<PAGE>
Filed Pursuant to Rule 497(e)
Registration File No.: 333-02419
TCW/DW GLOBAL TELECOM TRUST
PROSPECTUS
DECEMBER 23, 1996
- ------------------------------------------------------------------------------
TCW/DW Global Telecom Trust (the "Fund") is an open-end, diversified
management investment company, whose investment objective is long-term
capital appreciation. The Fund seeks to achieve its investment objective by
investing primarily in a portfolio consisting of securities of domestic and
foreign companies operating in all aspects of the telecommunications and
information industries. Such issuers are information transporters (such as
local/regional telephone companies, long-distance carriers and cable
television), content providers (such as movie studios, transaction services,
publishers and advertisers) and providers of enabling technologies (such as
manufacturers of information-processing servers, software and communications
products). See "Investment Objective and Policies."
Shares of the Fund are continuously offered at the net asset value per share
next determined following receipt of an order, without imposition of a sales
charge. However, repurchases and/or redemptions of shares are subject in most
cases to a contingent deferred sales charge, scaled down from 5% to 1% of the
amount redeemed, if made within six years of purchase, which charge will be
paid to the Fund's Distributor, Dean Witter Distributors Inc. See
"Repurchases and Redemptions--Contingent Deferred Sales Charge." In addition,
the Fund pays the Distributor a Rule 12b-1 distribution fee pursuant to a
Plan of Distribution at the annual rate of 1% of the lesser of the (i)
average daily aggregate net sales or (ii) average daily net assets of the
Fund. See "Purchase of Fund Shares--Plan of Distribution."
This Prospectus sets forth concisely the information you should know before
investing in the Fund. It should be read and retained for future reference.
Additional information about the Fund is contained in the Statement of
Additional Information, dated December 23, 1996, which has been filed with
the Securities and Exchange Commission, and which is available at no charge
upon request of the Fund at the address or telephone numbers listed on this
page. The Statement of Additional Information is incorporated herein by
reference.
TABLE OF CONTENTS
Prospectus Summary .................................................... 2
Summary of Fund Expenses .............................................. 3
Financial Highlights (unaudited) ...................................... 4
The Fund and its Management ........................................... 5
Investment Objective and Policies ..................................... 5
Risk Considerations and Investment Practices ....................... 6
Investment Restrictions ............................................... 11
Purchase of Fund Shares ............................................... 12
Shareholder Services .................................................. 13
Repurchases and Redemptions ........................................... 15
Dividends, Distributions and Taxes .................................... 17
Performance Information ............................................... 17
Additional Information ................................................ 18
Financial Statements (unaudited)
November 30, 1996 .................................................... 19
Shares of the Fund are not deposits or obligations of, or guaranteed or
endorsed by, any bank, and the shares are not federally insured by the
Federal Deposit Insurance Corporation, the Federal Reserve Board, or any
other agency.
TCW/DW GLOBAL TELECOM TRUST
Two World Trade Center
New York, New York 10048
(212) 392-2550 or
(800) 869-NEWS (toll-free)
Dean Witter Distributors Inc.
Distributor
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
PROSPECTUS SUMMARY
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
THE The Fund is organized as a Trust, commonly known as a Massachusetts business
FUND trust, and is an open-end, diversified management investment company investing
primarily in a portfolio consisting of securities of domestic and foreign companies
operating in all aspects of the telecommunications and information industries.
- ------------------ --------------------------------------------------------------------------
SHARES Shares of beneficial interest with $0.01 par value (see page 18).
OFFERED
- ------------------ --------------------------------------------------------------------------
OFFERING At net asset value (see page 12). Shares redeemed within six years of purchase
PRICE are subject to a contingent deferred sales charge under most circumstances (see
page 15).
- ------------------ --------------------------------------------------------------------------
MINIMUM Minimum initial investment, $1,000 ($100 if the account is opened through
PURCHASE EasyInvest (Service Mark) ); minimum subsequent investment, $100 (see page 12).
- ------------------ --------------------------------------------------------------------------
INVESTMENT The investment objective of the Fund is long-term capital appreciation.
OBJECTIVE
- ------------------ --------------------------------------------------------------------------
MANAGER Dean Witter Services Company Inc. (the "Manager"), a wholly-owned subsidiary
of Dean Witter InterCapital Inc. ("InterCapital"), is the Fund's manager. The
Manager also serves as manager to thirteen other investment companies advised
by TCW Funds Management, Inc. (the "TCW/DW Funds"). The Manager and InterCapital
serve in various investment management, advisory, management and administrative
capacities to a total of 100 investment companies and other portfolios with
assets of approximately $91 billion at November 30, 1996 (see page 5).
- ------------------ --------------------------------------------------------------------------
ADVISER TCW Funds Management, Inc. (the "Adviser") is the Fund's investment adviser.
In addition to the Fund, the Adviser serves as investment adviser to thirteen
other TCW/DW Funds. As of October 31, 1996, the Adviser and its affiliates had
approximately $53 billion under management or committed to management in various
fiduciary or advisory capacities, primarily to institutional investors (see
page 5).
- ------------------ --------------------------------------------------------------------------
MANAGEMENT The Manager receives a monthly fee at the annual rate of 0.60% of daily net
AND ADVISORY assets. The Adviser receives a monthly fee at an annual rate of 0.40% of daily
FEES net assets (see page 5).
- ------------------ --------------------------------------------------------------------------
DIVIDENDS Income dividends and capital gains, if any, will be distributed no less than
annually. Dividends and capital gains distributions are automatically reinvested
in additional shares at net asset value unless the shareholder elects to receive
cash (see page 17).
- ------------------ --------------------------------------------------------------------------
DISTRIBUTOR Dean Witter Distributors Inc. (the "Distributor"). The Distributor receives
from the Fund a distribution fee accrued daily and payable monthly at the rate
of 1.0% per annum of the lesser of (i) the average daily aggregate net sales
or (ii) the Fund's average daily net assets. This fee compensates the Distributor
for services provided in distributing shares of the Fund and for sales-related
expenses. The Distributor also receives the proceeds of any contingent deferred
sales charges (see pages 12 and 15).
- ------------------ --------------------------------------------------------------------------
REDEMPTION-- Shares are redeemable by the shareholder at net asset value. An account may
CONTINGENT be involuntarily redeemed if the total value of the account is less than $100
DEFERRED or, if the account was opened through EasyInvest (Service Mark), if after twelve
SALES months the shareholder has invested less than $1,000 in the account. Although
CHARGE no commission or sales load is imposed upon the purchase of shares, a contingent
deferred sales charge (scaled down from 5% to 1%) is imposed on any redemption
of shares if after such redemption the aggregate current value of an account
with the Fund falls below the aggregate amount of the investor's purchase payments
made during the six years preceding the redemption. However, there is no charge
imposed on redemption of shares purchased through reinvestment of dividends
or distributions (see page 15).
- ------------------ --------------------------------------------------------------------------
RISK The net asset value of the Fund's shares will fluctuate with changes in the
CONSIDERATIONS market value of the Fund's portfolio securities. The market value of the Fund's
portfolio securities will increase or decrease due to a variety of economic,
market or political factors affecting companies and/or industries in which the
Fund invests. In addition, the value of the Fund's fixed-income and convertible
securities generally increases or decreases due to economic and market factors,
as well as changes in prevailing interest rates. Generally, a rise in interest
rates will result in a decrease in value while a drop in interest rates will
result in an increase in value. The Fund may invest in lower rated or unrated
convertible securities (see page 7). There are also certain risks associated
with the Fund's investments in the telecommunications and information industries
(see page 7). The Fund will invest in the securities of foreign issuers which
entails certain additional risks. The Fund may also invest in options and futures
transactions which may be considered speculative in nature and may involve greater
risks than those customarily assumed by other investment companies which do
not invest in such instruments. In addition, the Fund may enter into forward
foreign currency exchange contracts in connection with its foreign securities
investments and may purchase securities on a when-issued, delayed delivery or
"when, as and if issued" basis, which involve certain special risks (see pages
6-11). An investment in shares of the Fund should not be considered a complete
investment program and is not appropriate for all investors. Investors should
carefully consider their ability to assume these risks and the risks outlined
under the heading "Risk Considerations and Investment Practices" (see page 6)
before making an investment in the Fund.
- ------------------ --------------------------------------------------------------------------
</TABLE>
The above is qualified in its entirety by the detailed information appearing
elsewhere in this Prospectus and in the Statement of Additional Information.
2
<PAGE>
SUMMARY OF FUND EXPENSES
- ----------------------------------------------------------------------
The following table illustrates all expenses and fees that a shareholder
of the Fund will incur. The estimated annualized fees and expenses set forth
in the table are for the fiscal period ending May 31, 1997.
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<CAPTION>
<S> <C>
Maximum Sales Charge Imposed on Purchases ............................................. None
Maximum Sales Charge Imposed on Reinvested Dividends .................................. None
Contingent Deferred Sales Charge
(as a percentage of the lesser of original purchase price or redemption proceeds) .. 5.0%
</TABLE>
A contingent deferred sales charge is imposed at the following declining rates:
<TABLE>
<CAPTION>
YEAR SINCE PURCHASE PAYMENT MADE PERCENTAGE
--------------
<S> <C>
First ............................... 5.0%
Second .............................. 4.0%
Third ............................... 3.0%
Fourth .............................. 2.0%
Fifth ............................... 2.0%
Sixth ............................... 1.0%
Seventh and thereafter .............. None
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Redemption Fees .......................................................... None
Exchange Fee ............................................................. None
ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management and Advisory Fees ............................................. 1.00%
12b-1 Fees* .............................................................. 0.98%
Other Expenses ........................................................... 0.40%
Total Fund Operating Expenses** .......................................... 2.38%
</TABLE>
- ------------
* The 12b-1 fee is accrued daily and payable monthly, at an annual rate
of 1.0% of the lesser of: (a) the average daily aggregate gross sales
of the Fund's shares since inception (not including reinvestment of
dividends or distributions), less the average daily aggregate net asset
value of the Fund's shares redeemed since the Fund's inception upon
which a contingent deferred sales charge has been imposed or waived, or
(b) the Fund's daily net assets. A portion of the 12b-1 fee equal to
0.25% of the Fund's average daily net assets is characterized as a
service fee within the meaning of National Association of Securities
Dealers, Inc. ("NASD") guidelines and is a payment made to the selling
broker for personal service and/or maintenance of shareholder accounts.
The remainder of the 12b-1 fee is an asset based sales charge, and is a
distribution fee paid to the Distributor to compensate it for the
services provided and the expenses borne by the Distributor and others
in the distribution of the Fund's shares (see "Purchase of Fund
Shares").
** "Total Fund Operating Expenses," as shown above, is based upon the sum
of the annualized 12b-1 Fees, Management and Advisory Fees and
estimated "Other Expenses," which may be incurred by the Fund for the
fiscal period ending May 31, 1997.
<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS
- ------- ---------- -----------
<S> <C> <C>
You would pay the following expenses on a $1,000 investment, assuming (1) 5% annual return and
(2) redemption at the end of each time period: .................................................. $74 $104
You would pay the following expenses on the same investment, assuming no redemption: ............ $24 $74
</TABLE>
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES OR PERFORMANCE. ACTUAL EXPENSES OF THE FUND MAY BE GREATER OR
LESS THAN THOSE SHOWN.
The purpose of this table is to assist the investor in understanding the
various costs and expenses that an investor in the Fund will bear directly or
indirectly. For a more complete description of these costs and expenses, see
"The Fund and its Management," "Plan of Distribution" and "Repurchases and
Redemptions" in this Prospectus.
Long-term shareholders of the Fund may pay more in sales charges including
distribution fees than the economic equivalent of the maximum front-end sales
charges permitted by the NASD.
3
<PAGE>
FINANCIAL HIGHLIGHTS (unaudited)
- -----------------------------------------------------------------------------
The following ratios and per share data for a share of beneficial interest
outstanding throughout the period have been taken from the records of the
Fund without examination by independent accountants. The financial highlights
should be read in conjunction with the unaudited financial statements and
notes thereto which are contained in this Prospectus commencing on page 19.
<TABLE>
<CAPTION>
FOR THE PERIOD
AUGUST 28, 1996*
THROUGH NOVEMBER 30, 1996
-------------------------
<S> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period .. $ 10.00
-----------------
Net investment loss .................... (0.03)
Net realized and unrealized gain ...... 0.73
-----------------
Total from investment operations ...... 0.70
-----------------
Net asset value, end of period ......... $ 10.70
=================
TOTAL INVESTMENT RETURN+ .............. 7.00 %(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses ............................... 2.37 %(2)
Net investment loss .................... (1.23)%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands $103,830
Portfolio turnover rate ................ 20 %(1)
Average commission rate paid ........... $0.0218
</TABLE>
- ------------
* Commencement of operations.
+ Does not reflect the deduction of sales charge. Calculated based on the
net asset value as of the last business day of the period.
(1) Not annualized.
(2) Annualized.
See Notes to Financial Statements
4
<PAGE>
THE FUND AND ITS MANAGEMENT
- ----------------------------------------------------------------------
TCW/DW Global Telecom Trust (the "Fund") is an open-end, diversified
management investment company. The Fund is a trust of the type commonly known
as a "Massachusetts business trust" and was organized under the laws of
Massachusetts on March 28, 1996.
Dean Witter Services Company Inc. (the "Manager"), whose address is Two
World Trade Center, New York, New York 10048, is the Fund's Manager. The
Manager is a wholly-owned subsidiary of Dean Witter InterCapital Inc.
("InterCapital"). InterCapital is a wholly-owned subsidiary of Dean Witter,
Discover & Co. ("DWDC"), a balanced financial services organization providing
a broad range of nationally marketed credit and investment products.
The Manager acts as manager to thirteen other TCW/DW Funds. The Manager
and InterCapital serve in various investment management, advisory, management
and administrative capacities to a total of 100 investment companies, thirty
of which are listed on the New York Stock Exchange, with combined assets of
approximately $87.9 billion as of November 30, 1996. InterCapital also
manages and advises portfolios of pension plans, other institutions and
individuals which aggregated approximately $3.1 billion at such date.
The Fund has retained the Manager to manage its business affairs,
supervise its overall day-to-day operations (other than providing investment
advice) and provide all administrative services.
TCW Funds Management, Inc. (the "Adviser"), whose address is 865 South
Figueroa Street, Suite 1800, Los Angeles, California 90017, is the Fund's
investment adviser. The Adviser was organized in 1987 as a wholly-owned
subsidiary of The TCW Group, Inc. ("TCW"), whose subsidiaries, including
Trust Company of the West and TCW Asset Management Company, provide a variety
of trust, investment management and investment advisory services. Robert A.
Day, who is Chairman of the Board of Directors of TCW, may be deemed to be a
control person of the Adviser by virtue of the aggregate ownership by Mr. Day
and his family of more than 25% of the outstanding voting stock of TCW. The
Adviser serves as investment adviser to twelve other TCW/DW Funds in addition
to the Fund. As of October 31, 1996, the Adviser and its affiliated companies
had approximately $53 billion under management or committed to management,
primarily from institutional investors.
The Fund has retained the Adviser to invest the Fund's assets.
The Fund's Trustees review the various services provided by the Manager
and the Adviser to ensure that the Fund's general investment policies and
programs are being properly carried out and that administrative services are
being provided to the Fund in a satisfactory manner.
As full compensation for the services and facilities furnished to the Fund
and for expenses of the Fund assumed by the Manager, the Fund pays the
Manager monthly compensation calculated daily by applying the annual rate of
0.60% to the Fund's net assets. As compensation for its investment advisory
services, the Fund pays the Adviser monthly compensation calculated daily by
applying an annual rate of 0.40% to the Fund's net assets. The total fees
paid by the Fund to the Manager and the Adviser are higher than the fees paid
by most other investment companies for similar services.
The Fund's expenses include: the fees of the Manager and the Adviser; the
fee pursuant to the Plan of Distribution (see "Purchase of Fund Shares");
taxes; legal, transfer agent, custodian and auditing fees; federal and state
registration fees; and printing and other expenses relating to the Fund's
operations which are not expressly assumed by the Manager or Adviser under
their respective Agreements with the Fund.
INVESTMENT OBJECTIVE AND POLICIES
- ----------------------------------------------------------------------
The investment objective of the Fund is long-term capital appreciation.
This objective is fundamental and may not be changed without shareholder
approval. There is no assurance that the objective will be achieved.
The Fund seeks to achieve its investment objective by investing under
normal circumstances at least 65% of its total assets in common stocks and
securities convertible into common stocks of domestic and foreign companies
operating in all aspects of the telecommunications and information industries
(the "Target Industries"). The Fund will not have more than 25% of its total
assets invested in convertible securities. All or some of the convertible
securities in which the Fund may invest may be below investment grade. See
the Appendix to the Statement of Additional Information for a discussion of
ratings of fixed-income securities.
The Target Industries are information transporters, content providers and
providers of enabling technologies. Information transporters are companies
involved in developing and manufacturing any portion of the so-called
information superhighway, such as local/regional telephone companies,
long-distance carriers, cable television, personal communications systems,
wireless, cellular, paging, direct broadcast satellite and the Internet.
Content providers are companies providing some of the information content
that is transmitted via the information superhighway such as movie studios,
providers of transaction services, manufacturers of games and educational
programming, publishers and advertisers. Finally, providers of enabling
technologies are manufacturers of products such as information-processing
servers, consumer electronics, data and video compression, software, storage
and semiconductor products.
5
<PAGE>
Companies considered to be in the Target Industries will be those which
derive at least 35% of their revenues or earnings from the Target Industries,
or devote at least 35% of their assets to activities in the Target
Industries. Investments in securities of issuers in any one country, other
than the United States, will represent no more than 25% of the Fund's total
assets. The Fund will have at least 65% of its total assets invested in
securities of issuers located in at least three different countries.
Under normal market conditions, the Fund will maintain at least 25% of its
portfolio in securities issued by issuers located in the United States. As
such, the Fund will have a greater exposure than other "global" mutual funds
to economic and political events occurring in the U.S. Changes in prevailing
U.S. interest rates, federal tax rate increases, or adverse changes in
federal or state regulations or exchange rules may all have a
disproportionate impact upon the Fund as a result of its concentration
policy. Moreover, the Fund's concentration in securities of U.S. issuers will
mean that the Fund's investments are more likely to be responsive, both
positively and negatively, to declines or advances in the U.S. dollar with
respect to foreign currencies.
The communication and use of information using existing and developing
technologies is becoming increasingly important to the global economy. There
are opportunities for continued growth in demand for components, products,
media and systems to collect, store, retrieve, transmit, process, distribute,
record, reproduce and put information to use. The telecommunications,
broadcasting, cable television, media, entertainment and computer industries
are involved in creating new ways of exchanging information and distributing
content as consumers and businesses seek to buy packages of services
including combinations of local and long distance telephone, wireless, cable
television and Internet services. While governmental regulation may impact
the Target Industries both positively and negatively (see "Risk
Considerations and Investment Practices" below), the Adviser believes that
the enactment by the U.S. Congress of the Telecommunications Reform Act of
1996 may add to these growth opportunities through increasing competition,
mergers and other transactions that could fundamentally change the way
consumers and businesses obtain communication services. All such factors are
part of the Adviser's overall investment selection process.
Up to 75% of the Fund's total assets may be invested in equity securities
of foreign issuers. Such foreign investments may be in the form of direct
investments in securities of foreign issuers or in the form of American
Depository Receipts (ADRs), European Depository Receipts (EDRs), Global
Depository Receipts (GDRs) or other similar securities convertible into
securities of foreign issuers. These securities may not necessarily be
denominated in the same currency as the securities into which they may be
converted. ADRs are receipts typically issued by a United States bank or
trust company evidencing ownership of the underlying securities. EDRs are
European receipts evidencing a similar arrangement. Generally, ADRs, in
registered form, are designed for use in the United States securities markets
and EDRs, in bearer form, are designed for use in European securities
markets. GDRs are issued by a foreign bank or trust company and evidence
ownership of the underlying foreign securities. Generally, GDRs are in bearer
form and are designed for use in European and other foreign securities
markets. The Fund's investments in unlisted foreign securities are subject to
the Fund's overall policy limiting its investment in illiquid securities to
15% or less of its net assets.
Up to 35% of the Fund's total assets may be invested in investment grade
fixed-income securities consisting of securities issued or guaranteed by the
U.S. Government, its agencies or instrumentalities, corporate debt securities
and money market instruments. With respect to corporate debt securities, the
term "investment grade" means securities which are rated Baa or higher by
Moody's Investors Services, Inc. ("Moody's") or BBB or higher by Standard &
Poor's Corporation ("S&P") or, if not rated, are deemed by the Adviser to be
of comparable quality. See the Appendix to the Statement of Additional
Information for a discussion of ratings of fixed-income securities.
Investments in fixed-income securities rated either BBB by S&P or Baa by
Moody's (the lowest credit ratings designated "investment grade") have
speculative characteristics and, therefore, changes in economic conditions or
other circumstances are more likely to weaken their capacity to make
principal and interest payments than would be the case with investments in
securities with higher credit ratings. If a non-convertible fixed-income
security held by the Fund is rated BBB or Baa and is subsequently downgraded
by a rating agency, or otherwise falls below investment grade the Fund will
sell such securities as soon as is practicable without undue market or tax
consequences to the Fund.
Money market instruments in which the Fund may invest are securities
issued or guaranteed by the U.S. Government or its agencies (Treasury Bills,
Notes and Bonds); obligations of banks subject to regulation by the U.S.
Government and having total assets of $1 billion or more; Eurodollar
certificates of deposit; obligations of savings banks and savings and loan
associations having total assets of $1 billion or more; fully insured
certificates of deposit; and commercial paper rated within the two highest
grades by Moody's or S&P or, if not rated, issued by a company having an
outstanding debt issue rated AAA by S&P or Aaa by Moody's.
There may be periods during which, in the opinion of the Adviser, market
conditions warrant reduction of some or all of the Fund's securities
holdings. During such periods, the Fund may adopt a temporary "defensive"
posture in which up to 100% of its total assets may be invested in money
market instruments or cash.
RISK CONSIDERATIONS AND INVESTMENT PRACTICES
Given the investment risks described below, an investment in shares of the
Fund should not be considered a complete investment program and is not
appropriate for all
6
<PAGE>
investors. Investors should carefully consider their ability to assume these
risks before making an investment in the Fund.
The net asset value of the Fund's shares will fluctuate with changes in
the market value of the Fund's portfolio securities. The market value of the
Fund's portfolio securities will increase or decrease due to a variety of
economic, market or political factors which cannot be predicted.
Additionally, the net asset value of the Fund's shares may increase or
decrease due to changes in prevailing interest rates. Generally, a rise in
interest rates will result in a decrease in the value of the Fund's
fixed-income securities, while a drop in interest rates will result in an
increase in the value of those securities.
Telecommunications and Information Industries. The Fund concentrates its
investments in the telecommunications and information industries. Certain
economic factors or specific events may exert a disproportionate impact upon
the prices of equity securities of companies within a particular industry
relative to their impact on the prices of securities of companies engaged in
other industries. Because of this concentration, the value of the Fund's
shares may be more volatile than that of investment companies that do not
similarly concentrate their investments. The communications and information
industries may be subject to greater changes in governmental policies and
governmental regulation than many other industries in the United States and
worldwide. Regulatory approval requirements, ownership restrictions and
restrictions on rates of return and types of services that may be offered may
materially affect the products and services of these and related industries.
Additionally, the products and services of companies in these industries may
be subject to faster obsolescence as a result of greater competition,
advancing technological developments, and changing market and consumer
preferences. As a result, the stocks of companies in these industries may
exhibit greater price volatility than those of companies in other industries.
Lower Rated or Unrated Convertible Securities. The Fund may acquire,
through purchase or a distribution by the issuer of a security held in its
portfolio, a fixed-income security which is convertible into common stock of
the issuer. Convertible securities rank senior to common stocks in a
corporation's capital structure and, therefore, entail less risk than the
corporation's common stock. The value of a convertible security is a function
of its "investment value" (its value as if it did not have a conversion
privilege), and its "conversion value" (the security's worth if it were to be
exchanged for the underlying security, at market value, pursuant to its
conversion privilege).
To the extent that a convertible security's investment value is greater
than its conversion value, its price will be primarily a reflection of such
investment value and its price will be likely to increase when interest rates
fall and decrease when interest rates rise, as with a fixed-income security
(the credit standing of the issuer and other factors may also have an effect
on the convertible security's value). If the conversion value exceeds the
investment value, the price of the convertible security will rise above its
investment value and, in addition, may sell at some premium over its
conversion value. (This premium represents the price investors are willing to
pay for the privilege of purchasing a fixed-income security with a
possibility of capital appreciation due to the conversion privilege.) At such
times the price of the convertible security will tend to fluctuate directly
with the price of the underlying equity security.
A portion of the convertible securities in which the Fund may invest will
generally be rated below investment grade. Securities below investment grade
are the equivalent of high yield, high risk bonds, commonly known as "junk
bonds." Investment grade is generally considered to be debt securities rated
BBB or higher by Standard & Poor's Corporation ("S&P") or Baa or higher by
Moody's Investors Service, Inc. ("Moody's"). Fixed-income securities rated
Baa by Moody's or BBB by S&P have speculative characteristics greater than
those of more highly rated securities, while fixed-income securities rated Ba
or BB or lower by Moody's and S&P, respectively, are considered to be
speculative investments. The Fund will not invest in convertible securities
that are rated lower than B by S&P or Moody's or, if not rated, determined to
be of comparable quality by the Adviser. The Fund will not invest in debt
securities that are in default in payment of principal or interest. The
ratings of fixed-income securities by Moody's and S&P are a generally
accepted barometer of credit risk. However, as the creditworthiness of
issuers of lower-rated fixed-income securities is more problematic than that
of issuers of higher-rated fixed-income securities, the achievement of the
Fund's investment objective will be more dependent upon the Adviser's own
credit analysis than would be the case with a mutual fund investing primarily
in higher quality bonds. The Adviser will utilize a security's credit rating
as simply one indication of an issuer's creditworthiness and will principally
rely upon its own analysis of any security currently held by the Fund or
potentially purchasable by the Fund for its portfolio. See the Appendix to
the Statement of Additional Information for a discussion of ratings of
fixed-income securities.
Because of the special nature of the Fund's permitted investments in lower
rated or unrated convertible securities, the Adviser must take account of
certain special considerations in assessing the risks associated with such
investments. The prices of lower rated or unrated securities have been found
to be less sensitive to changes in prevailing interest rates than higher
rated investments, but are likely to be more sensitive to adverse economic
changes or individual corporate developments. During an economic downturn or
substantial period of rising interest rates, highly leveraged issuers may
experience financial stress which would adversely affect their ability to
service their principal and interest payment obligations, to meet their
projected business goals or to obtain additional financing. If the issuer of
a fixed-income security owned by the Fund defaults, the Fund may incur
additional expenses to seek recovery. In addition, periods of economic
uncertainty and change can be expected to result in an increased volatility
of market
7
<PAGE>
prices of lower rated or unrated securities and a corresponding volatility in
the net asset value of a share of the Fund.
Foreign securities. Foreign securities investments may be affected by
changes in currency rates or exchange control regulations, changes in
governmental administration or economic or monetary policy (in the United
States and abroad) or changed circumstances in dealings between nations.
Fluctuations in the relative rates of exchange between the currencies of
different nations will affect the value of the Fund's investments denominated
in foreign currency. Changes in foreign currency exchange rates relative to
the U.S. dollar will affect the U.S. dollar value of the Fund's assets
denominated in that currency and thereby impact upon the Fund's total return
on such assets.
Foreign currency exchange rates are determined by forces of supply and
demand on the foreign exchange markets. These forces are themselves affected
by the international balance of payments and other economic and financial
conditions, government intervention, speculation and other factors. Moreover,
foreign currency exchange rates may be affected by the regulatory control of
the exchanges on which the currencies trade. The foreign currency
transactions of the Fund will be conducted on a spot basis or through forward
foreign currency exchange contracts (described below). The Fund will incur
certain costs in connection with these currency transactions.
Investments in foreign securities will also occasion risks relating to
political and economic developments abroad, including the possibility of
expropriations or confiscatory taxation, limitations on the use or transfer
of Fund assets and any effects of foreign social, economic or political
instability. Foreign companies are not subject to the regulatory requirements
of U.S. companies and, as such, there may be less publicly available
information about such companies. Moreover, foreign companies are not subject
to uniform accounting, auditing and financial reporting standards and
requirements comparable to those applicable to U.S. companies.
Securities of foreign issuers may be less liquid than comparable
securities of U.S. issuers and, as such, their price changes may be more
volatile. Furthermore, foreign exchanges and broker-dealers are generally
subject to less government and exchange scrutiny and regulation than their
American counterparts. Brokerage commissions, dealer concessions and other
transaction costs may be higher on foreign markets than in the U.S. In
addition, differences in clearance and settlement procedures on foreign
markets may occasion delays in settlements of the Fund's trades effected in
such markets. As such, the inability to dispose of portfolio securities due
to settlement delays could result in losses to the Fund due to subsequent
declines in value of such securities and the inability of the Fund to make
intended security purchases due to settlement problems could result in a
failure of the Fund to make potentially advantageous investments. To the
extent the Fund purchases Eurodollar certificates of deposit issued by
foreign branches of domestic United States banks, consideration will be given
to their domestic marketability, the lower reserve requirements normally
mandated for overseas banking operations, the possible impact of
interruptions in the flow of international currency transactions and future
international political and economic developments which might adversely
affect the payment of principal or interest.
Warrants and Stock Rights. The Fund may invest up to 5% of the value of
its net assets in warrants, including not more than 2% in warrants not listed
on either the New York or American Stock Exchange. The Fund may also invest
in stock rights. Warrants are, in effect, an option to purchase equity
securities at a specific price, generally valid for a specific period of
time, and have no voting rights, pay no dividends and have no rights with
respect to the corporations issuing them. The Fund may acquire warrants and
stock rights attached to other securities without reference to the foregoing
limitations.
Repurchase Agreements. The Fund may enter into repurchase agreements,
which may be viewed as a type of secured lending by the Fund, and which
typically involve the acquisition by the Fund of debt securities from a
selling financial institution such as a bank, savings and loan association or
broker-dealer. The agreement provides that the Fund will sell back to the
institution, and that the institution will repurchase, the underlying
security at a specified price and at a fixed time in the future, usually not
more than seven days from the date of purchase. While repurchase agreements
involve certain risks not associated with direct investments in debt
securities, the Fund follows procedures designed to minimize those risks. See
the Statement of Additional Information for a further discussion of such
investments.
Private Placements. The Fund may invest up to 10% of its net assets in
securities which are subject to restrictions on resale because they have not
been registered under the Securities Act of 1933, as amended (the "Securities
Act"), or which are otherwise restricted. (Securities eligible for resale
pursuant to Rule 144A under the Securities Act, and determined to be liquid
pursuant to the procedures discussed in the following paragraph, are not
subject to the foregoing restriction.) These securities are generally
referred to as private placements or restricted securities. Limitations on
the resale of such securities may have an adverse effect on their
marketability, and may prevent the Fund from disposing of them promptly at
reasonable prices. The Fund may have to bear the expense of registering such
securities for resale and the risk of substantial delays in effecting such
registration.
The Securities and Exchange Commission has adopted Rule 144A under the
Securities Act, which permits the Fund to sell restricted securities to
qualified institutional buyers without limitation. The Adviser, pursuant to
procedures adopted by the Trustees of the Fund, will make a determination as
to the liquidity of each such restricted security purchased by the Fund. If
such Rule 144A security is determined to be "liquid," such security will not
be included within the category "illiquid securities," which under current
policy may not exceed 15% of the Fund's net assets. However, investing in
Rule 144A securities could have the
8
<PAGE>
effect of increasing the level of Fund illiquidity to the extent the Fund, at
a particular point in time, may be unable to find qualified institutional
buyers interested in purchasing such securities.
When-Issued and Delayed Delivery Securities and Forward Commitments. From
time to time, in the ordinary course of business, the Fund may purchase
securities on a when-issued or delayed delivery basis or may purchase or sell
securities on a forward commitment basis. When such transactions are
negotiated, the price is fixed at the time of the commitment, but delivery
and payment can take place a month or more after the date of the commitment.
An increase in the percentage of the Fund's assets committed to the purchase
of securities on a when-issued, delayed delivery or forward commitment basis
may increase the volatility of the Fund's net asset value. See the Statement
of Additional Information for a further discussion of such investments.
When, As and If Issued Securities. The Fund may purchase securities on a
"when, as and if issued" basis under which the issuance of the security
depends upon the occurrence of a subsequent event, such as approval of a
merger, corporate reorganization, leveraged buyout or debt restructuring. If
the anticipated event does not occur and the securities are not issued, the
Fund will have lost an investment opportunity. An increase in the percentage
of the Fund's assets committed to the purchase of securities on a "when, as
and if issued" basis may increase the volatility of its net asset value. See
the Statement of Additional Information for a further discussion of such
investments.
Zero Coupon Securities. A portion of the fixed-income securities purchased
by the Fund may be zero coupon securities. Such securities are purchased at a
discount from their face amount, giving the purchaser the right to receive
their full value at maturity. The interest earned on such securities is,
implicitly, automatically compounded and paid out at maturity. While such
compounding at a constant rate eliminates the risk of receiving lower yields
upon reinvestment of interest if prevailing interest rates decline, the owner
of a zero coupon security will be unable to participate in higher yields upon
reinvestment of interest received on interest-paying securities if prevailing
interest rates rise.
A zero coupon security pays no interest to its holder during its life.
Therefore, to the extent the fund invests in Zero coupon securities, it will
not receive current cash available for distribution to shareholders. In
addition, zero coupon securities are subject to substantially greater price
fluctuations during periods of changing prevailing interest rates than are
comparable securities which pay interest on a current basis. Current federal
tax law requires that a holder (such as the Fund) of a zero coupon security
accrue a portion of the discount at which the security was purchased as
income each year even though the Fund receives no interest payments in cash
on the security during the year.
Lending of Portfolio Securities. Consistent with applicable regulatory
requirements, the Fund may lend its portfolio securities to brokers, dealers
and other financial institutions, provided that such loans are callable at
any time by the Fund (subject to certain notice provisions described in the
Statement of Additional Information), and are at all times secured by cash or
money market instruments, which are maintained in a segregated account
pursuant to applicable regulations and that are equal to at least the market
value, determined daily, of the loaned securities. As with any extensions of
credit, there are risks of delay in recovery and in some cases even loss of
rights in the collateral should the borrower of the securities fail
financially. However, loans of portfolio securities will only be made to
firms deemed by the Adviser to be creditworthy and when the income which can
be earned from such loans justifies the attendant risks. The Fund will not
under any circumstances lend more than 25% of the value of its total assets.
Options and Futures Transactions. The Fund may purchase and sell (write)
call and put options on (i) portfolio securities which are denominated in
either U.S. dollars or foreign currencies; (ii) stock indexes; and (iii) the
U.S. dollar and foreign currencies. Such options are or may in the future be
listed on several U.S. and foreign securities exchanges or may be traded in
over-the-counter transactions ("OTC options"). OTC options are purchased from
or sold (written) to dealers or financial institutions which have entered
into direct agreements with the Fund.
The Fund is permitted to write covered call options on portfolio
securities and the U.S. dollar and foreign currencies, without limit, in
order to hedge against the decline in the value of a security or currency in
which such security is denominated (although such hedge is limited to the
value of the premium received) and to close out long call option positions.
The Fund may write covered put options, under which the Fund incurs an
obligation to buy the security (or currency) underlying the option from the
purchaser of the put at the option's exercise price at any time during the
option period, at the purchaser's election.
The Fund may purchase listed and OTC call and put options and options on
stock indexes in amounts equalling up to 10% of its total assets, with a
maximum of 5% of its total assets invested in the purchase of stock index
options. The Fund may purchase call options to close out a covered call
position or to protect against an increase in the price of a security it
anticipates purchasing or, in the case of call options on a foreign currency,
to hedge against an adverse exchange rate change of the currency in which the
security it anticipates purchasing is denominated vis-a-vis the currency in
which the exercise price is denominated. The Fund may purchase put options on
securities which it holds in its portfolio to protect itself against a
decline in the value of the security and to close out written put positions
in a manner similar to call option closing purchase transactions. There are
no other limits on the Fund's ability to purchase call and put options other
than compliance with the foregoing policies.
The Fund may purchase and sell futures contracts that are currently
traded, or may in the future be traded, on U.S. and foreign commodity
exchanges on underlying portfolio securities, on any currency ("currency"
futures), on U.S. and foreign fixed-income securities ("interest rate"
futures) and
9
<PAGE>
on such indexes of U.S. or foreign equity or fixed-income securities as may
exist or come into being ("index" futures). The Fund may purchase or sell
interest rate futures contracts for the purpose of hedging some or all of the
value of its portfolio securities (or anticipated portfolio securities)
against changes in prevailing interest rates. The Fund may purchase or sell
index futures contracts for the purpose of hedging some or all of its
portfolio (or anticipated portfolio) securities against changes in their
prices. The Fund may purchase or sell currency futures contracts to hedge
against an anticipated rise or decline in the value of the currency in which
a portfolio security is denominated vis-a-vis another currency. As a futures
contract purchaser, the Fund incurs an obligation to take delivery of a
specified amount of the obligation underlying the contract at a specified
time in the future for a specified price. As a seller of a futures contract,
the Fund incurs an obligation to deliver the specified amount of the
underlying obligation at a specified time in return for an agreed upon price.
The Fund also may purchase and write call and put options on futures
contracts which are traded on an exchange and enter into closing transactions
with respect to such options to terminate an existing position.
New futures contracts, options and other financial products and various
combinations thereof continue to be developed. The Fund may invest in any
such futures, options or products as may be developed, to the extent
consistent with its investment objective and applicable regulatory
requirements.
Risks of Options and Futures Transactions. The Fund may close out its
position as writer of an option, or as a buyer or seller of a futures
contract, only if a liquid secondary market exists for options or futures
contracts of that series. There is no assurance that such a market will
exist, particularly in the case of OTC options, as such options may generally
only be closed out by entering into a closing purchase transaction with the
purchasing dealer. Also, exchanges may limit the amount by which the price of
many futures contracts may move on any day. If the price moves equal the
daily limit on successive days, then it may prove impossible to liquidate a
futures position until the daily limit moves have ceased.
Futures contracts and options transactions may be considered speculative
in nature and may involve greater risks than those customarily assumed by
other investment companies which do not invest in such instruments. One such
risk is that the Adviser could be incorrect in its expectations as to the
direction or extent of various interest rate or price movements or the time
span within which the movements take place. For example, if the Fund sold
futures contracts for the sale of securities in anticipation of an increase
in interest rates, and then interest rates went down instead, causing bond
prices to rise, the Fund would lose money on the sale. Another risk which
will arise in employing futures contracts to protect against the price
volatility of portfolio securities is that the prices of securities,
currencies and indexes subject to futures contracts (and thereby the futures
contract prices) may correlate imperfectly with the behavior of the U.S.
dollar cash prices of the Fund's portfolio securities and their denominated
currencies. See the Statement of Additional Information for a further
discussion of risks.
Forward Foreign Currency Exchange Contracts. The Fund may enter into
forward foreign currency exchange contracts ("forward contracts") in
connection with its foreign securities investments.
A forward contract involves an obligation to purchase or sell a currency
at a future date, which may be any fixed number of days from the date of the
contract agreed upon by the parties, at a price set at the time of the
contract. The Fund may enter into forward contracts as a hedge against
fluctuations in future foreign exchange rates.
The Fund will enter into forward contracts under various circumstances.
When the Fund enters into a contract for the purchase or sale of a security
denominated in a foreign currency, it may, for example, desire to "lock in"
the price of the security in U.S. dollars or some other foreign currency
which the Fund is temporarily holding in its portfolio. By entering into a
forward contract for the purchase or sale, for a fixed amount of dollars or
other currency, of the amount of foreign currency involved in the underlying
security transactions, the Fund will be able to protect itself against a
possible loss resulting from an adverse change in the relationship between
the U.S. dollar or other currency which is being used for the security
purchase (by the Fund or the counterparty) and the foreign currency in which
the security is denominated during the period between the date on which the
security is purchased or sold and the date on which payment is made or
received.
At other times, when, for example, the Fund's Adviser believes that the
currency of a particular foreign country may suffer a substantial decline
against the U.S. dollar or some other foreign currency, the Fund may enter
into a forward contract to sell, for a fixed amount of dollars or other
currency, the amount of foreign currency approximating the value of some or
all of the Fund's securities holdings (or securities which the Fund has
purchased for its portfolio) denominated in such foreign currency. Under
identical circumstances, the Fund may enter into a forward contract to sell,
for a fixed amount of U.S. dollars or other currency, an amount of foreign
currency other than the currency in which the securities to be hedged are
denominated approximating the value of some or all of the portfolio
securities to be hedged. This method of hedging, called "cross-hedging," will
be selected by the Adviser when it is determined that the foreign currency in
which the portfolio securities are denominated has insufficient liquidity or
is trading at a discount as compared with some other foreign currency with
which it tends to move in tandem.
In addition, when the Fund's Adviser anticipates purchasing securities at
some time in the future, and wishes to lock in the current exchange rate of
the currency in which those securities are denominated against the U.S.
dollar or some other foreign currency, the Fund may enter into a forward
contract to purchase an amount of currency equal to some or all of the value
of the anticipated purchase, for a fixed amount of U.S. dollars or other
currency. The Fund
10
<PAGE>
may, however, close out the forward contract without purchasing the security
which was the subject of the "anticipatory" hedge.
In all of the above circumstances, if the currency in which the Fund's
securities holdings (or anticipated portfolio securities) are denominated
rises in value with respect to the currency which is being purchased (or
sold), then the Fund will have realized fewer gains than had the Fund not
entered into the forward contracts. Moreover, the precise matching of the
forward contract amounts and the value of the securities involved will not
generally be possible, since the future value of such securities in foreign
currencies will change as a consequence of market movements in the value of
those securities between the date the forward contract is entered into and
the date it matures. The Fund is not required to enter into such transactions
with regard to its foreign currency-denominated securities and will not do so
unless deemed appropriate by the Adviser. The Fund generally will not enter
into a forward contract with a term of greater than one year, although it may
enter into forward contracts for periods of up to five years. The Fund may be
limited in its ability to enter into hedging transactions involving forward
contracts by the Internal Revenue Code requirements relating to qualification
as a regulated investment company (see "Dividends, Distributions and Taxes").
PORTFOLIO MANAGEMENT
The Fund's portfolio is actively managed by the Adviser with a view to
achieving the Fund's investment objective. Robert M. Hanisee and John A.
Healey, each a Managing Director of the Adviser, are the primary portfolio
managers of the Fund. Messrs. Hanisee and Healey have been portfolio managers
with affiliates of The TCW Group, Inc. since 1990 and 1995, respectively.
Prior to 1995, Mr. Healey served as an independent consultant with Healey
Partners.
In determining which securities to purchase for the Fund or hold in the
Fund's portfolio, the Adviser will rely on information from various sources,
including research, analysis and appraisals of brokers and dealers, including
Dean Witter Reynolds Inc. ("DWR"), a broker-dealer affiliate of the Manager,
and others regarding economic developments and interest rate trends, and the
Adviser's own analysis of factors it deems relevant.
Orders for transactions in portfolio securities and commodities are placed
for the Fund with a number of brokers and dealers, including DWR. The Fund
may incur brokerage commissions on transactions conducted through DWR. The
Fund intends to buy and hold securities for capital appreciation. Although
the Fund does not intend to engage in substantial short-term trading as a
means of achieving its investment objective, the Fund may sell portfolio
securities without regard to the length of time that they have been held, in
order to take advantage of new investment opportunities or yield
differentials, or because the Fund desires to preserve gains or limit losses
due to changing economic conditions, interest rate trends, or the financial
condition of the issuer. It is not anticipated that the Fund's portfolio
turnover rate will exceed 150% in any one year. The Fund will incur
underwriting discount costs (on underwritten securities) and brokerage costs
commensurate with its portfolio turnover rate, and thus a higher level (over
100%) of portfolio transactions will increase the Fund's overall brokerage
expenses. Short term gains and losses may result from such portfolio
transactions. See "Dividends, Distributions and Taxes" for a discussion of
the tax implications of the Fund's transactions.
The expenses of the Fund relating to its portfolio management are likely
to be greater than those incurred by other investment companies investing
only in securities issued by domestic issuers, as custodial costs, brokerage
commissions and other transaction charges related to investing on foreign
markets are generally higher than in the United States.
Except as specifically noted, all investment policies and practices
discussed above are not fundamental policies of the Fund and thus may be
changed without shareholder approval.
INVESTMENT RESTRICTIONS
- ----------------------------------------------------------------------
The investment restrictions listed below are among the restrictions which
have been adopted by the Fund as fundamental policies. Under the Investment
Company Act of 1940, as amended (the "Act"), a fundamental policy may not be
changed without the vote of a majority of the outstanding voting securities
of the Fund, as defined in the Act. For purposes of the following
limitations: (i) all percentage limitations apply immediately after a
purchase or initial investment, and (ii) any subsequent change in any
applicable percentage resulting from market fluctuations or other changes in
total or net assets does not require elimination of any security from the
portfolio.
The Fund may not:
1. As to 75% of its assets, invest more than 5% of the value of its total
assets in the securities of any one issuer (other than obligations issued,
or guaranteed by, the United States Government, its agencies or
instrumentalities).
2. As to 75% of its assets, purchase more than 10% of all outstanding
voting securities or more than 10% of any class of securities of any one
issuer.
3. Invest 25% or more of the value of its total assets in securities of
issuers in any one industry except that the Fund will invest at least 25%
of its total assets in the telecommunications and information industry.
This restriction does not apply to obligations issued or guaranteed by the
United States Government, its agencies or instrumentalities.
11
<PAGE>
PURCHASE OF FUND SHARES
- ----------------------------------------------------------------------
The Fund offers its shares to the public on a continuous basis. Pursuant
to a Distribution Agreement between the Fund and Dean Witter Distributors
Inc. (the "Distributor"), an affiliate of the Manager, shares of the Fund are
distributed by the Distributor and offered by DWR and other dealers (which
may include TCW Brokerage Services, an affiliate of the Adviser) who have
entered into selected broker-dealer agreements with the Distributor
("Selected Broker-Dealers"). The principal executive office of the
Distributor is located at Two World Trade Center, New York, New York 10048.
The minimum initial purchase is $1,000 and subsequent purchases of $100 or
more may be made by sending a check, payable to TCW/DW Global Telecom Trust,
directly to Dean Witter Trust Company (the "Transfer Agent") at P.O. Box
1040, Jersey City, NJ 07303, or by contacting an account executive of DWR or
other Selected Broker-Dealer. The minimum initial purchase in the case of
investments through EasyInvest (Service Mark), an automatic purchase plan
(see "Shareholder Services"), is $100, provided that the schedule of
automatic investments will result in investments totalling at least $1,000
within the first twelve months. In the case of investments pursuant to
Systematic Payroll Deduction Plans (including Individual Retirement Plans),
the Fund, in its discretion, may accept investments without regard to any
minimum amounts which would otherwise be required if the Fund has reason to
believe that additional investments will increase the investment in all
accounts under such Plans to at least $1,000. Certificates for shares
purchased will not be issued unless a request is made by the shareholder in
writing to the Transfer Agent.
Shares of the Fund are sold through the Distributor on a normal three
business day settlement basis; that is, payment is due on the third business
day (settlement date) after the order is placed with the Distributor. Since
DWR and other Selected Broker-Dealers forward investors' funds on settlement
date, they will benefit from the temporary use of the funds if payment is
made prior thereto. As noted above, orders placed directly with the Transfer
Agent must be accompanied by payment. Investors will be entitled to receive
income dividends and capital gains distributions if their order is received
by the close of business on the day prior to the record date for such
dividends and distributions.
The offering price will be the net asset value per share next determined
following receipt of an order by the Transfer Agent (see "Determination of
Net Asset Value"). While no sales charge is imposed at the time shares are
purchased, a contingent deferred sales charge may be imposed at the time of
redemption (see "Repurchases and Redemptions"). Sales personnel of a Selected
Broker-Dealer are compensated for selling shares of the Fund at the time of
their sale by the Distributor and/or Selected Broker-Dealer. In addition,
some sales personnel of the Selected Broker-Dealer will receive various types
of non-cash compensation or special sales incentives, including trips,
educational and/or business seminars and merchandise. The Fund and the
Distributor reserve the right to reject any purchase orders.
PLAN OF DISTRIBUTION
The Fund has adopted a Plan of Distribution pursuant to Rule 12b-1 under
the Act (the "Plan"), under which the Fund pays the Distributor a fee, which
is accrued daily and payable monthly, at an annual rate of 1% of the lesser
of: (a) the average daily aggregate gross sales of the Fund's shares since
the inception of the Fund (not including reinvestments of dividends or
capital gains distributions), less the average daily aggregate net asset
value of the Fund's shares redeemed since the Fund's inception upon which a
contingent deferred sales charge has been imposed or waived; or (b) the
Fund's average daily net assets. This fee is treated by the Fund as an
expense in the year it is accrued. A portion of the fee payable pursuant to
the Plan, equal to 0.25% of the Fund's average daily net assets, is
characterized as a service fee within the meaning of NASD guidelines. The
service fee is a payment made for personal service and/or the maintenance of
shareholder accounts.
For the fiscal period August 28, 1996 (commencement of operations) through
November 30, 1996, the Fund accrued payments under the Plan amounting to
$226,815, which amount is equal to the annualized rate of 0.97% of the Fund's
average daily net assets for the fiscal period. The payments accrued under
the Plan were calculated pursuant to clause (a) of the compensation formula
under the Plan.
Amounts paid under the Plan are paid to the Distributor to compensate it
for the services provided and the expenses borne by the Distributor and
others in the distribution of the Fund's shares, including the payment of
commissions for sales of the Fund's shares and compensation to and expenses
of DWR account executives and others who engage in or support distribution of
shares or who service shareholder accounts, including overhead and telephone
expenses; printing and distribution of prospectuses and reports used in
connection with the offering of the Fund's shares to other than current
shareholders; and preparation, printing and distribution of sales literature
and advertising materials. In addition, the Distributor may utilize fees paid
pursuant to the Plan to compensate DWR and other Selected Broker-Dealers for
their opportunity costs in advancing such amounts, which compensation would
be in the form of a carrying charge on any unreimbursed distribution
expenses.
At any given time, the expenses in distributing shares of the Fund may be
in excess of the total of (i) the payments made by the Fund pursuant to the
Plan, and (ii) the proceeds of contingent deferred sales charges paid by
investors upon the redemption of shares (see "Repurchases and
Redemptions--Contingent Deferred Sales Charge"). For example, if $1 million
in expenses in distributing shares of the Fund had been incurred and $750,000
had been received as described in (i) and (ii) above, the excess expense
12
<PAGE>
would amount to $250,000. The Distributor has advised the Fund that the
excess distribution expenses (including the excess carrying charge described
above) totalled $6,257,689 at November 30, 1996, which was equal to 6.03% of
the Fund's net assets on such date.
Because there is no requirement under the Plan that the Distributor be
reimbursed for all distribution expenses or any requirement that the Plan be
continued from year to year, such excess amount does not constitute a
liability of the Fund. Although there is no legal obligation for the Fund to
pay expenses incurred in excess of payments made to the Distributor under the
Plan and the proceeds of contingent deferred sales charges paid by investors
upon redemption of shares, if for any reason the Plan is terminated, the
Trustees will consider at that time the manner in which to treat such
expenses. Any cumulative expenses incurred but not yet recovered through
distribution fees of contingent deferred sales charges, may or may not be
recovered through future distribution fees or contingent deferred sales
charges.
DETERMINATION OF NET ASSET VALUE
The net asset value per share of the Fund is determined once daily at 4:00
p.m., New York time (or, on days when the New York Stock Exchange closes
prior to 4:00 p.m., at such earlier time), on each day that the New York
Stock Exchange is open by taking the value of all assets of the Fund,
subtracting all its liabilities, dividing by the number of shares outstanding
and adjusting to the nearest cent. The net asset value per share will not be
determined on Good Friday and on such other federal and non-federal holidays
as are observed by the New York Stock Exchange.
In the calculation of the Fund's net asset value: (1) an equity portfolio
security listed or traded on the New York or American Stock Exchange or other
domestic or foreign stock exchange is valued at its latest sale price on that
exchange (if there were no sales that day, the security is valued at the
latest bid price); and (2) all other portfolio securities for which
over-the-counter market quotations are readily available are valued at the
latest bid price. When market quotations are not readily available, including
circumstances under which it is determined by the Adviser that sale or bid
prices are not reflective of a security's market value, portfolio securities
are valued at their fair value as determined in good faith under procedures
established by and under the general supervision of the Board of Trustees.
For valuation purposes, quotations of foreign portfolio securities, other
assets and liabilities and forward contracts stated in foreign currency are
translated into U.S. dollar equivalents at the prevailing market rates prior
to the close of the New York Stock Exchange as of the morning of valuation.
Dividends receivable are accrued as of the ex-dividend date or as of the time
that the relevant ex-dividend date and amounts become known.
Short-term debt securities with remaining maturities of 60 days or less at
the time of purchase are valued at amortized cost, unless the Trustees
determine such does not reflect the securities' market value, in which case
these securities will be valued at their fair value as determined by the
Trustees. Other short-term debt securities will be valued on a mark-to-market
basis until such time as they reach a remaining maturity of 60 days,
whereupon they will be valued at amortized cost using their value on the 61st
day unless the Trustees determine such does not reflect the securities'
market value, in which case these securities will be valued at their fair
value as determined by the Trustees. All other securities and other assets
are valued at their fair value as determined in good faith under procedures
established by and under the supervision of the Trustees.
Certain of the Fund's portfolio securities may be valued by an outside
pricing service approved by the Fund's Trustees. The pricing service may
utilize a matrix system incorporating security quality, maturity and coupon
as the evaluation model parameters, and/or research evaluations by its staff,
including review of broker-dealer market price quotations, in determining
what the pricing service believes is the fair valuation of such portfolio
securities.
SHAREHOLDER SERVICES
- -----------------------------------------------------------------------------
Automatic Investment of Dividends and Distributions. All income dividends
and capital gains distributions are automatically paid in full and fractional
shares of the Fund (or, if specified by the shareholder, any other TCW/DW
Fund), unless the shareholder requests that they be paid in cash. Shares so
acquired are not subject to the imposition of a contingent deferred sales
charge upon their redemption (see "Repurchases and Redemptions").
Investment of Dividends or Distributions Received in Cash. Any shareholder
who receives a cash payment representing a dividend or capital gains
distribution may invest such dividend or distribution at the net asset value
per share next determined after receipt by the Transfer Agent, by returning
the check or the proceeds to the Transfer Agent within 30 days after the
payment date. Shares so acquired are not subject to the imposition of a
contingent deferred sales charge upon their redemption (see "Repurchases and
Redemptions").
EasyInvest (Service Mark). Shareholders may subscribe to EasyInvest, an
automatic purchase plan which provides for any amount from $100 to $5,000 to
be transferred automatically from a checking or savings account, on a
semi-monthly, monthly or quarterly basis, to the Fund's Transfer Agent for
investment in shares of the Fund. Shares purchased through EasyInvest will be
added to the shareholder's existing account at the net asset value calculated
the same business day the transfer of funds is effected. For further
information or to subscribe to EasyInvest, shareholders should contact their
DWR or other Selected Broker-Dealer account executive or the Transfer Agent.
13
<PAGE>
Systematic Withdrawal Plan. A systematic withdrawal plan (the "Withdrawal
Plan") is available for shareholders who own or purchase shares of the Fund
having a minimum value of $10,000 based upon the then current net asset
value. The Withdrawal Plan provides for monthly or quarterly (March, June,
September and December) checks in any dollar amount, not less than $25, or in
any whole percentage of the account balance, on an annualized basis. Any
applicable contingent deferred sales charge will be imposed on shares
redeemed under the Withdrawal Plan (See "Repurchases and
Redemptions--Contingent Deferred Sales Charge"). Therefore, any shareholder
participating in the Withdrawal Plan will have sufficient shares redeemed
from his or her account so that the proceeds (net of any applicable
contingent deferred sales charge) to the shareholder will be the designated
monthly or quarterly amount.
Shareholders should contact their DWR or other Selected Broker-Dealer
account executive or the Transfer Agent for information about any of the
above services.
Tax Sheltered Retirement Plans. Retirement plans are available for use by
corporations, the self-employed, Individual Retirement Accounts and Custodial
Accounts under Section 403(b)(7) of the Internal Revenue Code. Adoption of
such plans should be on advice of legal counsel or tax adviser.
For further information regarding plan administration, custodial fees and
other details, investors should contact their account executive or the
Transfer Agent.
EXCHANGE PRIVILEGE
The Fund makes available to its shareholders an "Exchange Privilege"
allowing the exchange of shares of the Fund for shares of any other TCW/DW
Fund sold with a contingent deferred sales charge ("CDSC Funds"), for shares
of TCW/DW North American Government Income Trust, TCW/DW Income and Growth
Fund, TCW/DW Balanced Fund and for shares of five money market funds for
which InterCapital serves as investment manager: Dean Witter Liquid Asset
Fund Inc., Dean Witter U.S. Government Money Market Trust, Dean Witter
Tax-Free Daily Income Trust, Dean Witter California Tax-Free Daily Income
Trust and Dean Witter New York Municipal Money Market Trust (the foregoing
eight funds are hereinafter collectively referred to as the "Exchange
Funds"). Exchanges may be made after the shares of the Fund acquired by
purchase (not by exchange or dividend reinvestment) have been held for thirty
days. There is no waiting period for exchanges of shares acquired by exchange
or dividend reinvestment.
Shareholders utilizing the Fund's Exchange Privilege may subsequently
re-exchange such shares back to the Fund. However, no exchange privilege is
available between the Fund and any other fund managed by the Manager or
InterCapital, other than other TCW/DW Funds and the five money market funds
listed above.
An exchange to another CDSC Fund or to any Exchange Fund that is not a
money market fund is on the basis of the next calculated net asset value per
share of each fund after the exchange order is received. When exchanging into
a money market fund from the Fund or any other TCW/DW Fund, shares of the
Fund are redeemed out of the Fund at their next calculated net asset value
and the proceeds of the redemption are used to purchase shares of the money
market fund at their net asset value determined the following day. Subsequent
exchanges between any of the money market funds and any TCW/DW Fund can be
effected on the same basis. No contingent deferred sales charge ("CDSC") is
imposed at the time of any exchange, although any applicable CDSC will be
imposed upon ultimate redemption. During the period of time the shareholder
remains in the Exchange Fund (calculated from the last day of the month in
which the Exchange Fund shares were acquired), the holding period (for the
purpose of determining the rate of the CDSC) is frozen. If those shares are
subsequently reexchanged for shares of a CDSC Fund, the holding period
previously frozen when the first exchange was made resumes on the last day of
the month in which shares of a CDSC Fund are reacquired. Thus, the CDSC is
based upon the time (calculated as described above) the shareholder was
invested in a CDSC Fund (see "Repurchases and Redemptions--Contingent
Deferred Sales Charge"). However, in the case of shares of the Fund exchanged
into an Exchange Fund, upon a redemption of shares which results in a CDSC
being imposed, a credit (not to exceed the amount of the CDSC) will be given
in an amount equal to the Exchange Fund 12b-1 distribution fees which are
attributable to those shares. (Exchange Fund 12b-1 distribution fees are
described in the prospectuses for those funds.)
Purchases and exchanges should be made for investment purposes only. A
pattern of frequent exchanges may be deemed by the Manager to be abusive and
contrary to the best interests of the Fund's other shareholders and, at the
Manager's discretion, may be limited by the Fund's refusal to accept
additional purchases and/or exchanges from the investor. Although the Fund
does not have any specific definition of what constitutes a pattern of
frequent exchanges, and will consider all relevant factors in determining
whether a particular situation is abusive and contrary to the best interests
of the Fund and its other shareholders, investors should be aware that the
Fund, each of the other TCW/DW Funds and each of the money market funds may
in its discretion limit or otherwise restrict the number of times this
Exchange Privilege may be exercised by any investor. Any such restriction
will be made by the Fund on a prospective basis only, upon notice to the
shareholder not later than ten days following such shareholder's most recent
exchange. Also, the Exchange Privilege may be terminated or revised at any
time by the Fund and/or any of such other TCW/DW Funds or money market funds
for which shares of the Fund have been exchanged, upon such notice as may be
required by applicable regulatory agencies. Shareholders maintaining margin
accounts with DWR or another Selected Broker-Dealer are referred to their
account executive regarding restrictions on exchange of shares of the Fund
pledged in the margin account.
14
<PAGE>
The current prospectus for each fund describes its investment objective(s)
and policies, and shareholders should obtain a copy and examine it carefully
before investing. Exchanges are subject to the minimum investment requirement
and any other conditions imposed by each fund. An exchange will be treated
for federal income tax purposes the same as a repurchase or redemption of
shares, on which the shareholder may realize a capital gain or loss. However,
the ability to deduct capital losses on an exchange may be limited in
situations where there is an exchange of shares within ninety days after the
shares are purchased. The Exchange Privilege is only available in states
where an exchange may legally be made.
If DWR or another Selected Broker-Dealer is the current dealer of record
and its account numbers are part of the account information, shareholders may
initiate an exchange of shares of the Fund for shares of any of the money
market funds for which the Exchange Privilege is available pursuant to this
Exchange Privilege by contacting their DWR or other Selected Broker-Dealer
account executive (no Exchange Privilege Authorization Form is required).
Other shareholders (and those shareholders who are clients of DWR or another
Selected Broker-Dealer but who wish to make exchanges directly by writing or
telephoning the Transfer Agent) must complete and forward to the Transfer
Agent an Exchange Privilege Authorization Form, copies of which may be
obtained from the Transfer Agent, to initiate an exchange. If the
Authorization Form is used, exchanges may be made in writing or by contacting
the Transfer Agent at (800) 869-NEWS (toll-free). The Fund will employ
reasonable procedures to confirm that exchange instructions communicated over
the telephone are genuine. Such procedures include requiring various forms of
personal identification such as name, mailing address, social security or
other tax identification number and DWR or other Selected Broker-Dealer
account number (if any). Telephone instructions will also be recorded. If
such procedures are not employed, the Fund may be liable for any losses due
to unauthorized or fraudulent instructions.
Telephone exchange instructions will be accepted if received by the
Transfer Agent between 9:00 a.m. and 4:00 p.m. New York time, on any day the
New York Stock Exchange is open. Any shareholder wishing to make an exchange
who has previously filed an Exchange Privilege Authorization Form and who is
unable to reach the Fund by telephone should contact his or her DWR or other
Selected Broker-Dealer account executive, if appropriate, or make a written
exchange request. Shareholders are advised that during periods of drastic
economic or market changes, it is possible that the telephone exchange
procedures may be difficult to implement, although this has not been the case
in the past with other funds managed by the Manager.
Shareholders should contact their DWR or other Selected Broker-Dealer
account executive or the Transfer Agent for further information about the
Exchange Privilege.
REPURCHASES AND REDEMPTIONS
- ----------------------------------------------------------------------
Repurchase. DWR and other Selected Dealers are authorized to repurchase
shares represented by a share certificate which is delivered to any of their
offices. Shares held in a shareholder's account without a share certificate
may also be repurchased by DWR and other Selected Broker-Dealers upon the
telephonic or telegraphic request of the shareholder. The repurchase price is
the net asset value per share next computed (see "Purchase of Fund Shares")
after such repurchase order is received by DWR or other Selected
Broker-Dealer, reduced by any applicable contingent deferred sales charge
("CDSC") (see below).
The CDSC, if any, will be the only fee imposed by the Fund, the
Distributor, DWR or other Selected Broker-Dealer. The offers by DWR and other
Selected Broker-Dealers to repurchase shares may be suspended without notice
by them at any time. In that event, shareholders may redeem their shares
through the Fund's Transfer Agent as set forth below under "Redemption."
Redemption. Shares of the Fund can be redeemed for cash at any time at the
net asset value per share next determined; however, such redemption proceeds
will be reduced by the amount of any applicable contingent deferred sales
charge (see below). If shares are held in a shareholder's account without a
share certificate, a written request for redemption to the Fund's Transfer
Agent at P.O. Box 983, Jersey City, NJ 07303 is required. If certificates are
held by the shareholder, the shares may be redeemed by surrendering the
certificates with a written request for redemption along with any additional
documentation required by the Transfer Agent.
Contingent Deferred Sales Charge. Shares of the Fund which are held for
six years or more after purchase (calculated from the last day of the month
in which the shares were purchased) will not be subject to any charge upon
redemption. Shares redeemed sooner than six years after purchase may,
however, be subject to a charge upon redemption. This charge is called a
"contingent deferred sales charge" ("CDSC"), which will be a percentage of
the dollar amount of shares redeemed and will be assessed on an amount equal
to the lesser of the current market value or the cost of the shares being
redeemed. The size of this percentage will depend upon how long the shares
have been held, as set forth in the table below:
<TABLE>
<CAPTION>
CONTINGENT DEFERRED
YEAR SINCE SALES CHARGE AS A
PURCHASE PERCENTAGE OF AMOUNT
PAYMENT MADE REDEEMED
- --------------------------- -----------------------
<S> <C>
First ...................... 5.0%
Second ..................... 4.0%
Third ...................... 3.0%
Fourth ..................... 2.0%
Fifth ...................... 2.0%
Sixth ...................... 1.0%
Seventh and thereafter .... None
</TABLE>
15
<PAGE>
A CDSC will not be imposed on: (i) any amount which represents an increase
in value of shares purchased within the six years preceding the redemption;
(ii) the current net asset value of shares purchased more than six years
prior to the redemption; and (iii) the current net asset value of shares
purchased through reinvestment of dividends or distributions. Moreover, in
determining whether a CDSC is applicable it will be assumed that amounts
described in (i), (ii) and (iii) above (in that order) are redeemed first.
In addition, the CDSC, if otherwise applicable, will be waived in the case
of:
(1) redemptions of shares held at the time a shareholder dies or becomes
disabled, only if the shares are: (a) registered either in the name of an
individual shareholder (not a trust), or in the names of such shareholder and
his or her spouse as joint tenants with right of survivorship; or (b) held
in a qualified corporate or self-employed retirement plan, Individual
Retirement Account ("IRA") or Custodial Account under Section 403(b)(7) of
the Internal Revenue Code ("403(b) Custodial Account"), provided in either
case that the redemption is requested within one year of the death or initial
determination of disability;
(2) redemptions in connection with the following retirement plan
distributions: (a) lump-sum or other distributions from a qualified
corporate or self-employed retirement plan following retirement (or, in the
case of a "key employee" of a "top heavy" plan, following attainment of age
59 1/2); (b) distributions from an IRA or 403(b) Custodial Account following
attainment of age 59 1/2; or (c) a tax-free return of an excess contribution
to an IRA; and
(3) all redemptions of shares held for the benefit of a participant in a
corporate or self-employed retirement plan qualified under Section 401(k) of
the Internal Revenue Code which offers investment companies managed by the
Manager or its parent, Dean Witter InterCapital Inc., as self-directed
investment alternatives and for which Dean Witter Trust Company or Dean
Witter Trust FSB, each of which is an affiliate of the Manager, serves as
Trustee ("Eligible 401(k) Plan"), provided that either: (a) the plan
continues to be an Eligible 401(k) Plan after the redemption; or (b) the
redemption is in connection with the complete termination of the plan
involving the distribution of all plan assets to participants.
With reference to (1) above, for the purpose of determining disability,
the Distributor utilizes the definition of disability contained in Section
72(m)(7) of the Internal Revenue Code, which relates to the inability to
engage in gainful employment. With reference to (2) above, the term
"distribution" does not encompass a direct transfer of IRA, 403(b) Custodial
Account or retirement plan assets to a successor custodian or trustee. All
waivers will be granted only following receipt by the Distributor of
confirmation of the shareholder's entitlement.
Payment for Shares Redeemed or Repurchased. Payment for shares presented
for repurchase or redemption will be made by check within seven days after
receipt by the Transfer Agent of the certificate and/or written request in
good order. Such payment may be postponed or the right of redemption
suspended under unusual circumstances, e.g., when normal trading is not
taking place on the New York Stock Exchange. If the shares to be redeemed
have recently been purchased by check, payment of the redemptionproceeds may
be delayed for the minimum time needed to verify that the check used for
investment has been honored (not more than fifteen days from the time of
receipt of the check by the Transfer Agent). Shareholders maintaining margin
accounts with DWR or another Selected Broker-Dealer are referred to their
account executive regarding restrictions on redemption of shares of the Fund
pledged in the margin account.
Reinstatement Privilege. A shareholder who has had his or her shares
repurchased or redeemed and has not previously exercised this reinstatement
privilege may, within thirty days after the date of the repurchase or
redemption, reinstate any portion or all of the proceeds of such repurchase
or redemption in shares of the Fund at net asset value next determined after
a reinstatement request, together with the proceeds, is received by the
Transfer Agent and receive a pro-rata credit for any CDSC paid in connection
with such repurchase or redemption.
Involuntary Redemption. The Fund reserves the right, on sixty days'
notice, to redeem, at their net asset value, the shares of any shareholder
(other than shares held in an Individual Retirement Account or Custodial
Account under Section 403(b)(7) of the Internal Revenue Code) whose shares
due to redemptions by the shareholder have a value of less than $100 or such
lesser amount as may be fixed by the Trustees or, in the case of an account
opened through EasyInvest (Service Mark), if after twelve months the
shareholder has invested less than $1,000 in the account. However, before the
Fund redeems such shares and sends the proceeds to the shareholder, it will
notify the shareholder that the value of the shares is less than the
applicable amount and allow him or her sixty days to make an additional
investment in an amount which will increase the value of his or her account
to at least the applicable amount before the redemption is processed. No CDSC
will be imposed on any involuntary redemption.
16
<PAGE>
DIVIDENDS, DISTRIBUTIONS AND TAXES
- ----------------------------------------------------------------------
Dividends and Distributions. The Fund intends to pay dividends and to
distribute substantially all of its net investment income and net short-term
and net long-term capital gains, if any, at least once each year. The Fund
may, however, determine to retain all or part of any net long-term capital
gains in any year for reinvestment.
All dividends and any capital gains distributions will be paid in
additional Fund shares and automatically credited to the shareholder's
account without issuance of a share certificate unless the shareholder
requests in writing that all dividends and/or distributions be paid in cash.
(See "Shareholder Services--Automatic Investment of Dividends and
Distributions.")
Taxes. Because the Fund intends to distribute all of its net investment
income and capital gains to shareholders and otherwise qualify as a regulated
investment company under Subchapter M of the Internal Revenue Code, it is not
expected that the Fund will be required to pay any federal income tax.
Shareholders who are required to pay taxes on their income will normally have
to pay federal income taxes, and any state income taxes, on the dividends and
distributions they receive from the Fund. Such dividends and distributions,
to the extent that they are derived from net investment income or net
short-term capital gains, are taxable to the shareholder as ordinary income
regardless of whether the shareholder receives such payments in additional
shares or in cash. Any dividends declared with a record date in the last
quarter of any calendar year which are paid in the following year prior to
February 1 will be deemed received by the shareholder in the prior calendar
year. Dividend payments will be eligible for the federal dividends received
deduction available to the Fund's corporate shareholders only to the extent
the aggregate dividends received by the Fund would be eligible for the
deduction if the Fund were the shareholder claiming the dividends received
deduction. In this regard, a 46-day holding period generally must be met by
the Fund and the shareholder.
Distributions of net long-term capital gains, if any, are taxable to
shareholders as long-term capital gains regardless of how long a shareholder
has held the Fund's shares and regardless of whether the distribution is
received in additional shares or in cash. The Fund is subject to foreign
withholding taxes and the pass through of such taxes may not be available to
shareholders.
The Fund may at times make payments from sources other than income or net
capital gains. Payments from such sources will, in effect, represent a return
of a portion of each shareholder's investment. All, or a portion, of such
payments will not be taxable to shareholders.
After the end of the calendar year, shareholders will be sent full
information on their dividends and capital gains distributions for tax
purposes. To avoid being subject to a 31% federal backup withholding tax on
taxable dividends, capital gains distributions and the proceeds of
redemptions and repurchases, shareholders' taxpayer identification numbers
must be furnished and certified as to their accuracy.
Shareholders should consult their tax advisers as to the applicability of
the foregoing to their current situation.
PERFORMANCE INFORMATION
- ----------------------------------------------------------------------
From time to time the Fund may quote its "total return" in advertisements
and sales literature. The total return of the Fund is based on historical
earnings and is not intended to indicate future performance. The "average
annual total return" of the Fund refers to a figure reflecting the average
annualized percentage increase (or decrease) in the value of an initial
investment in the Fund of $1,000 over one, five and ten years or the life of
the Fund, if less than any of the foregoing. Average annual total return
reflects all income earned by the Fund, any appreciation or depreciation of
the Fund's assets, all expenses incurred by the Fund and all sales charges
which would be incurred by redeeming shareholders, for the period. It also
assumes reinvestment of all dividends and distributions paid by the Fund.
In addition to the foregoing, the Fund may advertise its total return over
different periods of time by means of aggregate, average, and year-by-year or
other types of total return figures. Such calculations may or may not reflect
the deduction of the contingent deferred sales charge which, if reflected,
would reduce the performance quoted. The Fund may also advertise the growth
of hypothetical investments of $10,000, $50,000 and $100,000 in shares of the
Fund. The Fund from time to time may also advertise its performance relative
to certain performance rankings and indexes compiled by independent
organizations (such as mutual fund performance rankings of Lipper Analytical
Services, Inc.).
17
<PAGE>
ADDITIONAL INFORMATION
- ----------------------------------------------------------------------
Voting Rights. All shares of beneficial interest of the Fund are of $0.01
par value and are equal as to earnings, assets and voting privileges.
The Fund is not required to hold Annual Meetings of Shareholders and, in
ordinary circumstances, the Fund does not intend to hold such meetings. The
Trustees may call Special Meetings of Shareholders for action by shareholder
vote as may be required by the Act or the Declaration of Trust. Under certain
circumstances, the Trustees may be removed by action of the Trustees or by
the shareholders.
Under Massachusetts law, shareholders of a business trust may, under
certain circumstances, be held personally liable as partners for obligations
of the Fund. However, the Declaration of Trust contains an express disclaimer
of shareholder liability for acts or obligations of the Fund, requires that
Fund obligations include such disclaimer, and provides for indemnification
and reimbursement of expenses out of the Fund's property for any shareholder
held personally liable for the obligations of the Fund. Thus, the risk of a
shareholder incurring financial loss on account of shareholder liability is
limited to circumstances in which the Fund itself would be unable to meet its
obligations. Given the above limitation on shareholder personal liability,
and the nature of the Fund's assets and operations, the possibility of the
Fund being unable to meet its obligations is remote and thus, in the opinion
of Massachusetts counsel to the Fund, the risk to Fund shareholders of
personal liability is remote.
Code of Ethics. The Adviser is subject to a Code of Ethics with respect to
investment transactions in which the Adviser's officers, directors and
certain other persons have a beneficial interest to avoid any actual or
potential conflict or abuse of their fiduciary position. The Code of Ethics,
as it pertains to the TCW/DW Funds, contains several restrictions and
procedures designed to eliminate conflicts of interest including: (a)
pre-clearance of personal investment transactions to ensure that personal
transactions by employees are not being conducted at the same time as the
Adviser's clients; (b) quarterly reporting of personal securities
transactions; (c) a prohibition against personally acquiring securities in an
initial public offering, entering into uncovered short sales and writing
uncovered options; (d) a seven day "blackout period" prior or subsequent to a
TCW/DW Fund transaction during which portfolio managers are prohibited from
making certain transactions in securities which are being purchased or sold
by a TCW/DW Fund; (e) a prohibition, with respect to certain investment
personnel, from profiting in the purchase and sale, or sale and purchase, of
the same (or equivalent) securities within 60 calendar days; and (f) a
prohibition against acquiring any security which is subject to firm wide or,
if applicable, a department restriction of the Adviser. The Code of Ethics
provides that exemptive relief may be given from certain of its requirements,
upon application. The Adviser's Code of Ethics complies with regulatory
requirements and, insofar as it relates to persons associated with registered
investment companies, the 1994 Report of the Advisory Group on Personal
Investing of the Investment Company Institute.
Shareholder Inquiries. All inquiries regarding the Fund should be directed
to the Fund at the telephone numbers or address set forth on the front cover
of this Prospectus.
18
<PAGE>
TCW/DW GLOBAL TELECOM TRUST
Portfolio of Investments November 30, 1996 (unaudited)
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------- --------------
<S> <C> <C>
COMMON STOCKS (94.1%)
AUSTRALIA (1.5%)
PUBLISHING
72,400 News Corp. Ltd. (ADR) ................. $1,538,500
--------------
BRAZIL (1.5%)
TELECOMMUNICATIONS
20,400 Telecomunicacoes Brasileiras S/A-
Tebras (ADR) .......................... 1,545,300
--------------
CANADA (3.4%)
COMMUNICATIONS-EQUIPMENT & SOFTWARE
26,200 Newbridge Network Corp.* .............. 779,450
--------------
COMMUNICATIONS-
EQUIPMENT/MANUFACTURERS
18,800 Northern Telecom Ltd. ................. 1,236,100
--------------
ENTERTAINMENT
69,000 Cinar Films, Inc. (Class B)* .......... 1,518,000
--------------
TOTAL CANADA .......................... 3,533,550
--------------
CHILE (0.8%)
TELECOMMUNICATIONS
8,300 Compania de Telecommunicaciones
de Chile S.A. (ADR) ................... 789,537
--------------
FINLAND (1.0%)
TELECOMMUNICATIONS
17,600 Nokia Corp. (ADR) ..................... 987,800
--------------
GERMANY (1.6%)
OIL RELATED
20,000 RWE AG ................................ 883,978
--------------
TELECOMMUNICATIONS
30,100 Tele Danmark A/S (ADR) ................ 752,500
--------------
TOTAL GERMANY ......................... 1,636,478
--------------
HUNGARY (0.7%)
CABLE/CELLULAR
2,800 Matav RT* ............................. 727,135
--------------
INDONESIA (0.6%)
TELECOMMUNICATIONS
250,000 PT Indosat ............................ 690,593
--------------
ITALY (2.7%)
AUTOMOTIVE
800,000 Pirelli SpA ........................... 1,461,279
--------------
TELECOMMUNICATIONS
600,000 Telecom Italia SpA .................... 1,412,481
--------------
TOTAL ITALY ........................... 2,873,760
--------------
JAPAN (3.8%)
ELECTRONIC & ELECTRICAL EQUIPMENT
24,000 Sony Corp. (ADR) ...................... $1,551,000
--------------
ELECTRONIC COMPONENTS
10,000 Hitachi Ltd. (ADR) .................... 946,250
--------------
UTILITIES -TELEPHONE
40,000 Nippon Telegraph & Telephone (ADR) ... 1,440,000
--------------
TOTAL JAPAN ........................... 3,937,250
--------------
MALAYSIA (1.3%)
TELECOMMUNICATIONS
236,000 Leader Universal Holdings Berhad ..... 537,107
88,000 Telekom Malaysia Berhad* .............. 801,108
--------------
TOTAL MALAYSIA ........................ 1,338,215
--------------
MEXICO (0.7%)
LEISURE TIME/EQUIPMENT
25,000 Grupo Televisa S.A. (GDR)* ............ 681,250
--------------
NETHERLANDS (2.0%)
ELECTRONICS
50,000 Philips Electronics N.V. .............. 2,025,000
--------------
NORWAY (0.8%)
TELECOMMUNICATION EQUIPMENT
21,408 Nera ASA (ADR) ........................ 872,376
--------------
PHILIPPINES (1.5%)
UTILITIES TELEPHONE
28,264 Philippine Long Distance Telephone Co.
(ADR) ................................. 1,625,180
--------------
PORTUGAL (1.4%)
TELECOMMUNICATIONS
56,400 Portugal Telecom S.A. (ADR) ........... 1,494,600
--------------
RUSSIA (1.0%)
TELECOMMUNICATIONS
45 Rostelecom (RDC)-144A** ............... 1,035,000
--------------
SPAIN (0.8%)
UTILITIES-TELEPHONE
41,300 Telefonica de Espana .................. 904,961
--------------
SWEDEN (2.0%)
UTILITIES-TELEPHONE
66,000 Ericsson (L.M.) Telephone Co. AB (ADR). 2,029,500
--------------
UNITED KINGDOM (2.5%)
CABLE/CELLULAR
25,700 British Telecommunications PLC (ADR) . 1,635,163
--------------
19
<PAGE>
TCW/DW GLOBAL TELECOM TRUST
Portfolio of Investments November 30, 1996 (unaudited) (continued)
NUMBER OF
SHARES VALUE
- ----------- --------------
TELECOMMUNICATIONS
21,200 Vodafone Group PLC (ADR) .............. $ 916,900
--------------
TOTAL UNITED KINGDOM .................. 2,552,063
--------------
UNITED STATES (61.0%)
ADVERTISING
34,500 Omnicom Group, Inc. ................... 1,759,500
--------------
BROADCAST MEDIA
36,700 American Radio Systems Corp.* ......... 990,900
29,000 BET Holdings, Inc. (Class A)* ......... 804,750
40,500 Cox Communications, Inc. (Class A)* .. 830,250
27,600 Infinity Broadcasting Corp. (Class A)*. 886,650
43,600 Liberty Media Group (Class A)* ....... 1,084,550
15,000 Univision Communications, Inc.* ...... 596,250
--------------
5,193,350
--------------
BUSINESS SERVICES
44,700 Cognizant Corp* ....................... 1,542,150
--------------
CABLE TELEVISION EQUIPMENT
50,000 TV Filme, Inc.* ....................... 656,250
--------------
COMMUNICATIONS-EQUIPMENT & SOFTWARE
22,600 Cascade Communications Corp.* ......... 1,553,750
29,200 Cisco Systems, Inc.* .................. 1,981,950
--------------
3,535,700
--------------
COMPUTER SOFTWARE
9,900 Microsoft Corp.* ...................... 1,553,062
17,200 Pairgain Technologies, Inc.* .......... 1,094,350
28,600 Security Dynamics Technologies, Inc.*.. 1,176,175
15,200 Shiva Corp.* .......................... 627,000
60,900 Trusted Information Systems, Inc.* ... 723,187
--------------
5,173,774
--------------
COMPUTER SOFTWARE & SERVICES
102,500 GT Interactive Software Corp.* ....... 1,191,562
36,900 Objective Systems Integrators, Inc.* . 899,437
43,500 Sterling Commerce, Inc.* .............. 1,370,250
--------------
3,461,249
--------------
COMPUTERS-SYSTEMS
16,500 3Com Corp.* ........................... 1,239,562
--------------
ELECTRIC-MAJOR
94,000 Westinghouse Electric Corp. ........... 1,762,500
--------------
ELECTRONIC & ELECTRICAL EQUIPMENT
20,100 C-Cube Microsystems, Inc.* ............ 871,837
23,600 Vitesse Semiconductors Corp.* ......... 1,123,950
--------------
1,995,787
--------------
ELECTRONICS-DEFENSE
27,500 General Motors Corp. (Class H) ....... $1,498,750
--------------
ELECTRONICS-SEMICONDUCTORS/COMPONENTS
9,600 Intel Corp. ........................... 1,216,800
25,100 Maxim Integrated Products, Inc.* ..... 1,160,875
36,100 Motorola, Inc. ........................ 1,999,038
30,100 Triquint Semiconductor, Inc.* ......... 673,488
--------------
5,050,201
--------------
ENTERTAINMENT
24,900 Electronic Arts, Inc.* ................ 799,913
20,000 Evergreen Media Corp. (Class A)* ..... 495,000
--------------
1,294,913
--------------
FINANCE
100,800 CUC International, Inc.* .............. 2,658,600
--------------
MEDIA GROUP
68,000 General Instrument Corp.* ............. 1,504,500
--------------
PUBLISHING
68,700 Golden Books Family Entertainment,
Inc.* ................................. 781,463
50,100 Mecklermedia Corp.* ................... 1,014,525
11,400 Scholastic Corp.* ..................... 849,300
--------------
2,645,288
--------------
TELECOMMUNICATION EQUIPMENT
81,100 Harmonic Lightwaves, Inc.* ............ 1,601,725
42,800 LCC International, Inc. (Class A)* ... 642,000
109,900 Loral Space & Communications Ltd.* ... 2,033,150
37,000 P-COM, Inc.* .......................... 1,156,250
13,600 U.S. Robotics Corp.* .................. 1,067,600
--------------
6,500,725
--------------
TELECOMMUNICATIONS
38,300 LCI International, Inc.* .............. 1,249,538
29,100 Lucent Technologies, Inc. ............. 1,491,375
28,400 MFS Communications Company, Inc.* .... 1,370,300
28,200 Omipoint Corp.* ....................... 740,250
27,100 Qualcomm Inc.* ........................ 1,131,425
35,000 SmarTalk Teleservices Inc.* ........... 437,500
37,800 Sprint Corp. .......................... 1,582,875
71,400 Tele-Communications, Inc. (Class A)* . 963,900
95,900 Tele-Communications International,
Inc. (Class A)* ....................... 1,438,500
85,700 Teleport Communications Group Inc.
(Class A)* ............................ 2,838,813
20
<PAGE>
TCW/DW GLOBAL TELECOM TRUST
Portfolio of Investments November 30, 1996 (unaudited) (continued)
NUMBER OF
SHARES VALUE
- ----------- --------------
48,300 Western Wireless Corp. (Class A)* .... $ 676,200
49,700 Winstar Communications, Inc.* ......... 1,031,275
--------------
14,951,951
--------------
TOYS
125,000 T-HQ, Inc.* ........................... 960,938
--------------
TOTAL UNITED STATES ................... 63,385,688
--------------
VENEZUELA (1.5%)
TELECOMMUNICATIONS
60,000 Compania Anonima Nacional Telefonos de
Venezuela (ADR)* ...................... $ 1,522,500
--------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $91,206,669) (A) .... 94.1% 97,726,236
CASH AND OTHER ASSETS
IN EXCESS OF LIABILITIES ............. 5.9 6,104,033
--------- ---------------
NET ASSETS ............................ 100.0% $103,830,269
========= ===============
</TABLE>
- ------------
ADR American Depository Receipt.
GDR Global Depository Receipt.
RDC Russian Depository Certificate.
* Non-income producing security.
** Resale is restricted to qualified institutional investors.
(a) The aggregate cost for federal income tax purposes approximates
identified cost. The aggregate gross unrealized appreciation was
$9,370,160 and the aggregate gross unrealized depreciation was
$2,850,593, resulting in net unrealized appreciation of $6,519,567.
See Notes to Financial Statements
21
<PAGE>
TCW/DW GLOBAL TELECOM TRUST
Summary of Investments November 30, 1996 (unaudited)
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENT OF
INDUSTRY VALUE NET ASSETS
- -------- ------------- ------------
<S> <C> <C>
Advertising ............................. $ 1,759,500 1.7%
Automotive .............................. 1,461,279 1.4
Broadcast Media ......................... 5,193,350 5.0
Business Services ....................... 1,542,150 1.5
Cable Television Equipment .............. 656,250 0.6
Cable/Cellular .......................... 2,362,297 2.3
Communications -Equipment & Software ... 4,315,150 4.2
Communications -Equipment/Manufacturers 1,236,100 1.2
Computer Software ....................... 5,173,775 5.0
Computer Software & Services ............ 3,461,250 3.3
Computers -Systems ...................... 1,239,562 1.2
Electric -Major ......................... 1,762,500 1.7
Electronic & Electrical Equipment ...... 3,546,787 3.4
Electronic Components ................... 946,250 0.9
Electronics ............................. 2,025,000 1.9
Electronics -Defense .................... 1,498,750 1.4
Electronics -Semiconductors/Components . 4,376,712 4.2
Entertainment ........................... 3,486,401 3.4
Finance ................................. 2,658,600 2.6
Leisure Time/Equipment .................. 681,250 0.7
Media Group ............................. 1,504,500 1.4
Oil Related ............................. 883,978 0.9
Publishing .............................. 4,183,788 4.0
Telecommunication Equipment ............. 7,373,101 7.1
Telecommunications ...................... 27,437,377 26.4
Toys .................................... 960,938 0.9
Utilities -Telephone .................... 5,999,641 5.8
------------- ------------
$97,726,236 94.1%
============= ============
</TABLE>
22
<PAGE>
TCW/DW GLOBAL TELECOM TRUST
Financial Statements
- -----------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
November 30, 1996 (unaudited)
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $91,206,669) ............. $ 97,726,236
Cash ....................................... 4,887,114
Receivable for:
Investments sold .......................... 1,415,958
Shares of beneficial interest sold ....... 494,604
Dividends ................................. 47,142
Interest .................................. 34,674
Deferred organizational expenses ........... 149,993
Prepaid expenses ........................... 12,879
--------------
TOTAL ASSETS ............................. 104,768,600
--------------
LIABILITIES:
Payable for:
Investments purchased ..................... 549,333
Plan of distribution fee .................. 78,002
Management fee ............................ 48,600
Investment advisory fee ................... 32,400
Shares of beneficial interest repurchased 15,662
Organizational expenses .................... 158,225
Accrued expenses ........................... 56,109
--------------
TOTAL LIABILITIES ........................ 938,331
--------------
NET ASSETS:
Paid-in-capital ............................ 97,619,568
Net unrealized appreciation ................ 6,519,444
Net investment loss ........................ (285,674)
Net realized loss .......................... (23,069)
--------------
NET ASSETS ............................... $103,830,269
==============
NET ASSET VALUE PER SHARE, 9,700,081
shares outstanding (unlimited shares
authorized of $.01 par value) ............. $ 10.70
==============
</TABLE>
- -----------------------------------------------------------------------------
STATEMENT OF OPERATIONS For the period
August 28, 1996* through November 30, 1996 (unaudited)
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
NET INVESTMENT INCOME:
INCOME
Interest ................................. $ 185,227
Dividends (net of $4,378 foreign
withholding tax) ........................ 81,897
--------------
TOTAL INCOME ............................ 267,124
--------------
EXPENSES
Plan of distribution fee ................. 226,815
Management fee ........................... 139,843
Investment advisory fee .................. 93,228
Custodian fees ........................... 21,092
Transfer agent fees and expenses ........ 16,874
Professional fees ........................ 16,427
Registration fees ........................ 14,214
Shareholder reports and notices .......... 10,894
Organizational expenses .................. 8,232
Trustees' fees and expenses .............. 5,179
--------------
TOTAL EXPENSES .......................... 552,798
--------------
NET INVESTMENT LOSS ..................... (285,674)
--------------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on:
Investments .............................. (23,424)
Foreign exchange transactions ............ 355
--------------
NET LOSS ................................ (23,069)
--------------
Net unrealized appreciation on:
Investments .............................. 6,519,567
Translation of other assets and
liabilities denominated in foreign
currencies .............................. (123)
--------------
NET APPRECIATION ........................ 6,519,444
--------------
NET GAIN ................................ 6,496,375
--------------
NET INCREASE ............................ $ 6,210,701
==============
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD AUGUST
28, 1996* THROUGH
NOVEMBER 30, 1996
------------------------
(UNAUDITED)
<S> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment loss .......................................... $ (285,674)
Net realized loss ............................................ (23,069)
Net unrealized appreciation .................................. 6,519,444
------------------------
Net increase ................................................ 6,210,701
Net increase from transactions in shares of beneficial
interest ...................................................... 97,519,568
------------------------
Net increase ................................................ 103,730,269
NET ASSETS:
Beginning of period ........................................... 100,000
------------------------
END OF PERIOD (Including a net investment loss of $285,674) .. $103,830,269
========================
</TABLE>
- ------------
* Commencement of Operations.
See Notes to Financial Statements
23
<PAGE>
TCW/DW GLOBAL TELECOM TRUST
Notes to Financial Statements November 30, 1996 (unaudited)
- -----------------------------------------------------------------------------
1. ORGANIZATION AND ACCOUNTING POLICIES -- TCW/DW Global Telecom Trust (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 objective is long-term capital appreciation. The Fund seeks
to achieve its objective by investing primarily in securities of domestic and
foreign companies operating in all aspects of the telecommunications and
information industries. The Fund was organized as a Massachusetts business
trust on March 28, 1996 and had no other operations other than those relating
to organizational matters and the issuance of 10,000 shares of beneficial
interest for $100,000 to Dean Witter InterCapital Inc. ("InterCapital"), an
affiliate of Dean Witter Services Company Inc. (the "Manager"), to effect the
Fund's initial capitalization. The Fund commenced operations on August 28,
1996.
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 -- (1) an equity security listed or traded
on the New York, American or other domestic or foreign stock exchange is
valued at its latest sale price on that exchange prior to the time when
assets are valued; if there were no sales that day, the security is
valued at the latest bid price (in cases where securities are traded on
more than one exchange; the securities are valued on the exchange
designated as the primary market by the Adviser); (2) all other
portfolio securities for which over-the-counter market quotations are
readily available are valued at the latest available bid price prior to
the time of valuation; (3) when market quotations are not readily
available, including circumstances under which it is determined by the
Adviser that sale or bid prices are not reflective of a security's
market value, portfolio securities are valued at their fair value as
determined in good faith under procedures established by and under the
general supervision of the Trustees; (4) certain portfolio securities
may be valued by an outside pricing service approved by the Trustees.
The pricing service utilizes a matrix system incorporating security
quality, maturity and coupon as the evaluation model parameters, and/or
research and evaluations by its staff, including review of broker-dealer
market price quotations, if available, in determining what it believes
is the fair valuation of the portfolio securities valued by such pricing
service; and (5) short-term debt securities having a maturity date of
more than sixty days at time of purchase are valued on a mark-to-market
basis until sixty days prior to maturity and thereafter at amortized
cost based on their value on the 61st day. Short-term debt securities
have a maturity date of sixty days or less at the time of purchase are
valued at amortized cost.
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. Dividend income and other distributions are
recorded on the ex-dividend date except for certain dividends on foreign
securities which are recorded as soon as the Fund is informed after the
ex-dividend date. Discounts are accreted over the life of the respective
securities. Interest income is accrued daily.
C. Foreign Currency Translation -- The books and records of the Fund are
maintained in U.S. dollars as follows: (1) the foreign currency market
value of investment securities, other assets and liabilities and forward
contracts are translated at the exchange rates prevailing at the end of
the period; and (2) purchases, sales, income and expenses are translated
at the exchange rates prevailing on the respective dates of such
transactions. The resultant exchange gains and losses are included in
the Statement of
24
<PAGE>
TCW/DW GLOBAL TELECOM TRUST
Notes to Financial Statements November 30, 1996 (unaudited) (continued)
- -----------------------------------------------------------------------------
Operations as realized and unrealized gain/loss on foreign exchange
transactions. Pursuant to U.S. Federal income tax regulations, certain
foreign exchange gains/losses included in realized and unrealized
gain/loss are included in or are a reduction of ordinary income for
federal income tax purposes. The Fund does not isolate that portion of
the results of operations arising as a result of changes in the foreign
exchange rates from the changes in the market prices of the securities.
D. Forward Foreign Currency Contracts -- The Fund may enter into forward
foreign currency contracts which are valued daily at the appropriate
exchange rates. The resultant unrealized exchange gains and losses are
included in the Statement of Operations as unrealized foreign currency
gain or loss and in the Statement of Assets and Liabilities as part of
the related foreign currency denominated asset or liability. The Fund
records realized gains or losses on delivery of the currency or at the
time the forward contract is extinguished (compensated) by entering into
a closing transaction prior to delivery.
E. 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.
F. Dividends and Distributions to Shareholders -- The Fund records
dividends and distributions to its shareholders on the ex-dividend date.
The amount of dividends and distributions from net investment income and
net realized capital gains are determined in accordance with federal
income tax regulations which may differ from generally accepted
accounting principles. These "book/tax" differences are either
considered temporary or permanent in nature. To the extent these
differences are permanent in nature, such amounts are reclassified
within the capital accounts based on their federal tax-basis treatment;
temporary differences do not require reclassification. Dividends and
distributions which exceed net investment income and net realized
capital gains for financial reporting purposes but not for tax purposes
are reported as dividends in excess of net investment income or
distributions in excess of net realized capital gains. To the extent
they exceed net investment income and net realized capital gains for tax
purposes, they are reported as distributions of paid-in-capital.
G. Organizational Expenses -- InterCapital paid the organizational
expenses in the amount of approximately $158,000 which will be
reimbursed for the full amount thereof. Such expenses have been deferred
and are being amortized on the straight-line method over a period not to
exceed five years from the commencement of operations.
2. MANAGEMENT AGREEMENT -- Pursuant to a Management Agreement, the Fund pays
the Manager a management fee, accrued daily and payable monthly, by applying
the annual rate of 0.60% to the net assets of the Fund determined as of the
close of each business day.
Under the terms of the Management Agreement, the 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 Manager. The Manager also bears the cost of
telephone services, heat, light, power and other utilities provided to the
Fund.
3. INVESTMENT ADVISORY AGREEMENT -- Pursuant to an Investment Advisory
Agreement with TCW Funds Management, Inc. (the "Adviser"), the Fund pays the
Adviser an advisory fee, accrued daily and payable monthly, by applying the
annual rate of 0.40% to the net assets of the Fund determined as of the close
of each business day.
25
<PAGE>
TCW/DW GLOBAL TELECOM TRUST
Notes to Financial Statements November 30, 1996 (unaudited) (continued)
- -----------------------------------------------------------------------------
Under the terms of the Investment Advisory Agreement, the Fund has
retained the Adviser to invest the Fund's assets, including placing orders
for the purchase and sale of portfolio securities. The Adviser obtains and
evaluates such information and advice relating to the economy, securities
markets, and specific securities as it considers necessary or useful to
continuously manage the assets of the Fund in a manner consistent with its
investment objective. In addition, the Adviser pays the salaries of all
personnel, including officers of the Fund, who are employees of the Adviser.
4. PLAN OF DISTRIBUTION -- Shares of the Fund are distributed by Dean Witter
Distributors Inc. (the "Distributor"), an affiliate of the Manager. The Fund
has adopted a Plan of Distribution (the "Plan"), pursuant to Rule 12b-1 under
the Act, pursuant to which the Fund pays the Distributor compensation,
accrued daily and payable monthly, at an annual rate of 1.0% of the lesser
of: (a) the average daily aggregate gross sales of the Fund's shares since
the Fund's inception (not including reinvestment of dividend or capital gain
distributions) less the average daily aggregate net asset value of the Fund's
shares redeemed since the Fund's inception upon which a contingent deferred
sales charge has been imposed or upon which such charge has been waived; or
(b) the Fund's average daily net assets. Amounts paid under the Plan are paid
to the Distributor to compensate it for the services provided and the
expenses borne by it and others in the distribution of the Fund's shares,
including the payment of commissions for sales of the Fund's shares and
incentive compensation to, and expenses of, the account executives of Dean
Witter Reynolds Inc. ("DWR"), an affiliate of the Manager and Distributor,
and other employees or selected broker-dealers who engage in or support
distribution of the Fund's shares or who service shareholder accounts,
including overhead and telephone expenses, printing and distribution of
prospectuses and reports used in connection with the offering of the Fund's
shares to other than current shareholders and preparation, printing and
distribution of sales literature and advertising materials. In addition, the
Distributor may be compensated under the Plan for its opportunity costs in
advancing such amounts, which compensation would be in the form of a carrying
charge on any unreimbursed expenses incurred by the Distributor.
Provided that the Plan continues in effect, any cumulative expenses
incurred but not yet recovered, may be recovered through future distribution
fees from the Fund and contingent deferred sales charges from the Fund's
shareholders.
Although there is no legal obligation for the Fund to pay expenses
incurred in excess of payments made to the Distributor under the Plan and the
proceeds of contingent deferred sales charges paid by investors upon
redemption of shares, if for any reason the Plan is terminated, the Trustees
will consider at that time the manner in which to treat such expenses. The
Distributor has advised the Fund that such excess amounts, including carrying
charges, totaled $6,257,689 at November 30, 1996.
The Distributor has informed the Fund that for the period ended November
30, 1996, it received approximately $24,000 in contingent deferred sales
charges from certain redemptions of the Fund's shares.
5. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES --The cost of
purchases and proceeds from sales of portfolio securities, excluding
short-term investments, for the period ended November 30, 1996 aggregated
$104,142,182 and $12,912,089, respectively.
26
<PAGE>
TCW/DW GLOBAL TELECOM TRUST
Notes to Financial Statements November 30, 1996 (unaudited) (continued)
- -----------------------------------------------------------------------------
6. SHARES OF BENEFICIAL INTEREST --Transactions in shares of beneficial
interest were as follows:
<TABLE>
<CAPTION>
FOR THE PERIOD
AUGUST 28, 1996*
THROUGH
NOVEMBER 30, 1996
--------------------------
SHARES AMOUNT
----------- -------------
<S> <C> <C>
Sold ........... 9,823,222 $98,882,513
Repurchased ... (133,141) (1,362,945)
----------- -------------
Net increase .. 9,690,081 $97,519,568
=========== =============
</TABLE>
- ------------
* Commencement of Operations
7. PURPOSES OF AND RISKS RELATING TO CERTAIN FINANCIAL INSTRUMENTS -- The
Fund may enter into forward foreign currency contracts ("forward contracts")
to facilitate settlement of foreign currency denominated portfolio
transactions or to manage foreign currency exposure associated with foreign
currency denominated securities. At November 30, 1996, there were no
outstanding forward contracts.
Forward contracts involve elements of market risk in excess of the amounts
reflected in the Statement of Assets and Liabilities. The Fund bears the risk
of an unfavorable change in foreign exchange rates underlying the forward
contracts. Risks may also arise upon entering into these contracts from the
potential inability of the counterparties to meet the terms of their
contracts.
8. SELECTED PER SHARE DATA AND RATIOS -- See the "Financial Highlights" table
on page 4 of this Prosepctus.
27
<PAGE>
TCW/DW GLOBAL TELECOM TRUST
Two World Trade Center
New York, New York 10048
TRUSTEES
John C. Argue
Richard M. DeMartini
Charles A. Fiumefreddo
John R. Haire
Dr. Manuel H. Johnson
Thomas E. Larkin, Jr.
Michael E. Nugent
John L. Schroeder
Marc I. Stern
OFFICERS
Charles A. Fiumefreddo
Chairman and Chief Executive Officer
Thomas E. Larkin, Jr.
President
Sheldon Curtis
Vice President, Secretary and
General Counsel
Robert M. Hanisee
Vice President
John A. Healey
Vice President
Thomas F. Caloia
Treasurer
CUSTODIAN
The Chase Manhattan Bank
One Chase Plaza
New York, NY 10005
TRANSFER AGENT AND
DIVIDEND DISBURSING 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
MANAGER
Dean Witter Services Company Inc.
ADVISER
TCW Funds Management, Inc.
