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DEAN WITTER
NATURAL RESOURCE DEVELOPMENT SECURITIES INC.
PROSPECTUS--MAY 11, 1994
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DEAN WITTER NATURAL RESOURCE DEVELOPMENT SECURITIES INC. (THE "FUND") IS AN
OPEN-END DIVERSIFIED MANAGEMENT INVESTMENT COMPANY WHOSE INVESTMENT OBJECTIVE IS
CAPITAL GROWTH. THE FUND INVESTS PRIMARILY IN COMMON STOCK OF COMPANIES IN THE
NATURAL RESOURCES AND RELATED AREAS, INCLUDING COMPANIES ENGAGED IN THE
EXPLORATION FOR AND DEVELOPMENT, PRODUCTION AND DISTRIBUTION OF NATURAL
RESOURCES OR IN THE DEVELOPMENT OF ENERGY-EFFICIENT TECHNOLOGIES OR OTHER
NATURAL RESOURCE RELATED SUPPLIES OR PRODUCTS. (SEE "INVESTMENT OBJECTIVE AND
POLICIES.")
Shares of the Fund are continuously offered at net asset value. However,
redemptions and/or repurchases are subject in most circumstances 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 "Redemptions and Repurchases --
Contingent Deferred Sales Charge.") In addition, the Fund pays the Distributor a
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 since inception of the
Plan of Distribution or (ii) average daily net assets of the Fund attributable
to shares issued since the inception of the Plan of Distribution. (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 May 11, 1994, which has been filed with the
Securities and Exchange Commission, and which is available at no charge upon
request of the Fund at the address or telephone numbers listed on this page. The
Statement of Additional Information is incorporated herein by reference.
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TABLE OF CONTENTS
Prospectus Summary.................................. 2
Summary of Fund Expenses............................ 3
Financial Highlights................................ 4
The Fund and its Management......................... 5
Investment Objective and Policies................... 5
Investment Restrictions............................. 8
Purchase of Fund Shares............................. 9
Shareholder Services................................ 11
Redemptions and Repurchases......................... 13
Dividends, Distributions and Taxes.................. 14
Performance Information............................. 15
Additional Information.............................. 15
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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.
DEAN WITTER
NATURAL RESOURCE DEVELOPMENT
SECURITIES INC.
TWO WORLD TRADE CENTER
NEW YORK, NEW YORK 10048
(212) 392-2550
(800) 526-3143
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
DEAN WITTER DISTRIBUTORS INC., DISTRIBUTOR
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PROSPECTUS SUMMARY
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THE FUND The Fund, a Maryland corporation, is an open-end diversified management investment
company investing primarily in common stock of companies in the natural resources and
related areas.
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SHARES OFFERED Common Stock with $0.01 par value (see page 15).
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OFFERING At net asset value without sales charge (see page 9). Shares redeemed within six years
PRICE of purchase are subject to a contingent deferred sales charge under most circumstances
(see page 13).
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MINIMUM Minimum initial investment $1,000; minimum subsequent investment $100 (see page 9).
PURCHASE
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INVESTMENT The investment objective of the Fund is capital growth.
OBJECTIVE
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INVESTMENT Dean Witter InterCapital Inc. ("InterCapital"), the Investment Manager of the Fund, and
MANAGER its wholly-owned subsidiary, Dean Witter Services Company Inc., serve in various
investment management, advisory, management and administrative capacities to
eighty-three investment companies and other portfolios with assets of approximately $73
billion at February 28,1994 (see page 5).
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MANAGEMENT The Investment Manager receives a monthly fee at an annual rate of 0.625 of 1% of daily
FEE net assets up to $250 million and 0.50 of 1% of daily net assets over $250 million.
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DIVIDENDS AND Dividends from net investment income dividends paid annually; capital gains, if any,
CAPITAL GAINS distributed annually or retained for reinvestment by the Fund. Dividends and capital
DISTRIBUTIONS gains distributions automatically reinvested in additional shares at net asset value
unless the shareholder elects to receive cash (see page 14).
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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 (a) the Fund's average daily aggregate net sales or (b) the Fund's
average daily net assets. This fee compensates the Distributor for the services provided
in distributing shares of the Fund and for its sales related expenses. The Distributor
also receives the proceeds of any contingent deferred sales charges (see pages 9 and
13).
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REDEMPTION -- Shares are redeemable by the shareholder at net asset value. An account may be
CONTINGENT involuntarily redeemed if the total value of the account is less than $100. Although no
DEFERRED commission or sales charge is imposed upon the purchase of shares, a contingent deferred
SALES CHARGE sales charge (scaled down from 5% to 1%) is imposed on any redemption of shares which
causes the aggregate current value of an account with the Fund to fall below the
aggregate amount of the investor's purchase payments made during the preceding six
years. There is no charge imposed on redemption of shares purchased through reinvestment
of dividends or distributions (see page 13).
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RETIREMENT You can take advantage of tax benefits for personal retirement accounts by investing in
PLANS the Fund through an IRA (Individual Retirement Account) or Custodial Account under
Section 403(b)(7) of the Internal Revenue Code (see page 11).
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RISKS The net asset value of the Fund's shares will fluctuate with changes in market value of
portfolio securities. Emphasis on natural resources may result in exposure of some
companies to foreign political and currency risks and substantial price fluctuations.
Investors should review the investment objective and policies of the Fund carefully and
consider their ability to assume the risks involved in purchasing shares of the Fund
(see page 5). The Fund may also invest in futures and options 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 (see page 6). In
addition, the investor is directed to the discussions of foreign securities on page 7.
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THE ABOVE IS QUALIFIED IN ITS ENTIRETY BY THE DETAILED INFORMATION APPEARING
ELSEWHERE IN THE PROSPECTUS
AND IN THE STATEMENT OF ADDITIONAL INFORMATION.
2
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SUMMARY OF FUND EXPENSES
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The following table illustrates all expenses and fees that a shareholder of the
Fund will incur. The expenses
and fees set forth in the table are for the fiscal year ended February 28, 1994,
except as otherwise noted.
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<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES
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Maximum Sales Charge Imposed on Purchases.................................................................... None
Maximum Sales Charge Imposed on Reinvested Dividends......................................................... None
Deferred Sales Charge
(as a percentage of the lesser of original purchase price or redemption proceeds)........................... 5.0%
A contingent deferred sales charge is imposed at the following declining rates:
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<CAPTION>
PERCENTAGE OF
YEAR SINCE PURCHASE PAYMENT MADE AMOUNT REDEEMED
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First.......................................................................... 5.0%
Second......................................................................... 4.0%
Third.......................................................................... 3.0%
Fourth......................................................................... 2.0%
Fifth.......................................................................... 2.0%
Sixth.......................................................................... 1.0%
Seventh and thereafter......................................................... None
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Redemption Fees.................................................................................. None
Exchange Fees.................................................................................... None
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<CAPTION>
ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS)
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Management Fees............................................................................................ 0.63%
12b-1 Fees*................................................................................................ 0.95%
Other Expenses............................................................................................. 0.33%
Total Fund Operating Expenses.............................................................................. 1.91%
<FN>
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* A portion of the 12b-1 fee, which may not exceed 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 ("NASD") guidelines.
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EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
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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............................................................... $ 69 $ 90 $123 $223
You would pay the following expenses on the same investment, assuming
no redemption........................................................ $ 19 $ 60 $103 $223
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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 "Redemptions and
Repurchases."
Long-term shareholders of the Fund may pay more in sales charges and
distribution fees than the economic equivalent of the maximum front-end sales
charges permitted by the NASD.
3
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FINANCIAL HIGHLIGHTS
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The following ratios and per share data for a share of capital stock
outstanding throughout each period have been audited by Price Waterhouse,
independent accountants. The per share data and ratios should be read in
conjunction with the financial statements and notes thereto and the unqualified
report of independent accountants which are contained in the Statement of
Additional Information. Further information about the performance of the Fund is
contained in the Fund's Annual Report to Shareholders which may be obtained
without charge upon request to the Fund.
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<CAPTION>
FOR THE YEARS ENDED FEBRUARY 28,
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1994 1993 1992* 1991 1990 1989 1988* 1987 1986 1985
-------- -------- -------- -------- -------- -------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE
OPERATING
PERFORMANCE:
Net asset value,
beginning of
period........ $ 11.36 $ 10.20 $ 11.03 $ 11.33 $ 9.93 $ 9.46 $ 9.10 $ 7.43 $ 7.41 $ 8.06
-------- -------- -------- -------- -------- -------- -------- ------- ------- -------
Net investment
income....... 0.09 0.16 0.20 0.25 0.30 0.23 0.20 0.14 0.22 0.23
Net realized
and
unrealized
gain (loss)
on
investments... 1.25 1.18 (0.44 ) 0.02 1.80 0.72 0.44 1.75 0.03 (0.62 )
-------- -------- -------- -------- -------- -------- -------- ------- ------- -------
Total from
investment
operations.... 1.34 1.34 (0.24 ) 0.27 2.10 0.95 0.64 1.89 0.25 (0.39 )
-------- -------- -------- -------- -------- -------- -------- ------- ------- -------
Less dividends
and
distributions:
Dividends from
net
investment
income....... (0.09 ) (0.18 ) (0.20 ) (0.28 ) (0.32 ) (0.21 ) (0.28 ) (0.22 ) (0.23 ) (0.17 )
Distributions
from net
realized
gains on
investments... (0.79 ) 0.00 (0.39 ) (0.29 ) (0.38 ) (0.27 ) 0.00 0.00 0.00 (0.09 )
-------- -------- -------- -------- -------- -------- -------- ------- ------- -------
Total dividends
and
distributions... (0.88 ) (0.18 ) (0.59 ) (0.57 ) (0.70 ) (0.48 ) (0.28 ) (0.22 ) (0.23 ) (0.26 )
-------- -------- -------- -------- -------- -------- -------- ------- ------- -------
Net asset value,
end of
period........ $ 11.82 $ 11.36 $ 10.20 $ 11.03 $ 11.33 $ 9.93 $ 9.46 $ 9.10 $ 7.43 $ 7.41
-------- -------- -------- -------- -------- -------- -------- ------- ------- -------
-------- -------- -------- -------- -------- -------- -------- ------- ------- -------
TOTAL INVESTMENT
RETURN+....... 12.16 % 13.31 % (1.91 )% 2.87 % 21.11 % 10.29 % 7.32 % 26.21 % 3.50 % (5.07 )%
RATIOS/SUPPLEMENTAL
DATA:
Net assets, end
of period (in
thousands).... $139,459 $118,496 $113,145 $150,636 $154,741 $136,911 $171,725 $82,985 $23,664 $24,940
Ratio of
expenses to
average net
assets........ 1.91 % 1.96 % 1.93 % 1.80 % 1.81 % 1.92 % 1.81 % 1.74 % 1.39 % 1.28 %
Ratio of net
investment
income to
average net
assets........ 0.73 % 1.46 % 1.67 % 2.28 % 2.57 % 2.09 % 2.14 % 2.61 % 3.07 % 2.68 %
Portfolio
turnover
rate.......... 69 % 52 % 31 % 29 % 22 % 7 % 26 % 14 % 78 % 124 %(1)
<FN>
*YEAR ENDED FEBRUARY 29.
+DOES NOT REFLECT THE DEDUCTION OF SALES LOAD.
(1) EXCLUDED LONG-TERM U.S. GOVERNMENT SECURITIES WHICH ARE INCLUDED IN
SUBSEQUENT YEARS.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
4
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THE FUND AND ITS MANAGEMENT
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Dean Witter Natural Resource Development Securities Inc. (the "Fund") is an
open-end diversified management investment company incorporated in Maryland on
December 22, 1980.
Dean Witter InterCapital Inc. ("InterCapital" or the "Investment Manager"),
whose address is Two World Trade Center, New York, New York 10048, is the Fund's
investment manager. The Investment Manager, which was incorporated in July,
1992, is a wholly-owned subsidiary of Dean Witter, Discover & Co. ("DWDC"), a
balanced financial services organization providing a broad range of nationally
marketed credit and investment products.
InterCapital and its wholly-owned subsidiary, Dean Witter Services Company
Inc., serve in various investment management, advisory, management and
administrative capacities to eighty-three investment companies, thirty of which
are listed on the New York Stock Exchange, with combined total assets of
approximately $71 billion as of February 28, 1994. The Investment Manager also
manages and advises portfolios of pension plans, other institutions and
individuals which aggregated approximately $2 billion at such date.
The Fund has retained the Investment Manager to provide administrative
services, manage its business affairs and manage the investment of the Fund's
assets, including the placing of orders for the purchase and sale of portfolio
securities. InterCapital has retained Dean Witter Services Company Inc. to
perform the aforementioned administrative services to the Fund.
The Fund's Board of Directors reviews the various services provided by the
Investment Manager to ensure that the Fund's general investment policies and
programs are being properly carried out and that administrative services are
being provided to the Fund in a satisfactory manner.
As full compensation for the services and facilities furnished to the Fund
and for expenses of the Fund assumed by the Investment Manager, the Fund pays
the Investment Manager monthly compensation calculated daily by applying the
following annual rates to the net assets of the Fund determined as of the close
of each business day: 0.625% of the portion of the daily net assets not
exceeding $250 million and 0.50% of the portion of the daily net assets
exceeding $250 million. For the fiscal year ended February 28, 1994, the Fund
accrued total compensation to the Investment Manager amounting to 0.625% of the
Fund's average daily net assets and the Fund's total expenses amounted to 1.91%
of the Fund's average daily net assets.
INVESTMENT OBJECTIVE AND POLICIES
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The investment objective of the Fund is capital growth. There is no assurance
that the objective will be achieved. This objective is fundamental and may not
be changed without the approval of the stockholders of the Fund. The Fund will
invest primarily in common stock of companies in the natural resources and
related areas, and will invest at least 65% of its net assets at all times,
except for temporary and defensive purposes, in the securities of companies
engaged in these areas. A portfolio company is considered to be so engaged when
at least 50% of its assets and/or revenues are currently the result of ownership
or development of assets in such areas. Such companies include those engaged in
the exploration for and development, production and distribution of natural
resources, in the development of energy-efficient technologies or in other
natural resource related supplies or services.
The Fund will seek capital growth by investing in securities of issuers
believed to be responsive to domestic and world demand for natural resources. As
a result of the challenges presented by natural resource needs, the Fund
believes that opportunities for growth can be found in securities of issuers
which: (1) own or process natural resources, such as precious metals, other
minerals, water, timberland and forest products; (2) own or produce sources of
energy such as oil, natural gas, coal, uranium, geothermal, oil shale and
biomass; (3) participate in the exploration for and development of natural
resources supplies from new and conventional sources; (4) own or control oil,
gas, or other mineral leases (which may not produce recoverable energy or
resources), rights or royalty interests; (5) provide natural resources
transportation, distribution or processing services, such as refining and
pipeline services; (6) provide related services or
5
<PAGE>
supplies, such as drilling, well servicing, chemicals, parts and equipment; and
(7) contribute energy-efficient technologies, such as systems for energy
conversion, conservation and pollution control. Emphasis on natural resources
may result in exposure of some portfolio companies to foreign political and
currency risks and substantial price fluctuations.
The Fund may purchase securities on a when issued or delayed delivery basis,
may purchase or sell securities on a forward commitment basis and may purchase
securities on a "when, as and if issued" basis.
OPTIONS AND FUTURES TRANSACTIONS
The Fund may purchase and sell (write) call and put options on debt and equity
securities which are listed on Exchanges or are written in over-the-counter
transactions ("OTC options"). Listed options, which are currently listed on
several different Exchanges, are issued by the Options Clearing Corporation. OTC
options are purchased from or sold (written) to dealers or financial
institutions which have entered into direct agreements with the Fund. The Fund
will engage in OTC option transactions only with primary U.S. Government
securities dealers recognized by the Federal Reserve Bank of New York. The Fund
will not write covered options on portfolio securities exceeding in the
aggregate 25% of the value of its total assets.
The Fund may invest up to 10% of its total assets in the purchase of put and
call options on securities and stock indexes, with a maximum of 5% of the Fund's
total assets invested in stock index options. The Fund may purchase put options
on securities which it holds (or has the right to acquire) in its portfolio only
to protect itself against a decline in the value of the security. The Fund may
also purchase put options to close out written put positions. There are no other
limits on the Fund's ability to purchase call and put options. The Fund may also
purchase and write options on stock indexes. See "Risks of Options on Indexes"
in the Statement of Additional Information.
The Fund may also purchase and sell interest rate and stock index futures
contracts ("futures contracts") that are traded on U.S. commodity exchanges on
such underlying securities as U.S. Treasury bonds, notes, and bills and GNMA
Certificates ("interest rate" futures) and such indexes as the S&P 500 Index and
the New York Stock Exchange Composite Index ("stock index" futures) and the
Moody's Investment-Grade Corporate Bond Index ("bond index" futures). The Fund
will purchase or sell interest rate futures contracts and bond index futures
contracts for the purpose of hedging its fixed-income portfolio (or anticipated
portfolio) securities against changes in prevailing interest rates. The Fund
will purchase or sell stock index futures contracts for the purpose of hedging
its equity portfolio (or anticipated portfolio) securities against changes in
their prices.
The Fund also may purchase and write call and put options on futures
contracts and enter into closing transactions with respect to such options to
terminate an existing position.
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. 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. The extent to which the Fund may enter into transactions involving
options and futures contracts may be limited by the Internal Revenue Code's
requirements for qualification as a regulated investment company and the Fund's
intention to qualify as such. See "Dividends, Distributions and Taxes."
While the futures contracts and options transactions to be engaged in by the
Fund for the purpose of hedging the Fund's portfolio securities are not
speculative in nature, there are risks inherent in the use of such instruments.
One such risk is that the Investment Manager 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, causing bond
prices to rise, the Fund would incur a loss on the sale. Another risk which may
arise in employing futures contracts to protect against the price volatility of
portfolio securities is that the prices of securities and indexes subject to
futures contracts (and thereby the futures contracts prices) may correlate
imperfectly with the behavior of the cash prices of the Fund's portfolio
securities. See the Statement of Additional Information for further discussion
of such risks.
6
<PAGE>
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.
PRIVATE PLACEMENTS
The Fund may invest up to 5% of its total 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 not readily marketable. (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 Investment Manager,
pursuant to procedures adopted by the Directors of the Fund, will make a
determination as to the liquidity of each restricted security purchased by the
Fund. If a restricted 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 total assets.
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.
SPECIFIC INVESTMENT POLICIES
The Fund has adopted the following specific policies which are not fundamental
investment policies and which may be changed by the Fund's Board of Directors:
(1) At least 65% of the Fund's total assets will be invested in common
stock of domestic and foreign companies in the natural resources areas
described above. The Fund may also invest in securities convertible into
common stock and may acquire warrants and other rights to acquire common
stock in connection with purchases of portfolio securities.
(2) The Fund may invest in securities of foreign companies. However, the
Fund will not invest more than 10% of its net assets in securities of such
issuers (other than Canadian issuers on which there is no limit).
Investments in certain Canadian issuers may be speculative due to certain
political risks and may be subject to substantial price fluctuations. The
Fund's investments in unlisted foreign securities are deemed to be illiquid
securities, which under the Fund's current investment policies may not in
the aggregate amount to more than 15% of the Fund's total assets. 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. Costs may be incurred in
connection with conversions between various currencies held by the Fund.
(3) Up to 35% of the value of the Fund's total assets may be invested
in: (a) common stock of companies not in the natural resources areas; (b)
investment grade corporate debt securities when, in the opinion of the
Investment Manager, the projected total return on such securities is equal
to or greater than the expected total return on equity securities, or when
such holdings might be expected to reduce the volatility of the portfolio
(for purposes of this provision, the term "total return" means the
difference between the cost of a security and the aggregate of its market
value and dividends received); (c) U.S. Government securities (securities
issued or guaranteed as to principal and interest by the United States or
its agencies and instrumentalities); and (d) in money market instruments
under any one or more of the
7
<PAGE>
following circumstances: (i) pending investment of proceeds of sale of Fund
shares or of portfolio securities; (ii) pending settlement of purchases of
portfolio securities; or (iii) to maintain liquidity for the purpose of
meeting anticipated redemptions.
(4) Notwithstanding any of the foregoing limitations, the Fund may
invest more than 35% of its total assets in money market instruments to
maintain, temporarily, a "defensive" posture when, in the opinion of the
Investment Manager, it is advisable to do so because of economic or market
conditions.
The foregoing limitations will apply at the time of acquisition based on the
last determined value of the relevant security or other change in the Fund's
assets. Any subsequent change in any applicable percentage resulting from
fluctuations in value will not require elimination of any security from the
portfolio.
PORTFOLIO MANAGEMENT
The Fund's portfolio is actively managed by its Investment Manager with a view
to achieving the Fund's investment objective. In determining which securities to
purchase for the Fund or hold in the Fund's portfolio, the Investment Manager
will rely on information from various sources, including research, analysis and
appraisals of brokers and dealers, including Dean Witter Reynolds Inc. ("DWR"),
a broker-dealer affiliate of the Investment Manager, the views of Trustees of
the Fund and others regarding economic developments and interest rate trends;
and the Investment Manager's own analysis of factors it deems relevant. No
particular emphasis will be given to investments in securities for the purpose
of earning current income. The Fund's portfolio is managed within InterCapital's
Large Capitalization Equities Group, which manages twenty-six equity funds and
fund portfolios, with approximately $16 billion in assets as of March 31, 1994.
Diane Lisa Sobin and Konrad Krill, Vice Presidents of InterCapital, are the
primary portfolio managers of the Fund. Ms. Sobin and Mr. Krill have been the
Fund's primary portfolio managers since July, 1990 and May, 1994, respectively,
and have been portfolio managers or investment analysts at InterCapital for over
five years.
Pursuant to an order of the Securities and Exchange Commission, the Fund may
effect principal transactions in certain money market instruments with DWR. In
addition, the Fund may incur brokerage commissions on transactions conducted
through DWR.
Although the Fund does not engage in substantial short-term trading as a
means of achieving its investment objective, it may sell portfolio securities
without regard to the length of time they have been held, in accordance with the
investment policies described earlier. The Fund will incur underwriting discount
costs (on underwritten securities) and brokerage costs commensurate with its
portfolio turnover rate. Short term gains and losses may result from such
portfolio transactions. See "Dividends, Distributions and Taxes" for a full
discussion of the tax implications of the Fund's trading policy.
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. 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. Purchase more than 10% of all outstanding voting securities or any
class of securities of any one issuer.
3. Invest more than 25% of the value of its total assets in securities
of issuers in any one industry. This restriction does not apply to bank
obligations or obligations issued or guaranteed by
8
<PAGE>
the United States Government or its agencies or instrumentalities.
4. Invest more than 5% of the value of its total assets in securities
of issuers having a record, together with predecessors, of less than three
years of continuous operation. This restriction shall not apply to any
obligation issued or guaranteed by the United States Government, its
agencies or instrumentalities.
PURCHASE OF FUND SHARES
- --------------------------------------------------------------------------------
The Fund offers its shares for sale 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 Investment Manager,
shares of the Fund are distributed by the Distributor and offered by DWR and
other brokers and dealers who have entered into 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. Subsequent purchases of $100 or more
may be made by sending a check, payable to Dean Witter Natural Resource
Development Securities Inc., 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. 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
each account under such Plans to at least $1,000. Certificates for shares
purchased will not be issued unless requested by the shareholder in writing to
the Transfer Agent.
Shares of the Fund are sold through the Distributor on a normal five business
day settlement basis; that is, payment is due on the fifth business day
(settlement date) after the order is placed with the Distributor. Shares of the
Fund purchased through the Distributor are entitled to dividends beginning on
the next business day following settlement date. 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. Shares
purchased through the Transfer Agent are entitled to dividends beginning on the
next business day following receipt of an order. As noted above, orders placed
directly with the Transfer Agent must be accompanied by payment. The offering
price will be the net asset value per share next determined following receipt of
an order (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 "Redemptions and Repurchases"). Sales
personnel are compensated for selling shares of the Fund at the time of their
sale by the Distributor and/or Selected Dealer. In addition, some sales
personnel of the Selected Broker-Dealer will receive non-cash compensation in
the form of trips to educational and/or business seminars and merchandise as
special sales incentives. The Fund and the Distributor reserve the right to
reject any purchase orders.
PLAN OF DISTRIBUTION
The Fund has adopted a PLan of Distribution, pursuant to Rule 12b-1 under the
Act (the "Plan"), under which the Fund will pay the Distributor a fee, which 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 the
Plan's inception on July 2, 1984 (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 Plan'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. 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 incentive 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
9
<PAGE>
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
expenses incurred.
For the fiscal year ended February 28, 1994, the Fund accrued payments under
the Plan amounting to $1,251,125, which amount is equal to 0.95% of the Fund's
average daily net assets for the fiscal year. The payments accrued under the
Plan were calculated pursuant to clause (b) of the compensation formula under
the Plan. A portion of the fee payable pursuant to the Plan, which may not
exceed 0.25% of the Fund's average daily net assets, is characterized as a
service fee within the meaning of NASD guidelines.
At any given time, the Distributor may incur 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 "Redemption and
Repurchases--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 would
amount to $250,000. The Distributor has advised the Fund that the excess
distribution expenses, including the carrying charge described above, totalled
$5,711,393 at February 28, 1994, which was equal to 4.10% of the Fund's net
assets on such date. Because there is no requirement under the Plan that the
Distributor be reimbursed for all expenses or any requirement that the Plan be
continued from year to year, this 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 Directors will consider
at that time the manner in which to treat such expenses. Any cumulative expenses
incurred, but not yet recovered through distribution fees or 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 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 of the Fund is determined once daily at 4:00 p.m., New York time, on each
day that the New York Stock Exchange is open. 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 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 (in cases where a security is traded
on more than one exchange, the security is valued on the exchange designated as
the primary market by the Directors), 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 Investment Manager that sale
and 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 Fund's
Directors. Short-term debt securities with remaining maturities of sixty days or
less are valued at amortized cost unless the Directors 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 Directors.
Certain of the Fund's portfolio securities may be valued by an outside
pricing service approved by the Fund's Trustees. The pricing service utilizes 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 it believes
is the fair valuation of the portfolio securities valued by such pricing
service.
10
<PAGE>
SHAREHOLDER SERVICES
- --------------------------------------------------------------------------------
AUTOMATIC INVESTMENT OF DIVIDENDS AND DISTRIBUTIONS. All income dividends and
capital gains distributions are automatically paid in full and fractional shares
of the Fund (or if specified by the shareholder, any other open-end investment
company for which InterCapital serves as Investment Manager (collectively, with
the Fund, the "Dean Witter Funds")), unless the shareholder requests that they
be paid in cash. Shares so acquired are not subject to the imposition of a
contingent deferred sales charge upon their redemption (see "Redemptions and
Repurchases").
INVESTMENT OF DIVIDENDS AND 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 thirty days after the payment date. Shares
so acquired are not subject to the imposition of a contingent deferred sales
charge upon their redemption (see "Redemptions and Repurchases").
EASYINVEST -SM-. Shareholders may subscribe to EasyInvest, an automatic purchase
plan which provides for any amount from $100 to $5,000 to be transferred
automatically from a checking or savings account, on a semi-monthly, monthly or
quarterly basis, to the Transfer Agent for investment in shares of the Fund.
SYSTEMATIC WITHDRAWAL PLAN. A systematic withdrawal plan (the "Withdrawal Plan")
is available for shareholders who own or purchase shares of the Fund having a
minimum value of $10,000 based upon the then current 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 "Redemptions and Repurchases--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 further information about any of the above
services.
TAX-SHELTERED RETIREMENT PLANS. Retirement plans are available for use by
corporations, the self-employed, eligible 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 other Dean Witter Funds sold
with a contingent deferred sales charge ("CDSC funds"), and for shares of Dean
Witter Short-Term U.S. Treasury Trust, Dean Witter Limited Term Municipal Trust,
Dean Witter Short-Term Bond Fund and five Dean Witter Funds which are money
market funds (the foregoing eight non-CDSC funds are hereinafter collectively
referred to in this section 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.
An exchange to another CDSC fund or 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, 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 business day. Subsequent exchanges between any of the
money market funds and any of the CDSC funds 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.
Shares of the Fund acquired in exchange for shares of another CDSC fund having a
different CDSC schedule than that of this Fund will be subject to the CDSC
schedule of this Fund, even if such shares are subsequently re-exchanged for
shares of the CDSC fund originally purchased. During the period of time the
shareholder remains in the Exchange Fund
11
<PAGE>
(calculated from the last day of the month in which the 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 shares of a CDSC fund (see "Redemptions and
Repurchases--Contingent Deferred Sales Charge"). However, in the case of shares
exchanged for shares of 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
incurred on or after that date which are attributable to those shares. (Exchange
Fund 12b-1 distribution fees, if any, are described in the prospectuses for
those funds.)
In addition, shares of the Fund may be acquired in exchange for shares of
Dean Witter Funds sold with a front-end sales charge ("front-end sales charge
funds"), but shares of the Fund, however acquired, may not be exchanged for
shares of front-end sales charge funds. Shares of a CDSC fund acquired in
exchange for shares of a front-end sales charge fund (or in exchange for shares
of other Dean Witter Funds for which shares of a front-end sales charge fund
have been exchanged) are not subject to any CDSC upon their redemption.
Purchases and exchanges should be made for investment purposes only. A
pattern of frequent exchanges may be deemed by the Investment Manager to be
abusive and contrary to the best interests of the Fund's other shareholders and,
at the Investment Manager's discretion, may be limited by the Fund's refusal to
accept additional purchases and/or exchanges from the investor. Although the
Fund does not have any specific definition of what constitutes a pattern of
frequent exchanges, and will consider all relevant factors in determining
whether a particular situation is abusive and contrary to the best interests of
the Fund and its other shareholders, investors should be aware that the Fund and
each of the other Dean Witter Funds may in their discretion limit or otherwise
restrict the number of times this Exchange Privilege may be exercised by any
investor. Any such restriction will be made by the Fund on a prospective basis
only, upon notice to the shareholder not later than ten days following such
shareholder's most recent exchange.
Also, the Exchange Privilege may be terminated or revised at any time by the
Fund and/or any of such Dean Witter Funds for which shares of the Fund may be
exchanged, upon such notice as may be required by applicable regulatory
agencies. Shareholders 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.
The current prospectus for each fund describes its investment objective(s)
and policies, and shareholders should obtain one and examine it carefully before
investing. Exchanges are subject to the minimum investment requirement and any
other conditions imposed by each fund. In the case of any shareholder holding a
share certificate or certificates, no exchanges may be made until the share
certificate(s) have been received by the Transfer Agent and deposited in the
shareholder's account. 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 other 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 Dean
Witter 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 by contacting the Transfer Agent at (800) 526-3143 (toll free). The Fund
will employ reasonable procedures to confirm that exchange instructions
communicated over the telephone are genuine. Such procedures 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
12
<PAGE>
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 with the Dean Witter
Funds in the past.
Shareholders should contact their DWR or other Selected Broker-Dealer account
executive or the Transfer Agent for further information about the Exchange
Privilege.
REDEMPTIONS AND REPURCHASES
- --------------------------------------------------------------------------------
REDEMPTION. Shares of the Fund can be redeemed for cash at any time at net asset
value per share next determined; however, such redemption proceeds will be
reduced by the amount of any applicable contingent deferred sales charges (see
below). If shares are held in a shareholder's account without a stock
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 information 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>
<S> <C>
CONTINGENT DEFERRED
YEAR SINCE SALES CHARGE
PURCHASE AS A PERCENTAGE OF
PAYMENT MADE AMOUNT REDEEMED
-------------------
First.............................. 5.0 %
Second............................. 4.0 %
Third.............................. 3.0 %
Fourth............................. 2.0 %
Fifth.............................. 2.0 %
Sixth.............................. 1.0 %
Seventh and thereafter............. None
</TABLE>
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 and/or shares acquired in exchange
for shares of Dean Witter Funds sold with a front-end sales charge or of other
Dean Witter Funds acquired in exchange for such shares. 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
(i) 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 or Custodial Account under Section 403(b)(7) of the Internal Revenue
Code, provided in either case that the redemption is requested within one year
of the death or initial determination of disability, and (ii) 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,
13
<PAGE>
following attainment of age 59 1/2); (b) distributions from an Individual
Retirement Account or Custodial Account under Section 403(b)(7) of the Internal
Revenue code following attainment of age 59 1/2; or (c) a tax-free return of an
excess contribution to an IRA. For the purpose of determining disability, the
Distributor utilizes the definition contained in Section 72(m)(7) of the
Internal Revenue Code, which relates to the inability to engage in gainful
employment. All waivers will be granted only following receipt by the
Distributor of confirmation of the shareholder's entitlement.
REPURCHASE. DWR and other Selected Broker-Dealers are authorized to repurchase
shares represented by a stock certificate which is delivered to any of their
offices. Shares held in a shareholder's account without a stock certificate may
also be repurchased by DWR and other Selected Broker-Dealers upon the telephonic
request of the shareholder. The repurchase price is the net asset value per
share, next determined (see "Purchase of Fund Shares") after such repurchase
order is received by DWR or other Selected Broker-Dealer, reduced by any
applicable CDSC.
The CDSC, if any, will be the only fee imposed upon repurchase by the Fund,
the Distributor, DWR or other Selected Broker-Dealers. 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 above under "Redemption."
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 redemption proceeds may be
delayed for the minimum time needed to verify that the check used for investment
has been honored (not more than fifteen days from the time of receipt of the
check by the Transfer Agent). Shareholders maintaining margin accounts with DWR
or another Selected Broker-Dealer are referred to their account executive
regarding restrictions on redemption of shares of the Fund pledged in the margin
account.
REINSTATEMENT PRIVILEGE. A shareholder who has had his or her shares redeemed or
repurchased and has not previously exercised this reinstatement privilege may,
within thirty days after the date of the redemption or repurchase, reinstate any
portion or all of the proceeds of such redemption or repurchase in shares of the
Fund at the net asset value next determined after a reinstatement request,
together with proceeds, is received by the Transfer Agent and receive a pro rata
credit for any CDSC paid in connection with such redemption or repurchase.
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 have a value of
less than $100, or such lesser amount as may be fixed by the Fund's Board of
Directors. 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 $100 and allow the shareholder to make an additional investment in
an amount which will increase the value of the account to $100 or more before
the redemption is processed. No CDSC will be imposed on any involuntary
redemption.
DIVIDENDS, DISTRIBUTIONS AND TAXES
- --------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS. The Fund intends to pay dividends and to distribute
substantially all of the Fund's net investment income and net short-term capital
gains, if any, at least once each year. The Fund may, however, determine either
to distribute or 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 (without sales charge) and will be automatically credited to the
shareholder's account without issuance of a stock certificate unless the
shareholder requests in writing that all dividends 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 net short-term capital gains to shareholders and otherwise remain qualified
as a regulated investment company under Subchapter M of the Internal Revenue
Code of 1986, it is not
14
<PAGE>
expected that the Fund will be required to pay any federal income tax on such
income and capital gains. Shareholders who are required to pay taxes on their
income will normally have to pay Federal income taxes, and any state income
taxes and/or local 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 dividend income regardless of whether the
shareholder receives such distributions in additional shares or in cash.
As a regulated investment company, the Fund is subject to the requirements
that less than 30% of the Fund's gross income be derived from gains from the
sale or other disposition of securities held for less than three months. This
requirement may limit the Fund's ability to engage in options and futures
transactions.
After the end of the year, shareholders will receive 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.
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. Capital gains distributions are not eligible for
the dividends received deduction.
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 periods of one, five and ten years. 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 stated periods. It
also assumes reinvestment of all dividends and distributions paid by the Fund.
In addition to the foregoing, the Fund may advertise its total return over
different periods of time by means of aggregate, average, year-by-year or other
types of total return figures. 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.).
ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
VOTING RIGHTS. All shares of common stock of the Fund are of $0.01 par value and
are equal as to earnings, assets and voting privileges. There are no conversion,
pre-emptive or other subscription rights. In the event of liquidation, each
share of common stock of the Fund is entitled to its portion of all of the
Fund's assets after all debts and expenses have been paid. The shares do not
have cumulative voting rights.
Under ordinary circumstances, the Fund is not required, nor does it intend,
to hold Annual Meetings of Stockholders. The Directors may call Special Meetings
of Stockholders for action by stockholder vote as may be required by the Act or
the Fund's By-Laws.
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.
15
<PAGE>
DEAN WITTER
NATURAL RESOURCE DEVELOPMENT SECURITIES INC.
TWO WORLD TRADE CENTER
NEW YORK, NEW YORK 10048
BOARD OF DIRECTORS
Jack F. Bennett
Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn
John R. Haire
Dr. John E. Jeuck
Dr. Manuel H. Johnson
Paul Kolton
Michael E. Nugent
Philip J. Purcell
John L. Schroeder
Edward R. Telling
OFFICERS
Charles A. Fiumefreddo
Chairman and Chief Executive Officer
Sheldon Curtis
Vice President, Secretary and
General Counsel
Diane Lisa Sobin
Vice President
Thomas F. Caloia
Treasurer
CUSTODIAN
The Bank of New York
110 Washington Street
New York, New York 10286
TRANSFER AGENT AND
DIVIDEND DISBURSING AGENT
Dean Witter Trust Company
Harborside Financial Center
Plaza Two
Jersey City, New Jersey 07311
INDEPENDENT ACCOUNTANTS
Price Waterhouse
1177 Avenue of the Americas
New York, New York 10036
INVESTMENT MANAGER
Dean Witter InterCapital Inc.
