<PAGE>
DEAN WITTER LIMITED TERM MUNICIPAL TRUST
Two World Trade Center, New York, New York 10048
LETTER TO THE SHAREHOLDERS March 31, 1997
DEAR SHAREHOLDER:
We are pleased to present the annual report on the operations of Dean Witter
Limited Term Municipal Trust for the fiscal year ended March 31, 1997.
Economic growth moderated during the third quarter of
1996, causing fixed-income yields to move lower through
November. However, increased consumer spending led to
an acceleration of economic activity, which prompted yields to rise between
December and March. On March 25, 1997, the Federal Reserve Board raised the
federal-funds rate 25 basis points to 5.50 percent in a preemptive move
against a possible spike in the rate of inflation.
MUNICIPAL MARKET CONDITIONS
Intermediate-term municipal bond yields, as measured by 10-year double
"A"-rated general obligation bonds, fell from a high of 5.40 percent in June
1996 to 4.80 percent in November before rising again to 5.15 percent at the
end of March. Although municipal yields followed the pattern of Treasuries,
they generally were less volatile. The ratio of 10-year double "A"-rated
general obligation bond yields to 10-year U.S. Treasury yields fell from 79
percent to 75 percent during the past 12 months. A declining ratio means that
municipal bond prices outperformed U.S. Treasury prices. The ratio's range
for the past three years has been between 73 percent and 85 percent.
On the supply side of the market, new-issue municipal volume increased 14
percent to $183 billion in 1996. Underwriting volume this year is expected to
exceed bond maturities and redemptions.
PERFORMANCE
The Fund's net asset value (NAV) declined from $9.95 to $9.91 per share
during the fiscal year ended March 31, 1997. Based on this NAV change, plus
reinvestment of tax-free dividends totaling $0.40 per share, the Fund's total
return was 3.65 percent. As of March 31, 1997, the Fund's SEC yield and
distribution rate were both 4.22 percent.
<PAGE>
DEAN WITTER LIMITED TERM MUNICIPAL TRUST
LETTER TO THE SHAREHOLDERS March 31, 1997, continued
The accompanying chart illustrates the performance of a $10,000 investment in
the Fund since inception (July 12, 1993) through the fiscal year ended March
31, 1997, versus the performance of a similar hypothetical investment in the
issues comprising the unmanaged Lehman Brothers 10-Year Municipal Bond Index
and the Lipper Analytical Services, Inc. Intermediate Muni Debt Funds Index.
GROWTH OF $10,000
DATE TOTAL LEHMAN LIPPER
- -------------------------------------------------------------------------------
July 12, 1993 $10000 $10000 $10000
- -------------------------------------------------------------------------------
March 31, 1994 $ 9891 $ 9927 $10011
- -------------------------------------------------------------------------------
March 31, 1995 $10287 $10673 $10550
- -------------------------------------------------------------------------------
March 31, 1996 $11153 $11619 $11280
- -------------------------------------------------------------------------------
March 31, 1997 $11560(2) $12224 $11750
===============================================================================
AVERAGE ANNUAL TOTAL RETURNS
ONE YEAR LIFE OF FUND
=====================================================
3.65 (1) 3.98 (1)
=====================================================
=======================================================================
________Fund _______Lehman (3) ______Lipper (4)
=======================================================================
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, 1997.
(3) The Lehman Brothers 10-Year Municipal 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. The performance of the index does not include any expenses,
fees or charges. The Index is unmanaged and should not be considered
an investment.
(4) The Lipper Intermediate Muni Debt Funds Index is an equally-weighted
performance index of the largest qualifying funds (based on net
assets) in the Lipper Intermediate Municipal Debt Funds objective.
The Index, which is adjusted for capital gains distributions and
income dividends, is unmanaged and should not be considered an
investment. There are currently 30 funds represented in this index.
PORTFOLIO STRUCTURE
As of March 31, 1997, intermediate-term municipal bonds represented 89
percent of the Fund's net assets. Short-term investments represented 8
percent of net assets. The portfolio was diversified among 12 specific
municipal sectors and 39 separate issuers. The portfolio's average maturity
and duration were 6.4 years and 5.2 years, respectively. Bonds subject to the
alternative minimum tax (AMT) accounted for 17 percent of net assets. At the
end of March, the Fund had net assets totaling in excess of $61 million. The
portfolio maintained high quality with an average credit rating of double "A"
or higher as of March 31, as measured by Standard & Poor's Corp. or Moody's
Investors Service, Inc.
LOOKING AHEAD
With the collapse of flat-tax proposals, municipal bonds have improved
relative to U.S. Treasury securities. Tax-free yields are currently near the
bottom of their average range versus Treasury yields. If municipal yields
were to rise in the future, the Fund would likely sell its relatively
defensive bonds with shorter maturities to extend maturity and increase call
protection.
<PAGE>
DEAN WITTER LIMITED TERM MUNICIPAL TRUST
(The chart below represents information which appears as a graphic in
the printed report)
A pie chart reflecting the credit quality of the portfolio as rated by
Moody's or Standard & Poors Credit Ratings as of March 31, 1997.
CREDIT RATING PERCENT
------------- -------
Aaa or AAA 30%
Aa or AA 26%
A or A 31%
Baa or BBB 9%
Not rated 4%
FIVE LARGEST SECTORS as of March 31, 1997.
SECTORS PERCENT
------- -------
All others 52%
Education 11%
General Obligation 10%
Transportation 10%
Water & Sewer 9%
Hospital 8%
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,
/s/ Charles A. Fiumefreddo
CHARLES A. FIUMEFREDDO
Chairman of the Board
<PAGE>
DEAN WITTER LIMITED TERM MUNICIPAL TRUST
PORTFOLIO OF INVESTMENTS March 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MUNICIPAL BONDS (89.0%)
General Obligation (9.7%)
$1,000 Wilmington, Delaware, Refg Ser 1993 B (FGIC) ................... 4.60 % 07/01/04 $ 976,560
1,000 Honolulu, Hawaii, Refg Ser 1993 B .............................. 5.00 10/01/03 1,002,200
1,000 Rosemont, Illinois, Ser 1993 B .................................. 5.30 12/01/04 1,008,700
2,000 Massachusetts, Refg Ser 1993 C ................................. 4.80 08/01/03 1,982,660
1,000 Massillon City School District, Ohio, Refg Ser 1994 (AMBAC) .... 4.70 12/01/05 974,520
- ----------- -------------
6,000 5,944,640
- ----------- -------------
Educational Facilities Revenue (10.5%)
1,500 University of Delaware, Ser 1993 ............................... 4.90 11/01/02 1,501,395
1,000 Massachusetts Health & Educational Facilities Authority, Boston
College Ser K ................................................. 4.80 06/01/04 987,890
2,000 University of Minnesota, Ser 1993 A ............................. 4.80 08/15/03 1,981,520
2,000 New York State Dormitory Authority, State University Ser 1993 B 5.25 05/15/05 1,963,620
- ----------- -------------
6,500 6,434,425
- ----------- -------------
Electric Revenue (4.8%)
1,000 Salt River Project Agricultural Improvement & Power District,
Arizona, Refg Ser 1993 B ...................................... 4.75 01/01/03 992,490
2,000 San Antonio, Texas, Electric & Gas Refg Ser 1994 ................ 4.70 02/01/05 1,946,720
- ----------- -------------
3,000 2,939,210
- ----------- -------------
Hospital Revenue (8.0%)
1,000 California Statewide Communities Development Authority,
Cedars-Sinai Medical Center Ser 1993 ........................... 4.70 11/01/03 972,930
1,000 Michigan Hospital Finance Authority, McLaren Obligated Group Ser
1993 A ........................................................ 5.00 10/15/04 965,870
1,000 Murray, Utah, IHC Hospitals Inc Refg Ser 1993 (AMBAC) .......... 5.00 05/15/04 1,000,540
1,000 Fairfax County Industrial Development Authority, Virginia, Inova
Health System Foundation Refg Ser 1993 A ....................... 4.70 08/15/04 975,020
1,000 Wisconsin Health & Educational Facilities Authority, Hospital
Sisters Services
Ser 1993 (MBIA) ................................................ 5.00 06/01/03 995,220
- ----------- -------------
5,000 4,909,580
- ----------- -------------
Industrial Development/Pollution Control Revenue (4.9%)
1,000 Massachusetts Industrial Finance Agency, Eastern Edison Co Refg
Ser 1993 ...................................................... 5.875 08/01/08 968,900
2,000 Greenwood, Wisconsin, Land O'Lakes Inc (AMT) .................... 5.50 09/01/03 2,017,500
- ----------- -------------
3,000 2,986,400
- ----------- -------------
Mortgage Revenue -Multi-Family (3.5%)
2,130 Wisconsin Housing & Economic Development Authority, Ser 1993 B
(AMT) ......................................................... 5.10 11/01/03 2,117,689
- ----------- -------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER LIMITED TERM MUNICIPAL TRUST
PORTFOLIO OF INVESTMENTS March 31, 1997, continued
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Mortgage Revenue -Single Family (3.3%)
$2,000 Connecticut Housing Finance Authority, 1993 Subser F-1 .......... 4.90 % 05/15/04 $1,991,340
- ----------- -------------
Public Facilities Revenue (6.3%)
2,000 Regional Convention & Sports Complex Authority, Missouri, Refg
Ser A 1993 .................................................... 4.75 08/15/04 1,931,100
2,000 Ohio Building Authority, Correctional Refg 1994 Ser A ........... 4.65 10/01/04 1,945,220
- ----------- -------------
4,000 3,876,320
- ----------- -------------
Resource Recovery Revenue (3.3%)
2,000 Northeast Maryland Waste Disposal Authority, Montgomery County
- ----------- Ser 1993 A (AMT) ............................................... 5.50 07/01/01 2,023,200
-------------
Student Loan Revenue (6.5%)
2,000 Montana Higher Education Student Assistance Corporation, Senior
Ser 1993 B (AMT) .............................................. 5.10 12/01/01 1,997,400
2,000 South Carolina Education Assistance Authority, Ser 1993 A-1
(AMT) ......................................................... 5.00 09/01/03 1,975,100
- ----------- -------------
4,000 3,972,500
- ----------- -------------
Tax Allocation (6.4%)
1,895 Pleasanton Joint Powers Financing Authority, California,
Reassessment Ser 1993 A ........................................ 5.60 09/02/00 1,929,053
2,000 Sacramento Financing Authority, California, Refg Ser 1993 A
(AMBAC) ....................................................... 4.85 11/01/04 1,989,900
- ----------- -------------
3,895 3,918,953
- ----------- -------------
Transporation Facilities Revenue (9.6%)
1,000 Delaware River & Bay Authority, Delaware & New Jersey, Ser 1993+ 4.50 01/01/04 967,130
2,000 Washington Metropolitan Area Transit Authority, District of
Columbia, Maryland and Virginia, Refg Ser 1993 (FGIC)++ ........ 4.90 01/01/05 1,964,960
1,000 Chicago, Illinois, Chicago-O'Hare Int'l Airport Refg Ser 1993 A 4.80 01/01/05 961,840
2,000 Harris County, Texas, Toll Road Refg Ser 1994 (AMBAC) ........... 4.85 08/15/05 1,975,000
- ----------- -------------
6,000 5,868,930
- ----------- -------------
Water & Sewer Revenue (8.9%)
1,000 Atlanta, Georgia, Water & Sewer Ser 1993 ....................... 4.50 01/01/04 968,800
1,000 Massachusetts Water Resources Authority, Ser 1993 C ............ 5.25 12/01/06 999,170
1,000 New York City Municipal Water Finance Authority, New York, Ser
1994 B ........................................................ 5.125 06/15/04 997,240
1,500 Pittsburgh Water & Sewer Authority, Pennsylvania, Refg Ser 1993
A (FGIC) ....................................................... 4.60 09/01/03 1,465,575
1,000 Southeastern Public Service Authority, Virginia, Regional Solid
Waste Refg ....................................................
Ser 1993 A (MBIA) .............................................. 4.70 07/01/04 980,560
- ----------- -------------
5,500 5,411,345
- ----------- -------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER LIMITED TERM MUNICIPAL TRUST
PORTFOLIO OF INVESTMENTS March 31, 1997, continued
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Other Revenue (3.3%)
$2,000 Pennsylvania Intergovernmental Cooperation Authority, Special
- ----------- Tax Ser 1993 (FGIC) ........................................... 5.05% 06/15/04 $1,997,460
-------------
55,025 TOTAL MUNICIPAL BONDS
- ----------- (Identified Cost $54,766,712) ........................................... 54,391,992
-------------
SHORT-TERM MUNICIPAL OBLIGATIONS (7.7%)
1,800 East Baton Rouge Parish, Louisiana, Exxon Corp Ser 1989
(Demand 04/01/97) ............................................. 3.90* 11/01/19 1,800,000
2,900 Royal Oak Hospital Finance Authority, Michigan, William Beaumont
- ----------- Hospital Ser 1996 J (Demand 04/01/97) ......................... 3.80* 01/01/03 2,900,000
-------------
4,700 TOTAL SHORT-TERM MUNICIPAL OBLIGATIONS
- ----------- (Identified Cost $4,700,000) ........................................................ 4,700,000
-------------
$59,725 TOTAL INVESTMENTS
=========== (Identified Cost $59,466,712)(a) ......................................... 96.7% 59,091,992
-------------
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES ........................... 3.3 2,005,848
---------- -------------
NET ASSETS .............................................................. 100.0% $61,097,840
========== =============
</TABLE>
- ------------
AMT Alternative Minimum Tax.
+ Joint Exemption in Delaware and New Jersey.
++ Joint Exemption in District of Columbia, Maryland and Virginia.
* Current coupon of variable rate demand obligation.
(a) The aggregate cost for federal income tax purposes approximates
identified cost. The aggregate gross unrealized appreciation is
$123,290 and the aggregate gross unrealized depreciation is
$498,010, resulting in net unrealized depreciation of $374,720.
Bond Insurance:
- ---------------
AMBAC AMBAC Indemnity Corporation.
FGIC Financial Guaranty Insurance Company.
MBIA Municipal Bond Investors Assurance Corporation.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER LIMITED TERM MUNICIPAL TRUST
PORTFOLIO OF INVESTMENTS March 31, 1997, continued
- ------------------------------------------------------------------
Geographic Summary of Investments
Based on Market Value as a Percentage of Net Assets
March 31, 1997
Arizona 1.6%
California 8.0
Connecticut 3.3
Delaware 5.6
District of Columbia 3.2
Georgia 1.6
Hawaii 1.6
Illinois 3.2
Louisiana 2.9
Maryland 6.5%
Massachusetts 8.1
Michigan 6.3
Minnesota 3.2
Missouri 3.2
Montana 3.3
New Jersey 1.6
New York 4.8
Ohio 4.8
Pennsylvania 5.7%
South Carolina 3.2
Texas 6.4
Utah 1.6
Virginia 6.4
Wisconsin 8.4
Joint Exemptions* (7.8)
-------
Total 96.7%
=======
- ------------
* Joint exemptions have been included in more than one geographic location.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER LIMITED TERM MUNICIPAL TRUST
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
March 31, 1997
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $59,466,712)....................................... $59,091,992
Cash................................................................. 98,804
Receivable for:
Shares of beneficial interest sold................................. 1,506,713
Interest........................................................... 732,027
Deferred organizational expenses .................................... 40,457
Prepaid expenses and other assets.................................... 4,184
-------------
TOTAL ASSETS....................................................... 61,474,177
-------------
LIABILITIES:
Payable for:
Shares of beneficial interest repurchased.......................... 221,335
Dividends to shareholders.......................................... 34,394
Investment management fee.......................................... 25,958
Accrued expenses .................................................... 94,650
-------------
TOTAL LIABILITIES.................................................. 376,337
-------------
NET ASSETS:
Paid-in-capital...................................................... 70,270,587
Net unrealized depreciation ......................................... (374,720)
Accumulated net realized loss........................................ (8,798,027)
-------------
NET ASSETS ........................................................ $61,097,840
=============
NET ASSET VALUE PER SHARE,
6,165,243 shares outstanding (unlimited shares authorized of $.01
par value).......................................................... $ 9.91
=============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER LIMITED TERM MUNICIPAL TRUST
FINANCIAL STATEMENTS, continued
STATEMENT OF OPERATIONS
For the year ended March 31, 1997
<TABLE>
<CAPTION>
<S> <C>
NET INVESTMENT INCOME:
INTEREST INCOME........................ $3,225,927
------------
EXPENSES
Investment management fee.............. 331,532
Shareholder reports and notices ...... 60,216
Professional fees ..................... 52,835
Registration fees ..................... 51,691
Transfer agent fees and expenses ...... 35,885
Organizational expenses ............... 31,690
Trustees' fees and expenses............ 9,598
Custodian fees......................... 3,973
Other.................................. 9,312
------------
TOTAL EXPENSES....................... 586,732
LESS: EXPENSE OFFSET................. (3,958)
------------
NET EXPENSES......................... 582,774
------------
NET INVESTMENT INCOME................ 2,643,153
------------
NET REALIZED AND UNREALIZED LOSS:
Net realized loss ..................... (226,959)
Net change in unrealized depreciation (32,266)
------------
NET LOSS............................. (259,225)
------------
NET INCREASE........................... $2,383,928
============
</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 YEAR FOR THE YEAR
ENDED ENDED
MARCH 31, 1997 MARCH 31, 1996
- ------------------------------------------------------ -------------- --------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income ................................. $ 2,643,153 $ 3,288,222
Net realized loss...................................... (226,959) (204,169)
Net change in unrealized depreciation ................. (32,266) 3,701,666
-------------- --------------
NET INCREASE......................................... 2,383,928 6,785,719
Dividends from net investment income................... (2,659,597) (3,271,778)
Net decrease from transactions in shares of beneficial
interest.............................................. (11,392,426) (16,247,458)
-------------- --------------
NET DECREASE......................................... (11,668,095) (12,733,517)
NET ASSETS:
Beginning of period.................................... 72,765,935 85,499,452
-------------- --------------
END OF PERIOD
(Including undistributed net investment income of
$0 and $16,444, respectively) ........................ $ 61,097,840 $ 72,765,935
============== ==============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER LIMITED TERM MUNICIPAL TRUST
NOTES TO FINANCIAL STATEMENTS March 31, 1997
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's investment objective is to provide
a high level of current income which is exempt from federal income tax,
consistent with the preservation of capital and prescribed standards of
quality and maturity. The Fund seeks to achieve this objective by investing
primarily in intermediate term, investment grade municipal securities. The
Fund was organized as a Massachusetts business trust on February 25, 1993 and
commenced operations on July 12, 1993.
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 -- Portfolio securities are valued by an outside
independent pricing service approved by the Trustees. The pricing service has
informed the Fund that in valuing the 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 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.
<PAGE>
DEAN WITTER LIMITED TERM MUNICIPAL TRUST
NOTES TO FINANCIAL STATEMENTS March 31, 1997, 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.
E. ORGANIZATIONAL EXPENSES -- Dean Witter InterCapital Inc. (the "Investment
Manager") paid the organizational expenses of the Fund in the amount of
$141,529 which were reimbursed exclusive of $12,651 which was absorbed 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 Fund pays the 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 proceeds from sales of portfolio securities, excluding short-term
investments, for the year ended March 31, 1997 aggregated $16,219,488.
<PAGE>
DEAN WITTER LIMITED TERM MUNICIPAL TRUST
NOTES TO FINANCIAL STATEMENTS March 31, 1997, continued
Dean Witter Trust Company, an affiliate of the Investment Manager, is the
Fund's transfer agent. At March 31, 1997, the Fund had transfer agent fees
and expenses payable of approximately $11,700.
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 year
ended March 31, 1997 included in Trustees' fees and expenses in the Statement
of Operations amounted to $4,550. At March 31, 1997, the Fund had an accrued
pension liability of $19,862 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 FOR THE
YEAR ENDED YEAR ENDED
MARCH 31, 1997 MARCH 31, 1996
----------------------------- ----------------------------
SHARES AMOUNT SHARES AMOUNT
------------- --------------- ------------- --------------
<S> <C> <C> <C> <C>
Sold 2,662,724 $ 26,485,209 4,179,668 $ 41,325,172
Reinvestment of dividends 207,775 2,068,215 252,716 2,510,255
------------- --------------- ------------- --------------
2,870,499 28,553,424 4,432,384 43,835,427
Repurchased (4,015,739) (39,945,850) (6,068,284) (60,082,885)
------------- --------------- ------------- --------------
Net decrease (1,145,240) $(11,392,426) (1,635,900) $(16,247,458)
============= =============== ============= ==============
</TABLE>
5. FEDERAL INCOME TAX STATUS
At March 31, 1997, the Fund had an approximate net capital loss carryover
which may be used to offset future capital gains to the extent provided by
regulations, which is available through March 31 of the following years:
<TABLE>
<CAPTION>
AMOUNTS IN THOUSANDS
- --------------------------------------------
2003 2004 2005 TOTAL
- -------- -------- ------ -------
<S> <C> <C> <C>
$4,630 $3,941 $227 $8,798
======== ======== ====== =======
</TABLE>
<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 ENDED MARCH 31, JULY 12, 1993*
------------------------------- THROUGH
1997 1996 1995 MARCH 31, 1994
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period ..... $ 9.95 $ 9.56 $ 9.61 $10.00
---------- ---------- --------- --------------
Net investment income..................... 0.40 0.41 0.42 0.29
Net realized and unrealized gain (loss) .. (0.04) 0.39 (0.05) (0.39)
---------- ---------- --------- --------------
Total from investment operations.......... 0.36 0.80 0.37 (0.10)
Less dividends from net investment
income................................... (0.40) (0.41) (0.42) (0.29)
---------- ---------- --------- --------------
Net asset value, end of period............ $ 9.91 $ 9.95 $ 9.56 $ 9.61
========== ========== ========= ==============
TOTAL INVESTMENT RETURN+.................. 3.65% 8.42% 4.01% (1.11)%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses.................................. 0.88%(4) 0.87%(4) 0.76% 0.31%(2)(3)
Net investment income..................... 3.99% 4.09% 4.41% 3.92%(2)(3)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands .. $61,098 $72,766 $85,499 $170,589
Portfolio turnover rate .................. -- % -- % 2% 6%(1)
</TABLE>
- ------------
* Commencement of operations.
+ Calculated based on the net asset value as of the last business day of
the period.
(1) Not annualized.
(2) Annualized.
(3) If the Fund had borne all of its expenses that were assumed/reimbursed
or waived by the Investment Manager, the annualized expense and net
investment income ratios would have been 0.75% and 3.48%, respectively.
(4) Does not reflect the effect of expense offsets of 0.01%.
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, 1997, the results of
its operations for the year then ended, the changes in its net assets for
each of the two years in the period then ended and the financial highlights
for each of the three years in the period 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 at March
31, 1997 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 9, 1997
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1997 FEDERAL TAX NOTICE (unaudited)
During the year ended March 31, 1997, the Fund paid to shareholders
$0.40 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
Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn
John R. Haire
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
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 use 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, 1997
