DEAN WITTER LIQUID ASSET FUND INC, DEFS14A, 1997-03-20

DEAN WITTER LIQUID ASSET FUND INC
DEFS14A, 1997-03-20

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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
[ ] Confidential, for Use of the Commission Only (as
permitted by Rule 14a-6(e)(2))
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.149-11(c) or
Section 240.14a-12

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Active Assets Money Trust
Active Assets Tax-Free Trust
Active Assets California Tax-Free Trust
Active Assets Government Securities Trust
Dean Witter Liquid Asset Fund Inc.
Dean Witter U.S. Government Money Market Trust
Dean Witter California Tax-Free Daily Income Trust
Dean Witter New York Municipal Money Market Trust
Dean Witter Tax-Free Daily Income Trust
(Name of Registrant(s) Specified in its Charter)

- --------------------------------------------------------------------------------
Barry Fink
(Name of Person(s) Filing Proxy Statement)

Payment of Filing Fee (check the appropriate box):

[ x ] No fee required.
[ ] 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:

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

4) Proposed maximum aggregate value of transaction:

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

5) Fee previously paid:

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

[ ] 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 Form or Schedule and the date of its filing.

1) Amount Previously Paid:

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2) Form, Schedule or Registration Statement No.:

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3) Filing Party:

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4) Date Filed:

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ACTIVE ASSETS MONEY TRUST
ACTIVE ASSETS TAX-FREE TRUST
ACTIVE ASSETS CALIFORNIA TAX-FREE TRUST
ACTIVE ASSETS GOVERNMENT SECURITIES TRUST
DEAN WITTER LIQUID ASSET FUND INC.
DEAN WITTER U.S. GOVERNMENT MONEY MARKET TRUST
DEAN WITTER CALIFORNIA TAX-FREE DAILY INCOME TRUST
DEAN WITTER NEW YORK MUNICIPAL MONEY MARKET TRUST
DEAN WITTER TAX-FREE DAILY INCOME TRUST

NOTICE OF SPECIAL MEETINGS OF SHAREHOLDERS
TO BE HELD MAY 21, 1997

Notice is hereby given that Special Meetings of Shareholders of each Dean
Witter Fund listed above (each, a "Fund" and collectively, the "Funds") will be
held jointly (the "Meeting") in the Career Development Room, 61st Floor, 2 World
Trade Center, New York, New York 10048, on May 21, 1997, at 10:00 a.m., New York
City time, for the following purposes:

1. For each Fund, to approve or disapprove a new Investment Management
Agreement between the Fund and Dean Witter InterCapital Inc., a
wholly-owned subsidiary of Dean Witter, Discover & Co. ("DWDC"), in
connection with the proposed merger of Morgan Stanley Group Inc. with
DWDC;

2. For each Fund, to elect nine (9) Trustees or Directors, as applicable,
to serve until their successors shall have been elected and qualified;

3. For each of Active Assets Money Trust and Active Assets Government
Securities Trust, to approve or disapprove an amendment to its investment
policies to authorize its Board of Trustees to modify its investment
policies (TO BE VOTED ON BY SHAREHOLDERS OF ACTIVE ASSETS MONEY TRUST AND
ACTIVE ASSETS GOVERNMENT SECURITIES TRUST ONLY);

4. For each Fund, to approve or disapprove a new investment policy with
respect to investments in certain other investment companies;

5. For each Fund, to ratify or reject the selection of Price Waterhouse LLP
as the Fund's independent accountants for its current fiscal year; and

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

Shareholders of record of each Fund as of the close of business on March 12,
1997 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 with
respect to one or more Funds, 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 concerned
Fund's shares present in person or by proxy at the Meeting. The persons named as
proxies will
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vote in favor of such adjournment those proxies which they are entitled to vote
in favor of Proposal 1 and will vote against any such adjournment those proxies
to be voted against that Proposal.

BARRY FINK
SECRETARY

March 19, 1997
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.

THE BOARD OF DIRECTORS/TRUSTEES OF EACH FUND RECOMMENDS THAT YOU CAST YOUR
VOTE:

- FOR approval of each new Investment Management Agreement.

- FOR the election of all of the Directors/Trustees nominated for election.

- FOR approval of an amendment to the investment policies of each of Active
Assets Money Trust and Active Assets Government Securities Trust to
authorize its Board of Trustees to modify its investment policies
(SHAREHOLDERS OF ACTIVE ASSETS MONEY TRUST AND ACTIVE ASSETS GOVERNMENT
SECURITIES TRUST ONLY);

- FOR approval of a new investment policy for each Fund relating to
investments in certain other investment companies.

- FOR the ratification of the selection of independent public accountants
for the current fiscal year of each Fund.

YOUR VOTE IS IMPORTANT

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TWO WORLD TRADE CENTER, NEW YORK, NEW YORK 10048
---------------------

JOINT PROXY STATEMENT
---------------------

SPECIAL MEETINGS OF SHAREHOLDERS
MAY 21, 1997

This statement is furnished in connection with the solicitation of proxies
by the Board of Directors/Trustees (the "Board" or "Trustees") of each Dean
Witter Fund listed above (each, a "Fund" and collectively, the "Funds") for use
at the Special Meetings of Shareholders of each Fund to be held jointly on May
21, 1997 (the "Meeting"), and at any adjournments thereof. The first mailing of
this Proxy Statement is expected to be made on or about March 19, 1997.

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 1, 3, 4 and 5 set forth in the attached Notice of
Special Meetings 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 Funds, execution and delivery of a later dated proxy to the
Secretary of the Funds (if returned and received in time to be voted), or
attendance and voting at the Meeting. Attendance at the Meeting will not in and
of itself revoke a proxy.

The table below sets forth each Proposal and those Shareholders who are
entitled to vote for each such Proposal.

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
PROPOSAL
FUND 1 2 3 4
5
Active Assets Money Trust X X X X X
Active Assets Tax-Free Trust X X X X
Active Assets California Tax-Free Trust X X X X
Active Assets Government Securities Trust X X X X X
Dean Witter Liquid Asset Fund Inc. X X X X
Dean Witter U.S. Government Money Market Trust X X X X
Dean Witter California Tax-Free Daily Income Trust X X X X
Dean Witter New York Municipal Money Market Trust X X X X
Dean Witter Tax-Free Daily Income Trust X X X X
</TABLE>

<PAGE>

The holders of shares ("Shareholders") of record of each Fund as of the
close of business on March 12, 1997, the record date for the determination of
Shareholders entitled to notice of and to vote at the Meeting (the "Record
Date"), are entitled to one vote for each share held and a fractional vote for a
fractional share. The table below sets forth the number of shares outstanding
for each Fund as of the Record Date. The following persons are known to own 5%
or more of the outstanding shares of Dean Witter U.S. Government Money Market
Trust as of the Record Date: Seafarers Pension Plan, 5201 Auth Way, Camp
Springs, Maryland (54,168,026 shares or approximately 5.8% of the outstanding
shares) and Mellon Bank, N.A., Mutual Funds, P.O. Box 3198, Pittsburgh,
Pennsylvania, as trustee of the Dean Witter START Plan and the SPS Transaction
Services, Inc. START Plan, employee benefit plans established by Dean Witter
Reynolds Inc. and SPS Transaction Services, Inc. (an affiliate of Dean Witter
Reynolds Inc.) for their employees as qualified under Section 401(k) of the
Internal Revenue Code (81,667,425 shares or approximately 8.8% of the
outstanding shares). No person was known to own as much as 5% of the outstanding
shares of any of the other Funds on that date. The percentage ownership of
shares of the Funds changes from time to time depending on purchases and
redemptions by Shareholders and the total number of shares outstanding.

<TABLE>
<CAPTION>
NUMBER OF SHARES
OUTSTANDING AS OF
MARCH 12, 1997
NAME OF FUND (RECORD DATE)
- ----------------------------------------------------------------------------------------------------- -----------------
<S> <C>
Active Assets Money Trust............................................................................ 8,907,236,640
Active Assets Tax-Free Trust......................................................................... 1,739,738,527
Active Assets California Tax-Free Trust.............................................................. 443,158,911
Active Assets Government Securities Trust............................................................ 674,047,709
Dean Witter Liquid Asset Fund Inc.................................................................... 12,520,172,172
Dean Witter U.S. Government Money Market Trust....................................................... 927,037,232
Dean Witter California Tax-Free Daily Income Trust................................................... 265,735,152
Dean Witter New York Municipal Money Market Trust.................................................... 41,786,990
Dean Witter Tax-Free Daily Income Trust.............................................................. 555,822,346
</TABLE>

The cost of soliciting proxies for the Meeting, which consists principally
of printing and mailing expenses and which is expected to be approximately
$2,300,500, will be allocated as follows: 90% of the cost will be borne by Dean
Witter, Discover & Co. and 10% of the cost will be borne by the Funds.
Therefore, the total cost of soliciting proxies borne by each Fund is estimated
to be approximately as follows: Active Assets Money Trust--$30,650; Active
Assets Tax-Free Trust--$3,250; Active Assets California Tax-Free Trust--$1,000;
Active Assets Government Securities Trust--$1,300; Dean Witter Liquid Asset Fund
Inc.--$161,100; Dean Witter U.S. Government Money Market Trust--$27,950; Dean
Witter California Tax-Free Daily Income Trust--$1,300; Dean Witter New York
Municipal Money Market Trust--$600; and Dean Witter Tax-Free Daily Income
Trust--$2,900. 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 Funds and officers and regular employees of certain
affiliates of the Funds, including Dean Witter InterCapital Inc., Dean Witter
Trust Company, Dean Witter Services Company Inc. and/or Dean Witter Reynolds
Inc., without special compensation. In addition, Dean Witter InterCapital Inc.
may employ First Data Corp. as proxy solicitor, the cost of which is estimated
to be approximately $830,800 and will be borne by Dean Witter, Discover & Co.

First Data Corp. or Dean Witter Trust Company may call Shareholders to ask
if they would be willing to have their votes recorded by telephone. The
telephone voting procedure is designed to authenticate Shareholders' identities,
to allow Shareholders to authorize the voting of their shares in accordance with
their instructions and to confirm that their instructions have been recorded
properly. No recommendation will be made as to how a Shareholder should vote on
any Proposal other than to refer to the recommendations of the Board. The Funds
have been advised by counsel that these procedures are consistent with the
requirements of applicable law.

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Shareholders voting by telephone will be asked for their social security number
or other identifying information and will be given an opportunity to authorize
proxies to vote their shares in accordance with their instructions. To ensure
that the Shareholders' instructions have been recorded correctly they will
receive a confirmation of their instructions in the mail. A special toll-free
number will be available in case the information contained in the confirmation
is incorrect. Although a Shareholder's vote may be taken by telephone, each
Shareholder will receive a copy of this Proxy Statement and may vote by mail
using the enclosed proxy card. With respect to the solicitation of a telephonic
vote by First Data Corp., additional expenses are expected to be approximately
$6.00 per telephone vote transacted, which would be borne by Dean Witter,
Discover & Co.

(1) APPROVAL OR DISAPPROVAL OF NEW INVESTMENT
MANAGEMENT AGREEMENT
BACKGROUND
Dean Witter InterCapital Inc. (the "Investment Manager" or "InterCapital")
currently serves as investment manager of each Fund pursuant to an investment
management agreement entered into by each Fund and InterCapital (each, a
"Current Agreement" and collectively, the "Current Agreements"), and in that
capacity provides investment advisory and certain other services to the Funds.
InterCapital is a wholly-owned subsidiary of Dean Witter, Discover & Co.
("DWDC"). The approval of a new investment management agreement between each
Fund and InterCapital (each, a "New Agreement" and collectively, the "New
Agreements") is being sought in connection with the proposed merger of Morgan
Stanley Group Inc. ("Morgan Stanley") and DWDC (the "Merger").

INFORMATION CONCERNING MORGAN STANLEY

Morgan Stanley and various of its directly or indirectly owned subsidiaries,
including Morgan Stanley & Co. Incorporated ("Morgan Stanley & Co."), a
registered broker-dealer and investment adviser, and Morgan Stanley
International, provide a wide range of financial services on a global basis.
Their principal businesses include securities underwriting, distribution and
trading; merger, acquisition, restructuring, real estate, project finance and
other corporate finance advisory activities; merchant banking and other
principal investment activities; stock brokerage and research services; asset
management; the trading of foreign exchange and commodities on a broad range of
asset categories, rates and indicies; and global custody, securities clearance
services and securities lending.

THE MERGER

Pursuant to the terms of the Merger, Morgan Stanley will be merged with and
into DWDC with the surviving corporation to be named Morgan Stanley, Dean
Witter, Discover & Co. Following the Merger, InterCapital will be a direct,
wholly-owned subsidiary of Morgan Stanley, Dean Witter, Discover & Co.

Under the terms of the Merger, each share of Morgan Stanley common stock
will be converted into the right to receive 1.65 shares of DWDC common stock and
each issued and outstanding share of DWDC common stock will remain outstanding
and will thereafter represent one share of Morgan Stanley, Dean Witter, Discover
& Co. common stock. Following the Merger, Morgan Stanley's shareholders will own
approximately 45% and DWDC's shareholders will own approximately 55% of the
outstanding shares of common stock of Morgan Stanley, Dean Witter, Discover &
Co.

The Board of Directors of Morgan Stanley, Dean Witter, Discover & Co. will
consist of fourteen members, two of which will be Morgan Stanley insiders and
two of which will be DWDC insiders. The remaining ten directors will be outside
directors, with Morgan Stanley and DWDC each designating five of the ten. The
Chairman and Chief Executive Officer of Morgan Stanley, Dean Witter, Discover &
Co. will be Philip J. Purcell, who is the current Chairman and Chief Executive
Officer of DWDC. The President and Chief Operating Officer of Morgan Stanley,
Dean Witter, Discover & Co. will be John Mack, who is the current President of
Morgan Stanley.

3
<PAGE>

The Merger is expected to be completed in mid-1997 and is subject to certain
closing conditions, including certain regulatory approvals and the approval of
shareholders of both DWDC and Morgan Stanley.

APPROVAL OF NEW INVESTMENT MANAGEMENT AGREEMENTS

In order to assure continuity of investment management services to each Fund
after the Merger, the Board of each Fund met in person for the purpose of
considering whether it would be in the best interests of each Fund and its
Shareholders to enter into a New Agreement between each Fund and the Investment
Manager which would become effective upon the later of Shareholder approval of
the New Agreement or consummation of the Merger. At its meetings, and for the
reasons discussed below (see "The Boards' Consideration"), the Board of each
Fund, including all of the Trustees who are not "interested persons," as defined
in the Investment Company Act of 1940, as amended (the "1940 Act"), of the
Investment Manager (the "Independent Trustees"), unanimously approved the New
Agreements and recommended their respective approval by Shareholders.

THE TERMS OF EACH NEW AGREEMENT, INCLUDING FEES PAYABLE BY A FUND
THEREUNDER, ARE IDENTICAL, IN ALL MATERIAL RESPECTS, TO THOSE OF THE
CORRESPONDING CURRENT AGREEMENT, EXCEPT FOR THE DATES OF EFFECTIVENESS AND
TERMINATION. The terms of the Current Agreements are fully described under "The
Current Investment Management Agreements" below. If approved by Shareholders,
each New Agreement will continue in effect for an initial term expiring April
30, 1999. Each New Agreement will be continued in effect from year to year
thereafter if each such continuance is approved by the Board or by a majority of
the outstanding voting securities (as defined below) of the Fund and, in either
event, by the vote cast in person of a majority of the Independent Trustees. In
the event that Shareholders of a Fund do not approve a New Agreement, the
Current Agreement will remain in effect and the Board will take such action, if
any, as it deems to be in the best interests of the concerned Fund and its
Shareholders, which may include proposing that Shareholders approve an agreement
in lieu of the New Agreement. In the event that the Merger is not consummated,
the Investment Manager will continue to provide services to the Funds in
accordance with the terms of the Current Agreements for such periods as may be
approved at least annually by the Board, including a majority of the Independent
Trustees.

REQUIRED VOTE

Each New Agreement cannot be implemented unless approved at the Meeting, or
any adjournment thereof, by a majority of the outstanding voting securities of
the respective Fund. Such a majority means the affirmative vote of the holders
of (a) 67% or more of the shares of the respective Fund present, in person or by
proxy, at the Meeting, if the holders of more than 50% of the outstanding shares
are so present, or (b) more than 50% of the outstanding shares of the respective
Fund, whichever is less.

THE BOARD OF EACH FUND UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE FOR
APPROVAL OF THE NEW INVESTMENT MANAGEMENT AGREEMENT.

THE BOARDS' CONSIDERATION

At a special meeting of the Committee of the Independent Trustees of the
Funds held on February 20, 1997, at which each of the Independent Trustees of
the Funds was present, and a meeting of the full Board on February 21, 1997, the
Trustees evaluated each of the New Agreements (the form of which is attached
hereto as Appendix A). Prior to and during the meetings, the Independent
Trustees requested and received all information they deemed necessary to enable
them to determine whether each of the New Agreements is in the best interests of
the respective Fund and its Shareholders. They were assisted in their review and
deliberations by independent legal counsel. In determining whether to approve
the New Agreements, the Trustees assessed the implications of the

4
<PAGE>
Merger for the Investment Manager and its ability to continue to provide
services to the Funds of the same scope and quality as are presently provided.
In particular, the Trustees inquired as to the impact of the Merger on the
Investment Manager's personnel, management, facilities and financial
capabilities, and received assurances in this regard from senior management of
DWDC and the Investment Manager that the Merger would not adversely affect the
Investment Manager's ability to fulfill its obligations under its respective
agreements with the Funds or to operate its business in a manner consistent with
past practices. In addition, the Trustees considered the effects of the
Investment Manager and Morgan Stanley becoming affiliated persons of each other.
Following the Merger, the 1940 Act will prohibit or impose certain conditions on
the ability of the Funds to engage in certain transactions with Morgan Stanley
and its affiliates. For example, absent exemptive relief, the Funds will be
prohibited from purchasing securities from Morgan Stanley & Co., a wholly-owned
broker-dealer subsidiary of Morgan Stanley, in transactions in which Morgan
Stanley & Co. acts as principal, and the Funds will have to satisfy certain
conditions in order to engage in securities transactions in which Morgan Stanley
& Co. acts as broker or to purchase securities in an underwritten offering in
which Morgan Stanley & Co. acts as an underwriter. In this connection, senior
management of the Investment Manager represented to the Trustees that they do
not believe these prohibitions or conditions will have a material effect on the
management or performance of the Funds.

The Trustees also considered that each New Agreement is identical, in all
material respects, to the corresponding Current Agreement (other than the dates
of effectiveness and termination).

Based upon the Trustees' review and the evaluations of the materials they
received, and after consideration of all factors deemed relevant to them, the
Trustees of each Fund, including all of the Independent Trustees, determined
that each of the New Agreements is in the best interests of each respective Fund
and its Shareholders. ACCORDINGLY, THE BOARD OF EACH FUND, INCLUDING ALL OF THE
INDEPENDENT TRUSTEES, APPROVED EACH NEW AGREEMENT AND VOTED TO RECOMMEND
APPROVAL BY SHAREHOLDERS OF EACH FUND.

THE CURRENT INVESTMENT MANAGEMENT AGREEMENTS

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

The Investment Manager pays the compensation of the officers of the Funds
and provides the Funds 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 Funds' shares and the preparation of
prospectuses, statements of additional information, 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 Current Agreements, each Fund pays the Investment Manager compensation which
is accrued daily and payable monthly at the following rates. For Active Assets
Money Trust, Active Assets Tax-Free Trust, Active Assets California Tax-Free
Trust, Active Assets Government Securities Trust, Dean Witter U.S. Government
Money Market Trust, Dean Witter California Tax-Free Daily Income Trust, Dean
Witter New York Municipal Money Market Trust and Dean Witter Tax-Free Daily
Income Trust, the management fee rate is determined by applying the following
annual rates to the net assets of the Fund determined as of the close of each
business day: 0.50% to the portion of the daily net assets not exceeding $500
million; 0.425% to the portion of the daily net assets exceeding $500 million
but not exceeding $750 million; 0.375% to the portion of the daily net assets
exceeding $750 million but not exceeding

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<PAGE>
$1 billion; 0.35% to the portion of the daily net assets exceeding $1 billion
but not exceeding $1.5 billion; 0.325% to the portion of the daily net assets
exceeding $1.5 billion but not exceeding $2 billion; 0.30% to the portion of the
daily net assets exceeding $2 billion but not exceeding $2.5 billion; 0.275% to
the portion of the daily net assets exceeding $2.5 billion but not exceeding $3
billion; and 0.25% to the portion of the daily net assets exceeding $3 billion.
For Dean Witter Liquid Asset Fund Inc. the management fee rate is determined by
applying the following annual rates to the net assets of the Fund determined as
of the close of each business day: 0.50% to the portion of the daily net assets
not exceeding $500 million; 0.425% to the portion of the daily net assets
exceeding $500 million but not exceeding $750 million; 0.375% to the portion of
the daily net assets exceeding $750 million but not exceeding $1 billion; 0.35%
to the portion of the daily net assets exceeding $1 billion but not exceeding
$1.35 billion; 0.325% to the portion of the daily net assets exceeding $1.35
billion but not exceeding $1.75 billion; 0.30% to the portion of the daily net
assets exceeding $1.75 billion but not exceeding $2.15 billion; 0.275% to the
portion of the daily net assets exceeding $2.15 billion but not exceeding $2.5
billion; 0.25% to the portion of the daily net assets exceeding $2.5 billion but
not exceeding $15 billion; 0.249% to the portion of the daily net assets
exceeding $15 billion but not exceeding $17.5 billion; and 0.248% to the portion
of the daily net assets exceeding $17.5 billion. The management fees paid by
each Fund during its last fiscal year and the net assets of each Fund as of its
fiscal year end are set forth in the table below.

<TABLE>
<CAPTION>
MANAGEMENT FEE
LAST FISCAL PAID DURING FUND'S NET ASSETS AS OF
FUND YEAR END LAST FISCAL YEAR FISCAL YEAR END
- -------------------------------------------------------------------- ----------- ------------------ -----------------
<S> <C> <C> <C>
Active Assets Money Trust........................................... 6/30/96 $ 19,802,633 $ 7,170,143,290
Active Assets Tax-Free Trust........................................ 6/30/96 6,571,351 1,541,887,129
Active Assets California Tax-Free Trust............................. 6/30/96 1,781,282 384,218,164
Active Assets Government Securities Trust........................... 6/30/96 2,841,130 571,400,088
Dean Witter Liquid Asset Fund Inc................................... 8/31/96 30,669,867 11,389,468,650
Dean Witter U.S. Government Money Market Trust...................... 1/31/97 4,190,754 927,084,621
Dean Witter California Tax-Free Daily Income Trust.................. 12/31/96 1,326,761 259,590,346
Dean Witter New York Municipal Money Market Trust................... 12/31/96 212,463 40,758,246
Dean Witter Tax-Free Daily Income Trust............................. 12/31/96 2,738,887 521,879,353
</TABLE>

Under the Current Agreements, each Fund is obligated to bear all of the
costs and expenses of its operation, except those specifically assumed by the
Investment Manager or Dean Witter Distributors Inc. ("Distributors" or the
"Distributor"), the Funds' Distributor, including, without limitation: fees
pursuant to any plan of distribution that each Fund may adopt; charges and
expenses of any registrar, custodian or depository appointed by each Fund for
the safekeeping of its cash, portfolio securities or commodities and other
property, and any stock transfer or dividend agent or agents appointed by each
Fund; brokers' commissions chargeable to each Fund in connection with portfolio
securities transactions to which the Fund is a party; all taxes, including
securities or commodities issuance and transfer taxes, and corporate fees
payable by each Fund to federal, state or other governmental agencies; costs and
expenses of engraving or printing of certificates representing shares of each
Fund; all costs and expenses in connection with registration and maintenance of
registration of each Fund 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 each Fund 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 each Fund's
shares; charges and expenses of legal counsel, including counsel to the
Independent Trustees of the

6
<PAGE>
Funds, and independent accountants in connection with any matter relating to
each Fund (not including compensation or expenses of attorneys employed by the
Investment Manager); association dues; interest payable on each Fund's
borrowings; postage; insurance premiums on property or personnel (including
officers and Trustees) of each Fund which inure to the Fund's benefit;
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 of each Fund's operations unless otherwise
explicitly provided in the respective Current Agreements.

The administrative services called for under the Current Agreements are
performed by Dean Witter Services Company Inc. ("DWSC"), a wholly-owned
subsidiary of InterCapital.

Each Current Agreement was first approved by the Board of the applicable
Fund on October 30, 1992. The Current Agreement for Active Assets California
Tax-Free Trust was last approved by its Shareholders at a special meeting of
Shareholders held on January 13, 1993 and the Current Agreement for each of the
other Funds was last approved by the Shareholders of the applicable Fund at a
special meeting of Shareholders held on January 12, 1993.

After its respective initial term, each Current Agreement continues in
effect from year to year thereafter, provided that each such continuance is
approved by the vote of a majority, as defined by the 1940 Act, of the
outstanding voting securities of each Fund or by the Trustees, and, in either
event, by the vote cast in person by a majority of the Independent Trustees at a
meeting called for the purpose of voting on such approval. Each Current
Agreement has been continued in effect from year to year by action of the Board,
including the Independent Trustees. Prior to the Board's February 21, 1997
meeting, the most recent approval occurred at a meeting of the Board held on
April 17, 1996.

Each Current 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 applicable Fund, 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.

THE INVESTMENT MANAGER

Dean Witter InterCapital Inc. is each Fund'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.

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 Dean Witter Reynolds Inc. ("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, InterCapital, DWSC and Dean Witter Trust Company
("DWTC") ; James F. Higgins, President and Chief Operating Officer of Dean
Witter Financial, Executive Vice President of DWDC and Director of DWR,
Distributors, InterCapital, DWSC and DWTC; Charles A. Fiumefreddo, Executive
Vice President and Director of DWR and 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.

7
<PAGE>
The business address of the foregoing Directors and Executive Officer is Two
World Trade Center, New York, New York 10048. DWDC has its offices at 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. Appendix B lists the investment companies for which InterCapital
provides investment management or investment advisory services and which have
similar investment objectives to those of the Funds and sets forth the fees
payable to InterCapital by such companies, including the Funds, and their net
assets as of March 12, 1997. DWSC also has its offices at Two World Trade
Center, New York, New York 10048.

Dean Witter Distributors Inc. acts as the Funds' Distributor. Like
InterCapital, the Distributor is a wholly-owned subsidiary of DWDC. Pursuant to
each Fund's Rule 12b-1 plan, each Fund pays the Distributor 12b-1 fees for
distribution related services. DWTC, an affiliate of InterCapital, serves as the
transfer agent of the Funds. The table below sets forth for each Fund the
distribution fees paid to the Distributor and the transfer agency fees paid to
DWTC during the Fund's last fiscal year:

<TABLE>
<CAPTION>
DISTRIBUTION FEES PAID TRANSFER AGENT FEES
TO THE DISTRIBUTOR PAID TO DWTC
DURING LAST FISCAL DURING LAST FISCAL
FUND YEAR YEAR
- ------------------------------------------------------------------------ ---------------------- ----------------------
<S> <C> <C>
Active Assets Money Trust............................................... $ 6,495,409 $ 3,112,938
Active Assets Tax-Free Trust............................................ 1,560,662 355,031
Active Assets California Tax-Free Trust................................. 351,571 73,519
Active Assets Government Securities Trust............................... 570,309 121,843
Dean Witter Liquid Asset Fund Inc....................................... 10,716,020 26,264,255
Dean Witter U.S. Government Money Market Trust.......................... 879,924 4,716,932
Dean Witter California Tax-Free Daily Income Trust...................... 263,178 180,040
Dean Witter New York Municipal Money Market Trust....................... 38,852 44,442
Dean Witter Tax-Free Daily Income Trust................................. 537,867 455,855
</TABLE>

Once the Merger is consummated and the New Agreements are approved, the
Distributor and DWTC fully intend to continue to provide, respectively, the same
services to the Funds as are currently being provided.

Because DWR and InterCapital are under the common control of DWDC, DWR is an
affiliated broker of the Funds. During each of their respective last fiscal
years, none of the Funds paid any brokerage commissions to DWR.

(2) ELECTION OF TRUSTEES FOR EACH FUND

The number of Trustees of each Fund has been fixed by the Board at nine.
There are presently eight Trustees, all of whom are standing for re-election at
the Meeting for indefinite terms. In addition, the Board of each Fund has
nominated Wayne E. Hedien for election as Trustee at the Meeting for the first
time.

Six of the current eight Trustees (Michael Bozic, Edwin J. Garn, John R.
Haire, Manuel H. Johnson, Michael E. Nugent and John L. Schroeder) are
Independent Trustees. Mr. Hedien, who has been nominated for election at the
Meeting, if elected, also will be an Independent Trustee. The other two current
Trustees, Charles A. Fiumefreddo and Philip J. Purcell, are "interested persons"
(as such term is defined in the 1940 Act) of the Funds and InterCapital and,
thus, are not Independent Trustees. 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.
Other than Messrs. Bozic, Purcell and Schroeder, who were elected as Trustees by
the other Trustees of the Funds, all of the members of the Board currently
serving were previously elected at a meeting of Shareholders.

8
<PAGE>

The following information regarding each of the nominees for election as
Trustee includes principal occupations and employment for at least the last five
years, age, shares of each Fund owned, if any, as of March 12, 1997 (shown in
parentheses), positions with the Funds, and directorships (or trusteeships) in
other companies which file periodic reports with the Securities and Exchange
Commission, including the 84 investment companies, including the Funds, for
which InterCapital serves as investment manager or investment adviser (referred
to herein as the "Dean Witter Funds") and the 14 investment companies for which
InterCapital's wholly-owned subsidiary, DWSC, serves as manager and TCW Funds
Management, Inc. serves as investment adviser (referred to herein as the "TCW/DW
Funds").

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

MICHAEL BOZIC, Trustee since April 1994*; age 56 (Active Assets Tax-Free
Trust - 122,634 shares); Chairman and Chief Executive Officer of Levitz
Furniture Corporation (since November 1995); Director or Trustee of the Dean
Witter Funds; formerly President and Chief Executive Officer of Hills Department
Stores (May 1991-July 1995); formerly variously Chairman, Chief Executive
Officer, President and Chief Operating Officer (1987-1991) of the Sears
Merchandise Group of Sears, Roebuck and Co. ("Sears"); Director of Eaglemark
Financial Services, Inc., the United Negro College Fund and Weirton Steel
Corporation.

CHARLES A. FIUMEFREDDO, Trustee since July 1991*; age 63 (Dean Witter
Tax-Free Daily Income Trust - 2 shares; Dean Witter U.S. Government Money Market
Trust - 2,048 shares; Active Assets Money Trust - 6,702 shares); 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 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 64 (Dean Witter
Liquid Asset Fund Inc. - 314 shares); 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 Corporation (since January 1993); Director of Franklin
Quest (time management systems) and John Alden Financial Corp (health
insurance); member of the board of various civic and charitable organizations.

JOHN R. HAIRE, Trustee since January 1981*; age 72 (Active Assets Tax-Free
Trust - 431,243 shares); 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; Chairman of the Audit Committee and Chairman of the
Committee of the Independent Trustees and Trustee of the TCW/DW Funds; formerly
President, Council for Aid to Education (1978-1989) and Chairman and Chief
Executive Officer of Anchor Corporation, an investment adviser (1964-1978);
Director of Washington National Corporation (insurance).

WAYNE E. HEDIEN, age 63 (Active Assets Tax-Free Trust - 110,691 shares);
Retired; Director of The PMI Group, Inc. (private mortgage insurance); Trustee
and Vice Chairman of The Field Museum of Natural History; formerly associated
with the Allstate Companies (1966-1994), most recently as Chairman of The
Allstate Corporation (March 1993-December 1994) and Chairman and Chief Executive
Officer of its wholly-owned subsidiary, Allstate Insurance Company (July
1989-December 1994); director of various other business and charitable
organizations.

- ------------------------
*This date is the date the Trustee began serving the Dean Witter Funds complex.

9
<PAGE>
DR. MANUEL H. JOHNSON, Trustee since July 1991*; age 48; Senior Partner,
Johnson Smick International, Inc., a consulting firm; Co-Chairman and a founder
of the Group of Seven Council (G7C), an international economic commission;
Director or Trustee of the Dean Witter Funds; Trustee of the TCW/DW Funds;
Director of NASDAQ (since June 1995); Director of Greenwich Capital Markets Inc.
(broker-dealer); Trustee of the Financial Accounting Foundation (oversight
organization for the FASB); formerly Vice Chairman of the Board of Governors of
the Federal Reserve System (1986-1990) and Assistant Secretary of the U.S.
Treasury (1982-1986).

MICHAEL E. NUGENT, Trustee since July 1991*; age 60 (Active Assets Money
Trust - 901 shares); General Partner, Triumph Capital, L.P., a private
investment partnership; Director or Trustee of the Dean Witter Funds; Trustee of
the TCW/DW Funds; formerly Vice President, Bankers Trust Company and BT Capital
Corporation (1984-1988); Director of various business organizations.

PHILIP J. PURCELL, Trustee since April 1994*; age 53 (Dean Witter Liquid
Asset Fund Inc. - 46,277 shares; Active Assets Money Trust - 69,195 shares;
Active Assets Tax-Free Trust - 3,464,245); Chairman of the Board of Directors
and Chief Executive Officer of DWDC, DWR and Novus Credit Services Inc.;
Director of InterCapital, DWSC and 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 66 (Dean Witter Liquid
Asset Fund Inc. - 30,933 shares); Retired; Director or Trustee of the Dean
Witter Funds; Trustee of the TCW/DW Funds; Director of Citizens Utilities
Company; formerly Executive Vice President and Chief Investment Officer of the
Home Insurance Company (1991-1995).

The other executive officers of each Fund are: Barry Fink, Vice President,
Secretary and General Counsel; Robert M. Scanlan, Vice President; Robert S.
Giambrone, Vice President; Joseph J. McAlinden, Vice President; and Thomas F.
Caloia, Treasurer; and, with respect to the individual Funds, the other
executive officers are as follows: Active Assets Money Trust and Active Assets
Government Securities Trust -- Jonathan R. Page, Vice President and Patricia A.
Cuddy, Vice President; Active Assets Tax-Free Trust and Active Assets California
Tax-Free Trust -- Jonathan R. Page, Vice President and Katherine H. Stromberg,
Vice President; Dean Witter Liquid Asset Fund Inc. and Dean Witter U.S.
Government Money Market Trust -- Jonathan R. Page, Vice President; Dean Witter
California Tax-Free Daily Income Trust, Dean Witter New York Municipal Money
Market Trust and Dean Witter Tax-Free Daily Income Trust -- Katherine H.
Stromberg, Vice President. In addition, the following individuals serve as Vice
Presidents of the Funds: Active Assets Money Trust and Active Assets Government
Securities Trust -- Peter M. Avelar, Vice President and James F. Willison, Vice
President; Active Assets Tax-Free Trust and Active Assets California Tax-Free
Trust -- Peter M. Avelar, Vice President, James F. Willison, Vice President,
Joseph Arcieri, Vice President and Gerard J. Lian, Vice President; Dean Witter
Liquid Asset Fund Inc. -- Peter M. Avelar, Vice President, James F. Willison,
Vice President and Patricia A. Cuddy, Vice President; Dean Witter U.S.
Government Money Market Trust -- Peter M. Avelar, Vice President, Paul D. Vance,
Vice President, James F. Willison, Vice President and Patricia A. Cuddy, Vice
President; Dean Witter California Tax-Free Daily Income Trust, Dean Witter New
York Municipal Money Market Trust and Dean Witter Tax-Free Daily Income Trust --
Peter M. Avelar, Vice President, Jonathan R. Page, Vice President, James F.
Willison, Vice President, Joseph Arcieri, Vice President and Gerard J. Lian,
Vice President. In addition, Frank Bruttomesso, Marilyn K. Cranney, Lou Anne D.
McInnis, Carsten Otto and Ruth Rossi serve as Assistant Secretaries of each
Fund.

Mr. Fink is 42 years old and is currently First Vice President (since June
1993), Secretary and General Counsel (since February 1997) of InterCapital and
DWSC and (since August 1996) Assistant Secretary of DWR;

- ------------------------
*This date is the date the Trustee began serving the Dean Witter Funds complex.

10
<PAGE>

he is also First Vice President, Assistant Secretary and Assistant General
Counsel of Distributors (since February 1997). He was previously Vice President,
Assistant Secretary and Assistant General Counsel of InterCapital and DWSC. Mr.
Scanlan is 60 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. Giambrone is 42 years
old and is currently Senior Vice President of InterCapital, DWSC, Distributors
and DWTC (since August 1995) and Director of DWTC (since April 1996). He was
formerly a partner of KPMG Peat Marwick, LLP. Mr. McAlinden is 54 years old and
is currently Executive Vice President of InterCapital (since April 1996); he is
also Chief Investment Officer of InterCapital and Director of DWTC (since April
1996). He was previously Senior Vice President of InterCapital (June 1995-April
1996) and prior thereto was a Managing Director of Dillon Reed. Mr. Caloia is 51
years old and is currently First Vice President and Assistant Treasurer of
InterCapital and DWSC. Mr. Page is 50 years old and is Senior Vice President of
InterCapital. Ms. Cuddy is 42 years old and is currently Vice President of
InterCapital (since June, 1994). She was previously Senior Vice President of
various investment companies managed by Dreyfus Corporation. Ms. Stromberg is 48
years old and is currently Vice President of InterCapital. Mr. Vance is 61 years
old and is currently Senior Vice President of InterCapital. Mr. Willison is 53
years old and is currently Senior Vice President of InterCapital. Mr. Avelar is
38 years old and is currently Senior Vice President of InterCapital. Mr. Arcieri
is 48 years old and is currently Vice President of InterCapital. Mr. Lian is 42
years old and is currently Vice President of InterCapital. Other than Messrs.
Scanlan, Giambrone and McAlinden and Ms. Cuddy, each of the above officers has
been an employee of InterCapital or DWR (formerly the corporate parent of
InterCapital) for over five years.

THE BOARD OF TRUSTEES, THE INDEPENDENT TRUSTEES, AND THE COMMITTEES

The Board currently consists of eight (8) Trustees. These same individuals
also serve as directors or trustees for all of the Dean Witter Funds, and are
referred to in this section as Trustees. As of the date of this Proxy Statement,
there are a total of 84 Dean Witter Funds, comprised of 127 portfolios. As of
February 28, 1997, the Dean Witter Funds had total net assets of approximately
$84.2 billion and more than six million shareholders.

Six Trustees and the new nominee (77% of the total number) have no
affiliation or business connection with InterCapital or any of its affiliated
persons. The other two Trustees (the "Management Trustees") are affiliated with
InterCapital. For a period of at least three years after consummation of the
Merger, at least 75% of the members of the Board of Trustees of each Fund will
not be "interested persons" (as defined in the 1940 Act) of the Investment
Manager. Four of the six Independent Trustees are also Independent Trustees of
the TCW/DW Funds.

Law and regulation establish both general guidelines and specific duties for
the Independent Trustees. The Dean Witter Funds seek as Independent Trustees
individuals of distinction and experience in business and finance, government
service or academia; these are people whose advice and counsel are in demand by
others and for whom there is often competition. To accept a position on the
Funds' Boards, such individuals may reject other attractive assignments because
the Funds make substantial demands on their time. Indeed, by serving on the
Funds' Boards, certain Trustees who would otherwise be qualified and in demand
to serve on bank boards would be prohibited by law from doing so.

All of the current Independent Trustees serve as members of the Audit
Committee and the Committee of the Independent Trustees. Three of them also
serve as members of the Derivatives Committee. The Committees hold some meetings
at InterCapital's offices and some outside InterCapital. Management Trustees or
officers do not attend these meetings unless they are invited for purposes of
furnishing information or making a report. The Funds do not have any nominating
or compensation committees.

11
<PAGE>
The Committee of the Independent Trustees is charged with recommending to
the full Board approval of management, advisory and administration contracts,
Rule 12b-1 plans and distribution and underwriting agreements; continually
reviewing Fund performance; checking on the pricing of portfolio securities,
brokerage commissions, transfer agent costs and performance, and trading among
Funds in the same complex; and approving fidelity bond and related insurance
coverage and allocations, as well as other matters that arise from time to time.
The Independent Trustees are required to select and nominate individuals to fill
any Independent Trustee vacancy on the Board of any Fund that has a Rule 12b-1
plan of distribution. Most of the Dean Witter Funds have such a plan.

The Audit Committee is charged with recommending to the full Board the
engagement or discharge of the Funds' independent accountants; directing
investigations into matters within the scope of the independent accountants'
duties, including the power to retain outside specialists; reviewing with the
independent accountants the audit plan and results of the auditing engagement;
approving professional services provided by the independent accountants and
other accounting firms prior to the performance of such services; reviewing the
independence of the independent accountants; considering the range of audit and
non-audit fees; reviewing the adequacy of the Fund's system of internal
controls; and preparing and submitting Committee meeting minutes to the full
Board.

Finally, the Board of each Fund has formed a Derivatives Committee to
establish parameters for and oversee the activities of the Fund with respect to
derivative investments, if any, made by the Fund.

The following chart sets forth the number of meetings of the Board, the
Audit Committee, the Committee of the Independent Trustees and the Derivatives
Committee of each Fund during its most recent fiscal year. No Trustee attended
fewer than 75% of the meetings of the Board, the Audit Committee, the Committee
of the Independent Trustees or the Derivatives Committee held while he served in
such positions.

NUMBER OF BOARD AND COMMITTEE MEETINGS HELD DURING LAST FISCAL YEAR

<TABLE>
<CAPTION>
COMMITTEE
OF THE
BOARD OF INDEPENDENT AUDIT
FISCAL TRUSTEES TRUSTEES COMMITTEE
NAME OF FUND YEAR-END MEETINGS MEETINGS MEETINGS
- ----------------------------------------------------------- --------- --------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Active Assets Money Trust.................................. 6/30/96 4 10 3
Active Assets Tax-Free Trust............................... 6/30/96 4 10 3
Active Assets California Tax-Free Trust.................... 6/30/96 4 10 3
Active Assets Government Securities Trust.................. 6/30/96 4 10 3
Dean Witter Liquid Asset Fund Inc.......................... 8/31/96 4 10 3
Dean Witter U.S. Government Money Market Trust............. 1/31/97 5 10 2
Dean Witter California Tax-Free Daily Income Trust......... 12/31/96 5 10 3
Dean Witter New York Municipal Money Market Trust.......... 12/31/96 5 10 3
Dean Witter Tax-Free Daily Income Trust.................... 12/31/96 5 10 3

DERIVATIVES
COMMITTEE
NAME OF FUND MEETINGS
- ----------------------------------------------------------- -----------------
<S> <C>
Active Assets Money Trust.................................. 4
Active Assets Tax-Free Trust............................... 4
Active Assets California Tax-Free Trust.................... 4
Active Assets Government Securities Trust.................. 4
Dean Witter Liquid Asset Fund Inc.......................... 3
Dean Witter U.S. Government Money Market Trust............. 3
Dean Witter California Tax-Free Daily Income Trust......... 3
Dean Witter New York Municipal Money Market Trust.......... 3
Dean Witter Tax-Free Daily Income Trust.................... 3
</TABLE>

DUTIES OF CHAIRMAN OF COMMITTEE OF THE INDEPENDENT TRUSTEES AND AUDIT COMMITTEE

The Chairman of the Committee of the Independent Trustees and the Audit
Committee maintains an office at the Funds' headquarters in New York. He is
responsible for keeping abreast of regulatory and industry developments and the
Funds' operations and management. He screens and/or prepares written materials
and

12
<PAGE>
identifies critical issues for the Independent Trustees to consider, develops
agendas for Committee meetings, determines the type and amount of information
that the Committees will need to form a judgment on various issues, and arranges
to have that information furnished to Committee members. He also arranges for
the services of independent experts and consults with them in advance of
meetings to help refine reports and to focus on critical issues. Members of the
Committees believe that the person who serves as Chairman of both Committees and
guides their efforts is pivotal to the effective functioning of the Committees.

The Chairman of the Committees also maintains continuous contact with the
Funds' management, with independent counsel to the Independent Trustees and with
the Funds' independent auditors. He arranges for a series of special meetings
involving the annual review of investment advisory, management and other
operating contracts of the Funds and, on behalf of the Committees, conducts
negotiations with the Investment Manager and other service providers. In effect,
the Chairman of the Committees serves as a combination of chief executive and
support staff of the Independent Trustees.

The Chairman of the Committee of the Independent Trustees and the Audit
Committee is not employed by any other organization and devotes his time
primarily to the services he performs as Committee Chairman and Independent
Trustee of the Dean Witter Funds and as an Independent Trustee and, since July
1, 1996, as Chairman of the Committee of the Independent Trustees and the Audit
Committee of the TCW/DW Funds. The current Committee Chairman has had more than
35 years experience as a senior executive in the investment company industry.

ADVANTAGES OF HAVING SAME INDIVIDUALS AS INDEPENDENT TRUSTEES FOR ALL DEAN
WITTER FUNDS

The Independent Trustees and the Funds' management believe that having the
same Independent Trustees for each of the Dean Witter Funds avoids the
duplication of effort that would arise from having different groups of
individuals serving as Independent Trustees for each of the Funds or even of
sub-groups of Funds. They believe that having the same individuals serve as
Independent Trustees of all the Funds tends to increase their knowledge and
expertise regarding matters which affect the Fund complex generally and enhances
their ability to negotiate on behalf of each Fund with the Fund's service
providers. This arrangement also precludes the possibility of separate groups of
Independent Trustees arriving at conflicting decisions regarding operations and
management of the Funds and avoids the cost and confusion that would likely
ensue. Finally, having the same Independent Trustees serve on all Fund Boards
enhances the ability of each Fund to obtain, at modest cost to each separate
Fund, the services of Independent Trustees, and a Chairman of their Committees,
of the caliber, experience and business acumen of the individuals who serve as
Independent Trustees of the Dean Witter Funds.

SHARE OWNERSHIP BY TRUSTEES

The Trustees have adopted a policy pursuant to which each Trustee and/or his
or her spouse is required to invest at least $25,000 in any of the Funds in the
Dean Witter Funds complex (and, if applicable, in the TCW/DW Funds complex) on
whose boards the Trustee serves. In addition, the policy contemplates that the
Trustees will, over time, increase their aggregate investment in the Funds above
the $25,000 minimum requirement. The Trustees may allocate their investments
among specific Funds in any manner they determine is appropriate based on their
individual investment objectives. As of the date of this Proxy Statement, each
Trustee is in compliance with the policy. Any future Trustee will be given a one
year period following his or her election within which to comply with the
foregoing. As of December 31, 1996, the total value of the investments by the
Trustees and/or their spouses in shares of the Dean Witter Funds (and, if
applicable, the TCW/DW Funds) was approximately $9.8 million.

13
<PAGE>
As of the Record Date, the aggregate number of shares of each Fund owned by
the Fund's officers and Trustees as a group was less than 1 percent of each
Fund's outstanding shares.

COMPENSATION OF INDEPENDENT TRUSTEES

Each Fund pays each Independent Trustee an annual fee of $1,000 plus a per
meeting fee of $50 for meetings of the Board of Trustees or committees of the
Board attended by the Trustee (each Fund pays the Chairman of the Audit
Committee an annual fee of $750 and pays the Chairman of the Committee of the
Independent Trustees an additional annual fee of $1,200). Each Fund also
reimburses such Trustees for travel and other out-of-pocket expenses incurred by
them in connection with attending such meetings. Trustees and officers of the
Funds who are or have been employed by the Investment Manager or an affiliated
company receive no compensation or expense reimbursement from the Funds.

As of the date of this Proxy Statement, 57 of the Dean Witter Funds,
including all of the Funds represented in this Proxy Statement, have adopted a
retirement program under which an Independent Trustee who retires after serving
for at least five years (or such lesser period as may be determined by the
Board) as an Independent Director or Trustee of any Dean Witter Fund that has
adopted the retirement program (each such Fund referred to as an "Adopting Fund"
and each such Trustee referred to as an "Eligible Trustee") is entitled to
retirement payments upon reaching the eligible retirement age (normally, after
attaining age 72). Annual payments are based upon length of service. Currently,
upon retirement, each Eligible Trustee is entitled to receive from the Fund,
commencing as of his or her retirement date and continuing for the remainder of
his or her life, an annual retirement benefit (the "Regular Benefit") equal to
25.0% of his or her Eligible Compensation plus 0.4166666% of such Eligible
Compensation for each full month of service as an Independent Director or
Trustee of any Adopting Fund in excess of five years up to a maximum of 50.0%
after ten years of service. The foregoing percentages may be changed by the
Board. "Eligible Compensation" is one-fifth of the total compensation earned by
such Eligible Trustee for service to the Fund in the five year period prior to
the date of the Eligible Trustee's retirement. An Eligible Trustee may elect
alternate payments of his or her retirement benefits based upon the combined
life expectancy of such Eligible Trustee and his or her spouse on the date of
such Eligible Trustee's retirement. The amount estimated to be payable under
this method, through the remainder of the later of the lives of such Eligible
Trustee and spouse, will be the actuarial equivalent of the Regular Benefit. In
addition, the Eligible Trustee may elect that the surviving spouse's periodic
payment of benefits will be equal to either 50% or 100% of the previous periodic
amount, an election that, respectively, increases or decreases the previous
periodic amount so that the resulting payments will be the actuarial equivalent
of the Regular Benefit. Benefits under the retirement program are not secured or
funded by the Funds. As of the date of this Proxy Statement, each Fund
represented in this Proxy Statement has adopted the retirement program.

The following tables illustrate the compensation paid to each Fund's
Independent Trustees by the Fund for its last fiscal year and the retirement
benefits accrued to each Fund's Independent Trustees by the Fund for its last
fiscal year and the estimated retirement benefits for the Fund's Independent
Trustees, to commence upon their retirement, as of the end of the Fund's last
fiscal year.

14
<PAGE>

ACTIVE ASSETS MONEY TRUST

<TABLE>
<CAPTION>
FUND COMPENSATION ESTIMATED RETIREMENT BENEFITS
---------------------------- -------------------------------------------------
RETIREMENT ESTIMATED ESTIMATED
BENEFITS CREDITED YEARS ESTIMATED ANNUAL
AGGREGATE ACCRUED AS OF SERVICE AT PERCENTAGE OF BENEFITS
COMPENSATION FUND RETIREMENT ELIGIBLE UPON
NAME OF INDEPENDENT TRUSTEE FROM THE FUND EXPENSES (MAXIMUM 10) COMPENSATION RETIREMENT(1)
- --------------------------------- ------------- ------------- ----------------- --------------- -------------
<S> <C> <C> <C> <C> <C>
Michael Bozic.................... $ 1,700 $ 396 10 50.0% $ 850
Edwin J. Garn.................... 1,750 586 10 50.0 850
John R. Haire.................... 3,863 1,685 10 50.0 2,315
Dr. Manuel H. Johnson............ 1,700 242 10 50.0 850
Michael E. Nugent................ 1,750 418 10 50.0 850
John L. Schroeder................ 1,750 769 8 41.7 708
</TABLE>

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

(1) Based on current levels of compensation. Amount of annual benefits also
varies depending on the Trustee's elections described in the discussion of
the retirement program above.

ACTIVE ASSETS TAX-FREE TRUST

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

(1) Based on current levels of compensation. Amount of annual benefits also
varies depending on the Trustee's elections described in the discussion of
the retirement program above.

15
<PAGE>

ACTIVE ASSETS CALIFORNIA TAX-FREE TRUST

<TABLE>
<CAPTION>
FUND COMPENSATION ESTIMATED RETIREMENT BENEFITS
---------------------------- -------------------------------------------------
RETIREMENT ESTIMATED ESTIMATED
BENEFITS CREDITED YEARS ESTIMATED ANNUAL
AGGREGATE ACCRUED AS OF SERVICE AT PERCENTAGE OF BENEFITS
COMPENSATION FUND RETIREMENT ELIGIBLE UPON
NAME OF INDEPENDENT TRUSTEE FROM THE FUND EXPENSES (MAXIMUM 10) COMPENSATION RETIREMENT(1)
- --------------------------------- ------------- ------------- ----------------- --------------- -------------
<S> <C> <C> <C> <C> <C>
Michael Bozic.................... $ 1,700 $ 396 10 50.0% $ 850
Edwin J. Garn.................... 1,750 670 10 50.0 850
John R. Haire.................... 3,863 5,233 10 50.0 2,203
Dr. Manuel H. Johnson............ 1,700 267 10 50.0 850
Michael E. Nugent................ 1,750 503 10 50.0 850
John L. Schroeder................ 1,750 769 8 41.7 708
</TABLE>

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

(1) Based on current levels of compensation. Amount of annual benefits also
varies depending on the Trustee's elections described in the discussion of
the retirement program above.

ACTIVE ASSETS GOVERNMENT SECURITIES TRUST

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

(1) Based on current levels of compensation. Amount of annual benefits also
varies depending on the Trustee's elections described in the discussion of
the retirement program above.

16
<PAGE>

DEAN WITTER LIQUID ASSET FUND INC.

<TABLE>
<CAPTION>
FUND COMPENSATION ESTIMATED RETIREMENT BENEFITS
---------------------------- -------------------------------------------------
RETIREMENT ESTIMATED ESTIMATED
BENEFITS CREDITED YEARS ESTIMATED ANNUAL
AGGREGATE ACCRUED AS OF SERVICE AT PERCENTAGE OF BENEFITS
COMPENSATION FUND RETIREMENT ELIGIBLE UPON
NAME OF INDEPENDENT DIRECTOR FROM THE FUND EXPENSES (MAXIMUM 10) COMPENSATION RETIREMENT(1)
- --------------------------------- ------------- ------------- ----------------- --------------- -------------
<S> <C> <C> <C> <C> <C>
Michael Bozic.................... $ 1,750 $ 377 10 50.0% $ 850
Edwin J. Garn.................... 1,800 548 10 50.0 850
John R. Haire.................... 3,913 961 10 50.0 2,296
Dr. Manuel H. Johnson............ 1,750 229 10 50.0 850
Michael E. Nugent................ 1,750 391 10 50.0 850
John L. Schroeder................ 1,750 728 8 41.7 708
</TABLE>

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

(1) Based on current levels of compensation. Amount of annual benefits also
varies depending on the Director's elections described in the discussion of
the retirement program above.

DEAN WITTER U.S. GOVERNMENT MONEY MARKET TRUST

<TABLE>
<CAPTION>
FUND COMPENSATION ESTIMATED RETIREMENT BENEFITS
---------------------------- -------------------------------------------------
RETIREMENT ESTIMATED ESTIMATED
BENEFITS CREDITED YEARS ESTIMATED ANNUAL
AGGREGATE ACCRUED AS OF SERVICE AT PERCENTAGE OF BENEFITS
COMPENSATION FUND RETIREMENT ELIGIBLE UPON
NAME OF INDEPENDENT TRUSTEE FROM THE FUND EXPENSES (MAXIMUM 10) COMPENSATION RETIREMENT(1)
- --------------------------------- ------------- ------------- ----------------- --------------- -------------
<S> <C> <C> <C> <C> <C>
Michael Bozic.................... $ 1,800 $ 339 10 50.0% $ 875
Edwin J. Garn.................... 1,800 475 10 50.0 875
John R. Haire.................... 3,650 (404)(2) 10 50.0 2,211
Dr. Manuel H. Johnson............ 1,750 203 10 50.0 875
Michael E. Nugent................ 1,800 339 10 50.0 875
John L. Schroeder................ 1,750 647 8 41.7 729
</TABLE>

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

(1) Based on current levels of compensation. Amount of annual benefits also
varies depending on the Trustee's elections described in the discussion of
the retirement program above.

(2) This number reflects the effect of the extension of Mr. Haire's term as
Trustee until June 1, 1998.

17
<PAGE>

DEAN WITTER CALIFORNIA TAX-FREE DAILY INCOME TRUST

<TABLE>
<CAPTION>
FUND COMPENSATION ESTIMATED RETIREMENT BENEFITS
---------------------------- -------------------------------------------------
RETIREMENT ESTIMATED ESTIMATED
BENEFITS CREDITED YEARS ESTIMATED ANNUAL
AGGREGATE ACCRUED AS OF SERVICE AT PERCENTAGE OF BENEFITS
COMPENSATION FUND RETIREMENT ELIGIBLE UPON
NAME OF INDEPENDENT TRUSTEE FROM THE FUND EXPENSES (MAXIMUM 10) COMPENSATION RETIREMENT(1)
- --------------------------------- ------------- ------------- ----------------- --------------- -------------
<S> <C> <C> <C> <C> <C>
Michael Bozic.................... $ 1,800 $ 338 10 50.0% $ 850
Edwin J. Garn.................... 1,800 473 10 50.0 850
John R. Haire.................... 3,900 (365)(2) 10 50.0 2,296
Dr. Manuel H. Johnson............ 1,750 202 10 50.0 850
Michael E. Nugent................ 1,800 338 10 50.0 850
John L. Schroeder................ 1,750 645 8 41.7 708
</TABLE>

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

(1) Based on current levels of compensation. Amount of annual benefits also
varies depending on the Trustee's elections described in the discussion of
the retirement program above.

(2) This number reflects the effect of the extension of Mr. Haire's term as
Trustee until June 1, 1998.

DEAN WITTER NEW YORK MUNICIPAL MONEY MARKET TRUST

<TABLE>
<CAPTION>
FUND COMPENSATION ESTIMATED RETIREMENT BENEFITS
---------------------------- -------------------------------------------------
RETIREMENT ESTIMATED ESTIMATED
BENEFITS CREDITED YEARS ESTIMATED ANNUAL
AGGREGATE ACCRUED AS OF SERVICE AT PERCENTAGE OF BENEFITS
COMPENSATION FUND RETIREMENT ELIGIBLE UPON
NAME OF INDEPENDENT TRUSTEE FROM THE FUND EXPENSES (MAXIMUM 10) COMPENSATION RETIREMENT(1)
- --------------------------------- ------------- ------------- ----------------- --------------- -------------
<S> <C> <C> <C> <C> <C>
Michael Bozic.................... $ 1,800 $ 338 10 50.0% $ 850
Edwin J. Garn.................... 1,800 473 10 50.0 850
John R. Haire.................... 3,900 (365)(2) 10 50.0 2,296
Dr. Manuel H. Johnson............ 1,750 202 10 50.0 850
Michael E. Nugent................ 1,800 338 10 50.0 850
John L. Schroeder................ 1,750 645 8 41.7 708
</TABLE>

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

(1) Based on current levels of compensation. Amount of annual benefits also
varies depending on the Trustee's elections described in the discussion of
the retirement program above.

(2) This number reflects the effect of the extension of Mr. Haire's term as
Trustee until June 1, 1998.

18
<PAGE>

DEAN WITTER TAX-FREE DAILY INCOME TRUST

<TABLE>
<CAPTION>
FUND COMPENSATION ESTIMATED RETIREMENT BENEFITS
---------------------------- -------------------------------------------------
RETIREMENT ESTIMATED ESTIMATED
BENEFITS CREDITED YEARS ESTIMATED ANNUAL
AGGREGATE ACCRUED AS OF SERVICE AT PERCENTAGE OF BENEFITS
COMPENSATION FUND RETIREMENT ELIGIBLE UPON
NAME OF INDEPENDENT TRUSTEE FROM THE FUND EXPENSES (MAXIMUM 10) COMPENSATION RETIREMENT(1)
- --------------------------------- ------------- ------------- ----------------- --------------- -------------
<S> <C> <C> <C> <C> <C>
Michael Bozic.................... $ 1,800 $ 338 10 50.0% $ 850
Edwin J. Garn.................... 1,800 473 10 50.0 850
John R. Haire.................... 3,900 (365)(2) 10 50.0 2,296
Dr. Manuel H. Johnson............ 1,750 202 10 50.0 850
Michael E. Nugent................ 1,800 338 10 50.0 850
John L. Schroeder................ 1,750 645 8 41.7 708
</TABLE>

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

(1) Based on current levels of compensation. Amount of annual benefits also
varies depending on the Trustee's elections described in the discussion of
the retirement program above.

(2) This number reflects the effect of the extension of Mr. Haire's term as
Trustee until June 1, 1998.

The following table illustrates the compensation paid to the Independent
Trustees of the Funds for the calendar year ended December 31, 1996 for services
to the 82 Dean Witter Funds and, in the case of Messrs. Haire, Johnson, Nugent
and Schroeder, the 14 TCW/DW Funds that were in operation at December 31, 1996.
With respect to Messrs. Haire, Johnson, Nugent and Schroeder, the TCW/DW Funds
are included solely because of a limited exchange privilege between those Funds
and five Dean Witter Money Market Funds.

CASH COMPENSATION FROM DEAN WITTER FUNDS AND TCW/DW FUNDS

<TABLE>
<CAPTION>
FOR SERVICE AS
CHAIRMAN OF FOR SERVICE AS
FOR SERVICE COMMITTEES OF CHAIRMAN OF TOTAL CASH
AS DIRECTOR OR INDEPENDENT COMMITTEES OF COMPENSATION
TRUSTEE AND FOR SERVICE AS DIRECTORS/ INDEPENDENT FOR SERVICES TO
COMMITTEE MEMBER TRUSTEE AND TRUSTEES AND TRUSTEES AND 82 DEAN WITTER
OF 82 DEAN COMMITTEE MEMBER AUDIT COMMITTEES AUDIT COMMITTEES FUNDS AND 14
WITTER OF 14 TCW/DW OF 82 DEAN WITTER OF 14 TCW/DW
NAME OF INDEPENDENT TRUSTEE FUNDS FUNDS FUNDS TCW/DW FUNDS FUNDS
- --------------------------- ---------------- ---------------- ----------------- ----------------- -------------------
<S> <C> <C> <C> <C> <C>
Michael Bozic.............. $138,850 -- -- -- $ 138,850
Edwin J. Garn.............. 140,900 -- -- -- 140,900
John R. Haire.............. 106,400 $64,283 $195,450 $ 12,187 378,320
Dr. Manuel H. Johnson...... 137,100 66,483 -- -- 203,583
Michael E. Nugent.......... 138,850 64,283 -- -- 203,133
John L. Schroeder.......... 137,150 69,083 -- -- 206,233
</TABLE>

The following table illustrates the retirement benefits accrued to the
Independent Trustees of the Funds by the 57 Dean Witter Funds (including all of
the Funds represented in this Proxy Statement) for the year ended

19
<PAGE>

December 31, 1996, and the estimated retirement benefits for the Independent
Trustees, to commence upon their retirement, from the 57 Dean Witter Funds as of
December 31, 1996.

RETIREMENT BENEFITS FROM ALL DEAN WITTER FUNDS

<TABLE>
<CAPTION>
RETIREMENT BENEFITS ACCRUED ESTIMATED ANNUAL
ESTIMATED CREDITED ESTIMATED AS EXPENSES BENEFITS UPON
YEARS OF PERCENTAGE BY ALL RETIREMENT FROM ALL
SERVICE AT RETIREMENT OF ELIGIBLE ADOPTING ADOPTING
NAME OF INDEPENDENT TRUSTEE (MAXIMUM 10) COMPENSATION FUNDS FUNDS(3)
- ---------------------------- ---------------------- --------------- ----------------------------- -------------------
<S> <C> <C> <C> <C>
Michael Bozic............... 10 50.0% $ 20,147 $ 51,325
Edwin J. Garn............... 10 50.0 27,772 51,325
John R. Haire............... 10 50.0 46,952 129,550
Dr. Manuel H. Johnson....... 10 50.0 10,926 51,325
Michael E. Nugent........... 10 50.0 19,217 51,325
John L. Schroeder........... 8 41.7 38,700 42,771
</TABLE>

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

(3) Based on current levels of compensation. Amount of annual benefits also
varies depending on the Trustee's elections described in the discussion of
the retirement program above.

The persons named as attorneys-in-fact in the enclosed proxy have advised
the Funds that unless a proxy instructs them to withhold authority to vote for
all listed nominees or for any individual nominee, they will vote all validly
executed proxies for the election of the nominees named above. All of the
nominees have consented to being named in this Proxy Statement and to serve, if
elected, and no circumstances now known will prevent any of the nominees from
serving (if elected, Mr. Hedien's term will commence September 1, 1997). If any
nominee should be unable or unwilling to serve, the proxy will be voted for a
substitute nominee proposed by the present Trustees or, in the case of an
Independent Trustee nominee, by the Independent Trustees. With respect to Dean
Witter Liquid Asset Fund Inc., the election of each Director requires the
approval of a plurality of the shares of the Fund represented and entitled to
vote at the Meeting. With respect to each of the other Funds, the election of
each Trustee requires the approval of a majority of the shares of the Fund
represented and entitled to vote at the Meeting.

THE BOARD OF EACH FUND UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE
ELECTION OF ALL OF THE TRUSTEES NOMINATED FOR ELECTION.

(3) APPROVAL OR DISAPPROVAL OF AN AMENDMENT TO THE INVESTMENT POLICIES
OF ACTIVE ASSETS MONEY TRUST AND ACTIVE ASSETS GOVERNMENT SECURITIES
TRUST TO AUTHORIZE THE BOARD TO MODIFY THE INVESTMENT POLICIES OF
EACH FUND

Active Assets Money Trust and Active Assets Government Securities Trust
(collectively, the "Money Market Funds") have certain investment policies that
are fundamental and are therefore changeable only by a vote of a "majority" (as
defined in the 1940 Act) of the outstanding voting securities of each Money
Market Fund. With respect to the fundamental investment policies set forth
below, the Board of Trustees of each Money Market Fund considered and approved
for submission to each Money Market Fund's Shareholders a recommendation by
InterCapital that such investment policies be considered non-fundamental. The
Board of each Money Market

20
<PAGE>

Fund believes that adopting the proposed amendment to the investment policies
would be beneficial to the Fund's Shareholders because it will allow each Money
Market Fund to modify these policies at a later date to respond to changes in
regulatory policies or changes in market conditions without the delay and
expense of seeking Shareholder approval. Changes to non-fundamental investment
policies only require approval of each Money Market Fund's Board of Trustees.
Any such changes would be reflected in a revised prospectus which would be
provided to Shareholders.

Under its existing fundamental investment policies, Active Assets Money
Trust may invest in the following instruments:

(i) Obligations issued or guaranteed as to principal and interest by the
United States or its agencies or its instrumentalities, including Treasury
bills, notes, bonds and coupons.

(ii) Obligations (including certificates of deposit, bankers' acceptances
and bank notes) of banks subject to regulation by the U.S. Government and having
total assets of $1 billion or more, and instruments secured by such obligations,
including obligations of foreign branches of domestic banks.

(iii) Certificates of deposit of savings banks and savings and loan
associations, having total assets of $1 billion or more.

(iv) Certificates of deposit of banks and saving institutions, having total
assets of less than $1 billion, if the principal amount of the obligation is
insured by the Federal Deposit Insurance Corporation, limited to $100,000
principal amount per certificate and to 10% or less of the Fund's total assets
in all such obligations and in all illiquid assets, in the aggregate.

(v) Commercial paper rated within the two highest grades by Standard &
Poor's Corporation ("Standard & Poor's") or the highest grade by Moody's
Investors Service, Inc. ("Moody's"), or, if not rated, issued by a company
having an outstanding debt issue rated at least AA by Standard and Poor's or Aa
by Moody's.

(vi) Corporate obligations, rated at least A by Standard & Poor's or
Moody's maturing in one year or less.

(vii) Repurchase agreements.

Under its existing fundamental investment policies, Active Assets Government
Securities Trust may invest in the following instruments:

(i) Obligations issued or guaranteed by the United States or its agencies
or instrumentalities, including Treasury bills, coupons, notes and bonds.

(ii) Certificates of deposit of banks and saving institutions, having total
assets of less than $1 billion, if the principal amount of the obligation is
insured by the Federal Deposit Insurance Corporation, limited to $100,000
principal amount per certificate and to 10% or less of the Fund's total assets
in all such obligations and in all illiquid assets, in the aggregate.

At the current time, each Board intends to make certain changes to bring the
investment policies of the Money Market Funds into conformity with amendments
enacted during the last several years to Rule 2a-7 under the 1940 Act with
respect to taxable money market funds. With respect to Active Assets Money
Trust, the Board intends to modify references in its investment policies with
respect to commercial paper and corporate obligations by deleting the references
to ratings by Standard & Poor's and Moody's and replacing them with references
to ratings by two nationally recognized statistical rating organizations
("NRSROs"). This change reflects the current marketplace in which Standard &
Poor's and Moody's are no longer the only NRSROs, and parallels the requirements
set forth in Rule 2a-7.

21
<PAGE>
Each Board intends to make an additional change with respect to the Money
Market Funds. Also in conformity with Rule 2a-7, this change would be that no
single instrument purchased by a Money Market Fund may have a maturity in excess
of thirteen months (currently the limit is twelve months).

The Board of each Money Market Fund does not presently contemplate any other
changes to the investment policies of a Fund, although approval of this proposal
will allow each Board to adopt such changes to the respective Fund's investment
policies as it determines to be appropriate in the future. Each Board believes
that adoption of this proposal is in the best interests of Shareholders because
it would afford each Money Market Fund greater flexibility to respond promptly
to market or regulatory changes in the future. If the proposed change is not
approved, changes to investment policies could take place only following the
delay of a special shareholder meeting held at the expense of Shareholders of
each Fund.

REQUIRED VOTE

To become effective, the proposed amendment to each Money Market Fund's
investment policies must be approved by the vote of a majority of the
outstanding voting securities of the respective Fund. As indicated earlier, such
a majority means the affirmative vote of the holders of (a) 67% or more of the
shares of the respective Fund present, in person or by proxy, at the Meeting, if
the holders of more than 50% of the outstanding shares are so present, or (b)
more than 50% of the outstanding shares of the respective Fund, whichever is
less.

THE BOARD OF EACH OF ACTIVE ASSETS MONEY TRUST AND ACTIVE ASSETS GOVERNMENT
SECURITIES TRUST UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE FOR APPROVAL OF
THE PROPOSED AMENDMENT TO THE INVESTMENT POLICIES OF EACH FUND TO AUTHORIZE ITS
BOARD TO MODIFY ITS INVESTMENT POLICIES.

(4) APPROVAL OR DISAPPROVAL OF A NEW INVESTMENT POLICY WITH RESPECT TO
INVESTMENTS IN CERTAIN OTHER INVESTMENT COMPANIES

The Board of each Fund has approved, subject to Shareholder approval, a new
investment policy that has the effect of modifying certain investment
restrictions of the Funds so as to permit each Fund to convert to a master/
feeder structure. Under a master/feeder structure, the assets of mutual funds
with common investment objectives and substantially the same investment policies
are pooled together and, rather than being managed separately, are "fed" into a
combined pool for portfolio management purposes. The individual pools are known
as "feeder" funds and the combined pool is known as a "master" fund.

Upon conversion to a master/feeder structure, a Fund would invest all of its
assets in a corresponding master fund and hold only beneficial interests in the
master fund. The master fund, in turn, would invest directly in individual
securities of other issuers. The Fund would otherwise continue its normal
operations. The Board of each Fund would retain the right to withdraw the Fund's
investment from the master fund at any time it determined that it would be in
the best interests of Shareholders; the Fund would then resume investing
directly in individual securities of other issuers or invest in another master
fund.

As an investor in a master fund, a Fund would be entitled to vote in
proportion to its relative interest in the master fund. Specifically, as to any
issue on which Shareholders vote, a Fund would vote its interest in the master
fund in proportion to the votes cast by its Shareholders. If there were other
investors in the master fund, there could be no assurance that any issue that
receives a majority of the votes cast by a Fund's Shareholders would receive a
majority of votes cast by all master fund shareholders.

Conversion to a master/feeder structure would only be authorized by the
Board of a Fund if it determined such structure to be in the best interests of
Shareholders. Should the Board authorize any such conversion, a

22
<PAGE>
Fund's prospectus and statement of additional information would be amended to
reflect the Fund's conversion to a master/feeder structure and its Shareholders
would be notified.

While neither the Board nor InterCapital has determined that any Fund should
participate in a master/feeder structure, the Trustees believe that the Funds
should have the flexibility to implement such structure at a future date, if
appropriate. At present, however, certain fundamental investment restrictions of
each Fund would prevent the Fund from doing so without seeking Shareholder
approval. For example, each Fund has fundamental investment restrictions which
limit the extent to which the Fund may invest in other investment companies or
in any one issuer. As such, a vote of a Fund's Shareholders would be required
before a Fund could participate in a master/feeder structure. In the interest of
efficiency and to eliminate the costs associated with a future proxy statement
that would be necessary to modify these investment restrictions, the Board of
each Fund recommends that Shareholders vote to modify the Fund's investment
restrictions by adding the following new investment policy:

"Notwithstanding any other investment policy or restriction, a
Fund may seek to achieve its investment objective by investing all
or substantially all of its assets in another investment company
having substantially the same investment objectives and policies
as the Fund."

REQUIRED VOTE

To become effective, the proposed changes to each Fund's investment
restrictions must be approved by the vote of a majority of the outstanding
voting securities of the respective Fund. As indicated earlier, the "vote of a
majority of the outstanding voting securities" is defined in the 1940 Act as the
lesser of the vote of (i) 67% or more of the shares of the respective Fund
entitled to vote thereon present at the Meeting if the holders of more than 50%
of such outstanding shares are present in person or represented by proxy; or
(ii) more than 50% of such outstanding shares of the Fund entitled to vote
thereon.

THE BOARD OF EACH FUND UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE FOR
APPROVAL OF THE NEW INVESTMENT POLICY WITH RESPECT TO INVESTMENTS IN CERTAIN
OTHER INVESTMENT COMPANIES.

(5) RATIFICATION OR REJECTION OF SELECTION OF INDEPENDENT ACCOUNTANTS

The Trustees have unanimously selected the firm of Price Waterhouse LLP
("Price Waterhouse") as each Fund's independent accountants for the fiscal
year-ends indicated below next to the name of the Fund:

<TABLE>
<CAPTION>
FUND FISCAL YEAR ENDING
- ------------------------------------------------------------------------------------------------ ----------------------
<S> <C>
Active Assets Money Trust....................................................................... June 30, 1997
Active Assets Tax-Free Trust.................................................................... June 30, 1997
Active Assets California Tax-Free Trust......................................................... June 30, 1997
Active Assets Government Securities Trust....................................................... June 30, 1997
Dean Witter Liquid Asset Fund Inc............................................................... August 31, 1997
Dean Witter U.S. Government Money Market Trust.................................................. January 31, 1998
Dean Witter California Tax-Free Daily Income Trust.............................................. December 31, 1997
Dean Witter New York Municipal Money Market Trust............................................... December 31, 1997
Dean Witter Tax-Free Daily Income Trust......................................................... December 31, 1997
</TABLE>

The selection of Price Waterhouse is being submitted for ratification or
rejection by Shareholders at the Meeting. Price Waterhouse has been the
independent accountants for each of the Funds since its inception, and has no
direct or indirect financial interest in the Funds.

23
<PAGE>
A representative of Price Waterhouse is expected to be present at the
Meeting and will be available to make a statement, and to respond to appropriate
questions of Shareholders.

Ratification of the selection of Price Waterhouse requires the approval of a
majority of the shares of each Fund represented and entitled to vote at the
Meeting.

THE BOARD OF EACH FUND UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS OF EACH FUND
RATIFY THE SELECTION OF PRICE WATERHOUSE AS THE INDEPENDENT ACCOUNTANTS FOR THE
FUND.

ADDITIONAL INFORMATION

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 with
respect to one or more Funds, the persons named as proxies may propose one or
more adjournments of the Meeting of the concerned Fund 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 concerned Fund'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 1 and will vote against any
such adjournment those proxies required to be voted against that proposal.

Abstentions and, if applicable, broker "non-votes" will not count as votes
in favor of any of the proposals, and broker "non-votes" will not be deemed to
be present at the meeting for purposes of determining whether a particular
proposal to be voted upon has been approved. Broker "non-votes" are shares held
in street name for which the broker indicates that instructions have not been
received from the beneficial owners or other persons entitled to vote and for
which the broker does not have discretionary voting authority.

SHAREHOLDER PROPOSALS

The Funds do not hold regular shareholders' meetings. Proposals of
Shareholders of any Fund intended to be presented at the next meeting of
Shareholders must be received a reasonable time prior to the mailing of the
proxy materials sent in connection with the meeting, for inclusion in the proxy
statement for that meeting.

REPORTS TO SHAREHOLDERS

EACH FUND'S MOST RECENT ANNUAL REPORT FOR THE FUND'S MOST RECENT FISCAL YEAR
AND, IN THE CASE OF ACTIVE ASSETS MONEY TRUST, ACTIVE ASSETS TAX-FREE TRUST,
ACTIVE ASSETS CALIFORNIA TAX-FREE TRUST AND ACTIVE ASSETS GOVERNMENT SECURITIES
TRUST, THE SUCCEEDING SEMI-ANNUAL REPORT, HAVE BEEN SENT PREVIOUSLY TO
SHAREHOLDERS AND ARE AVAILABLE WITHOUT CHARGE UPON REQUEST FROM ADRIENNE
RYAN-PINTO AT DWTC, HARBORSIDE FINANCIAL CENTER, PLAZA TWO, JERSEY CITY, NEW
JERSEY 07311 (TELEPHONE 1-800-869-NEWS (TOLL-FREE)).

INTEREST OF CERTAIN PERSONS

DWDC, DWR, the Investment Manager, DWSC, the Distributor and certain of
their respective Directors, officers, and employees, including persons who are
Trustees or officers of the Funds, may be deemed to have an interest in certain
of the proposals described in this Proxy Statement to the extent that certain of
such companies and their affiliates have contractual and other arrangements,
described elsewhere in this Proxy Statement, pursuant to which they are paid
fees by the Funds, and certain of those individuals are compensated for
performing services relating to the Funds and may also own shares of DWDC. Such
companies and persons may thus be deemed to derive benefits from the approvals
by Shareholders of such proposals.

24
<PAGE>
OTHER BUSINESS

The management of the Funds 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
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.

By Order of the Boards of
Trustees

BARRY FINK
SECRETARY

25
<PAGE>
APPENDIX A

FORM OF NEW INVESTMENT MANAGEMENT AGREEMENT

AGREEMENT made as of the [ ] day of [ ], 1997, by and between
Dean Witter [ ], [a Maryland corporation -- Dean Witter Liquid Asset
Fund Inc. only] [an unincorporated business trust organized under the laws of
the Commonwealth of Massachusetts--all other Funds] (hereinafter called the
"Fund"), and Dean Witter InterCapital Inc., a Delaware corporation (hereinafter
called the "Investment Manager"):

WHEREAS, The Fund is engaged in business as an open-end management
investment company and is registered as such under the Investment Company Act of
1940, as amended (the "Act"); and

WHEREAS, The Investment Manager is registered as an investment adviser under
the Investment Advisers Act of 1940, and engages in the business of acting as
investment adviser; and

WHEREAS, The Fund desires to retain the Investment Manager to render
management and investment advisory services in the manner and on the terms and
conditions hereinafter set forth; and

WHEREAS, The Investment Manager desires to be retained to perform services
on said terms and conditions:

Now, Therefore, this Agreement

W I T N E S S E T H:

that in consideration of the premises and the mutual covenants hereinafter
contained, the Fund and the Investment Manager agree as follows:

1. The Fund hereby retains the Investment Manager to act as investment
manager of the Fund and, subject to the supervision of the Trustees, to
supervise the investment activities of the Fund as hereinafter set forth.
Without limiting the generality of the foregoing, the Investment Manager shall
obtain and evaluate such information and advice relating to the economy,
securities and commodities markets and securities and commodities as it deems
necessary or useful to discharge its duties hereunder; shall continuously manage
the assets of the Fund in a manner consistent with the investment objectives and
policies of the Fund; shall determine the securities and commodities to be
purchased, sold or otherwise disposed of by the Fund and the timing of such
purchases, sales and dispositions; and shall take such further action, including
the placing of purchase and sale orders on behalf of the Fund, as the Investment
Manager shall deem necessary or appropriate. The Investment Manager shall also
furnish to or place at the disposal of the Fund such of the information,
evaluations, analyses and opinions formulated or obtained by the Investment
Manager in the discharge of its duties as the Fund may, from time to time,
reasonably request.

2. The Investment Manager shall, at its own expense, maintain such staff
and employ or retain such personnel and consult with such other persons as it
shall from time to time determine to be necessary or useful to the performance
of its obligations under this Agreement. Without limiting the generality of the
foregoing, the staff and personnel of the Investment Manager shall be deemed to
include persons employed or otherwise retained by the Investment Manager to
furnish statistical and other factual data, advice regarding economic factors
and trends, information with respect to technical and scientific developments,
and such other information, advice and assistance as the Investment Manager may
desire. The Investment Manager shall, as agent for the Fund, maintain the Fund's
records and books of account (other than those maintained by the Fund's transfer
agent, registrar, custodian and other agencies). All such books and records so
maintained shall be the property of the Fund and,

A-1
<PAGE>
upon request therefor, the Investment Manager shall surrender to the Fund such
of the books and records so requested.

3. The Fund will, from time to time, furnish or otherwise make available to
the Investment Manager such financial reports, proxy statements and other
information relating to the business and affairs of the Fund as the Investment
Manager may reasonably require in order to discharge its duties and obligations
hereunder.

4. The Investment Manager shall bear the cost of rendering the investment
management and supervisory services to be performed by it under this Agreement,
and shall, at its own expense, pay the compensation of the officers and
employees, if any, of the Fund, and provide such office space, facilities and
equipment and such clerical help and bookkeeping services as the Fund shall
reasonably require in the conduct of its business. The Investment Manager shall
also bear the cost of telephone service, heat, light, power and other utilities
provided to the Fund.

5. The Fund assumes and shall pay or cause to be paid all other expenses of
the Fund, including without limitation: fees pursuant to any plan of
distribution that the Fund may adopt; the charges and expenses of any registrar,
any custodian or depository appointed by the Fund 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 Fund; brokers' commissions
chargeable to the Fund in connection with portfolio transactions to which the
Fund is a party; all taxes, including securities or commodities issuance and
transfer taxes, and fees payable by the Fund to federal, state or other
governmental agencies; the cost and expense of engraving or printing
certificates representing shares of the Fund; all costs and expenses in
connection with the registration and maintenance of registration of the Fund and
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 and statements of additional information of the Fund
and supplements thereto to the Fund's 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 pricing of the Fund's shares; charges and expenses of legal
counsel, including counsel to the Trustees of the Fund who are not interested
persons (as defined in the Act) of the Fund or the Investment Manager, and of
independent accountants, in connection with any matter relating to the Fund;
membership dues of industry associations; interest payable on Fund borrowings;
postage; insurance premiums on property or personnel (including officers and
Trustees) of the Fund which inure to its benefit; 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 of the
Fund's operation unless otherwise explicitly provided herein.

6. For the services to be rendered, the facilities furnished, and the
expenses assumed by the Investment Manager, the Fund shall pay to the Investment
Manager monthly compensation determined by applying the following annual rates
to the Fund's daily net assets: [ ].* Except as hereinafter set forth,
compensation under this Agreement shall be calculated and accrued daily and the
amounts of the daily accruals shall be paid monthly. Such calculations shall be
made by applying 1/365ths of the annual rates to the Fund's net assets each day
determined as of the close of business on that day or the last previous business
day. If this Agreement becomes effective subsequent to the first day of a month
or shall terminate before the last day of a month, compensation for

- ------------------------
*See pages 5 and 6 of the Proxy Statement for a table setting forth the
management fee rates applicable to each Fund.

A-2
<PAGE>
that part of the month this Agreement is in effect shall be prorated in a manner
consistent with the calculation of the fees as set forth above.

Subject to the provisions of paragraph 7 hereof, payment of the Investment
Manager's compensation for the preceding month shall be made as promptly as
possible after completion of the computations contemplated by paragraph 7
hereof.

7. In the event the operating expenses of the Fund, including amounts
payable to the Investment Manager pursuant to paragraph 6 hereof, for any fiscal
year ending on a date on which this Agreement is in effect, exceed the expense
limitations applicable to the Fund imposed by state securities laws or
regulations thereunder, as such limitations may be raised or lowered from time
to time, the Investment Manager shall reduce its management fee to the extent of
such excess and, if required, pursuant to any such laws or regulations, will
reimburse the Fund for annual operating expenses in excess of any expense
limitation that may be applicable; provided, however, there shall be excluded
from such expenses the amount of any interest, taxes, brokerage commissions,
distribution fees and extraordinary expenses (including but not limited to legal
claims and liabilities and litigation costs and any indemnification related
thereto) paid or payable by the Fund. Such reduction, if any, shall be computed
and accrued daily, shall be settled on a monthly basis, and shall be based upon
the expense limitation applicable to the Fund as at the end of the last business
day of the month. Should two or more such expense limitations be applicable as
at the end of the last business day of the month, that expense limitation which
results in the largest reduction in the Investment Manager's fee shall be
applicable.

For purposes of this provision, should any applicable expense limitation be
based upon the gross income of the Fund, such gross income shall include, but
not be limited to, interest on debt securities in the Fund's portfolio accrued
to and including the last day of the Fund's fiscal year, and dividends declared
on equity securities in the Fund's portfolio, the record dates for which fall on
or prior to the last day of such fiscal year, but shall not include gains from
the sale of securities.

8. The Investment Manager will use its best efforts in the supervision and
management of the investment activities of the Fund, but in the absence of
willful misfeasance, bad faith, gross negligence or reckless disregard of its
obligations hereunder, the Investment Manager shall not be liable to the Fund or
any of its investors for any error of judgment or mistake of law or for any act
or omission by the Investment Manager or for any losses sustained by the Fund or
its investors.

9. Nothing contained in this Agreement shall prevent the Investment Manager
or any affiliated person of the Investment Manager from acting as investment
adviser or manager for any other person, firm or corporation and shall not in
any way bind or restrict the Investment Manager or any such affiliated person
from buying, selling or trading any securities or commodities for their own
accounts or for the account of others for whom they may be acting. Nothing in
this Agreement shall limit or restrict the right of any Trustee, officer or
employee of the Investment Manager to engage in any other business or to devote
his or her time and attention in part to the management or other aspects of any
other business whether of a similar or dissimilar nature.

10. This Agreement shall remain in effect until April 30, 1999 and from year
to year thereafter provided such continuance is approved at least annually by
the vote of holders of a majority, as defined in the Investment Company Act of
1940, as amended (the "Act"), of the outstanding voting securities of the Fund
or by the Trustees of the Fund; provided that in either event such continuance
is also approved annually by the vote of a majority of the Trustees of the Fund
who are not parties to this Agreement or "interested persons" (as defined in the
Act) of any such party, which vote must be cast in person at a meeting called
for the purpose of voting on such approval; provided, however, that (a) the Fund
may, at any time and without the payment of any penalty, terminate this
Agreement upon thirty days' written notice to the Investment Manager, either by
majority vote of the Trustees of

A-3
<PAGE>
the Fund or by the vote of a majority of the outstanding voting securities of
the Fund; (b) this Agreement shall immediately terminate in the event of its
assignment (to the extent required by the Act and the rules thereunder) unless
such automatic terminations shall be prevented by an exemptive order of the
Securities and Exchange Commission; and (c) the Investment Manager may terminate
this Agreement without payment of penalty on thirty days' written notice to the
Fund. Any notice under this Agreement shall be given in writing, addressed and
delivered, or mailed post-paid, to the other party at the principal office of
such party.

11. This Agreement may be amended by the parties without the vote or consent
of the shareholders of the Fund to supply any omission, to cure, correct or
supplement any ambiguous, defective or inconsistent provision hereof, or if they
deem it necessary to conform this Agreement to the requirements of applicable
federal laws or regulations, but neither the Fund nor the Investment Manager
shall be liable for failing to do so.

12. This Agreement shall be construed in accordance with the laws of the
State of New York and the applicable provisions of the Act. To the extent the
applicable law of the State of New York, or any of the provisions herein,
conflicts with the applicable provisions of the Act, the latter shall control.

13. The Investment Manager and the Fund each agree that the name "Dean
Witter," which comprises a component of the Fund's name, is a property right of
Dean Witter Reynolds Inc. The Fund agrees and consents that (i) it will only use
the name "Dean Witter" as a component of its name and for no other purpose, (ii)
it will not purport to grant to any third party the right to use the name "Dean
Witter" for any purpose, (iii) the Investment Manager or its parent, Morgan
Stanley, Dean Witter, Discover & Co., or any corporate affiliate of the
Investment Manager's parent, may use or grant to others the right to use the
name "Dean Witter," or any combination or abbreviation thereof, as all or a
portion of a corporate or business name or for any commercial purpose, including
a grant of such right to any other investment company, (iv) at the request of
the Investment Manager or its parent, the Fund will take such action as may be
required to provide its consent to the use of the name "Dean Witter," or any
combination or abbreviation thereof, by the Investment Manager or its parent or
any corporate affiliate of the Investment Manager's parent, or by any person to
whom the Investment Manager or its parent or any corporate affiliate of the
Investment Manager's parent shall have granted the right to such use, and (v)
upon the termination of any investment advisory agreement into which the
Investment Manager and the Fund may enter, or upon termination of affiliation of
the Investment Manager with its parent, the Fund shall, upon request by the
Investment Manager or its parent, cease to use the name "Dean Witter" as a
component of its name, and shall not use the name, or any combination or
abbreviation thereof, as a part of its name or for any other commercial purpose,
and shall cause its officers, Trustees and shareholders to take any and all
actions which the Investment Manager or its parent may request to effect the
foregoing and to reconvey to the Investment Manager or its parent any and all
rights to such name.

[For all Funds except Dean Witter Liquid Asset Fund Inc.--14. The
Declaration of Trust establishing Dean Witter [ ], dated [ ],
a copy of which, together with all amendments thereto (the "Declaration"), is on
file in the office of the Secretary of the Commonwealth of Massachusetts,
provides that the name Dean Witter [ ] refers to the Trustees under the
Declaration collectively as Trustees, but not as individuals or personally; and
no Trustee, shareholder, officer, employee or agent of Dean Witter [ ]
shall be held to any personal liability, nor shall resort be had to their
private property for the satisfaction of any obligation or claim or otherwise,
in connection with the affairs of said Dean Witter [ ], but the Trust
Estate only shall be liable.]

A-4
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement on the day and year first above written in New York, New York.

DEAN WITTER [ ]

By
......................................

Attest:

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

DEAN WITTER INTERCAPITAL INC.

By
......................................

Attest:

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

A-5
<PAGE>
APPENDIX B

InterCapital serves as investment manager to the Funds and the other
investment companies listed below which have similar investment objectives to
one or more of the Funds. Set forth below is a chart showing the net assets of
each such investment company as of March 12, 1997 and the investment management
fee rate(s) applicable to such investment company.

<TABLE>
<CAPTION>
CURRENT INVESTMENT
MANAGEMENT FEE RATE(S)
NET ASSETS AS A PERCENTAGE OF
AS OF 03/12/97 NET ASSETS
--------------- -----------------------------
<C> <S> <C> <C>
1. ACTIVE ASSETS CALIFORNIA TAX-FREE TRUST.............................. $440,611,354 0.50% on assets up to $500
million, scaled down at
various asset levels to 0.25%
on assets over $3 billion
2. ACTIVE ASSETS GOVERNMENT SECURITIES TRUST............................ $681,982,027 0.50% on assets up to $500
million, scaled down at
various asset levels to 0.25%
on assets over $3 billion
3. ACTIVE ASSETS MONEY TRUST............................................ $8,921,354,553 0.50% on assets up to $500
million, scaled down at
various asset levels to 0.25%
on assets over $3 billion
4. ACTIVE ASSETS TAX-FREE TRUST......................................... $1,751,293,513 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 CALIFORNIA TAX-FREE DAILY INCOME TRUST................... $266,303,159 0.50% on assets up to $500
million, scaled down at
various asset levels to 0.25%
on assets over $3 billion
6. DEAN WITTER LIQUID ASSET FUND INC. .................................. $12,519,913,252 0.50% on assets up to $500
million, scaled down at
various asset levels to
0.248% on assets over $17.5
billion
7. DEAN WITTER NEW YORK MUNICIPAL MONEY MARKET TRUST....................
$41,418,939 0.50% on assets up to $500
million, scaled down at
various asset levels to 0.25%
on assets over $3 billion
8. DEAN WITTER TAX-FREE DAILY INCOME TRUST.............................. $555,640,894 0.50% on assets up to $500
million, scaled down at
various asset levels to 0.25%
on assets over $3 billion
9. DEAN WITTER U.S. GOVERNMENT MONEY MARKET TRUST....................... $933,178,675 0.50% on assets up to $500
million, scaled down at
various asset levels to 0.25%
on assets over $3 billion
10. DEAN WITTER RETIREMENT SERIES:
(A) LIQUID ASSET SERIES.............................................. $23,818,464 0.50%(1)
(B) U.S. GOVERNMENT MONEY MARKET SERIES.............................. $7,400,809 0.50%(1)
11. DEAN WITTER SELECT DIMENSIONS INVESTMENT SERIES:*
(A) MONEY MARKET PORTFOLIO........................................... $84,905,881 0.50%
12. DEAN WITTER VARIABLE INVESTMENT SERIES:*
(A) MONEY MARKET PORTFOLIO........................................... $339,300,697 0.50%
</TABLE>

- ------------------------------
* Open-end investment company offered only to life insurance companies in
connection with variable annuity and/or variable life insurance contracts.

(1) InterCapital has undertaken, until July 31, 1997, to continue to assume all
operating expenses of each Series of Dean Witter Retirement Series (except
for any brokerage fees and a portion of organizational expenses) and to
waive the compensation provided for each Series in its investment management
agreement with that company to the extent that such expenses and
compensation on an annualized basis exceed 1.0% of the daily net assets of
the pertinent Series.

B-1
<PAGE>

ACTIVE ASSETS MONEY TRUST

PROXY

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES

The undersigned hereby appoints Robert M. Scanlan, Barry Fink, and Joseph J.
McAlinden, or any of them, proxies, each with the power of substitution, to
vote on behalf of the undersigned at the Special Meeting of Shareholders of
Active Assets Money Trust on May 21, 1997, at 10:00 a.m., New York City time,
and at any adjournment thereof, on the proposals set forth in the Notice of
Meeting dated March 19, 1997 as follows:

(CONTINUED ON REVERSE SIDE)

THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
"FOR" THE TRUSTEES AND THE PROPOSALS SET FORTH ON THE REVERSE HEREOF AND AS
RECOMMENDED BY THE BOARD OF TRUSTEES.

IMPORTANT -- THIS PROXY MUST BE SIGNED AND DATED ON THE REVERSE SIDE.

<PAGE>

/X/ PLEASE MARK VOTES AS
IN THE EXAMPLE USING
BLACK OR BLUE INK

FOR AGAINST ABSTAIN

1. Approval of New Investment Management / / / / / /
Agreement with Dean Witter InterCapital
Inc. in connection with proposed merger.

FOR ALL
FOR WITHHOLD EXCEPT

2. Election of Trustees:
/ / / / / /
Michael Bozic, Charles A. Fiumefreddo,
Edwin J. Garn, John R. Haire, Wayne E.
Hedien, Manuel H. Johnson, Michael E.
Nugent, Philip J. Purcell, John L.
Schroeder
IF YOU WISH TO WITHHOLD AUTHORITY FOR ANY
PARTICULAR NOMINEE, MARK THE "FOR ALL EXCEPT"
BOX AND STRIKE A LINE THROUGH THE NOMINEE'S
NAME.

FOR AGAINST ABSTAIN

3. Approval of Amendment to Investment / / / / / /
Policies to authorize Board of
Trustees to modify investment policies.

FOR AGAINST ABSTAIN

4. Approval of New Investment Policy / / / / / /
with respect to investments in certain
other investment companies.

FOR AGAINST ABSTAIN

5. Ratification of appointment of Price / / / / / /
Waterhouse LLP as Independent
Accountants.

Please make sure to sign and date
this Proxy using black or blue ink. Date
--------------------
- ------------------------------------- ---------------------------------------

- ------------------------------------- ---------------------------------------
Shareholder sign in the box above Co-Owner (if any) sign in the box above

- --------------------------------------------------------------------------------
^ PLEASE DETACH AT PERFORATION ^

ACTIVE ASSETS MONEY TRUST

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

IMPORTANT

PLEASE SEND IN YOUR PROXY............TODAY!

YOU ARE URGED TO DATE AND SIGN THE ATTACHED PROXY AND RETURN IT PROMPTLY IN THE
ENCLOSED ENVELOPE. THIS WILL HELP SAVE THE EXPENSE OF FOLLOW-UP LETTERS TO
SHAREHOLDERS WHO HAVE NOT RESPONDED.

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

<PAGE>

ACTIVE ASSETS TAX-FREE TRUST

PROXY

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES

The undersigned hereby appoints Robert M. Scanlan, Barry Fink, and Joseph J.
McAlinden, or any of them, proxies, each with the power of substitution, to
vote on behalf of the undersigned at the Special Meeting of Shareholders of
Active Assets Tax-Free Trust on May 21, 1997, at 10:00 a.m., New York City
time, and at any adjournment thereof, on the proposals set forth in the
Notice of Meeting dated March 19, 1997 as follows:

(Continued on reverse side)

IMPORTANT -- THIS PROXY MUST BE SIGNED AND DATED ON THE REVERSE SIDE.

<PAGE>

/X/ PLEASE MARK VOTES AS
IN THE EXAMPLE USING
BLACK OR BLUE INK

FOR AGAINST ABSTAIN

1. Approval of New Investment Management / / / / / /
Agreement with Dean Witter InterCapital
Inc. in connection with proposed merger.

FOR ALL
FOR WITHHOLD EXCEPT

2. Election of Trustees: / / / / / /

Michael Bozic, Charles A. Fiumefreddo,
Edwin J. Garn, John R. Haire, Wayne E.
Hedien, Manuel H. Johnson, Michael E.
Nugent, Philip J. Purcell, John L.
Schroeder

IF YOU WISH TO WITHHOLD AUTHORITY FOR
ANY PARTICULAR NOMINEE, MARK THE
"FOR ALL EXCEPT" BOX AND STRIKE A LINE
THROUGH THE NOMINEE'S NAME.

FOR AGAINST ABSTAIN

3. Approval of New Investment Policy / / / / / /
with respect to investments in certain
other investment companies.

FOR AGAINST ABSTAIN

4. Ratification of appointment of Price / / / / / /
Waterhouse LLP as Independent
Accountants.

Please make sure to sign and date
this Proxy using black or blue ink. Date
-----------------
- ------------------------------------- ---------------------------------------

- ------------------------------------- ---------------------------------------
Shareholder sign in the box above Co-Owner (if any) sign in the box above

- --------------------------------------------------------------------------------
^ PLEASE DETACH AT PERFORATION ^

ACTIVE ASSETS TAX-FREE TRUST

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

IMPORTANT

PLEASE SEND IN YOUR PROXY............TODAY!

YOU ARE URGED TO DATE AND SIGN THE ATTACHED PROXY AND RETURN IT PROMPTLY IN THE
ENCLOSED ENVELOPE. THIS WILL HELP SAVE THE EXPENSE OF FOLLOW-UP LETTERS TO
SHAREHOLDERS WHO HAVE NOT RESPONDED.

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

<PAGE>

ACTIVE ASSETS CALIFORNIA TAX-FREE TRUST

PROXY

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES

The undersigned hereby appoints Robert M. Scanlan, Barry Fink, and Joseph J.
McAlinden, or any of them, proxies, each with the power of substitution, to
vote on behalf of the undersigned at the Special Meeting of Shareholders of
Active Assets California Tax-Free Trust on May 21, 1997, at 10:00 a.m., New
York City time, and at any adjournment thereof, on the proposals set forth in
the Notice of Meeting dated March 19, 1997 as follows:

(CONTINUED ON REVERSE SIDE)

THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED "FOR" THE TRUSTEES AND THE PROPOSALS SET FORTH ON THE REVERSE HEREOF
AND AS RECOMMENDED BY THE BOARD OF TRUSTEES.

IMPORTANT -- THIS PROXY MUST BE SIGNED AND DATED ON THE REVERSE SIDE.

<PAGE>

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

X PLEASE MARK VOTES AS
IN THE EXAMPLE USING
BLACK OR BLUE INK

FOR AGAINST ABSTAIN

1. Approval of New Investment Management / / / / / /
Agreement with Dean Witter InterCapital
Inc. in connection with proposed merger.

FOR ALL
FOR WITHHOLD EXCEPT

2. Election of Trustees: / / / / / /

Michael Bozic, Charles A. Fiumefreddo,
Edwin J. Garn, John R. Haire, Wayne E.
Hedien, Manuel H. Johnson, Michael E.
Nugent, Philip J. Purcell, John L.
Schroeder

IF YOU WISH TO WITHHOLD AUTHORITY FOR
ANY PARTICULAR NOMINEE, MARK THE "FOR
ALL EXCEPT" BOX AND STRIKE A LINE THROUGH
THE NOMINEE'S NAME.

FOR AGAINST ABSTAIN

3. Approval of New Investment Policy / / / / / /
with respect to investments in certain
other investment companies.

FOR AGAINST ABSTAIN

4. Ratification of appointment of Price / / / / / /
Waterhouse LLP as Independent
Accountants.

Please make sure to sign and date
this Proxy using black or blue ink. Date
----------------
- ------------------------------------- ---------------------------------------

- ------------------------------------- ---------------------------------------
Shareholder sign in the box above Co-Owner (if any) sign in the box above

- --------------------------------------------------------------------------------
^ PLEASE DETACH AT PERFORATION ^

ACTIVE ASSETS CALIFORNIA TAX-FREE TRUST

- --------------------------------------------------------------------------------
IMPORTANT

PLEASE SEND IN YOUR PROXY............TODAY!

YOU ARE URGED TO DATE AND SIGN THE ATTACHED PROXY AND RETURN IT PROMPTLY IN THE
ENCLOSED ENVELOPE. THIS WILL HELP SAVE THE EXPENSE OF FOLLOW-UP LETTERS TO
SHAREHOLDERS WHO HAVE NOT RESPONDED.

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

<PAGE>

ACTIVE ASSETS GOVERNMENT SECURITIES TRUST

PROXY

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES

The undersigned hereby appoints Robert M. Scanlan, Barry Fink, and Joseph J.
McAlinden, or any of them, proxies, each with the power of substitution, to
vote on behalf of the undersigned at the Special Meeting of Shareholders of
Active Assets Government Securities Trust on May 21, 1997, at 10:00 a.m., New
York City time, and at any adjournment thereof, on the proposals set forth in
the Notice of Meeting dated March 19, 1997 as follows:

(CONTINUED ON REVERSE SIDE)

THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED "FOR" THE TRUSTEES AND THE PROPOSALS SET FORTH ON THE REVERSE HEREOF
AND AS RECOMMENDED BY THE BOARD OF TRUSTEES.

IMPORTANT -- THIS PROXY MUST BE SIGNED AND DATED ON THE REVERSE SIDE.

<PAGE>

- --------------------------------------------------------------------------------
/X/ PLEASE MARK VOTES AS
IN THE EXAMPLE USING
BLACK OR BLUE INK

FOR AGAINST ABSTAIN

1. Approval of New Investment Management / / / / / /
Agreement with Dean Witter InterCapital
Inc. in connection with proposed merger.

FOR ALL
FOR WITHHOLD EXCEPT

2. Election of Trustees: / / / / / /

Michael Bozic, Charles A. Fiumefreddo,
Edwin J. Garn, John R. Haire, Wayne E.
Hedien, Manuel H. Johnson, Michael E.
Nugent, Philip J. Purcell, John L.
Schroeder

IF YOU WISH TO WITHHOLD AUTHORITY FOR
ANY PARTICULAR NOMINEE, MARK THE "FOR
ALL EXCEPT" BOX AND STRIKE A LINE
THROUGH THE NOMINEE'S NAME.

FOR AGAINST ABSTAIN

3. Approval of Amendment to Investment / / / / / /
Policies to authorize Board of
Trustees to modify investment policies.

FOR AGAINST ABSTAIN

4. Approval of New Investment Policy / / / / / /
with respect to investments in certain
other investment companies.

FOR AGAINST ABSTAIN

5. Ratification of appointment of Price / / / / / /
Waterhouse LLP as Independent
Accountants.

Please make sure to sign and date
this Proxy using black or blue ink. Date
---------------------
- ------------------------------------- ---------------------------------------

- ------------------------------------- ---------------------------------------
Shareholder sign in the box above Co-Owner (if any) sign in the box above

- --------------------------------------------------------------------------------
^ PLEASE DETACH AT PERFORATION ^

ACTIVE ASSETS GOVERNMENT SECURITIES TRUST

- --------------------------------------------------------------------------------
IMPORTANT

PLEASE SEND IN YOUR PROXY............TODAY!

YOU ARE URGED TO DATE AND SIGN THE ATTACHED PROXY AND RETURN IT PROMPTLY IN THE
ENCLOSED ENVELOPE. THIS WILL HELP SAVE THE EXPENSE OF FOLLOW-UP LETTERS TO
SHAREHOLDERS WHO HAVE NOT RESPONDED.

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

<PAGE>

DEAN WITTER LIQUID ASSET FUND INC.

PROXY

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned hereby appoints Robert M. Scanlan, Barry Fink, and Joseph J.
McAlinden, or any of them, proxies, each with the power of substitution, to
vote on behalf of the undersigned at the Special Meeting of Stockholders of
Dean Witter Liquid Asset Fund Inc. on May 21, 1997, at 10:00 a.m., New York
City time, and at any adjournment thereof, on the proposals set forth in the
Notice of Meeting dated March 19, 1997 as follows:

(CONTINUED ON REVERSE SIDE)

THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED "FOR" THE DIRECTORS AND THE PROPOSALS SET FORTH ON THE REVERSE HEREOF
AND AS RECOMMENDED BY THE BOARD OF DIRECTORS.

IMPORTANT -- THIS PROXY MUST BE SIGNED AND DATED ON THE REVERSE SIDE.

<PAGE>

/X/ PLEASE MARK VOTES AS
IN THE EXAMPLE USING
BLACK OR BLUE INK

FOR AGAINST ABSTAIN
1. Approval of New Investment Management / / / / / /
Agreement with Dean Witter InterCapital
Inc. in connection with proposed merger.

FOR ALL
FOR WITHHOLD EXCEPT

2. Election of Directors: / / / / / /

Michael Bozic, Charles A. Fiumefreddo,
Edwin J. Garn, John R. Haire, Wayne E. Hedien,
Manuel H. Johnson, Michael E. Nugent,
Philip J. Purcell, John L. Schroeder

IF YOU WISH TO WITHHOLD AUTHORITY FOR ANY
PARTICULAR NOMINEE, MARK THE "FOR ALL EXCEPT"
BOX AND STRIKE A LINE THROUGH THE NOMINEE'S NAME.

FOR AGAINST ABSTAIN
3. Approval of New Investment Policy / / / / / /
with respect to investments in
certain other investment companies.

FOR AGAINST ABSTAIN
4. Ratification of appointment of Price / / / / / /
Waterhouse LLP as Independent
Accountants.

Please make sure to sign and date
this Proxy using black or blue ink. Date
---------------------
- ------------------------------------- ---------------------------------------

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

Stockholder sign in the box above Co-Owner (if any) sign in the box above

- --------------------------------------------------------------------------------
^ PLEASE DETACH AT PERFORATION ^

DEAN WITTER LIQUID ASSET FUND INC.

- --------------------------------------------------------------------------------
IMPORTANT

PLEASE SEND IN YOUR PROXY............TODAY!

YOU ARE URGED TO DATE AND SIGN THE ATTACHED PROXY AND RETURN IT PROMPTLY IN THE
ENCLOSED ENVELOPE. THIS WILL HELP SAVE THE EXPENSE OF FOLLOW-UP LETTERS TO
STOCKHOLDERS WHO HAVE NOT RESPONDED.
- -------------------------------------------------------------------------------
<PAGE>

DEAN WITTER U.S. GOVERNMENT MONEY MARKET TRUST

PROXY

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES

The undersigned hereby appoints Robert M. Scanlan, Barry Fink, and Joseph J.
McAlinden, or any of them, proxies, each with the power of substitution, to
vote on behalf of the undersigned at the Special Meeting of Shareholders of
Dean Witter U.S. Government Money Market Trust on May 21, 1997, at 10:00
a.m., New York City time, and at any adjournment thereof, on the proposals
set forth in the Notice of Meeting dated March 19, 1997 as follows:

(CONTINUED ON REVERSE SIDE)

THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED "FOR" THE TRUSTEES AND THE PROPOSALS SET FORTH ON THE REVERSE HEREOF
AND AS RECOMMENDED BY THE BOARD OF TRUSTEES.

IMPORTANT -- THIS PROXY MUST BE SIGNED AND DATED ON THE REVERSE SIDE.

<PAGE>

/X/ PLEASE MARK VOTES AS
IN THE EXAMPLE USING
BLACK OR BLUE INK

FOR AGAINST ABSTAIN

1. Approval of New Investment Management / / / / / /
Agreement with Dean Witter InterCapital
Inc. in connection with proposed merger.

FOR ALL
FOR WITHHOLD EXCEPT

2. Election of Trustees: / / / / / /

Michael Bozic, Charles A. Fiumefreddo,
Edwin J. Garn, John R. Haire, Wayne E.
Hedien, Manuel H. Johnson, Michael E.
Nugent, Philip J. Purcell, John L.
Schroeder

IF YOU WISH TO WITHHOLD AUTHORITY FOR ANY
PARTICULAR NOMINEE, MARK THE "FOR ALL EXCEPT"
BOX AND STRIKE A LINE THROUGH THE NOMINEE'S NAME.

FOR AGAINST ABSTAIN
3. Approval of New Investment Policy / / / / / /
with respect to investments in
certain other investment companies.

FOR AGAINST ABSTAIN
4. Ratification of appointment of Price / / / / / /
Waterhouse LLP as Independent
Accountants.

Please make sure to sign and date
this Proxy using black or blue ink. Date
---------------------
- ------------------------------------- ---------------------------------------

- ------------------------------------- ---------------------------------------
Shareholder sign in the box above Co-Owner (if any) sign in the box above

- --------------------------------------------------------------------------------
^ PLEASE DETACH AT PERFORATION ^

DEAN WITTER U.S. GOVERNMENT MONEY MARKET TRUST

- --------------------------------------------------------------------------------
IMPORTANT

PLEASE SEND IN YOUR PROXY............TODAY!

YOU ARE URGED TO DATE AND SIGN THE ATTACHED PROXY AND RETURN IT PROMPTLY IN THE
ENCLOSED ENVELOPE. THIS WILL HELP SAVE THE EXPENSE OF FOLLOW-UP LETTERS TO
SHAREHOLDERS WHO HAVE NOT RESPONDED.
- --------------------------------------------------------------------------------
<PAGE>

DEAN WITTER CALIFORNIA TAX-FREE DAILY INCOME TRUST

PROXY

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES

The undersigned hereby appoints Robert M. Scanlan, Barry Fink, and Joseph J.
McAlinden, or any of them, proxies, each with the power of substitution, to
vote on behalf of the undersigned at the Special Meeting of Shareholders of
Dean Witter California Tax-Free Daily Income Trust on May 21, 1997, at 10:00
a.m., New York City time, and at any adjournment thereof, on the proposals
set forth in the Notice of Meeting dated March 19, 1997 as follows:

(CONTINUED ON REVERSE SIDE)

THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED "FOR" THE TRUSTEES AND THE PROPOSALS SET FORTH ON THE REVERSE HEREOF
AND AS RECOMMENDED BY THE BOARD OF TRUSTEES.

IMPORTANT -- THIS PROXY MUST BE SIGNED AND DATED ON THE REVERSE SIDE.

<PAGE>

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

/X/ PLEASE MARK VOTES AS
IN THE EXAMPLE USING
BLACK OR BLUE INK

FOR AGAINST ABSTAIN

1. Approval of New Investment Management / / / / / /
Agreement with Dean Witter InterCapital
Inc. in connection with proposed merger.

FOR ALL
FOR WITHHOLD EXCEPT

2. Election of Trustees: / / / / / /

Michael Bozic, Charles A. Fiumefreddo,
Edwin J. Garn, John R. Haire, Wayne E.
Hedien, Manuel H. Johnson, Michael E.
Nugent, Philip J. Purcell, John L.
Schroeder

IF YOU WISH TO WITHHOLD AUTHORITY FOR
ANY PARTICULAR NOMINEE, MARK THE "FOR
ALL EXCEPT" BOX AND STRIKE A LINE THROUGH
THE NOMINEE'S NAME.

FOR AGAINST ABSTAIN

3. Approval of New Investment Policy / / / / / /
with respect to investments in certain
other investment companies.

FOR AGAINST ABSTAIN

4. Ratification of appointment of Price / / / / / /
Waterhouse LLP as Independent
Accountants.

Please make sure to sign and date
this Proxy using black or blue ink. Date
----------------
- ------------------------------------- ---------------------------------------

- ------------------------------------- ---------------------------------------
Shareholder sign in the box above Co-Owner (if any) sign in the box above

- --------------------------------------------------------------------------------
^ PLEASE DETACH AT PERFORATION ^

DEAN WITTER CALIFORNIA TAX-FREE DAILY INCOME TRUST

- --------------------------------------------------------------------------------
IMPORTANT

PLEASE SEND IN YOUR PROXY............TODAY!

YOU ARE URGED TO DATE AND SIGN THE ATTACHED PROXY AND RETURN IT PROMPTLY IN THE
ENCLOSED ENVELOPE. THIS WILL HELP SAVE THE EXPENSE OF FOLLOW-UP LETTERS TO
SHAREHOLDERS WHO HAVE NOT RESPONDED.

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

<PAGE>

DEAN WITTER NEW YORK MUNICIPAL MONEY MARKET TRUST

PROXY

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES

The undersigned hereby appoints Robert M. Scanlan, Barry Fink, and Joseph J.
McAlinden, or any of them, proxies, each with the power of substitution, to
vote on behalf of the undersigned at the Special Meeting of Shareholders of
Dean Witter New York Municipal Money Market Trust on May 21, 1997, at 10:00
a.m., New York City time, and at any adjournment thereof, on the proposals
set forth in the Notice of Meeting dated March 19, 1997 as follows:

(CONTINUED ON REVERSE SIDE)

THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED "FOR" THE TRUSTEES AND THE PROPOSALS SET FORTH ON THE REVERSE HEREOF
AND AS RECOMMENDED BY THE BOARD OF TRUSTEES.

IMPORTANT -- THIS PROXY MUST BE SIGNED AND DATED ON THE REVERSE SIDE.

<PAGE>

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
/X/ PLEASE MARK VOTES AS
IN THE EXAMPLE USING
BLACK OR BLUE INK

FOR AGAINST ABSTAIN

1. Approval of New Investment Management / / / / / /
Agreement with Dean Witter InterCapital
Inc. in connection with proposed merger.

FOR ALL
FOR WITHHOLD EXCEPT

2. Election of Trustees: / / / / / /

Michael Bozic, Charles A. Fiumefreddo,
Edwin J. Garn, John R. Haire, Wayne E.
Hedien, Manuel H. Johnson, Michael E.
Nugent, Philip J. Purcell, John L.
Schroeder

IF YOU WISH TO WITHHOLD AUTHORITY FOR
ANY PARTICULAR NOMINEE, MARK THE "FOR
ALL EXCEPT" BOX AND STRIKE A LINE
THROUGH THE NOMINEE'S NAME.

FOR AGAINST ABSTAIN

3. Approval of New Investment Policy / / / / / /
with respect to investments in certain
other investment companies.

FOR AGAINST ABSTAIN

4. Ratification of appointment of Price / / / / / /
Waterhouse LLP as Independent
Accountants.

Please make sure to sign and date
this Proxy using black or blue ink. Date
---------------------
- ------------------------------------- ---------------------------------------

- ------------------------------------- ---------------------------------------
Shareholder sign in the box above Co-Owner (if any) sign in the box above

- --------------------------------------------------------------------------------
^ PLEASE DETACH AT PERFORATION ^

DEAN WITTER NEW YORK MUNICIPAL MONEY MARKET TRUST

- --------------------------------------------------------------------------------
IMPORTANT

PLEASE SEND IN YOUR PROXY............TODAY!

YOU ARE URGED TO DATE AND SIGN THE ATTACHED PROXY AND RETURN IT PROMPTLY IN THE
ENCLOSED ENVELOPE. THIS WILL HELP SAVE THE EXPENSE OF FOLLOW-UP LETTERS TO
SHAREHOLDERS WHO HAVE NOT RESPONDED.

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

<PAGE>

DEAN WITTER TAX-FREE DAILY INCOME TRUST

PROXY

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES

The undersigned hereby appoints Robert M. Scanlan, Barry Fink, and Joseph J.
McAlinden, or any of them, proxies, each with the power of substitution, to
vote on behalf of the undersigned at the Special Meeting of Shareholders of
Dean Witter Tax-Free Daily Income Trust on May 21, 1997, at 10:00 a.m., New
York City time, and at any adjournment thereof, on the proposals set forth in
the Notice of Meeting dated March 19, 1997 as follows:

(CONTINUED ON REVERSE SIDE)

THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED "FOR" THE TRUSTEES AND THE PROPOSALS SET FORTH ON THE REVERSE HEREOF
AND AS RECOMMENDED BY THE BOARD OF TRUSTEES.

IMPORTANT -- THIS PROXY MUST BE SIGNED AND DATED ON THE REVERSE SIDE.

<PAGE>

/X/ PLEASE MARK VOTES AS
IN THE EXAMPLE USING
BLACK OR BLUE INK

FOR AGAINST ABSTAIN

1. Approval of New Investment Management / / / / / /
Agreement with Dean Witter InterCapital
Inc. in connection with proposed merger.

FOR ALL
FOR WITHHOLD EXCEPT

FOR AGAINST ABSTAIN

3. Approval of New Investment Policy / / / / / /
with respect to investments in certain
other investment companies.

FOR AGAINST ABSTAIN

4. Ratification of appointment of Price / / / / / /
Waterhouse LLP as Independent
Accountants.

Please make sure to sign and date
this Proxy using black or blue ink. Date
---------------------
- ------------------------------------- ---------------------------------------

- ------------------------------------- ---------------------------------------
Shareholder sign in the box above Co-Owner (if any) sign in the box above

- --------------------------------------------------------------------------------
^ PLEASE DETACH AT PERFORATION ^

DEAN WITTER TAX-FREE DAILY INCOME TRUST

- --------------------------------------------------------------------------------
IMPORTANT

PLEASE SEND IN YOUR PROXY............TODAY!

YOU ARE URGED TO DATE AND SIGN THE ATTACHED PROXY AND RETURN IT PROMPTLY IN THE
ENCLOSED ENVELOPE. THIS WILL HELP SAVE THE EXPENSE OF FOLLOW-UP LETTERS TO
SHAREHOLDERS WHO HAVE NOT RESPONDED.

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