............................ 4.70 11/01/03 1,845,060
1,420 Michigan Hospital Finance Authority, McLaren Obligated Group Ser
1993 A .......................................................... 5.00 10/15/04 1,306,315
1,000 Murray, Utah, IHC Hospitals Inc Refg Ser 1993 (AMBAC) .......... 5.00 05/15/04 963,750
1,000 Fairfax County Industrial Development Authority, Virginia, Inova
Health System Foundation Refg Ser 1993 A ........................ 4.70 08/15/04 930,160
1,000 Wisconsin Health & Educational Facilities Authority, Hospital
Sisters Services Ser 1993 (MBIA Insured) ........................ 5.00 06/01/03 966,740
----------- -------------
6,420 6,012,025
----------- -------------
INDUSTRIAL DEVELOPMENT/POLLUTION CONTROL REVENUE (3.3%)
1,000 Massachusetts Industrial Finance Agency, Eastern Edison Co Refg
Ser 1993 ........................................................ 5.875 08/01/08 949,830
2,000 Greenwood, Wisconsin, Land O'Lakes Inc (AMT) .................... 5.50 09/01/03 1,912,860
----------- -------------
3,000 2,862,690
----------- -------------
MORTGAGE REVENUE - MULTI-FAMILY (2.3%)
2,130 Wisconsin Housing & Economic Development Authority, Ser 1993 B
(AMT) ........................................................... 5.10 11/01/03 1,989,164
----------- -------------

MORTGAGE REVENUE - SINGLE FAMILY (2.2%)
2,000 Connecticut Housing Finance Authority, 1993 Subser F-1 ......... 4.90 05/15/04 1,889,980
----------- -------------
</TABLE>

<PAGE>

STUDENT LOAN REVENUE (5.7%)
1,000 New England Education Loan Marketing Corporation, Massachusetts,
Ser 1992 G ...................................................... 5.20 08/01/02 974,360
2,000 Montana Higher Education Student Assistance Corporation, Senior
Ser 1993 B (AMT) ................................................ 5.10 12/01/01 1,968,800
2,000 South Carolina Education Assistance Authority, Ser 1993 A-1
(AMT) ........................................................... 5.00 09/01/03 1,908,600
----------- -------------
5,000 4,851,760
----------- -------------
TAX ALLOCATION REVENUE (6.7%)
1,960 Pleasanton Joint Powers Financing Authority, California,
Reassessment Ser 1993 A ......................................... 5.60 09/02/00 1,950,847
2,000 Sacramento Financing Authority, California, Refg Ser 1993 A
(AMBAC) ......................................................... 4.85 11/01/04 1,898,340
2,000 Santa Maria Redevelopment Agency, California, Town Center &
Westside Parking Refg Ser 1993 .................................. 4.75 06/01/03 1,888,380
----------- -------------
5,960 5,737,567
----------- -------------
TRANSPORTATION REVENUE (8.7%)
1,000 Alaska, International Airports Refg Ser I (AMT) (MBIA) ......... 5.10 10/01/03 961,970
1,000 Delaware River & Bay Authority, Delaware & New Jersey, Ser
1993** .......................................................... 4.50 01/01/04 916,190
2,000 Washington Metropolitan Area Transit Authority, District of
Columbia, Maryland and Virginia Refg Ser 1993 (FGIC)** ......... 4.90 01/01/05 1,885,680
2,000 Chicago, Illinois, Chicago - O'Hare Int'l Airport Refg Ser 1993
A ............................................................... 4.80 01/01/05 1,817,680
2,000 Harris County, Texas, Toll Road Refg Ser 1994 (AMBAC) .......... 4.85 08/15/05 1,887,560
----------- -------------
8,000 7,469,080
----------- -------------
WATER & SEWER REVENUE (9.4%)
1,000 Atlanta, Georgia, Water & Sewer Ser 1993 ........................ 4.50 01/01/04 916,840
2,000 Massachusetts Water Resources Authority, Ser 1993 C ............ 5.25 12/01/06 1,930,480
2,000 New York City Municipal Water Finance Authority, New York, Ser
1994 B .......................................................... 5.125 06/15/04 1,881,440
</TABLE>

<PAGE>

DEAN WITTER LIMITED TERM MUNICIPAL TRUST
PORTFOLIO OF INVESTMENTS March 31, 1995 (continued)
-------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATE VALUE
----------- -------- ---------- -------------
<S> <C> <C> <C> <C>
$ 1,500 Pittsburgh Water & Sewer Authority, Pennsylvania, Refg Ser 1993
A (FGIC) ........................................................ 4.60 % 09/01/03 $ 1,408,005
2,000 Southeastern Public Service Authority, Virginia, Regional Solid
Waste Refg Ser 1993 A (MBIA) .................................... 4.70 07/01/04 1,871,240
----------- -------------
8,500 8,008,005
----------- -------------
OTHER REVENUE (2.3%)
2,000 Pennsylvania Intergovernmental Cooperation Authority, Special
Tax Ser 1993 (FGIC) ............................................. 5.05 06/15/04 1,941,080
----------- -------------
83,575 TOTAL MUNICIPAL BONDS (IDENTIFIED COST $83,192,555) ................................... 79,148,435
----------- -------------
SHORT-TERM MUNICIPAL OBLIGATIONS (3.2%)
2,200 Phoenix, Arizona, Ser 1994-1 (Tender 04/03/95) .................. 4.50* 06/01/18 2,200,000
500 Gulf Coast Waste Disposal Authority, Texas, Amoco Oil Co Ser
1992 (Tender 04/03/95) .......................................... 4.40* 10/01/17 500,000
----------- -------------
2,700 TOTAL SHORT-TERM MUNICIPAL OBLIGATIONS (IDENTIFIED COST $2,700,000) ................... 2,700,000
----------- -------------
$86,275 TOTAL INVESTMENTS (IDENTIFIED COST $85,892,555) (A) ....................... 95.7% 81,848,435
===========
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES ............................ 4.3 3,651,017
-------------
NET ASSETS ................................................................ 100.0% $85,499,452
=============
<FN>
------------
AMT Alternative Minimum Tax.
Bond Insurance:
AMBAC AMBAC Indemnity Corporation.
FGIC Financial Guaranty Insurance Company.
MBIA Municipal Bond Investors Assurance Corporation.
* Variable or floating rate securities. Coupon rate shown reflects rate in
effect on March 31, 1995.
** Jointly issued.
(a) The aggregate cost for federal income tax purposes is $85,892,555; the
aggregate gross and net unrealized depreciation is $4,044,120.
</TABLE>

-------------------------------------------------------------------------------
GEOGRAPHIC SUMMARY OF INVESTMENTS
Based on Market Value as a Percent of Net Assets
March 31, 1995
-------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
Alaska .............. 1.1%
Arizona ............. 3.7
California .......... 8.9
Connecticut ......... 2.2
Delaware ............ 3.9
District of Columbia 2.1
Georgia ............. 1.1
Hawaii .............. 1.1%
Illinois ............ 4.4
Maryland ............ 2.3
Massachusetts ....... 9.0
Michigan ............ 1.5
Minnesota ........... 5.4
Missouri ............ 2.1
Montana ............. 2.3%
New York ............ 7.9
Ohio ................ 5.3
Pennsylvania ........ 6.1
Rhode Island ........ 1.1
South Carolina ...... 2.2
Texas ............... 6.0
Utah ................ 1.1%
Virginia ............ 3.3
Washington .......... 2.6
Wisconsin ........... 5.7
Joint Issues ........ 3.3
------
Total ...............95.7%
======
-------------------------------------------------------------------------------
</TABLE>

See Notes to Financial Statements

<PAGE>

DEAN WITTER LIMITED TERM MUNICIPAL TRUST
FINANCIAL STATEMENTS
-----------------------------------------------------------------------------

STATEMENT OF ASSETS AND LIABILITIES
March 31,1995
-----------------------------------------------------------------------------

<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $85,892,555) ............ $81,848,435
Cash ...................................... 207,767
Receivable for:
Investments sold ......................... 1,490,096
Interest ................................. 1,140,616
Shares of beneficial interest sold ...... 896,365
Deferred organizational expenses .......... 98,964
Prepaid expenses and other assets ........ 16,691
-------------
TOTAL ASSETS ............................ 85,698,934
-------------
LIABILITIES:
Payable for:
Shares of beneficial interest repurchased 67,375
Investment management fee ................ 36,410
Dividends to shareholders ................ 21,438
Accrued expenses and other payables ...... 74,259
-------------
TOTAL LIABILITIES ....................... 199,482
-------------
NET ASSETS:
Paid-in-capital ........................... 97,910,471
Net unrealized depreciation ............... (4,044,120)
Accumulated net realized loss ............. (8,366,899)
-------------
NET ASSETS .............................. $85,499,452
=============
NET ASSET VALUE PER SHARE, 8,946,383
shares outstanding (unlimited shares
authorized of $.01 par value) ............ $9.56
=============
</TABLE>
-------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
For the year ended March 31, 1995
-----------------------------------------------------------------------------

<TABLE>
<CAPTION>
<S> <C>
NET INVESTMENT INCOME:
INTEREST INCOME ........................ $ 6,089,417
-------------
EXPENSES
Investment management fee ............. 589,450
Professional fees ..................... 75,978
Transfer agent fees and expenses ..... 63,713
Registration fees ..................... 55,049
Organizational expenses ............... 32,722
Trustees' fees and expenses ........... 29,776
Shareholder reports and notices ...... 29,385
Other ................................. 14,541
-------------
TOTAL EXPENSES ....................... 890,614
-------------
NET INVESTMENT INCOME ................ 5,198,803
-------------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized loss ..................... (8,283,452)
Net change in unrealized depreciation 5,381,579
-------------
NET LOSS ............................. (2,901,873)
-------------
NET INCREASE ......................... $ 2,296,930
=============

</TABLE>

<PAGE>

STATEMENT OF CHANGES IN NET ASSETS

-----------------------------------------------------------------------------

<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE YEAR JULY 12, 1993*
ENDED MARCH THROUGH MARCH
31, 1995 31, 1994
-------------- --------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income .................................................... $ 5,198,803 $ 3,848,943
Net realized loss ........................................................ (8,283,452) (83,447)
Net change in unrealized depreciation .................................... 5,381,579 (9,425,699)
-------------- --------------
Net increase (decrease) ................................................. 2,296,930 (5,660,203)
-------------- --------------
Dividends to shareholders from net investment income ...................... (5,198,803) (3,848,943)
Net increase (decrease) from transactions in shares of beneficial interest (82,188,083) 179,998,554
-------------- --------------
Total increase (decrease) ............................................... (85,089,956) 170,489,408
NET ASSETS:
Beginning of period ...................................................... 170,589,408 100,000
-------------- --------------
END OF PERIOD ............................................................ $ 85,499,452 $170,589,408
============== ==============
<FN>
--------------
* Commencement of operations.
</TABLE>

See Notes to Financial Statements

<PAGE>

DEAN WITTER LIMITED TERM MUNICIPAL TRUST
NOTES TO FINANCIAL STATEMENTS
-----------------------------------------------------------------------------

1. ORGANIZATION AND ACCOUNTING POLICIES -- Dean Witter Limited Term Municipal
Trust (the "Fund") is registered under the Investment Company Act of 1940, as
amended, as a diversified, open-end management investment company. The Fund
was organized as a Massachusetts business trust on February 25, 1993 and had
no operations until July 12, 1993 other than matters relating to the sale of
10,000 shares of beneficial interest for $100,000 to Dean Witter InterCapital
Inc. (the "Investment Manager"). The Fund commenced operations on July 12,
1993.

The following is a summary of significant accounting policies:

A. Valuation of Investments -- Portfolio securities are valued for the
Fund by an outside independent pricing service approved by the Trustees. The
pricing service has informed the Fund that in valuing the Fund's portfolio
securities, it uses both a computerized matrix of tax-exempt securities and
evaluations by its staff, in each case based on information concerning market
transactions and quotations from dealers which reflect the bid side of the
market each day. The Fund's portfolio securities are thus valued by reference
to a combination of transactions and quotations for the same or other
securities believed to be comparable in quality, coupon, maturity, type of
issue, call provisions, trading characteristics and other features deemed to
be relevant. When market quotations are not readily available, including
circumstances under which it is determined by the Adviser 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). 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 and premiums on securities purchased are amortized/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 and nontaxable 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 -- The Investment Manager paid the
organizational expenses of the Fund in the amount of $139,572. The Fund
reimbursed the Investment Manager for $139,572,

<PAGE>

DEAN WITTER LIMITED TERM MUNICIPAL TRUST
NOTES TO FINANCIAL STATEMENTS (continued)
-----------------------------------------------------------------------------

exclusive of $14,608 assumed by the Investment Manager. Such expenses have
been deferred and are being amortized by 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 (the "Agreement"), the Fund pays its Investment Manager a
management fee, accrued daily and payable monthly, by applying the annual
rate of 0.50% to the Fund's net assets 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. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES -- The cost of
purchases and proceeds from sales of portfolio securities, excluding
short-term investments, for the year ended March 31, 1995 aggregated
$1,700,000 and $83,687,464, respectively.

Dean Witter Trust Company, an affiliate of the Investment Manager, is the
Fund's transfer agent. At March 31, 1995, the Fund had transfer agent fees
and expenses payable of approximately $7,600.

The Fund adopted 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 March 31, 1995 included in Trustees' fees and expenses in the Statement
of Operations amounted to $12,000. At March 31, 1995, the Fund had an accrued
pension liability of $14,710 which is included in accrued expenses in the
Statement of Assets and Liabilities.

4. SHARES OF BENEFICIAL INTEREST -- Transactions in shares of beneficial
interest were as follows:

<TABLE>
<CAPTION>
FOR THE YEAR ENDED MARCH 31, FOR THE PERIOD JULY 12, 1993*
1995 THROUGH MARCH 31, 1994
------------------------------- -------------------------------
SHARES AMOUNT SHARES AMOUNT
-------------- --------------- -------------- ---------------
<S> <C> <C> <C> <C>
Sold ...................... 5,996,771 $ 56,905,855 30,407,994 $ 308,424,328
Reinvestment of dividends 431,682 4,067,263 301,685 3,050,020
-------------- --------------- -------------- ---------------
6,428,453 60,973,118 30,709,679 311,474,348
Repurchased ............... (15,228,776) (143,161,201) (12,972,973) (131,475,794)
-------------- --------------- -------------- ---------------
Net increase (decrease) .. (8,800,323) $ (82,188,083) 17,736,706 $ 179,998,554
============== =============== ============== ===============
<FN>
---------------
* Commencement of operations.
</TABLE>

5. FEDERAL INCOME TAX STATUS -- At March 31, 1995, the Fund had net capital
loss carryovers of approximately $4,630,000 which will be available through
March 31, 2003 which may be used 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 net capital losses of approximately $3,737,000 during
fiscal 1995. At March 31, 1995, the Fund had temporary book/tax differences
primarily attributable to post-October losses.

<PAGE>

DEAN WITTER LIMITED TERM MUNICIPAL 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 YEAR JULY 12, 1993*
ENDED MARCH THROUGH MARCH
31, 1995 31, 1994
-------------- --------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period .... $ 9.61 $ 10.00
-------------- --------------
Net investment income .................... 0.42 0.29
Net realized and unrealized loss ........ (0.05) (0.39)
-------------- --------------
Total from investment operations ........ 0.37 (0.10)
-------------- --------------
Dividends from net investment income .... (0.42) (0.29)
-------------- --------------
Net asset value, end of period ........... $ 9.56 $ 9.61
============== ==============
TOTAL INVESTMENT RETURN .................. 4.01% (1.11)%(1)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $85,499 $170,589
Ratios to average net assets:
Expenses ................................ 0.76% 0.31%(2)(3)
Net investment income ................... 4.41% 3.92%(2)(3)
Portfolio turnover rate .................. 2 % 6%(1)
</TABLE>

[FN]
--------------
* Commencement of operations.
(1) Not annualized.
(2) Annualized.
(3) If the Fund had borne all of its expenses that were assumed or waived
by the Investment Manager, the above annualized expense and net
investment income ratios to average net assets would have been 0.75%
and 3.48%, respectively.

See Notes to Financial Statements

<PAGE>

DEAN WITTER LIMITED TERM MUNICIPAL TRUST
REPORT OF INDEPENDENT ACCOUNTANTS
-----------------------------------------------------------------------------

To the Shareholders and Trustees of Dean Witter Limited Term Municipal 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
Limited Term Municipal Trust (the "Fund") at March 31, 1995, the results of
its operations for the year then ended, and the changes in its net assets and
the financial highlights for the year then ended and for the period July 12,
1993 (commencement of operations) through March 31, 1994, 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 owned at
March 31, 1995 by correspondence with the custodian, provide a reasonable
basis for the opinion expressed above.

PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York 10036
May 10, 1995

-------------------------------------------------------------------------------
1995 FEDERAL TAX NOTICE (unaudited)

During the year ended March 31, 1995, the Fund paid to the shareholders $0.42
per share from net investment income. All of the Fund's dividends from net
investment income were exempt interest dividends, excludable from gross
income for Federal income tax purposes.
-------------------------------------------------------------------------------

<PAGE>

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

Katherine H. Stromberg
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

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
Limited Term
Municipal Trust

Annual Report
March 31, 1995