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Filed Pursuant to Rule 497(c)
Registration File No.: 33-62158
PROSPECTUS
MAY 27, 1994
Dean Witter Limited Term Municipal Trust (the "Fund") is a no-load, open-end
diversified management investment company whose investment objective is to
provide a high level of current income that is exempt from federal income tax
consistent with the preservation of capital and prescribed standards of quality
and maturity. The Fund seeks to achieve its objective by investing
predominately in intermediate term, investment grade municipal securities with
an anticipated average dollar-weighted maturity range of 7 to 10 years and a
maximum average dollar-weighted maturity of 12 years. (See "Investment
Objective and Policies.")
Shares of the Fund are sold and redeemed at net asset value without the
imposition of a sales charge. In accordance with a Plan of Distribution
pursuant to Rule 12b-1 under the Investment Company Act of 1940 with Dean
Witter Distributors Inc. (the "Distributor"), the Fund authorizes the
Distributor or any of its affiliates, including Dean Witter InterCapital Inc.,
to make payments, out of their own resources, for specific expenses incurred in
promoting the distribution of the Fund's shares.
This Prospectus sets forth concisely the information you should know before
investing in the Fund. It should be read and retained for future reference.
Additional information about the Fund is contained in the Statement of
Additional Information, dated May 27, 1994, which has been filed with the
Securities and Exchange Commission, and which is available at no charge upon
request of the Fund at the address or telephone numbers listed below. The
Statement of Additional Information is incorporated herein by reference.
Dean Witter
Limited Term Municipal Trust
Two World Trade Center
New York, New York 10048
(212) 392-2550 or
(800) 526-3143
TABLE OF CONTENTS
Prospectus Summary/ 2
Summary of Fund Expenses/ 3
Financial Highlights/ 4
The Fund and its Management/ 5
Investment Objective and Policies/ 5
Investment Restrictions/10
Purchase of Fund Shares/10
Shareholder Services/12
Redemptions and Repurchases/14
Dividends, Distributions and Taxes/14
Performance Information/16
Additional Information/16
Shares of the Fund are not deposits or obligations of, or guaranteed or
endorsed by, any bank, and the shares are not federally insured by the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other agency.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
DEAN WITTER DISTRIBUTORS INC.
DISTRIBUTOR
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PROSPECTUS SUMMARY
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<CAPTION>
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<S> <C>
THE
FUND The Fund is organized as a Massachusetts business trust, and is
a no-load, open-end diversified management investment company
investing predominately in intermediate term municipal bonds.
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SHARES
OFFERED Shares of beneficial interest with $0.01 par value (see page
16).
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OFFERING
PRICE The price of the shares offered by this Prospectus is determined
once daily as of 4:00 p.m., New York time, on each day that the
New York Stock Exchange is open, and is equal to the net asset
value per share without a sales charge (see page 11).
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MINIMUM
PURCHASE Minimum initial purchase through Distributor, $1,000; minimum
subsequent investment, $100 (see page 10).
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INVESTMENT
OBJECTIVE The investment objective of the Fund is to provide investors
with a high level of current income, that is exempt from federal
income tax consistent with the preservation of capital and
prescribed standards of quality and maturity.
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INVESTMENT
POLICIES The Fund will invest at least 75% of its net assets in municipal
securities rated A or better by Moody's Investors Service
("Moody's") or Standard & Poor's Corporation ("S&P"). The
municipal securities in the Fund's portfolio will have an
anticipated average dollar-weighted maturity range of 7 to 10
years and a maximum average dollar-weighted maturity of 12 years
(see page 5).
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INVESTMENT
MANAGER Dean Witter InterCapital Inc. ("InterCapital"), the Investment
Manager of the Fund, and its wholly-owned subsidiary, Dean
Witter Services Company Inc., serve in various investment
management, advisory, management and administrative capacities
to eighty-three investment companies and other portfolios with
assets of approximately $70.8 billion at April 30, 1994 (see
page 5).
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MANAGEMENT
FEE The Investment Manager receives a monthly fee at the annual rate
of 0.50% of the average daily net assets (see page 5).
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DIVIDENDS AND
CAPITAL GAINS
DISTRIBUTIONS Dividends are declared daily and paid monthly. Capital gains
distributions, if any, are paid at least once a year or are
retained for reinvestment by the Fund. Dividends and
distributions are automatically invested in additional shares at
net asset value unless the shareholder elects to receive cash
(see page 14).
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DISTRIBUTOR
AND PLAN OF
DISTRIBUTION Dean Witter Distributors Inc. (the "Distributor") sells shares
of the Fund through Dean Witter Reynolds Inc. ("DWR") and other
selected broker-dealers pursuant to selected broker-dealer
agreements. The Distributor has entered into a Plan of
Distribution pursuant to Rule 12b-1 under the Investment Company
Act of 1940, as amended (the "Act") with the Fund authorizing
the Distributor or any of its affiliates, including the
Investment Manager to make payments, out of their own resources,
for expenses incurred in connection with the promotion or
distribution of the Fund's shares (see page 10).
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REDEMPTION Shares are redeemable at net asset value. An account may be
involuntarily redeemed if total value of the account is less
than $100 (see page 14).
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SHAREHOLDER
SERVICES Automatic Investment of Dividends and Distributions (unless
otherwise requested); Investment of Distributions Received in
Cash; Exchange Privilege; Systematic Withdrawal Plan;
EasyInvest(SM); (see page 12).
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RISKS The prices of interest-bearing securities are inversely affected
by changes in interest rates and, therefore, are subject to the
risk of market price fluctuations. The values of fixed-income
securities also may be affected by changes in the credit rating
or financial condition of the issuing entities. Certain of the
tax-exempt securities in which the Fund may invest without limit
may subject certain investors to the federal, and any applicable
state, alternative minimum tax. (see page 14).
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The above is qualified in its entirety by the detailed information appearing
elsewhere in this Prospectus and in the Statement of Additional Information.
2
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SUMMARY OF FUND EXPENSES
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The following table illustrates all expenses and fees that a shareholder of the
Fund will incur. The expenses and fees set forth in the table are for the
fiscal year ending March 31, 1995.
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<CAPTION>
Shareholder Transaction Expenses
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Maximum Sales Charge Imposed on Purchases................................ None
Maximum Sales Charge Imposed on Reinvested Dividends..................... None
Deferred Sales Charge.................................................... None
Redemption Fees.......................................................... None
Exchange Fee............................................................. None
<CAPTION>
Annual Fund Operating Expenses (as a Percentage of Average Net Assets)
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Management Fees*......................................................... 0.50%
12b-1 Fees............................................................... None
Other Expenses*.......................................................... 0.17%
Total Fund Operating Expenses*........................................... 0.67%
</TABLE>
"Management Fees" as shown above, are for the fiscal year of the Fund ending
March 31, 1995. "Other Expenses," as shown above, is based upon estimated
amounts of expenses of the Fund expected to be incurred during its current
fiscal year ending March 31, 1995.
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<CAPTION>
Example 1 year 3 years
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<S> <C> <C>
You would pay the following expenses on a $1,000
investment, assuming (1) 5% annuall return and
(2) redemption at the end of each time period:........... $7 $21
</TABLE>
The fees and expenses disclosed above do not reflect the assumption of any
expenses or the waiver of any compensation by the Investment Manager.
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES OR PERFORMANCE. ACTUAL EXPENSES OF THE FUND MAY BE MORE OR LESS THAN
THOSE SHOWN.
The purpose of this table is to assist the investor in understanding the
various costs and expenses that an investor in the Fund will bear directly or
indirectly. For a more complete description of these costs and expenses, see
"The Fund and Its Management."
3
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FINANCIAL HIGHLIGHTS
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The following ratios and per share data for a share of beneficial interest
outstanding throughout the period have been audited by Price Waterhouse,
independent accountants. The financial highlights should be read in conjunction
with the financial statements, notes thereto and the unqualified report of
independent accountants which are contained in the Statement of Additional
Information. Further information about the performance of the Fund is contained
in the Fund's Annual Report to Shareholders, which may be obtained without
charge upon request from the Fund.
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<CAPTION>
For the period
July 12, 1993*
through
March 31, 1994
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PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period.................... $10.00
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Net investment income.................................. 0.29
Net realized and unrealized loss on investments........ (0.39)
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Total from investment operations........................ (0.10)
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Dividends from net investment income.................... (0.29)
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Net asset value, end of period.......................... $ 9.61
======
TOTAL INVESTMENT RETURN.................................. (1.11)%(1)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands)................ $170,589
Ratio of expenses to average net assets................. 0.31%(2)(3)
Ratio of net investment income to average net assets.... 3.92%(2)(3)
Portfolio turnover rate................................. 6%
<FN>
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* Commencement of operations.
(1) Not annualized.
(2) Annualized.
(3) If the Fund had borne all of its expenses that were assumed or waived by
the Investment Manager, the above annualized ratios of expenses and net
investment income to average net assets would have been 0.75% and 3.48%,
respectively.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
4
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THE FUND AND ITS MANAGEMENT
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Dean Witter Limited Term Municipal Trust (the "Fund") is a no-load, open-end
diversified management investment company. The Fund is a trust of the type
commonly known as a "Massachusetts business trust" and was organized under the
laws of The Commonwealth of Massachusetts on February 25, 1993.
Dean Witter InterCapital Inc. ("InterCapital" or the "Investment Manager"),
whose address is Two World Trade Center, New York, New York 10048, is the
Fund's Investment Manager. The Investment Manager, which was incorporated in
July, 1992, is a wholly-owned subsidiary of Dean Witter, Discover & Co.
("DWDC"), a balanced financial services organization providing a broad range of
nationally marketed credit and investment products.
InterCapital and its wholly-owned subsidiary, Dean Witter Services Company
Inc., serve in various investment management, advisory, management and
administrative capacities to a total of eighty-three investment companies,
thirty of which are listed on the New York Stock Exchange, with combined total
assets including this Fund of approximately $68.8 billion as of April 30, 1994.
The Investment Manager also manages portfolios of pensions plans, other
institutions and individuals which aggregated approximately $2 billion at such
date.
The Fund has retained the Investment Manager, pursuant to an Investment
Management Agreement, to provide administrative services, manage its business
affairs and manage the investment of the Fund's as sets, including the placing
of orders for the purchase and sale of portfolio securities. InterCapital has
retained Dean Witter Services Company Inc. to perform the aforementioned
administrative services for the Fund. The Fund's Board of Trustees reviews the
various services provided by or under the direction of the Investment Manager
to ensure that the Fund's general investment policies and programs are being
properly carried out and that administrative services are being provided to the
Fund in a satisfactory manner.
As full compensation for the services and facilities furnished to the Fund
and for expenses of the Fund assumed by the Investment Manager, the Fund pays
the Investment Manager monthly compensation calculated daily by applying the
annual rate of 0.50% to the Fund's net assets determined as of the close of
each business day. The Fund's expenses include the fees of the Investment
Manager; taxes; legal, transfer agent, custodian and auditing fees; federal and
state registration fees; and printing and other expenses relating to the Fund's
operations which are not expressly assumed by the Investment Manager under the
Investment Management Agreement with the Fund. The Investment Manager had
undertaken to assume all operating expenses (except for any brokerage fees) and
to waive the compensation provided for in its Investment Management Agreement
for the period July 12, 1993 (commencement of operations) through December 31,
1993.
INVESTMENT OBJECTIVE AND POLICIES
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The investment objective of the Fund is to provide a high level of current
income that is exempt from federal income tax consistent with the preservation
of capital and prescribed standards of quality and maturity. The Fund will
seek to achieve its investment objective by investing predominately in
intermediate term municipal securities. The investment objective is a
fundamental policy of the Fund and may not be changed without the approval of
the holders of a majority of the Fund's shares. There is no assurance that the
Fund's investment objective will be achieved.
The Fund will invest at least 75% of its net assets in (a) Municipal Bonds
which are rated at the time of purchase within the three highest grades by
Moody's Investors Service, Inc. ("Moody's") or Standard & Poor's Corporation
("S&P"); (b) Municipal Notes which at the time of purchase are rated in the two
highest grades by Moody's or S&P, or, if not rated, have outstanding one or
more issues of Municipal Bonds rated as set forth in clause (a) of this
paragraph; and (c) Municipal Commercial Paper which at the time of purchase are
rated P-1 by Moody's and A-1 by S&P.
5
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The Fund may also invest up to 25% of its net assets in municipal securities
rated Baa by Moody's or BBB by S&P, or if not rated, are determined by the
Investment Manager to be the equivalent of Baa/BBB or better. A description of
municipal security ratings is contained in the Appendix to the Statement of
Additional Information.
The municipal securities in the Fund's portfolio will have an anticipated
average dollar-weighted maturity range of 7 to 10 years, with a maximum average
dollar-weighted maturity of 12 years. However, at least 80% of the net assets
of the Fund will be subject to an average dollar-weighted maturity constraint
of 15 years. When computing the average dollar-weighted maturity, the Fund
intends to treat investments which permit the holder to demand payment of
principal at any time or at specified intervals prior to the stated final
maturity as having a maturity equal to the next demand date. The final maturity
of these demand obligations will be no more than 25 years, until such time as
the Staff of the Securities and Exchange Commission has determined the
appropriateness of using maturity shortening techniques for obligations with
longer final maturities.
The foregoing percentage and rating limitations apply at the time of
acquisition of a security based on the last previous determination of the net
asset value of the Fund. Any subsequent change in any rating by a rating
service or change in percentages resulting from market fluctuations or other
changes in total assets of the Fund will not require elimination of any
security from the Fund's portfolio. Therefore, the Fund may hold securities
which have been downgraded from ratings of Baa or BBB or lower by Moody's or
S&P. However such investments may not exceed 5% of the net assets of the Fund.
Any investments which exceed this limitation will be eliminated from the
portfolio within a reasonable period of time (such time as the Investment
Manager determines that it is practicable to sell the investment without undue
market or tax consequences to the Fund). Municipal obligations rated below
investment grade by Moody's or S&P are considered to be speculative
investments, some of which may not be currently paying any interest and may
have extremely poor prospects of ever attaining any real investment standing.
Investments in municipal bonds rated either Baa by Moody's or BBB by S&P
(investment grade bonds--the lowest rated permissible investments by the Fund)
have speculative characteristics and, therefore, changes in economic conditions
or other circumstances are more likely to weaken their capacity to make
principal and interest payments than would be the case with investments in
securities with higher credit ratings.
The ratings assigned by Moody's and S&P represent their opinions as to the
quality of the securities which they undertake to rate (see the Appendix to the
Statement of Additional Information). It should be emphasized, however, that
the ratings are general and not absolute standards of quality.
The two principal classifications of municipal obligations and commercial
paper are "general obligation" and "revenue" obligations or commercial paper.
General obligation bonds, notes or commercial paper are secured by the issuer's
pledge of its faith, credit and taxing power for the payment of principal and
interest. Issuers of general obligation bonds, notes or commercial paper
include a state, its counties, cities, towns and other governmental units.
Revenue bonds, notes or commercial paper are payable from the revenues derived
from a particular facility or class of facilities or, in some cases, from
specific revenue sources. Revenue bonds, notes or commercial paper are issued
for a wide variety of purposes, including the financing of electric, gas, water
and sewer systems and other public utilities; industrial development and
pollution control facilities; single and multi-family housing units; public
buildings and facilities; air and marine ports, transportation facilities such
as toll roads, bridges and tunnels; and health and educational facilities such
as hospitals and dormitories. They rely primarily on user fees to pay debt
service, although the principal revenue source is often supplemented by
additional security features which are intended to enhance the creditworthiness
of the issuer's obligations. In some cases, particularly revenue bonds issued
to finance housing and public buildings, a direct or implied "moral
obligation" of a governmental unit may be pledged to the payment of debt
service. In other cases, a special tax or other charge may augment user fees.
Included within the revenue bonds category, as noted above, are
participations in lease obligations or installment purchase contracts
(hereinafter collectively
6
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called "lease obligations") of municipalities. State and local governments,
agencies or authorities issue lease obligations to acquire equipment and
facilities. Lease obligations may have risks not normally associated with
general obligation or other revenue bonds. Leases, and installment purchase or
conditional sale contracts (which may provide for title to the leased asset to
pass eventually to the issuer), have developed as a means for governmental
issuers to acquire property and equipment without the necessity of complying
with the constitutional and statutory requirements generally applicable for the
issuance of debt. Certain lease obligations contain "non-appropriation" clauses
that provide that the governmental issuer has no obligation to make future
payments under the lease or contract unless money is appropriated for such
purpose by the appropriate legislative body on an annual or other periodic
basis. Consequently, continued lease payments on those lease obligations
containing "non-appropriation" clauses are dependent on future legislative
actions. If such legislative actions do not occur, the holders of the lease
obligation may experience difficulty in exercising their rights, including
disposition of the property.
In addition, lease obligations represent a relatively new type of financing
that has not yet developed the depth of marketability associated with more
conventional municipal obligations, and, as a result, certain of such lease
obligations may be considered illiquid securities. To determine whether or not
the Fund will consider such securities to be illiquid (the Fund may not invest
more than fifteen percent of its net assets in illiquid securities), the
Trustees of the Fund have established guidelines to be utilized by the Fund in
determining the liquidity of a lease obligation. The factors to be considered
in making the determination include: 1) the frequency of trades and quoted
prices for the obligation; 2) the number of dealers willing
to purchase or sell the security and the number of other potential purchasers;
3) the willingness of dealers to undertake to make a market in the security;
and 4) the nature of the marketplace trades, including, the time needed to
dispose of the security, the method of soliciting offers, and the mechanics
of the transfer.
The value of the Fund's portfolio securities and, therefore, the Fund's net
asset value per share, may increase or decrease due to various factors,
principally changes in prevailing interest rates and the ability of the issuers
of the Fund's portfolio securities to pay interest and principal on such
obligations on a timely basis. Generally, a rise in interest rates will result
in a decrease in the Fund's net asset value per share, while a drop in interest
rates will result in an increase in the Fund's net asset value per share.
Under normal conditions, at least 80% of the total assets of the Fund will be
invested in securities, the interest on which is exempt from federal income
taxes. However, the Fund may invest more than 20% of its total assets in
taxable money market instruments in order to maintain a temporary "defensive"
position, when, in the opinion of the Investment Manager, prevailing market or
financial conditions (including unavailability of securities of requisite
quality) so warrant. Certain of the tax-exempt securities in which the Fund may
invest without limit may subject certain investors to the federal alternative
minimum tax or any applicable state alternative minimum tax and, therefore, a
substantial portion of the income produced by the Fund may be taxable to such
investors under any federal or any applicable state alternative minimum tax.
The Fund, therefore, may not be a suitable investment for investors who are
subject to the alternative minimum tax. The suitability of the Fund for these
investors will depend upon a comparison of the after-tax yield likely to be
provided from the Fund to comparable tax-exempt investments not subject to such
tax and also to comparable fully taxable investments in light of each
investor's tax position. See "Dividends, Distributions and Taxes."
When-Issued and Delayed Delivery Securities and Forward Commitments. From
time to time, in the ordinary course of business, the Fund may purchase
securities on a when-issued or delayed delivery basis or may purchase or sell
securities on a forward commitment basis. When such transactions are
negotiated, the price is fixed at the time of the commitment, but delivery and
payment can take place a month or more after the date of the commitment. There
is no overall limit on the percentage of the Fund's assets
7
<PAGE>
which may be committed to the purchase of securities on a when-issued, delayed
delivery or forward commitment basis. An increase in the percentage of the
Fund's assets committed to the purchase of securities on a when-issued, delayed
delivery or forward commitment basis may increase the volatility of the Fund's
net asset value.
When, As and If Issued Securities. The Fund may purchase securities on a
"when, as and if issued" basis under which the issuance of the security depends
upon the occurrence of a subsequent event, such as approval of a merger,
corporate reorganization, leveraged buyout or debt restructuring. If the
anticipated event does not occur and the securities are not issued, the Fund
will have lost an investment opportunity. There is no overall limit on the
percentage of the Fund's assets which may be committed to the purchase of
securities on a "when, as and if issued" basis. An increase in the percentage
of the Fund's assets committed to the purchase of securities on a "when, as and
if issued" basis may increase the volatility of its net asset value.
HEDGING ACTIVITIES
Subject to applicable state law, the Fund may enter into financial futures
contracts, options on such futures and municipal bond index futures contracts
for hedging purposes.
Financial Futures Contracts and Options on Futures. The Fund may invest in
financial futures contracts and related options thereon. The Fund may sell a
financial futures contract or purchase a put option on such futures contract,
if the Investment Manager anticipates interest rates to rise, as a hedge
against a decrease in the value of the Funds' portfolio securities. If the
Investment Manager anticipates that interest rates will decline, the Fund may
purchase a financial futures contract or a call option thereon to protect
against an increase in the price of the securities that the Fund intends to
purchase. These futures contracts and related options thereon will be used only
as a hedge against anticipated interest rate changes. A futures contract sale
creates an obligation by the Fund, as seller, to deliver the specific type of
instrument called for in the contract at a specified future time for a
specified price. A futures contract purchase would create an obligation by the
Fund, as purchaser, to take delivery of the specific type of financial
instrument at a specified future time at a specified price. The specific
securities delivered or taken, respectively, at settlement date, would not be
determined until or near that date. The determination would be in accordance
with the rules of the exchange on which the futures contract sale or purchase
was effected.
Although the terms of financial futures contracts specify actual delivery or
receipt of securities, in most instances the contracts are closed out before
the settlement date without the making or taking of delivery of the securities.
Closing out of a futures contract is effected by entering into an offsetting
purchase or sale transaction.
Unlike a financial futures contract, which requires the parties to buy and
sell a security on a set date, an option on such a futures contract entitles
its holder to decide on or before a future date whether to enter into such a
contract (a long position in the case of a call option and a short position in
the case of a put option). If the holder decides not to enter into the
contract, the premium paid for the option on the contract is lost. Since the
value of the option is fixed at the point of sale, there are no daily payments
of cash to reflect the change in the value of the underlying contract as there
is by a purchaser or seller of a futures contract. The value of the option does
change and is reflected in the net asset value of the Fund.
A risk in employing futures contracts to protect against the price volatility
of portfolio securities is that the prices of securities subject to such
futures contracts may correlate imperfectly with the behavior of the cash
prices of the Fund's portfolio securities. The risk of imperfect correlation
will be increased by the fact that the financial futures contracts in which the
Fund may invest are on taxable securities rather than tax-exempt securities,
and there is no guarantee that the prices of taxable securities will move in a
similar
8
<PAGE>
manner to the prices of tax-exempt securities. The correlation may be distorted
by the fact that the futures market is dominated by short-term traders seeking
to profit from the difference between a contract or security price objective
and their cost of borrowed funds. Such distortions are generally minor and
would diminish as the contract approached maturity.
Another risk is that the Investment Manager could be incorrect in its
expectations as to the direction or extent of various interest rate movements
or the time span within which the movements take place. For example, if the
Fund sold financial futures contracts for the sale of securities in
anticipation of an increase in interest rates, and then interest rates went
down instead, causing bond prices to rise, the Fund would lose money on the
sale.
In addition to the risks that apply to all options transactions (see the
Statement of Additional Information for a description of the characteristics
of, and the risks of investing in, options on debt securities), there are
several special risks relating to options on futures. In particular, the
ability to establish and close out positions on such options will be subject
to the development and maintenance of a liquid secondary market. It is not
certain that this market will develop or be maintained.
Municipal Bond Index Futures. The Fund may utilize municipal bond index
futures contracts for hedging purposes. The strategies in employing such
contracts will be similar to that discussed above with respect to financial
futures and options thereon. A municipal bond index is a method of reflecting
in a single number the market value of many different municipal bonds and is
designed to be representative of the municipal bond market generally. The index
fluctuates in response to changes in the market values of the bonds included
within the index. Unlike futures contracts on particular financial instruments,
transactions in futures on a municipal bond index will be settled in cash, if
held until the close of trading in the contract. However, like any other
futures contract, a position in the contract may be closed out by a purchase or
sale of an offsetting contract for the same delivery month prior to expiration
of the contract.
The Fund may not enter into futures contracts or related options thereon if
immediately thereafter the amount committed to margin plus the amount paid for
option premiums exceeds 5% of the value of the Fund's total assets. The Fund
may not purchase or sell futures contracts or related options if immediately
thereafter more than one-third of the net assets of the Fund would be hedged.
Options. The Fund may purchase or sell (write) options on debt securities as
a means of achieving additional return or hedging the value of the Fund's
portfolio. The Fund would only buy options listed on national securities
exchanges. The Fund, will not purchase options on behalf of the Fund if, as a
result, the aggregate cost of all outstanding options exceeds 10% of the Fund's
total assets.
Lending of Portfolio Securities. The Fund will not lend portfolio securities
if such loans are not permitted by the laws or regulations of any state in
which its shares are qualified for sale and will not lend more than 25% of the
value of the total assets of the Fund.
PORTFOLIO MANAGEMENT
The Fund's portfolio is actively managed by its Investment Manager with a view
to achieving the Fund's investment objective. The Fund is managed within
InterCapital's Municipal Fixed Income Group, which manages 32 tax-exempt
municipal bond funds, with approximately $12 billion in assets. Ms. Katherine
H. Stromberg is the Fund's portfolio manager. Ms. Stromberg has been a
municipal bond portfolio manager for more than 14 years. Prior to joining
InterCapital in October 1991, Ms. Stromberg was Vice President of Kidder
Peabody Asset Management Inc. In determining which securities to purchase for
the Fund or hold in the Fund's portfolio, the Investment Manager will rely on
information from various sources, including research, analysis and appraisals
of brokers and dealers, including Dean Witter Reynolds Inc. ("DWR", a broker-
dealer affiliate of the Investment Manager); the views of the Trustees of the
Fund and others regarding economic developments and interest rate trends; and
the Investment Manager's own analysis of factors it deems relevant.
9
<PAGE>
Brokerage commissions are not normally charged on the purchase or sale of
municipal obligations, but such transactions may involve costs in the form of
spreads between bid and asked prices. Pursuant to an order of the Securities
and Exchange Commission, the Fund may effect principal transactions in certain
taxable money market instruments with DWR. In addition, the Fund may incur
brokerage commissions on futures' and options' transactions conducted through
DWR. It is not anticipated that the portfolio trading engaged in by the Fund
will result in its portfolio turnover rate exceeding 100%.
INVESTMENT RESTRICTIONS
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The investment restrictions listed below are among the restrictions, a
complete listing of which is contained in the Statement of Additional
Information, which have been adopted by the Fund as fundamental policies. Under
the Investment Company Act of 1940, as amended (the "Act"), a fundamental
policy may not be changed without the vote of a majority of the outstanding
voting securities of the Fund, as defined in the Act.
For purposes of the following restrictions: (a) an "issuer" of a security is
the entity whose assets and revenues are committed to the payment of interest
and principal on that particular security, provided that the guarantee of a
security will be considered a separate security and provided further that a
guarantee of a se curity shall not be deemed to be a security issued by the
guarantor if the value of all securities issued or guaranteed by the guarantor
and owned by the Fund does not exceed 10% of the value of the total assets of
the Fund; (b) a "taxable security" is any security the interest on which is
subject to federal income tax; and (c) all percentage limitations apply
immediately after a purchase or initial investment, and any subsequent change
in any applicable percentage resulting from market fluctuations does not
require elimination of any security from the portfolio.
The Fund may not:
1. With respect to 75% of its total assets, purchase securities of any issuer
if, immediately thereafter, more than 5% of the value of its total assets are
in the securities of any one issuer (other than obligations issued, or
guaranteed by, the United States Government, its agencies or
instrumentalities).
2. With respect to 75% of its total assets, purchase more than 10% of all
outstanding taxable debt securities of any one issuer (other than debt
securities issued, or guaranteed as to principal and interest by, the United
States Government, its agencies or instrumentalities).
3. Invest 25% or more of the value of its total assets in securities of
issuers in any one industry (industrial development and pollution control
bonds are grouped into industries based upon the business in which the issuers
of such obligations are engaged). This restriction does not apply to
obligations issued or guaranteed by the United States Government, its agencies
or instrumentalities or to domestic bank obligations.
PURCHASE OF FUND SHARES
- -------------------------------------------------------------------------------
The Fund offers it shares for sale to the public on a continuous basis at
the offering price without the imposition of a sales charge. The offering
price will be the net asset value per share next determined following receipt
of an order (see "Determination of Net Asset Value"). Pursuant to a
Distribution Agreement between the Fund and Dean Witter Distributors Inc. (the
"Distributor"), an affiliate of the Investment Manager, shares of the Fund are
distributed by the Distributor and are offered by DWR and other broker-dealers
which have entered into selected broker-dealer agreements with the Distributor
("Selected Broker-Dealers"). The principal executive office of the Distributor
is located at Two World Trade Center, New York,
New York 10048.
10
<PAGE>
The minimum initial purchase is $1,000 and subsequent purchases of $100 or
more may be made by sending a check, payable to Dean Witter Limited Term
Municipal Trust, directly to Dean Witter Trust Company (the "Transfer Agent")
at P.O. Box 1040, Jersey City, NJ 07303 or by contacting an account executive
of DWR or of another Selected Broker-Dealer. In the case of investments
pursuant to Systematic Payroll Deduction Plans, the Fund, in its discretion,
may accept investments without regard to any minimum amounts which would
otherwise be required if the Fund has reason to believe that additional
investments will increase the investment in all accounts under such Plans to at
least $1,000. Certificates for shares purchased will not be issued unless a
request is made by the shareholder in writing to the Transfer Agent.
Shares of the Fund are sold through the Distributor or a Selected Broker-
Dealer on a normal five business day settlement basis; that is, payment is due
on the fifth business day (settlement date) after the order is placed with the
Distributor or Selected Broker-Dealer. Since DWR or any other Selected Broker-
Dealer may forward investors' funds on settlement date, they will benefit from
the temporary use of the funds if payment is made prior thereto. As noted
above, orders placed directly with the Transfer Agent must be accompanied by
payment. Investors will be entitled to receive income dividends if their order
is received by the close of business on the day prior to the record date for
such dividends and distributions.
Sales personnel of a Selected Broker-Dealer are compensated for shares of the
Fund sold by them by the Distributor or any of its affiliates and/or by a
Selected Broker-Dealer. In addition, some sales personnel of the Selected
Broker-Dealer will receive non-cash compensation in the form of trips to
educational seminars and merchandise as special sales incentives. The Fund and
the Distributor reserve the right to reject any purchase orders.
PLAN OF DISTRIBUTION
The Fund has entered into a Plan of Distribution pursuant to Rule 12b-1 under
the Act with the Distributor whereby the Distributor is authorized to utilize
its own resources or those of its affiliates, including InterCapital, to
finance certain services and activities in connection with the distribution of
the Fund's shares. The principal activities and services which may be provided
by the Distributor, DWR, its affiliates and other Selected Broker-Dealers under
the Plan include: (1) compensation to, and expenses of, account executives and
other employees of DWR and other Selected Broker-Dealers, including overhead
and telephone expenses; (2) sales incentives and bonuses to sales
representatives and to marketing personnel in connection with promoting sales
of the Fund's shares; (3) expenses incurred in connection with promoting sales
of the Fund's shares; (4) preparing and distributing sales literature; and (5)
providing advertising and promotional activities, including direct mail
solicitation and television, radio, newspaper, magazine and other media
advertisements.
DETERMINATION OF NET ASSET VALUE
The net asset value per share of the Fund is determined once daily at 4:00
p.m., New York time on each day that the New York Stock Exchange is open by
taking the value of all assets of the Fund, subtracting all of its respective
liabilities, dividing by the number of shares outstanding and adjusting to the
nearest cent. The net asset value per share of the Fund will not be determined
on Good Friday and on such other federal and non-federal holidays as are
observed by the New York Stock Exchange.
Certain of the Fund's portfolio securities (other than short-term taxable
debt securities, futures and options) may be valued by an outside independent
pricing service ap proved by the Fund's Trustees. The service utilizes a
computerized grid matrix of tax-exempt securities and evaluations by its staff
in determining what it believes is the fair value of the Fund's portfolio
securities. The Board believes that timely and reliable market quotations are
generally not readily available to the Fund for purposes of valuing tax-exempt
securities and that the valuations supplied by the pricing service are more
likely to approximate the fair value of such securities. A more detailed
discussion of valuation procedures is in the Fund's Statement of Additional
Information.
11
<PAGE>
SHAREHOLDER SERVICES
- -------------------------------------------------------------------------------
Automatic Investment of Dividends and Distributions. All income dividends and
capital gains distributions are automatically paid in full and fractional
shares of the Fund (or, if specified by the shareholder, any other open-end
investment company for which InterCapital serves as investment manager
(collectively, with the Fund, the "Dean Witter Funds")), unless the shareholder
requests that they be paid in cash.
EasyInvest(SM). Shareholders may subscribe to EasyInvest, an automatic
purchase plan which provides for any amount from $100 to $5,000 to be
transferred automatically from a checking or savings account, on a semi-
monthly, monthly or quarterly basis, to the Fund's Transfer Agent for
investment in shares of the Fund.
Systematic Withdrawal Plan. A systematic withdrawal plan (the "Withdrawal
Plan") is available for shareholders who own or purchase shares of the Fund
having a minimum value of $10,000 based upon the then current offering price.
The Withdrawal Plan provides for monthly or quarterly (March, June, September
and December) checks in any dollar amount, not less than $25 or in any whole
percentage of the account balance, on an annualized basis. Withdrawal Plan
payments should not be considered as dividends, yields or income. If periodic
withdrawal plan payments continuously exceed net investment income and net
capital gains, the shareholder's original investment could be correspondingly
reduced and ultimately exhausted.
Each withdrawal constitutes a redemption of shares and any gain or loss
realized must be recognized for federal income, and generally, for state and
local tax purposes.
Shareholders should contact their DWR or other Selected Broker-Dealer account
executive or the Transfer Agent for further information about any of the above
services.
Exchange Privilege. An "Exchange Privilege", that is, the privilege of
exchanging shares of certain Dean Witter Funds for shares of the Fund, exists
whereby shares of various Dean Witter Funds which are open-end investment
companies sold with either a front-end (at time of purchase) sales charge
("FESC funds") or a contingent deferred sales charge ("CDSC funds") may be
redeemed at their next calculated net asset value and the proceeds of the
redemption may be used to purchase shares of the Fund, shares of Dean Witter
Tax-Free Daily Income Trust, Dean Witter U.S. Government Money Market Trust,
Dean Witter Liquid Asset Fund Inc., Dean Witter California Tax-Free Daily
Income Trust and Dean Witter New York Municipal Money Market Trust (which five
funds are hereinafter called "money market funds") and shares of Dean Witter
Short-Term U.S. Treasury Trust and Dean Witter Short-Term Bond Fund
(collectively, the Fund, the money market funds, Dean Witter Short-Term U.S.
Treasury Trust and Dean Witter Short-Term Bond Fund are referred to herein as
the "Exchange Funds"). An exchange from an FESC fund or a CDSC fund to an
Exchange Fund is on the basis of the next calculated net asset value per share
of each fund after the exchange order is received. When exchanging into a money
market fund from an FESC fund or a CDSC fund, shares of the FESC fund or the
CDSC fund are redeemed at their next calculated net asset value and exchanged
for shares of the money market fund at their net asset value determined the
following business day. Subsequently, shares of the Exchange Funds received in
an exchange for shares of an FESC fund (regardless of the type of fund
originally purchased) may be redeemed and exchanged for shares of the other
Exchange Funds, FESC funds or CDSC funds (however, shares of CDSC funds,
including shares acquired in exchange for (i) shares of FESC funds or (ii)
shares of the Exchange Funds which were acquired in exchange for shares of FESC
funds, may not be exchanged for shares of FESC funds). Additionally, shares of
the Exchange Funds received in an exchange for shares of a CDSC fund
(regardless of the type of fund originally purchased) may be redeemed and
exchanged for shares of the other Exchange Funds or CDSC funds. Ultimately, any
applicable contingent deferred sales charge ("CDSC") will have to be paid upon
redemption of shares originally purchased from a CDSC fund. (If shares of the
Exchange Funds received in exchange for shares originally purchased from a CDSC
fund are exchanged for shares of another CDSC fund having a different CDSC
12
<PAGE>
schedule than that of the CDSC fund from which the Exchange Funds shares were
acquired, the shares will be subject to the higher CDSC schedule.) During the
period of time the shares originally purchased from a CDSC fund remain in the
Exchange Funds (calculated from the last day of the month in which the Exchange
Funds shares were acquired), the holding period (for the purpose of determining
the rate of CDSC) is frozen. If those shares are subsequently reexchanged for
shares of a CDSC fund, the holding period previously frozen when the first
exchange was made resumes on the last day of the month in which shares of CDSC
fund are reacquired. Thus, the CDSC is based upon the period of time the
shareholder was invested in a CDSC fund. Exchanges involving FESC funds or
CDSC funds may be made after the shares of the FESC fund or CDSC fund acquired
by purchase (not by exchange or dividend reinvestment) have been held for
thirty days. There is no waiting period for exchanges of shares acquired by
exchange or dividend reinvestment.
Purchases and exchanges should be made for investment purposes only. A
pattern of frequent exchanges may be deemed by the Investment Manager to be
abusive and contrary to the best interests of the Fund's other shareholders
and, at the Investment Manager's discretion, may be limited by the Fund's
refusal to accept additional purchases and/or exchanges from the investor.
Although the Fund does not have any specific definition of what constitutes a
pattern of frequent exchanges, and will consider all relevant factors in
determining whether a particular situation is abusive and contrary to the best
interests of the Fund and its other shareholders, investors should be aware
that the Fund and each of the other Dean Witter Funds may in their discretion
limit or otherwise restrict the number of times this Exchange Privilege may be
exercised by any investor. Any such restriction will be made by the Fund on a
prospective basis only, upon notice to the shareholder not later than ten days
following such shareholder's most recent exchange. Also, the Exchange
Privilege may be terminated or revised at any time by the Fund and/or any of
such Dean Witter Funds for which shares of the Fund may be exchanged, upon such
notice as may be required by applicable regulatory agencies. Shareholders main
tain ing margin accounts with DWR or another Selected Broker-Dealer are
referred to their account executive regarding restrictions or exchanging of
shares of the Fund pledged in the Margin Account.
The current prospectus for each fund describes its investment objective(s)
and policies, and shareholders should obtain one and read it carefully before
investing. Exchanges are subject to the minimum investment requirement and any
other conditions imposed by each fund. An exchange will be treated for federal
income tax purposes the same as a repurchase or redemption of shares on which
the shareholder has realized a capital gain or loss. However, the ability to
deduct capital losses on an exchange may be limited in situations where there
is an exchange of shares within ninety days after the shares are purchased. The
Exchange Privilege is only available in states where an exchange may legally be
made.
If DWR or another Selected Broker-Dealer is the current dealer of record and
its account numbers are part of the account information, shareholders may
initiate an exchange of shares of the Fund for shares of any of the above Dean
Witter Funds (for which the Exchange Privilege is available) pursuant to this
Exchange Privilege by contacting their DWR or another Selected Broker-Dealer
account executive (no Exchange Privilege Authorization Form is required). Other
shareholders (and those shareholders who are clients of DWR or another Selected
Broker-Dealer but who wish to make exchanges directly by writing or telephoning
the Transfer Agent) must complete and forward to the Transfer Agent an Exchange
Privilege Authorization Form, copies of which may be obtained from the Transfer
Agent, to initiate an exchange. If the Authorization Form is used, exchanges
may be made in writing or by contacting the Transfer Agent at (800) 526-3143
(toll free). The Fund will employ reasonable procedures to confirm that
exchange instructions communicated over the telephone are genuine. Such
procedures may include requiring various forms of personal identification such
as name, mailing address, social security or other tax identification number
and DWR or other Selected Dealer account number (if any). Telephone
instructions may also be recorded. If such procedures are not employed, the
Fund may be liable for any losses due to unauthorized or fraudulent
instructions.
13
<PAGE>
Telephone exchange instructions will be accepted if received by the Transfer
Agent between 9:00 a.m. and 4:00 p.m. New York time, on any day the New York
Stock Exchange is open. Any shareholder wishing to make an exchange who has
previously filed an Exchange Privilege Authorization Form and who is unable to
reach the Fund by telephone should contact his or her DWR or other Selected
Broker-Dealer account executive, if appropriate, or make a written exchange
request. Shareholders are advised that during periods of drastic economic or
market changes, it is possible that the telephone exchange procedures may be
difficult to implement, although this has not been the experience of the other
Dean Witter Funds in the past.
For further information regarding the Exchange Privilege, shareholders
should contact their DWR or other Selected Broker-Dealer account executive or
the Transfer Agent.
REDEMPTIONS AND REPURCHASES
- -------------------------------------------------------------------------------
Redemption. Shares of the Fund can be redeemed for cash at any time at its
respective current net asset value per share (without any redemption or other
charge). If shares are held in a shareholder's account without a share
certificate, a written request for redemption is required. If certificates are
held by the shareholder, the shares may be redeemed by surrendering the
certificates with a written request for redemption along with any additional
documentation required by the Transfer Agent, to the Fund's Transfer Agent at
P.O. Box 983, Jersey City, NJ 07303.
Repurchase. DWR and other Selected Broker-Dealers are authorized to
repurchase, shares represented by a share certificate which is delivered to any
of their offices. Shares held in a shareholder's account without a share
certificate may also be repurchased by DWR and other Selected Broker-Dealers
upon the telephonic request of the shareholder. The repurchase price is the net
asset value next determined (see "Purchase of Fund Shares--Determination of Net
Asset Value") after such repurchase order is received by DWR and other Selected
Broker-Dealers.
Payment for Shares Redeemed or Repurchased. Payment for shares presented for
repurchase or redemption will be made by check within seven days after receipt
by the Transfer Agent of the certificate and/or written request in good order.
Such payment may be postponed or the right of redemption suspended under
unusual circumstances. If the shares to be redeemed have recently been
purchased by check, payment of the redemption proceeds may be delayed for the
minimum time needed to verify that the check used for investment has been
honored (not more than fifteen days from the time of receipt of the check by
the Transfer Agent). Shareholders maintaining margin accounts with DWR or
another Selected Broker-Dealer are referred to their account executive
regarding restrictions on redemption of shares of the Fund pledged in the
margin account.
Involuntary Redemption. The Fund reserves the right to redeem, on 60 days'
notice and at net asset value, the shares (other than shares held in an
Individual Retirement Account or custodial account under Section 403(b)(7) of
the Internal Revenue Code) of any shareholder whose shares have a value of less
than $100 as a result of redemptions or repurchases, or such lesser amount as
may be fixed by the Trustees.
DIVIDENDS, DISTRIBUTIONS AND TAXES
- -------------------------------------------------------------------------------
Dividends and Distributions. The Fund declares dividends on each day the New
York Stock Exchange is open for business. Such dividends are payable monthly.
The Fund intends to distribute substantially all of its daily net investment
income on an annual basis. Dividends from net short-term capital gains, if any,
will be paid at least once each year. Any dividends or distributions declared
in the last quarter of any calendar year which are paid in the following year
prior to February 1 will be deemed received by the shareholder in the prior
year. Shareholders may instruct the Transfer Agent (in writing) to have their
dividends paid out monthly in cash. Processing of dividend checks begins
immediately following the monthly payment date.
14
<PAGE>
Shareholders who have requested to receive dividends in cash will normally be
sent their monthly dividend check during the first ten days of the following
month.
Taxes. Because the Fund intends to distribute substantially all of its net
investment income and net capital gains, if any, to shareholders, and intends
to otherwise comply with all the provisions of Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code"), to qualify as a regulated
investment company ("RIC"), it is not expected that the Fund will be required
to pay any federal income tax.
The Fund intends to qualify to pay "exempt-interest dividends" to its
shareholders by maintaining, as of the close of each quarter of its taxable
year, at least 50% of the value of its total assets in tax-exempt securities.
If the fund qualifies as a RIC and satisfies such requirement, dividends from
net investment income to shareholders, whether taken in cash or reinvested in
additional Fund shares, will be excludable from gross income for federal income
tax purposes to the extent net interest income is represented by interest on
tax-exempt securities. Exempt-interest dividends are included, however, in
determining what portion, if any, of a person's Social Security benefits are
subject to federal income tax.
The Code subjects interest received on certain otherwise tax-exempt
securities to an alternative minimum tax. This alternative minimum tax applies
to interest received on "private activity bonds" (in general, bonds that
benefit non-governmental entities) issued after August 7, 1986 which, although
tax-exempt, are used for purposes other than those generally performed by
governmental units (e.g., bonds used for commercial or housing purposes).
Income received on such bonds is classified as a "tax preference item", under
the alternative minimum tax, for both individual and corporate investors. There
is no percentage limitation with respect to the Fund's investments in such
"private activity bonds," with the result that a portion of the exempt-
interest dividends paid by the Fund may be an item of tax preference to
shareholders subject to the alternative minimum tax. In addition, certain
corporations which are subject to the alternative minimum tax may have to
include a portion of exempt-interest dividends in calculating their alternative
minimum taxable income in situations where the "adjusted current earnings" of
the corporation exceeds its alternative minimum taxable income.
The Fund will mail to shareholders a statement indicating the percentage of
the dividend distributions for each taxable year which constitutes exempt-
interest dividends and the percentage, if any, that is taxable, and the
percentage, if any, of the exempt-interest dividends which constitutes an item
of tax preference.
Shareholders will normally be subject to federal personal income tax on
market discount on certain taxable and tax-exempt fixed-income securities,
dividends paid from interest income derived from taxable securities and on
distributions of net capital gains. For federal income tax purposes,
distributions of long-term capital gains, if any, are taxable to shareholders
as long-term capital gains, regardless of how long a shareholder has held the
Fund's shares and regardless of whether the distribution is received in
additional shares or cash. To avoid being subject to a 31% backup withholding
tax on taxable dividends and capital gains distributions and the proceeds of
redemptions and repurchases, shareholders' taxpayer identification numbers must
be furnished and certified as to accuracy. Interest on indebtedness incurred by
shareholders or related parties to purchase or carry shares of an investment
company paying exempt-interest dividends, such as the Fund, will not be
deductible by the investor for federal income tax purposes.
Under the Revenue Reconciliation Act of 1993, all or a portion of the Fund's
gain from the sale or redemption of tax-exempt obligations purchased at a
market discount after April 30, 1993 will be treated as ordinary income rather
than capital gain. This rule may increase the amount of ordinary income
dividends received by shareholders.
The foregoing relates to federal income taxation as in effect as of the date
of this Prospectus. Distributions from investment income and capital gains,
including exempt-interest dividends, may be subject to state franchise taxes if
received by a corporation doing business in various states, and to state and
local taxes. Shareholders should consult their tax advisers as to the
applicability of the above to their own tax situation.
15
<PAGE>
PERFORMANCE INFORMATION
- -------------------------------------------------------------------------------
From time to time the Fund advertises its "yield" and "effective yield"
and/or its "total return" in advertisements." Both yield figures are based on
historical earnings and are not intended to indicate future performance. The
"yield" of the Fund refers to the income generated by an investment in the Fund
over a given seven-day period (which period will be stated in the
advertisement). This income is then "annualized." That is, the amount of income
generated by the investment during that seven-day period is assumed to be
generated each seven-day period within a 365-day period and is shown as a
percentage of the investment. The "effective yield" for a seven-day period is
calculated similarly but, when annualized, the income earned by an investment
in the Fund is assumed to be reinvested each week within a 365-day period. The
"effective yield" will be slightly higher than the "yield" because of the
compounding effect of this assumed reinvestment. The Fund may also quote tax-
equivalent yield which is calculated by determining the pre-tax yield which,
after being taxed at a stated rate, would be equivalent to the yield determined
as described above.
The "average annual total return" of the Fund refers to a figure reflecting
the average annualized percentage increase (or decrease) in the value of an
initial investment in the Fund of $1,000 over a period of one year, as well as
the life of the Fund. Average annual total return reflects all income earned by
the Fund, any appreciation or depreciation of the assets of the Fund and all
expenses incurred by the Fund for the stated periods. It also assumes
reinvestment of all dividends and distributions paid by the Fund.
In addition to the foregoing, the Fund may advertise its total return over
different periods of time by means of aggregate, average, year-by-year or other
types of total return figures. The Fund may also advertise the growth of
hypothetical investments of $10,000, $50,000 and $100,000 in shares of the
Fund. The Fund from time to time may also advertise its performance relative to
certain performance rankings (such as Lipper Analytical Services Inc.) and
indices compiled by independent organizations (such as the Lehman Brothers
Municipal Bond Index and Sub-indices).
ADDITIONAL INFORMATION
- -------------------------------------------------------------------------------
Voting Rights. All shares of beneficial interest of the Fund are of $0.01 par
value and are equal as to earnings, assets and voting privileges.
The Fund is not required to hold Annual Meetings of Shareholders and in
ordinary circumstances the Fund does not intend to hold such meetings.
Under Massachusetts law, shareholders of a business trust may, under certain
circumstances, be held personally liable as partners for obligations of the
Fund. However, the Declaration of Trust contains an express disclaimer of
shareholder liability for acts or obligations of the Fund, requires that Fund
documents include such disclaimer and provides for indemnification and
reimbursement of expenses out of the Fund's property for any shareholder held
personally liable for the obligations of the Fund. Thus, the risk of a
shareholder incurring financial loss on account of shareholder liability is
limited to circumstances in which the Fund itself would be unable to meet its
obligations. Given the above limitations on shareholder personal liability and
the nature of the Fund's assets and operations, the possibility of the Fund
being unable to meet its obligations is remote and in the opinion of
Massachusetts counsel to the Fund, the risk to Fund shareholders of personal
liability is remote.
Shareholder Inquiries. All inquiries regarding the Fund should be directed to
the Fund or the Distributor or to the Transfer Agent at the telephone numbers
or addresses, as are set forth on the front cover of this Prospectus.
16
<PAGE>
THE DEAN WITTER FAMILY OF FUNDS
MONEY MARKET FUNDS
Dean Witter Liquid Asset Fund Inc.
Dean Witter U.S. Government Money
Market Trust
Dean Witter Tax-Free Daily Income Trust
Dean Witter California Tax-Free Daily
Income Trust
Dean Witter New York Municipal Money
Market Trust
EQUITY FUNDS
Dean Witter American Value Fund
Dean Witter Natural Resource Development
Securities Inc.
Dean Witter Dividend Growth Securities Inc.
Dean Witter Developing Growth Securities Trust
Dean Witter World Wide Investment Trust
Dean Witter Value-Added Market Series
Dean Witter Utilities Fund
Dean Witter Capital Growth Securities
Dean Witter European Growth Fund Inc.
Dean Witter Precious Metals and Minerals Trust
Dean Witter Pacific Growth Fund Inc.
Dean Witter Health Sciences Trust
Dean Witter Global Dividend Growth Securities
Dean Witter Global Utilities Fund
Dean Witter National Municipal Trust
FIXED-INCOME FUNDS
Dean Witter High Yield Securities Inc.
Dean Witter Tax-Exempt Securities Trust
Dean Witter U.S. Government Securities Trust
Dean Witter Federal Securities Trust
Dean Witter Convertible Securities Trust
Dean Witter California Tax-Free Income Fund
Dean Witter New York Tax-Free Income Fund
Dean Witter World Wide Income Trust
Dean Witter Intermediate Income Securities
Dean Witter Global Short-Term Income Fund Inc.
Dean Witter Multi-State Municipal Series Trust
Dean Witter Premier Income Trust
Dean Witter Short-Term U.S. Treasury Trust
Dean Witter Diversified Income Trust
Dean Witter Limited Term Municipal Trust
Dean Witter Short-Term Bond Fund
Dean Witter High Income Securities
ASSET ALLOCATION FUNDS
Dean Witter Managed Assets Trust
Dean Witter Strategist Fund
ACTIVE ASSETS ACCOUNT PROGRAM
Active Assets Money Trust
Active Assets Tax-Free Trust
Active Assets California Tax-Free Trust
Active Assets Government Securities Trust
DEAN WITTER RETIREMENT SERIES
Liquid Asset Series
U.S. Government Money Market Series
U.S. Government Securities Series
Intermediate Income Securities Series
American Value Series
Capital Growth Series
Dividend Growth Series
Stategist Series
Utilities Series
Value-Added Market Series
Global Equity Series
<PAGE>
Dean Witter
Limited Term Municipal Trust
Two World Trade Center
New York, New York 10048
TRUSTEES
Jack F. Bennett
Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn
John R. Haire
Dr. John E. Jeuck
Dr. Manuel H. Johnson
Paul Kolton
Michael E. Nugent
Philip J. Purcell
John L. Schroeder
Edward R. Telling
OFFICERS
Charles A. Fiumefreddo
Chairman and Chief Executive Officer
Sheldon Curtis
Vice President, Secretary and General Counsel
Katherine H. Stromberg
Vice President
Thomas F. Caloia
Treasurer
CUSTODIAN
The Bank of New York
110 Washington Street
New York, New York 10286
TRANSFER AGENT AND
DIVIDEND DISBURSING AGENT
Dean Witter Trust Company
Harborside Financial Center,
Plaza Two
Jersey City, New Jersey 07311
INDEPENDENT ACCOUNTANTS
Price Waterhouse
1177 Avenue of the Americas
New York, New York 10036
INVESTMENT MANAGER
Dean Witter InterCapital Inc.
DEAN WITTER
LIMITED TERM
MUNICIPAL TRUST
PROSPECTUS--MAY 27, 1994
