<PAGE>
DEAN WITTER LIMITED TERM MUNICIPAL TRUST TWO WORLD TRADE CENTER, NEW YORK, NEW
YORK 10048
LETTER TO THE SHAREHOLDERS
DEAR SHAREHOLDER:
Bond investments have improved steadily since late last year. Progressive
tightening of monetary policy by the Federal Reserve Board over the 12 months
through February 1995 led to slower economic growth and caused bonds to rally.
The move this year toward lower long-term interest rates reversed 1994's
prevailing trend of rapidly rising rates.
MUNICIPAL MARKET CONDITIONS
Intermediate-term yields, as measured by 10-year double "A" rated general
obligations bonds, moved lower from 5.35 percent in March to 4.90 percent at the
end of September. This 45 basis point decline in yield was equivalent to a 3.4
percent price increase on a 10-year bond with a 5.35 percent coupon. During the
same period, 1-year municipal note yields registered a parallel decline from
4.42 percent to 3.96 percent. As a result, the yield pickup of 10-year over
1-year maturities of about 90 basis points was maintained.
Tax-exempt bonds began the year by outperforming U.S. Treasury bonds, but then
deteriorated on a relative basis. The ratio of 10-year double "A" rated general
obligation bond yields to 10-year U.S. Treasury bond yields moved from a high of
80 percent in November 1994 to 74 percent by early February 1995. A declining
ratio means that municipal bond prices have been stronger than U.S. Treasury
prices. In the spring, the municipal market began to discount the risk of
comprehensive changes in the tax code created by flat-tax rhetoric from
Washington. This caused the yield ratio to rise to 84 percent in June. However,
the yield ratio improved to 79 percent by the end of September based on thin
supply and reinvestment demand.
The municipal market continued to experience consolidation in 1995. Municipal
underwriting in the first nine months of the year was down 20 percent from the
same period in 1994. This change followed a 44 percent drop in volume for all of
1994. Generally, demand for new issues was limited to investors replacing older
issues. CS First Boston and Donaldson Lufkin Jenrette withdrew from the
municipal business and caused further consolidation.
<PAGE>
DEAN WITTER LIMITED TERM MUNICIPAL TRUST
LETTER TO THE SHAREHOLDERS, CONTINUED
TAX REFORM
Flat-tax advocates have generated increased publicity for their proposals and
have affected the municipal market since early 1995. Most of the discussion on
proposed tax-reform measures is based on theoretical concepts, containing broad
assumptions and lacking specific detail. Basically, the various plans raise
questions about the fairness of changing from a progressive to a regressive tax
structure. Low flat tax rate plans call for the elimination of deductions for
mortgage interest, charitable contributions, property taxes and state and local
income taxes. If politicians make tax reform a central issue in the 1996
elections, media coverage will expand from the financial page to the front page.
When major tax reform turmoil occurred in 1986, municipal yields briefly
exceeded taxable yields.
In addition to the market risk associated with flat-tax proposals, municipal
credits would also be negatively impacted. If mortgage interest and property tax
deductions were eliminated, municipalities would experience a decline in their
property tax base. The loss of state and local income tax deductions would
increase the relative economic disadvantage that high tax states already face.
The flat tax represents a shift in tax accountability from the federal to local
governments. Taxpayer recognition of the extent of changes under consideration
may impede the passage of comprehensive tax reform.
FUND PERFORMANCE AND PORTFOLIO STRUCTURE
Dean Witter Limited Term Municipal Trust's total return for the six-month period
ended September 30, 1995, was 6.28 percent. Tax-free dividends totaling
approximately $0.21 per share
were paid during the period. As of
September 30, 1995, the Fund's 30-day
SEC yield was 4.18 percent and its
distribution rate was 4.07 percent.
Although the Fund experienced moderate
redemptions during the period, the
portfolio's overall structure (coupons
and maturities) was maintained. At the
end of September, intermediate-term
municipal bonds represented 94 percent
of net assets. The portfolio was
diversified among 14 municipal sectors
and 45 separate issuers. The three
largest municipal sectors at the end of
the period were: general obligation,
water/sewer and transportation. These
sectors represented 35 percent of the
portfolio. The
[GRAPHIC]
<TABLE>
<S> <C>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
Moody's or Standard & Poor's Credit Ratings (% of
net assets)
Aa or AA 18%
Aaa or AAA 33%
Non-Rated 3%
Baa or BBB 9%
A or A 37%
</TABLE>
<PAGE>
DEAN WITTER LIMITED TERM MUNICIPAL TRUST
LETTER TO THE SHAREHOLDERS, CONTINUED
portfolio's weighted average maturity of 8 years and duration of 7 years changed
only modestly during the period. Bonds subject to the alternative minimum tax
(AMT) accounted for 16 percent of net assets. At the end of the period the Fund
had net assets in excess of $80 million. The portfolio also maintained high
quality with an average rating of double "A" as measured by Moody's Investors
Service, Inc. or Standard & Poor's Corp. The credit quality ratings of the
intermediate-term portfolio are summarized at left.
LOOKING AHEAD
The slower pace of economic growth in 1995 and the Federal Reserve Board's
previous interest rate moves have improved bond market expectations. The
decreasing supply of new issues, combined with significant maturities and calls
for redemption, should continue to be positive for the municipal market.
However, tax reduction proposals are likely to continue to receive publicity and
may cloud the outlook for tax-exempt bonds. With intermediate maturity
municipals yielding about 80 percent of Treasuries, the market has begun the
process of discounting the risk that a flat tax may eventually pass.
We appreciate your ongoing support of Dean Witter Limited Term Municipal Trust
and look forward to continuing to serve your investment needs.
Very truly yours,
[SIG]
CHARLES A. FIUMEFREDDO
CHAIRMAN OF THE BOARD
<PAGE>
DEAN WITTER LIMITED TERM MUNICIPAL TRUST
PORTFOLIO OF INVESTMENTS SEPTEMBER 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ---------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
MUNICIPAL BONDS (93.8%)
GENERAL OBLIGATION (14.9%)
$ 2,000 Wilmington, Delaware, Refg Ser
1993 B (FGIC)............... 4.60% 07/01/04 $ 1,963,120
2,000 District of Columbia, Refg Ser
1994 A (MBIA)............... 4.95 06/01/05 1,940,020
1,000 Honolulu, Hawaii, Refg Ser
1993 B...................... 5.00 10/01/03 1,016,470
2,000 Rosemont, Illinois, Ser 1993
B........................... 5.30 12/01/04 2,036,180
2,000 Massachusetts, Refg Ser 1993
C........................... 4.80 08/01/03 1,992,120
2,000 New York City, New York, Ser
1992 A...................... 6.10 08/01/02 2,062,860
1,000 Massillon City School
District, Ohio, Refg Ser
1994 (AMBAC)................ 4.70 12/01/05 980,140
------------
- ------------
11,990,910
12,000
------------
- ------------
EDUCATIONAL FACILITIES REVENUE (8.6%)
1,500 University of Delaware, Ser
1993........................ 4.90 11/01/02 1,509,735
1,500 Massachusetts Health &
Educational Facilities
Authority, Boston College
Ser K....................... 4.80 06/01/04 1,484,175
2,000 University of Minnesota, Ser
1993 A...................... 4.80 08/15/03 2,010,300
2,000 New York State Dormitory
Authority, State University
Ser 1993 B.................. 5.25 05/15/05 1,970,180
------------
- ------------
6,974,390
7,000
------------
- ------------
ELECTRIC REVENUE (7.3%)
1,000 Salt River Project
Agricultural Improvement &
Power District, Arizona,
Refg Ser 1993 B............. 4.75 01/01/03 998,090
3,000 San Antonio, Texas, Electric &
Gas Refg Ser 1994........... 4.70 02/01/05 2,913,690
2,000 Snohomish County Public
Utility District #1,
Washington, Generation Ser
1993 B (AMT)................ 5.35 01/01/05 1,979,700
------------
- ------------
5,891,480
6,000
------------
- ------------
HOSPITAL REVENUE (7.3%)
2,000 California Statewide
Communities Development
Authority, Cedars-Sinai
Medical Center Ser 1993..... 4.70 11/01/03 1,951,300
1,000 Michigan Hospital Finance
Authority, McLaren Obligated
Group Ser 1993 A............ 5.00 10/15/04 946,970
1,000 Murray, Utah, IHC Hospitals
Inc Refg Ser 1993 (AMBAC)... 5.00 05/15/04 1,006,900
1,000 Fairfax County Industrial
Development Authority,
Virginia, Inova Health
System Foundation Refg Ser
1993 A...................... 4.70 08/15/04 955,160
1,000 Wisconsin Health & Educational
Facilities Authority,
Hospital Sisters Services
Ser 1993 (MBIA)............. 5.00 06/01/03 1,006,260
------------
- ------------
5,866,590
6,000
------------
- ------------
INDUSTRIAL DEVELOPMENT/POLLUTION CONTROL REVENUE (3.7%)
1,000 Massachusetts Industrial
Finance Agency, Eastern
Edison Co Refg Ser 1993..... 5.875 08/01/08 992,350
2,000 Greenwood, Wisconsin, Land
O'Lakes Inc (AMT)........... 5.50 09/01/03 2,013,600
------------
- ------------
3,005,950
3,000
------------
- ------------
MORTGAGE REVENUE - MULTI-FAMILY (2.6%)
2,130 Wisconsin Housing & Economic
Development Authority, Ser
1993 B (AMT)................ 5.10 11/01/03 2,065,376
------------
- ------------
MORTGAGE REVENUE - SINGLE FAMILY (2.4%)
2,000 Connecticut Housing Finance
Authority, 1993 Subser
F-1......................... 4.90 05/15/04 1,966,740
------------
- ------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER LIMITED TERM MUNICIPAL TRUST
PORTFOLIO OF INVESTMENTS SEPTEMBER 30, 1995 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ---------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
PUBLIC FACILITIES REVENUE (8.4%)
$ 1,400 St Paul Housing &
Redevelopment Authority,
Minnesota, Civic Center Ser
1993........................ 4.80% 11/01/03 $ 1,377,838
2,000 Regional Convention & Sports
Complex Authority, Missouri,
Refg Ser A 1993............. 4.75 08/15/04 1,928,240
2,000 Ohio Building Authority,
Correctional Refg 1994 Ser
A........................... 4.65 10/01/04 1,956,780
1,500 Pittsburgh Stadium Authority,
Pennsylvania, Refg Ser 1993
(MBIA)...................... 4.85 10/01/04 1,480,605
------------
- ------------
6,743,463
6,900
------------
- ------------
RESOURCE RECOVERY REVENUE (2.5%)
2,000 Northeast Maryland Waste
Disposal Authority,
Montgomery County Ser 1993 A
(AMT)....................... 5.50 07/01/01 2,031,300
------------
- ------------
STUDENT LOAN REVENUE (6.2%)
1,000 New England Education Loan
Marketing Corporation,
Massachusetts, Ser 1992 G... 5.20 08/01/02 999,920
2,000 Montana Higher Education
Student Assistance
Corporation, Senior Ser 1993
B (AMT)..................... 5.10 12/01/01 2,013,500
2,000 South Carolina Education
Assistance Authority, Ser
1993 A-1 (AMT).............. 5.00 09/01/03 1,999,880
------------
- ------------
5,013,300
5,000
------------
- ------------
TAX ALLOCATION REVENUE (7.3%)
1,955 Pleasanton Joint Powers
Financing Authority,
California, Reassessment Ser
1993 A...................... 5.60 09/02/00 1,967,395
2,000 Sacramento Financing
Authority, California, Refg
Ser 1993 A (AMBAC).......... 4.85 11/01/04 1,981,080
2,000 Santa Maria Redevelopment
Agency, California, Town
Center & Westside Parking
Refg Ser 1993............... 4.75 06/01/03 1,968,320
------------
- ------------
5,916,795
5,955
------------
- ------------
TRANSPORTATION REVENUE (9.7%)
1,000 Alaska, International Airports
Refg Ser 1 (AMT) (MBIA)..... 5.10 10/01/03 1,006,510
1,000 Delaware River & Bay
Authority, Delaware & New
Jersey, Ser 1993 *.......... 4.50 01/01/04 965,130
2,000 Washington Metropolitan Area
Transit Authoriy, District
of Columbia, Maryland and
Virginia Refg Ser 1993
(FGIC) **................... 4.90 01/01/05 1,985,140
2,000 Chicago, Illinois,
Chicago-O'Hare Int'l Airport
Refg Ser 1993 A............. 4.80 01/01/05 1,900,700
2,000 Harris County, Texas, Toll
Road Refg Ser 1994
(AMBAC)..................... 4.85 08/15/05 1,984,400
------------
- ------------
7,841,880
8,000
------------
- ------------
WATER & SEWER REVENUE (10.4%)
1,000 Atlanta, Georgia, Water &
Sewer Ser 1993.............. 4.50 01/01/04 969,060
2,000 Massachusetts Water Resources
Authority, Ser 1993 C....... 5.25 12/01/06 2,003,160
2,000 New York City Municipal Water
Finance Authority, New York,
Ser 1994 B.................. 5.125 06/15/04 2,010,280
1,500 Pittsburgh Water & Sewer
Authority, Pennsylvania,
Refg Ser 1993 A (FGIC)...... 4.60 09/01/03 1,475,505
2,000 Southeastern Public Servic
Authority, Virginia,
Regional Solid Waste Refg
Ser 1993 A (MBIA)........... 4.70 07/01/04 1,961,860
------------
- ------------
8,419,865
8,500
------------
- ------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER LIMITED TERM MUNICIPAL TRUST
PORTFOLIO OF INVESTMENTS SEPTEMBER 30, 1995 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ---------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
OTHER REVENUE (2.5%)
$ 2,000 Pennsylvania Intergovernmental
Cooperation Authority,
Special Tax Ser 1993
(FGIC)...................... 5.05% 06/15/04 $ 2,006,180
------------
- ------------
TOTAL MUNICIPAL BONDS (IDENTIFIED COST
$76,145,386)........................................
76,485 75,734,219
- ------------ ------------
SHORT-TERM MUNICIPAL OBLIGATIONS (3.5%)
2,100 Indiana Hospital Equipment
Financing Authority, Ser
1985 (MBIA) (Demand
10/04/95)................... 4.50+ 12/01/15 2,100,000
700 Louisiana Recovery District
Sales Tax Ser 1988 (FGIC)
(Demand 10/02/95)........... 4.75+ 07/01/97 700,000
------------
- ------------
TOTAL SHORT-TERM MUNICIPAL OBLIGATIONS (IDENTIFIED
COST $2,800,000)....................................
2,800 2,800,000
- ------------ ------------
$ 79,285 TOTAL INVESTMENTS (IDENTIFIED
COST $78,945,386) (A)......... 97.3% 78,534,219
- ------------
- ------------
CASH AND OTHER ASSETS IN
EXCESS OF LIABILITIES......... 2.7 2,198,775
----- -----------
NET ASSETS.................... 100.0% $80,732,994
----- -----------
----- -----------
<FN>
- ---------------------
AMT Alternative Minimum Tax.
+ Current coupon of variable rate security.
* Joint exemption in Delaware and New Jersey.
** Joint exemption in Maryland and Virginia.
(a) The aggregate cost for federal income tax puposes is $78,945,386; the
aggregate gross unrealized appreciation is $278,417 and the aggregate
gross unrealized depreciation is $689,584, resulting in net unrealized
depreciation of $411,167.
BOND INSURANCE:
AMBAC AMBAC Indemnity Corporation.
FGIC Financial Guaranty Insurance Company.
MBIA Municipal Bond Investors Assurance Corporation.
</TABLE>
GEOGRAPHIC SUMMARY OF INVESTMENTS
Based on Market Value as a Percentage of Net Assets
SEPTEMBER 30, 1995 (UNAUDITED)
<TABLE>
<S> <C>
Alaska.......... 1.2%
Arizona......... 1.2
California...... 9.7
Connecticut..... 2.4
Delaware........ 4.3
District of
Columbia....... 2.4
Georgia......... 1.2%
Hawaii.......... 1.3
Illinois........ 4.9
Indiana......... 2.6
Louisiana....... 0.9
Maryland........ 2.5
Massachusetts... 9.3
Michigan........ 1.2%
Minnesota....... 4.2
Missouri........ 2.4
Montana......... 2.5
New York........ 7.5
Ohio............ 3.6
Pennsylvania.... 6.1
South
Carolina....... 2.5%
Texas........... 6.1
Utah............ 1.2
Virginia........ 3.6
Washington...... 2.5
Wisconsin....... 6.3
Joint
Exemption...... 3.7
---
Total........... 97.3%
---
---
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER LIMITED TERM MUNICIPAL TRUST
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1995 (UNAUDITED)
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $78,945,386)............................. $78,534,219
Cash........................................................ 140,093
Receivable for:
Interest................................................ 1,054,935
Shares of beneficial interest sold...................... 1,030,561
Deferred organizational expenses............................ 85,699
Prepaid expenses and other assets........................... 71,387
-----------
TOTAL ASSETS........................................... 80,916,894
-----------
LIABILITIES:
Payable for:
Shares of beneficial interest repurchased............... 71,596
Investment management fee............................... 33,343
Dividends to shareholders............................... 17,812
Accrued expenses and other payables......................... 61,149
-----------
TOTAL LIABILITIES...................................... 183,900
-----------
NET ASSETS:
Paid-in-capital............................................. 89,750,865
Net unrealized depreciation................................. (411,167)
Accumulated undistributed net investment income............. 8,869
Accumulated net realized loss............................... (8,615,573)
-----------
NET ASSETS............................................. $80,732,994
-----------
-----------
NET ASSET VALUE PER SHARE,
8,114,639 SHARES OUTSTANDING
(UNLIMITED SHARES AUTHORIZED OF $.01 PAR VALUE)...........
$9.95
-----------
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER LIMITED TERM MUNICIPAL TRUST
FINANCIAL STATEMENTS, CONTINUED
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1995 (UNAUDITED)
<TABLE>
<S> <C>
NET INVESTMENT INCOME:
INTEREST INCOME............................................. $2,062,467
----------
EXPENSES
Investment management fee................................... 205,131
Professional fees........................................... 30,665
Transfer agent fees and expenses............................ 26,202
Registration fees........................................... 25,972
Shareholder reports and notices............................. 18,128
Trustees' fees and expenses................................. 16,937
Organizational expenses..................................... 13,265
Other....................................................... 5,325
----------
TOTAL EXPENSES......................................... 341,625
----------
NET INVESTMENT INCOME.................................. 1,720,842
----------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized loss........................................... (248,674)
Net change in unrealized depreciation....................... 3,632,953
----------
NET GAIN............................................... 3,384,279
----------
NET INCREASE................................................ $5,105,121
----------
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER LIMITED TERM MUNICIPAL TRUST
FINANCIAL STATEMENTS, CONTINUED
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED FOR THE YEAR
SEPTEMBER 30, 1995 ENDED
(UNAUDITED) MARCH 31, 1995
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income....................................... $ 1,720,842 $ 5,198,803
Net realized loss........................................... (248,674) (8,283,452)
Net change in unrealized depreciation....................... 3,632,953 5,381,579
------------------ --------------
NET INCREASE........................................... 5,105,121 2,296,930
------------------ --------------
Dividends from net investment income........................ (1,711,973) (5,198,803)
Net decrease from transactions in shares of beneficial
interest.................................................. (8,159,606) (82,188,083)
------------------ --------------
TOTAL DECREASE......................................... (4,766,458) (85,089,956)
NET ASSETS:
Beginning of period......................................... 85,499,452 170,589,408
------------------ --------------
END OF PERIOD
(INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME OF $8,869
AND $0, RESPECTIVELY)................................... $80,732,994 $ 85,499,452
------------------ --------------
------------------ --------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER LIMITED TERM MUNICIPAL TRUST
NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1995 (UNAUDITED)
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 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. 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 and premiums are amortized 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 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
<PAGE>
DEAN WITTER LIMITED TERM MUNICIPAL TRUST
NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1995 (UNAUDITED) CONTINUED
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
$139,572. The Fund reimbursed the Investment Manager for $124,964, exclusive of
amounts assumed. 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 Fund pays 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 proceeds from sales of portfolio securities, excluding short-term
investments, for the six months ended September 30, 1995 aggregated $6,808,966.
Dean Witter Trust Company, an affiliate of the Investment Manager, is the Fund's
transfer agent. At September 30, 1995, the Fund had transfer agent fees and
expenses payable of approximately $9,000.
The Fund has an unfunded noncontributory defined benefit pension plan covering
all independent Trustees of the Fund who will have served as independent
Trustees for at least five years at the time of retirement. Benefits under this
plan are based on years of service and compensation during the last five years
of service. Aggregate pension costs for the six months ended September 30, 1995
<PAGE>
DEAN WITTER LIMITED TERM MUNICIPAL TRUST
NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1995 (UNAUDITED) CONTINUED
included in Trustees' fees and expenses in the Statement of Operations amounted
to $6,017. At September 30, 1995, the Fund had an accrued pension liability of
$20,655 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 SIX MONTHS ENDED FOR THE YEAR ENDED
SEPTEMBER 30, 1995 MARCH 31, 1995
---------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
----------- -------------- ----------- ------------
<S> <C> <C> <C> <C>
Sold............................................................. 2,421,126 $ 23,610,283 5,996,771 $ 56,905,855
Reinvestment of dividends........................................ 132,987 1,304,518 431,682 4,067,263
----------- -------------- ----------- ------------
2,554,113 24,914,801 6,428,453 60,973,118
Repurchased...................................................... (3,385,857) (33,074,407) (15,228,776) (143,161,201)
----------- -------------- ----------- ------------
Net decrease..................................................... (831,744) $ (8,159,606) (8,800,323) $(82,188,083)
----------- -------------- ----------- ------------
----------- -------------- ----------- ------------
</TABLE>
5. FEDERAL INCOME TAX STATUS
At March 31, 1995, the Fund had a net capital loss carryover 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 Funds' 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 SIX
MONTHS ENDED FOR THE PERIOD
SEPTEMBER 30, FOR THE YEAR JULY 12, 1993*
1995 ENDED THROUGH
(UNAUDITED) MARCH 31, 1995 MARCH 31, 1994
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period.................................. $ 9.56 $ 9.61 $ 10.00
------ ------ ------
Net investment income................................................. 0.21 0.42 0.29
Net realized and unrealized gain (loss)............................... 0.39 (0.05) (0.39)
------ ------ ------
Total from investment operations...................................... 0.60 0.37 (0.10)
------ ------ ------
Dividends from net investment income.................................. (0.21) (0.42) (0.29)
------ ------ ------
Net asset value, end of period........................................ $ 9.95 $ 9.56 $ 9.61
------ ------ ------
------ ------ ------
TOTAL INVESTMENT RETURN............................................... 6.28%(1) 4.01% (1.11)%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses.............................................................. 0.83%(2) 0.76% 0.31%(2)(3)
Net investment income................................................. 4.21%(2) 4.41% 3.92%(2)(3)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands............................... $80,733 $85,499 $170,589
Portfolio turnover rate............................................... -- % 2% 6%(1)
<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.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<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
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
LIMITED TERM
MUNICIPAL TRUST
[Graphic]
SEMIANNUAL REPORT
APRIL 30, 1995
