WITTER DEAN GOVERNMENT INCOME TRUST, DEF 14A, 1994-11-01

WITTER DEAN GOVERNMENT INCOME TRUST
DEF 14A, 1994-11-01

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Schedule 14A Information required in proxy statement.
Schedule 14A Information
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )

Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]

Check the appropriate box:

[ ] Preliminary Proxy Statement
[ ] Preliminary Additional Materials
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.149-11(c) or
Section 240.14a-12

Dean Witter Government Income Trust. . . . . . . . . . . . . . .
(Name of Registrant as Specified in its Charter)

Lou Anne D. McInnis. . . . . . . . . . . . . . . . . . . . . . .
(Name of Person(s) Filing Proxy Statement)

Payment of Filing Fee (check the appropriate box):

[ X ] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(j)(1), or
14a-6(j)(2)
[ ] $500 per each party to the controversy pursuant to Exchange
Act Rule 14a-6(j)(3)
[ ] Fee computed on table below per Exchange Act Rules
14a-6(j)(4) and 0-11.

1) Title of each class of securities to which transaction
applies:

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2) Aggregate number of securities to which transaction applies:

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:

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4) Proposed maximum aggregate value of transaction:

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Set forth the amount on which the filing fee is calculated and
state how it was determined.

[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the
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4) Date Filed:

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14a.94

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DEAN WITTER GOVERNMENT INCOME TRUST

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD DECEMBER 22, 1994

The Annual Meeting of Shareholders of DEAN WITTER GOVERNMENT INCOME TRUST
(the "Trust"), an unincorporated business trust organized under the laws of
the Commonwealth of Massachusetts, will be held in the Conference Center,
Forty-Fourth Floor, 2 World Trade Center, New York, New York 10048, on
December 22, 1994, at 9:00 a.m., New York City time, for the following
purposes:

1. To elect five (5) Trustees, three (3) to serve until the 1997 Annual
Meeting, one (1) to serve until the 1996 Annual Meeting and one (1) to serve
until the 1995 Annual Meeting, or, in each case, until their successors shall
have been elected and qualified;

2. To approve or disapprove the continuance of the Trust's currently
effective Investment Management Agreement with Dean Witter InterCapital Inc.;

3. To ratify or reject the selection of Price Waterhouse LLP as the
Trust's independent accountants for the fiscal year ending September 30,
1995; and

4. To transact such other business as may properly come before the Meeting
or any adjournments thereof.

Shareholders of record as of the close of business on October 20, 1994 are
entitled to notice of and to vote at the Meeting. If you cannot be present in
person, your management would greatly appreciate your filling in, signing and
returning the enclosed proxy promptly in the envelope provided for that
purpose.

In the event that the necessary quorum to transact business or the vote
required to approve or reject any proposal is not obtained at the Meeting,
the persons named as proxies may propose one or more adjournments of the
Meeting for a total of not more than 60 days in the aggregate to permit
further solicitation of proxies. Any such adjournment will require the
affirmative vote of the holders of a majority of the Trust's shares present
in person or by proxy at the Meeting. The persons named as proxies will vote
in favor of such adjournment those proxies which they are entitled to vote in
favor of Proposal 2 and will vote against any such adjournment those proxies
required to be voted against that proposal.

SHELDON CURTIS,
Secretary

November 1, 1994
New York, New York

IMPORTANT
YOU CAN HELP AVOID THE NECESSITY AND EXPENSE OF SENDING FOLLOW-UP LETTERS
TO ENSURE A QUORUM BY PROMPTLY RETURNING THE ENCLOSED PROXY. IF YOU ARE
UNABLE TO BE PRESENT IN PERSON, PLEASE FILL IN, SIGN AND RETURN THE ENCLOSED
PROXY IN ORDER THAT THE NECESSARY QUORUM MAY BE REPRESENTED AT THE MEETING.
THE ENCLOSED ENVELOPE REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.

<PAGE>

DEAN WITTER GOVERNMENT INCOME TRUST

TWO WORLD TRADE CENTER, NEW YORK, NEW YORK 10048

---------------
PROXY STATEMENT

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

ANNUAL MEETING OF SHAREHOLDERS
DECEMBER 22, 1994

This statement is furnished in connection with the solicitation of proxies
by the Board of Trustees (the "Board") of DEAN WITTER GOVERNMENT INCOME TRUST
(the "Trust"), for use at the Annual Meeting of Shareholders of the Trust to
be held on December 22, 1994 (the "Meeting"), and at any adjournments
thereof.

If the enclosed form of proxy is properly executed and returned in time to
be voted at the Meeting, the proxies named therein will vote the shares
represented by the proxy in accordance with the instructions marked thereon.
Unmarked proxies will be voted for each of the nominees for election as
Trustee and in favor of Proposals 2 and 3 as set forth in the attached Notice
of Annual Meeting of Shareholders. A proxy may be revoked at any time prior
to its exercise by any of the following: written notice of revocation to the
Secretary of the Trust, execution and delivery of a later dated proxy to the
Secretary of the Trust, or attendance and voting at the Meeting.

Shareholders of record as of the close of business on October 20, 1994,
the record date for the determination of Shareholders entitled to notice of
and to vote at the Meeting, are entitled to one vote for each share held and
a fractional vote for a fractional share. On October 20, 1994, there were
outstanding 55,849,400 shares of beneficial interest of the Trust, all with
$.01 par value. No person was known to own as much as 5% of the outstanding
shares of the Trust on that date. The Trustees and officers of the Trust,
together, owned less than 1% of the Trust's outstanding shares on that date.
The percentage ownership of shares of the Trust changes from time to time
depending on purchases and sales by shareholders and the total number of
shares outstanding.

The cost of soliciting proxies for the Meeting will be borne by the Trust.
The solicitation of proxies will be by mail, which may be supplemented by
solicitation by mail, telephone or otherwise through Trustees and officers of
the Trust and officers and regular employees of Dean Witter InterCapital Inc.
("InterCapital" or the "Investment Manager"), without special compensation
therefor. The first mailing of this proxy statement is expected to be made on
or about November 1, 1994.

(1) ELECTION OF TRUSTEES

The number of Trustees has currently been fixed by the Trustees, pursuant
to the Trust's Declaration of Trust, at twelve. At the Meeting, five Trustees
are to be elected to the Trust's Board of Trustees. There are currently
twelve Trustees, three of whom (Manuel H. Johnson, Paul Kolton and John L.
Schroeder) are standing for election at this Meeting to serve until the 1997
Annual Meeting, one of whom (Michael Bozic) is standing for election at this
Meeting to serve until the 1996 Meeting and one of whom (Philip J. Purcell)
is standing for election at this Meeting to serve until the 1995 Annual
Meeting in accordance with the Trust's Declaration of Trust.

Nine of the current twelve Trustees (Jack F. Bennett, Michael Bozic, Edwin
J. Garn, John R. Haire, John E. Jeuck, Manuel H. Johnson, Paul Kolton,
Michael E. Nugent, and John L. Schroeder) are "Independent

<PAGE>

Trustees", that is, Trustees who are not "interested persons" of the Trust,
as that term is defined in the Investment Company Act of 1940, as amended
(the "Act"). Mr. Edward R. Telling, whose term as Trustee ends at the Meeting
and Mr. John E. Jeuck, whose term extends until the 1996 Annual Meeting of
Shareholders, have informed the Trust of their intention to retire as of the
date of the Meeting. The nominees for election as Trustees have been proposed
by the Trustees now serving or, in the case of the nominees for positions as
Independent Trustees, by the Independent Trustees now serving. Messrs. Bozic,
Purcell and Schroeder were elected as Trustees by the other Trustees on April
8, 1994. All of the other Trustees have been elected by the Shareholders of
the Trust.

The Board has two committees, an Audit Committee and a Committee of the
Independent Trustees, consisting, in both cases, of the Independent Trustees.
Mr. Haire serves as the Chairman of both Committees. There are no nominating
or compensation committees of the Board.

The functions of the Audit Committee are: recommendation to the Trustees
of the engagement or discharge of the Trust's independent accountants;
direction and supervision of investigations into matters within the scope of
the independent accountants' duties, including the power to retain outside
specialists; review with the independent accountants of the audit plan and
results of the auditing engagement; approval of each professional service,
audit and non-audit, provided by the independent accountants and other
accounting firms prior to the performance of such service; review of the
independence of the independent accountants; consideration of the range of
audit and non-audit fees; review of the adequacy of the Trust's system of
internal accounting controls; advice to the independent accountants and
personnel of management that they have direct access to the Committee at all
times; and preparation and submission of Committee meeting minutes to the
full Board.

The functions of the Committee of the Independent Trustees are:
recommendation to the full Board of approval of any management, advisory
and/or administration agreements; recommendations to the full Board of any
underwriting and/or distribution agreements; review of the fidelity bond and
premium allocation; review of errors and omissions, uncollectible items of
deposit and any other joint insurance policies and premium allocation; review
of, and monitoring of compliance with, procedures adopted pursuant to certain
rules promulgated under the Act; review of, and monitoring of compliance
with, guidelines and procedures for effecting principal transactions in
certain taxable money market instruments with Dean Witter Reynolds Inc.
("DWR"); and such other duties as the Independent Trustees shall, from time
to time, conclude are necessary to carry out their duties under the Act.

The nominees of the Board of Trustees for election as Trustees are listed
below. It is the intention of the persons named in the enclosed form of proxy
to vote the shares represented by them for the election of these nominees:
Michael Bozic, Manuel H. Johnson, Paul Kolton, Philip J. Purcell and John L.
Schroeder. Should any of the nominees become unable or unwilling to accept
nomination or election, the persons named in the proxy will exercise their
voting power in favor of such person or persons as the Board may recommend.
All of the nominees have consented to being named in this proxy statement and
to serve if elected. The Trust knows no reason why said nominees would be
unable or unwilling to accept nomination or election. Trustees will be
elected by a plurality of the votes cast at the Meeting. Abstentions and
broker "non-votes" will have the same effect as a vote against the proposal.

Pursuant to the provisions of the Declaration of Trust (Section 2.2, as
amended), the nominees for election as Trustees are divided into three
separate classes, each class having a term of three years. The term of office
of one of each of the three classes will expire each year.

The Board has determined that the nominees for election as Trustee shall
be standing for election as Trustee in each of the three classes of Trustee
as follows: Class I--Messrs. Bennett, Bozic and Fiumefreddo

<PAGE>

Class II--Messrs. Johnson, Kolton and Schroeder; and Class III--Messrs. Garn,
Haire, Nugent and Purcell. Each nominee will, if elected, serve a term of up
to approximately three years running for the period assigned to that class
and terminating at the date of the annual meeting of Shareholders so
designated by the Board, or any adjournment thereof. As a consequence of this
method of election, the replacement of a majority of the Board could be
delayed for up to two years. In accordance with the above, one Trustee in
Class I is standing for election at this Meeting and, if elected, will serve
until the 1996 Annual Meeting or until his successor shall have been elected
and qualified, the Trustees in Class II are standing for election at this
Meeting and, if elected, will serve until the 1997 Annual Meeting or until
their successors shall have been elected and qualified and one Trustee in
Class III is standing for election at this Meeting and, if elected, will
serve until the 1995 Annual Meeting or until his successor shall have been
elected and qualified.

The following information regarding each of the nominees for election as
Trustee, and each of the other members of the Board, includes his principal
occupations and employment for at least the last five years, his age, shares
of the Trust owned, if any, as of October 20, 1994 (shown in parentheses),
positions with the Trust, and directorships (or trusteeships) in other
companies which file periodic reports with the Securities and Exchange
Commission, including other investment companies for which InterCapital
serves as investment manager or investment adviser, namely, InterCapital
Income Securities Inc., InterCapital Quality Municipal Investment Trust,
InterCapital Insured Municipal Trust, InterCapital Quality Municipal Income
Trust, InterCapital Quality Municipal Securities, InterCapital California
Quality Municipal Securities, InterCapital New York Quality Municipal
Securities, InterCapital Insured Municipal Bond Trust, InterCapital Insured
Municipal Income Trust, InterCapital California Insured Municipal Income
Trust, InterCapital Insured Municipal Securities, InterCapital Insured
California Municipal Securities, Dean Witter High Yield Securities Inc., Dean
Witter Liquid Asset Fund Inc., Dean Witter Variable Investment Series, Dean
Witter Select Municipal Reinvestment Fund, Dean Witter U.S. Government Money
Market Trust, Dean Witter U.S. Government Securities Trust, Dean Witter
Tax-Exempt Securities Trust, Dean Witter Tax-Free Daily Income Trust, Dean
Witter American Value Fund, Dean Witter Convertible Securities Trust, Dean
Witter Dividend Growth Securities Inc., Dean Witter Global Short-Term Income
Fund Inc., Dean Witter Natural Resource Development Securities Inc., Dean
Witter Pacific Growth Fund Inc., Dean Witter Federal Securities Trust, Dean
Witter World Wide Investment Trust, Dean Witter Developing Growth Securities
Trust, Dean Witter California Tax-Free Income Fund, Dean Witter New York
Tax-Free Income Fund, Dean Witter Strategist Fund, Dean Witter Managed Assets
Trust, Dean Witter Value-Added Market Series, Dean Witter Utilities Fund,
Dean Witter California Tax-Free Daily Income Trust, High Income Advantage
Trust, High Income Advantage Trust II, High Income Advantage Trust III, Dean
Witter World Wide Income Trust, Dean Witter Intermediate Income Securities,
Dean Witter European Growth Fund Inc., Dean Witter Precious Metals and
Minerals Trust, Dean Witter Capital Growth Securities, Dean Witter New York
Municipal Money Market Trust, Dean Witter Multi-State Municipal Series Trust,
Dean Witter Short-Term U.S. Treasury Trust, Active Assets California Tax-Free
Trust, Active Assets Money Trust, Active Assets Tax-Free Trust, Active Assets
Government Securities Trust, Dean Witter Diversified Income Trust, Dean
Witter Premier Income Trust, Dean Witter Health Sciences Trust, Dean Witter
Retirement Series, Dean Witter Global Dividend Growth Securities, Dean Witter
Limited Term Municipal Trust, Dean Witter Short-Term Bond Fund, Dean Witter
Global Utilities Fund, Dean Witter National Municipal Trust, Dean Witter High
Income Securities, Dean Witter International SmallCap Fund, Dean Witter
Mid-Cap Growth Fund, Dean Witter Select Dimensions Investment Series,
Municipal Income Trust, Municipal Income Trust II, Municipal Income Trust
III, Municipal Income Opportunities Trust, Municipal Income Opportunities
Trust II, Municipal Income Opportunities Trust III, Prime Income Trust and
Municipal Premium Income Tust (these investment companies, together with the
Trust, are referred to herein collectively as the "Dean Witter Funds"), and
investment companies for which Dean Witter Services Company Inc. ("DWSC"), a
wholly-owned subsidiary of InterCapital, serves as manager

<PAGE>

and TCW Funds Management, Inc., serves as investment adviser, namely, TCW/DW
Core Equity Trust, TCW/DW North American Government Income Trust, TCW/DW
Latin American Growth Fund, TCW/DW Income and Growth Fund, TCW/DW SmallCap
Growth Fund, TCW/DW North American Intermediate Income Fund, TCW/DW Balanced
Fund, TCW/DW Emerging Markets Opportunities Trust, TCW/DW Global Convertible
Trust, TCW/DW Total Return Trust, TCW/DW Term Trust 2000, TCW/DW Term Trust
2002 and TCW/DW Term Trust 2003 (the "TCW/DW Funds").

The nominees for Trustees to be elected at the Meeting are:

MICHAEL BOZIC, Trustee since April, 1994; age 53; President and Chief
Executive Officer of Hills Department Stores (since May, 1991); formerly
Chairman and Chief Executive Officer (January, 1987-August, 1990) and
President and Chief Operating Officer (August, 1990-February, 1991) of the
Sears Merchandise Group of Sears, Roebuck and Co.; Director or Trustee of the
Dean Witter Funds; Director of Harley Davidson Credit Inc., the United Negro
College Fund and Domain Inc. (home decor retailer).

MANUEL H. JOHNSON, Trustee since July, 1991; age 45; Senior Partner,
Johnson Smick International, Inc., a consulting firm (since June, 1985); Koch
Professor of International Economics and Director of the Center for Global
Market Studies at George Mason University (since September, 1990);
Co-Chairman and a founder of the Group of Seven Council (G7C), an
international economic commission (since September, 1990); Director or
Trustee of the Dean Witter Funds; Trustee of the TCW/DW Funds; Director of
Greenwich Capital Markets Inc. (broker-dealer); formerly Vice Chairman of the
Board of Governors of the Federal Reserve System (February, 1986-August,
1990) and Assistant Secretary of the U.S. Treasury (1982-1986).

PAUL KOLTON, Trustee since January, 1988; age 71; Director or Trustee of
the Dean Witter Funds; Chairman of the Audit Committee and Chairman of the
Committee of the Independent Trustees and Trustee of the TCW/DW Funds;
formerly Chairman of Financial Accounting Standards Advisory Council and
Chairman and Chief Executive Officer of the American Stock Exchange; Director
of UCC Investors Holding Inc. (Uniroyal Chemical Company, Inc.); Director or
Trustee of various not-for-profit organizations.

PHILIP J. PURCELL,* Trustee since April, 1994; age 51; Chairman of the
Board of Directors and Chief Executive Officer of Dean Witter, Discover & Co.
("DWDC"), Dean Witter Reynolds Inc. ("DWR") and Novus Credit Services Inc.;
Director of Dean Witter InterCapital Inc. ("InterCapital"), Dean Witter
Services Company Inc. ("DWSC") and Dean Witter Distributors Inc.
("Distributors"); Director or Trustee of the Dean Witter Funds; Director
and/or officer of various DWDC subsidiaries.

JOHN L. SCHROEDER, Trustee since April, 1994; age 64; Executive Vice
President and Chief Investment Officer of the Home Insurance Company (since
August, 1991); Director or Trustee of the Dean Witter Funds; Director of
Citizens Utilities Company; formerly Chairman and Chief Investment Officer of
Axe-Houghton Management and the Axe-Houghton Funds (April, 1983-June, 1991)
and President of USF&G Financial Services, Inc. (June, 1990-June, 1991).

The Trustees who are not standing for reelection at the Meeting are:

JACK F. BENNETT, Trustee since January, 1988; age 70; Retired; Director or
Trustee of the Dean Witter Funds; formerly Senior Vice President and Director
of Exxon Corporation (1975-1989) and Under Secretary of the U.S. Treasury for
Monetary Affairs (1974-1975); Director of Philips Electronics N.V., Tandem
Computers Inc. and Massachusetts Mutual Insurance Co.; Director or Trustee of
various not-for-profit and business organizations.

<PAGE>

CHARLES A. FIUMEFREDDO,* Trustee since July, 1991; age 61; Chairman, Chief
Executive Officer and Director of InterCapital, DWSC and Distributors;
Executive Vice President and Director of DWR; Chairman, Director or Trustee,
President and Chief Executive Officer of the Dean Witter Funds; Chairman,
Chief Executive Officer and Trustee of the TCW/DW Funds; Chairman and
Director of Dean Witter Trust Company ("DWTC"); Director and/or officer of
various DWDC subsidiaries; formerly Executive Vice President and Director of
DWDC (until February, 1993).

EDWIN JACOB (JAKE) GARN, Trustee since January, 1993; age 62; Director or
Trustee of the Dean Witter Funds; formerly United States Senator (R-Utah)
(1974-1992) and Chairman, Senate Banking Committee (1980-1986); formerly
Mayor of Salt Lake City, Utah (1971-1974); formerly Astronaut, Space Shuttle
Discovery (April 12-19, 1985); Vice Chairman, Huntsman Chemical Corporation
(since January, 1993); Member of the board of various civic and charitable
organizations.

JOHN R. HAIRE, Trustee since January, 1988; age 69; Chairman of the Audit
Committee and Chairman of the Committee of the Independent Directors or
Trustees and Director or Trustee of the Dean Witter Funds; Trustee of the
TCW/DW Funds; formerly President, Council for Aid to Education (1978-October,
1989) and Chairman and Chief Executive Officer of Anchor Corporation, an
investment adviser (1964-1978); Director of Washington National Corporation
(insurance) and Bowne & Co., Inc. (printing).

MICHAEL E. NUGENT, Trustee since July, 1991; age 58; General Partner,
Triumph Capital, L.P., a private investment partnership (since April, 1988);
Director or Trustee of the Dean Witter Funds; Trustee of the TCW/DW Funds;
formerly Vice President, Bankers Trust Company and BT Capital Corporation
(September, 1984-March, 1988); Director of various business organizations.

The executive officers of the Trust other than shown above are: Sheldon
Curtis, Vice President, Secretary and General Counsel; Robert M. Scanlan,
Vice President; David A. Hughey, Vice President; Edmund C. Puckhaber, Vice
President; Rajesh K. Gupta, Vice President; and Thomas F. Caloia, Treasurer.
In addition, Peter M. Avelar, Jonathan R. Page and James F. Willison are Vice
Presidents of the Trust and Marilyn K. Cranney, Barry Fink, Lawrence S.
Lafer, Lou Anne D. McInnis and Ruth Rossi serve as Assistant Secretaries. Mr.
Curtis is 62 years old and is currently Senior Vice President and General
Counsel of InterCapital and DWSC and Assistant Secretary of DWR and DWDC; he
is also Senior Vice President, Assistant Secretary and Assistant General
Counsel of Distributors and Senior Vice President and Secretary of DWTC. Mr.
Scanlan is 58 years old and is currently President and Chief Operating
Officer of InterCapital (since March, 1993) and DWSC; he is also Executive
Vice President of Distributors and Executive Vice President and Director of
DWTC. He was previously Executive Vice President of InterCapital (July,
1992-March, 1993) and prior thereto was Chairman of Harborview Group Inc. Mr.
Hughey is 63 years old and is currently Executive Vice President and Chief
Administrative Officer of InterCapital and DWSC; he is also Executive Vice
President and Chief Administrative Officer of Distributors and DWTC as well
as a Director of DWTC. He was previously President of DWTC (October,
1989-March, 1993). Mr. Puckhaber is 55 years old and is currently Executive
Vice President of InterCapital (since January, 1991) and Director of DWTC.
Mr. Gupta is 34 years old and is currently Senior Vice President of
InterCapital. Mr. Caloia is 48 years old and is currently First Vice
President of InterCapital and Assistant Treasurer of InterCapital and DWSC.
Mr. Avelar is 36 years old and is currently Senior Vice President of
InterCapital. He was previously employed by PaineWebber Asset Management as a
senior portfolio manager (March, 1989-December, 1990). Mr. Page is 48 years
old and is currently Senior Vice

- - ----------
* Messrs. Fiumefreddo and Purcell may be deemed "interested persons" as
defined in Section 2(a)(19) of the Act, of the Trust and its Investment
Manager due to their affiliation with the Investment Manager and/or its
affiliated companies.
6

<PAGE>

President of InterCapital. Mr. Willison is 51 years old and is currently
Senior Vice President of InterCapital. Other than Messrs. Scanlan and Avelar,
each of the above officers has been an employee of InterCapital or DWR
(formerly the corporate parent of InterCapital) for over five years.

Messrs. Fiumefreddo, Purcell and Telling, who serve as Trustees of the
Trust, and certain other officers of the Trust own securities of DWDC which
in the aggregate, constitute less than 1% of the securities of each class
outstanding.

Each of the Independent Trustees is paid by the Trust an annual retainer
fee of $1,200 plus $50 for each meeting of the Board of Trustees or any
committee of the Board of Trustees attended by the Trustee in person (the
Trust pays the Chairman of the Audit Committee an additional annual fee of
$1,000 and pays the Chairman of the Committee of the Independent Trustees an
additional annual fee of $2,400, in each case inclusive of the Committee
meeting fees), together with any out-of-pocket expenses incurred by them in
connection with attendance at any such meetings. The Trust pays no
remuneration to any Trustee who is not an Independent Trustee or to any of
the Trust's officers. The Trust has adopted a retirement program under which
an Independent Trustee who retires after a minimum required period of service
would be entitled to retirement payments upon reaching the eligible
retirement date (normally, after attaining age 72) based upon length of
service and computed as a percentage of one-fifth of the total compensation
earned by such Trustee for service to the Trust in the five-year period prior
to the date of the Trustee's retirement. For the fiscal year ended September
30, 1994, the Trust accrued a total of $21,992 for Trustees' fees and
expenses and $9,180 for benefits under the retirement program. During the
fiscal year ended September 30, 1994, the Board held seven meetings, and the
Audit Committee and the Committee of the Independent Trustees, which are both
presently comprised of the nine Independent Trustees, held three meetings and
ten meetings, respectively. During the fiscal year ended September 30, 1994,
no Trustee attended fewer than 75% of the meetings of the Board, the Audit
Committee and the Committee of the Independent Trustees held while he served
in such positions.

(2) APPROVAL OR DISAPPROVAL OF CURRENTLY EFFECTIVE
INVESTMENT MANAGEMENT AGREEMENT

The Trust's investments are managed by Dean Witter InterCapital Inc.
(referred to herein as the "Investment Manager" or "InterCapital"), pursuant
to an Investment Management Agreement dated June 30, 1993 (referred to herein
as the "Management Agreement") which took effect upon the distribution by
Sears, Roebuck and Co. to its shareholders of all the common shares of DWDC
(the parent company of InterCapital and DWR) then owned by Sears.

The Management Agreement was approved by the Board of Trustees on October
30, 1992, and by the Shareholders of the Trust at the Annual Meeting of
Shareholders held on January 13, 1993. The present Management Agreement
supersedes an earlier management agreement originally entered into by the
Trust with DWR, through its InterCapital Division, and initially approved by
the Board, including a majority of the Independent Trustees, on January 6,
1988 and last approved by the Shareholders of the Trust at their Annual
Meeting of Shareholders on December 30, 1991. In an internal reorganization
which took place in January, 1993, InterCapital assumed the investment
management activities previously performed by the InterCapital Division of
DWR. The assumption by InterCapital of DWR's rights and obligations under
this earlier management agreement in connection with the reorganization was
approved by the Trustees at a meeting held on October 30, 1992 and also by
the Shareholders of the Trust at the Annual Meeting of Shareholders on
January 13, 1993.

The terms of the Management Agreement, including fees payable by the Trust
thereunder, are substantially identical in all respects to those of the
Management Agreement except for the dates of effectiveness and expiration and
the name of the Investment Manager. The Management Agreement's

<PAGE>

continuation until April 30, 1995 was approved by the Trustees, including a
majority of the Independent Trustees, at a meeting of the Board held on April
8, 1994. In the event Shareholders do not approve continuance of the
Management Agreement by the required majority vote at the forthcoming meeting
or any adjournment thereof, the Board of Trustees of the Trust will take such
action as it deems to be in the best interest of the Trust and its
Shareholders, which may include calling a special meeting of Shareholders to
vote on a new investment management agreement.

In considering whether or not to approve the Management Agreement, the
Board of Trustees reviewed the terms of the agreement and considered all
materials and information deemed relevant to its determination. Among other
things, the Board considered the nature and scope of services to be rendered,
the quality of the Manager's services and personnel, and the appropriateness
of the fees that are paid under the Management Agreement. Based upon its
review, the Board of Trustees, including all of the Independent Trustees,
determined that the approval of the Management Agreement was in the best
interests of the Trust and its Shareholders.

The favorable vote of a majority of the outstanding voting securities of
the Trust is required for the approval of the Management Agreement. Such a
majority is defined in the Act as the lesser of: (a) 67% or more of the
shares present at the Meeting, if the holders of more than 50% of the
outstanding shares of the Trust are present or represented by proxy, or (b)
more than 50% of the outstanding shares. Abstentions and broker "non-votes"
will have the same effect as a vote against the proposal.

THE TRUSTEES UNANIMOUSLY RECOMMEND THAT THE SHAREHOLDERS APPROVE THE
MANAGEMENT AGREEMENT.

THE MANAGEMENT AGREEMENT

The Management Agreement provides that the Investment Manager shall obtain
and evaluate such information and advice relating to the economy, securities
and commodity markets and securities and commodities as it deems necessary or
useful to discharge its duties under the Management Agreement, and that it
shall continuously supervise the management of the assets of the Trust in a
manner consistent with the investment objectives and policies of the Trust
and subject to such other limitations and directions as the Board may, from
time to time, prescribe.

Under the Management Agreement, the Trust is obligated to bear all of the
costs and expenses of its operation, except those specifically assumed by the
Investment Manager, including, without limitation: charges and expenses of
any registrar, custodian or depository appointed by the Trust for the
safekeeping of its cash, portfolio securities or commodities and other
property, and any stock transfer or dividend agent or agents appointed by the
Trust; brokers' commissions chargeable to the Trust in connection with
portfolio securities transactions to which the Trust is a party; all taxes,
including securities or commodities issuance and transfer taxes, and
corporate fees payable by the Trust to federal, state or other governmental
agencies; all costs and expenses of engraving or printing of certificates
representing shares of the Trust; all costs and expenses in connection with
registration and maintenance of registration of the Trust and of its shares
with the Securities and Exchange Commission and various states and other
jurisdictions (including filing fees and legal fees and disbursements of
counsel); the cost and expense of printing, including typesetting, and
distributing prospectuses of the Trust to its Shareholders; all expenses of
Shareholders' and Trustees' meetings and of preparing, printing and mailing
proxy statements and reports to Shareholders; fees and travel expenses of
Trustees or members of any advisory board or committee, who are not employees
of the Investment Manager or any corporate affiliate of the Investment
Manager; all expenses incident to the payment of any dividend, distribution,
withdrawal or redemption, whether in shares or in cash, charges and expenses
of any outside service used for the pricing of the Trust's shares, charges
and expenses of legal counsel, including counsel to the Independent Trustees
of the Trust, and independent accountants in connection with any matter
relating to the Trust (not including

<PAGE>

compensation or expenses of attorneys employed by the Investment Manager);
association dues; interest payable on the Trust's borrowings; fees and
expenses incident to the listing of the Trust's shares on any stock exchange;
postage; insurance premiums on property or personnel (including officers and
Trustees) of the Trust which inure to its benefit; and extraordinary expenses
(including, but not limited to, legal claims and liabilities and litigation
costs and any indemnification related thereto); and all other charges and
costs to the Trust's operations unless otherwise explicitly provided in the
Management Agreement.

The Management Agreement provides that the Investment Manager shall
continuously manage the assets of the Trust in a manner consistent with the
Trust's investment objectives. The Investment Manager has authority to place
orders for the purchase and sale of portfolio securities on behalf of the
Trust without prior approval of its Trustees. The Trustees review the
investment portfolio at their regular meetings. In addition, the Investment
Manager pays the compensation of the officers of the Trust and provides the
Trust with office space and equipment, and clerical and bookkeeping services
and telephone service, heat, light, power and other utilities. The Investment
Manager also pays for the services of personnel in connection with the
pricing of the Trust's shares and the preparation of prospectuses, proxy
statements and reports required to be filed with federal and state securities
commissions (except insofar as the participation or assistance of independent
accountants and attorneys is, in the opinion of the Investment Manager,
necessary or desirable). In return for its services and the expenses the
Investment Manager assumes under the Management Agreement, the Trust pays the
Investment Manager compensation which is calculated and accrued weekly and
payable monthly and which is determined by applying the annual rate of 0.60%
to the Trust's average weekly net assets. For the fiscal year ended September
30, 1994, the Trust accrued to the Investment Manager total compensation of
$3,131,392. The net assets of the Trust totalled $486,633,829 at September
30, 1994.

The Management Agreement had an initial term ending April 30, 1994 and
provides that, after the initial period of effectiveness, it will continue in
effect from year to year thereafter provided such continuance is approved at
least annually by vote of a majority, as defined in the act, of the
outstanding voting securities of the Trust or by the Trustees of the Trust,
and, in either event, by the vote cast in person by a majority of the
Trustees who are not parties to the Management Agreement or "interested
persons" of any such party (as defined in the Act) at a meeting called for
the purpose of voting on such approval. The Management Agreement's
continuation until April 30, 1995 was approved by the Trustees, including a
majority of the Independent Trustees, at a Meeting of the Trustees held on
April 8, 1994, called for the purpose of approving the Management Agreement.

The Management Agreement also provides that it may be terminated at any
time by the Investment Manager, the Trustees or by a vote of a majority of
the outstanding voting securities of the Trust, in each instance without the
payment of any penalty, on thirty days' notice and provides for its automatic
termination in the event of its assignment.

Effective December 31, 1993, pursuant to a Services Agreement between
InterCapital and DWSC, a wholly-owned subsidiary of InterCapital, DWSC began
to provide the administrative services to the Trust which were previously
performed directly by InterCapital. The foregoing internal reorganization did
not result in any change in the nature or scope of the administrative
services being provided to the Trust or any of the fees paid by the Trust for
the overall services being performed under the terms of the Management
Agreement.

THE INVESTMENT MANAGER

Dean Witter InterCapital Inc. is the Trust's investment manager.
InterCapital maintains its offices at Two World Trade Center, New York, New
York 10048. InterCapital, which was incorporated in July, 1992, is a
wholly-owned subsidiary of DWDC, a balanced financial services organization
providing a broad range of nationally marketed credit and investment
products. As noted above, in an internal reorganization which took

<PAGE>

place in January, 1993, InterCapital assumed the investment advisory,
management and administrative activities previously performed by the
InterCapital Division of DWR. InterCapital also manages and advises or
administers portfolios of other investment companies and pension plans and
other institutional and individual investors.

The Principal Executive Officer and Directors of InterCapital, and their
principal occupations, are:

Philip J. Purcell, Chairman of the Board of Directors and Chief Executive
Officer of DWDC and DWR and Director of InterCapital, DWSC and Distributors;
Richard M. DeMartini, President and Chief Operating Officer of Dean Witter
Capital, Executive Vice President of DWDC and Director of DWR, Distributors,
DWSC, DWTC and InterCapital; James F. Higgins, President and Chief Operating
Officer of Dean Witter Financial, Executive Vice President of DWDC and
Director of DWR, Distributors, InterCapital, DWTC and DWSC; Charles A.
Fiumefreddo, Executive Vice President and Director of DWR, Chairman of the
Board of Directors, Chief Executive Officer and Director of InterCapital,
DWSC and Distributors and Chairman of the Board of Directors and Director of
DWTC; Christine A. Edwards, Executive Vice President, Secretary and General
Counsel of DWDC, Executive Vice President, Secretary, General Counsel and
Director of DWR, Executive Vice President, Secretary, Chief Legal Officer and
Director of Distributors and Director of InterCapital and DWSC; and Thomas C.
Schneider, Executive Vice President and Chief Financial Officer of DWDC and
Executive Vice President, Chief Financial Officer and Director of DWR,
Distributors, InterCapital and DWSC.

The business address of the foregoing Directors and Executive Officers is
Two World Trade Center, New York, New York 10048.

InterCapital and its wholly-owned subsidiary, DWSC, serve in various
investment management, advisory, management and administrative capacities to
investment companies and pension plans and other institutional and individual
investors. The Appendix lists the investment companies for which InterCapital
provides investment management or investment advisory services and sets forth
the net assets and fees payable by such companies.

DWDC has its offices at Two World Trade Center, New York, New York 10048.
There are various lawsuits pending against DWDC involving material amounts
which, in the opinion of its management, will be resolved with no material
effect on the consolidated financial position of the company.

During the fiscal year ended September 30, 1994, the Trust accrued to Dean
Witter Trust Company, the Trust's Transfer Agent and an affiliate of the
Investment Manager, transfer agency fees of $307,222.

PORTFOLIO TRANSACTIONS AND BROKERAGE

The Investment Manager currently serves as investment manager to a number
of clients, including other investment companies, and may in the future act
as investment manager or advisor to others. It is the practice of the
Investment Manager to cause purchase and sale transactions to be allocated
among the Trust and others whose assets it manages in such manner as it deems
equitable. In making such allocations among the Trust and other client
accounts, the main factors considered are the respective investment
objectives, the relative size of portfolio holdings of the same or comparable
securities, the availability of cash for investment, the size of investment
commitments generally held and the opinions of the persons responsible for
managing the portfolios of the Trust and other client accounts.

Subject to the general supervision of the Board, the Investment Manager is
responsible for decisions to buy and sell securities for the Trust, the
selection of brokers and dealers to effect the transactions and the
negotiation of brokerage commissions, if any. The Trust expects that the
primary market for the securities in which it invests will generally be the
over-the-counter market. Securities are generally traded on the
over-the-counter market on a "net" basis with non-affiliated dealers acting
as principal for their own accounts

<PAGE>

without a stated commission, although the price of the security usually
includes a profit to the dealer. Options and futures transactions will
usually be effected through a broker and a commission will be charged.
Purchases of money market instruments are made from dealers, underwriters and
issuers; sales, if any, prior to maturity, are made to dealers and issuers
and the Trust does not normally incur any brokerage commission expense on
such transactions. Money market instruments are generally traded on a "net"
basis with dealers acting as principal for their own accounts without a
stated commission, although the price of the security usually includes a
profit to the dealer. The Trust also expects that securities will be
purchased at times in underwritten offerings where the price includes a fixed
amount of compensation to the underwriter, generally referred to as the
underwriter's concession or discount. When securities are purchased or sold
directly from or to an issuer no commissions or discounts are paid. On
occasion, the Trust may also purchase certain money market instruments
directly from an issuer, in which case no commissions or discounts are paid.

The policy of the Trust, regarding purchases and sales of securities for
its portfolio is that primary consideration be given to obtaining the most
favorable price and efficient execution of transactions. In seeking to
implement the Trust's policy, the Investment Manager will effect transactions
with those brokers and dealers who the Investment Manager believes provide
the most favorable prices and are capable of providing efficient executions.
If the Investment Manager believes such price and execution are obtainable
from more than one broker or dealer, it may give consideration to placing
portfolio transactions with those brokers and dealers who also furnish
research and other services to the Trust or the Investment Manager. Such
services may include, but are not limited to, any one or more of the
following: information as to the availability of securities for purchase or
sale, statistical or factual information or opinions pertaining to
investments, wire services and appraisals or evaluations of portfolio
securities. In transactions effected with a dealer, acting as principal, who
furnishes research services to the Trust, the Trust will not purchase
securities at a higher price, or sell securities at a lower price, than would
be the case if the dealer had not furnished such services.

Such information and services received by the Investment Manager from
brokers and dealers may be of benefit to the Investment Manager in the
management of accounts of some or all of their other clients and may not in
all cases benefit the Trust directly. While such services are useful and
important in supplementing its own research facilities, the Investment
Manager believes the value of such services is not determinable and does not
significantly reduce its expenses. The Trust does not reduce the management
fees it pays to the Investment Manager by any amount that may be attributable
to the value of such services. During the fiscal year ended September 30,
1994, the Trust paid no brokerage commissions. During the same period, the
portfolio turnover rate of the Trust was 59%.

Pursuant to an Order of the Securities and Exchange Commission, the Trust
may effect principal transactions in certain money market instruments with
DWR. The Trust will limit its transactions with DWR to U.S. Government and
government agency securities, bank money instruments (i.e., certificates of
deposit and banker's acceptances) and commercial paper. Such transactions
will be effected with DWR only when the price available from DWR is better
than that available from other dealers.

Consistent with the policies described above, brokerage transactions in
securities listed on exchanges or admitted to unlisted trading privileges may
be effected through DWR. In order for DWR to effect any portfolio
transactions for the Trust, the commissions, fees or other remuneration
received by DWR must be reasonable and fair compared to the commissions, fees
or other remuneration paid to other brokers in connection with comparable
transactions involving similar securities being purchased or sold on an
exchange during a comparable period of time. This standard would allow DWR to
receive no more than the remuneration which would be expected to be received
by an unaffiliated broker in a commensurate arm's-length transaction.
Furthermore, the Board, including a majority of its Independent Trustees,
have adopted procedures which are reasonably designed to provide that any
commissions, fees or other remuneration paid to DWR are consistent with the
foregoing standard. During the fiscal year ended September 30, 1994, the
Trust did not pay any brokerage commissions to DWR.

<PAGE>

(3) RATIFICATION OR REJECTION OF SELECTION OF INDEPENDENT ACCOUNTANTS

The Trustees have unanimously selected the firm of Price Waterhouse LLP as
the Trust's independent accountants for the fiscal year ending September 30,
1995. Price Waterhouse LLP has been the independent accountants for the Trust
since its inception, and has no direct or indirect financial interest in the
Trust.

A representative of Price Waterhouse LLP is expected to be present at the
Meeting and will be available to make a statement, if he or she so desires,
and to respond to appropriate questions of Shareholders.

The affirmative vote of the holders of a majority of the shares
represented and entitled to vote at the Annual Meeting is required for
ratification of the selection of Price Waterhouse LLP as the independent
accountants for the Trust. Abstentions and broker "non-votes" will have the
same effect as a vote against the proposal.

THE TRUSTEES UNANIMOUSLY RECOMMEND THAT SHAREHOLDERS RATIFY THE SELECTION
OF PRICE WATERHOUSE LLP AS THE INDEPENDENT ACCOUNTANTS FOR THE TRUST.

ADDITIONAL INFORMATION

In the event that the necessary quorum to transact business, at the
Meeting or the vote required to approve or reject any proposal is not
obtained, the persons named as proxies may propose one or more adjournments
of the meeting for a total of not more than 60 days in the aggregate to
permit further solicitation of proxies. Any such adjournment will require the
affirmative vote of the holders of a majority of the Trust's shares present
in person or by proxy at the meeting. The persons named as proxies will vote
in favor of such adjournment those proxies which they are entitled to vote in
favor of Proposal 2 and will vote against any such adjournment those proxies
required to be voted against that proposal.

SHAREHOLDERS PROPOSALS

Proposals of security holders intended to be presented at the next Annual
Meeting of Shareholders must be received no later than July 17, 1995, for
inclusion in the proxy statement for that meeting.

OTHER BUSINESS

The management knows of no other matters which may be presented at the
Meeting. However, if any matters not now known properly come before the
Meeting, it is the intention of the persons named in the enclosed form of
proxy, or their substitutes, to vote all shares that they are entitled to
vote on any such matter, utilizing such proxy in accordance with their best
judgment on such matters.

FINANCIAL STATEMENTS OF THE INVESTMENT MANAGER

The balance sheet of InterCapital, annexed hereto as an Exhibit, is
required by Rule 20a-2 under the Act. THIS IS NOT A FINANCIAL STATEMENT OF
THE TRUST. The Trust's financial statements are set forth in its Annual
Report for the fiscal year ended September 30, 1994, copies of which were
previously sent to Shareholders.

By Order of the Board of Trustees

SHELDON CURTIS
Secretary

<PAGE>

APPENDIX

InterCapital serves as investment manager or investment adviser to the
following investment companies, with the net assets shown as of October 20,
1994:

(1) Dean Witter High Yield Securities Inc., with assets of approximately
$460 million, for an investment management fee at an annual rate of 0.50% on
assets up to $500 million, scaled down at various asset levels to 0.30% on
assets over $3 billion; (2) Dean Witter Liquid Asset Fund Inc., with assets
of approximately $8.8 billion, for an investment management fee at an annual
rate of 0.50% on assets up to $500 million, scaled down at various asset
levels to 0.248% on assets over $17.5 billion; (3) Dean Witter Tax-Exempt
Securities Trust, with assets of approximately $1.4 billion, for an
investment management fee at an annual rate of 0.50% on assets up to $500
million, scaled down at various assets levels to 0.325% on assets over $1.25
billion; (4) Dean Witter Tax-Free Daily Income Trust, with assets of
approximately $604 million, for an investment management fee at an annual
rate of 0.50% on assets up to $500 million, scaled down at various asset
levels to 0.25% on assets over $3 billion; (5) Dean Witter American Value
Fund, with assets of approximately $1.5 billion, for an investment management
fee at an annual rate of 0.625% on assets up to $250 million and 0.50% on
assets over $250 million; (6) Dean Witter Dividend Growth Securities Inc.,
with assets of approximately $6.9 billion, for an investment management fee
at an annual rate of 0.625% on assets up to $250 million, scaled down at
various asset levels to 0.325% on assets over $8 billion; (7) Dean Witter
Variable Investment Series, with assets of approximately $2.6 billion, for an
investment management fee at an annual rate of 1.0% (of which 40% is paid to
a Sub-Adviser) of the net assets of each of the European Growth Portfolio and
the Pacific Growth Portfolio, 0.75% of the net assets of the Global Dividend
Growth Portfolio, 0.65% of the net assets of the Capital Growth Portfolio,
0.65% of the net assets of the Utilities Portfolio up to $500 million and
0.55% of the net assets of the Portfolio over $500 million, 0.625% of the net
assets of the Dividend Growth Portfolio up to $500 million and 0.50% of the
net assets of the Portfolio over $500 million, and 0.50% of the net assets of
each of the other five Portfolios; (8) Dean Witter Select Municipal
Reinvestment Fund, with assets of approximately $90 million, for an
investment management fee at an annual rate of 0.50%; (9) Active Assets Money
Trust, with assets of approximately $4.6 billion, for an investment
management fee at an annual rate of 0.50% on assets up to $500 million,
scaled down at various asset levels to 0.25% on assets over $3 billion; (10)
Active Assets Tax-Free Trust, with assets of approximately $1.5 billion, for
an investment management fee at an annual rate of 0.50% on assets up to $500
million, scaled down at various asset levels to 0.25% on assets over $3
billion; (11) Active Assets California Tax-Free Trust, with assets of
approximately $300 million, for an investment management fee of 0.50% on
assets up to $500 million, scaled down at various levels to 0.25% on assets
over $3 billion; (12) Active Assets Government Securities Trust, with assets
of approximately $505 million, for an investment management fee at an annual
rate of 0.50% on assets up to $500 million, scaled down at various asset
levels to 0.25% on assets over $3 billion; (13) Dean Witter Natural Resource
Development Securities Inc., with assets of approximately $148 million, for
an investment management fee at an annual rate of 0.625% on assets up to $250
million and 0.50% on assets over $250 million; (14) Dean Witter U.S.
Government Money Market Trust, with assets of approximately $755 million, for
an investment management fee at an annual rate of 0.50% on assets up to $500
million, scaled down at various asset levels to 0.25% on assets over $3
billion; (15) Dean Witter Developing Growth Securities Trust, with assets of
approximately $338 million, for an investment management fee at an annual
rate of 0.50% on assets up to $500 million and 0.475% on assets over $500
million; (16) Dean Witter U.S. Government Securities Trust, with assets of
approximately $9.0 billion, for an investment management fee at an annual
rate of 0.50% on assets up to $1 billion, scaled down at various asset levels
to 0.30% on assets over $12.5 billion; (17) Dean Witter California Tax-Free
Income Fund, with assets of approximately $1.1 billion, for an investment
management fee at an annual rate of 0.55% on assets up to $500 million,
scaled down at various asset levels to 0.475% on assets over $1 billion; (18)
Dean Witter New York Tax-Free Income Fund, with assets of approximately $221
million, for an investment management fee at an annual rate of 0.55% on
assets up to

I-1

<PAGE>

$500 million and 0.525% on assets over $500 million; (19) Dean Witter
Convertible Securities Trust, with assets of approximately $189 million, for
an investment management fee at an annual rate of 0.60% on assets up to $750
million, scaled down at various asset levels to 0.425% on assets over $3
billion; (20) Dean Witter Federal Securities Trust, with assets of
approximately $846 million, for an investment management fee at an annual
rate of 0.55% on assets up to $1 billion, scaled down at various asset levels
to 0.35% on assets over $12.5 billion; (21) InterCapital Income Securities
Inc., with assets of approximately $206 million, for an investment management
fee at an annual rate of 0.50%; (22) Dean Witter Value-Added Market Series,
with assets of approximately $496 million, for an investment management fee
at an annual rate of 0.50% on assets up to $500 million and 0.45% on assets
over $500 million; (23) Dean Witter Utilities Fund, with assets of
approximately $3.0 billion, for an investment management fee at an annual
rate of 0.65% on assets up to $500 million, scaled down at various asset
levels to 0.425% on assets over $5 billion; (24) Dean Witter California
Tax-Free Daily Income Trust, with assets of approximately $250 million, for
an investment management fee at an annual rate of 0.50% on assets up to $500
million, scaled down at various asset levels to 0.25% on assets over $3
billion; (25) Dean Witter Managed Assets Trust, with assets of approximately
$361 million, for an investment management fee at an annual rate of 0.60% on
assets up to $500 million and 0.55% on assets over $500 million; (26) High
Income Advantage Trust, with assets of approximately $158 million, for an
investment management fee at an annual rate of 0.75% on assets up to $250
million, scaled down at various asset levels to 0.30% on assets over $1
billion; (27) High Income Advantage Trust II, with assets of approximately
$213 million, for an investment management fee at an annual rate of 0.75% on
assets up to $250 million, scaled down at various asset levels to 0.30% on
assets over $1 billion; (28) High Income Advantage Trust III, with assets of
approximately $82 million, for an investment management fee at an annual rate
of 0.75% on assets up to $250 million, scaled down at various asset levels to
0.30% on assets over $1 billion; (29) Dean Witter Strategist Fund, with
assets of approximately $794 million, for an investment management fee at an
annual rate of 0.60% on assets up to $500 million, scaled down at various
asset levels to 0.50% on assets over $1 billion; (30) Dean Witter
Intermediate Income Securities, with assets of approximately $235 million,
for an investment management fee at an annual rate of 0.60% on assets up to
$500 million, scaled down at various asset levels to 0.30% on assets over $1
billion; (31) Dean Witter World Wide Income Trust, with assets of
approximately $182 million, for an investment management fee at an annual
rate of 0.75% on assets up to $250 million, scaled down at various asset
levels to 0.30% on assets over $1 billion; (32) Dean Witter Government Income
Trust, with assets of approximately $480 million, for an investment
management fee at an annual rate of 0.60%; (33) Dean Witter New York
Municipal Money Market Trust, with assets of approximately $42 million, for
an investment management fee at an annual rate of 0.50% on assets up to $500
million, scaled down at various asset levels to 0.25% on assets over $3
billion; (34) Dean Witter European Growth Fund Inc., with assets of
approximately $756 million, for an investment management fee at an annual
rate of 1.0% on assets up to $500 million and 0.95% on assets over $500
million (of which 40% is paid to a Sub-Adviser); (35) Dean Witter Capital
Growth Securities, with assets of approximately $460 million, for an
investment management fee at an annual rate of 0.65% on assets up to $500
million, scaled down at various asset levels to 0.475% on assets over $1.5
billion; (36) Dean Witter Precious Metals and Minerals Trust, with assets of
approximately $79 million, for an investment management fee at an annual rate
of 0.80%; (37) Dean Witter Global Short-Term Income Fund Inc., with assets of
approximately $173 million, for an investment management fee at an annual
rate of 0.55% on assets up to $500 million and 0.50% on assets over $500
million; (38) Dean Witter Pacific Growth Fund Inc., with assets of
approximately $1.5 billion, for an investment management fee at an annual
rate of 1.0% on assets up to $1 billion and 0.95% on assets over $1 billion
(of which 40% is paid to a Sub-Adviser); (39) InterCapital Insured Municipal
Bond Trust, with assets of approximately $116 million, for an investment
management fee at an annual rate of 0.35%; (40) InterCapital Quality
Municipal Investment Trust, with assets of approximately $405 million, for an
investment management fee at an annual rate of 0.35%; (41) InterCapital
Insured Municipal Trust, with assets of approximately $519 million, for an
investment management fee at an annual rate of 0.35%; (42) InterCapital
Quality Municipal

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Income Trust, with assets of approximately $807 million, for an investment
management fee at an annual rate of 0.35%; (43) Dean Witter Multi-State
Municipal Series Trust, with assets of approximately $436 million, for an
investment management fee at an annual rate of 0.35% of the net assets of
each Series; (44) Dean Witter Premier Income Trust, with assets of
approximately $45 million, for an investment management fee at an annual rate
of 0.50% (of which 40% is paid to a Sub-Adviser); (45) Dean Witter Short-Term
U.S. Treasury Trust, with assets of approximately $401 million, for an
investment management fee at an annual rate of 0.35%; (46) Dean Witter
Diversified Income Trust, with assets of approximately $405 million, for an
investment management fee at an annual rate of 0.40%; (47) Dean Witter Health
Sciences Trust, with assets of approximately $249 million, for an investment
management fee at an annual rate of 1.0%; (48) Dean Witter Retirement Series,
with assets of approximately $56 million, for an investment management fee at
an annual rate of 1.0% of the net assets of the Global Equity Series, 0.85%
of the net assets of each of the American Value Series, the Capital Growth
Series and the Strategist Series, 0.75% of the net assets of each of the
Dividend Growth Series and the Utilities Series, 0.65% of the net assets of
each of the U.S. Government Securities Series and the Intermediate Income
Securities Series, and 0.50% of the net assets of each of the Liquid Asset
Series, the U.S. Government Money Market Series and the Value-Added Market
Series; (49) InterCapital Insured Municipal Income Trust, with assets of
approximately $652 million, for an investment management fee at an annual
rate of 0.35%; (50) InterCapital California Insured Municipal Income Trust,
with assets of approximately $259 million, for an investment management fee
at an annual rate of 0.35%; (51) Dean Witter Global Dividend Growth
Securities, with assets of approximately $1.7 billion, for an investment
management fee at an annual rate of 0.75%; (52) InterCapital Quality
Municipal Securities, with assets of approximately $408 million, for an
investment management fee at an annual rate of 0.35%; (53) InterCapital
California Quality Municipal Securities, with assets of approximately $215
million, for an investment management fee at an annual rate of 0.35%; (54)
InterCapital New York Quality Municipal Securities, with assets of
approximately $98 million, for an investment management fee at an annual rate
of 0.35%; (55) Dean Witter Limited Term Municipal Trust, with assets of
approximately $114 million, for an investment management fee at an annual
rate of 0.50%; (56) Dean Witter Short-Term Bond Fund, with assets of
approximately $43 million, for an investment management fee at an annual rate
of 0.70%; (57) InterCapital Insured Municipal Securities, with assets of
approximately $135 million, for an investment management fee at an annual
rate of 0.35%; (58) InterCapital Insured California Municipal Securities,
with assets of approximately $60 million, for an investment management fee at
an annual rate of 0.35%; (59) Municipal Income Trust, with assets of
approximately $323 million, for an investment advisory fee at an annual rate
of 0.35% on assets up to $250 million and 0.25% on assets over $250 million;
(60) Municipal Income Trust II, with assets of approximately $279 million,
for an investment advisory fee at an annual rate of 0.40% on assets up to
$250 million and 0.30% on assets over $250 million; (61) Municipal Income
Trust III, with assets of approximately $62 million, for an investment
advisory fee at an annual rate of 0.40% on assets up to $250 million and
0.30% on assets over $250 million; (62) Municipal Income Opportunities Trust,
with assets of approximately $178 million, for an investment advisory fee at
an annual rate of 0.50%; (63) Municipal Income Opportunities Trust II, with
assets of approximately $173 million, for an investment advisory fee at an
annual rate of 0.50%; (64) Municipal Income Opportunities Trust III, with
assets of approximately $104 million, for an investment advisory fee at an
annual rate of 0.50%; (65) Municipal Premium Income Trust, with assets of
approximately $382 million, for an investment advisory fee at an annual rate
of 0.40%; (66) Prime Income Trust, with assets of approximately $316 million,
for an investment advisory fee at an annual rate of 0.90% on assets up to
$500 million and 0.85% on assets over $500 million; (67) Dean Witter Global
Utilities Fund, with assets of approximately $326 million, for an investment
management fee at an annual rate of 0.65%; (68) Dean Witter National
Municipal Securities, with assets of approximately $32 million, for an
investment management fee at an annual rate of 0.35%; (69) Dean Witter High
Income Securities, with assets of approximately $93 million, for an
investment management fee at an annual rate of 0.50%; (70) Dean Witter
International SmallCap Fund, with assets of approximately $99 million, for an
investment management fee at

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<PAGE>

an annual rate of 1.25%; (71) Dean Witter Mid-Cap Growth Fund, with assets of
approximately $78 million, for an investment management fee at an annual rate
of 0.75% and (72) Dean Witter Select Dimensions Investment Series, a new
investment company, for an investment management fee at an annual rate of
0.625% of the net assets of each of the Dividend Growth Portfolio and the
American Value Portfolio, 0.40% of the net assets of the Diversified Income
Portfolio, 0.50% of the net assets of each of the Money Market Portfolio, the
Value-Added Market Series Portfolio and the Developing Growth Portfolio,
0.65% of the net assets of each of the North American Government Securities
Portfolio and the Utilities Portfolio, 0.75% of the net assets of the
Balanced Portfolio, 0.85% of the net assets of Core Equity Portfolio, 1.00%
of the net assets of the Global Equity Portfolio and 1.25% of the net assets
of the Emerging Markets Portfolio. InterCapital also serves as Investment
Adviser of Dean Witter World Wide Investment Trust and Dean Witter World Wide
Investment Fund, along with Daiwa International Capital Management Corp. and
NatWest Investment Management Limited. Dean Witter World Wide Investment
Trust had assets of approximately $624 million and InterCapital receives an
Investment Adviser's fee at an annual rate of 0.55% of the Trust's daily net
assets up to $500 million and 0.5225% of the Trust's daily net assets over
$500 million. Shares of Dean Witter World Wide Investment Fund, an investment
company organized under the laws of Luxembourg, are not offered for purchase
in the United States or to American citizens outside of the United States.
InterCapital also serves as sub-adviser to Templeton Global Opportunities
Trust, with assets of approximately $517 million, for which it receives a fee
of 0.25% per annum.

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<PAGE>

EXHIBIT

INDEPENDENT AUDITORS' REPORT

Board of Directors and Stockholders of
Dean Witter InterCapital Inc.:

We have audited the accompanying balance sheet of Dean Witter InterCapital
Inc. (the "Company") (a wholly-owned subsidiary of Dean Witter, Discover &
Co.) as of December 31, 1993. This financial statement is the responsibility
of the Company's management. Our responsibility is to express an opinion on
this financial statement based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statement is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statement. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.

In our opinion, such balance sheet presents fairly, in all material
respects, the financial position of Dean Witter InterCapital at December 31,
1993 in conformity with generally accepted accounting principles.

DELOITTE & TOUCHE LLP
February 28, 1994

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DEAN WITTER INTERCAPITAL INC.
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1993
(IN THOUSANDS)

<TABLE>
<CAPTION>
<S> <C>
ASSET
Cash and cash equivalents ........................................................... $ 57,810
Management and administration fees receivable ....................................... 27,010
Investments ......................................................................... 7,644
Office facilities, at cost (less accumulated depreciation and amortization of
$5,122) ............................................................................ 3,892
Other assets ........................................................................ 18,176
----------
$114,532
==========
LIABILITIES AND STOCKHOLDER'S EQUITY
Income taxes payable (Note 3) ....................................................... $ 45,545
Dividends payable ................................................................... 12,662
Accrued compensation and employee benefits .......................................... 12,337
Payable to affiliate ................................................................ 4,000
Other liabilities ................................................................... 14,998
----------
Total liabilities ............................................................... 89,532
----------
Stockholder's equity:
Common stock, $.01 par value; 1,000 shares authorized and outstanding ............. --
Additional paid-in capital ......................................................... 10,000
Retained earnings .................................................................. 15,000
----------
Total stockholder's equity ...................................................... 25,000
----------
$114,532
==========
</TABLE>

See notes to consolidated balance sheet.

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<PAGE>

DEAN WITTER INTERCAPITAL INC.
NOTES TO CONSOLIDATED BALANCE SHEET

1. INTRODUCTION AND BASIS OF PRESENTATION

The consolidated balance sheet includes the accounts of Dean Witter
InterCapital Inc. and its wholly-owned subsidiaries (the "Company"). The
Company is wholly-owned by Dean Witter, Discover & Co. ("DWDC"), which was
formerly a subsidiary of Sears, Roebuck and Co. ("Sears"). All material
intercompany balances and transactions with its subsidiaries have been
eliminated.

On March 1, 1993, DWDC completed an initial public offering of 33.8
million shares of its common stock at $27 per share. This transaction had the
effect of reducing Sears ownership in DWDC to 80.1 percent. On June 30, 1993,
Sears divested its remaining ownership of DWDC's common stock by means of a
special dividend to Sears shareholders.

On December 22, 1993, Dean Witter Reynolds Inc. ("DWR") transferred the
net assets of the Company in the form of a dividend to DWDC. Prior to
December 22, 1993, the Company was wholly-owned by DWR, a wholly-owned
subsidiary of DWDC.

The Company is a registered investment adviser under the Investment
Advisers Act of 1940. The Company sponsors and performs management and
administrative services for mutual funds, principally those sold by DWR ("DWR
funds"). The Company also performs such services for individual,
institutional, trust and estate accounts.

The Company commenced operations in January 1993 and assumed the advisory
business of DWR.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Cash equivalents consist of highly liquid investments not held for resale
with maturities, when purchased, of three months or less.

Fixed assets are generally depreciated utilizing accelerated methods over
useful lives of five to eight years. Leasehold improvements are amortized
over the lesser of the lease term or useful life.

3. INCOME TAXES

The Company provides deferred income taxes which result from recording
certain transactions in different years for tax and financial reporting
purposes.

Payments for income taxes are limited to those which would result from the
Company filing a separate federal income tax return.

The Company has available net operating loss carryforwards at December 31,
1993 in the amount of $112,200,000 which begin to expire in 2002.

4. RELATED PARTY TRANSACTIONS

Certain administrative services are provided by DWR which are reimbursed
by the Company.

5. EMPLOYEE BENEFIT PLANS

Substantially all employees are covered by a non-contributory defined
benefit pension plan sponsored by DWR. Pension benefits are based on length
of service and average annual compensation.

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<PAGE>

Certain employees are covered by postretirement plans sponsored by DWR
that provide medical and life insurance for retirees and eligible dependents.
Eligibility for retiree medical and life benefits is generally based on a
combination of age and years of service at retirement.

The Company reimburses DWR for pension and other postretirement benefit
expenses.

6. LITIGATION

The Company has been named as a defendant in various lawsuits. It is the
opinion of management, after consultation with outside counsel, that the
resolution of such suits will not have a material adverse effect on the
consolidated financial condition of the Company.

7. FINANCIAL INSTRUMENTS FAIR VALUE INFORMATION

The estimated fair value amounts of financial instruments have been
determined by the Company using available market information and appropriate
valuation methodologies. Considerable judgment is required to develop
estimates of fair value.

Substantially all financial instruments on the Company's consolidated
balance sheet are carried at fair value or at amounts which approximate fair
value.

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<PAGE>

<PAGE>
DEAN WITTER GOVERNMENT INCOME TRUST
ANNUAL MEETING OF SHAREHOLDERS--DECEMBER 22, 1994

PROXY

The undersigned hereby appoints SHELDON CURTIS, EDMUND C. PUCKHABER,
ROBERT M. SCANLAN, or any of them, proxies, each with the power of
substitution, to vote on behalf of the undersigned at the Annual Meeting of
Shareholders of DEAN WITTER GOVERNMENT INCOME TRUST on December 22, 1994 at
9:00 a.m., New York City time, and at any adjournment thereof, on the
proposals set forth in the Notice of Meeting dated November 1, 1994 as
follows:

THIS PROXY IS SOLICITED BY THE TRUSTEES. IF NO SPECIFICATION IS MADE ON
REVERSE SIDE, THIS PROXY WILL BE VOTED FOR ALL NOMINEES FOR TRUSTEES AND FOR
THE PROPOSALS.

(Continued, and to be dated and signed on reverse side.)

<PAGE>

PLEASE MARK BOXES [//] OR [X] IN BLUE OR BLACK INK.
1. ELECTION OF TRUSTEE:
[ ] FOR ALL NOMINEES
(except as marked to the contrary below)
[ ] WITHHOLD AUTHORITY
(to vote for all nominees)

Michael Bozic, Manuel E. Johnson, Paul Kolton, Philip J. Purcell, John L.
Schroeder

(INSTRUCTION: To withhold authority to vote for any individual nominee write
that nominee's name on the space provided below.)
- - -----------------------------------------------------------------------------
2. APPROVAL OF INVESTMENT MANAGEMENT AGREEMENT:
FOR [ ] AGAINST [ ] ABSTAIN [ ]

3. RATIFICATION OF APPOINTMENT OF PRICE WATERHOUSE LLP AS INDEPENDENT
ACCOUNTANTS:
FOR [ ] AGAINST [ ] ABSTAIN [ ]

123

and in their discretion in the transaction of any other business which may
properly come before the meeting.

Please sign personally. If the share is registered in more than one name,
each joint owner or each fiduciary should sign personally. Only authorized
officers should sign for corporations.

Dated
- - -----------------------------------------------------------------------------

- - -----------------------------------------------------------------------------
Signature

IMPORTANT: PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD IN THE ENCLOSED
ENVELOPE.