DEAN WITTER LIQUID ASSET FUND INC, N-30D, 1997-05-12

DEAN WITTER LIQUID ASSET FUND INC
N-30D, 1997-05-12

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<PAGE>
DEAN WITTER LIQUID ASSET FUND INC. TWO WORLD TRADE CENTER, NEW YORK, NEW YORK
10048
LETTER TO THE SHAREHOLDERS FEBRUARY 28, 1997

DEAR SHAREHOLDER:

As of February 28, 1997, Dean Witter Liquid Asset Fund had assets in excess of
$12.4 billion. The Fund's annualized net yield for the six-month period ended
February 28, 1997, was 4.95 percent and its annualized 30-day yield at the end
of the period was 4.97 percent. On February 28, 1997, the portfolio's average
maturity was 79 days.

MARKET OVERVIEW

During the period under review, rates available on money market securities
remained steady, as the Federal Reserve Board's monetary policy remained
constant for the past one-year period with a stable discount rate of 5.00
percent and a federal funds target of 5.25 percent. However, this may change as
a result of the economy's resurging strength, which has been evident since last
summer.

Industrial production and retail sales have been strong for the beginning of the
first quarter of 1997. Any further increase in capacity utilization or signs of
labor tightness might lead the Federal Open Market Committee to take preemptive
action against possible inflationary pressures. Thus, an increase in the target
for the federal funds rate and other money market rates for the balance of 1997
has become more likely with the increasing pace of economic activity.

PORTFOLIO COMPOSITION AND STRUCTURE

On February 28, 1997, approximately 81 percent of the portfolio was invested in
high-quality commercial paper, 16 percent in short-term bank notes and
certificates of deposit of major, financially strong commercial banks, 1 percent
in bankers' acceptances issued by such institutions, and the remaining 2 percent
in federal agency and U.S. Treasury obligations.

At the end of the period under review, more than 76 percent of the Fund's assets
were due to mature in less than four months. The portfolio is thus well
positioned for stability of principal with a
<PAGE>
DEAN WITTER LIQUID ASSET FUND INC.
LETTER TO THE SHAREHOLDERS FEBRUARY 28, 1997, CONTINUED

high degree of liquidity. We continue to operate the Fund in a straightforward,
conservative style without including structured notes or derivatives that could
fluctuate excessively with changing interest rates.

LOOKING AHEAD

While economic activity has increased, we do not expect significantly higher
inflation for 1997 than was experienced in 1996. We anticipate that investment
yields available to the Fund during the next six months will be similar to, or
perhaps slightly higher than, those achieved during the past six months. As
always, the Fund seeks to provide liquidity, preservation of capital and a yield
that reflects prevailing money market conditions.

We appreciate your ongoing support of Dean Witter Liquid Asset Fund and look
forward to continuing to serve your investment needs and objectives.

Very truly yours,

[SIGNATURE]
CHARLES A. FIUMEFREDDO
CHAIRMAN OF THE BOARD
<PAGE>
DEAN WITTER LIQUID ASSET FUND INC.
PORTFOLIO OF INVESTMENTS FEBRUARY 28, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
ANNUALIZED
PRINCIPAL YIELD ON
AMOUNT IN DATE OF MATURITY
THOUSANDS PURCHASE DATE
- ------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
COMMERCIAL PAPER (80.9%)
AUTOMOTIVE - FINANCE (7.2%)
$$295,000 Ford Motor Credit Co.................................................. 5.34-5.44% 04/08/97-04/28/97
612,000 General Motors Acceptance Corp........................................ 5.41-5.71 03/14/97-08/25/97
BANK HOLDING COMPANIES (16.1%)
295,000 BankAmerica Corp...................................................... 5.44-5.45 04/25/97-06/05/97
500,000 Bankers Trust New York Corp........................................... 5.34-5.45 03/17/97-05/30/97
390,000 Morgan (J.P.) & Co., Inc.............................................. 5.43-5.48 03/20/97-07/15/97
30,000 Mellon Financial Co................................................... 5.43 06/02/97
25,000 NationsBank Corp...................................................... 5.30 04/30/97
435,000 PNC Funding Corp...................................................... 5.40-5.43 03/21/97-05/01/97
250,000 Republic New York Corp................................................ 5.38-5.50 04/23/97-08/04/97
89,000 SunTrust Banks, Inc................................................... 5.47 03/25/97
BANKS - COMMERCIAL (32.3%)
525,000 Abbey National North America Corp..................................... 5.42-5.65 03/24/97-10/10/97
337,000 ABN-AMRO North America Finance Inc.................................... 5.39-5.67 03/06/97-10/10/97
350,000 ANZ (Delaware) Inc.................................................... 5.34-5.57 03/04/97-09/12/97
75,000 Barclays U.S. Funding Corp............................................ 5.33-5.38 03/07/97-05/20/97
522,000 Canadian Imperial Holdings Inc........................................ 5.36-5.42 03/04/97-08/28/97
605,000 Deutsche Bank Financial Inc........................................... 5.39-5.50 04/01/97-08/05/97
465,000 Dresdner U.S. Finance Inc............................................. 5.35-5.62 05/07/97-07/22/97
50,000 Internationale Nederlanden (U.S.) Funding Corp........................ 5.50 07/07/97
190,000 National Australia Funding (DE) Inc................................... 5.39-5.52 03/11/97-07/24/97
307,000 Societe Generale N.A., Inc............................................ 5.34-5.62 03/27/97-07/25/97
280,000 Toronto-Dominion Holdings USA Inc..................................... 5.37-5.63 03/03/97-10/16/97
50,000 Union Commercial Funding Corp......................................... 5.56 07/10/97
310,000 Westpac Capital Corp.................................................. 5.40-5.75 03/06/97-07/08/97
BROKERAGE (1.9%)
240,000 Goldman Sachs Group L.P............................................... 5.39-5.42 03/11/97-03/19/97
FINANCE - COMMERCIAL (2.2%)
270,000 CIT Group Holdings, Inc............................................... 5.32-5.47 04/09/97-05/21/97
FINANCE - CONSUMER (8.0%)
390,000 American Express Credit Corp.......................................... 5.27-5.43 03/04/97-05/30/97
235,000 Avco Financial Services Inc........................................... 5.40-5.49 04/08/97-06/18/97
142,000 Beneficial Corp....................................................... 5.35-5.47 04/11/97-05/13/97
220,000 Household Finance Corp................................................ 5.37-5.42 03/07/97-05/09/97
20,000 Norwest Financial, Inc................................................ 5.30 04/16/97

PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- -----------
<C> <C>

$$295,000 $ 293,036,875
612,000 601,334,522
-------------------
894,371,397
-------------------

295,000 291,593,029
500,000 495,726,511
390,000 383,765,553
30,000 29,585,375
25,000 24,781,250
435,000 432,782,128
250,000 247,514,733
89,000 88,679,600
-------------------
1,994,428,179
-------------------

525,000 518,086,579
337,000 328,838,997
350,000 344,511,621
75,000 74,663,611
522,000 515,986,872
605,000 596,294,878
465,000 458,138,339
50,000 49,047,111
190,000 186,911,453
307,000 302,951,231
280,000 275,838,760
50,000 49,015,681
310,000 306,522,840
-------------------
4,006,807,973
-------------------

240,000 239,555,072
-------------------

270,000 267,794,981
-------------------

390,000 388,288,147
235,000 232,309,746
142,000 140,756,753
220,000 218,834,283
20,000 19,865,578
-------------------
1,000,054,507
-------------------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER LIQUID ASSET FUND INC.
PORTFOLIO OF INVESTMENTS FEBRUARY 28, 1997 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
ANNUALIZED
PRINCIPAL YIELD ON
AMOUNT IN DATE OF MATURITY
THOUSANDS PURCHASE DATE
- ------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
FINANCE - DIVERSIFIED (7.2%)
$ 290,000 Associates Corp. of North America..................................... 5.35-5.49% 04/07/97-05/07/97
619,000 General Electric Capital Corp......................................... 5.33-5.98 03/03/97-10/02/97
FOODS & BEVERAGES (0.8%)
25,000 Coca-Cola Co.......................................................... 5.37 04/02/97
81,000 Heinz (H.J.) Co....................................................... 5.45-5.49 03/03/97-06/20/97
INDUSTRIALS (1.0%)
110,000 Caterpillar Financial Services Corp................................... 5.42-5.45 04/29/97-06/20/97
12,000 Motorola Inc.......................................................... 5.30 05/08/97
INSURANCE (0.3%)
40,000 AIG Funding Inc....................................................... 5.41-5.62 03/17/97-08/21/97
OFFICE EQUIPMENT (2.1%)
135,000 IBM Credit Corp....................................................... 5.34-5.40 03/13/97-05/29/97
125,000 International Business Machines Corp.................................. 5.36-5.37 03/05/97-03/19/97
RETAIL (0.5%)
60,000 Sears Roebuck Acceptance Corp......................................... 5.34-5.42 03/05/97-04/14/97
TELEPHONE (0.5%)
30,000 Ameritech Corp........................................................ 5.59 03/25/97
30,000 BellSouth Telecommunications Inc...................................... 5.42 03/10/97
UTILITIES - FINANCE (0.8%)
100,000 National Rural Utilities Cooperative Finance Corp..................... 5.36 03/10/97-03/11/97

TOTAL COMMERCIAL PAPER
(AMORTIZED COST $10,045,126,448)...........................................................................

SHORT-TERM BANK NOTES (7.9%)
185,000 Bank of America NT & SA............................................... 5.42-5.49 03/25/97-06/27/97
315,000 F.C.C. National Bank.................................................. 5.50-5.53 04/29/97-07/11/97
130,000 First National Bank of Boston......................................... 5.41-5.46 04/29/97-07/10/97
25,000 First National Bank of Chicago........................................ 5.40 08/20/97
220,000 La Salle National Bank................................................ 5.36-5.61 03/05/97-10/31/97
100,000 NationsBank, N.A...................................................... 5.38 03/13/97

TOTAL SHORT-TERM BANK NOTES
(AMORTIZED COST $975,000,000)..............................................................................

PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- -----------
<C> <C>

$ 290,000 $ 287,873,753
619,000 610,452,608
-------------------
898,326,361
-------------------

25,000 24,882,222
81,000 80,167,450
-------------------
105,049,672
-------------------

110,000 108,763,692
12,000 11,881,227
-------------------
120,644,919
-------------------

40,000 39,446,011
-------------------

135,000 134,367,946
125,000 124,838,133
-------------------
259,206,079
-------------------

60,000 59,729,555
-------------------

30,000 29,891,200
30,000 29,959,875
-------------------
59,851,075
-------------------

100,000 99,860,667
-------------------

10,045,126,448
-------------------

185,000 185,000,000
315,000 315,000,000
130,000 130,000,000
25,000 25,000,000
220,000 220,000,000
100,000 100,000,000
-------------------

975,000,000
-------------------
</TABLE>

TOTAL CERTIFICATES OF DEPOSIT
(AMORTIZED COST $1,025,000,000)............................................................................

U.S. GOVERNMENT & AGENCY OBLIGATIONS (1.8%)
40,000 Federal Farm Credit Bank.............................................. 5.57 11/12/97
35,000 Federal Home Loan Banks............................................... 5.43 03/31/97
50,000 Federal Home Loan Mortgage Corp....................................... 5.40 03/31/97
100,000 U.S. Treasury Bills................................................... 5.14-5.52 03/06/97-02/05/98

TOTAL U.S. GOVERNMENT & AGENCY OBLIGATIONS
(AMORTIZED COST $221,581,003)..............................................................................

BANKERS' ACCEPTANCES (1.7%)
27,000 Chase Manhattan Bank, N.A............................................. 5.32-5.43 04/22/97-05/27/97
100,000 Corestates Bank, N.A.................................................. 5.37-5.48 03/06/97-08/20/97
10,000 First Bank National Association....................................... 5.40 05/19/97
80,000 Republic National Bank of New York.................................... 5.37 04/07/97

TOTAL BANKERS' ACCEPTANCES
(AMORTIZED COST $214,680,369)..............................................................................

REPURCHASE AGREEMENT (0.1%)
14,647 The Bank of New York (dated 02/28/97; proceeds $14,653,838;
collateralized by $2,317,056 Federal Home Loan Banks 0.00% due
08/26/97 valued at $2,255,767 and by $12,672,570 U.S. Treasury Note
5.875% due 01/31/99 valued at $12,684,611) (Identified Cost
$14,647,430)........................................................ 5.25 03/03/97

PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- -----------
<C> <C>

$ 445,000 $ 445,000,000
150,000 150,000,000
340,000 340,000,000
90,000 90,000,000
-------------------

1,025,000,000
-------------------

40,000 38,492,445
35,000 34,843,958
50,000 49,778,333
100,000 98,466,267
-------------------

221,581,003
-------------------

27,000 26,717,994
100,000 98,511,114
10,000 9,884,572
80,000 79,566,689
-------------------

214,680,369
-------------------

14,647

14,647,430
-------------------

TOTAL INVESTMENTS
(AMORTIZED COST $12,496,035,250) (A)..................................... 100.7 % 12,496,035,250

LIABILITIES IN EXCESS OF CASH AND OTHER ASSETS........................... (0.7) (86,490,517)
----- --------------

NET ASSETS............................................................... 100.0 % $12,409,544,733
----- --------------
----- --------------

<FN>
- ---------------------
(a) Cost is the same for federal income tax purposes.
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER LIQUID ASSET FUND INC.
FINANCIAL STATEMENTS

STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1997 (UNAUDITED)

<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value
(amortized cost $12,496,035,250).......................... $12,496,035,250
Cash........................................................ 90,001
Receivable for:
Interest................................................ 26,024,832
Capital stock sold...................................... 201,576
Prepaid expenses and other assets........................... 637,850
---------------

TOTAL ASSETS........................................... 12,522,989,509
---------------

LIABILITIES:
Payable for:
Capital stock repurchased............................... 107,024,766
Investment management fee............................... 2,600,905
Plan of distribution fee................................ 950,225
Accrued expenses and other payables......................... 2,868,880
---------------

TOTAL LIABILITIES...................................... 113,444,776
---------------
NET ASSETS:
Paid-in-capital............................................. 12,408,857,593
Accumulated undistributed net investment income............. 687,140
---------------

NET ASSETS............................................. $12,409,544,733
---------------
---------------

NET ASSET VALUE PER SHARE,
12,409,528,787 SHARES OUTSTANDING (25,000,000,000 SHARES
AUTHORIZED OF $.01 PAR VALUE).............................
$1.00
---------------
---------------
</TABLE>

STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED FEBRUARY 28, 1997 (UNAUDITED)

<TABLE>
<S> <C>
NET INVESTMENT INCOME:

INTEREST INCOME............................................. $330,709,419
------------

EXPENSES
Investment management fee................................... 16,318,450
Transfer agent fees and expenses............................ 13,315,657
Plan of distribution fee.................................... 5,774,564
Registration fees........................................... 523,145
Shareholder reports and notices............................. 279,552
Custodian fees.............................................. 168,280
Professional fees........................................... 33,674
Directors' fees and expenses................................ 7,142
Other....................................................... 45,643
------------

TOTAL EXPENSES......................................... 36,466,107
------------

NET INVESTMENT INCOME AND NET INCREASE...................... $294,243,312
------------
------------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER LIQUID ASSET FUND INC.
FINANCIAL STATEMENTS, CONTINUED

STATEMENT OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED FOR THE YEAR
FEBRUARY 28, ENDED
1997 AUGUST 31,
(UNAUDITED) 1996
- --------------------------------------------------------------------------------------------
<S> <C> <C>

INCREASE (DECREASE) IN NET ASSETS:

OPERATIONS:
Net investment income and net increase...................... $ 294,243,312 $ 556,631,606
Dividends from net investment income........................ (294,244,919) (556,625,540)
Net increase from capital stock transactions................ 1,020,077,690 1,029,986,565
-------------- --------------

NET INCREASE........................................... 1,020,076,083 1,029,992,631

NET ASSETS:
Beginning of period......................................... 11,389,468,650 10,359,476,019
-------------- --------------

END OF PERIOD
(INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME OF
$687,140 AND $688,747, RESPECTIVELY).................... $12,409,544,733 $11,389,468,650
-------------- --------------
-------------- --------------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER LIQUID ASSET FUND INC.
NOTES TO FINANCIAL STATEMENTS FEBRUARY 28, 1997 (UNAUDITED)

1. ORGANIZATION AND ACCOUNTING POLICIES

Dean Witter Liquid Asset Fund Inc. (the "Fund") is registered under the
Investment Company Act of 1940, as amended (the "Act"), as a diversified,
open-end management investment company. The Fund's investment objectives are
high current income, preservation of capital and liquidity. The Fund was
incorporated in Maryland on September 3, 1974 and commenced operations on
September 22, 1975.

The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures. Actual results could differ from
those estimates.

The following is a summary of significant accounting policies:

A. VALUATION OF INVESTMENTS -- Portfolio securities are valued at amortized
cost, which approximates market value.

B. ACCOUNTING FOR INVESTMENTS -- Security transactions are accounted for on the
trade date (date the order to buy or sell is executed). Realized gains and
losses on security transactions are determined by the identified cost method.
Discounts are accreted and premiums are amortized over the life of the
respective securities. Interest income is accrued daily.

C. FEDERAL INCOME TAX STATUS -- It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its taxable income to its shareholders.
Accordingly, no federal income tax provision is required.

D. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- The Fund records dividends
and distributions as of the close of each business day.

2. INVESTMENT MANAGEMENT AGREEMENT

Pursuant to an Investment Management Agreement with Dean Witter InterCapital
Inc. (the "Investment Manager"), the Fund pays the Investment Manager a
management fee, accrued daily and payable monthly, 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
<PAGE>
DEAN WITTER LIQUID ASSET FUND INC.
NOTES TO FINANCIAL STATEMENTS FEBRUARY 28, 1997 (UNAUDITED) CONTINUED

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.

Under the terms of the Agreement, the Investment Manager maintains certain of
the Fund's books and records and furnishes, at its own expense, office space,
facilities, equipment, clerical, bookkeeping and certain legal services and pays
the salaries of all personnel, including officers of the Fund who are employees
of the Investment Manager. The Investment Manager also bears the cost of
telephone services, heat, light, power and other utilities provided to the Fund.

3. PLAN OF DISTRIBUTION

Dean Witter Distributors Inc. (the "Distributor"), an affiliate of the
Investment Manager, is the distributor of the Fund's shares and, in accordance
with a Plan of Distribution (the "Plan") pursuant to Rule 12b-1 under the Act,
finances certain expenses in connection therewith.

Under the Plan, the Distributor bears the expense of all promotional and
distribution related activities on behalf of the Fund, except for expenses that
the Directors determine to reimburse, as described below. The following
activities and services may be provided by the Distributor, Dean Witter Reynolds
Inc. ("DWR"), an affiliate of the Investment Manager and Distributor, its
affiliates and other selected broker-dealers under the Plan: (1) compensation
to, and expenses of, DWR's and other selected broker-dealers' account executives
and other employees, including overhead and telephone expenses; (2) sales
incentives and bonuses to sales representatives and to marketing personnel in
connection with promoting sales of the Fund's shares; (3) expenses incurred in
connection with promoting sales of the Fund's shares; (4) preparing, printing
and distributing sales literature; and (5) providing advertising and promotional
activities, including direct mail solicitation and television, radio, newspaper,
magazine and other media advertisements.

The Fund is authorized to reimburse the Distributor for specific expenses the
Distributor incurs or plans to incur in promoting the distribution of the Fund's
shares. The amount of each monthly reimbursement payment may in no event exceed
an amount equal to a payment at the annual rate of 0.15% of the Fund's average
daily net assets during the month. Expenses incurred by the Distributor pursuant
to the Plan in any fiscal year will not be reimbursed by the Fund through
payments accrued in any subsequent fiscal year. For the six months ended
February 28, 1997, the distribution fee was accrued at the annual rate of 0.10%.
<PAGE>
DEAN WITTER LIQUID ASSET FUND INC.
NOTES TO FINANCIAL STATEMENTS FEBRUARY 28, 1997 (UNAUDITED) CONTINUED

4. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES

The cost of purchases and proceeds from sales/maturities of portfolio securities
for the six months ended February 28, 1997 aggregated $19,779,418,048 and
$19,019,358,068, respectively.

Dean Witter Trust Company, an affiliate of the Investment Manager and
Distributor, is the Fund's transfer agent. At February 28, 1997, the Fund had
transfer agent fees and expenses payable of approximately $2,113,000.

The Fund has an unfunded noncontributory defined benefit pension plan covering
all independent Directors of the Fund who will have served as independent
Directors for at least five years at the time of retirement. Benefits under this
plan are based on years of service and compensation during the last five years
of service. Aggregate pension costs for the six months ended February 28, 1997
included in Directors' fees and expenses in the Statement of Operations amounted
to $755. At February 28, 1997, the Fund had an accrued pension liability of
$48,525 which is included in accrued expenses in the Statement of Assets and
Liabilities.

5. CAPITAL STOCK

Transactions in capital stock, at $1.00 per share, were as follows:

<TABLE>
<CAPTION>
FOR THE YEAR
ENDED
AUGUST 31, 1996
FOR THE SIX ----------------
MONTHS ENDED
FEBRUARY 28,
1997
----------------
(UNAUDITED)
<S> <C> <C>
Shares sold...................................................... 17,124,977,740 31,284,601,651
Shares issued in reinvestment of dividends....................... 293,449,817 554,968,386
---------------- ----------------
17,418,427,557 31,839,570,037
Shares repurchased............................................... (16,398,349,867) (30,809,583,472)
---------------- ----------------
Net increase..................................................... 1,020,077,690 1,029,986,565
---------------- ----------------
---------------- ----------------
</TABLE>
<PAGE>
DEAN WITTER LIQUID ASSET FUND INC.
FINANCIAL HIGHLIGHTS

Selected ratios and per share data for a share of capital stock outstanding
throughout each period:

<TABLE>
<CAPTION>
FOR THE
SIX
MONTHS
ENDED
FEBRUARY FOR THE YEAR ENDED AUGUST 31
28, 1997 ------------------------------------------------------
(UNAUDITED) 1996 1995 1994 1993 1992
- ------------------------------------------------------------------------------------

<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:

Net asset value,
beginning of
period.......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------- --------- --------- ---------- --------- ---------

Net investment
income.......... 0.025 0.050 0.053 0.030 0.027 0.040

Less dividends
from net
investment
income.......... (0.025) (0.050) (0.053) (0.030) (0.027) (0.040)
---------- --------- --------- ---------- --------- ---------

Net asset value,
end of period... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------- --------- --------- ---------- --------- ---------
---------- --------- --------- ---------- --------- ---------

TOTAL INVESTMENT
RETURN+.......... 2.51%(1) 5.15% 5.41% 3.07% 2.72% 4.10%

RATIOS TO AVERAGE
NET ASSETS:
Expenses......... 0.61%(2) 0.63% 0.65% 0.70% 0.69% 0.67%

Net investment
income.......... 4.95%(2) 5.02% 5.28% 3.02% 2.67% 4.03%

SUPPLEMENTAL DATA:
Net assets, end
of period, in
millions........ $12,410 $11,389 $10,359 $8,492 $7,959 $9,214
<FN>

- ---------------------
+ Calculated based on the net asset value as of the last business day of the
period.
(1) Not annualized.
(2) Annualized.
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>

Board of Directors
- ----------------------------------
Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn
John R. Haire
Dr. Manuel H. Johnson
Michael E. Nugent
Philip J. Purcell
John L. Schroeder

Officers
- ---------------------------------- DEAN WITTER
Charles A. Fiumefreddo
CHAIRMAN AND CHIEF EXECUTIVE OFFICER LIQUID ASSET FUND

Barry Fink
VICE PRESIDENT, SECRETARY AND GENERAL COUNSEL

Jonathan R. Page
VICE PRESIDENT

Thomas F. Caloia
TREASURER

Transfer Agent
- ----------------------------------
Dean Witter Trust Company
Harborside Financial Center - Plaza Two
Jersey City, New Jersey 07311

Independent Accountants
- ----------------------------------
Price Waterhouse LLP
1177 Avenue of the Americas
New York, New York 10036

Investment Manager
- ----------------------------------
Dean Witter InterCapital Inc.
Two World Trade Center
New York, New York 10048

The financial statements
included herein have been taken
from the records of the Fund
without examination by the
independent accountants and
accordingly they do not express
an opinion thereon.

This report is submitted for the
general information of
shareholders of the Fund. For
more detailed information about
the Fund, its officers and
directors, fees, expenses and
other pertinent information, SEMIANNUAL REPORT
please see the prospectus of the
Fund. FEBRUARY 28, 1997

This report is not authorized
for distribution to prospective
investors in the Fund unless
preceded or accompanied by an
effective prospectus.