<PAGE>
PROSPECTUS - AUGUST 23, 1999
ACTIVE ASSETS
MONEY TRUST
TAX-FREE TRUST
CALIFORNIA TAX-FREE TRUST
GOVERNMENT SECURITIES TRUST
FOUR DIFFERENT MONEY MARKET FUNDS OFFERED EXCLUSIVELY TO PARTICIPANTS IN
THE ACTIVE ASSETS ACCOUNT-Registered Trademark- FINANCIAL SERVICE PROGRAM AND
TO OTHER INVESTORS WHO HAVE BROKERAGE ACCOUNTS WITH DEAN WITTER REYNOLDS
FOR INFORMATION ON THE ACTIVE ASSETS PROGRAM, READ THE ENCLOSED
"CLIENT ACCOUNT AGREEMENT" AND/OR CALL TOLL FREE (800) 869-3326
OR IF YOU ARE IN NEW YORK CITY CALL (212) 392-5000.
The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the adequacy of this Prospectus. Any representation to
the contrary is a criminal offense.
<PAGE>
CONTENTS
<TABLE>
<S> <C> <C>
Eligible
Investors/Overview ...................................................... 1
The Funds
Active Assets Money
Trust Investment Objectives................................. 2
Principal Investment Strategies....................... 2
Principal Risks....................................... 3
Past Performance...................................... 4
Fees and Expenses..................................... 5
Active Assets
Tax-Free Trust Investment Objective.................................. 6
Principal Investment Strategies....................... 6
Principal Risks....................................... 7
Past Performance...................................... 8
Fees and Expenses..................................... 9
Active Assets
California
Tax-Free Trust Investment Objective.................................. 10
Principal Investment Strategies....................... 10
Principal Risks....................................... 11
Past Performance...................................... 12
Fees and Expenses..................................... 13
Active Assets
Government
Securities Trust Investment Objectives................................. 14
Principal Investment Strategies....................... 14
Principal Risks....................................... 15
Past Performance...................................... 16
Fees and Expenses..................................... 17
Fund Management ...................................................... 18
Shareholder Information Pricing Fund Shares................................... 19
How Are Fund Investments Made?........................ 19
How Are Fund Shares Sold?............................. 20
Distributions......................................... 22
Tax Consequences...................................... 23
The Funds' Financial
Information ...................................................... 24
THIS PROSPECTUS CONTAINS IMPORTANT INFORMATION ABOUT THE FUNDS.
PLEASE READ IT CAREFULLY AND KEEP IT FOR FUTURE REFERENCE.
</TABLE>
<PAGE>
ELIGIBLE INVESTORS/OVERVIEW
Active Assets Money Trust, Active Assets Tax-Free Trust, Active
Assets California Tax-Free Trust and Active Assets Government
Securities Trust (each, a Fund) are four separate money market funds
offered exclusively to: (i) participants in Dean Witter Reynolds'
Active Assets Account-Registered Trademark- Financial Service Program
(the Active Assets Program); and (ii) other investors that have a
brokerage account with Dean Witter Reynolds. (Dean Witter Reynolds is
affiliated with Morgan Stanley Dean Witter Advisors Inc., the Funds'
Investment Manager.)
The Active Assets Program offers its participants (Participants) a
Dean Witter brokerage account (an Active Assets Account) that is
linked to the Funds, a federally insured bank account, a
Visa-Registered Trademark- debit card and a checking account. Both
the debit card and the checkwriting privileges are offered through
Bank One, Columbus, N.A. The annual fee presently charged for
participating in the Active Assets Program is $80 ($100 for
businesses). At any time, Dean Witter may change the annual fee
charged and the services provided under the Program. For details on
the Active Assets Program please read the enclosed Client Account
Agreement carefully.
For details on how investments are made in the Funds, see "How Are
Fund Investments Made?" on p. 19.
1
<PAGE>
[Sidebar]
MONEY MARKET
A MUTUAL FUND HAVING THE GOAL TO SELECT SECURITIES TO PROVIDE CURRENT INCOME
WHILE SEEKING TO MAINTAIN A STABLE SHARE PRICE OF $1.00.
YIELD
THE FUND'S YIELD REFLECTS THE ACTUAL INCOME THE FUND PAYS TO YOU EXPRESSED AS A
PERCENTAGE OF THE FUND'S SHARE PRICE. BECAUSE THE FUND'S INCOME FROM ITS
PORTFOLIO SECURITIES WILL FLUCTUATE, THE INCOME IT IN TURN DISTRIBUTES TO YOU
AND THE FUND'S YIELD WILL VARY.
[End Sidebar]
THE FUNDS
ACTIVE ASSETS MONEY TRUST
[ICON] INVESTMENT OBJECTIVES
- --------------------------------------------------------------------------------
Active Assets Money Trust is a money market fund that seeks to
provide high current income, preservation of capital and liquidity.
[ICON] PRINCIPAL INVESTMENT STRATEGIES
- --------------------------------------------------------------------------------
The Fund invests in high quality, short-term debt obligations. In
selecting investments, the "Investment Manager," Morgan Stanley Dean
Witter Advisors Inc., seeks to maintain the Fund's share price at
$1.00. The share price remaining stable at $1.00 means that the Fund
would preserve the principal value of your investment.
The Fund's investments include the following money market
instruments:
- Commercial paper.
- Corporate obligations.
- Debt obligations of U.S.-regulated banks and instruments secured by
those obligations. These investments include certificates of deposit.
- Certificates of deposit of savings banks and savings and loan
associations.
- Debt obligations issued or guaranteed as to principal and interest by
the U.S. Government, its agencies or its instrumentalities.
- Repurchase agreements, which may be viewed as a type of secured
lending by the Fund.
2
<PAGE>
[ICON] PRINCIPAL RISKS
- --------------------------------------------------------------------------------
There is no assurance that the Fund will achieve its investment
objectives.
CREDIT AND INTEREST RATE RISKS. Principal risks of investing in the
Fund are associated with its debt obligation investments. All debt
obligations, such as bonds, are subject to two types of risk: credit
risk and interest rate risk. Credit risk refers to the possibility
that the issuer of a security will be unable to make interest
payments and/or repay the principal on its debt. Interest rate risk
refers to fluctuations in the value of a debt security resulting from
changes in the general level of interest rates.
The Investment Manager actively manages the Fund's assets to reduce
the risk of losing any principal investment as a result of credit or
interest rate risks. The Fund's assets are reviewed to maintain or
improve creditworthiness. In addition, federal regulations require
money market funds to invest only in debt obligations of high quality
and short-term maturities.
YEAR 2000. The Fund could be adversely affected if the computer
systems necessary for the efficient operation of the Investment
Manager, the Fund's other service providers and the markets and
corporate and governmental issuers in which the Fund invests do not
properly process and calculate date-related information from and
after January 1, 2000. While year 2000-related computer problems
could have a negative effect on the Fund, the Investment Manager and
its affiliates are working hard to avoid any problems and to obtain
assurances from their service providers that they are taking similar
steps.
In addition, it is possible that the markets for securities in which
the Fund invests may be detrimentally affected by computer failures
throughout the financial services industry beginning January 1, 2000.
Improperly functioning trading systems may result in settlement
problems and liquidity issues. Corporate and governmental data
processing errors also may result in production problems for
individual companies and overall economic uncertainties. Earnings of
individual issuers will be affected by remediation costs, which may
be substantial and may be reported inconsistently in U.S. and foreign
financial statements. Accordingly, the Fund's investments may be
adversely affected.
Shares of the Fund are not bank deposits and are not insured or
guaranteed by the FDIC or any other government agency. Although the
Fund seeks to preserve the value of your investment at $1.00 per
share, if it is unable to do so, it is possible to lose money by
investing in the Fund.
3
<PAGE>
[Sidebar]
ANNUAL TOTAL RETURNS
THIS CHART SHOWS HOW THE PERFORMANCE OF THE FUND'S SHARES HAS VARIED FROM YEAR
TO YEAR OVER THE PAST 10 CALENDAR YEARS.
AVERAGE ANNUAL
TOTAL RETURNS
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL RETURNS WITH THOSE OF A COMPARABLE
MEASURE OF MARKET PERFORMANCE OVER TIME.
[End Sidebar]
[ICON] PAST PERFORMANCE
- --------------------------------------------------------------------------------
The bar chart and table below provide some indication of the risks of
investing in the Fund. The Fund's past performance does not indicate
how the Fund will perform in the future.
ANNUAL TOTAL RETURNS - CALENDAR YEARS
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
1989 9.04%
90 7.99%
91 5.77%
92 3.47%
93 2.80%
94 3.87%
95 5.72%
96 5.19%
97 5.32%
98 5.28%
</TABLE>
During the periods shown in the bar chart, the highest return for a
calendar quarter was 2.33% (quarter ended June 30, 1989) and the
lowest return for a calendar quarter was 0.67% (quarter ended June
30, 1993). Year-to-date total return information as of June 30,
1999 was 2.28%.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS (AS OF DECEMBER 31, 1998)
- -------------------------------------------------------------------------------
PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
<S> <C> <C> <C>
- -------------------------------------------------------------------------------
Active Assets Money Trust 5.28% 5.07% 5.43%
- -------------------------------------------------------------------------------
Lipper Money Market Fund Index(1) 5.10% 4.90% 5.32%
- -------------------------------------------------------------------------------
</TABLE>
1 The Lipper Money Market Fund Index is an equally-weighted performance index
of the largest qualifying (based on net assets) in the Lipper Money Market
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.
For the Fund's most recent 7-day annualized yield you may call (800)
869-NEWS.
4
<PAGE>
[Sidebar]
ANNUAL FUND
OPERATING EXPENSES
THESE EXPENSES ARE DEDUCTED FROM THE FUND'S ASSETS AND ARE BASED ON EXPENSES
PAID FOR THE FISCAL YEAR ENDED JUNE 30, 1999.
[End Sidebar]
[ICON] FEES AND EXPENSES
- --------------------------------------------------------------------------------
The table below briefly describes the fees and expenses that you may
pay if you buy and hold shares of the Fund. The Fund is a no-load
fund. The Fund does not impose any sales charges and does not charge
account or exchange fees.
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
<S> <C>
- -----------------------------------------------------------------------
Management fee 0.27%
- -----------------------------------------------------------------------
Distribution and service (12b-1) fees 0.10%
- -----------------------------------------------------------------------
Other expenses 0.06%
- -----------------------------------------------------------------------
Total annual Fund operating expenses 0.43%
- -----------------------------------------------------------------------
</TABLE>
EXAMPLE
This example is intended to help you compare the cost of investing in
the Fund with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the Fund, your
investment has a 5% return each year, and the Fund's operating
expenses remain the same. Although your actual costs may be higher or
lower, the table below shows your costs at the end of each period
based on these assumptions.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C>
- --------------------------------------------------
$44 $138 $241 $542
- --------------------------------------------------
</TABLE>
5
<PAGE>
[Sidebar]
MONEY MARKET
A MUTUAL FUND HAVING THE GOAL TO SELECT SECURITIES TO PROVIDE CURRENT INCOME
WHILE SEEKING TO MAINTAIN A STABLE SHARE PRICE OF $1.00.
YIELD
THE FUND'S YIELD REFLECTS THE ACTUAL INCOME THE FUND PAYS TO YOU EXPRESSED AS A
PERCENTAGE OF THE FUND'S SHARE PRICE. BECAUSE THE FUND'S INCOME FROM ITS
PORTFOLIO SECURITIES WILL FLUCTUATE, THE INCOME IT IN TURN DISTRIBUTES TO YOU
AND THE FUND'S YIELD WILL VARY.
[End Sidebar]
ACTIVE ASSETS TAX-FREE TRUST
[ICON] INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------
Active Assets Tax-Free Trust is a money market fund that seeks to
provide as high a level of daily income exempt from federal personal
income tax as is consistent with stability of principal and
liquidity.
[ICON] PRINCIPAL INVESTMENT STRATEGIES
- --------------------------------------------------------------------------------
The Fund will invest in high quality, short-term
securities that are normally municipal obligations
that pay interest exempt from federal income taxes.
The Fund's "Investment Manager," Morgan Stanley Dean
Witter Advisors Inc., seeks to maintain the Fund's
share price at $1.00. The share price remaining
stable at $1.00 means that the Fund would preserve
the principal value of your investment.
Municipal obligations are securities issued by state
and local governments, and their agencies. These
securities typically are "general obligation" or
"revenue" bonds, notes or commercial paper. General
obligation securities are secured by the issuer's
faith and credit, as well as its taxing power, for
payment of principal and interest. Revenue bonds,
however, are generally payable from a specific
revenue source. They are issued to fund a wide
variety of public and private projects in sectors
such as transportation, education and industrial
development. Included within the revenue bonds
category are participations in lease obligations and
installment purchase contracts of municipalities.
The Fund has a fundamental policy of investing at
least 80% of its total assets in securities the
interest on which is exempt from federal personal
income tax. This policy may not be changed without
shareholder approval.
The Fund may invest up to 20% of its total assets in securities that
pay interest income subject to the "alternative minimum tax," and
some taxpayers may have to pay tax on a Fund distribution of this
income; see the "Tax Consequences" section of this PROSPECTUS for
more details.
6
<PAGE>
[ICON] PRINCIPAL RISKS
- --------------------------------------------------------------------------------
There is no assurance that the Fund will achieve its investment
objective.
CREDIT AND INTEREST RATE RISKS. Principal risks of investing in the
Fund are associated with its municipal investments. Municipal
obligations, as with all debt securities, are subject to two types of
risks: credit risk and interest rate risk.
Credit risk refers to the possibility that the issuer of a security
will be unable to make interest payments and repay the principal on
its debt. Interest rate risk, another risk of debt securities, refers
to fluctuations in the value of a fixed-income security resulting
from changes in the general level of interest rates.
The Investment Manager, however, actively manages the Fund's assets
to reduce the risk of losing any principal investment as a result of
credit or interest rate risks. The Fund's assets are reviewed to
maintain or improve creditworthiness. In addition, federal
regulations require money market funds, such as the Fund, to invest
only in debt obligations of high quality and short-term maturities.
YEAR 2000. The Fund could be adversely affected if the computer
systems necessary for the efficient operation of the Investment
Manager, the Fund's other service providers and the markets and
governmental issuers in which the Fund invests do not properly
process and calculate date-related information from and after January
1, 2000. While year 2000-related computer problems could have a
negative effect on the Fund, the Investment Manager and its
affiliates are working hard to avoid any problems and to obtain
assurances from their service providers that they are taking similar
steps.
In addition, it is possible that the markets for securities in which
the Fund invests may be detrimentally affected by computer failures
throughout the financial services industry beginning January 1, 2000.
Improperly functioning trading systems may result in settlement
problems and liquidity issues. Governmental data processing errors
also may result in overall economic uncertainties. Individual issuers
will be affected by remediation costs, which may be substantial.
Accordingly, the Fund's investments may be adversely affected.
Shares of the Fund are not bank deposits and are not insured or
guaranteed by the FDIC or any other government agency. Although the
Fund seeks to preserve the value of your investment at $1.00 per
share, if it is unable to do so, it is possible to lose money by
investing in the Fund.
7
<PAGE>
[Sidebar]
ANNUAL TOTAL RETURNS
THIS CHART SHOWS HOW THE PERFORMANCE OF THE FUND'S SHARES HAS VARIED FROM YEAR
TO YEAR OVER A 10-YEAR PERIOD.
AVERAGE ANNUAL
TOTAL RETURNS
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL RETURNS WITH THOSE OF A COMPARABLE
MEASURE OF MARKET PERFORMANCE OVER TIME.
[End Sidebar]
[ICON] PAST PERFORMANCE
- --------------------------------------------------------------------------------
The bar chart and table below provide some indication of the risks of
investing in the Fund. The Fund's past performance does not indicate
how the Fund will perform in the future.
ANNUAL TOTAL RETURNS - CALENDAR YEARS
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
1989 5.96%
90 5.51%
91 4.08%
92 2.53%
93 1.99%
94 2.38%
95 3.36%
96 2.98%
97 3.14%
98 2.95%
</TABLE>
During the periods shown in the bar chart, the highest return for a
calendar quarter was 1.59% (quarter ended June 30, 1989) and the
lowest return for a calendar quarter was 0.46% (quarter ended March
31, 1994). Year-to-date total return information as of June 30,
1999 was 1.27%.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS (AS OF DECEMBER 31, 1998)
- -------------------------------------------------------------------------------
PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
<S> <C> <C> <C>
------------------------------------------------------------------------------
Active Assets Tax-Free Trust 2.95% 2.96% 3.48%
- -------------------------------------------------------------------------------
Lipper Tax-Exempt Money Market
Funds Index(1) 3.04% 3.06% 3.58%
- -------------------------------------------------------------------------------
</TABLE>
1 The Lipper Tax-Exempt Money Market Fund Index is an equally-weighted
performance index of the largest qualifying funds (based on net assets) in
the Lipper Tax-Exempt Money Market 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.
For the Fund's most recent 7-day annualized yield you may call (800)
869-NEWS.
8
<PAGE>
[Sidebar]
ANNUAL FUND
OPERATING EXPENSES
THESE EXPENSES ARE DEDUCTED FROM THE FUND'S ASSETS AND ARE BASED ON EXPENSES
PAID FOR THE FISCAL YEAR ENDED JUNE 30, 1999.
[End Sidebar]
[ICON] FEES AND EXPENSES
- --------------------------------------------------------------------------------
The table below briefly describes the fees and expenses that you may
pay if you buy and hold shares of the Fund. The Fund is a no-load
fund. The Fund does not impose any sales charges and does not charge
account fees.
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
<S> <C>
- -----------------------------------------------------------------------
Management fee 0.39%
- -----------------------------------------------------------------------
Distribution and service (12b-1) fees 0.10%
- -----------------------------------------------------------------------
Other expenses 0.03%
- -----------------------------------------------------------------------
Total annual Fund operating expenses 0.52%
- -----------------------------------------------------------------------
</TABLE>
EXAMPLE
This example is intended to help you compare the cost of investing in
the Fund with the cost of investing in other mutual funds.
This example shows what expenses you could pay over time. The example
assumes that you invest $10,000 in the Fund, your investment has a 5%
return each year, and the Fund's operating expenses remain the same.
Although your actual costs may be higher or lower, the table below
shows your costs at the end of each period based on these
assumptions.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C>
- --------------------------------------------------
$53 $168 $292 $656
- --------------------------------------------------
</TABLE>
9
<PAGE>
[Sidebar]
MONEY MARKET
A MUTUAL FUND HAVING THE GOAL TO SELECT SECURITIES TO PROVIDE CURRENT INCOME
WHILE SEEKING TO MAINTAIN A STABLE SHARE PRICE OF $1.00.
YIELD
THE FUND'S YIELD REFLECTS THE ACTUAL INCOME THE FUND PAYS TO YOU EXPRESSED AS A
PERCENTAGE OF THE FUND'S SHARE PRICE. BECAUSE THE FUND'S INCOME FROM ITS
PORTFOLIO SECURITIES WILL FLUCTUATE, THE INCOME IT IN TURN DISTRIBUTES TO YOU
AND THE FUND'S YIELD WILL VARY.
[End Sidebar]
ACTIVE ASSETS CALIFORNIA TAX-FREE TRUST
[ICON] INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------
Active Assets California Tax-Free Trust is a money market fund that
seeks to provide as high a level of daily income exempt from federal
and California personal income tax as is consistent with stability of
principal and liquidity.
[ICON] PRINCIPAL INVESTMENT STRATEGIES
- --------------------------------------------------------------------------------
The Fund will invest in high quality, short-term securities that are
normally municipal obligations that pay interest exempt from federal
and California income taxes. The Fund's "Investment Manager," Morgan
Stanley Dean Witter Advisors Inc., seeks to maintain the Fund's share
price at $1.00. The share price remaining stable at $1.00 means that
the Fund would preserve the principal value of your investment.
The Investment Manager generally invests substantially all of the
Fund's assets in California municipal obligations. The interest on
these investments is exempt from federal and California state income
tax. The Fund may invest up to 20% of its assets in securities that
pay interest income subject to the "alternative minimum tax," and
some taxpayers may have to pay tax on a Fund distribution of this
income; see the "Tax Consequences" section of this PROSPECTUS for
more details. Municipal obligations are securities issued by state
and local governments and regional government authorities. These
securities typically are "general obligation" or "revenue" bonds,
notes or commercial paper. General obligation securities are secured
by the issuer's faith and credit, as well as its taxing power, for
payment of principal and interest. Revenue bonds, however, are
generally payable from a specific revenue source. They are issued to
fund a wide variety of public and private projects in sectors such as
transportation, education and industrial development. Included within
the revenue bonds category are participations in lease obligations
and installment contracts of municipalities.
The Fund has a fundamental policy of investing at least 80% of its
total assets in securities the interest on which is exempt from
federal and California personal income tax. This policy may not be
changed without shareholder approval.
10
<PAGE>
[ICON] PRINCIPAL RISKS
- --------------------------------------------------------------------------------
There is no assurance that the Fund will achieve its investment
objective.
CREDIT AND INTEREST RATE RISKS. A principal risk of investing in the
Fund is associated with its municipal investments, particularly its
concentration in municipal obligations of a single state. Municipal
obligations, as with all debt securities, are subject to two types of
risks: credit risk and interest rate risk.
Credit risk refers to the possibility that the issuer of a security
will be unable to make interest payments and repay the principal on
its debt. However, unlike most fixed-income mutual funds, the Fund is
subject to the added credit risk of concentrating its investments in
a single state -- California -- and its municipalities. Because the
Fund concentrates its investments in securities issued by California
state and local governments and government authorities, the Fund
could be affected by political, economic and regulatory developments
concerning these issuers. Should any difficulties develop concerning
California issuers' ability to pay principal and/or interest on their
debt obligations, the Fund's value and yield could be adversely
affected.
Interest rate risk, another risk of debt securities, refers to
fluctuations in the value of a fixed-income security resulting from
changes in the general level of interest rates.
The Investment Manager, however, actively manages the Fund's assets
to reduce the risk of losing any principal investment as a result of
credit or interest rate risks. The Fund's assets are reviewed to
maintain or improve creditworthiness. In addition, federal
regulations require money market funds, such as the Fund, to invest
only in debt obligations of high quality and short-term maturities.
YEAR 2000. The Fund could be adversely affected if the computer
systems necessary for the efficient operation of the Investment
Manager, the Fund's other service providers and the markets and
governmental issuers in which the Fund invests do not properly
process and calculate date-related information from and after January
1, 2000. While year 2000-related computer problems could have a
negative effect on the Fund, the Investment Manager and its
affiliates are working hard to avoid any problems and to obtain
assurances from their service providers that they are taking similar
steps.
In addition, it is possible that the markets for securities in which
the Fund invests may be detrimentally affected by computer failures
throughout the financial services industry beginning January 1, 2000.
Improperly functioning trading systems may result in settlement
problems and liquidity issues. Governmental data processing errors
also may result in overall economic uncertainties. Individual issuers
will be affected by remediation costs, which may be substantial.
Accordingly, the Fund's investments may be adversely affected.
Shares of the Fund are not bank deposits and are not insured or
guaranteed by the FDIC or any other government agency. Although the
Fund seeks to preserve the value of your investment at $1.00 per
share, if it is unable to do so, it is possible to lose money by
investing in the Fund.
11
<PAGE>
[Sidebar]
ANNUAL TOTAL RETURNS
THIS CHART SHOWS HOW THE PERFORMANCE OF THE FUND'S SHARES HAS VARIED FROM YEAR
TO YEAR DURING THE LIFE OF THE FUND.
AVERAGE ANNUAL
TOTAL RETURNS
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL RETURNS WITH THOSE OF A COMPARABLE
MEASURE OF MARKET PERFORMANCE OVER TIME AND ASSUME YOU SOLD YOUR SHARES AT THE
END OF EACH PERIOD.
[End Sidebar]
[ICON] PAST PERFORMANCE
- --------------------------------------------------------------------------------
The bar chart and table below provide some indication of the risks of
investing in the Fund. The Fund's past performance does not indicate
how the Fund will perform in the future.
ANNUAL TOTAL RETURNS - CALENDAR YEARS
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
1992 2.14%
93 1.72%
94 2.20%
95 3.10%
96 2.73%
97 2.88%
98 2.58%
</TABLE>
During the periods shown in the bar chart, the highest return for a
calendar quarter was 0.82% (quarter ended June 30, 1995) and the
lowest return for a calendar quarter was 0.41% (quarter ended March
31, 1994). Year-to-date total return as of June 30, 1999 was 1.10%.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS (AS OF DECEMBER 31, 1998)
- ----------------------------------------------------------------------------------
LIFE OF FUND
PAST 1 YEAR PAST 5 YEARS (SINCE 11/12/91)
<S> <C> <C> <C>
---------------------------------------------------------------------------------
Active Assets California Tax-Free
Trust 2.58% 2.70% 2.51%
- ----------------------------------------------------------------------------------
Lipper California Tax-Exempt Money
Market Index(1) 2.77% 3.00% 2.82%(2)
- ----------------------------------------------------------------------------------
</TABLE>
1 The Lipper California Tax-Exempt Money Market Index is an equally-weighted
performance index of the largest qualifying funds (based on net assets) in
the Lipper California Tax-Exempt Money Market 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.
2 For the period November 30, 1991 to December 31, 1998.
For the Fund's most recent 7-day annualized yield you may call (800)
869-NEWS.
12
<PAGE>
[Sidebar]
ANNUAL FUND
OPERATING EXPENSES
THESE EXPENSES ARE DEDUCTED FROM THE FUND'S ASSETS AND ARE BASED ON EXPENSES
PAID FOR THE FISCAL YEAR ENDED JUNE 30, 1999.
[End Sidebar]
[ICON] FEES AND EXPENSES
- --------------------------------------------------------------------------------
The table below briefly describes the fees and expenses that you may
pay if you buy and hold shares of the Fund. The Fund is a no-load
fund. The Fund does not impose any sales charges and does not charge
account fees.
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
<S> <C>
- -----------------------------------------------------------------------
Management fee 0.48%
- -----------------------------------------------------------------------
Distribution and service (12b-1) fees 0.10%
- -----------------------------------------------------------------------
Other expenses 0.05%
- -----------------------------------------------------------------------
Total annual Fund operating expenses 0.63%
- -----------------------------------------------------------------------
</TABLE>
EXAMPLE
This example is intended to help you compare the cost of investing in
the Fund with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the Fund, your
investment has a 5% return each year, and the Fund's operating
expenses remain the same. Although your actual costs may be higher or
lower, the table below shows your costs at the end of each period
based on these assumptions.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C>
- --------------------------------------------------
$64 $201 $349 $782
- --------------------------------------------------
</TABLE>
13
<PAGE>
[Sidebar]
MONEY MARKET
A MUTUAL FUND HAVING THE GOAL TO SELECT SECURITIES TO PROVIDE CURRENT INCOME
WHILE SEEKING TO MAINTAIN A STABLE SHARE PRICE OF $1.00.
YIELD
THE FUND'S YIELD REFLECTS THE ACTUAL INCOME THE FUND PAYS TO YOU EXPRESSED AS A
PERCENTAGE OF THE FUND'S SHARE PRICE. BECAUSE THE FUND'S INCOME FROM ITS
PORTFOLIO SECURITIES WILL FLUCTUATE, THE INCOME IT IN TURN DISTRIBUTES TO YOU
AND THE FUND'S YIELD WILL VARY.
[End Sidebar]
ACTIVE ASSETS GOVERNMENT SECURITIES TRUST
[ICON] INVESTMENT OBJECTIVES
- --------------------------------------------------------------------------------
Active Assets Government Securities Trust is a money market fund that
seeks to provide high current income, preservation of capital and
liquidity.
[ICON] PRINCIPAL INVESTMENT STRATEGIES
- --------------------------------------------------------------------------------
The Fund will invest in high quality, short-term U.S. Government
securities. The Fund's "Investment Manager," Morgan Stanley Dean
Witter Advisors Inc., seeks to maintain the Fund's share price at
$1.00. The share price remaining stable at $1.00 means that the Fund
would preserve the principal value of your investment.
The U.S. Government securities that the Fund may purchase include:
- U.S. Treasury bills, notes and bonds, all of which
are direct obligations of the U.S. Government.
- Securities issued by agencies and instrumentalities
of the U.S. Government which are backed by the full
faith and credit of the United States. Among the
agencies and instrumentalities issuing these
obligations are the Government National Mortgage
Association and the Federal Housing Administration.
- Securities issued by agencies and instrumentalities
which are not backed by the full faith and credit
of the United States, but whose issuing agency or
instrumentality has the right to borrow from the
U.S. Treasury to meet its obligations. Among these
agencies and instrumentalities are the Federal
National Mortgage Association, the Federal Home
Loan Mortgage Corporation and the Federal Home Loan
Banks.
- Securities issued by agencies and instrumentalities
which are backed solely by the credit of the
issuing agency or instrumentality. Among these
agencies and instrumentalities is the Federal Farm
Credit System.
The Fund also may invest up to 10% of its total assets in FDIC
insured certificates of deposit of banks and savings and loan
institutions.
In addition, the Fund may invest in repurchase agreements which may
be viewed as a type of secured lending by the Fund.
14
<PAGE>
[ICON] PRINCIPAL RISKS
- --------------------------------------------------------------------------------
There is no assurance that the Fund will achieve its investment
objectives.
CREDIT AND INTEREST RATE RISKS. A principal risk of investing in the
Fund is associated with its U.S. Government securities investments,
which are subject to two types of risks: credit risk and interest
rate risk. Credit risk refers to the possibility that the issuer of a
security will be unable to make interest payments and repay the
principal on its debt. Interest rate risk, another risk of debt
securities, refers to fluctuations in the value of a fixed-income
security resulting from changes in the general level of interest
rates.
Credit risk is minimal with respect to the Fund's U.S. Government
securities investments. Repurchase agreements involve a greater
degree of credit risk. The Investment Manager, however, actively
manages the Fund's assets to reduce the risk of losing any principal
investment as a result of credit or interest rate risks. In addition,
federal regulations require money market funds, such as the Fund, to
invest only in debt obligations of high quality and short-term
maturities.
YEAR 2000. The Fund could be adversely affected if the computer
systems necessary for the efficient operation of the Investment
Manager, the Fund's other service providers and the markets and
governmental issuers in which the Fund invests do not properly
process and calculate date-related information from and after January
1, 2000. While year 2000-related computer problems could have a
negative effect on the Fund, the Investment Manager and its
affiliates are working hard to avoid any problems and to obtain
assurances from their service providers that they are taking similar
steps.
In addition, it is possible that the markets for securities in which
the Fund invests may be detrimentally affected by computer failures
throughout the financial services industry beginning January 1, 2000.
Improperly functioning trading systems may result in settlement
problems and liquidity issues. Governmental data processing errors
also may result in production problems for individual companies and
overall economic uncertainties. Earnings of individual issuers will
be affected by remediation costs, which may be substantial and may be
reported inconsistently in U.S. and foreign financial statements.
Accordingly, the Fund's investments may be adversely affected.
Shares of the Fund are not bank deposits and are not insured or
guaranteed by the FDIC or any other government agency. Although the
Fund seeks to preserve the value of your investment at $1.00 per
share, if it is unable to do so, it is possible to lose money by
investing in the Fund.
15
<PAGE>
[Sidebar]
ANNUAL TOTAL RETURNS
THIS CHART SHOWS HOW THE PERFORMANCE OF THE FUND'S SHARES HAS VARIED FROM YEAR
TO YEAR OVER THE PAST 10 CALENDAR YEARS.
AVERAGE ANNUAL
TOTAL RETURNS
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL RETURNS WITH THOSE OF A COMPARABLE
MEASURE OF MARKET PERFORMANCE OVER TIME.
[End Sidebar]
[ICON] PAST PERFORMANCE
- --------------------------------------------------------------------------------
The bar chart and table below provide some indication of the risks of
investing in the Fund. The Fund's past performance does not indicate
how the Fund will perform in the future.
ANNUAL TOTAL RETURNS - CALENDAR YEARS
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
1989 8.61%
90 7.63%
91 5.52%
92 3.25%
93 2.57%
94 3.61%
95 5.40%
96 4.89%
97 4.99%
98 4.96%
</TABLE>
During the periods shown in the bar chart, the highest return for a
calendar quarter was 2.24% (quarter ended June 30, 1989) and the
lowest return for a calendar quarter was 0.62% (quarter ended June
30, 1993). Year-to-date total return information as of June 30,
1999 was 2.15%.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS (AS OF DECEMBER 31, 1998)
- -------------------------------------------------------------------------------
PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
<S> <C> <C> <C>
- -------------------------------------------------------------------------------
Active Assets Government
Securities Trust 4.96% 4.77% 5.13%
- -------------------------------------------------------------------------------
Lipper U.S. Government Money
Market Funds Index(1) 4.95% 4.79% 5.19%
- -------------------------------------------------------------------------------
</TABLE>
1 The Lipper U.S. Government Money Market Funds Index is an equally-weighted
performance index of the largest qualifying funds (based on net assets) in
the Lipper U.S. Government Money Market 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.
For the Fund's most recent 7-day annualized yield you may call (800)
869-NEWS.
16
<PAGE>
[Sidebar]
ANNUAL FUND
OPERATING EXPENSES
THESE EXPENSES ARE DEDUCTED FROM THE FUND'S ASSETS AND ARE BASED ON EXPENSES
PAID FOR THE FISCAL YEAR ENDED JUNE 30, 1999.
[End Sidebar]
[ICON] FEES AND EXPENSES
- --------------------------------------------------------------------------------
The table below briefly describes the fees and expenses that you may
pay if you buy and hold shares of the Fund. The Fund is a no-load
fund. The Fund does not impose any sales charges and does not impose
account fees.
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
<S> <C>
- -----------------------------------------------------------------------
Management fee 0.46%
- -----------------------------------------------------------------------
Distribution and service (12b-1) fees 0.10%
- -----------------------------------------------------------------------
Other expenses 0.05%
- -----------------------------------------------------------------------
Total annual Fund operating expenses 0.61%
- -----------------------------------------------------------------------
</TABLE>
EXAMPLE
This example is intended to help you compare the cost of investing in
the Fund with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the Fund, your
investment has a 5% return each year, and the Fund's operating
expenses remain the same. Although your actual costs may be higher or
lower, the table below shows your costs at the end of each period
based on these assumptions.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C>
- --------------------------------------------------
$63 $196 $342 $765
- --------------------------------------------------
</TABLE>
17
<PAGE>
[Sidebar]
MORGAN STANLEY DEAN WITTER ADVISORS INC.
THE INVESTMENT MANAGER IS WIDELY RECOGNIZED AS A LEADER IN THE MUTUAL FUND
INDUSTRY AND TOGETHER WITH MORGAN STANLEY DEAN WITTER SERVICES COMPANY INC., ITS
WHOLLY-OWNED SUBSIDIARY, HAS MORE THAN $137 BILLION IN ASSETS UNDER MANAGEMENT
OR ADMINISTRATION AS OF JULY 31, 1999.
[End Sidebar]
FUND MANAGEMENT
Each Fund has retained the Investment Manager -- Morgan Stanley Dean
Witter Advisors Inc. -- to provide administrative services, manage
its business affairs and invest its assets, including the placing of
orders for the purchase and sale of portfolio securities. The
Investment Manager is a wholly-owned subsidiary of Morgan Stanley
Dean Witter & Co., a preeminent global financial services firm that
maintains leading market positions in each of its three primary
businesses: securities, asset management and credit services. Its
main business office is located at Two World Trade Center, New York,
NY 10048.
Each Fund pays the Investment Manager a monthly
management fee as full compensation for the services
and facilities furnished to the Fund, and for Fund
expenses assumed by the Investment Manager. The fee
is based on each Fund's average daily net assets.
For the fiscal year ended June 30, 1999, each Fund
accrued total compensation to the Investment Manager
as follows:
<TABLE>
<CAPTION>
INVESTMENT MANAGEMENT
FEE ACCRUED
(AS A PERCENT OF
FUND FUND'S AVERAGE NET ASSETS)
<S> <C>
- ------------------------------------------------------------------------------
Active Assets Money Trust 0.27%
- ------------------------------------------------------------------------------
Active Assets Tax-Free Trust 0.39%
- ------------------------------------------------------------------------------
Active Assets California Tax-Free Trust 0.48%
- ------------------------------------------------------------------------------
Active Assets Government Securities Trust 0.46%
- ------------------------------------------------------------------------------
</TABLE>
18
<PAGE>
[Sidebar]
CONTACTING A
FINANCIAL ADVISOR
IF YOU ARE NEW TO THE
MORGAN STANLEY DEAN
WITTER FAMILY OF FUNDS AND
WOULD LIKE TO CONTACT A
FINANCIAL ADVISOR, CALL
(800) THE-DEAN FOR THE
TELEPHONE NUMBER OF THE
MORGAN STANLEY DEAN
WITTER OFFICE NEAREST YOU.
YOU MAY ALSO ACCESS OUR
OFFICE LOCATOR ON OUR
INTERNET SITE AT:
www.msdw.com/individual/funds
[End Sidebar]
SHAREHOLDER INFORMATION
[ICON] PRICING FUND SHARES
- --------------------------------------------------------------------------------
The price of each Fund's shares, called "net asset value," is based
on the amortized cost of the Fund's portfolio securities. The
amortized cost valuation method involves valuing a debt obligation in
reference to its cost, rather than market forces.
The net asset value per share of each Fund is determined once daily
at 12:00 noon Eastern time on each day that the New York Stock
Exchange is open. Shares will not be priced on days that the New York
Stock Exchange is closed.
[ICON] HOW ARE FUND INVESTMENTS MADE?
- --------------------------------------------------------------------------------
PARTICIPANTS:
Cash balances in your Active Assets Account that are not invested in
securities will be automatically invested in shares of the Fund of
your choice on days that the New York Stock Exchange is open for
business (a "business day"). Alternatively, you may choose to have
your cash balances deposited in a federally insured bank account
selected by Dean Witter. (Currently, the designated bank account is
held with MountainWest Financial Corporation.) You may change your
selection at any time to any of the other three Funds (or to deposit
account balances in the designated bank account) by notifying your
Morgan Stanley Dean Witter Financial Advisor. Upon selecting a
different Fund, all of your shares held in the previously designated
Fund will automatically be sold and reinvested in shares of the newly
selected Fund.
Your Active Assets Account will be reviewed on each business day to
determine whether the account has a cash balance as a result of any
credits accrued that day. Credits to your account may arise, for
example, from sales of securities or from direct cash payments into
the account. The cash balance, reduced by any debits to your Active
Assets Account incurred that day, will be used to purchase shares of
the Fund of your choice on the next business day at the Fund's share
price calculated on that next day. Debits may arise from purchases of
securities, margin calls, other account charges, Visa debit card
purchases or cash advances, and any checks written against the
account.
Dividends are not earned until the next business day following the
purchase of Fund shares.
If you make a cash payment into your Active Assets Account after your
Financial Advisor's deadline for processing checks has passed, then
investment in the Fund of your choice may not occur until the second
business day after the payment is made (and
19
<PAGE>
at the price of the Fund's shares calculated on that second business
day). No payments into the Active Assets Account will be credited
until federal or other immediately available funds become available
to the account.
There is no minimum investment amount for Participants, although the
current minimum initial deposit into an Active Assets Account is
$5,000 in cash or securities.
NON-PARTICIPANTS:
To invest in any of the Funds, contact your Morgan Stanley Dean
Witter Financial Advisor. Your Financial Advisor will assist you
step-by-step with the procedures to invest in a Fund. The minimum
investment amount is $5,000 for initial investments. We may offer
reduced minimums or automatic investment options for investors that
have certain brokerage accounts held with Dean Witter. Fund shares
are purchased at the next share price calculated after we receive
your purchase order (accompanied by federal or other immediately
available funds).
Non-Participants considering investing in any of the Funds should
recognize that the Funds have been created specifically for the
Active Assets Program and, as such, the Funds do not offer typical
money market fund features such as checkwriting privileges to
non-Participants. (We do offer other comparable money market funds
that have these features. For more information, call your Morgan
Stanley Dean Witter Financial Advisor.)
PLAN OF DISTRIBUTION:
Each Fund has adopted a Plan of Distribution in accordance with Rule
12b-1 under the Investment Company Act of 1940. The Plan allows each
Fund to pay distribution fees for the sale and distribution of these
shares. It also allows each Fund to pay for services to shareholders.
Because these fees are paid out of each Fund's assets on an ongoing
basis, over time these fees will increase the cost of your investment
and may cost you more than paying other types of sales charges.
[ICON] HOW ARE FUND SHARES SOLD?
- --------------------------------------------------------------------------------
PARTICIPANTS:
AUTOMATIC SALES. Your Active Assets Account will be reviewed on each
business day to determine whether the account has a negative balance
as a result of debits incurred on that day. Of course, the negative
balance will be reduced by any credits accrued to the account on that
day. On the next business day, a sufficient number of your Fund
shares will automatically be sold to equal the value of the negative
balance. The sale price of the Fund's shares will be the share price
calculated on that next business day. If the value of your Fund
shares is insufficient to equal the negative balance, Dean Witter is
authorized to take the actions described in your Client Account
Agreement, including, if you are eligible, applying a margin loan to
your account to cover outstanding debits.
20
<PAGE>
In addition, if Dean Witter or Bank One exercises its right to
terminate the Active Assets Program, then all of your Fund shares
will be sold.
VOLUNTARY SALES. If you wish to sell all or some of your Fund shares,
you may do so by:
(a) writing a Bank One check against your account in an amount equal
to the value of shares you wish to sell (there may be fees
imposed for writing these checks);
(b) obtaining a cash advance using your Bank One Visa debit card
(there may be fees imposed on cash advances and you may be
limited to withdrawing up to $5,000 per day); or
(c) calling your Morgan Stanley Dean Witter Financial Advisor.
Once you have taken any of these steps, Fund shares will be sold at
the Fund's share price calculated on the next business day. Proceeds
from your sale of Fund shares will be reduced by any outstanding
debits to your Active Assets Account. Prior to selling any Fund
shares through any of the above methods you should call the Active
Assets information number appearing on the cover of this PROSPECTUS
to determine the value of Fund shares you own. If there is an
insufficient value of Fund shares to cover your account withdrawals
(I.E., debit card purchases or checks written), then Dean Witter may
take the authorized steps described in the Client Account Agreement.
NON-PARTICIPANTS:
You can sell some or all of your Fund shares at any time. Your shares
will be sold at the next share price calculated after we receive your
order to sell as described below.
To sell your shares, simply call your Morgan Stanley Dean Witter
Financial Advisor or other authorized financial representative.
Payment will be sent to the address to which the account is
registered or deposited in your brokerage account.
You may also sell your shares by writing a "letter of instruction"
that includes:
- your account number;
- the dollar amount or the number of shares you wish to sell; and
- the signature of each owner as it appears on the account.
If you are requesting payment to anyone other than the registered
owner(s) or that payment be sent to any address other than the
address of the registered owner(s) or pre-designated bank account,
you will need a signature guarantee. You can generally obtain a
signature guarantee from an eligible guarantor acceptable to Morgan
Stanley Dean Witter Trust FSB. (You should contact Morgan Stanley
Dean Witter Trust FSB at (800) 869-NEWS for a determination as to
whether a particular institution is an eligible guarantor.) A notary
public CANNOT provide a signature guarantee. Additional documentation
may be required for shares held by a corporation, partnership,
trustee or
21
<PAGE>
executor. Mail the letter to Morgan Stanley Dean Witter Trust FSB at
P.O. Box 983, Jersey City, NJ 07303. A check will be mailed to the
name(s) and address in which the account is registered, or otherwise
according to your instructions.
After we receive your complete instructions to sell as described
above, a check will be mailed to you within seven days, although we
will attempt to make payment within one business day. Payment may
also be sent to your brokerage account.
Certain Dean Witter brokerage accounts held by non-Participants may
be eligible for an automatic redemption option where Fund shares are
sold automatically under specified circumstances. For more
information contact your Morgan Stanley Dean Witter Financial
Advisor.
PARTICIPANTS AND NON-PARTICIPANTS:
Payment for Fund shares sold may be postponed or the right to have
Fund shares sold may be suspended under unusual circumstances. If you
request to sell shares that were recently purchased by check, payment
of the sale proceeds may be delayed for the minimum time needed to
verify that the check has been honored (not more than fifteen days
from the time the check is received).
[ICON] DISTRIBUTIONS
- --------------------------------------------------------------------------------
Each Fund passes substantially all of its earnings along to its
investors as "distributions." Each Fund earns interest from
fixed-income investments. These amounts are passed along to Fund
shareholders as "income dividend distributions." Each Fund realizes
capital gains whenever it sells securities for a higher price than it
paid for them. These amounts may be passed along as "capital gain
distributions;" the Investment Manager does not anticipate that there
will be significant capital gain distributions.
Each Fund declares income dividends, payable on each day the New York
Stock Exchange is open for business, of all of its daily net income
to shareholders of record as of 12:00 noon the preceding business
day. Dividends are reinvested automatically in additional shares of
the Fund (rounded to the last 1/100 of a share). With respect to each
of Active Assets Money Trust and Active Assets Government Securities
Trust, its short-term capital gains, if any, are declared and payable
on each business day. The other Funds' short-term capital gains, if
any, are distributed periodically. Each Fund's long-term capital
gains, if any, are distributed at least once in December.
22
<PAGE>
[ICON] TAX CONSEQUENCES
- --------------------------------------------------------------------------------
As with any investment, you should consider how your investment in a
Fund will be taxed. The tax information in this PROSPECTUS is
provided as general information. You should consult your own tax
professional about the tax consequences of an investment in a Fund.
Your income dividend distributions from Active Assets Money Trust and
Active Assets Government Securities Trust are normally subject to
federal and state income tax when they are paid.
Income dividend distributions from Active Assets Tax-Free Trust are
normally exempt from federal income tax and will generally be subject
to state income tax. Income dividend distributions from Active Assets
California Tax-Free Trust are exempt from federal and California
state income taxes -- to the extent they are derived from California
municipal obligations. With respect to these two Funds, income
derived from certain portfolio securities may be subject to federal,
state and/or local income taxes.
With respect to Active Assets Tax-Free Trust and Active Assets
California Tax-Free Trust, income derived from certain municipal
securities may be subject to the federal "alternative minimum tax."
Certain tax-exempt securities whose proceeds are used to finance
private, for-profit organizations are subject to this special tax
system that ensures that individuals pay at least some federal taxes.
Although interest on these securities is generally exempt from
federal income tax, some taxpayers who have many tax deductions or
exemptions nevertheless may have to pay tax on the income.
If a Fund makes any capital gain distributions, those distributions
will normally be subject to federal and state income tax when they
are paid. Any short-term capital gain distributions are taxable to
you as ordinary income. Any long-term capital gain distributions are
taxable to you as long-term capital gains, no matter how long you
have owned shares in a Fund.
Every January, you will be sent a statement (IRS Form 1099-DIV)
showing the distributions paid to you in the previous year. The
statement provides full information on your dividends and capital
gains for tax purposes.
You should provide your social security or tax identification number.
By providing this information, you will avoid being subject to a
federal backup withholding tax of 31% on taxable distributions and
sale proceeds. Any withheld amount would be sent to the IRS as an
advance tax payment.
23
<PAGE>
THE FUNDS' FINANCIAL INFORMATION
ACTIVE ASSETS MONEY TRUST
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the Trust's
financial performance for the past 5 fiscal years of the Trust. Certain
information reflects financial results for a single Trust share throughout each
year. The total returns in the table represent the rate an investor would have
earned or lost on an investment in the Trust (assuming reinvestment of all
dividends and distributions).
This information has been audited by PricewaterhouseCoopers LLP, independent
accountants, whose report, along with the Trust's financial statements, is
included in this Prospectus.
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------
SELECTED PER SHARE DATA
- ---------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ---------------------------------------------------------------------------------------------------------------------
Net income from investment operations 0.048 0.052 0.051 0.052 0.051
- ---------------------------------------------------------------------------------------------------------------------
Less dividends from net investment income (0.048) (0.052) (0.051) (0.052) (0.051)
- ---------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ---------------------------------------------------------------------------------------------------------------------
TOTAL RETURN 4.92% 5.38% 5.23% 5.33% 5.23%
- ---------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ---------------------------------------------------------------------------------------------------------------------
Expenses 0.43% 0.44% 0.45% 0.47% 0.49%
- ---------------------------------------------------------------------------------------------------------------------
Net investment income 4.78% 5.24% 5.07% 5.21% 5.16%
- ---------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ---------------------------------------------------------------------------------------------------------------------
Net assets, end of period, in millions $15,989 $11,922 $8,928 $7,170 $5,709
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
24
ACTIVE ASSETS MONEY TRUST
<PAGE>
ACTIVE ASSETS TAX-FREE TRUST
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the Trust's
financial performance for the past 5 fiscal years of the Trust. Certain
information reflects financial results for a single Trust share throughout each
year. The total returns in the table represent the rate an investor would have
earned or lost on an investment in the Trust (assuming reinvestment of all
dividends and distributions).
This information has been audited by PricewaterhouseCoopers LLP, independent
accountants, whose report, along with the Trust's financial statements, is
included in this Prospectus.
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------
SELECTED PER SHARE DATA
- ---------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ---------------------------------------------------------------------------------------------------------------------
Net income from investment operations 0.027 0.031 0.030 0.031 0.030
- ---------------------------------------------------------------------------------------------------------------------
Less dividends from net investment income (0.027) (0.031) (0.030) (0.031) (0.030)
- ---------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ---------------------------------------------------------------------------------------------------------------------
TOTAL RETURN 2.73% 3.11% 3.05% 3.12% 3.09%
- ---------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ---------------------------------------------------------------------------------------------------------------------
Expenses 0.52% 0.54% 0.55% 0.55% 0.56%
- ---------------------------------------------------------------------------------------------------------------------
Net investment income 2.68% 3.05% 2.98% 3.08% 3.05%
- ---------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ---------------------------------------------------------------------------------------------------------------------
Net assets, end of period, in millions $2,290 $1,869 $1,634 $1,542 $1,499
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
25
ACTIVE ASSETS TAX-FREE TRUST
<PAGE>
ACTIVE ASSETS CALIFORNIA TAX-FREE TRUST
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the Trust's
financial performance for the past 5 fiscal years of the Trust. Certain
information reflects financial results for a single Trust share throughout each
year. The total returns in the table represent the rate an investor would have
earned or lost on an investment in the Trust (assuming reinvestment of all
dividends and distributions).
This information has been audited by PricewaterhouseCoopers LLP, independent
accountants, whose report, along with the Trust's financial statements, is
included in this Prospectus.
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------
SELECTED PER SHARE DATA
- ---------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ---------------------------------------------------------------------------------------------------------------------
Net income from investment operations 0.023 0.028 0.028 0.028 0.029
- ---------------------------------------------------------------------------------------------------------------------
Less dividends from net investment income (0.023) (0.028) (0.028) (0.028) (0.029)
- ---------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ---------------------------------------------------------------------------------------------------------------------
TOTAL RETURN 2.31% 2.84% 2.83% 2.82% 2.89%
- ---------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ---------------------------------------------------------------------------------------------------------------------
Expenses 0.63%(1) 0.64% 0.66%(1) 0.67% 0.67%
- ---------------------------------------------------------------------------------------------------------------------
Net investment income 2.28% 2.79% 2.78% 2.79% 2.86%
- ---------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ---------------------------------------------------------------------------------------------------------------------
Net assets, end of period, in thousands $625,753 $549,779 $431,382 $384,218 $313,566
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Does not reflect the effect of expense offset of 0.01%.
SEE NOTES TO FINANCIAL STATEMENTS
26
ACTIVE ASSETS CALIFORNIA TAX-FREE TRUST
<PAGE>
ACTIVE ASSETS GOVERNMENT SECURITIES TRUST
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the Trust's
financial performance for the past 5 fiscal years of the Trust. Certain
information reflects financial results for a single Trust share throughout each
year. The total returns in the table represent the rate an investor would have
earned or lost on an investment in the Trust (assuming reinvestment of all
dividends and distributions).
This information has been audited by PricewaterhouseCoopers LLP, independent
accountants, whose report, along with the Trust's financial statements, is
included in this Prospectus.
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------
SELECTED PER SHARE DATA
- ---------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ---------------------------------------------------------------------------------------------------------------------
Net income from investment operations 0.045 0.049 0.048 0.049 0.048
- ---------------------------------------------------------------------------------------------------------------------
Less dividends from net investment income (0.045) (0.049) (0.048) (0.049) (0.048)
- ---------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ---------------------------------------------------------------------------------------------------------------------
TOTAL RETURN 4.64% 5.05% 4.92% 5.03% 4.92%
- ---------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ---------------------------------------------------------------------------------------------------------------------
Expenses 0.61% 0.63% 0.64% 0.65% 0.67%
- ---------------------------------------------------------------------------------------------------------------------
Net investment income 4.50% 4.93% 4.78% 4.93% 4.84%
- ---------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ---------------------------------------------------------------------------------------------------------------------
Net assets, end of period, in millions $995 $699 $620 $571 $542
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
27
ACTIVE ASSETS GOVERNMENT SECURITIES TRUST
<PAGE>
PROSPECTUS - AUGUST 23, 1999
Additional information about each Fund's investments is available in the Fund's
SEMI-ANNUAL REPORT TO SHAREHOLDERS. The Funds' STATEMENT OF ADDITIONAL
INFORMATION also provides additional information about the Funds. The STATEMENT
OF ADDITIONAL INFORMATION is incorporated herein by reference (legally is part
of this PROSPECTUS). For a free copy of any of these documents, to request other
information about the Funds, or to make shareholder inquiries, please call:
(800) 869-NEWS
You also may obtain information about each Fund by calling your Morgan Stanley
Dean Witter Financial Advisor or by visiting our Internet site at:
www.msdw.com/individual/funds
Information about the Funds (including the STATEMENT OF ADDITIONAL INFORMATION)
can be viewed and copied at the Securities and Exchange Commission's Public
Reference Room in Washington, DC. Information about the Reference Room's
operations may be obtained by calling the SEC at (800) SEC-0330. Reports and
other information about the Funds are available on the SEC's Internet site at
www.sec.gov, and copies of this information may be obtained, upon payment of a
duplicating fee, by writing the Public Reference Section of the SEC, Washington,
DC 20549-6009.
TICKER SYMBOLS:
ACTIVE ASSETS MONEY
TRUST AAMXX
- -------------------- -------
ACTIVE ASSETS
TAX-FREE TRUST AATXX
- -------------------- -------
ACTIVE ASSETS
CALIFORNIA TAX-FREE
TRUST AACXX
- -------------------- -------
ACTIVE ASSETS
GOVERNMENT
SECURITIES TRUST AAGXX
- -------------------- -------
(THE FUND'S INVESTMENT COMPANY ACT FILE NOS. ARE 811-3159, 811-3162, 811-6530,
811-3165)
Active Assets
MONEY TRUST
TAX-FREE TRUST
CALIFORNIA TAX-FREE TRUST
GOVERNMENT SECURITIES TRUST
FOUR DIFFERENT MONEY MARKET FUNDS OFFERED
EXCLUSIVELY TO PARTICIPANTS IN THE ACTIVE
ASSETS ACCOUNT-Registered Trademark-
FINANCIAL SERVICE PROGRAM AND TO OTHER
INVESTORS WHO HAVE BROKERAGE ACCOUNTS WITH
DEAN WITTER REYNOLDS.
