<PAGE> 1
DEAN WITTER LIMITED TERM MUNICIPAL TRUST Two World Trade Center, New York, New
York 10048
LETTER TO THE SHAREHOLDERS September 30, 1997
DEAR SHAREHOLDER:
We are pleased to present the semiannual report on the operations of Dean Witter
Limited Term Municipal Trust for the six-month period ended September 30, 1997.
Rapid economic growth in the first quarter of 1997 led the Federal Reserve Board
to tighten monetary policy in March in a preemptive move against a possible
increase in the rate of inflation. This pushed interest rates higher between
December 1996 and April 1997. Economic expansion slowed in the second quarter,
causing the bond market to rally. By July, yields had declined to last
November's levels. In addition to more moderate economic growth, low inflation
and a stable Fed policy, the bond rally was also aided by the dollar's strong
overseas performance and the shrinking federal budget deficit. The bond market
gave ground in August on fears that wage pressures arising from tight labor
conditions would prompt the Fed to tighten further. However, the trend toward
lower yields resumed in September and by the end of the third quarter most of
the price declines experienced in August had been erased.
MUNICIPAL MARKET CONDITIONS
Municipal yields followed the trend of Treasury yields but with less volatility.
Intermediate-term municipal bond yields, as measured by 10-year double "A"-rated
general obligation bonds, rose from 4.90 percent to 5.25 percent between
December 1996 and April 1997. The bond rally which began in the spring pushed
yields to a low of 4.60 percent in July before ending September at 4.70 percent.
The ratio of 10-year double "A"-rated general obligation bond yields to 10-year
U.S. Treasury yields rose slightly from 75 percent at the end of March 1997 to
77 percent in September. A rising ratio means that municipals have
underperformed Treasuries and become more attractive. Over the past four years,
this ratio has ranged from a low of 73 percent to a high of 85 percent.
<PAGE> 2
DEAN WITTER LIMITED TERM MUNICIPAL TRUST
LETTER TO THE SHAREHOLDERS September 30, 1997, continued
New-issue underwriting volume increased slightly in the first half of 1997. The
decline in interest rates led to a surge in refunding activity in the third
quarter. As a result, new-issue municipal volume was up
18 percent during the first nine months of 1997. Refundings accounted for 25
percent of total volume. The yield spread between lower-rated issues and
high-grade credits continued to narrow.
PERFORMANCE
Dean Witter Limited Term Municipal Trust's total return for the six-month period
ended September 30, 1997, was 4.79 percent. Tax-free dividends totaling $0.20
per share were paid during the period. The Fund's net asset value increased from
$9.91 to $10.18 per share.
PORTFOLIO STRUCTURE
As of September 30, 1997, intermediate-term municipal bonds represented 95
percent of the Fund's net assets. The Fund's short-term investment position
decreased from 8 percent to 4 percent of net assets during the six-month period.
The portfolio was diversified among 13 specific municipal sectors and 36
separate issuers. The portfolio's average maturity was 6.1 years and duration
was 5.0. Bonds subject to the alternative minimum tax (AMT) accounted for 19
percent of net assets. The portfolio maintained high quality with more than half
of the bonds rated double or triple "A", as measured by Standard & Poor's Corp.
or Moody's Investors Service, Inc. At the end of September, the Fund's net
assets were in excess of $53 million.
LARGEST SECTORS as of September 30, 1997
(% of Net Assets)
Transportation 12%
Education 12
Water & Sewer 10
General Obligation 10
Hospital 10
Mortgage 8
Student Loans 8
Electric 6
DR/PCR* 6
All Others 18
CREDIT RATINGS as of September 30, 1997
(% of Total Long-Term Portfolio)
Aaa/AAA 28%
Aa/AA 27
A/A 31
Baa/BBB 10
N/R 4
An measured by Moody's Investors Service, Inc
or Standard & Poor's Corp.
Portfolio structure is subject to change.
<PAGE> 3
DEAN WITTER LIMITED TERM MUNICIPAL TRUST
LETTER TO THE SHAREHOLDERS September 30, 1997, continued
LOOKING AHEAD
Municipals have followed the trend of Treasuries this year but have been less
volatile. We expect that the tax-free income objectives of the fund will
continue to appeal to investors seeking the moderate risk of intermediate
maturities. The recent enactment of the Taxpayer Relief Act of 1997 did not
impact municipals directly and the long-term benefits of tax-exempt income
remained intact.
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> 4
DEAN WITTER LIMITED TERM MUNICIPAL TRUST
RESULTS OF SPECIAL MEETING (unaudited)
* * *
On May 21, 1997, a special meeting of the Fund's shareholders was held for the
purpose of voting on four separate matters, the results of which were as
follows:
(1) APPROVAL OF A NEW INVESTMENT MANAGEMENT AGREEMENT BETWEEN THE FUND AND DEAN
WITTER INTERCAPITAL INC. IN CONNECTION WITH THE MERGER OF MORGAN STANLEY
GROUP INC. WITH DEAN WITTER, DISCOVER & CO.:
<TABLE>
<S> <C>
For....................................................................... 2,989,007
Against................................................................... 182,060
Abstain................................................................... 200,843
</TABLE>
(2) ELECTION OF TRUSTEES:
<TABLE>
<S> <C>
Michael Bozic
For..................... 3,062,880
Withheld................ 309,030
Charles A. Fiumefreddo
For..................... 3,062,880
Withheld................ 309,030
Edwin J. Garn
For..................... 3,062,880
Withheld................ 309,030
John R. Haire
For..................... 3,062,880
Withheld................ 309,030
Wayne E. Hedien
For..................... 3,062,880
Withheld................ 309,030
Dr. Manuel H. Johnson
For..................... 3,062,880
Withheld................ 309,030
Michael E. Nugent
For..................... 3,062,880
Withheld................ 309,030
Philip J. Purcell
For..................... 3,062,880
Withheld................ 309,030
John L. Schroeder
For..................... 3,062,880
Withheld................ 309,030
</TABLE>
(3) APPROVAL OF A NEW INVESTMENT POLICY WITH RESPECT TO INVESTMENTS IN CERTAIN
OTHER INVESTMENT COMPANIES:
<TABLE>
<S> <C>
For....................................................................... 2,749,611
Against................................................................... 259,335
Abstain................................................................... 362,964
</TABLE>
(4) RATIFICATION OF PRICE WATERHOUSE LLP AS INDEPENDENT ACCOUNTANTS:
<TABLE>
<S> <C>
For....................................................................... 3,012,369
Against................................................................... 162,766
Abstain................................................................... 196,785
</TABLE>
<PAGE> 5
DEAN WITTER LIMITED TERM MUNICIPAL TRUST
PORTFOLIO OF INVESTMENTS September 30, 1997 (unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
MUNICIPAL BONDS (94.8%)
General Obligation (9.6%)
$ 1,000 Wilmington, Delaware, Refg Ser 1993 B (FGIC)............................. 4.60 % 07/01/04 $ 1,009,770
1,000 Honolulu, Hawaii, Refg Ser 1993 B........................................ 5.00 10/01/03 1,030,290
1,000 Rosemont, Illinois, Ser 1993 B........................................... 5.30 12/01/04 1,042,890
1,000 Massachusetts, Refg Ser 1993 C........................................... 4.80 08/01/03 1,019,820
1,000 Massillon City School District, Ohio, Refg Ser 1994 (AMBAC).............. 4.70 12/01/05 1,016,220
- -------- ------------
5,000 5,118,990
- -------- ------------
Educational Facilities Revenue (11.5%)
1,000 University of Delaware, Ser 1993......................................... 4.90 11/01/02 1,024,820
1,000 Massachusetts Health & Educational Facilities Authority, Boston College
Ser K................................................................... 4.80 06/01/04 1,018,790
2,000 University of Minnesota, Ser 1993 A...................................... 4.80 08/15/03 2,019,260
2,000 New York State Dormitory Authority, State University Ser 1993 B.......... 5.25 05/15/05 2,052,940
- -------- ------------
6,000 6,115,810
- -------- ------------
Electric Revenue (5.7%)
1,000 Salt River Project Agricultural Improvement & Power District, Arizona,
Refg Ser 1993 B......................................................... 4.75 01/01/03 1,019,950
2,000 San Antonio, Texas, Electric & Gas Refg Ser 1994......................... 4.70 02/01/05 2,019,160
- -------- ------------
3,000 3,039,110
- -------- ------------
Hospital Revenue (9.6%)
1,000 California Statewide Communities Development Authority, Cedars-Sinai
Medical Center Ser 1993................................................. 4.70 11/01/03 1,015,510
1,000 Michigan Hospital Finance Authority, McLaren Obligated Group Ser 1993
A....................................................................... 5.00 10/15/04 1,011,810
1,000 Murray, Utah, IHC Hospitals Inc Refg Ser 1993 (AMBAC).................... 5.00 05/15/04 1,030,050
1,000 Fairfax County Industrial Development Authority, Virginia, Inova Health
System Foundation Refg Ser 1993 A....................................... 4.70 08/15/04 1,009,900
1,000 Wisconsin Health & Educational Facilities Authority, Hospital Sisters
Services Ser 1993 (MBIA)................................................ 5.00 06/01/03 1,024,210
- -------- ------------
5,000 5,091,480
- -------- ------------
Industrial Development/Pollution Control Revenue (5.8%)
1,000 Massachusetts Industrial Finance Agency, Eastern Edison Co Refg Ser
1993.................................................................... 5.875 08/01/08 1,014,000
2,000 Greenwood, Wisconsin, Land O'Lakes Inc (AMT)............................. 5.50 09/01/03 2,050,040
- -------- ------------
3,000 3,064,040
- -------- ------------
Mortgage Revenue--Multi-Family (4.0%)
2,130 Wisconsin Housing & Economic Development Authority, Ser 1993 B (AMT)..... 5.10 11/01/03 2,147,402
- -------- ------------
Mortgage Revenue--Single Family (3.8%)
2,000 Connecticut Housing Finance Authority, 1993 Subser F-1................... 4.90 05/15/04 2,008,640
- -------- ------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 6
DEAN WITTER LIMITED TERM MUNICIPAL TRUST
PORTFOLIO OF INVESTMENTS September 30, 1997 (unaudited) continued
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Public Facilities Revenue (4.7%)
$ 1,000 Regional Convention & Sports Complex Authority, Missouri, Refg Ser A
1993.................................................................... 4.75 % 08/15/04 $ 1,000,530
1,500 Ohio Building Authority, Correctional Refg 1994 Ser A.................... 4.65 10/01/04 1,515,720
- -------- ------------
2,500 2,516,250
- -------- ------------
Resource Recovery Revenue (3.9%)
2,000 Northeast Maryland Waste Disposal Authority, Montgomery County Ser 1993 A
- -------- (AMT)................................................................... 5.50 07/01/01 2,064,380
------------
Student Loan Revenue (7.6%)
2,000 Montana Higher Education Student Assistance Corporation, Senior Ser 1993
B (AMT)................................................................. 5.10 12/01/01 2,032,860
2,000 South Carolina Education Assistance Authority, Ser 1993 A-1 (AMT)........ 5.00 09/01/03 2,031,640
- -------- ------------
4,000 4,064,500
- -------- ------------
Tax Allocation (3.6%)
1,880 Pleasanton Joint Powers Financing Authority, California, Reassessment Ser
- -------- 1993 A.................................................................. 5.60 09/02/00 1,940,630
------------
Transportation Facilities Revenue (11.5%)
1,000 Delaware River & Bay Authority, Delaware & New Jersey, Ser 1993+......... 4.50 01/01/04 1,000,480
2,000 Washington Metropolitan Area Transit Authority, District of Columbia,
Maryland and Virginia, Refg Ser 1993 (FGIC)++........................... 4.90 01/01/05 2,041,460
1,000 Chicago, Illinois, Chicago-O'Hare Int'l Airport Refg Ser 1993 A.......... 4.80 01/01/05 998,960
2,000 Harris County, Texas, Toll Road Refg Ser 1994 (AMBAC).................... 4.85 08/15/05 2,048,560
- -------- ------------
6,000 6,089,460
- -------- ------------
Water & Sewer Revenue (9.6%)
1,000 Atlanta, Georgia, Water & Sewer Ser 1993................................. 4.50 01/01/04 1,004,270
1,000 Massachusetts Water Resources Authority, Ser 1993 C...................... 5.25 12/01/06 1,041,280
1,000 New York City Municipal Water Finance Authority, New York, Ser 1994 B.... 5.125 06/15/04 1,032,270
1,000 Pittsburgh Water & Sewer Authority, Pennsylvania, Refg Ser 1993 A
(FGIC).................................................................. 4.60 09/01/03 1,009,770
1,000 Southeastern Public Service Authority, Virginia, Regional Solid Waste
Refg Ser 1993 A (MBIA).................................................. 4.70 07/01/04 1,014,260
- -------- ------------
5,000 5,101,850
- -------- ------------
Other Revenue (3.9%)
2,000 Pennsylvania Intergovernmental Cooperation Authority, Special Tax Ser
- -------- 1993 (FGIC)............................................................. 5.05 06/15/04 2,054,700
------------
49,510 TOTAL MUNICIPAL BONDS (Identified Cost $49,296,457)............................................. 50,417,242
- -------- ------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 7
DEAN WITTER LIMITED TERM MUNICIPAL TRUST
PORTFOLIO OF INVESTMENTS September 30, 1997 (unaudited) continued
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
SHORT-TERM MUNICIPAL OBLIGATION (4.1%)
$ 2,200 East Baton Rouge Parish, Louisiana, Exxon Corp Ser 1989 (Demand 10/01/97)
- -------- (Identified Cost $2,200,000)............................................ 3.70% * 11/01/19 $ 2,200,000
------------
$51,710 TOTAL INVESTMENTS (Identified Cost $51,496,457) (a).................................... 98.9% 52,617,242
========
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES........................................... 1.1 597,406
------ ------------
NET ASSETS.............................................................................. 100.0% $53,214,648
====== ============
</TABLE>
- ---------------------
<TABLE>
<S> <C>
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 and
net unrealized appreciation is $1,120,785.
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 Percent of Net Assets
September 30, 1997
<TABLE>
<S> <C>
Arizona.................. 1.9%
California............... 5.6
Connecticut.............. 3.8
Delaware................. 5.7
District of Columbia..... 3.8
Georgia.................. 1.9
Hawaii................... 1.9
Illinois................. 3.8
Louisiana................ 4.1
Maryland................. 7.7
Massachusetts............ 7.7
Michigan................. 1.9
Minnesota................ 3.8
Missouri................. 1.9
Montana.................. 3.8
New Jersey............... 1.9
New York................. 5.8
Ohio..................... 4.8
Pennsylvania............. 5.8
South Carolina........... 3.8
Texas.................... 7.6
Utah..................... 1.9
Virginia................. 7.6
Wisconsin................ 9.8
Joint Exemptions(1)...... (9.4)
----
Total.................... 98.9%
====
</TABLE>
- ---------------------
(1) Joint exemptions have been included in more than one geographic location.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 8
DEAN WITTER LIMITED TERM MUNICIPAL TRUST
FINANCIAL STATEMENTS
<TABLE>
<S> <C>
STATEMENT OF ASSETS AND LIABILITIES
September 30, 1997 (unaudited)
ASSETS:
Investments in securities, at value
(identified cost $51,496,457)........................................ $ 52,617,242
Cash.................................................................. 41,364
Receivable for:
Interest.......................................................... 643,683
Shares of beneficial interest sold................................ 290,297
Deferred organizational expenses...................................... 20,044
Prepaid expenses and other assets..................................... 30,026
------------
TOTAL ASSETS...................................................... 53,642,656
------------
LIABILITIES:
Payable for:
Shares of beneficial interest repurchased......................... 320,624
Dividends to shareholders......................................... 23,458
Investment management fee......................................... 23,382
Accrued expenses...................................................... 60,544
------------
TOTAL LIABILITIES................................................. 428,008
------------
NET ASSETS............................................................ $ 53,214,648
============
COMPOSITION OF NET ASSETS:
Paid-in-capital....................................................... $ 60,884,561
Net unrealized appreciation........................................... 1,120,785
Accumulated net realized loss......................................... (8,790,698)
------------
NET ASSETS........................................................ $ 53,214,648
============
NET ASSET VALUE PER SHARE,
5,225,044 shares outstanding
(unlimited shares authorized of $.01 par value)................... $10.18
======
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 9
DEAN WITTER LIMITED TERM MUNICIPAL TRUST
FINANCIAL STATEMENTS, continued
<TABLE>
<S> <C>
STATEMENT OF OPERATIONS
For the six months ended September 30, 1997 (unaudited)
NET INVESTMENT INCOME:
INTEREST INCOME......................................................... $1,342,805
-----------
EXPENSES
Investment management fee............................................... 138,876
Professional fees....................................................... 23,400
Registration fees....................................................... 21,267
Organizational expenses................................................. 20,413
Transfer agent fees and expenses........................................ 13,179
Shareholder reports and notices......................................... 13,096
Trustees' fees and expenses............................................. 10,860
Custodian fees.......................................................... 1,820
Other................................................................... 3,766
-----------
TOTAL EXPENSES...................................................... 246,677
Less: expense offset.................................................... (1,816)
-----------
NET EXPENSES........................................................ 244,861
-----------
NET INVESTMENT INCOME............................................... 1,097,944
-----------
NET REALIZED AND UNREALIZED GAIN:
Net realized gain....................................................... 7,329
Net change in unrealized depreciation................................... 1,495,505
-----------
NET GAIN............................................................ 1,502,834
-----------
NET INCREASE............................................................ $2,600,778
===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 10
DEAN WITTER LIMITED TERM MUNICIPAL TRUST
FINANCIAL STATEMENTS, continued
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
FOR THE SIX FOR THE YEAR
MONTHS ENDED ENDED
SEPTEMBER 30, 1997 MARCH 31, 1997
- ----------------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income................................ $ 1,097,944 $ 2,643,153
Net realized gain (loss)............................. 7,329 (226,959)
Net change in unrealized depreciation................ 1,495,505 (32,266)
------------ ------------
NET INCREASE..................................... 2,600,778 2,383,928
Dividends from net investment income................. (1,097,944) (2,659,597)
Net decrease from transactions in shares of
beneficial interest................................. (9,386,026) (11,392,426)
------------ ------------
NET DECREASE..................................... (7,883,192) (11,668,095)
NET ASSETS:
Beginning of period.................................. 61,097,840 72,765,935
------------ ------------
END OF PERIOD.................................... $ 53,214,648 $ 61,097,840
============ ============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 11
DEAN WITTER LIMITED TERM MUNICIPAL TRUST
NOTES TO FINANCIAL STATEMENTS September 30, 1997 (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'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> 12
DEAN WITTER LIMITED TERM MUNICIPAL TRUST
NOTES TO FINANCIAL STATEMENTS September 30, 1997 (unaudited) continued
D. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- The Fund records dividends and
distributions to its shareholders on the record date. The amount of dividends
and distributions from net investment income and net realized capital gains are
determined in accordance with federal income tax regulations which may differ
from generally accepted accounting principles. These "book/tax" differences are
either considered temporary or permanent in nature. To the extent these
differences are permanent in nature, such amounts are reclassified within the
capital accounts based on their federal tax-basis treatment; temporary
differences do not require reclassification. Dividends and distributions which
exceed net investment income and net realized capital gains for financial
reporting purposes but not for tax purposes are reported as dividends in excess
of net investment income or distributions in excess of net realized capital
gains. To the extent they exceed net investment income and net realized capital
gains for tax purposes, they are reported as distributions of paid-in-capital.
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 six months ended September 30, 1997 aggregated $5,486,330.
<PAGE> 13
DEAN WITTER LIMITED TERM MUNICIPAL TRUST
NOTES TO FINANCIAL STATEMENTS September 30, 1997 (unaudited) continued
Dean Witter Trust FSB, an affiliate of the Investment Manager, is the Fund's
transfer agent. At September 30, 1997, the Fund had transfer agent fees and
expenses payable of approximately $3,100.
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, 1997
included in Trustees' fees and expenses in the Statement of Operations amounted
to $3,461. At September 30, 1997, the Fund had an accrued pension liability of
$22,963 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 FOR THE
MONTHS ENDED YEAR ENDED
SEPTEMBER 30, 1997 MARCH 31, 1997
-------------------------- ---------------------------
(unaudited)
SHARES AMOUNT SHARES AMOUNT
---------- ----------- ---------- ------------
<S> <C> <C> <C> <C>
Sold.......................................................... 434,224 $ 4,262,932 2,662,724 $ 26,485,209
Reinvestment of dividends..................................... 73,783 862,260 207,775 2,068,215
---------- ------------ ---------- ------------
508,007 5,125,192 2,870,499 28,553,424
Repurchased................................................... (1,448,206) (14,511,218) (4,015,739) (39,945,850)
---------- ----------- ---------- ------------
Net decrease.................................................. (940,199) $(9,386,026) (1,145,240) $(11,392,426)
========== =========== ========== ============
</TABLE>
5. FEDERAL INCOME TAX STATUS
At March 31, 1997, the Fund had net capital loss carryover of approximately
$8,798,000 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
- ------ ------ -----
<S> <C> <C>
$4,630 $3,941 $ 227
====== ====== =====
</TABLE>
<PAGE> 14
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 FOR THE YEAR ENDED MARCH 31
MONTHS ENDED ---------------------------
SEPTEMBER 30, 1997 1997 1996
---------------------------------------------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period....................... $ 9.91 $ 9.95 $ 9.56
------ ------ ------
Net investment income...................................... 0.20 0.40 0.41
Net realized and unrealized gain (loss).................... 0.27 (0.04) 0.39
------ ------ ------
Total from investment operations........................... 0.47 0.36 0.80
Less dividends from net investment income.................. (0.20) (0.40) (0.41)
------ ------ ------
Net asset value, end of period............................. $10.18 $ 9.91 $ 9.95
====== ====== ======
TOTAL INVESTMENT RETURN+................................... 4.79%(1) 3.65% 8.42%
RATIOS TO AVERAGE NET ASSETS:
Expenses................................................... 0.89%(2)(4) 0.88%(4) 0.87%(4)
Net investment income...................................... 3.95%(2) 3.99% 4.09%
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands.................... $ 53,215 $61,098 $72,766
Portfolio turnover rate.................................... -- -- --
<CAPTION>
FOR THE PERIOD
FOR THE YEAR JULY 12, 1993*
ENDED MARCH 31 THROUGH
1995 MARCH 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 gain (loss).................... (0.05) (0.39)
------ ------
Total from investment operations........................... 0.37 (0.10
Less 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 TO AVERAGE NET ASSETS:
Expenses................................................... 0.76% 0.31%(2)(3)
Net investment income...................................... 4.41% 3.92%(2)(3)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands.................... $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 offset of 0.01%.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 15
(This Page Intentionally Left Blank)
<PAGE> 16
TRUSTEES
Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn
John R. Haire
Wayne E. Hedien
Dr. Manuel H. Johnson
Michael E. Nugent
Philip J. Purcell
John L. Schroeder
OFFICERS
Charles A. Fiumefreddo
Chairman and Chief Executive Officer
Barry Fink
Vice President, Secretary and General Counsel
Katherine H. Stromberg
Vice President
Thomas F. Caloia
Treasurer
TRANSFER AGENT
Dean Witter Trust FSB
Harborside Financial Center - Plaza Two
Jersey City, New Jersey 07311
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
1177 Avenue of the Americas
New York, New York 10036
INVESTMENT MANAGER
Dean Witter InterCapital Inc.
Two World Trade Center
New York, New York 10048
The financial statements included herein have been taken from the records of
the Fund without examination by the independent accountants and accordingly
they do not express an opinion thereon.
This report is submitted for the general information of shareholders of the
Fund. For more detailed information about the Fund, its officers and trustees,
fees, expenses and other pertinent information, please see the prospectus of
the Fund.
This report is not authorized for distribution to prospective investors in the
Fund unless preceded or accompanied by an effective prospectus.
DEAN WITTER
LIMITED TERM
MUNICIPAL TRUST
SEMIANNUAL REPORT
SEPTEMBER 30, 1997
