<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 21, 1994
REGISTRATION NOS.: 2-81151
811-3639
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933 [X]
PRE-EFFECTIVE AMENDMENT NO. [ ]
POST-EFFECTIVE AMENDMENT NO. 12 [X]
AND/OR
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940 [X]
AMENDMENT NO. 14 [X]
DEAN WITTER DEVELOPING GROWTH SECURITIES TRUST
(A MASSACHUSETTS BUSINESS TRUST)
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
TWO WORLD TRADE CENTER
NEW YORK, NEW YORK 10048
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (212) 392-1600
SHELDON CURTIS, ESQ.
TWO WORLD TRADE CENTER
NEW YORK, NEW YORK 10048
(NAME AND ADDRESS OF AGENT FOR SERVICE)
COPY TO:
DAVID M. BUTOWSKY, ESQ.
GORDON ALTMAN BUTOWSKY
WEITZEN SHALOV & WEIN
114 WEST 47TH STREET
NEW YORK, NEW YORK 10036
----------------
APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING:
As soon as practicable after this Post-Effective Amendment becomes effective.
IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE (CHECK APPROPRIATE BOX)
immediately upon filing pursuant to paragraph (b)
X on November 28, 1994 pursuant to paragraph (b)
60 days after filing pursuant to paragraph (a)
on (date) pursuant to paragraph (a) of rule 485.
The Registrant has registered an indefinite number of its shares under the
Securities Act of 1933 pursuant to Section (a)(1) of Rule 24f-2 under the
Investment Company Act of 1940. Pursuant to Section (b)(2) of Rule 24f-2, the
Registrant filed a Rule 24f-2 Notice for its fiscal year ended September 30,
1994 with the Securities and Exchange Commission on October 21, 1994.
AMENDING THE PROSPECTUS AND UPDATING FINANCIAL STATEMENTS
===============================================================================
<PAGE>
<PAGE>
DEAN WITTER DEVELOPING GROWTH SECURITIES TRUST
CROSS-REFERENCE SHEET
FORM N-1A
<TABLE>
<CAPTION>
ITEM CAPTION
------------------------- -----------------------------------------------------------------
PART A PROSPECTUS
<S> <C>
1. ...................... Cover Page
2. ...................... Prospectus Summary; Summary of Fund Expenses
3. ...................... Financial Highlights; Performance Information
4. ...................... Prospectus Summary; Financial Highlights; Investment Objective
and Policies; The Fund and Its Management, Cover Page; Investment
Restrictions
5. ...................... The Fund and Its Management; Back Cover; Investment Objectives
and Policies
6. ...................... Dividends, Distributions and Taxes; Additional Information
7. ...................... Purchase of Fund Shares; Shareholder Services; Prospectus Summary
8. ...................... Redemptions and Repurchases; Shareholder Services
9. ...................... Not applicable
<CAPTION>
PART B STATEMENT OF ADDITIONAL INFORMATION
<S> <C>
10. ...................... Cover Page
11. ...................... Table of Contents
12. ...................... The Fund and Its Management
13. ...................... Investment Practices and Policies; Investment Restrictions;
Portfolio Transactions and Brokerage
14. ...................... The Fund and Its Management; Trustees and Officers
15. ...................... The Fund and Its Management; Trustees and Officers
16. ...................... The Fund and Its Management; The Distributor; Shareholder
Services; Custodian and Transfer Agent; Independent
Accountants
17. ...................... Portfolio Transactions and Brokerage
18. ...................... Description of Shares of the Fund
19. ...................... The Distributor; Redemptions and Repurchases; Financial
Statements; Shareholder Services
20. ...................... Dividends, Distributions and Taxes
21. ...................... The Distributor
22. ...................... Performance Information
23. ...................... Financial Statements
</TABLE>
PART C
Information required to be included in Part C is set forth under the
appropriate item, so numbered, in Part C of this Registration Statement.
<PAGE>
<PAGE>
Prospectus
November 28, 1994
PROSPECTUS- NOVEMBER 28, 1994
- -----------------------------------------------------------------------------
Dean Witter Developing Growth Securities Trust (the "Fund") is an open-end
diversified management investment company whose investment objective is
long-term capital growth. While the Fund may invest in all types of equity
and debt securities, it invests primarily in common stocks of smaller and
medium-sized companies that, in the opinion of the Investment Manager, have
the potential for growing more rapidly than the economy and which may benefit
from new products or services, technological developments or changes in
management. (See "Investment Objective and Policies.")
Shares of the Fund are continuously offered at net asset value without the
imposition of a sales charge. However, redemptions and/or repurchases 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 "Redemptions and Repurchases--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 November 28, 1994, which has been filed with
the Securities and Exchange Commission, and which is available at no charge
upon request of the Fund at the address or telephone numbers listed below.
The Statement of Additional Information is incorporated herein by reference.
TABLE OF CONTENTS
Prospectus Summary .................................................... 2
Summary of Fund Expenses .............................................. 3
Financial Highlights .................................................. 4
The Fund and its Management ........................................... 4
Investment Objective and Policies ..................................... 5
Risk Considerations ................................................. 7
Investment Restrictions ............................................... 10
Purchase of Fund Shares ............................................... 10
Shareholder Services .................................................. 13
Redemptions and Repurchases ........................................... 15
Dividends, Distributions and Taxes .................................... 17
Performance Information ............................................... 18
Additional Information ................................................ 18
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK, AND THE SHARES ARE NOT FEDERALLY INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY
OTHER AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
DEAN WITTER
DEVELOPING GROWTH SECURITIES TRUST
TWO WORLD TRADE CENTER
NEW YORK, NEW YORK 10048
(212) 392-2550 OR
(800) 526-3143
Dean Witter Distributors Inc., Distributor
<PAGE>
<PAGE>
PROSPECTUS SUMMARY
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
The Fund The Fund is organized as a Trust, commonly known as a Massachusetts business trust, and is an open-end
diversified management investment company investing primarily in securities of smaller and medium-sized
companies that have the potential to grow much more rapidly than the economy (see page 5).
- ------------------- ------------------------------------------------------------------------------------------------------------
Shares Offered Shares of beneficial interest with $0.01 par value (see page 18).
- ------------------- ------------------------------------------------------------------------------------------------------------
Offering Price At net asset value without sales charge (see page 10). Shares redeemed within six years of purchase are
subject to a contingent deferred sales charge under most circumstances (see page 15).
- ------------------- ------------------------------------------------------------------------------------------------------------
Minimum Purchase Minimum initial investment, $1,000; minimum subsequent investment, $100 (see page 11).
- ------------------- ------------------------------------------------------------------------------------------------------------
Investment The investment objective of the Fund is long-term capital growth.
Objective
- ------------------- ------------------------------------------------------------------------------------------------------------
Investment Policies The Fund invests primarily in common stock of companies believed to have potential for significant growth.
However, it may also invest in convertible securities, preferred stock, bonds and warrants of such companies
and may engage in certain portfolio techniques, including leveraging (see page 5).
- ------------------- ------------------------------------------------------------------------------------------------------------
Investment Manager Dean Witter InterCapital Inc. ("InterCapital"), the Investment Manager of the Fund, and its wholly-owned
subsidiary, Dean Witter Services Company Inc., serve in various investment management, advisory, management
and administrative capacities to ninety investment companies and other portfolios with net assets of
approximately $69.5 billion at October 31, 1994 (see page 4).
- ------------------- ------------------------------------------------------------------------------------------------------------
Management Fee The Investment Manager receives a monthly fee at the annual rate of 0.50% of the Fund's daily net assets on
assets not exceeding $500 million and 0.475% of the Fund's daily net assets on assets exceeding $500 million
(see page 5).
- ------------------- ------------------------------------------------------------------------------------------------------------
Dividends and Dividends from net investment income and distributions from net capital gains, if any, are paid at least
Capital Gains once per year. Dividends and capital gains distributions are automatically reinvested in additional shares at
Distributions net asset Distributions value unless the shareholder elects to receive cash (see pages 13 and 17).
- ------------------- ------------------------------------------------------------------------------------------------------------
Distributor and Dean Witter Distributors Inc. (the "Distributor"). The Distributor receives from the Fund a distribution fee
Distribution Fee accrued daily and payable monthly at the rate of 1% per annum of the lesser of (i) the Fund's average daily
aggregate net sales or (ii) the Fund's average daily net assets. This fee compensates the Distributor for
the 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 11 and 15).
- ------------------- ------------------------------------------------------------------------------------------------------------
Redemption-- Shares are redeemable by the shareholder at net asset value. An account may be involuntarily redeemed if the
Contingent Deferred total value of the account is less than $100. Although no commission or sales load is imposed upon the
Sales Charge 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 pages 15-17).
- ------------------- ------------------------------------------------------------------------------------------------------------
Risks The net asset value of the Fund's shares will fluctuate with changes in the market value of its portfolio
securities. The Fund is intended for long-term investors who can accept the risks involved in seeking
long-term growth of capital through investment primarily in the securities of small and medium-sized growth
companies. It should be recognized that investing in such companies involves greater risk than is customarily
associated with more established companies. In addition, investors should consider the risks which may be
involved in certain of the investment policies and techniques which the Fund may employ in its operations,
including leveraging and investments in foreign securities (see pages 5-10).
- ------------------- ------------------------------------------------------------------------------------------------------------
</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>
<PAGE>
SUMMARY OF FUND EXPENSES
- -----------------------------------------------------------------------------
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 September 30, 1994.
<TABLE>
<CAPTION>
<S> <C>
Shareholder Transaction Expenses
- -------------------------------------------------------------------------------------
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%
</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
Redemption Fees .......................................... None
Exchange Fee .............................................. None
<CAPTION>
<S> <C>
Annual Fund Operating Expenses (as a Percentage of Average Net
Assets)
- ---------------------------------------------------------------------
Management Fees ...................................................... 0.50%
12b-1 Fees* .......................................................... 1.00%
Other Expenses ....................................................... 0.28%
Total Fund Operating Expenses ........................................ 1.78%
<FN>
- ---------------
* 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.
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------------------------------------------------------------- -------- --------- --------- ----------
<S> <C> <C> <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: ........................................ $68 $86 $116 $209
You would pay the following expenses on the same investment,
assuming no redemption: ..................................... $18 $56 $ 96 $209
</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 "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
<PAGE>
<PAGE>
FINANCIAL HIGHLIGHTS
- -----------------------------------------------------------------------------
The following ratios and per share data for a share of beneficial interest
outstanding throughout each period have been audited by Price Waterhouse LLP,
independent accountants. The financial highlights should be read in
conjunction with the financial statements, notes thereto and the unqualified
report of independent accountants, which are contained in the Statement of
Additional Information. Further information about the performance of the Fund
is contained in the Fund's Annual Report to Shareholders, which may be
obtained without charge upon request to the Fund.
<TABLE>
<CAPTION>
FOR THE YEAR ENDED SEPTEMBER 30,
---------------------------------------------------------------------
1994 1993 1992 1991 1990 1989
---------- ---------- ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 20.50 $ 12.20 $ 14.05 $ 8.92 $ 11.33 $ 9.67
---------- ---------- ---------- ---------- ---------- ---------
Net investment income (loss) ...... 0.00 (0.12) (0.12) (0.07) (0.15) 0.04
Net realized and unrealized gain
(loss) on investments ............. (1.82) 8.42 (1.73) 5.20 (2.21) 1.62
---------- ---------- ---------- ---------- ---------- ---------
Total from investment operations ... (1.82) 8.30 (1.85) 5.13 (2.36) 1.66
---------- ---------- ---------- ---------- ---------- ---------
Less dividends and distributions from:
Net investment income .............. 0.00 0.00 0.00 0.00 (0.05) 0.00
Net realized gains on investments .. (1.13) 0.00 0.00 0.00 0.00 0.00
---------- ---------- ---------- ---------- ---------- ---------
Total dividends and distributions ... (1.13) 0.00 0.00 0.00 (0.05) 0.00
---------- ---------- ---------- ---------- ---------- ---------
Net asset value, end of period .... $ 17.55 $ 20.50 $ 12.20 $14.05 $ 8.92 $ 11.33
========== ========== ========== ========== ========== =========
TOTAL INVESTMENT RETURN+ ............. (8.88)% 67.95% (13.17)% 57.51% (20.87)% 17.17%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands) ......................... $340,169 $240,389 $112,982 $115,337 $67,604 $89,236
Ratios to average net assets:
Expenses ............................. 1.78% 1.84% 1.86% 1.92% 2.02% 1.89%
Net investment income (loss) ......... (1.32)% (1.52)% (1.14)% (0.73)% (1.32)% 0.59%
Portfolio turnover rate ............... 160% 203% 153% 88 % 53% 84%
</TABLE>
<PAGE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
1988 1987 1986 1985
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 10.96 $ 8.57 $ 7.68 $ 7.95
---------- ---------- ---------- ----------
Net investment income (loss) ...... (0.03) (0.02) 0.01 0.05
Net realized and unrealized gain
(loss) on investments .......... (1.26) 2.42 0.92 (0.13)
---------- ---------- ---------- ----------
Total from investment operations ... (1.29) 2.40 0.93 (0.08)
---------- ---------- ---------- ----------
Less dividends and distributions from:
Net investment income .............. 0.00 (0.01) (0.04) (0.19)
Net realized gains on investments... 0.00 0.00 0.00 (0.00)
---------- ---------- ---------- ----------
Total dividends and distributions .. 0.00 (0.01) (0.04) (0.19)
---------- ---------- ---------- ----------
Net asset value, end of period .... $ 9.67 $ 10.96 $ 8.57 $ 7.68
========== ========== ========== ==========
TOTAL INVESTMENT RETURN+ ............ (11.77)% 28.07% 12.22% (1.05)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands) ........................ $108,411 $179,276 $139,662 $153,524
Ratios to average net assets:
Expenses ........................... 1.90% 1.83% 1.80% 1.82%
Net investment income (loss) ....... (0.28)% (0.20)% 0.08% 0.52%
Portfolio turnover rate ............ 70% 68% 90% 51%
<FN>
- ---------------
+ Does not reflect the deduction of sales load.
See Notes to Financial Statements
THE FUND AND ITS MANAGEMENT
- -----------------------------------------------------------------------------
Dean Witter Developing Growth Securities 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 December 28, 1982.
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 ninety investment companies, thirty of which are
listed on the New York Stock Exchange, with combined total assets of
approximately $67.5 billion as of October 31, 1994. The Investment Manager
also manages
4
<PAGE>
<PAGE>
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 for the Fund.
The Fund's Board of Trustees reviews the various services provided by or
under the direction of the Investment Manager to ensure that the Fund's
general investment policies and programs are being properly carried out and
that administrative services are being provided to the Fund in a satisfactory
manner.
As full compensation for the services and facilities furnished to the Fund
and for expenses of the Fund assumed by the Investment Manager, the Fund pays
the Investment Manager monthly compensation calculated daily by applying the
annual rate of 0.50% to the Fund's net assets not exceeding $500 million and
0.475% to the Fund's net assets exceeding $500 million. For the fiscal year
ended September 30, 1994, the Fund accrued total compensation to the
Investment Manager amounting to 0.50% of the Fund's average daily net assets
and the Fund's total expenses amounted to 1.78% of the Fund's average daily
net assets.
INVESTMENT OBJECTIVE AND POLICIES
- -----------------------------------------------------------------------------
The investment objective of the Fund is long-term capital growth. There is
no assurance that the objective will be achieved. This objective is
fundamental and may not be changed without shareholder approval. The
following policies may be changed by the Board of Trustees without
shareholder approval.
The Fund seeks to achieve capital growth which significantly exceeds the
historical total return of common stocks as measured by the Standard & Poor's
500 index. The primary emphasis is on the securities of smaller and
medium-sized companies that, in the opinion of the Investment Manager, have
the potential to grow much more rapidly than the economy; at times,
investments may also be made in the securities of larger, established
companies which also have such growth potential. The Fund will normally
invest at least 65% of its total assets in the securities of such companies.
In addition to common stock, this portion of the portfolio may also include
convertible securities, preferred stocks and warrants.
The Investment Manager attempts to identify companies whose earnings
growth will be significantly higher than the average. Dividend income is not
generally a consideration in the selection of stocks for purchase.
The Investment Manager focuses its stock selection for the Fund upon a
diversified group of emerging growth companies which have moved beyond the
difficult and extremely risky "start-up" phase and which at the time of
selection show positive earnings with the prospects of achieving significant
further profit gains in at least the next two-to-three years after
acquisition. New technologies, techniques, products or services,
cost-reducing measures, changes in management, capitalization or asset
deployment, changes in government regulations or favorable shifts in other
external circumstances may all contribute to the anticipated phase of growth.
The application of the Fund's investment policies is basically dependent
upon the judgment of the Investment Manager. The proportions of the Fund's
assets invested in particular industries will shift from time to time in
accordance with the judgment of the Investment Manager.
The Fund may invest up to 35% of its total assets in corporate debt
securities which are rated at the time of purchase Baa or better by Moody's
Investors Service Inc. or BBB or better by Standard & Poor's Corporation or
which, if not rated, are deemed to be of comparable quality by the Invest-
5
<PAGE>
<PAGE>
ment Manager, and money market instruments. There may be periods during
which, in the opinion of the Investment Manager, general 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
greater than 35% of its total assets are invested in cash or money market
instruments, including obligations issued or guaranteed as to principal or
interest by the United States Government, its agencies or instrumentalities,
certificates of deposit, bankers' acceptances and other obligations of
domestic banks having total assets of $1 billion or more, and short-term
commercial paper of corporations organized under the laws of any state or
political subdivision of the United States.
The securities in which the Fund invests may or may not be listed on a
national stock exchange, but if they are not so listed, will generally have
an established over-the-counter market.
Convertible Securities. A convertible security is a bond, debenture, note,
preferred stock or other security that may be converted into or exchanged for
a prescribed amount of common stock of the same or a different issuer within
a particular period of time at a specified price or formula. 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). For a
discussion of the risks of investing in convertible securities, see "Risk
Considerations" below.
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. For a discussion of the risks
of investing in repurchase agreements, see "Risk Considerations" below.
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 below, are not subject to the
foregoing restriction.) These securities are generally referred to as private
placements or restricted securities. 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
Trustees 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 net assets. For a discussion of the risks of investing in
private placements, see "Risk Considerations" below.
Leveraging. The Fund may borrow money, but only from a bank and in an
amount up to 25% of the value of the Fund's total assets (including the
amount borrowed) less its liabilities (not including any borrowings but
including the fair market value at the time of computation of any other
senior securities then outstanding). When the Fund borrows it will be because
it seeks to enhance capital appreciation by leveraging its investments
through purchasing securities with the borrowed funds. The Fund will be
required to maintain an asset coverage (including the proceeds of borrowings)
of at least 300% of such borrowings in accordance with the provisions
6
<PAGE>
<PAGE>
of the Investment Company Act of 1940 (the "Act"). The investment policy also
provides that the Fund may not purchase or sell a security on margin. For a
discussion of the risks of leveraging, see "Risk Considerations" below.
Foreign Securities. The Fund may invest in securities of foreign
companies. However, the Fund will not invest more than 10% of the value of
its total assets, at the time of purchase, in foreign securities (other than
securities of Canadian issuers registered under the Securities Exchange Act
of 1934 or American Depository Receipts, on which there is no such limit).
For a discussion of the risks of investing in foreign securities, see "Risk
Considerations" below.
The Fund may purchase securities on a when-issued or delayed delivery
basis, may purchase or sell securities on a forward commitment basis, may
purchase securities on a "when, as and if issued" basis, and may lend its
portfolio securities, as discussed under "Risk Considerations" below.
RISK CONSIDERATIONS
The net asset value of the Fund's shares will fluctuate with changes in
the market value of its 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. The Fund is intended
for long-term investors who can accept the risks involved in seeking
long-term growth of capital through investment primarily in the securities of
small and medium-sized growth companies. It should be recognized that
investing in such companies involves greater risk than is customarily
associated with investing in more established companies.
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 Fund will incur costs in
connection with conversions between various currencies.
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. Finally, in
the event of a default of any foreign debt obligations, it may be more
difficult for the Fund to obtain or enforce a judgment against the issuers of
such securities.
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
7
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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.
Investments in certain Canadian issuers may be speculative due to certain
political risks and may be subject to substantial price fluctuations.
Repurchase Agreements. While repurchase agreements involve certain risks
not associated with direct investments in debt securities, the Fund follows
procedures designed to minimize those risks. These procedures include
effecting repurchase transactions only with large, well-capitalized and
well-established financial institutions whose financial condition will be
continually monitored by the Investment Manager subject to procedures
established by the Board of Trustees of the Fund. In addition, the value of
the collateral underlying the repurchase agreement will be at least equal to
the repurchase price, including any accrued interest earned on the repurchase
agreement. In the event of a default or bankruptcy by a selling financial
institution, the Fund will seek to liquidate such collateral. However, the
exercising of the Fund's right to liquidate such collateral could involve
certain costs or delays and, to the extent that proceeds from any sale upon a
default of the obligation to repurchase were less than the repurchase price,
the Fund could suffer a loss. The Fund may not invest in repurchase
agreements that do not mature within seven days if any such investment,
together with any other illiquid assets held by the Fund, amounts to more
than 15% of its net assets.
Private Placements. Limitations on the resale of private placements 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. In the case of restricted
securities determined to be "liquid" pursuant to Rule 144A under the
Securities Act, the Fund's illiquidity could increase if qualified
institutional buyers become unavailable.
Convertible Securities. 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, the
convertible security will 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.
Leveraging. Borrowings for leveraging will be subject to current margin
requirements of the Federal Reserve Board and where necessary the Fund may
use any or all of its securities as collateral for such borrowings. Any
investment gains made with the additional monies in excess of interest paid
will cause the net asset value of the Fund's shares to rise to a greater
extent than would otherwise be the case. Conversely, if the investment
performance of the additional monies fails to cover their cost to the Fund,
net asset value will decrease to a greater extent than would otherwise be the
case. This is the speculative factor involved in leverage. If, due to market
fluctuations or other reasons, the value of the Fund's assets (including the
proceeds of borrowings) becomes at any time less than three times the amount
of any outstanding bank debt, the Fund, within three business days, will
reduce its bank debt to the extent necessary to meet the required 300% asset
coverage. In doing this, the Fund may have to sell a portion of its
investments at a time when it may be disadvantageous to do so.
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When-Issued and Delayed Delivery Securities and Forward Commitments. From
time to time, in the ordinary course of business, the Fund may purchase
securities on a when-issued or delayed delivery basis or may purchase or sell
securities on a forward commitment basis. When such transactions are
negotiated, the price is fixed at the time of the commitment, but delivery
and payment can take place a month or more after the date of the commitment.
There is no overall limit on the percentage of the Fund's assets which may be
committed to the purchase of securities on a when-issued, delayed delivery or
forward commitment basis. An increase in the percentage of the Fund's assets
committed to the purchase of securities on a when-issued, delayed delivery or
forward commitment basis may increase the volatility of the Fund's net asset
value.
When, As and If Issued Securities. The Fund may purchase securities on a
"when, as and if issued" basis under which the issuance of the security
depends upon the occurrence of a subsequent event, such as approval of a
merger, corporate reorganization, leveraged buyout or debt restructuring. If
the anticipated event does not occur and the securities are not issued, the
Fund will have lost an investment opportunity. There is no overall limit on
the percentage of the Fund's assets which may be committed to the purchase of
securities on a "when, as and if issued" basis. An increase in the percentage
of the Fund's assets committed to the purchase of securities on a "when, as
and if issued" basis may increase the volatility of the Fund's net asset
value.
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 Investment Manager to be creditworthy and when the income
which can be earned from such loans justifies the attendant risks.
For additional risk disclosure, please refer to the "Investment Objective
and Policies" section of the Prospectus and to the "Investment Practices and
Policies" section of the Statement of Additional Information.
PORTFOLIO MANAGEMENT
The Fund's portfolio is actively managed by its Investment Manager with a
view to achieving the Fund's investment objective. No particular emphasis is
given to investments in securities for the purpose of earning current income.
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 InterCapital, 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. The Fund is managed
within InterCapital's Small Capitalization Equities Group, which manages
eight funds and fund portfolios, with approximately $2.5 billion in assets at
October 31, 1994. Ronald J. Worobel, Senior Vice President of InterCapital,
and Jayne Stevlingson Wolff, Vice President of InterCapital, each a member of
InterCapital's Small Capitalization Equities Group, have been the primary
portfolio managers of the Fund since June, 1992 and September, 1994,
respectively. Mr. Worobel has been a portfolio manager with InterCapital
since June, 1992, prior to which time he was a portfolio manager with MacKay
Shields Financial Corp. (February, 1989-June, 1992). Ms. Wolff has been a
portfolio manager with InterCapital since October, 1992, prior to which time
she was an analyst with Bankers Trust New York Corp.
9
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<PAGE>
(January, 1990-September, 1992) and Campbell Advisors (April, 1986-December,
1989).
Orders for transactions in portfolio securities are placed for the Fund
with a number of brokers, including DWR. 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.
The portfolio trading engaged in by the Fund may result in its portfolio
turnover rate exceeding 200%, although it is not anticipated that this rate
will exceed 300%. The Fund will incur 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. See
"Dividends, Distributions and Taxes" for a discussion of the tax implications
of the Fund's trading policy. A more extensive discussion of the Fund's
portfolio brokerage policies is set forth in the Statement of Additional
Information.
INVESTMENT RESTRICTIONS
- -----------------------------------------------------------------------------
The investment restrictions listed below have been adopted by the Fund as
fundamental policies, along with certain other investment restrictions. Under
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.
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. Concentrate its investments in any particular industry, but if deemed
appropriate for attainment of its investment objective, up to 25% of its
total assets (valued at the time of investment) may be invested in any one
industry classification used by the Fund for investment purposes. This
restriction does not apply to obligations issued or guaranteed by 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
of the United States Government, its agencies or instrumentalities.
5. Borrow money, except from banks for investment purposes or as a
temporary measure for extraordinary or emergency purposes, within the limits
set forth in the Act (see "Leveraging", above).
If a percentage restriction is adhered to at the time of investment, a
later increase or decrease in percentage resulting from a change in values of
portfolio securities or amount of total or net assets will not be considered
a violation of any of the foregoing restrictions.
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 dealers who have entered into selected dealer agreements with
the Distributor ("Selected Broker-
10
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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 Developing Growth
Securities 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. 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 requested by the shareholder
in writing to the Transfer Agent. The offering price will be the net asset
value per share next determined following receipt of an order (see
"Determination of Net Asset Value").
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. 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. 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 Broker-Dealer. In addition, some sales
personnel of the Selected Broker-Dealer will receive various types of
non-cash compensation as 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 of 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 1.0% 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.
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 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.
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For the fiscal year ended September 30, 1994, the Fund accrued payments
under the Plan amounting to $3,031,093, which amount is equal to 1.0% 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.
At any given time, the expenses of 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 redemption of shares (see "Redemptions 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 such
excess amounts, including the carrying charge described above, totalled
$21,188,353 at September 30, 1994, which was equal to 6.23% 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, 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 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 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 once daily at 4:00
p.m., New York time, on each day that the New York Stock Exchange is open by
taking the value of all assets of the Fund, subtracting all 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 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 Trustees), 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 Board of Trustees (valuation of debt securities
for which market quotations are not readily available may be based upon
current market prices of securities which are comparable in coupon, rating
and maturity or an appropriate matrix utilizing similar factors).
Short-term debt securities with remaining maturities of sixty days or less
at the time of purchase are valued at amortized cost, unless the Trustees
determine such does not reflect the securities' fair value, in which case
these securities will be valued at their fair value as determined by 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 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 fairvaluation of the portfolio securities valued by
such pricing service.
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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, 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 herein-after 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.
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
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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 (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 "Redemptions and Repurchases--Contingent
Deferred Sales Charge"). However, in the case of shares exchanged into an
Exchange Fund on or after April 23, 1990, 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 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 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.
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
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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 Dean
Witter Funds (for which the Exchange Privilege is available) pursuant to this
Exchange Privilege by contacting their account executive (no Exchange
Privilege Authorization Form is required). Other shareholders (and those
shareholders who are clients of DWR or another Selected Broker-Dealer but who
wish to make exchanges directly by writing or telephoning the Transfer Agent)
must complete and forward to the Transfer Agent an Exchange Privilege
Authorization Form, copies of which may be obtained from the Transfer Agent,
to initiate an exchange. If the Authorization Form is used, exchanges may be
made in writing or by contacting the Transfer Agent at (800) 526-3143 (toll
free).
The Fund will employ reasonable procedures to confirm that exchange
instructions communicated over the telephone are genuine. Such procedures may
include requiring various forms of personal identification such as name,
mailing address, social security or other tax identification number and DWR
or other Selected Broker-Dealer account number (if any). Telephone
instructions may also be recorded. If such procedures are not employed, the
Fund may be liable for any losses due to unauthorized or fraudulent
instructions.
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 the
net asset value per share next determined; however, such redemption proceeds
may 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
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
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
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upon how long the shares have been held, as set forth in the table below:
</TABLE>
<TABLE>
<CAPTION>
CONTINGENT DEFERRED
YEAR SINCE SALES CHARGE
PURCHASE AS A PERCENTAGE OF
PAYMENT MADE AMOUNT 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>
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, no CDSC will be imposed on redemptions of
shares which are attributable to reinvestment of dividends or distributions
from, or the proceeds of, certain Unit Investment Trusts.
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, 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 ; and (c) a tax-free return of an excess contribution to an IRA.
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.
All waivers will be granted only following receipt by the Distributor of
confirmation of the investor's entitlement.
Repurchase. DWR and other Selected Broker-Dealers are authorized to
repurchase shares represented by a share certificate which is delivered to
any of their offices. Shares held in a shareholder's account without a share
certificate may also be repurchased by DWR and other Selected Broker-Dealers
upon the telephonic request of the shareholder. The repurchase price is the
net asset value next computed (see "Purchase of Fund Shares") after such
purchase 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 by the Fund, the
Distributor, DWR or other Selected Broker-Dealers. The offer 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 "Redemptions."
Payment for Shares Redeemed or Repurchased. Payment for shares presented
for repurchase or redemption will be made by check within seven days after
receipt by the Transfer Agent of the certificate and/or written request in
good order. Such payment may be postponed or the right of redemption
suspended under unusual circumstances. If the
16
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<PAGE>
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 executives 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 their 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 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
due to redemptions by the shareholder have a value of less than $100, or such
lesser amount as may be fixed by the Board of Trustees. 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 sixty days to make an additional investment in an
amount which will increase the value of his or her account to $100 or more
before the redemption is processed. No CDSC will be imposed on any
involuntary redemption.
DIVIDENDS, DISTRIBUTIONS AND TAXES
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Dividends and Distributions. The Fund intends to distribute substantially
all of its net investment income and net realized short-term and 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 net capital gains (to the extent not offset by capital loss
carryovers) to shareholders and remain qualified 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 any dividends and
distributions they receive from the Fund. Such dividends and distributions,
to the extent they are derived from net investment income and net short-term
capital gains, are taxable to the shareholder as ordinary dividend income
regardless of whether the shareholder receives such payments in additional
shares or in cash.
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 corporate dividends received deduction.
After the end of the calendar 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
17
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and the proceeds of redemptions and repurchases, shareholders' taxpayer
identification numbers must be furnished and certified as to 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 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 will 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 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 the
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 property of the
Fund for any shareholder held personally liable for the obligations of the
Fund. Thus, the risk of a shareholder incurring financial loss on account of
shareholder liability is limited to circumstances in which the Fund itself
would be unable to meet its obligations. Given the above limitations on
shareholder personal liability, and the nature of the Fund's assets and
operations, the possibility of the Fund being unable to meet its obligations
is remote and thus, in the opinion of Massachusetts counsel to the Fund, the
risk to Fund shareholders of personal liability is remote.
Shareholder Inquiries. All inquiries regarding the Fund should be directed
to the Fund at the telephone numbers or address set forth on the front cover
of this Prospectus.
18
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THE DEAN WITTER FAMILY OF FUNDS
MONEY MARKET FUNDS
Dean Witter Liquid Asset Fund Inc.
Dean Witter U.S. Government Money Market Trust
Dean Witter Tax-Free Daily Income Trust
Dean Witter California Tax-Free Daily Income Trust
Dean Witter New York Municipal Money Market Trust
EQUITY FUNDS
Dean Witter American Value Fund
Dean Witter Natural Resource Development Securities Inc.
Dean Witter Dividend Growth Securities Inc.
Dean Witter Developing Growth Securities Trust
Dean Witter World Wide Investment Trust
Dean Witter Value-Added Market Series
Dean Witter Utilities Fund
Dean Witter Capital Growth Securities
Dean Witter European Growth Fund Inc.
Dean Witter Precious Metals and Minerals Trust
Dean Witter Pacific Growth Fund Inc.
Dean Witter Health Sciences Trust
Dean Witter Global Dividend Growth Securities
Dean Witter Global Utilities Fund
Dean Witter International SmallCap Fund
Dean Witter Mid-Cap Growth Fund
FIXED INCOME FUNDS
Dean Witter High Yield Securities Inc.
Dean Witter Tax-Exempt Securities Trust
Dean Witter U.S. Government Securities Trust
Dean Witter Federal Securities Trust
Dean Witter Convertible Securities Trust
Dean Witter California Tax-Free Income Fund
Dean Witter New York Tax-Free Income Fund
Dean Witter World Wide Income Trust
Dean Witter Intermediate Income Securities
Dean Witter Global Short-Term Income Fund Inc.
Dean Witter Multi-State Municipal Series Trust
Dean Witter Premier Income Trust
Dean Witter Short-Term U.S. Treasury Trust
Dean Witter Diversified Income Trust
Dean Witter Limited Term Municipal Trust
Dean Witter Short-Term Bond Fund
Dean Witter National Municipal Trust
Dean Witter High Income Securities
DEAN WITTER RETIREMENT SERIES
Liquid Asset Series
U.S. Government Money Market Series
U.S. Government Securities Series
Intermediate Income Securities Series
American Value Series
Capital Growth Series
Dividend Growth Series
Strategist Series
Utilities Series
Value-Added Market Series
Global Equity Series
ASSET ALLOCATION FUNDS
Dean Witter Managed Assets Trust
Dean Witter Strategist Fund
ACTIVE ASSETS ACCOUNT PROGRAM
Active Assets Money Trust
Active Assets Tax-Free Trust
Active Assets California Tax-Free Trust
Active Assets Government Securities Trust
<PAGE>
<PAGE>
Dean Witter
Developing Growth Securities Trust
Two World Trade Center
New York, New York 10048
BOARD OF TRUSTEES
Jack F. Bennett
Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn
John R. Haire
Dr. John E. Jeuck
Dr. Manuel H. Johnson
Paul Kolton
Michael E. Nugent
Philip J. Purcell
John L. Schroeder
Edward R. Telling
OFFICERS
Charles A. Fiumefreddo
Chairman and Chief Executive Officer
Sheldon Curtis
Vice President, Secretary and
General Counsel
Ronald J. Worobel
Vice President
Jayne Stevlingson Wolff
Vice President
Thomas F. Caloia
Treasurer
CUSTODIAN
The Bank of New York
90 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 LLP
1177 Avenue of the Americas
New York, New York 10036
INVESTMENT MANAGER
Dean Witter InterCapital Inc.
11/28/94
DEAN WITTER
DEVELOPING
GROWTH
SECURITIES
PROSPECTUS
NOVEMBER 28, 1994
<PAGE>
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
NOVEMBER 28, 1994
DEAN WITTER
DEVELOPING
GROWTH
SECURITIES TRUST
- -----------------------------------------------------------------------------
Dean Witter Developing Growth Securities Trust (the "Fund") is an open-end
diversified management investment company whose investment objective is
long-term capital growth. While the Fund may invest in all types of equity
and debt securities, it will invest primarily in common stocks of smaller and
medium sized companies that, in the opinion of the Investment Manager, have
the potential for growing more rapidly than the economy and which may benefit
from new products or services, technological developments or changes in
management. (See "Investment Practices and Policies.")
A Prospectus for the Fund dated November 28, 1994, which provides the
basic information you should know before investing in the Fund, may be
obtained without charge from the Fund at its address or telephone number
listed below or from the Fund's Distributor, Dean Witter Distributors Inc.,
or from Dean Witter Reynolds Inc. at any of its branch offices. This
Statement of Additional Information is not a Prospectus. It contains
information in addition to and more detailed than that set forth in the
Prospectus. It is intended to provide you additional information regarding
the activities and operations of the Fund, and should be read in conjunction
with the Prospectus.
Dean Witter
Developing Growth Securities Trust
Two World Trade Center
New York, New York 10048
(212) 392-2550
<PAGE>
<PAGE>
TABLE OF CONTENTS
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
The Fund and its Management ................ 3
Trustees and Officers ...................... 6
Investment Practices and Policies .......... 9
Investment Restrictions .................... 11
Portfolio Transactions and Brokerage ...... 12
The Distributor ............................ 14
Determination of Net Asset Value ........... 17
Shareholder Services ....................... 17
Redemptions and Repurchases ................ 21
Dividends, Distributions and Taxes ........ 24
Performance Information .................... 25
Description of Shares of The Fund .......... 25
Custodian and Transfer Agent ............... 26
Independent Accountants .................... 26
Reports to Shareholders .................... 26
Legal Counsel .............................. 27
Experts .................................... 27
Registration Statement ..................... 27
Report of Independent Accountants .......... 28
Financial Statements--September 30, 1994 .. 29
</TABLE>
2
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THE FUND AND ITS MANAGEMENT
- -----------------------------------------------------------------------------
THE FUND
The Fund was organized under the laws of the Commonwealth of Massachusetts
on December 28, 1982 and is a trust of the type commonly known as a
"Massachusetts Business Trust."
THE INVESTMENT MANAGER
Dean Witter InterCapital Inc. (the "Investment Manager" or
"InterCapital"), a Delaware corporation, whose address is Two World Trade
Center, New York, New York, 10048, is the Fund's investment manager.
InterCapital is a wholly-owned subsidiary of Dean Witter, Discover & Co.
("DWDC"), a Delaware corporation. In an internal reorganization which took
place in January, 1993, InterCapital assumed the investment advisory,
administrative and management activities previously performed by the
InterCapital Division of Dean Witter Reynolds Inc. ("DWR"), a broker-dealer
affiliate of InterCapital. (As hereinafter used in this Statement of
Additional Information, the terms "InterCapital" and "Investment Manager"
refer to DWR's InterCapital Division prior to the internal reorganization and
Dean Witter InterCapital Inc. thereafter.) The daily management of the Fund
and research relating to the Fund's portfolio are conducted by or under the
direction of officers of the Fund and of the Investment Manager, subject to
review by the Fund's Board of Trustees. In addition, Trustees of the Fund
provide guidance on economic factors and interest rate trends. Information as
to these Trustees and officers is contained under the caption "Trustees and
Officers."
InterCapital is also the investment manager or investment adviser of the
following investment companies: Dean Witter Liquid Asset Fund Inc.,
InterCapital Income Securities Inc., Dean Witter High Yield Securities Inc.,
Dean Witter Tax-Free Daily Income Trust, Dean Witter Value-Added Market
Series, Dean Witter Tax-Exempt Securities Trust, Dean Witter Natural Resource
Development Securities Inc., Dean Witter Dividend Growth Securities Inc.,
Dean Witter American Value Fund, Dean Witter U.S. Government Money Market
Trust, Dean Witter Variable Investment Series, Dean Witter World Wide
Investment Trust, Dean Witter Select Municipal Reinvestment Fund, Dean Witter
U.S. Government Securities Trust, Dean Witter California Tax-Free Income
Fund, Dean Witter New York Tax-Free Income Fund, Dean Witter Convertible
Securities Trust, Dean Witter Federal Securities Trust, Dean Witter Managed
Assets Trust, High Income Advantage Trust, High Income Advantage Trust II,
High Income Advantage Trust III, Dean Witter Government Income Trust, Dean
Witter Utilities Fund, Dean Witter California Tax-Free Daily Income Trust,
Dean Witter Strategist Fund, Dean Witter World Wide Income Trust, Dean Witter
Intermediate Income Securities, Dean Witter New York Municipal Money Market
Trust, Dean Witter Capital Growth Securities, Dean Witter European Growth
Fund Inc., Dean Witter Precious Metals and Minerals Trust, Dean Witter Global
Short-Term Income Fund Inc., Dean Witter Pacific Growth Fund Inc., Dean
Witter Multi-State Municipal Series Trust, Dean Witter Premier Income Trust,
Dean Witter Short-Term U.S. Treasury Trust, InterCapital Insured Municipal
Bond Trust, InterCapital Insured Municipal Trust, InterCapital Insured
Municipal Income Trust, InterCapital California Insured Municipal Income
Trust, InterCapital Quality Municipal Investment Trust, InterCapital Quality
Municipal Income Trust, InterCapital Quality Municipal Securities,
InterCapital California Quality Municipal Securities, InterCapital New York
Quality Municipal Securities, Dean Witter Diversified Income Trust, Dean
Witter Health Sciences Trust, Dean Witter Retirement Series, Dean Witter
Global Dividend Growth Securities, Dean Witter Limited Term Municipal Trust,
InterCapital Insured Municipal Securities, InterCapital Insured California
Municipal Securities, Dean Witter Short-Term Bond Fund, Dean Witter Global
Utilities Fund, Dean Witter National Municipal Trust, Dean Witter High Income
Securities, Dean Witter International SmallCap Fund, Dean Witter Mid-Cap
Growth Fund, Dean Witter Select Dimensions Investment Series, Active Assets
Money Trust, Active Assets Tax-Free Trust, Active Assets California Tax-Free
Trust, Active Assets Government Securities Trust, Municipal Income Trust,
Municipal Income Trust II, Municipal Income Trust III, Municipal Income
Opportunities Trust, Municipal Income Opportunities Trust II, Municipal
Income Opportunities Trust III, Municipal Premium Income Trust and Prime
Income Trust. The foregoing investment companies, together with the Fund, are
collectively referred to as the Dean Witter Funds.
3
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In addition, Dean Witter Services Company Inc. ("DWSC"), a wholly-owned
subsidiary of InterCapital, serves as manager for the following companies for
which TCW Funds Management, Inc. is the investment adviser: TCW/DW Core
Equity Trust, TCW/DW North American Government Income Trust, TCW/DW Latin
American Growth Fund, TCW/DW Income and Growth Fund, TCW/DW Small Cap Growth
Fund, TCW/DW Balanced Fund, TCW/DW North American Intermediate Income Trust,
TCW/DW Global Convertible Trust, TCW/DW Total Return Trust, TCW/DW Emerging
Markets Opportunities Trust, TCW/DW Term Trust 2000, TCW/DW Term Trust 2002
and TCW/DW Term Trust 2003 (the "TCW/DW Funds"). InterCapital also serves as:
(i) sub-adviser to Templeton Global Opportunities Trust, an open-end
investment company; (ii) administrator of The BlackRock Strategic Term Trust
Inc., a closed-end investment company; and (iii) sub-administrator of
MassMutual Participation Investors and Templeton Global Governments Income
Trust, closed-end investment companies.
The Investment Manager also serves as an investment adviser for Dean
Witter World Wide Investment Fund, an investment company organized under the
laws of Luxembourg, shares of which may not be offered in the United States
or purchased by American citizens outside the United States.
Pursuant to an Investment Management Agreement (the "Agreement") with the
Investment Manager, the Fund has retained the Investment Manager to manage
the investment of the Fund's assets, including the placing of orders for the
purchase and sale of portfolio securities. The Investment Manager 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 and policies.
Under the terms of the Agreement, in addition to managing the Fund's
investments, the Investment Manager maintains certain of the Fund's books and
records and furnishes, at its own expense, such office space, facilities,
equipment, clerical help, bookkeeping and certain legal services as the Fund
may reasonably require in the conduct of its business, including the
preparation of prospectuses, proxy statements and reports required to be
filed with federal and state securities commissions (except insofar as the
participation or assistance of independent accountants and attorneys is, in
the opinion of the Investment Manager, necessary or desirable). In addition,
the Investment Manager pays the salaries of all personnel, including officers
of the Fund, who are employees of the Investment Manager. The Investment
Manager also bears the cost of telephone service, heat, light, power and
other utilities provided to the Fund.
Effective December 31, 1993, pursuant to a Services Agreement between
InterCapital and DWSC, DWSC began to provide the administrative services to
the Fund which were previously performed directly by InterCapital. The
foregoing internal reorganization did not result in any change in the nature
or scope of the administrative services being provided to the Fund or any of
the fees being paid by the Fund for the overall services being performed
under the terms of the existing Agreement.
Expenses not expressly assumed by the Investment Manager under the
Agreement or by the Distributor of the Fund's shares, Dean Witter
Distributors Inc. ("Distributors" or the "Distributor") (see "The
Distributor"), will be paid by the Fund. The expenses borne by the Fund
include, but are not limited to: expenses of the Plan of Distribution
pursuant to Rule 12b-1 (see "The Distributor"); charges and expenses of any
registrar, custodian, share transfer and dividend disbursing agent; brokerage
commissions; taxes; engraving and printing share certificates; registration
costs of the Fund and its shares under federal and state securities laws; the
cost and expenses of printing, including typesetting, and distributing
prospectuses of the Fund and supplements thereto to the Fund's shareholders;
all expenses of shareholders' and Trustees' meetings and of preparing,
printing and mailing proxy statements and reports to shareholders; fees and
travel expenses of Trustees or members of any advisory board or committee who
are not employees of the Investment Manager or any corporate affiliate of the
Investment Manager; all expenses incident to any dividend, withdrawal or
redemption options; charges and expenses of any outside service used for
pricing of the Fund's shares; fees and expenses of legal counsel, including
counsel to the Trustees who are not interested persons of the Fund or of the
Investment Manager (not including compensation or expenses of attorneys who
are employees of the Investment Manager) and independent accountants;
membership dues of industry associations; interest
4
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on Fund borrowings; postage; insurance premiums on property or personnel
(including officers and Trustees) of the Fund which inure to its benefit;
extraordinary expenses (including, but not limited to, legal claims and
liabilities and litigation costs and any indemnification relating thereto);
and all other costs of the Fund's operation.
As full compensation for the services and facilities furnished to the Fund
and 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 Fund's daily net assets: 0.50% of the portion
of the daily net assets not exceeding $500 million and 0.475% of the portion
of the daily net assets exceeding $500 million. Total operating expenses of
the Fund are subject to applicable limitations under rules and regulations of
states where the Fund is authorized to sell its shares. Therefore, operating
expenses are effectively subject to the most restrictive of such limitations
as the same may be amended from time to time. Presently, the most restrictive
limitations are as follows. If, in any fiscal year, the Fund's total
operating expenses, exclusive of taxes, interest, brokerage fees,
distribution fees and extraordinary expenses (to the extent permitted by
applicable state securities laws and regulations), exceed 2 1/2 % of the first
$30,000,000 of average daily net assets, 2% of the next $70,000,000 of average
daily net assets and 1 1/2 % of any excess over $100,000,000, the Investment
Manager will reimburse the Fund for the amount of such excess. Such amount, if
any, will be calculated daily and credited on a monthly basis. For the fiscal
years ended September 30, 1992, 1993 and 1994, the Fund accrued to the
Investment Manager total compensation in the amounts of $623,963, $798,445 and
$1,515,547, respectively. During such periods, the Fund's expenses did not
exceed the expense limitation.
The Agreement provides that in the absence of willful misfeasance, bad
faith, gross negligence or reckless disregard of its obligations thereunder,
the Investment Manager is not liable to the Fund or any of its investors for
any act or omission by the Investment Manager or for any losses sustained by
the Fund or its investors. The Agreement in no way restricts the Investment
Manager from acting as investment manager or adviser to others.
The Agreement was initially approved by the Board of Trustees on October
30, 1992 and by the shareholders of the Fund at a Special Meeting of
Shareholders held on January 12, 1993. The Agreement is substantially
identical to a prior investment management agreement which was initially
approved by the Trustees on January 18, 1983, by DWR as the then sole
shareholder on March 2, 1983, and by the shareholders of the Fund at a
Special Meeting of Shareholders held on July 16, 1984. The Agreement took
effect on June 30, 1993 upon the spin-off by Sears, Roebuck and Co. of its
remaining shares of DWDC. The Agreement may be terminated at any time,
without penalty, on thirty days' notice by the Board of Trustees of the Fund,
by the holders of a majority, as defined in the Investment Company Act of
1940 (the "Act"), of the outstanding shares of the Fund, or by the Investment
Manager. The Agreement will automatically terminate in the event of its
assignment (as defined in the Act).
Under its terms, the Agreement had an initial term ending April 30, 1994,
and will remain in effect from year to year thereafter, provided continuance
of the Agreement is approved at least annually by the vote of the holders of
a majority, as defined in the Act, of the outstanding shares of the Fund, or
by the Board of Trustees of the Fund; provided that in either event such
continuance is approved annually by the vote of a majority of the Trustees of
the Fund who are not parties to the Agreement or "interested persons" (as
defined in the Act) of any such party (the "Independent Trustees"), which
vote must be cast in person at a meeting called for the purpose of voting on
such approval. At their meeting held on April 8, 1994, the Fund's Board of
Trustees, including all of the Independent Trustees, approved an amendment to
the Agreement to lower the management fees charged on the Fund's daily net
assets in excess of $500 million and approved continuation of the Agreement,
as so amended, until April 30, 1995.
The Fund has acknowledged that the name "Dean Witter" is a property right
of DWR. The Fund has agreed that DWR or its parent company may use or, at any
time, permit others to use, the name "Dean Witter." The Fund has also agreed
that in the event the Agreement is terminated, or if the affiliation between
InterCapital and its parent company is terminated, the Fund will eliminate
the name "Dean Witter" from its name if DWR or its parent company shall so
request.
5
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TRUSTEES AND OFFICERS
- -----------------------------------------------------------------------------
The Trustees and Executive Officers of the Fund, their principal business
occupations during the last five years and their affiliations, if any, with
InterCapital and with the Dean Witter Funds and the TCW/DW Funds are shown
below.
<TABLE>
<CAPTION>
NAME, POSITION WITH FUND AND ADDRESS PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS
- -------------------------------------- -----------------------------------------------------------------
<S> <C>
Jack F. Bennett Retired; Director or Trustee of the Dean Witter Funds; formerly Senior
Trustee Vice President and Director of Exxon Corporation (1975-January, 1989)
141 Taconic Road and Under Secretary of the U.S. Treasury for Monetary Affairs (1974-1975);
Greenwich, Connecticut Director of Philips Electronics N.V., Tandem Computers Inc. and
Massachusetts Mutual Insurance Company; director or trustee of various
not-for-profit and business organizations.
Michael Bozic President and Chief Executive Officer of Hills Department Stores (since
Trustee May, 1991); formerly Chairman and Chief Executive Officer (January,
c/o Hills Stores Inc. 1987-August, 1990) and President and Chief Operating Officer (August,
15 Dan Road 1990-February, 1991) of the Sears Merchandise Group of Sears, Roebuck
Canton, Massachusetts and Co.; Director or Trustee of the Dean Witter Funds; Director of
Harley Davidson Credit Inc., the United Negro College Fund and Domain
Inc. (home decor retailer).
Charles A. Fiumefreddo* Chairman, Chief Executive Officer and Director of InterCapital, DWSC
Chairman of the Board, and Distributors; Executive Vice President and Director of DWR; Chairman,
President, Chief Executive Officer Director or Trustee, President and Chief Executive Officer of the Dean
and Trustee Witter Funds; Chairman, Chief Executive Officer and Trustee of the
Two World Trade Center TCW/DW Funds; Chairman and Director of Dean Witter Trust Company ("DWTC");
New York, New York Director and/or officer of various DWDC subsidiaries; formerly Executive
Vice President and Director of DWDC (until February, 1993).
Edwin J. Garn Director or Trustee of the Dean Witter Funds; formerly United States
Trustee Senator (R-Utah) (1974-1992) and Chairman, Senate Banking Committee
2000 Eagle Gate Tower (1980-1986); formerly Mayor of Salt Lake City, Utah (1971-1974); formerly
Salt Lake City, Utah Astronaut, Space Shuttle Discovery (April 12-19, 1985); Vice Chairman,
Huntsman Chemical Corporation (since January, 1993); Member of the
board of various civic and charitable organizations.
John R. Haire Chairman of the Audit Committee and Chairman of the Committee of the
Trustee Independent Directors or Trustees and Director or Trustee of the Dean
439 East 51st Street Witter Funds; Trustee of the TCW/DW Funds; formerly President, Council
New York, New York for Aid to Education (1978-October, 1989) and Chairman and Chief Executive
Officer of Anchor Corporation, an Investment Advisor (1964-1978);
Director of Washington National Corporation (insurance) and Bowne &
Co., Inc. (printing).
Dr. John E. Jeuck Retired; Director or Trustee of the Dean Witter Funds; formerly Robert
Trustee Law Professor of Business Administration, Graduate School of Business,
70 East Cedar Street University of Chicago (until July, 1989); Business consultant.
Chicago, Illinois
6
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<PAGE>
<CAPTION>
NAME, POSITION WITH FUND AND ADDRESS PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS
- -------------------------------------- -----------------------------------------------------------------
<S> <C>
Dr. Manuel H. Johnson Senior Partner, Johnson Smick International, Inc., a consulting firm;
Trustee Koch Professer of International Economics and Director of the Center
7521 Old Dominion Drive for Global Market Studies at George Mason University (since September,
Maclean, Virginia 1990); Co-Chairman and a founder of the Group of Seven Council (G7C),
an international economic commission (since September, 1990); Director
or Trustee of the Dean Witter Funds; Trustee of the TCW/DW Funds; Director
of Greenwich Capital Markets Inc. (broker-dealer); formerly Vice Chairman
of the Board of Governors of the Federal Reserve System (February,
1986-August, 1990) and Assistant Secretary of the U.S. Treasury
(1982-1986).
Paul Kolton Director or Trustee of the Dean Witter Funds; Chairman of the Audit
Trustee Committee and Chairman of the Committee of the Independent Trustees
9 Hunting Ridge Road and Trustee of the TCW/DW Funds; formerly Chairman of the Financial
Stamford, Connecticut Accounting Standards Advisory Council and Chairman and Chief Executive
Officer of the American Stock Exchange; Director of UCC Investors Holding
Inc. (Uniroyal Chemical Company, Inc.); director or trustee of various
not-for-profit organizations.
Michael E. Nugent General Partner, Triumph Capital, L.P., a private investment partnership
Trustee (since April, 1988); Director or Trustee of the Dean Witter Funds;
237 Park Avenue Trustee of the TCW/DW Funds; formerly Vice President, Bankers Trust
New York, New York Company and BT Capital Corporation (September, 1984-March, 1988);
Director of various business organizations.
Philip J. Purcell* Chairman of the Board of Directors and Chief Executive Officer of DWDC,
Trustee DWR and Novus Credit Services Inc.; Director of InterCapital, DWSC
Two World Trade Center and Distributors; Director or Trustee of the Dean Witter Funds; Director
New York, New York and/or officer of various DWDC subsidiaries.
John L. Schroeder Executive Vice President and Chief Investment Officer of the Home
Trustee Insurance Company (since August, 1991); Director or Trustee of the
Northgate 3A Dean Witter Funds; Director of Citizens Utilities Company; formerly
Alger Court Chairman and Chief Investment Officer of Axe-Houghton Management and
Bronxville, New York the Axe-Houghton Funds (April, 1983-June, 1991) and President of USF&G
Financial Services, Inc. (June, 1990-June, 1991).
Edward R. Telling* Retired; Director or Trustee of the Dean Witter Funds; formerly Chairman
Trustee of the Board of Directors and Chief Executive Officer (until December,
Sears Tower 1985) and President (from January, 1981-March, 1982 and from February,
Chicago, Illinois 1984-August, 1984) of Sears, Roebuck and Co.; formerly Director of
Sears, Roebuck and Co.
7
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<CAPTION>
NAME, POSITION WITH FUND AND ADDRESS PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS
- -------------------------------------- -----------------------------------------------------------------
<S> <C>
Sheldon Curtis Senior Vice President, Secretary and General Counsel of InterCapital
Vice President, Secretary and DWSC; Senior Vice President, Assistant Secretary and Assistant
and General Counsel General Counsel of Distributors; Senior Vice President and Secretary
Two World Trade Center of DWTC; Assistant Secretary of DWR; Vice President, Secretary and
New York, New York General Counsel of the Dean Witter Funds and the TCW/DW Funds.
Ronald J. Worobel Senior Vice President of InterCapital (since June, 1993); Vice President
Vice President of various Dean Witter Funds; formerly Vice President of InterCapital
Two World Trade Center (June, 1992-June, 1993) and Managing Director, MacKay-Shields Financial
New York, New York Corp. (February, 1989-June, 1992).
Jayne Stevlingson Wolff Vice President of InterCapital (since October, 1992); Vice President
Vice President of various Dean Witter Funds; formerly Assistant Vice President of
Two World Trade Center Bankers Trust New York Corp. (January, 1990-September, 1992) and
New York, New York Securities Analyst with Campbell Advisors (April, 1986-December, 1989).
Thomas F. Caloia First Vice President (since May, 1991) and Assistant Treasurer (since
Treasurer January, 1993) of InterCapital; First Vice President and Assistant
Two World Trade Center Treasurer of DWSC; Treasurer of the Dean Witter Funds and the TCW/DW
New York, New York Funds; previously Vice President of InterCapital.
</TABLE>
- ---------------
* Denotes Trustees who are "interested persons", as defined in the Act.
In addition, Robert M. Scanlan, President and Chief Operating Officer of
InterCapital and DWSC, Executive Vice President of Distributors and DWTC and
Director of DWTC, David A. Hughey, Executive Vice President and Chief
Administrative Officer of InterCapital, DWSC, Distributors and DWTC and
Director of DWTC, Edmund C. Puckhaber, Executive Vice President of
InterCapital, and Thomas H. Connelly, Kenton J. Hinchliffe, Ira N. Ross and
Paul D. Vance, Senior Vice Presidents of InterCapital, are Vice Presidents of
the Fund, and Marilyn K. Cranney and Barry Fink, First Vice Presidents and
Assistant General Counsels of InterCapital and DWSC, and Lawrence S. Lafer,
Lou Anne D. McInnis and Ruth Rossi, Vice Presidents and Assistant General
Counsels of InterCapital and DWSC, are Assistant Secretaries of the Fund.
The Fund pays each Trustee who is not an employee or retired employee of
the Investment Manager or an affiliated company an annual fee of $1,200 plus
$50 for each meeting of the Board of Trustees or any committee of the Board
of Trustees attended by the Trustee in person (the Fund pays the Chairman of
the Audit Committee an additional annual fee of $1,000 and pays the Chairman
of the Committee of the Independent Trustees an additional annual fee of
$2,400, in each case inclusive of the Committee meeting fees). The Fund
reimburses such Trustees for travel and other out-of-pocket expenses incurred
by them in connection with attending such meetings. The Fund has adopted a
retirement program under which an Independent Trustee who retires after a
minimum required period of service would be entitled to retirement payments
upon reaching the eligible retirement age (normally, after attaining age 72)
based upon length of service and computed as a percentage of one-fifth of the
total compensation earned by such Trustee for service to the Fund in the
five-year period prior to the date of the Trustee's retirement. Trustees and
officers of the Fund who are or have been employed by the Investment Manager
or an affiliated company receive no compensation or expense reimbursement
from the Fund. For the fiscal year ended September 30, 1994, the Fund accrued
a total of $31,479 for Trustees' fees and expenses. As of the date of this
Statement of Additional Information, the aggregate shares of the Fund owned
by the Fund's officers and Trustees as a group were less than one percent of
the Fund's shares of beneficial interest outstanding.
8
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<PAGE>
INVESTMENT PRACTICES AND POLICIES
- -----------------------------------------------------------------------------
Leveraging. As discussed in the Prospectus, the Fund may borrow money, but
only from a bank and in an amount up to 25% of the value of the Fund's total
assets (including the amount borrowed) less its liabilities (not including
any borrowings but including the fair market value at the time of computation
of any other senior securities then outstanding), in an effort to enhance
capital appreciation by leveraging its investments through purchasing
securities with the borrowed funds. Such borrowings will be subject to
current margin requirements of the Federal Reserve Board and where necessary
the Fund may use any or all of its securities as collateral for such
borrowings. Any investment gains made with the additional monies in excess of
interest paid will cause the net asset value of the Fund's shares to rise to
a greater extent than would otherwise be the case. Conversely, if the
investment performance of the additional monies fails to cover their cost to
the Fund, net asset value will decrease to a greater extent than would
otherwise be the case. This is the speculative factor involved in leverage.
The Fund will be required to maintain an asset coverage (including the
proceeds of borrowings) of at least 300% of such borrowings in accordance
with the provisions of the Act. If, due to market fluctuations or other
reasons, the value of the Fund's assets (including the proceeds of
borrowings) becomes at any time less than three times the amount of any
outstanding bank debt, the Fund, within three business days, will reduce its
bank debt to the extent necessary to meet the required 300% asset coverage.
In restoring the 300% asset coverage, the Fund may have to sell a portion of
its investments at a time when it may be disadvantageous to do so.
The investment policy provides that the Fund may not purchase or sell a
security on margin. The margin and bank borrowing restrictions will prevent
the ordinary purchase of a security which involves a cash borrowing from a
broker of any part of the purchase price of a security.
In addition to borrowings for leverage, the Fund may also borrow from
banks an additional amount as a temporary measure for extraordinary or
emergency purposes, and for these purposes, in no event an amount greater
than 5% of the value of the Fund's total assets. The Fund did not borrow any
money during its fiscal year ended September 30, 1994.
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, and are at all times secured by cash or cash
equivalents, which are maintained in a segregated account pursuant to
applicable regulations and that are at least equal to the market value,
determined daily, of the loaned securities. The advantage of such loans is
that the Fund continues to receive the income on the loaned securities while
at the same time earning interest on the cash amounts deposited as
collateral, which will be invested in short-term obligations. The Fund will
not lend its portfolio securities if such loans are not permitted by the laws
or regulations of any state in which its shares are qualified for sale and
will not lend more than 25% of the value of its total assets.
A loan may be terminated by the borrower on one business day's notice, or
by the Fund on four business days' notice. If the borrower fails to deliver
the loaned securities within four days after receipt of notice, the Fund
could use the collateral to replace the securities while holding the borrower
liable for any excess of replacement cost over the value of the collateral.
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, these loans of portfolio securities
will only be made to firms deemed by the Fund's management to be creditworthy
and when the income which can be earned from such loans justifies the
attendant risks. Upon termination of the loan, the borrower is required to
return the securities to the Fund. Any gain or loss in the value of the
securities during the period would inure to the Fund. The creditworthiness of
firms to which the Fund lends its portfolio securities will be monitored on
an ongoing basis by the Investment Manager pursuant to procedures adopted and
reviewed, on an ongoing basis, by the Board of Trustees of the Fund. The Fund
will pay reasonable finder's, administrative and custodial fees in connection
with a loan of its securities.
When voting or consent rights which accompany loaned securities pass to
the borrower, the Fund will follow the policy of calling the loaned
securities, to be delivered within one day after notice, to permit the
exercise of such rights if the matters involved would have a material effect
on the Fund's investment in such loaned securities. The Fund has not to date
lent any of its portfolio securities.
9
<PAGE>
<PAGE>
Repurchase Agreements. As discussed in the Prospectus, when cash may be
available for only a few days, it may be invested by the Fund in repurchase
agreements until such time as it may otherwise be invested or used for
payments of obligations of the Fund. These agreements, which may be viewed as
a type of secured lending by the Fund, 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 ("collateral") at a specified price
and at a fixed time in the future, usually not more than seven days from the
date of purchase. The collateral will be maintained in a segregated account
and will be marked to market daily to determine that the value of the
collateral, as specified in the agreement, does not decrease below the
purchase price plus accrued interest. If such decrease occurs, additional
collateral will be requested and, when received, added to the account to
maintain full collateralization. The Fund will accrue interest from the
institution until the time when the repurchase is to occur. Although such
date is deemed by the Fund to be the maturity date of a repurchase agreement,
the maturities of securities subject to repurchase agreements are not subject
to any limits.
While repurchase agreements involve certain risks not associated with
direct investments in debt securities, the Fund follows procedures designed
to minimize such risks. These procedures include effecting repurchase
transactions only with large, well-capitalized and well-established financial
institutions whose financial condition will be continually monitored by the
Investment Manager subject to procedures established by the Board of Trustees
of the Fund. In addition, as described above, the value of the collateral
underlying the repurchase agreement will always be at least equal to the
repurchase price, including any accrued interest earned on the repurchase
agreement. In the event of a default or bankruptcy by a selling financial
institution, the Fund will seek to liquidate such collateral. However, the
exercising of the Fund's right to liquidate such collateral could involve
certain costs or delays and, to the extent that proceeds from any sale upon a
default of the obligation to repurchase were less than the repurchase price,
the Fund could suffer a loss. It is the current policy of the Fund not to
invest in repurchase agreements that do not mature within seven days if any
such investment, together with any other illiquid assets held by the Fund,
amounts to more than 15% of its total assets. The Fund's investments in
repurchase agreements may at times be substantial when, in the view of the
Investment Manager, liquidity, tax or other considerations warrant.
Warrants. The Fund may invest in warrants, which 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 corporation issuing them. If warrants remain
unexercised at the end of the exercise period, they will lapse and the Fund's
investment in them will be lost. The prices of warrants do not necessarily
move parallel to the prices of the underlying securities.
When-Issued and Delayed Delivery Securities and Forward Commitments. As
discussed in the Prospectus, from time to time 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.
While the Fund will only purchase securities on a when-issued, delayed
delivery or forward commitment basis with the intention of acquiring the
securities, the Fund may sell the securities before the settlement date, if
it is deemed advisable. The securities so purchased or sold are subject to
market fluctuation and no interest or dividends accrue to the purchaser prior
to the settlement date. At the time the Fund makes the commitment to purchase
or sell securities on a when-issued, delayed delivery or forward commitment
basis, it will record the transaction and thereafter reflect the value, each
day, of such security purchased or, if a sale, the proceeds to be received,
in determining its net asset value. At the time of delivery of the
securities, their value may be more or less than the purchase or sale price.
The Fund will also establish a segregated account with its custodian bank in
which it will continually maintain cash or U.S. Government securities or
other high grade debt portfolio securities equal in value to commitments to
purchase securities on a when-issued, delayed delivery or forward commitment
basis. It is anticipated that the aggregate amount of the Fund's commitments
to purchase securities on a when-issued, delayed delivery or forward
commitment basis will not exceed 5% of the Fund's total assets.
10
<PAGE>
<PAGE>
When, As and If Issued Securities. As discussed in the Prospectus, 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
buy-out or debt restructuring. The commitment for the purchase of any such
security will not be recognized in the portfolio of the Fund until the
Investment Manager determines that issuance of the security is probable. At
such time, the Fund will record the transaction and, in determining its net
asset value, will reflect the value of the security daily. At such time, the
Fund will also establish a segregated account with its custodian bank in
which it will maintain cash or U.S. Government securities or other high grade
debt portfolio securities equal in value to recognized commitments for such
securities. Once a segregated account has been established, if the
anticipated event does not occur and the securities are not issued the Fund
will have lost an investment opportunity. It is anticipated that the
aggregate amount of the Fund's commitments to purchase securities on a "when,
as and if issued" basis at any one time will not exceed 5% of the Fund's
total assets. 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. The Investment Manager and the
Trustees do not believe that the net asset value of the Fund will be
adversely affected by its purchase of securities on such basis. In addition,
the value of the Fund's commitments to purchase the securities of any one
issuer, together with the value of all securities of such issuer owned by the
Fund, may not exceed 5% of the value of the Fund's total assets at the time
the initial commitment to purchase such securities is made (see "Investment
Restrictions"). The Fund may also sell securities on a "when, as and if
issued" basis provided that the issuance of the security will result
automatically from the exchange or conversion of a security owned by the Fund
at the time of the sale.
Portfolio Trading. It is anticipated that the Fund's portfolio turnover
rate will not exceed 300% in any one year. A 300% turnover rate would occur,
for example, if 300% of the securities held in the Fund's portfolio
(excluding all securities whose maturities at acquisition were one year or
less) were sold and replaced within one year.
INVESTMENT RESTRICTIONS
- -----------------------------------------------------------------------------
In addition to the investment restrictions enumerated in the Prospectus,
the investment restrictions listed below have been adopted by the Fund as
fundamental policies, except as otherwise indicated. Under 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. Such a
majority is defined as the lesser of (a) 67% or more of the shares present at
a meeting of shareholders of the Fund, if the holders of more than 50% of the
outstanding shares are present or represented by proxy, or (b) more than 50%
of the outstanding shares of the Fund.
The Fund may not:
1. Invest in securities of any issuer if, to the knowledge of the Fund,
any officer or trustee of the Fund or any officer or director of the
Investment Manager owns more than 1/2 of 1% of the outstanding securities
of such issuer, and such officers, trustees and directors who own more
than 1/2 of 1% own in the aggregate more than 5% of the outstanding
securities of such issuer.
2. Purchase or sell real estate or interests therein, although the Fund
may purchase securities of issuers which engage in real estate operations
and securities which are secured by real estate or interests therein.
3. Purchase or sell commodities or commodity futures contracts.
4. Purchase oil, gas or other mineral leases, rights or royalty
contracts, or exploration or development programs, except that the Fund
may invest in the securities of companies which operate, invest in, or
sponsor such programs.
5. Write, purchase or sell puts, calls, or combinations thereof.
6. Purchase securities of other investment companies, except in
connection with a merger, consolidation, reorganization or acquisition of
assets.
11
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<PAGE>
7. Invest more than 5% of its total assets in warrants, including not
more than 2% of such assets in warrants not listed on either the New York
or American Stock Exchange. However, the acquisition of warrants attached
to other securities is not subject to this restriction.
8. Pledge its assets or assign or otherwise encumber them except to
secure borrowings effected within the limitations set forth in restriction
(5) in the Prospectus. To meet the requirements of regulations in certain
states, the Fund, as a matter of operating policy but not as a fundamental
policy, will limit any pledge of its assets to 5% of its net assets so
long as shares of the Fund are being sold in those states.
9. Issue senior securities as defined in the Act except insofar as the
Fund may be deemed to have issued a senior security by reason of: (a)
entering into any repurchase agreement; (b) borrowing money in accordance
with restrictions described above and in the Prospectus; or (c) lending
portfolio securities.
10. Make loans of money or securities, except: (a) by the purchase of
debt obligations in which the Fund may invest consistent with its
investment objective and policies; (b) by investment in repurchase
agreements; or (c) by lending its portfolio securities.
11. Make short sales of securities.
12. Purchase securities on margin, except for such short-term loans as
are necessary for the clearance of purchases of portfolio securities.
13. Engage in the underwriting of securities, except insofar as the
Fund may be deemed an underwriter under the Securities Act of 1933 in
disposing of a portfolio security.
14. Invest for the purpose of exercising control or management of any
other issuer.
If a percentage restriction is adhered to at the time of investment, a
later increase or decrease in percentage resulting from a change in values of
portfolio securities or amount of total or net assets will not be considered
a violation of any of the foregoing restrictions.
PORTFOLIO TRANSACTIONS AND BROKERAGE
- -----------------------------------------------------------------------------
Subject to the general supervision of the Board of Trustees, the
Investment Manager is responsible for decisions to buy and sell securities
for the Fund, the selection of brokers and dealers to effect the
transactions, and the negotiation of brokerage commissions, if any. Purchases
and sales of securities on a stock exchange are effected through brokers who
charge a commission for their services. In the over-the-counter market,
securities are generally traded on a "net" basis with dealers acting as
principal for their own accounts without a stated commission, although the
price of the security usually includes a profit to the dealer. The Fund also
expects that securities will be purchased at times in underwritten offerings
where the price includes a fixed amount of compensation, generally referred
to as the underwriter's concession or discount. On occasion, the Fund may
also purchase certain money market instruments directly from an issuer, in
which case no commissions or discounts are paid. During the fiscal years
ended September 30, 1992, 1993 and 1994, the Fund paid a total of $158,338,
$483,337 and $938,464, respectively, in brokerage commissions. The brokerage
commissions paid for the fiscal year ended September 30, 1994 exceeded those
paid for fiscal 1993 as a result of the significant increase in the net
assets of the Fund.
The Investment Manager currently serves as investment manager to a number
of clients, including other investment companies, and may in the future act
as investment manager or adviser to others. It is the practice of the
Investment Manager to cause purchase and sale transactions to be allocated
among the Fund and others whose assets it manages in such manner as it deems
equitable. In making such allocations among the Fund and other client
accounts, the main factors considered are the respective investment
objectives, the relative size of portfolio holdings of the same or comparable
securities, the availability of cash for investment, the size of investment
commitments generally held and the opinions of the persons responsible for
managing the portfolios of the Fund and other client accounts.
The policy of the Fund regarding purchases and sales of securities for its
portfolio is that primary consideration will be given to obtaining the most
favorable prices and efficient execution of transactions.
12
<PAGE>
<PAGE>
Consistent with this policy, when securities transactions are effected on a
stock exchange, the Fund's policy is to pay commissions which are considered
fair and reasonable without necessarily determining that the lowest possible
commissions are paid in all circumstances. The Fund believes that a
requirement always to seek the lowest commission cost could impede effective
portfolio management and preclude the Fund and the Investment Manager from
obtaining a high quality of brokerage and research services. In seeking to
determine the reasonableness of brokerage commissions paid in any
transaction, the Investment Manager relies upon its experience and knowledge
regarding commissions generally charged by various brokers and on its
judgment in evaluating the brokerage and research services received from the
broker effecting the transaction. Such determinations are necessarily
subjective and imprecise, as in most cases an exact dollar value for those
services is not ascertainable.
In seeking to implement the Fund's policies, the Investment Manager
effects transactions with those brokers and dealers who the Investment
Manager believes provide the most favorable prices and are capable of
providing efficient executions. If the Investment Manager believes such price
and execution are obtainable from more than one broker or dealer, it may give
consideration to placing portfolio transactions with those brokers and
dealers who also furnish research and other services to the Fund or the
Investment Manager. Such services may include, but are not limited to, any
one or more of the following: information as to the availability of
securities for purchase or sale; statistical or factual information or
opinions pertaining to investment; wire services; and appraisals or
evaluations of portfolio securities. During the fiscal year ended September
30, 1994, the Fund directed the payment of $788,357 in brokerage commissions
in connection with transactions in the aggregate amount of $339,284,133 to
brokers because of research services provided.
The information and services received by the Investment Manager from
brokers and dealers may be of benefit to the Investment Manager in the
management of accounts of some of its other clients and may not in all cases
benefit the Fund directly. While the receipt of such information and services
is useful in varying degrees and would generally reduce the amount of
research or services otherwise performed by the Investment Manager and thus
reduce its expenses, it is of indeterminable value and the management fee
paid to the Investment Manager is not reduced by any amount that may be
attributable to the value of such services.
Pursuant to an order of the Securities and Exchange Commission, the Fund
may effect principal transactions in certain money market instruments with
DWR. The Fund will limit its transactions with DWR to U.S. Government and
Government Agency Securities, Bank Money Instruments (i.e., Certificates of
Deposit and Bankers' Acceptances) and Commercial Paper. Such transactions
will be effected with DWR only when the price available from DWR is better
than that available from other dealers. During the fiscal years ended
September 30, 1992, 1993 and 1994, the Fund did not effect any principal
transactions with DWR.
Consistent with the policy described above, brokerage transactions in
securities listed on exchanges or admitted to unlisted trading privileges may
be effected through DWR. In order for DWR to effect any portfolio
transactions for the Fund, the commissions, fees or other remuneration
received by DWR must be reasonable and fair compared to the commissions, fees
or other remuneration paid to other brokers in connection with comparable
transactions involving similar securities being purchased or sold on an
exchange during a comparable period of time. This standard would allow DWR to
receive no more than the remuneration which would be expected to be received
by an unaffiliated broker in a commensurate arm's-length transaction.
Furthermore, the Trustees of the Fund, including a majority of the Trustees
who are not interested persons of the Fund, as defined in the Act, have
adopted procedures which are reasonably designed to provide that any
commissions, fees or other remuneration paid to DWR are consistent with the
foregoing standard. The Fund does not reduce the management fee it pays to
the Investment Manager by any amount of the brokerage commissions it may pay
to DWR. During the fiscal years ended September 30, 1992, 1993 and 1994, the
Fund paid a total of $11,425, $82,685 and $118,670, respectively, in
brokerage commissions to DWR. For the fiscal year ended September 30, 1994,
the brokerage commissions paid to DWR represented approximately 12.65% of the
total brokerage commissions paid by the Fund for the year and were paid on
account of transactions having an aggregate dollar value equal to
approximately 15.74% of the aggregate dollar value of all portfolio
transactions of the Fund during the year for which commissions were paid.
13
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<PAGE>
During the fiscal year ended September 30, 1994, the Fund did not acquire
any securities of the ten brokers who executed the largest dollar amounts of
the Fund's portfolio transactions or of the ten dealers who executed the
largest dollar amounts of principal transactions with the Fund during the
period, or securities of the parents of those broker-dealers.
THE DISTRIBUTOR
- -----------------------------------------------------------------------------
As discussed in the Prospectus, shares of the Fund are distributed by Dean
Witter Distributors Inc. (the "Distributor"). The Distributor has entered
into a selected dealer agreement with DWR, which through its own sales
organization sells shares of the Fund. In addition, the Distributor may enter
into selected dealer agreements with other selected broker-dealers. The
Distributor, a Delaware corporation, is a wholly-owned subsidiary of DWDC.
The Trustees of the Fund, including a majority of the Trustees who are not,
and were not at the time they voted, interested persons of the Fund, as
defined in the Act (the "Independent Trustees"), approved, at their meeting
held on October 30, 1992, the current Distribution Agreement appointing the
Distributor as exclusive distributor of the Fund's shares and providing for
the Distributor to bear distribution expenses not borne by the Fund. The
current Distribution Agreement is substantively identical to the Fund's
previous distribution agreements. The Distribution Agreement took effect on
June 30, 1993 upon the spin-off by Sears, Roebuck and Co. of its remaining
shares of DWDC. By its terms, the Distribution Agreement had an initial term
ending April 30, 1994, and will remain in effect from year to year thereafter
if approved by the Board. At their meeting held on April 8, 1994, the
Trustees, including all of the Independent Trustees, approved the
continuation of the Distribution Agreement until April 30, 1995.
The Distributor bears all expenses it may incur in providing services
under the Distribution Agreement. Such expenses include the payment of
commissions for sales of the Fund's shares and incentive compensation to
account executives. The Distributor also pays certain expenses in connection
with the distribution of the Fund's shares, including the costs of preparing,
printing and distributing advertising or promotional materials, and the costs
of printing and distributing prospectuses and supplements thereto used in
connection with the offering and sale of the Fund's shares. The Fund bears
the costs of initial typesetting, printing and distribution of prospectuses
and supplements thereto to shareholders. The Fund also bears the costs of
registering the Fund and its shares under federal and state securities laws.
The Fund and the Distributor have agreed to indemnify each other against
certain liabilities, including liabilities under the Securities Act of 1933,
as amended. Under the Distribution Agreement, the Distributor uses its best
efforts in rendering services to the Fund, but in the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard of its
obligations, the Distributor is not liable to the Fund or any of its
shareholders for any error of judgment or mistake of law or for any act or
omission or for losses sustained by the Fund or its shareholders.
PLAN OF DISTRIBUTION
The Fund has adopted a Plan of Distribution pursuant to Rule 12b-1 under
the Act (the "Plan") pursuant to which the Fund pays the Distributor
compensation accrued daily and payable monthly at the annual rate of 1.0% 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 upon which such
charge has been waived, or (b) the average daily net assets of the Fund. The
Distributor also receives the proceeds of contingent deferred sales charges
imposed on certain redemptions of shares, which are separate and apart from
payments made pursuant to the Plan (see "Redemptions and
Repurchases--Contingent Deferred Sales Charge" in the Prospectus). The
Distributor has informed the Fund that it and/or DWR received approximately
$205,000, $262,000 and $450,000 in contingent deferred sales charges for the
fiscal years ended September 30, 1992, 1993 and 1994, respectively.
The Distributor has informed the Fund that a portion of the fees payable
by the Fund each year pursuant to the Plan equal to 0.25% of the Fund's
average daily net assets is characterized as a "service fee" under the Rules
of Fair Practice of the National Association of Securities Dealers, Inc. (of
which the
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Distributor is a member). Such portion of the fee is a payment made for
personal service and/or the maintenance of shareholder accounts. The
remaining portion of the Plan fees payable by the Fund is characterized as an
"asset-based sales charge" as such is defined by the aforementioned Rules of
Fair Practice.
The Plan was adopted by a majority vote of the Board of Trustees,
including all of the Trustees of the Fund who are not "interested persons" of
the Fund (as defined in the Act) and who have no direct or indirect financial
interest in the operation of the Plan (the "Independent 12b-1 Trustees"),
cast in person at a meeting called for the purpose of voting on the Plan, on
January 18, 1983, by DWR as the then sole shareholder of the Fund on March 1,
1983 and by the shareholders holding a majority, as defined in the Act, of
the outstanding voting securities of the Fund at a Special Meeting of
Shareholders of the Fund held on July 16, 1984.
At their meeting held on October 30, 1992, the Trustees of the Fund,
including all of the Independent 12b-1 Trustees, approved certain amendments
to the Plan which took effect in January, 1993 and were designed to reflect
the fact that upon the reorganization described above the share distribution
activities theretofore performed for the Fund by DWR were assumed by the
Distributor and DWR's sales activities are now being performed pursuant to
the terms of a selected dealer agreement between the Distributor and DWR. The
amendments provide that payments under the Plan will be made to the
Distributor rather than to DWR as before the amendment, and that the
Distributor in turn is authorized to make payments to DWR, its affiliates or
other selected broker-dealers (or direct that the Fund pay such entities
directly). The Distributor is also authorized to retain part of such fee as
compensation for its own distribution- related expenses. At their meeting
held on April 28, 1993, the Trustees, including a majority of the Independent
12b-1 Trustees, also approved certain technical amendments to the Plan in
connection with amendments adopted by the National Association of Securities
Dealers, Inc. to its Rules of Fair Practice.
Under the Plan and as required by Rule 12b-1, the Trustees receive and
review promptly after the end of each calendar quarter a written report
provided by the Distributor of the amounts expended under the Plan and the
purpose for which such expenditures were made. The Fund accrued amounts
payable to the Distributor under the Plan, during the fiscal year ended
September 30, 1994, of $3,031,093. This amount is equal to 1.0% of the Fund's
average daily net assets for the fiscal year and was calculated pursuant to
clause (b) of the compensation formula under the Plan. This amount is treated
by the Fund as an expense in the year it is accrued.
The Plan was adopted in order to permit the implementation of the Fund's
method of distribution. Under this distribution method shares of the Fund are
sold without a sales load being deducted at the time of purchase, so that the
full amount of an investor's purchase payment will be invested in shares
without any deduction for sales charges. Shares of the Fund are subject in
most cases to a contingent deferred sales charge, payable to the Distributor,
if redeemed during the six years after their purchase. DWR compensates its
account executives by paying them, from its own funds, commissions for the
sale of the Fund's shares, currently a gross sales credit of up to 5% of the
amount sold and an annual residual commission of up to 0.25 of 1% of the
current value (not including reinvested dividends or distributions) of the
amount sold. The gross sales credit is a charge which reflects commissions
paid by DWR to its account executives and DWR's Fund-associated
distribution-related expenses, including sales compensation, and overhead and
other branch office distribution-related expenses including (a) the expenses
of operating DWR's branch offices in connection with the sale of Fund shares,
including lease costs, the salaries and employee benefits of operations and
sales support personnel, utility costs, communications costs and the costs of
stationery and supplies, (b) the costs of client sales seminars, (c) travel
expenses of mutual fund sales coordinators to promote the sale of Fund shares
and (d) other expenses relating to branch promotion of Fund sales. The
distribution fee that the Distributor receives from the Fund under the Plan,
in effect, offsets distribution expenses incurred under the Plan on behalf of
the Fund and opportunity costs, such as the gross sales credit and an assumed
interest charge thereon ("carrying charge"). In the Distributor's reporting
of the distribution expenses to the Fund, such assumed interest (computed at
the "broker's call rate") has been calculated on the gross credit as it is
reduced by amounts received by the Distributor under the Plan and any
contingent deferred sales charges received by the
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Distributor upon redemption of shares of the Fund. No other interest charge
is included as a distribution expense in the Distributor's calculation of its
distribution costs for this purpose. The broker's call rate is the interest
rate charged to securities brokers on loans secured by exchange-listed
securities.
The Fund paid 100% of the $3,031,093 accrued under the Plan for the fiscal
year ended September 30, 1994 to the Distributor. The Distributor and DWR
estimate that they have spent, pursuant to the Plan, $46,938,073 on behalf of
the Fund since the inception of the Plan. It is estimated that this amount
was spent in approximately the following ways: (i) 6.27%
($2,942,486)--advertising and promotional expenses; (ii) 0.54%
($252,751)--printing of prospectuses for distribution to other than current
shareholders; and (iii) 93.19% ($43,742,836)--other expenses, including the
gross sales credit and the carrying charge, of which 21.62% ($9,457,037)
represents carrying charges, 32.91% ($14,396,607) represents commission
credits to DWR branch offices for payments of commissions to account
executives and 45.47% ($19,889,192) represents overhead and other branch
office distribution-related expenses.
At any given time, the expenses of distributing shares of the Fund may be
more or less than 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 redemption of shares. The Distributor has advised the Fund
that the excess distribution expenses, including the carrying charge designed
to approximate the opportunity costs incurred by DWR which arise from it
having advanced monies without having received the amount of any sales
charges imposed at the time of sale of the Fund's shares, totalled
$21,188,353 as of September 30, 1994. 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, 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 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 or contingent deferred sales
charges, may or may not be recovered through future distribution fees or
contingent deferred sales charges.
No interested person of the Fund nor any Trustee of the Fund who is not an
interested person of the Fund, as defined in the Act, has any direct
financial interest in the operation of the Plan except to the extent that the
Distributor, InterCapital, DWR or certain of their employees may be deemed to
have such an interest as a result of benefits derived from the successful
operation of the Plan or as a result of receiving a portion of the amounts
expended thereunder by the Fund.
Under its terms, the Plan remained in effect until December 31, 1983, and
will continue from year to year thereafter, provided such continuance is
approved annually by a vote of the Trustees in the manner described above.
Most recent continuance of the Plan for one year, until April 30, 1995, was
approved by the Board of Trustees of the Fund, including a majority of the
Independent 12b-1 Trustees, at a Board meeting held on April 8, 1994. Prior
to approving the continuation of the Plan, the Trustees requested and
received from the Distributor and reviewed all the information which they
deemed necessary to arrive at an informed determination. In making their
determination to continue the Plan, the Trustees considered: (1) the Fund's
experience under the Plan and whether such experience indicates that the Plan
is operating as anticipated; (2) the benefits the Fund had obtained, was
obtaining and would be likely to obtain under the Plan; and (3) what services
had been provided and were continuing to be provided under the Plan to the
Fund and its shareholders. Based upon their review, the Trustees of the Fund,
including each of the Independent 12b-1 Trustees, determined that
continuation of the Plan would be in the best interest of the Fund and would
have a reasonable likelihood of continuing to benefit the Fund and its
shareholders. In the Trustees' quarterly review of the Plan, they will
consider its continued appropriateness and the level of compensation provided
therein.
The Plan may not be amended to increase materially the amount to be spent
for the services described therein without approval by the shareholders of
the Fund, and all material amendments to the Plan must also be approved by
the Trustees in the manner described above. The Plan may be
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terminated at any time, without payment of any penalty, by vote of a majority
of the Independent 12b-1 Trustees or by a vote of a majority of the
outstanding voting securities of the Fund (as defined in the Act) on not more
than thirty days' written notice to any other party to the Plan. So long as
the Plan is in effect, the election and nomination of Independent 12b-1
Trustees shall be committed to the discretion of the Independent 12b-1
Trustees.
DETERMINATION OF NET ASSET VALUE
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As stated in the Prospectus, short-term securities with remaining
maturities of sixty 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 sixty 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.
The net asset value per share of the Fund is determined once daily as of
4:00 p.m., New York time on each day that the New York Stock Exchange is
open. The New York Stock Exchange currently observes the following holidays:
New Year's Day; Presidents' Day; Good Friday; Memorial Day; Independence Day;
Labor Day; Thanksgiving Day; and Christmas Day.
SHAREHOLDER SERVICES
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Upon the purchase of shares of the Fund, a Shareholder Investment Account
is opened for the investor on the books of the Fund and maintained by Dean
Witter Trust Company (the "Transfer Agent"). This is an open account in which
shares owned by the investor are credited by the Transfer Agent in lieu of
issuance of a share certificate. If a share certificate is desired, it must
be requested in writing for each transaction. Certificates are issued only
for full shares and may be redeposited in the account at any time. There is
no charge to the investor for issuance of a certificate. Whenever a
shareholder instituted transaction takes place in the Shareholder Investment
Account, the shareholder will be mailed a confirmation of the transaction
from the Fund or from DWR or other selected broker-dealer.
Automatic Investment of Dividends and Distributions. As stated in the
Prospectus, all income dividends and capital gains distributions are
automatically paid in full and fractional shares of the Fund, unless the
shareholder requests that they be paid in cash. Each purchase of shares of
the Fund is made upon the condition that the Transfer Agent is thereby
automatically appointed as agent of the investor to receive all dividends and
capital gains distributions on shares owned by the investor. Such dividends
and distributions will be paid, at the net asset value per share, in shares
of the Fund (or in cash if the shareholder so requests) as of the close of
business on the record date. At any time an investor may request the Transfer
Agent, in writing, to have subsequent dividends and/or capital gains
distributions paid to him or her in cash rather than shares. To assure
sufficient time to process the change, such request should be received by the
Transfer Agent at least five business days prior to the record date of the
dividend or distribution. In the case of recently purchased shares for which
registration instructions have not been received on the record date, cash
payments will be made to DWR or other selected broker-dealer, and will be
forwarded to the shareholder, upon the receipt of proper instructions.
Targeted Dividends.(SM) In states where it is legally permissible,
shareholders may also have all income dividends and capital gains
distributions automatically invested in shares of an open-end Dean Witter
Fund other than Dean Witter Developing Growth Securities Trust. Such
investment will be made as described above for automatic investment in shares
of the Fund, at the net asset value per share of the selected Dean Witter
Fund as of the close of business on the payment date of the dividend or
distribution and will begin to earn dividends, if any, in the selected Dean
Witter Fund the next business day. To participate in the Targeted Dividends
program, shareholders should contact their DWR or other selected
broker-dealer account executive or the Transfer Agent. Shareholders of the
Fund must be
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shareholders of the Dean Witter Fund targeted to receive investments from
dividends at the time they enter the Targeted Dividends program. Investors
should review the prospectus of the targeted Dean Witter Fund before entering
the program.
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. 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.
Investment of Dividends or Distributions Received in Cash. As discussed in
the Prospectus, any shareholder who receives a cash payment representing a
dividend or distribution may invest such dividend or distribution at net
asset value, without the imposition of a contingent deferred sales charge
upon redemption, by returning the check or the proceeds to the Transfer Agent
within thirty days after the payment date. If the shareholder returns the
proceeds of a dividend or distribution, such funds must be accompanied by a
signed statement indicating that the proceeds constitute a dividend or
distribution to be invested. Such investment will be made at the net asset
value per share next determined after receipt of the check or the proceeds by
the Transfer Agent.
Systematic Withdrawal Plan. As discussed in the Prospectus, 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.
The Transfer Agent acts as agent for the shareholder in tendering to the
Fund for redemption sufficient full and fractional shares to provide the
amount of the periodic withdrawal payment designated in the application. The
shares will be redeemed at their net asset value determined, at the
shareholder's option, on the tenth or twenty-fifth day (or next following
business day) of the relevant month or quarter and normally a check for the
proceeds will be mailed by the Transfer Agent, or amounts credited to a
shareholder's DWR or other selected broker-dealer brokerage account, within
five business days after the date of redemption. The Withdrawal Plan may be
terminated at any time by the Fund.
Withdrawal Plan payments should not be considered as dividends, yields or
income. If periodic withdrawal plan payments continuously exceed net
investment income and net capital gains, the shareholder's original
investment will be correspondingly reduced and ultimately exhausted.
Each withdrawal constitutes a redemption of shares and any gain or loss
realized must be recognized for federal income tax purposes. Although the
shareholder may make additional investments of $2,500 or more under the
Withdrawal Plan, withdrawals made concurrently with purchases of additional
shares may be inadvisable because of the contingent deferred sales charge
applicable to the redemption of shares purchased during the preceding six
years (see "Redemptions and Repurchases--Contingent Deferred Sales Charge").
Any shareholder who wishes to have payments under the Withdrawal Plan made
to a third party or sent to an address other than the one listed on the
account must send complete written instructions to the Transfer Agent to
enroll in the Withdrawal Plan. The shareholder's signature on such
instructions must be guaranteed by an eligible guarantor acceptable to the
Transfer Agent (shareholders should contact the Transfer Agent for a
determination as to whether a particular institution is such an eligible
guarantor). A shareholder may, at any time, change the amount and interval of
withdrawal payments
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through his or her account executive or by written notification to the
Transfer Agent. In addition, the party and/or the address to which checks are
mailed may be changed by written notification to the Transfer Agent, with
signature guarantees required in the manner described above. The shareholder
may also terminate the Withdrawal Plan at any time by written notice to the
Transfer Agent. In the event of such termination, the account will be
continued as a regular shareholder investment account. The shareholder may
also redeem all or part of the shares held in the Withdrawal Plan account
(see "Redemptions and Repurchases" in the Prospectus) at any time.
Direct Investments through Transfer Agent. As discussed in the Prospectus,
a shareholder may make additional investments in Fund shares at any time by
sending a check in any amount, not less than $100, payable to Dean Witter
Developing Growth Securities Trust, directly to the Fund's Transfer Agent.
Such amounts will be applied to the purchase of Fund shares at the net asset
value per share next computed after receipt of the check or purchase payment
by the Transfer Agent. The shares so purchased will be credited to the
investor's account.
EXCHANGE PRIVILEGE
As discussed in the Prospectus, the Fund makes available to its
shareholders an Exchange Privilege whereby shareholders of the Fund may
exchange their shares 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
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. 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.
Any new account established through the Exchange Privilege will have the
same registration and cash dividend or dividend reinvestment plan as the
present account, unless the Transfer Agent receives written notification to
the contrary. For telephone exchanges, the exact registration of the existing
account and the account number must be provided.
Any shares held in certificate form cannot be exchanged but must be
forwarded to the Transfer Agent and deposited into the shareholder's account
before being eligible for exchange. (Certificates mailed in for deposit
should not be endorsed.)
As described below, and in the Prospectus under the captions "Exchange
Privilege" and "Contingent Deferred Sales Charge", a contingent deferred
sales charge ("CDSC") may be imposed upon a redemption, depending on a number
of factors, including the number of years from the time of purchase until the
time of redemption or exchange ("holding period"). When shares of the Fund or
any other CDSC fund are exchanged for shares of an Exchange Fund, the
exchange is executed at no charge to the shareholder, without the imposition
of the CDSC at the time of the exchange. 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 or
"year since purchase payment made" is frozen. When shares are redeemed out of
the Exchange Fund, they will be subject to a CDSC which would be based upon
the period of time the shareholder held shares in a CDSC fund. However, in
the case of shares exchanged into an Exchange Fund on or after April 23,
1990, 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. Shareholders acquiring shares of
an Exchange Fund pursuant to this exchange privilege may exchange those
shares back into a CDSC fund from the Exchange Fund, with no CDSC being
imposed on such exchange. The holding period previously frozen when shares
were first exchanged for shares of the Exchange Fund resumes on the last day
of the month in which shares of a CDSC fund are reacquired. A CDSC is imposed
only upon an ultimate redemption, based upon the time (calculated as
described above) the shareholder was invested in a CDSC fund.
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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.
When shares initially purchased in a CDSC fund are exchanged for shares of
another CDSC fund, or for shares of an Exchange Fund, the date of purchase of
the shares of the fund exchanged into, for purposes of the CDSC upon
redemption, will be the last day of the month in which the shares being
exchanged were originally purchased. In allocating the purchase payments
between funds for purposes of the CDSC, the amount which represents the
current net asset value of shares at the time of the exchange which were (i)
purchased more than three or six years (depending on the CDSC schedule
applicable to the shares) prior to the exchange, (ii) originally acquired
through reinvestment of dividends or distributions and (iii) acquired in
exchange for shares of front-end sales charge funds, or for shares of other
Dean Witter Funds for which shares of front-end sales charge funds have been
exchanged (all such shares called "Free Shares"), will be exchanged first.
Shares of Dean Witter American Value Fund acquired prior to April 30, 1984,
shares of Dean Witter Dividend Growth Securities Inc. and Dean Witter Natural
Resource Development Securities Inc. acquired prior to July 2, 1984, and
shares of Dean Witter Strategist Fund acquired prior to November 8, 1989, are
also considered Free Shares and will be the first Free Shares to be
exchanged. After an exchange, all dividends earned on shares in an Exchange
Fund will be considered Free Shares. If the exchanged amount exceeds the
value of such Free Shares, an exchange is made, on a block-by-block basis, of
non-Free Shares held for the longest period of time (except that if shares
held for identical periods of time but subject to different CDSC schedules
are held in the same Exchange Privilege account, the shares of that block
that are subject to a lower CDSC rate will be exchanged prior to the shares
of that block that are subject to a higher CDSC rate). Shares equal to any
appreciation in the value of non-Free Shares exchanged will be treated as
Free Shares, and the amount of the purchase payments for the non-Free Shares
of the fund exchanged into will be equal to the lesser of (a) the purchase
payments for, or (b) the current net asset value of, the exchanged non-Free
Shares. If an exchange between funds would result in exchange of only part of
a particular block of non-Free Shares, then shares equal to any appreciation
in the value of the block (up to the amount of the exchange) will be treated
as Free Shares and exchanged first, and the purchase payment for that block
will be allocated on a pro rata basis between the non-Free Shares of that
block to be retained and the non-Free Shares to be exchanged. The prorated
amount of such purchase payment attributable to the retained non-Free Shares
will remain as the purchase payment for such shares, and the amount of
purchase payment for the exchanged non-Free Shares will be equal to the
lesser of (a) the prorated amount of the purchase payment for, or (b) the
current net asset value of, those exchanged non-Free Shares. Based upon the
procedures described in the Prospectus under the caption "Contingent Deferred
Sales Charge", any applicable CDSC will be imposed upon the ultimate
redemption of shares of any fund, regardless of the number of exchanges since
those shares were originally purchased.
The Transfer Agent acts as agent for shareholders of the Fund in effecting
redemptions of Fund shares and in applying the proceeds to the purchase of
other fund shares. In the absence of negligence on its part, neither the
Transfer Agent nor the Fund shall be liable for any redemption of Fund shares
caused by unauthorized telephone instructions. Accordingly, in such event the
investor shall bear the risk of loss. The staff of the Securities and
Exchange Commission is currently considering the propriety of such a policy.
With respect to the redemption or repurchase of shares of the Fund, the
application of proceeds to the purchase of new shares in the Fund or any
other of the funds and the general administration of the Exchange Privilege,
the Transfer Agent acts as agent for the Distributor and for the
shareholder's selected broker-dealer, if any, in the performance of such
functions. With respect to exchanges, redemptions or repurchases, the
Transfer Agent shall be liable for its own negligence and not for the default
or negligence of its correspondents or for losses in transit. The Fund shall
not be liable for any default or negligence of the Transfer Agent, the
Distributor or any selected broker-dealer.
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The Distributor and any selected broker-dealer have authorized and
appointed the Transfer Agent to act as their agent in connection with the
application of proceeds of any redemption of Fund shares to the purchase of
shares of any other fund and the general administration of the Exchange
Privilege. No commission or discounts will be paid to the Distributor or any
selected broker-dealer for any transactions pursuant to this Exchange
Privilege.
Exchanges are subject to the minimum investment requirement and any other
conditions imposed by each fund. (The minimum initial investment is $5,000
for Dean Witter Liquid Asset Fund Inc., Dean Witter Tax-Free Daily Income
Trust, Dean Witter California Tax-Free Daily Income Trust and Dean Witter New
York Municipal Money Market Trust, although those funds may, in their
discretion, accept initial investments of as low as $1,000. The minimum
initial investment is $10,000 for Dean Witter Short-Term U.S. Treasury Trust,
although that fund, in its discretion, may accept initial purchases of as low
as $5,000. The minimum initial investment for all other Dean Witter Funds for
which the Exchange Privilege is available is $1,000.) Upon exchange into an
Exchange Fund, the shares of that fund will be held in a special Exchange
Privilege Account separately from accounts of those shareholders who have
acquired their shares directly from that fund. As a result, certain services
normally available to shareholders of those funds, including the check
writing feature, will not be available for funds held in that account.
The Fund and each of the other Dean Witter Funds may limit the number of
times this Exchange Privilege may be exercised by any investor within a
specified period of time. Also, the Exchange Privilege may be terminated or
revised at any time by the Fund and/or any of the Dean Witter funds for which
shares of the Fund have been exchanged, upon such notice as may be required
by applicable regulatory agencies (presently sixty days' prior written notice
for termination or material revision), provided that six months' prior
written notice of termination will be given to the shareholders who hold
shares of Exchange Funds pursuant to the Exchange Privilege, and provided
further that the Exchange Privilege may be terminated or materially revised
without notice at times (a) when the New York Stock Exchange is closed for
other than customary weekends and holidays, (b) when trading on that Exchange
is restricted, (c) when an emergency exists as a result of which disposal by
the Fund of securities owned by it is not reasonably practicable or it is not
reasonably practicable for the Fund fairly to determine the value of its net
assets, (d) during any other period when the Securities and Exchange
Commission by order so permits (provided that applicable rules and
regulations of the Securities and Exchange Commission shall govern as to
whether the conditions prescribed in (b) or (c) exist) or (e) if the Fund
would be unable to invest amounts effectively in accordance with its
investment objective, policies and restrictions.
For further information regarding the Exchange Privilege, shareholders
should contact their DWR or other selected broker-dealer account executive or
the Transfer Agent.
REDEMPTIONS AND REPURCHASES
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Redemption. As stated in the Prospectus, 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 may 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 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. The share certificate, or an accompanying stock
power, and the request for redemption, must be signed by the shareholder or
shareholders exactly as the shares are registered. Each request for
redemption, whether or not accompanied by a share certificate, must be sent
to the Fund's Transfer Agent, which will redeem the shares at their net asset
value next computed (see "Purchase of Fund Shares" in the Prospectus) after
it receives the request, and certificate, if any, in good order. Any
redemption request received after such computation will be redeemed at the
next determined net asset value. The term "good order" means that the share
certificate, if any, and request for redemption are properly signed,
accompanied by any documentation required by the Transfer Agent, and bear
signature guarantees when required by the Fund or the Transfer Agent. If
redemption is requested by a corporation, partnership, trust or fiduciary,
the Transfer Agent may require that written evidence of authority acceptable
to the Transfer Agent be submitted before such request is accepted.
21
<PAGE>
<PAGE>
Whether certificates are held by the shareholder or shares are held in a
shareholder's account, if the proceeds are to be paid to any person other
than the record owner, or if the proceeds are to be paid to a corporation
(other than the Distributor or a selected broker-dealer for the account of
the shareholder), partnership, trust or fiduciary, or sent to the shareholder
at an address other than the registered address, signatures must be
guaranteed by an eligible guarantor acceptable to the Transfer Agent
(shareholders should contact the Transfer Agent for a determination as to
whether a particular institution is such an eligible guarantor). A stock
power may be obtained from any dealer or commercial bank. The Fund may change
the signature guarantee requirements from time to time upon notice to
shareholders, which may be by means of a new prospectus.
Contingent Deferred Sales Charge. As stated in the Prospectus, a
contingent deferred sales charge ("CDSC") will be imposed on any redemption
by an investor if after such redemption the current value of the investor's
shares of the Fund is less than the dollar amount of all payments by the
shareholder for the purchase of Fund shares during the preceding six years.
However, no CDSC will be imposed to the extent that the net asset value of
the shares redeemed does not exceed: (a) the current net asset value of
shares purchased more than six years prior to the redemption, plus (b) the
current net asset value of shares purchased through reinvestment of dividends
or distributions of the Fund or another Dean Witter Fund (see "Shareholder
Services--Targeted Dividends"), plus (c) the current net asset value of
shares acquired in exchange for (i) shares of Dean Witter front-end sales
charge funds, or (ii) shares of other Dean Witter Funds for which shares of
front-end sales charge funds have been exchanged (see "Shareholder
Services--Exchange Privilege"), plus (d) increases in the net asset value of
the investor's shares above the total amount of payments for the purchase of
Fund shares made during the preceding six years. The CDSC will be paid to the
Distributor. In addition, no CDSC will be imposed on redemptions of shares
which are attributable to reinvestment of dividends or distributions from, or
the proceeds of, certain Unit Investment Trusts.
In determining the applicability of the CDSC to each redemption, the
amount which represents an increase in the net asset value of the investor's
shares above the amount of the total payments for the purchase of shares
within the last six years will be redeemed first. In the event the redemption
amount exceeds such increase in value, the next portion of the amount
redeemed will be the amount which represents the net asset value of the
investor's shares purchased more than six years prior to the redemption
and/or shares purchased through reinvestment of dividends or distributions
and/or shares acquired in exchange for shares of Dean Witter front-end sales
charge funds, or for shares of other Dean Witter funds for which shares of
front-end sales charge funds have been exchanged. A portion of the amount
redeemed which exceeds an amount which represents both such increase in value
and the value of shares purchased more than six years prior to the redemption
and/or shares purchased through reinvestment of dividends or distributions
and/or shares acquired in the above-described exchanges will be subject to a
CDSC.
The amount of the CDSC, if any, will vary depending on the number of years
from the time of payment for the purchase of Fund shares until the time of
redemption of such shares. For purposes of determining the number of years
from the time of any payment for the purchase of shares, all payments made
during a month will be aggregated and deemed to have been made on the last
day of the month. The following table sets forth the rates of the CDSC:
<TABLE>
<CAPTION>
CONTINGENT DEFERRED
SALES CHARGE AS A
YEAR SINCE PURCHASE PAYMENT PERCENTAGE OF AMOUNT
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>
22
<PAGE>
<PAGE>
In determining the rate of the CDSC, it will be assumed that a redemption
is made of shares held by the investor for the longest period of time within
the applicable six-year period. This will result in any such CDSC being
imposed at the lowest possible rate. Accordingly, shareholders may redeem,
without incurring any CDSC, amounts equal to any net increase in the value of
their shares above the amount of their purchase payments made within the past
six years and amounts equal to the current value of shares purchased more
than six years prior to the redemption and shares purchased through
reinvestment of dividends or distributions or acquired in exchange for shares
of Dean Witter front-end sales charge funds, or for shares of other Dean
Witter Funds for which shares of front-end sales charge funds have been
exchanged. The CDSC will be imposed, in accordance with the table shown
above, on any redemptions within six years of purchase which are in excess of
these amounts and which redemptions are not (a) requested within one year of
death or initial determination of disability of a shareholder, or (b) made
pursuant to certain taxable distributions from retirement plans or retirement
accounts, as described in the Prospectus.
Payment for Shares Redeemed or Repurchased. As discussed in the
Prospectus, 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. The term good order means
that the share certificate, if any, and request for redemption are properly
signed, accompanied by any documentation required by the Transfer Agent, and
bear signature guarantees when required by the Fund or the Transfer Agent.
Such payment may be postponed or the right of redemption suspended at times
(a) when the New York Stock Exchange is closed for other than customary
weekends and holidays, (b) when trading on that Exchange is restricted, (c)
when an emergency exists as a result of which disposal by the Fund of
securities owned by it is not reasonably practicable or it is not reasonably
practicable for the Fund fairly to determine the value of its net assets, or
(d) during any other period when the Securities and Exchange Commission by
order so permits; provided that applicable rules and regulations of the
Securities and Exchange Commission shall govern as to whether the conditions
prescribed in (b) or (c) exist. If the shares to be redeemed have recently
been purchased by check (including a certificate or bank cashier's check),
payment of 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 investment 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.
Transfers of Shares. In the event a shareholder requests a transfer of any
shares to a new registration, such shares will be transferred without sales
charge at the time of transfer. With regard to the status of shares which are
either subject to the contingent deferred sales charge or free of such charge
(and with regard to the length of time shares subject to the charge have been
held), any transfer involving less than all the shares in an account will be
made on a pro-rata basis (that is, by transferring shares in the same
proportion that the transferred shares bear to the total shares in the
account immediately prior to the transfer). The transferred shares will
continue to be subject to any applicable contingent deferred sales charge as
if they had not been so transferred.
Reinstatement Privilege. As discussed in the Prospectus, 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 such proceeds,
is received by the Transfer Agent.
Exercise of the reinstatement privilege will not affect the federal income
tax treatment of any gain or loss realized upon the redemption or repurchase,
except that if the redemption or repurchase resulted in a loss and
reinstatement is made in shares of the Fund, some or all of the loss,
depending on the amount reinstated, will not be allowed as a deduction for
federal income tax purposes but will be applied to adjust the cost basis of
the shares acquired upon reinstatement.
23
<PAGE>
<PAGE>
DIVIDENDS, DISTRIBUTIONS AND TAXES
- -----------------------------------------------------------------------------
As discussed in the Prospectus, the Fund will determine either to
distribute or to retain all or part of any net long-term capital gains in any
year for reinvestment. If any such gains are retained, the Fund will pay
federal income tax thereon, and will notify shareholders that, following an
election by the Fund, the shareholders will be required to include such
undistributed gains in determining their taxable income and may claim their
share of the tax paid by the Fund as a credit against their individual
federal income tax.
Because the Fund intends to distribute all of its net investment income
and capital gains to shareholders and otherwise continue to 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 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 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 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.
Gains or losses on the sales of securities by the Fund will be long-term
capital gains or losses if the securities have been held by the Fund for more
than one year. Gains or losses on the sale of securities held for one year or
less will be short-term capital gains or losses.
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.
Any ordinary income dividends or capital gains distributions received by a
shareholder from any investment company will have the effect of reducing the
net asset value of the shareholder's shares in that company by the exact
amount of the dividend or capital gains distribution. Furthermore, capital
gains distributions and ordinary income dividends are subject to federal
income taxes. If the net asset value of the shares should be reduced below a
shareholder's cost as a result of the payment of dividends or realized
long-term capital gains, such payment would be in part a return of the
shareholder's investment to the extent of such reduction below the
shareholder's cost, but nonetheless would be taxable to the shareholder.
Therefore, an investor should consider the tax implications of purchasing
Fund shares immediately prior to a dividend or distribution record date.
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. The amount of dividends paid by the Fund which may qualify for the
dividends received deduction is limited to the aggregate amount of qualifying
dividends which the Fund derives from its portfolio investments which the
Fund has held for a minimum period, usually 46 days. Any distributions made
by the Fund will not be eligible for the dividends received deduction with
respect to shares which are held by the shareholder for 45 days or less. Any
long-term capital gain distributions will also not be eligible for the
dividends received deduction. The ability to take the dividends received
deduction will also be limited in the case of a Fund shareholder which incurs
or continues indebtedness which is directly attributable to its investment in
the Fund.
After the end of the year, shareholders will be sent full information on
their dividends and capital gains distributions for tax purposes, including
information as to the portion taxable as ordinary income, the portion taxable
as long-term capital gains and the portion eligible for the dividends
received deduction. 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.
24
<PAGE>
<PAGE>
Shareholders are urged to consult their attorneys or tax advisers
regarding specific questions as to federal, state or local taxes.
PERFORMANCE INFORMATION
- -----------------------------------------------------------------------------
As discussed in the Prospectus, from time to time the Fund may quote its
"total return" in advertisements and sales literature. The Fund's "average
annual total return" represents an annualization of the Fund's total return
over a specified period and is computed by finding the annual percentage rate
which will result in the ending redeemable value of a hypothetical $1,000
investment made at the beginning of a one, five or ten year period, or for
the period from the date of commencement of the Fund's operations, if shorter
than any of the foregoing. The ending redeemable value is reduced by any
contingent deferred sales charge at the end of the one, five or ten year or
other period. For the purpose of this calculation, it is assumed that all
dividends and distributions are reinvested. The formula for computing the
average annual total return involves a percentage obtained by dividing the
ending redeemable value by the amount of the initial investment, taking a
root of the quotient (where the root is equivalent to the number of years in
the period) and subtracting 1 from the result. The average annual total
returns of the Fund for the one, five and ten year periods ended September
30, 1994 were -13.88%, 10.35% and 9.31%, respectively.
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. For example, the average annual total
return of the Fund may be calculated in the manner described in the preceding
paragraph, but without deduction for any applicable contingent deferred sales
charge. Based on this calculation, the average annual total returns of the
Fund for the one, five and ten year periods ended September 30, 1994 were
- -8.88%, 10.62% and 9.31%, respectively.
In addition, the Fund may compute its aggregate total return for specified
periods by determining the aggregate percentage rate which will result in the
ending value of a hypothetical $1,000 investment made at the beginning of the
period. For the purpose of this calculation, it is assumed that all dividends
and distributions are reinvested. The formula for computing aggregate total
return involves a percentage obtained by dividing the ending value (without
reduction for any contingent deferred sales charge) by the initial $1,000
investment and subtracting 1 from the result. Based on the foregoing
calculation, the Fund's total return for the year ended September 30, 1994
was -8.88%, the total return for the five-year period ended September 30,
1994 was 65.62%, and the total return for the ten-year period ended September
30, 1994 was 143.48%.
The Fund may also advertise the growth of hypothetical investments of
$10,000, $50,000 and $100,000 in shares of the Fund by adding 1 to the Fund's
aggregate total return to date (expressed as a decimal and without taking
into account the effect of any applicable contingent deferred sales charge)
and multiplying by $10,000, $50,000 or $100,000, as the case may be.
Investments of $10,000, $50,000 and $100,000 in the Fund at inception would
have grown to $19,659, $98,295 and $196,590, respectively, at September 30,
1994.
The Fund from time to time may also advertise its performance relative to
certain performance rankings and indexes compiled by independent
organizations.
DESCRIPTION OF SHARES OF THE FUND
- -----------------------------------------------------------------------------
The shareholders of the Fund are entitled to a full vote for each full
share held. All of the Trustees, except for Messrs. Bozic, Purcell and
Schroeder, have been elected by the shareholders of the Fund, most recently
at a Special Meeting of Shareholders held on January 12, 1993. Messrs. Bozic,
Purcell and Schroeder were elected by the other Trustees of the Fund on April
8, 1994. The Trustees themselves have the power to alter the number and the
terms of office of the Trustees, and they may at any time lengthen their own
terms or make their terms of unlimited duration and appoint their own
successors, provided that always at least a majority of the Trustees has been
elected by the shareholders of the
25
<PAGE>
<PAGE>
Fund. Under certain circumstances the Trustees may be removed by action of
the Trustees. The shareholders also have the right under certain
circumstances to remove the Trustees. The voting rights of shareholders are
not cumulative, so that holders of more than 50 percent of the shares voting
can, if they choose, elect all Trustees being selected, while the holders of
the remaining shares would be unable to elect any Trustees.
The Declaration of Trust permits the Trustees to authorize the creation of
additional series of shares (the proceeds of which would be invested in
separate, independently managed portfolios) and additional classes of shares
within any series (which would be used to distinguish among the rights of
different categories of shareholders, as might be required by future
regulations or other unforeseen circumstances). However, the Trustees have
not authorized any such additional series or classes of shares.
The Declaration of Trust provides that no Trustee, officer, employee or
agent of the Fund is liable to the Fund or to a shareholder, nor is any
Trustee, officer, employee or agent liable to any third persons in connection
with the affairs of the Fund, except as such liability may arise from his/her
or its own bad faith, willful misfeasance, gross negligence, or reckless
disregard of his/her or its duties. It also provides that all third persons
shall look solely to the Fund property for satisfaction of claims arising in
connection with the affairs of the Fund. With the exceptions stated above,
the Declaration of Trust provides that a Trustee, officer, employee or agent
is entitled to be indemnified against all liability in connection with the
affairs of the Fund.
The Fund shall be of unlimited duration, subject to the provisions in the
Declaration of Trust concerning termination by action of the shareholders.
CUSTODIAN AND TRANSFER AGENT
- -----------------------------------------------------------------------------
The Bank of New York, 90 Washington Street, New York, New York 10286 is
the Custodian of the Fund's assets. Any of the Fund's cash balances with the
Custodian in excess of $100,000 are unprotected by federal deposit insurance.
Such balances may, at times, be substantial.
Dean Witter Trust Company, Harborside Financial Center, Plaza Two, Jersey
City, New Jersey 07311 is the Transfer Agent of the Fund's shares and
Dividend Disbursing Agent for payment of dividends and distributions on Fund
shares and Agent for shareholders under various investment plans described
herein. Dean Witter Trust Company is an affiliate of Dean Witter InterCapital
Inc., the Fund's Investment Manager, and of Dean Witter Distributors Inc.,
the Fund's Distributor. As Transfer Agent and Dividend Disbursing Agent, Dean
Witter Trust Company's responsibilities include maintaining shareholder
accounts; disbursing cash dividends and reinvesting dividends; processing
account registration changes; handling purchase and redemption transactions;
mailing prospectuses and reports; mailing and tabulating proxies; processing
share certificate transactions; and maintaining shareholder records and
lists. For these services Dean Witter Trust Company receives a per
shareholder account fee from the Fund.
INDEPENDENT ACCOUNTANTS
- -----------------------------------------------------------------------------
Price Waterhouse LLP serves as the independent accountants of the Fund.
The independent accountants are responsible for auditing the annual financial
statements of the Fund.
REPORTS TO SHAREHOLDERS
- -----------------------------------------------------------------------------
The Fund will send to shareholders, at least semi-annually, reports
showing the Fund's portfolio and other information. An annual report,
containing financial statements audited by independent accountants, will be
sent to shareholders each year.
The Fund's fiscal year ends on September 30. The financial statements of
the Fund must be audited at least once a year by independent accountants
whose selection is made annually by the Fund's Board of Trustees.
26
<PAGE>
<PAGE>
LEGAL COUNSEL
- -----------------------------------------------------------------------------
Sheldon Curtis, Esq., who is an officer and the General Counsel of the
Investment Manager, is an officer and the General Counsel of the Fund.
EXPERTS
- -----------------------------------------------------------------------------
The financial statements of the Fund included in this Statement of
Additional Information and incorporated by reference in the Prospectus have
been so included and incorporated in reliance on the report of Price
Waterhouse LLP, independent accountants, given on the authority of said firm
as experts in auditing and accounting.
REGISTRATION STATEMENT
- -----------------------------------------------------------------------------
This Statement of Additional Information and the Prospectus do not contain
all of the information set forth in the Registration Statement the Fund has
filed with the Securities and Exchange Commission. The complete Registration
Statement may be obtained from the Securities and Exchange Commission upon
payment of the fee prescribed by the rules and regulations of the Commission.
27
<PAGE>
<PAGE>
DEAN WITTER DEVELOPING GROWTH SECURITIES TRUST
REPORT OF INDEPENDENT ACCOUNTANTS
- -------------------------------------------------------------------------------
To the Shareholders and Trustees of Dean Witter Developing Growth Securities
Trust
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Dean Witter Developing Growth
Securities Trust (the "Fund") at September 30, 1994, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended and the financial highlights for each of
the ten years in the period then ended, in conformity with generally accepted
accounting principles. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the responsibility of the
Fund's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
financial statements in accordance with generally accepted auditing standards
which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities owned at September 30, 1994 by correspondence with
the custodian and brokers, provide a reasonable basis for the opinion expressed
above.
PRICE WATERHOUSE LLP
New York, New York
November 10, 1994
28
<PAGE>
<PAGE>
DEAN WITTER DEVELOPING GROWTH SECURITIES TRUST
PORTFOLIO OF INVESTMENTS SEPTEMBER 30, 1994
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------- ---------------
COMMON STOCKS (96.8%)
<C> <S> <C>
ADVERTISING (0.4%)
30,000 CMG Information Services, Inc.*......................................................... $ 307,500
70,000 Dimark, Inc.*........................................................................... 1,163,750
---------------
1,471,250
---------------
AEROSPACE & DEFENSE (0.7%)
70,000 Watkins-Johnson Company................................................................. 2,397,500
---------------
AUTO PARTS (1.0%)
80,000 Allen Group, Inc........................................................................ 1,650,000
20,000 Exide Corp.............................................................................. 947,500
17,000 Hi Shear Technology Corp.*.............................................................. 62,688
50,000 Safety Components International, Inc.*.................................................. 850,000
---------------
3,510,188
---------------
AUTO RELATED (0.8%)
100,000 Harley Davidson, Inc.................................................................... 2,762,500
---------------
BANKING (1.1%)
30,000 Commercial Federal Corp.*............................................................... 742,500
80,000 First Bank System, Inc.................................................................. 2,920,000
---------------
3,662,500
---------------
BANKS - REGIONAL (3.9%)
80,000 Bank South Corp......................................................................... 1,480,000
35,000 Charter One Financial, Inc.............................................................. 708,750
60,000 Coral Gables Fedcorp., Inc.*............................................................ 1,132,500
20,000 Cullen/Frost Bankers, Inc............................................................... 750,000
60,000 First Security Corp./Delaware........................................................... 1,710,000
20,000 Leader Financial Corp.*................................................................. 520,000
20,000 Liberty Bankcorp, Inc./Oklahoma......................................................... 660,000
30,000 Provident Bancorp, Inc.................................................................. 1,035,000
50,000 Provident Bankshares Corporation........................................................ 1,200,000
50,000 Regions Financial Corp.................................................................. 1,743,750
20,000 US Bancorp Oregon....................................................................... 510,000
20,000 Victoria Bankshares, Inc................................................................ 530,000
50,000 West One Bancorp........................................................................ 1,393,750
---------------
13,373,750
---------------
BANKS - THRIFT INSTITUTIONS (0.2%)
15,000 Columbia First Bank*.................................................................... 592,500
---------------
BIOTECHNOLOGY (2.2%)
80,000 Cellpro, Inc.*.......................................................................... 1,600,000
120,000 Centocor, Inc.*......................................................................... 2,205,000
80,000 Procyte Corp.*.......................................................................... 710,000
110,000 Protein Design Labs, Inc.*.............................................................. 2,117,500
120,000 U.S. Bioscience, Inc.*.................................................................. 930,000
---------------
7,562,500
---------------
BROADCAST MEDIA (0.3%)
45,000 United Video Satellite Group (Class A)*................................................. 877,500
---------------
</TABLE>
29
<PAGE>
<PAGE>
DEAN WITTER DEVELOPING GROWTH SECURITIES TRUST
PORTFOLIO OF INVESTMENTS SEPTEMBER 30, 1994 (CONTINUED)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------- BUILDING MATERIALS (0.1%) ---------------
<C> <S> <C>
20,000 NCI Building System*.................................................................... $ 380,000
---------------
BUSINESS EQUIPMENT (1.6%)
20,000 Corporate Express*...................................................................... 415,000
50,000 Investment Technology Group*............................................................ 662,500
40,000 IPC Information*........................................................................ 600,000
30,000 Metrologic Instrument*.................................................................. 330,000
30,000 Scitex, Ltd............................................................................. 671,250
90,000 Symbol Technologies, Inc.*.............................................................. 2,745,000
---------------
5,423,750
---------------
BUSINESS SYSTEMS (0.3%)
45,000 American Management Systems, Inc.*...................................................... 1,057,500
---------------
CHEMICALS (0.8%)
60,000 Borden Chemicals and Plastics, L.P...................................................... 1,485,000
70,000 Methanex Corp.*......................................................................... 1,242,500
---------------
2,727,500
---------------
COMMERCIAL SERVICES (1.8%)
25,000 Affiliated Computer*.................................................................... 487,500
50,000 Career Horizons, Inc.*.................................................................. 812,500
20,000 Danka Business Systems (ADR)............................................................ 367,500
25,800 Insurance Auto Auctions, Inc.*.......................................................... 864,300
100,000 Manpower, Inc........................................................................... 2,737,500
40,000 Norrell Corp............................................................................ 690,000
---------------
5,959,300
---------------
COMMUNICATIONS - SOFTWARE (1.6%)
70,000 FTP Software, Inc.*..................................................................... 1,662,500
20,000 Fulcrum Technologies, Inc.*............................................................. 235,000
60,000 Glenayre Technologies, Inc.*............................................................ 3,435,000
---------------
5,332,500
---------------
COMMUNICATIONS - EQUIPMENT/MANUFACTURERS (10.0%)
170,000 3COM Corp.*............................................................................. 6,353,750
100,000 Andrew Corp.*........................................................................... 4,975,000
70,000 Antec Corp.*............................................................................ 1,785,000
60,000 Boston Technology*...................................................................... 780,000
20,000 C Cor Electronics*...................................................................... 785,000
37,500 Cabletron System, Inc.*................................................................. 1,785,937
80,000 Cisco Systems, Inc.*.................................................................... 2,190,000
130,000 DSC Communications Corp.*............................................................... 3,705,000
100,000 General Datacomm Industries, Inc.*...................................................... 2,825,000
70,000 General Instrument Corp.*............................................................... 1,995,000
40,000 Telco Systems, Inc.*.................................................................... 520,000
150,000 Tellabs, Inc.*.......................................................................... 6,375,000
---------------
34,074,687
---------------
COMPUTER SOFTWARE (6.5%)
40,000 Adobe Systems........................................................................... 1,300,000
80,000 Alias Research, Inc.*................................................................... 1,560,000
54,000 Compuware*.............................................................................. 2,538,000
</TABLE>
30
<PAGE>
<PAGE>
DEAN WITTER DEVELOPING GROWTH SECURITIES TRUST
PORTFOLIO OF INVESTMENTS SEPTEMBER 30, 1994 (CONTINUED)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------- ---------------
<C> <S> <C>
140,000 Corel Corp.*............................................................................ $ 2,905,000
40,000 Informix Software, Inc.*................................................................ 1,105,000
50,000 Intuit, Inc.*........................................................................... 2,187,500
135,000 Oracle Systems Corp.*................................................................... 5,805,000
60,000 Peoplesoft, Inc.*....................................................................... 2,895,000
80,000 Vmark Software, Inc.*................................................................... 1,680,000
---------------
21,975,500
---------------
COMPUTER-AIDED DESIGN (1.3%)
40,000 Integrated Silicon Systems*............................................................. 1,150,000
20,000 Parametric Technology*.................................................................. 655,000
60,000 Synopsys, Inc.*......................................................................... 2,715,000
---------------
4,520,000
---------------
COMPUTERS - DISTRIBUTION (1.3%)
15,000 Intelligent Electronics, Inc............................................................ 253,125
20,000 Merisel, Inc.*.......................................................................... 197,500
110,000 Micro Warehouse, Inc.*.................................................................. 3,410,000
15,000 Tech Data Corp.*........................................................................ 281,250
40,000 Ultimate Electronics, Inc.*............................................................. 400,000
---------------
4,541,875
---------------
COMPUTERS - PERIPHERAL EQUIPMENT (2.3%)
110,000 EMC Corporation*........................................................................ 2,213,750
40,000 Exabyte Corp.*.......................................................................... 815,000
30,000 Mylex Corp.*............................................................................ 285,000
45,000 Network General Corp.*.................................................................. 871,875
100,000 Read-Rite Corp.*........................................................................ 1,875,000
80,000 Seagate Technology Corp.*............................................................... 1,920,000
---------------
7,980,625
---------------
CRUDE PRODUCTS (0.9%)
140,000 Pogo Producing Co....................................................................... 2,940,000
---------------
ELECTRICAL HOUSEHOLD APPLIANCES (1.9%)
30,000 Duracraft Corp.*........................................................................ 1,012,500
60,000 First Alert, Inc.*...................................................................... 2,280,000
50,000 Harman International Industries, Inc.................................................... 1,743,750
95,000 Recoton Corp.*.......................................................................... 1,520,000
---------------
6,556,250
---------------
ELECTRONICS (0.9%)
45,000 Hutchinson Technology, Inc.*............................................................ 1,215,000
30,000 Molex, Inc.............................................................................. 1,275,000
40,000 Trimble Navigation Ltd.*................................................................ 570,000
---------------
3,060,000
---------------
ENTERTAINMENT (0.7%)
40,000 Acclaim Entertainment, Inc.*............................................................ 680,000
100,000 Casino America, Inc.*................................................................... 1,125,000
40,000 Electronic Arts, Inc.*.................................................................. 730,000
---------------
2,535,000
---------------
</TABLE>
31
<PAGE>
<PAGE>
DEAN WITTER DEVELOPING GROWTH SECURITIES TRUST
PORTFOLIO OF INVESTMENTS SEPTEMBER 30, 1994 (CONTINUED)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------- ENVIRONMENTAL (2.1%) ---------------
<C> <S> <C>
20,000 Donaldson Co., Inc...................................................................... $ 445,000
40,000 Newpark Resources, Inc.*................................................................ 760,000
60,000 United Waste Systems, Inc.*............................................................. 1,455,000
90,000 Wellman, Inc............................................................................ 3,071,250
70,000 Western Waste Industries*............................................................... 1,242,500
---------------
6,973,750
---------------
FOOD PROCESSING (0.3%)
40,000 Hudson Foods, Inc. (Class A)............................................................ 910,000
---------------
HEALTH CARE DIVERSIFIED (0.8%)
100,000 United American Healthcare Corp.*....................................................... 2,850,000
---------------
HEALTHCARE PRODUCTS & SERVICES (2.6%)
31,000 Cardinal Health, Inc.................................................................... 1,298,125
60,000 Cerner Corp.*........................................................................... 2,430,000
100,000 Diagnostek, Inc.*....................................................................... 1,850,000
100,000 HBO & Co................................................................................ 3,400,000
---------------
8,978,125
---------------
HOSPITAL MANAGEMENT & HEALTH MAINTENANCE ORGANIZATIONS (7.8%)
100,000 Beverly Enterprises*.................................................................... 1,537,500
50,000 Columbia HCA Healthcare Corp............................................................ 2,175,000
35,000 Coventry Corp.*......................................................................... 805,000
120,000 Healthsouth Rehabilitation*............................................................. 4,710,000
100,000 Humana, Inc.*........................................................................... 2,362,500
25,000 Ornda Healthcorp*....................................................................... 396,875
40,000 Oxford Health Plans, Inc.*.............................................................. 3,040,000
100,000 Quantum Health Resources, Inc.*......................................................... 4,200,000
100,000 Regency Health Services, Inc.*.......................................................... 1,112,500
115,000 Sun Healthcare Group, Inc.*............................................................. 2,515,625
35,000 United Healthcare Corp.*................................................................ 1,855,000
40,000 Vencor, Inc.*........................................................................... 1,820,000
---------------
26,530,000
---------------
HOTELS / MOTELS (3.5%)
35,000 Doubletree, Corp.*...................................................................... 638,750
130,000 Hospitality Franchise Systems, Inc.*.................................................... 4,078,750
100,000 La Quinta Inns, Inc..................................................................... 3,587,500
110,000 Promus Cos., Inc.*...................................................................... 3,698,750
---------------
12,003,750
---------------
INSURANCE (2.6%)
100,000 AFLAC, Inc.............................................................................. 3,412,500
50,000 Frontier Insurance Group, Inc........................................................... 1,531,250
50,000 John Alden Financial Corp............................................................... 1,831,250
50,000 Partnerre Holdings, Ltd................................................................. 1,075,000
30,000 Pxre Corp............................................................................... 847,500
---------------
8,697,500
---------------
LEISURE TIME / EQUIPMENT (2.7%)
90,000 Arctco, Inc............................................................................. 1,665,000
30,000 Callaway Golf Co........................................................................ 1,031,250
</TABLE>
32
<PAGE>
<PAGE>
DEAN WITTER DEVELOPING GROWTH SECURITIES TRUST
PORTFOLIO OF INVESTMENTS SEPTEMBER 30, 1994 (CONTINUED)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------- ---------------
<C> <S> <C>
50,000 Cobra Golf, Inc.*....................................................................... $ 2,762,500
80,000 Hollywood Entertainment Corp.*.......................................................... 2,200,000
80,000 International Game Technology........................................................... 1,650,000
---------------
9,308,750
---------------
MACHINERY - CONSTRUCTION & MATERIALS (0.5%)
70,000 Kennametal, Inc......................................................................... 1,828,750
---------------
MEDICAL EQUIPMENT (2.9%)
120,000 Pyxis Corporation*...................................................................... 2,940,000
80,000 SciMed Life Systems, Inc.*.............................................................. 3,460,000
40,000 Sofamor Danek Group, Inc.*.............................................................. 775,000
50,000 Summit Technology, Inc.*................................................................ 1,687,500
50,000 Ventritex, Inc.*........................................................................ 975,000
---------------
9,837,500
---------------
MEDICAL SERVICES (0.3%)
50,000 Apogee, Inc.*........................................................................... 862,500
---------------
METALS & MINING (0.4%)
50,000 Freeport-McMoran Copper & Gold, Inc..................................................... 1,250,000
---------------
NATURAL GAS (1.0%)
60,000 Noble Affiliates, Inc................................................................... 1,605,000
70,000 Parker & Parsley Petroleum Co........................................................... 1,741,250
---------------
3,346,250
---------------
OIL & GAS PRODUCTS (1.0%)
50,000 Barrett Resources Corp.*................................................................ 931,250
50,000 Chesapeake Energy Corp.*................................................................ 1,037,500
90,000 Energy Service Company, Inc.*........................................................... 1,338,750
---------------
3,307,500
---------------
OIL WELL EQUIPMENT & SERVICE (3.1%)
100,000 Baker Hughes, Inc....................................................................... 1,862,500
140,000 Input/Output, Inc.*..................................................................... 3,290,000
70,000 Petroleum Geo - Services (ADR)*......................................................... 1,365,000
100,000 Seitel, Inc.*........................................................................... 2,712,500
90,000 Smith International, Inc.*.............................................................. 1,395,000
---------------
10,625,000
---------------
PAPER & FOREST PRODUCTS (0.7%)
20,000 Consolidated Paper...................................................................... 1,030,000
50,000 Shorewood Packaging Corp.*.............................................................. 1,075,000
20,000 Stone Container Corp.*.................................................................. 390,000
---------------
2,495,000
---------------
PHARMACEUTICALS (0.8%)
70,000 Dura Pharmaceuticals, Inc.*............................................................. 770,000
100,000 Ivax Corp............................................................................... 1,962,500
---------------
2,732,500
---------------
RETAIL - GENERAL MERCHANDISE (0.2%)
20,000 Dollar General.......................................................................... 515,000
---------------
</TABLE>
33
<PAGE>
<PAGE>
DEAN WITTER DEVELOPING GROWTH SECURITIES TRUST
PORTFOLIO OF INVESTMENTS SEPTEMBER 30, 1994 (CONTINUED)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------- RETAIL - SPECIALTY (3.4%) ---------------
<C> <S> <C>
12,500 Baby Superstore*........................................................................ $ 403,125
30,000 Bed Bath & Beyond, Inc.*................................................................ 765,000
31,300 Claires Stores, Inc..................................................................... 344,300
40,000 Ernst Home Center*...................................................................... 660,000
70,000 Fossil, Inc.*........................................................................... 1,697,500
60,000 Hechinger Co. (Class A)................................................................. 862,500
40,000 Lowe's Co., Inc......................................................................... 1,545,000
50,000 Welcome Home, Inc.*..................................................................... 587,500
135,000 Williams-Sonoma, Inc.*.................................................................. 4,590,000
---------------
11,454,925
---------------
SEMICONDUCTOR EQUIPMENT (7.8%)
75,000 Applied Materials, Inc.*................................................................ 3,468,750
40,000 Asyst Technologies, Inc.*............................................................... 620,000
70,000 Credence Systems Corp.*................................................................. 1,767,500
80,000 Electroglas, Inc.*...................................................................... 3,940,000
80,000 F S I International, Inc.*.............................................................. 1,840,000
100,000 KLA Instruments Corp.*.................................................................. 4,950,000
110,000 Kulicke & Soffa Industries*............................................................. 1,787,500
120,000 LSI Logic Corp.*........................................................................ 4,485,000
100,000 Ultratech Stepper, Inc.*................................................................ 3,600,000
---------------
26,458,750
---------------
SEMICONDUCTORS (4.3%)
40,000 Altera Corp.*........................................................................... 1,175,000
100,000 Analog Devices*......................................................................... 3,300,000
60,000 Atmel Corp*............................................................................. 1,882,500
80,000 DSP Group, Inc.*........................................................................ 1,720,000
55,000 Integrated Device Technology, Inc.*..................................................... 1,148,125
50,000 Microchip Technology, Inc.*............................................................. 1,950,000
100,000 Micron Technology, Inc.................................................................. 3,450,000
---------------
14,625,625
---------------
TELECOMMUNICATIONS (1.1%)
70,000 Airtouch Communications, Inc.*.......................................................... 2,003,750
30,000 Mobile Telecommunication Tech Corp.*.................................................... 607,500
40,000 Paging Network*......................................................................... 1,150,000
---------------
3,761,250
---------------
TEXTILES (1.4%)
40,000 Donnkenny, Inc.*........................................................................ 835,000
30,000 Farah, Inc.*............................................................................ 341,250
40,000 Nautica Enterprise, Inc.*............................................................... 1,220,000
50,000 Norton McNaughton, Inc.*................................................................ 1,000,000
60,000 Wolverine World Wide.................................................................... 1,530,000
---------------
4,926,250
---------------
TRANSPORTATION (2.9%)
25,000 Dorsey Trailers, Inc.*.................................................................. 403,125
20,000 Greenbrier Cos., Inc.*.................................................................. 367,500
70,000 Landstar System, Inc.*.................................................................. 2,362,500
60,000 Pittston Services Group................................................................. 1,710,000
</TABLE>
34
<PAGE>
<PAGE>
DEAN WITTER DEVELOPING GROWTH SECURITIES TRUST
PORTFOLIO OF INVESTMENTS SEPTEMBER 30, 1994 (CONTINUED)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------- ---------------
<C> <S> <C>
35,000 Railtex, Inc.*.......................................................................... $ 735,000
25,000 Swift Transportation Co., Inc.*......................................................... 1,068,750
75,000 Wabash National Corp.................................................................... 2,756,250
50,000 WorldCorp, Inc.*........................................................................ 337,500
---------------
9,740,625
---------------
TOTAL COMMON STOCKS (IDENTIFIED COST $286,546,866)...................................... 329,293,975
---------------
CONVERTIBLE PREFERRED STOCK (0.0%)
OIL & GAS PRODUCTS (0.0%)
4,000 Snyder Oil Corp. (Identified Cost $100,000)............................................. 97,000
---------------
WARRANTS* (0.0%)
ELECTRONIC COMPONENTS (0.0%)
20,000 Applied Science & Technology (expiration date 11/9/98).................................. 10,000
---------------
FINANCIAL SERVICES (0.0%)
25,000 Casino & Credit Services, Inc. (expiration date 8/10/98)................................ 34,375
---------------
TOTAL WARRANTS (IDENTIFIED COST $7,000)................................................. 44,375
---------------
<CAPTION>
PRINCIPAL
AMOUNT (IN
THOUSANDS)
- -----------
<C> <S> <C>
SHORT-TERM INVESTMENTS (3.5%)
U.S. GOVERNMENT AGENCY (A)(2.5%)
$ 8,590 Student Loan Market Association 4.9% due 10/3/94 (Amortized Cost $8,587,662)............ 8,587,662
-------------
REPURCHASE AGREEMENT (1.0%)
3,218 The Bank of New York 5.0% due 10/3/94 (dated 9/30/94; proceeds $3,219,973;
collateralized by $3,366,805 U.S. Treasury Bond 7.50% due 11/15/16 valued at
$3,283,005) (Identified Cost $3,218,632).............................................. 3,218,632
-------------
TOTAL SHORT-TERM INVESTMENTS (IDENTIFIED COST $11,806,294).............................. 11,806,294
-------------
TOTAL INVESTMENTS (IDENTIFIED COST $298,460,160)(B)................... 100.3% 341,241,644
LIABILITIES IN EXCESS OF OTHER ASSETS................................. (0.3) (1,072,660)
---------- -------------
NET ASSETS............................................................ 100.0% $ 340,168,984
---------- -------------
---------- -------------
<FN>
- ----------------
ADR AMERICAN DEPOSITORY RECEIPT.
* NON-INCOME PRODUCING SECURITY.
(A) U.S. GOVERNMENT AGENCY WAS PURCHASED ON A DISCOUNT BASIS. THE INTEREST
RATE SHOWN HAS BEEN ADJUSTED TO REFLECT A BOND EQUIVALENT YIELD.
(B) THE AGGREGATE COST FOR FEDERAL INCOME TAX PURPOSES IS $298,828,098; THE
AGGREGATE GROSS UNREALIZED APPRECIATION IS $52,953,832 AND THE AGGREGATE
GROSS UNREALIZED DEPRECIATION IS $10,540,286, RESULTING IN NET UNREALIZED
APPRECIATION OF $42,413,546.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
35
<PAGE>
<PAGE>
DEAN WITTER DEVELOPING GROWTH SECURITIES TRUST
FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1994
- -------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $298,460,160) (Note 1). $ 341,241,644
Receivable for:
Investments sold........................ 7,982,800
Shares of beneficial interest sold...... 1,311,969
Dividends............................... 94,530
Interest................................ 447
Prepaid expenses.......................... 47,401
-------------
TOTAL ASSETS...................... 350,678,791
-------------
LIABILITIES:
Payable for:
Investments purchased................... 9,700,764
Plan of distribution fee (Note 3)....... 272,828
Shares of beneficial interest
repurchased............................. 233,129
Investment management fee (Note 2)...... 136,414
Accrued expenses (Note 4)................. 166,672
-------------
TOTAL LIABILITIES................. 10,509,807
-------------
NET ASSETS:
Paid-in-capital........................... 294,784,855
Net unrealized appreciation on
investments............................. 42,781,484
Accumulated undistributed net investment
income.................................. 30,200
Accumulated undistributed net realized
gain on investments..................... 2,572,445
-------------
NET ASSETS........................ $ 340,168,984
-------------
-------------
NET ASSET VALUE PER SHARE, 19,378,001
shares outstanding (unlimited shares
authorized of $.01 par value)...........
$17.55
-------------
-------------
</TABLE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED SEPTEMBER 30, 1994
- -------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
INCOME
Dividends (net of $9,412 foreign
withholding tax).................... $ 905,624
Interest.............................. 486,977
-------------
TOTAL INCOME...................... 1,392,601
-------------
EXPENSES
Plan of distribution fee (Note 3)..... 3,031,093
Investment management fee (Note 2).... 1,515,547
Transfer agent fees and expenses
(Note 4)............................ 555,179
Registration fees..................... 112,520
Custodian fees........................ 46,290
Shareholder reports and notices....... 44,732
Professional fees..................... 42,989
Trustees' fees and expenses
(Note 4)............................ 31,479
Other................................. 6,305
-------------
TOTAL EXPENSES.................... 5,386,134
-------------
NET INVESTMENT LOSS............. (3,993,533)
-------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS (Note 1):
Net realized gain on investments...... 3,682,165
Net change in unrealized appreciation
on investments...................... (27,082,586)
-------------
NET LOSS ON INVESTMENTS........... (23,400,421)
-------------
NET DECREASE IN NET ASSETS
RESULTING FROM OPERATIONS..... $ (27,393,954)
-------------
-------------
</TABLE>
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE YEAR ENDED FOR THE YEAR ENDED
SEPTEMBER 30, 1994 SEPTEMBER 30, 1993
------------------- -------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment loss................................................. $ (3,993,533) $ (2,434,277)
Net realized gain on investments.................................... 3,682,165 28,771,728
Net change in unrealized appreciation on investments................ (27,082,586) 58,521,596
------------------- -------------------
Net increase (decrease) in net assets resulting from
operations..................................................... (27,393,954) 84,859,047
------------------- -------------------
Distributions to shareholders from net realized gain.................. (16,359,904) -0-
------------------- -------------------
Net increase from transactions in shares of beneficial interest
(Note 5)............................................................. 143,534,029 42,548,116
------------------- -------------------
Total increase.................................................. 99,780,171 127,407,163
NET ASSETS:
Beginning of period................................................... 240,388,813 112,981,650
------------------- -------------------
END OF PERIOD (including accumulated undistributed net investment
income of $30,200 and -0-, respectively)............................. $ 340,168,984 $ 240,388,813
------------------- -------------------
------------------- -------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
36
<PAGE>
<PAGE>
DEAN WITTER DEVELOPING GROWTH SECURITIES TRUST
NOTES TO FINANCIAL STATEMENTS
------------------------------------------------------------------------------
1. ORGANIZATION AND ACCOUNTING POLICIES -- Dean Witter Developing Growth
Securities 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 was organized as a Massachusetts business trust
on December 28, 1982 and commenced operations on April 29, 1983.
The following is a summary of significant accounting policies:
A. VALUATION OF INVESTMENTS -- (1) an equity security listed or traded on the
New York or American 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); (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,
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 (valuation of debt securities for which market quotations are
not readily available may be based upon current market prices of securities
which are comparable in coupon, rating and maturity or an appropriate matrix
utilizing similar factors); (4) short-term debt securities having a maturity
date of more than sixty days are valued on a mark-to-market basis, that is,
at prices based on market quotations for securities of a similar type,
yield, quality and maturity, until sixty days prior to maturity and
thereafter at amortized cost based on their value on the 61st day.
Short-term debt securities having a maturity date of sixty days or less at
the time of purchase are valued at amortized cost; and (5) 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.
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 on the identified cost
method. Dividend income is recorded on the ex-dividend date. Interest income
is accrued daily.
C. REPURCHASE AGREEMENTS -- The Fund's custodian takes possession on behalf
of the Fund of the collateral pledged for investments in repurchase
agreements. It is the policy of the Fund to value the underlying collateral
daily on a mark-to-market basis to determine that the value, including
accrued interest, is at least equal to the repurchase price plus accrued
interest. In the event of default of the obligation to repurchase, the Fund
has the right to liquidate the collateral and apply the proceeds in
satisfaction of the obligation.
D. 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.
E. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- The Fund records dividends
and distributions to its shareholders on the record 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 that 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
37
<PAGE>
<PAGE>
DEAN WITTER DEVELOPING GROWTH SECURITIES TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- -------------------------------------------------------------------------------
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.
2. INVESTMENT MANAGEMENT AGREEMENT -- Pursuant to an Investment Management
Agreement with Dean Witter InterCapital Inc. (the "Investment Manager"), the
Fund pays its Investment Manager a management fee, accrued daily and payable
monthly, by applying the following annual rates to the net assets of the Fund
determined as of the close of each business day: 0.50% of the portion of the
daily net assets not exceeding $500 million and 0.475% of the portion of the
daily net assets exceeding $500 million.
Under the terms of the Agreement, in addition to managing the Fund's
investments, the Investment Manager maintains certain of the Fund's books and
records and furnishes, at its own expense, office space, facilities, equipment,
clerical, bookkeeping and certain legal services, and pays the salaries of all
personnel, including officers of the Fund who are employees of the Investment
Manager. The Investment Manager also bears the cost of telephone services,
heat, light, power and other utilities provided to the Fund.
3. PLAN OF DISTRIBUTION -- Shares of the Fund are distributed by Dean Witter
Distributors Inc. (the "Distributor"), an affiliate of the Investment 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., an affiliate of the Investment Manager and Distributor, and other
employees or selected 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
by the Distributor, but not yet recovered, may be recovered through future
distribution fees from the Fund and contingent deferred sales charges from the
Fund's shareholders.
The Distributor has informed the Fund that for the year ended September 30,
1994, it received approximately $450,000 in contingent deferred sales charges
from certain redemptions of the Fund's shares. The Fund's shareholders pay such
charges which are not an expense of the Fund.
4. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES -- The cost of
purchases and the proceeds from sales of portfolio securities, excluding
short-term investments, for the year ended September 30, 1994 aggregated
$582,402,460 and $467,215,835, respectively. For the year ended September 30,
1994, the
38
<PAGE>
<PAGE>
DEAN WITTER DEVELOPING GROWTH SECURITIES TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- -------------------------------------------------------------------------------
Fund incurred brokerage commissions of $118,670 with Dean Witter Reynolds Inc.
for portfolio transactions executed on behalf of the Fund.
Dean Witter Trust Company, an affiliate of the Investment Manager and
Distributor, is the Fund's transfer agent. At September 30, 1994, the Fund had
transfer agent fees and expenses payable of approximately $54,000.
Effective January 1, 1994, the Fund adopted an unfunded noncontributory
defined benefit pension plan covering all independent Trustees of the Fund who
will have served as an independent Trustee for at least five years at the time
of retirement. Benefits under this plan are based on years of service and
compensation during the last five years of service. Aggregate pension costs for
the year ended September 30, 1994, included in Trustees' fees and expenses in
the Statement of Operations, amounted to $8,804. At September 30, 1994, the
Fund had an accrued pension liability of $8,124 which is included in accrued
expenses in the Statement of Assets and Liabilities.
5. SHARES OF BENEFICIAL INTEREST -- Transactions in shares of beneficial
interest were as follows:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED FOR THE YEAR ENDED
SEPTEMBER 30, 1994 SEPTEMBER 30, 1993
---------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
------------ -------------- ----------- --------------
<S> <C> <C> <C> <C>
Sold..................................... 18,140,578 $ 331,909,789 10,539,927 $ 172,956,853
Reinvestment of distributions............ 876,511 15,566,841 -0- -0-
------------ -------------- ----------- --------------
19,017,089 347,476,630 10,539,927 172,956,853
Repurchased.............................. (11,367,004) (203,942,601) (8,070,367) (130,408,737)
------------ -------------- ----------- --------------
Net increase............................... 7,650,085 $ 143,534,029 2,469,560 $ 42,548,116
------------ -------------- ----------- --------------
------------ -------------- ----------- --------------
</TABLE>
6. FEDERAL INCOME TAX STATUS -- At September 30, 1994, the Fund had temporary
book/tax differences which were primarily attributable to capital loss
deferrals on wash sales and permanent book/tax differences primarily
attributable to net operating losses and dividend redesignations. To reflect
cumulative reclassifications arising from permanent book/tax differences as of
September 30, 1993, accumulated undistributed net realized gain on investments
was charged $37,339, paid-in-capital was charged $6,143,207 and accumulated
undistributed net investment income was credited $6,180,546. To reflect
reclassifications arising from permanent book/tax differences for the year
ended September 30, 1994, paid-in-capital was charged and accumulated
undistributed net investment income was credited $4,023,729.
1994 FEDERAL TAX NOTICE (UNAUDITED)
During the year ended September 30, 1994, the Fund paid to shareholders
$1.133603 per share from long-term capital gains.
39
<PAGE>
<PAGE>
DEAN WITTER DEVELOPING GROWTH SECURITIES TRUST
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------
Selected ratios and per share data for a share of beneficial interest
outstanding throughout each period:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED SEPTEMBER 30,
------------------------------------------------------------------------------------------------------
1994 1993 1992 1991 1990 1989 1988 1987
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net asset value,
beginning of period..... $ 20.50 $ 12.20 $ 14.05 $ 8.92 $ 11.33 $ 9.67 $ 10.96 $ 8.57
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Net investment income
(loss).................. 0.00 (0.12) (0.12) (0.07) (0.15) 0.04 (0.03) (0.02)
Net realized and
unrealized gain (loss)
on investments.......... (1.82) 8.42 (1.73) 5.20 (2.21) 1.62 (1.26) 2.42
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Total from investment
operations.............. (1.82) 8.30 (1.85) 5.13 (2.36) 1.66 (1.29) 2.40
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Less dividends and
distributions from:
Net investment income.. 0.00 0.00 0.00 0.00 (0.05) 0.00 0.00 (0.01)
Net realized gains on
investments........... (1.13) 0.00 0.00 0.00 0.00 0.00 0.00 0.00
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Total dividends and
distributions........... (1.13) 0.00 0.00 0.00 (0.05) 0.00 0.00 (0.01)
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of
period.................. $ 17.55 $ 20.50 $ 12.20 $ 14.05 $ 8.92 $ 11.33 $ 9.67 $ 10.96
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
TOTAL INVESTMENT RETURN
+....................... (8.88)% 67.95% (13.17)% 57.51% (20.87)% 17.17% (11.77)% 28.07%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands).......... $ 340,169 $ 240,389 $ 112,982 $ 115,337 $ 67,604 $ 89,236 $ 108,411 $ 179,276
Ratios to average net
assets:
Expenses............... 1.78% 1.84% 1.86% 1.92% 2.02% 1.89% 1.90% 1.83%
Net investment income
(loss)................ (1.32)% (1.52)% (1.14)% (0.73)% (1.32)% 0.59% (0.28)% (0.20)%
Portfolio turnover
rate.................... 160% 203% 153% 88% 53% 84% 70% 68%
<FN>
- --------------------
+ DOES NOT REFLECT THE DEDUCTION OF SALES LOAD.
<CAPTION>
1986 1985
----------- -----------
<S> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net asset value,
beginning of period..... $ 7.68 $ 7.95
----------- -----------
Net investment income
(loss).................. 0.01 0.05
Net realized and
unrealized gain (loss)
on investments.......... 0.92 (0.13)
----------- -----------
Total from investment
operations.............. 0.93 (0.08)
----------- -----------
Less dividends and
distributions from:
Net investment income.. (0.04) (0.19)
Net realized gains on
investments........... 0.00 0.00
----------- -----------
Total dividends and
distributions........... (0.04) (0.19)
----------- -----------
Net asset value, end of
period.................. $ 8.57 $ 7.68
----------- -----------
----------- -----------
TOTAL INVESTMENT RETURN
+....................... 12.22% (1.05)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
<PAGE>
(in thousands).......... $ 139,662 $ 153,524
Ratios to average net
assets:
Expenses............... 1.80% 1.82%
Net investment income
(loss)................ 0.08% 0.52%
Portfolio turnover
rate.................... 90% 51%
<FN>
- --------------------
+ DOES NOT REFLECT THE DEDUCTION OF SALES LOAD.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
40
94NYC4504
INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT made as of the 30th day of June, 1993, and
amended as of May 1, 1994, by and between Dean
Witter Developing Growth Securities Trust, an unincorporated
business trust organized under the laws of the
Commonwealth of Massachusetts (hereinafter called the
"Fund"), and Dean Witter InterCapital Inc., a Delaware
corporation (hereinafter called the "Investment Manager"):
Whereas, The Fund is engaged in business as an open-
end management investment company and is registered
as such under the Investment Company Act of 1940, as amended
(the "Act"); and
Whereas, The Investment Manager is registered as an
investment adviser under the Investment Advisers Act of
1940, and engages in the business of acting as investment
adviser; and
Whereas, The Fund desires to retain the Investment
Manager to render management and investment advisory
services in the manner and on the terms and conditions
hereinafter set forth; and
Whereas, The Investment Manager desires to be
retained to perform services on said terms and conditions:
Now, Therefore, this Agreement
W I T N E S S E T H:
that in consideration of the premises and the mutual
covenants hereinafter contained, the Fund and the Investment
Manager agree as follows:
1. The Fund hereby retains the Investment Manager
to act as investment manager of the Fund and, subject
to the supervision of the Trustees, to supervise the
investment activities of the Fund as hereinafter set forth.
Without limiting the generality of the foregoing, the
Investment Manager shall obtain and evaluate such
information and advice relating to the economy, securities
and commodities markets and securities and commodities as it
deems necessary or useful to discharge its duties hereunder;
shall continuously manage the assets of the Fund in a manner
consistent with the investment objectives and policies of
the Fund; shall determine the securities and commodities to
be purchased, sold or otherwise disposed of by the Fund and
the timing of such purchases, sales and dispositions; and
shall take such further action, including the placing of
purchase and sale orders on behalf of the Fund, as the
Investment Manager shall deem necessary or appropriate. The
Investment Manager shall also furnish to or place at the
disposal of the Fund such of the information, evaluations,
analyses and opinions formulated or obtained by the
Investment Manager in the discharge of its duties as the
Fund may, from time to time, reasonably request.
2. The Investment Manager shall, at its own
expense, maintain such staff and employ or retain such
personnel and consult with such other persons as it shall
from time to time determine to be necessary or useful to the
performance of its obligations under this Agreement. Without
limiting the generality of the foregoing, the staff and
personnel of the Investment Manager shall be deemed to
include persons employed or otherwise retained by the
Investment Manager to furnish statistical and other factual
data, advice regarding economic factors and trends,
information with respect to technical and scientific
developments, and such other information, advice and
assistance as the Investment Manager may desire. The
Investment Manager shall, as agent for the Fund, maintain
the Fund's records and books of account (other than those
maintained by the Fund's transfer agent, registrar,
custodian and other agencies). All such books and records so
maintained shall be the property of the Fund and, upon
request therefor, the Investment Manager shall surrender to
the Fund such of the books and records so requested.
3. The Fund will, from time to time, furnish or
otherwise make available to the Investment Manager such
financial reports, proxy statements and other information
relating to the business and affairs of the Fund as the
Investment Manager may reasonably require in order to
discharge its duties and obligations hereunder.
<PAGE>
4. The Investment Manager shall bear the cost of
rendering the investment management and supervisory
services to be performed by it under this Agreement, and
shall, at its own expense, pay the compensation of the
officers and employees, if any, of the Fund, and provide
such office space, facilities and equipment and such
clerical help and bookkeeping services as the Fund shall
reasonably require in the conduct of its business. The
Investment Manager shall also bear the cost of telephone
service, heat, light, power and other utilities provided to
the Fund.
5. The Fund assumes and shall pay or cause to be
paid all other expenses of the Fund, including without
limitation: fees pursuant to any plan of distribution that
the Fund may adopt; the charges and expenses of any
registrar, any custodian or depository appointed by the Fund
for the safekeeping of its cash, portfolio securities or
commodities and other property, and any stock transfer or
dividend agent or agents appointed by the Fund; brokers'
commissions chargeable to the Fund in connection with
portfolio transactions to which the Fund is a party; all
taxes, including securities or commodities issuance and
transfer taxes, and fees payable by the Fund to federal,
state or other governmental agencies; the cost and expense
of engraving or printing certificates representing shares of
the Fund; all costs and expenses in connection with the
registration and maintenance of registration of the Fund and
its shares with the Securities and Exchange Commission and
various states and other jurisdictions (including filing
fees and legal fees and disbursements of counsel); the cost
and expense of printing, including typesetting, and
distributing prospectuses and statements of additional
information of the Fund and supplements thereto to the
Fund's shareholders; all expenses of shareholders' and
Trustees' meetings and of preparing, printing and mailing
proxy statements and reports to shareholders; fees and
travel expenses of Trustees or members of any advisory board
or committee who are not employees of the Investment Manager
or any corporate affiliate of the Investment Manager; all
expenses incident to the payment of any dividend,
distribution, withdrawal or redemption, whether in shares or
in cash; charges and expenses of any outside service used
for pricing of the Fund's shares; charges and expenses of
legal counsel, including counsel to the Trustees of the Fund
who are not interested persons (as defined in the Act) of
the Fund or the Investment Manager, and of independent
accountants, in connection with any matter relating to the
Fund; membership dues of industry associations; interest
payable on Fund borrowings; postage; insurance premiums on
property or personnel (including officers and Trustees) of
the Fund which inure to its benefit; extraordinary expenses
(including but not limited to, legal claims and liabilities
and litigation costs and any indemnification related
thereto); and all other charges and costs of the Fund's
operation unless otherwise explicitly
provided herein.
6. For the services to be rendered, the
facilities furnished, and the expenses assumed by the
Investment Manager, the Fund shall pay to the Investment
Manager monthly compensation determined by applying the
following annual rates to the Fund's daily net assets: 0.50%
of daily net assets up to $500 million; and 0.475% of daily
net assets over $500 million. Except as hereinafter set
forth, compensation under this Agreement shall be calculated
and accrued daily and the amounts of the daily accruals
shall be paid monthly. Such calculations shall be made by
applying 1/365ths of the annual rates to the Fund's net
assets each day determined as of the close of business on
that day or the last previous business day. If this
Agreement becomes effective subsequent to the first day of a
month or shall terminate before the last day of a month,
compensation for that part of the month this Agreement is in
effect shall be prorated in a manner consistent with the
calculation of the fees as set forth above.
Subject to the provisions of paragraph 7 hereof,
payment of the Investment Manager's compensation for the
preceding month shall be made as promptly as possible after
completion of the computations contemplated by paragraph 7
hereof.
7. In the event the operating expenses of the
Fund, including amounts payable to the Investment Manager
pursuant to paragraph 6 hereof, for any fiscal year ending
on a date on which this Agreement is in effect, exceed the
expense limitations applicable to the Fund imposed by state
securities laws or regulations thereunder, as such
limitations may be raised or lowered from time to time, the
Investment Manager shall reduce its management fee to the
extent of such excess and, if required, pursuant to any such
laws or regulations, will reimburse the Fund for annual
operating expenses in excess of any expense limitation that
<PAGE>
may be applicable; provided, however, there shall be
excluded from such expenses the amount of any interest,
taxes, brokerage commissions, distribution fees and
extraordinary expenses (including but not limited to legal
claims and liabilities and litigation costs and any
indemnification related thereto) paid or payable by the
Fund. Such reduction, if any, shall be computed and accrued
daily, shall be settled on a monthly basis, and shall be
based upon the expense limitation applicable to the Fund as
at the end of the last business day of the month. Should two
or more such expense limitations be applicable as at the end
of the last business day of the month, that expense
limitation which results in the largest reduction in the
Investment Manager's fee shall be applicable.
For purposes of this provision, should any applicable
expense limitation be based upon the gross income of the
Fund, such gross income shall include, but not be limited
to, interest on debt securities in the Fund's portfolio
accrued to and including the last day of the Fund's fiscal
year, and dividends declared on equity securities in the
Fund's portfolio, the record dates for which fall on or
prior to the last day of such fiscal year, but shall not
include gains from the sale of securities.
8. The Investment Manager will use its best
efforts in the supervision and management of the investment
activities of the Fund, but in the absence of willful
misfeasance, bad faith, gross negligence or reckless
disregard of its obligations hereunder, the Investment
Manager shall not be liable to the Fund or any of its
investors for any error of judgment or mistake of law or for
any act or omission by the Investment Manager or for any
losses sustained by the Fund or its investors.
9. Nothing contained in this Agreement shall
prevent the Investment Manager or any affiliated person of
the Investment Manager from acting as investment adviser or
manager for any other person, firm or corporation and shall
not in any way bind or restrict the Investment Manager or
any such affiliated person from buying, selling or trading
any securities or commodities for their own accounts or for
the account of others for whom they may be acting. Nothing
in this Agreement shall limit or restrict the right of any
Trustee, officer or employee of the Investment Manager to
engage in any other business or to devote his or her time
and attention in part to the management or other aspects of
any other business whether of a similar or dissimilar
nature.
10. This Agreement shall remain in effect until
April 30, 1995 and from year to year thereafter provided
such continuance is approved at least annually by the vote
of holders of a majority, as defined in the Investment
Company Act of 1940, as amended (the "Act"), of the
outstanding voting securities of the Fund or by the Trustees
of the Fund; provided that in either event such continuance
is also approved annually by the vote of a majority of the
Trustees of the Fund who are not parties to this Agreement
or "interested persons" (as defined in the Act) of any such
party, which vote must be cast in person at a meeting called
for the purpose of voting on such approval; provided,
however, that (a) the Fund may, at any time and without the
payment of any penalty, terminate this Agreement upon thirty
days' written notice to the Investment Manager, either by
majority vote of the Trustees of the Fund or by the vote of
a majority of the outstanding voting securities of the Fund;
(b) this Agreement shall immediately terminate in the event
of its assignment (to the extent required by the Act and the
rules thereunder) unless such automatic terminations shall
be prevented by an exemptive order of the Securities and
Exchange Commission; and (c) the Investment Manager may
terminate this Agreement without payment of penalty on
thirty days' written notice to the Fund. Any notice under
this Agreement shall be given in writing, addressed and
delivered, or mailed post-paid, to the other party at the
principal office of such party.
11. This Agreement may be amended by the parties
without the vote or consent of the shareholders of the
Fund to supply any omission, to cure, correct or supplement
any ambiguous, defective or inconsistent provision hereof,
or if they deem it necessary to conform this Agreement to
the requirements of applicable federal laws or regulations,
but neither the Fund nor the Investment Manager shall be
liable for failing to do so.
<PAGE>
12. This Agreement shall be construed in
accordance with the laws of the State of New York and the
applicable provisions of the Act. To the extent the
applicable law of the State of New York, or any of the
provisions herein, conflicts with the applicable provisions
of the Act, the latter shall control.
13. The Investment Manager and the Fund each agree
that the name "Dean Witter", which comprises a component of
the Fund's name, is a property right of Dean Witter Reynolds
Inc. The Fund agrees and consents that (i) it will only use
the name "Dean Witter" as a component of its name and for no
other purpose, (ii) it will not purport to grant to any
third party the right to use the name "Dean Witter" for any
purpose, (iii) the Investment Manager or its parent, Dean
Witter Reynolds Inc., or any corporate affiliate of the
Investment Manager's parent, may use or grant to others the
right to use the name "Dean Witter", or any combination or
abbreviation thereof, as all or a portion of a corporate or
business name or for any commercial purpose, including a
grant of such right to any other investment company, (iv) at
the request of the Investment Manager or its parent, the
Fund will take such action as may be required to provide its
consent to the use of the name "Dean Witter", or any
combination or abbreviation thereof, by the Investment
Manager or its parent or any corporate affiliate of the
Investment Manager's parent, or by any person to whom the
Investment Manager or its parent or any corporate affiliate
of the Investment Manager's parent shall have granted the
right to such use, and (v) upon the termination of any
investment advisory agreement into which the Investment
Manager and the Fund may enter, or upon termination of
affiliation of the Investment Manager with its parent, the
Fund shall, upon request by the Investment Manager or its
parent, cease to use the name "Dean Witter" as a component
of its name, and shall not use the name, or any combination
or abbreviation thereof, as a part of its name or for any
other commercial purpose, and shall cause its officers,
Trustees and shareholders to take any and all actions which
the Investment Manager or its parent may request to effect
the foregoing and to reconvey to the Investment Manager or
its parent any and all rights to such name.
14. The Declaration of Trust establishing Dean
Witter Developing Growth Securities Trust, dated
December 28, 1982, a copy of which, together with all
amendments thereto (the "Declaration"), is on file in the
office of the Secretary of the Commonwealth of
Massachusetts, provides that the name Dean Witter Developing
Growth Securities Trust refers to the Trustees under the
Declaration collectively as Trustees, but not as individuals
or personally; and no Trustee, shareholder, officer,
employee or agent of Dean Witter Developing Growth
Securities Trust shall be held to any personal liability,
nor shall resort be had to their private property for the
satisfaction of any obligation or claim or otherwise, in
connection with the affairs of said Dean Witter Developing
Growth Securities Trust, but the Trust Estate only
shall be liable.
<PAGE>
In Witness Whereof, the parties hereto have executed
and delivered this Agreement, as amended, on May 1, 1994, in
New York, New York.
Dean Witter Developing Growth
Securities Trust
By
. . . . . . . . . . . .. . . .
Attest:
. . . . . . . . . . . .
Dean Witter InterCapital Inc.
By
. . . . . . . . . . . . . .
Attest:
. . . . . . . . . . . .
<PAGE>
DEAN WITTER DEVELOPING GROWTH SECURITIES TRUST
SELECTED DEALERS AGREEMENT
Gentlemen:
Dean Witter Distributors Inc. (the "Distributor") has a distribution
agreement (the "Distribution Agreement") with Dean Witter Developing Growth
Securities Trust, a Massachusetts business trust (the "Fund"), pursuant to
which it acts as the Distributor for the sale of the Fund's shares of common
stock, par value $0.01 per share (the "Shares"). Under the Distribution
Agreement, the Distributor has the right to distribute Shares for resale.
The Fund is an open-end management investment company registered under the
Investment Company Act of 1940, as amended, and the Shares being offered to
the public are registered under the Securities Act of 1933, as amended. You
have received a copy of the Distribution Agreement between us and the Fund
and reference is made herein to certain provisions of such Distribution
Agreement. The terms used herein, including "Prospectus" and "Registration
Statement" of the Fund and "Selected Dealer" shall have the same meaning in
this Agreement as in the Distribution Agreement. As principal, we offer to
sell shares to you, as a Selected Dealer, upon the following terms and
conditions:
1. In all sales of Shares to the public you shall act as dealer for your
own account, and in no transaction shall you have any authority to act as
agent for the Fund, for us or for any Selected Dealer.
2. Orders received from you will be accepted through us or on our behalf
only at the net asset value applicable to each order, as set forth in the
current Prospectus. The procedure relating to the handling of orders shall be
subject to instructions which we or the Fund shall forward from time to time
to you. All orders are subject to acceptance or rejection by the Distributor
or the Fund in the sole discretion of either.
3. You shall not place orders for any Shares unless you have already
received purchase orders for such Shares at the applicable net asset values
and subject to the terms hereof and of the Distribution Agreement and the
Prospectus. You agree that you will not offer or sell any of the Shares
except under circumstances that will result in compliance with the applicable
Federal and state securities laws and that in connection with sales and
offers to sell Shares you will furnish to each person to whom any such sale
or offer is made a copy of the Prospectus (as then amended or supplemented)
and will not furnish to any person any information relating to the Shares,
which is inconsistent in any respect with the information contained in the
Prospectus (as then amended or supplemented) or cause any advertisement to be
published by radio or television or in any newspaper or posted in any public
place or use any sales promotional material without our consent and the
consent of the Fund.
4. The Distributor will compensate you for sales of shares of the Fund and
personal services to Fund shareholders by paying you a sales charge and/or
other commissions, which may be in the form of a gross sales credit and/or an
annual residual commission) and/or a service fee, under the terms and in the
percentage amounts as may be in effect from time to time by the Distributor.
5. You shall not withhold placing orders received from your customers so
as to profit yourself as a result of such withholding; e.g., by a change in
the "net asset value" from that used in determining the offering price to
your customers.
6. If any Shares sold to you under the terms of this Agreement are
repurchased by us for the account of the Fund or are tendered for redemption
within seven business days after the date of the confirmation of the original
purchase by you, it is agreed that you shall forfeit your right to, and
refund to us, any commission received by you with respect to such Shares.
7. No person is authorized to make any representations concerning the
Shares or the Fund except those contained in the current Prospectus and in
such printed information subsequently issued by us or the Fund as information
supplemental to such Prospectus. In purchasing Shares through us you shall
rely solely on the representations contained in the Prospectus and
supplemental information above mentioned. Any printed information which we
furnish you other than the Prospectus and the Fund's periodic reports and
proxy solicitation material are our sole responsibility and not the
responsibility of the Fund, and you agree that the Fund shall have no
liability or responsibility to you in these respects unless expressly assumed
in connection therewith.
1
C65773
<PAGE>
<PAGE>
8. You agree to deliver to each of the purchasers from you a copy of the
then current Prospectus at or prior to the time of offering or sale and you
agree thereafter to deliver to such purchasers copies of the annual and
interim reports and proxy solicitation materials of the Fund. You further
agree to endeavor to obtain proxies from such purchasers. Additional copies
of the Prospectus, annual or interim reports and proxy solicitation materials
of the Fund will be supplied to you in reasonable quantities upon request.
9. You are hereby authorized (i) to place orders directly with the Fund or
its agent for shares of the Fund to be sold by us subject to the applicable
terms and conditions governing the placement of orders for the purchase of
Fund shares, as set forth in the Distribution Agreement, and (ii) to tender
shares directly to the Fund or its agent for redemption subject to the
applicable terms and conditions set forth in the Distribution Agreement.
10. We reserve the right in our discretion, without notice, to suspend
sales or withdraw the offering of Shares entirely. Each party hereto has the
right to cancel this agreement upon notice to the other party.
11. We shall have full authority to take such action as we may deem
advisable in respect of all matters pertaining to the distribution and
redemption of Fund shares. We shall be under no liability to you except for
lack of good faith and for obligations expressly assumed by us herein.
Nothing contained in this paragraph is intended to operate as, and the
provisions of this paragraph shall not in any way whatsoever constitute, a
waiver by you of compliance with any provision of the Securities Act of 1933,
as amended, or of the rules and regulations of the Securities and Exchange
Commission issued thereunder.
12. You represent that you are a member of the National Association of
Securities Dealers, Inc. and, with respect to any sales in the United States,
we both hereby agree to abide by the Rules of Fair Practice of such
Association.
13. Upon application to us, we will inform you as to the states in which
we believe the Shares have been qualified for sale under, or are exempt from
the requirements of, the respective securities laws of such states, but we
assume no responsibility or obligation as to your right to sell Shares in any
jurisdiction.
14. All communications to us should be sent to the address shown below.
Any notice to you shall be duly given if mailed or telegraphed to you at the
address specified by you below.
15. This Agreement shall become effective as of the date of your
acceptance hereof, provided that you return to us promptly a signed and dated
copy.
Dean Witter Distributors Inc.
By ................................
(Authorized Signature)
Please return one signed copy
of this agreement to:
Dean Witter Distributors Inc.
Two World Trade Center
New York, New York 10048
Accepted:
Firm Name:
By:
Address:
Date:
2
C65773
SERVICES AGREEMENT
AGREEMENT made as of the 31st day of December, 1993 by and between Dean
Witter InterCapital Inc., a Delaware corporation (herein referred to as
"InterCapital"), and Dean Witter Services Company Inc., a Delaware
corporation (herein referred to as "DWS").
WHEREAS, InterCapital has entered into separate agreements (each such
agreement being herein referred to as an "Investment Management Agreement")
with certain investment companies as set forth on Schedule A (each such
investment company being herein referred to as a "Fund" and, collectively, as
the "Funds") pursuant to which InterCapital is to perform, or supervise the
performance of, among other services, administrative services for the Funds
(and, in the case of Funds with multiple portfolios, the Series or Portfolios
of the Funds (such Series and Portfolio being herein individually referred to
as "a Series" and, collectively, as "the Series"));
WHEREAS, InterCapital desires to retain DWS to perform the administrative
services as described below; and
WHEREAS, DWS desires to be retained by InterCapital to perform such
administrative services:
Now, therefore, in consideration of the mutual covenants and agreements of
the parties hereto as herein set forth, the parties covenant and agree as
follows:
1. DWS agrees to provide administrative services to each Fund as
hereinafter set forth. Without limiting the generality of the foregoing, DWS
shall (i) administer the Fund's business affairs and supervise the overall
day-to-day operations of the Fund (other than rendering investment advice);
(ii) provide the Fund with full administrative services, including the
maintenance of certain books and records, such as journals, ledger accounts
and other records required under the Investment Company Act of 1940, as
amended (the "Act"), the notification to the Fund and InterCapital of
available funds for investment, the reconciliation of account information and
balances among the Fund's custodian, transfer agent and dividend disbursing
agent and InterCapital, and the calculation of the net asset value of the
Fund's shares; (iii) provide the Fund with the services of persons competent
to perform such supervisory, administrative and clerical functions as are
necessary to provide effective operation of the Fund; (iv) oversee the
performance of administrative and professional services rendered to the Fund
by others, including its custodian, transfer agent and dividend disbursing
agent, as well as accounting, auditing and other services; (v) provide the
Fund with adequate general office space and facilities; (vi) assist in the
preparation and the printing of the periodic updating of the Fund's
registration statement and prospectus (and, in the case of an open-end Fund,
the statement of additional information), tax returns, proxy statements, and
reports to its shareholders and the Securities and Exchange Commission; and
(vii) monitor the compliance of the Fund's investment policies and
restrictions.
In the event that InterCapital enters into an Investment Management
Agreement with another investment company, and wishes to retain DWS to
perform administrative services hereunder, it shall notify DWS in writing. If
DWS is willing to render such services, it shall notify InterCapital in
writing, whereupon such other Fund shall become a Fund as defined herein.
2. DWS shall, at its own expense, maintain such staff and employ or retain
such personnel and consult with such other persons as it shall from time to
time determine to be necessary or useful to the performance of its
obligations under this Agreement. Without limiting the generality of the
foregoing, the staff and personnel of DWS shall be deemed to include officers
of DWS and persons employed or otherwise retained by DWS (including officers
and employees of InterCapital, with the consent of InterCapital) to furnish
services, statistical and other factual data, information with respect to
technical and scientific developments, and such other information, advice and
assistance as DWS may desire. DWS shall maintain each Fund's records and
books of account (other than those maintained by the Fund's transfer agent,
registrar, custodian and other agencies). All such books and records so
maintained shall be the property of the Fund and, upon request therefor, DWS
shall surrender to InterCapital or to the Fund such of the books and records
so requested.
3. InterCapital will, from time to time, furnish or otherwise make
available to DWS such financial reports, proxy statements and other
information relating to the business and affairs of the Fund as DWS may
reasonably require in order to discharge its duties and obligations to the
Fund under this Agreement or to comply with any applicable law and regulation
or request of the Board of Directors/Trustees of the Fund.
1
<PAGE>
<PAGE>
4. For the services to be rendered, the facilities furnished, and the
expenses assumed by DWS, InterCapital shall pay to DWS monthly compensation
calculated daily (in the case of an open-end Fund) or weekly (in the case of
a closed-end Fund) by applying the annual rate or rates set forth on Schedule
B to the net assets of each Fund. Except as hereinafter set forth, (i) in the
case of an open-end Fund, compensation under this Agreement shall be
calculated by applying 1/365th of the annual rate or rates to the Fund's or
the Series' daily net assets determined as of the close of business on that
day or the last previous business day and (ii) in the case of a closed-end
Fund, compensation under this Agreement shall be calculated by applying the
annual rate or rates to the Fund's average weekly net assets determined as of
the close of the last business day of each week. If this Agreement becomes
effective subsequent to the first day of a month or shall terminate before
the last day of a month, compensation for that part of the month this
Agreement is in effect shall be prorated in a manner consistent with the
calculation of the fees as set forth on Schedule B. Subject to the provisions
of paragraph 5 hereof, payment of DWS' compensation for the preceding month
shall be made as promptly as possible after completion of the computations
contemplated by paragraph 5 hereof.
5. In the event the operating expenses of any open-end Fund and/or any
Series thereof, or of InterCapital Income Securities Inc., including amounts
payable to InterCapital pursuant to the Investment Management Agreement, for
any fiscal year ending on a date on which this Agreement is in effect, exceed
the expense limitations applicable to the Fund and/or any Series thereof
imposed by state securities laws or regulations thereunder, as such
limitations may be raised or lowered from time to time, or, in the case of
InterCapital Income Securities Inc. or Dean Witter Variable Investment Series
or any Series thereof, the expense limitation specified in the Fund's
Investment Management Agreement, the fee payable hereunder shall be reduced
on a pro rata basis in the same proportion as the fee payable by the Fund
under the Investment Management Agreement is reduced.
6. DWS shall bear the cost of rendering the administrative services to be
performed by it under this Agreement, and shall, at its own expense, pay the
compensation of the officers and employees, if any, of the Fund employed by
DWS, and such clerical help and bookkeeping services as DWS shall reasonably
require in performing its duties hereunder.
7. DWS will use its best efforts in the performance of administrative
activitives on behalf of each Fund, but in the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard of its
obligations hereunder, DWS shall not be liable to the Fund or any of its
investors for any error of judgment or mistake of law or for any act or
omission by DWS or for any losses sustained by the Fund or its investors. It
is understood that, subject to the terms and conditions of the Investment
Management Agreement between each Fund and InterCapital, InterCapital shall
retain ultimate responsibility for all services to be performed hereunder by
DWS. DWS shall indemnify InterCapital and hold it harmless from any liability
that InterCapital may incur arising out of any act or failure to act by DWS
in carrying out its responsibilities hereunder.
8. It is understood that any of the shareholders, Directors/Trustees,
officers and employees of the Fund may be a shareholder, director, officer or
employee of, or be otherwise interested in, DWS, and in any person
controlling, controlled by or under common control with DWS, and that DWS and
any person controlling, controlled by or under common control with DWS may
have an interest in the Fund. It is also understood that DWS and any
affiliated persons thereof or any persons controlling, controlled by or under
common control with DWS have and may have advisory, management,
administration service or other contracts with other organizations and
persons, and may have other interests and businesses, and further may
purchase, sell or trade any securities or commodities for their own accounts
or for the account of others for whom they may be acting.
9. This Agreement shall continue until April 30, 1994, and thereafter
shall continue automatically for successive periods of one year unless
terminated by either party by written notice delivered to the other party
within 30 days of the expiration of the then-existing period. Notwithstanding
the foregoing, this Agreement may be terminated at any time, by either party
on 30 days' written notice delivered to the other party. In the event that
the Investment Management Agreement between any Fund and InterCapital is
terminated, this Agreement will automatically terminate with respect to such
Fund.
10. This Agreement may be amended or modified by the parties in any manner
by written agreement executed by each of the parties hereto.
2
<PAGE>
<PAGE>
11. This Agreement may be assigned by either party with the written
consent of the other party.
12. This Agreement shall be construed and interpreted in accordance with
the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written in New York, New York.
DEAN WITTER INTERCAPITAL INC.
By
. . . . . . . . . . . .. . . .
Attest:
. . . . . . . . . . . .
DEAN WITTER SERVICES COMPANY INC.
By
. . . . . . . . . . . . . .
Attest:
. . . . . . . . . . . .
3
<PAGE>
SCHEDULE A
DEAN WITTER FUNDS
AT DECEMBER 31, 1993
OPEN-END FUNDS
1. Active Assets California Tax-Free Trust
2. Active Assets Government Securities Trust
3. Active Assets Money Trust
4. Active Assets Tax-Free Trust
5. Dean Witter American Value Fund
6. Dean Witter California Tax-Free Daily Income Trust
7. Dean Witter California Tax-Free Income Fund
8. Dean Witter Capital Growth Securities
9. Dean Witter Convertible Securities Trust
10. Dean Witter Developing Growth Securities Trust
11. Dean Witter Diversified Income Trust
12. Dean Witter Dividend Growth Securities Inc.
13. Dean Witter Equity Income Trust
14. Dean Witter European Growth Fund Inc.
15. Dean Witter Federal Securities Trust
16. Dean Witter Global Dividend Growth Securities
17. Dean Witter Global Short-Term Income Fund Inc.
18. Dean Witter Health Sciences Trust
19. Dean Witter High Yield Securities Inc.
20. Dean Witter Intermediate Income Securities
21. Dean Witter Limited Term Municipal Trust
22. Dean Witter Liquid Asset Fund Inc.
23. Dean Witter Managed Assets Trust
24. Dean Witter Multi-State Municipal Series Trust
25. Dean Witter Natural Resource Development Securities Inc.
26. Dean Witter New York Municipal Money Market Trust
27. Dean Witter New York Tax-Free Income Fund
28. Dean Witter Pacific Growth Fund Inc.
29. Dean Witter Precious Metals and Minerals Trust
30. Dean Witter Premier Income Trust
31. Dean Witter Retirement Series
32. Dean Witter Select Municipal Reinvestment Fund
33. Dean Witter Short-Term U.S. Treasury Trust
34. Dean Witter Strategist Fund
35. Dean Witter Tax-Exempt Securities Trust
36. Dean Witter Tax-Free Daily Income Trust
37. Dean Witter U.S. Government Money Market Trust
38. Dean Witter U.S. Government Securities Trust
39. Dean Witter Utilities Fund
40. Dean Witter Value-Added Market Series
41. Dean Witter Variable Investment Series
42. Dean Witter World Wide Income Trust
43. Dean Witter World Wide Investment Trust
CLOSED-END FUNDS
44. High Income Advantage Trust
45. High Income Advantage Trust II
46. High Income Advantage Trust III
47. InterCapital Income Securities Inc.
48. Dean Witter Government Income Trust
49. InterCapital Insured Municipal Bond Trust
50. InterCapital Insured Municipal Trust
51. InterCapital Insured Municipal Income Trust
52. InterCapital California Insured Municipal Income Trust
53. InterCapital Quality Municipal Investment Trust
54. InterCapital Quality Municipal Income Trust
55. InterCapital Quality Municipal Securities
56. InterCapital California Quality Municipal Securities
57. InterCapital New York Quality Municipal Securities
4
<PAGE>
DEAN WITTER SERVICES COMPANY
SCHEDULE OF ADMINISTRATIVE FEES - MAY 1, 1994
Monthly compensation calculated daily by applying the following annual
rates to the fund's net assets.
Dean Witter Developing Growth 0.050% of the portion of the daily net assets
not Securities Trust exceeding $500 million; and
0.0475% of the portion of the daily net assets
exceeding $500 million.
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Statement of Additional Information
constituting part of this Post-Effective Amendment No. 12 to the registration
statement on Form N-1A (the "Registration Statement") of our report dated
November 10, 1994, relating to the financial statements and financial
highlights of Dean Witter Developing Growth Securities Trust, which appears in
such Statement of Additional Information, and to the incorporation by reference
of our report into the Prospectus which constitutes part of this Registration
Statement. We also consent to the references to us under the headings
"Independent Accountants" and "Experts" in such Statement of Additional
Information and to the reference to us under the heading "Financial Highlights"
in such Prospectus.
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York
November 16, 1994
CONSENT/CONSENT.IA/11
<TABLE>
<CAPTION>
SCHEDULE FOR COMPUTATIONS OF PERFORMANCE QUOTATIONS
DEVELOPING GROWTH SECURITIES
(A) AVERAGE ANNUAL TOTAL RETURNS (I.E. STANDARDIZED COMPUTATIONS)
<S> <C>
_ _
| ______________________ |
FORMULA: | | |
| /\ n | ERV |
T = | \ | ------------- | - 1
| \ | P |
| \| |
|_ _|
T = AVERAGE ANNUAL TOTAL RETURN
n = NUMBER OF YEARS
ERV = ENDING REDEEMABLE VALUE
P = INITIAL INVESTMENT
<CAPTION>
(A)
$1,000 ERV AS OF NUMBER OF AVERAGE ANNUAL
INVESTED - P 30-Sep-94 YEARS - n TOTAL RETURN - T
- ------------------ ----------- ----------- -----------------
<S> <C> <C> <C>
30-Sep-93 $861.20 1 -13.88%
30-Sep-89 $1,636.20 5 10.35%
30-Sep-84 $2,434.80 9 9.31%
</TABLE>
(B) AVERAGE ANNUAL TOTAL RETURNS WITHOUT DEDUCTION FOR APPLICABLE
SALES CHARGE (NON STANDARD COMPUTATIONS)
(C) TOTAL RETURN WITHOUT DEDUCTION FOR APPLICABLE SALES CHARGE
(NON STANDARD COMPUTATIONS)
_ _
| ______________________ |
FORMULA: | | |
| /\ n | EV |
t = | \ | ------------- | - 1
| \ | P |
| \| |
|_ _|
EV
TR = ---------- - 1
P
t = AVERAGE ANNUAL TOTAL RETURN
(NO DEDUCTION FOR APPLICABLE SALES CHARGE)
n = NUMBER OF YEARS
EV = ENDING VALUE (NO DEDUCTION FOR APPLICABLE SALES CHARGE)
P = INITIAL INVESTMENT
TR = TOTAL RETURN (NO DEDUCTION FOR APPLICABLE SALES CHARGE)
<TABLE>
<CAPTION>
(C) (B)
$1,000 EV AS OF TOTAL NUMBER OF AVERAGE ANNUAL
INVESTED - P 30-Sep-TR RETURN - TR YEARS - n TOTAL RETURN - t
------------ ----------- ----------- ---------- -----------------
<S> <C> <C> <C> <C>
30-Sep-93 $911.20 -8.88% 1 -8.88%
30-Sep-89 $1,656.20 65.62% 5 10.62%
30-Sep-84 $2,434.80 143.48% 9.99 9.31%
</TABLE>
(D) GROWTH OF $10,000
(E) GROWTH OF $50,000
(F) GROWTH OF $100,000
FORMULA: G= (TR+1)*P
G= GROWTH OF INITIAL INVESTMENT
P= INITIAL INVESTMENT
TR= TOTAL RETURN SINCE INCEPTION
<TABLE>
<CAPTION>
$10,000 TOTAL (D) GROWTH OF (E) GROWTH OF (F) GROWTH OF
INVESTED - P RETURN - TR $10,000 INVESTMENT - G $50,000 INVESTMENT - G $100,000 INVESTMENT - G
- ----------- ----------- ----------- ------------ ---------- -----------------------
<S> <C> <C> <C> <C>
29-Apr-83 96.59 $19,659 $98,295 $196,590
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1994
<PERIOD-END> SEP-30-1994
<INVESTMENTS-AT-COST> 298,460,160
<INVESTMENTS-AT-VALUE> 341,241,644
<RECEIVABLES> 9,389,746
<ASSETS-OTHER> 47,401
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 350,678,791
<PAYABLE-FOR-SECURITIES> 9,700,764
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 809,043
<TOTAL-LIABILITIES> 10,509,807
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 294,784,855
<SHARES-COMMON-STOCK> 19,378,001
<SHARES-COMMON-PRIOR> 11,727,916
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 30,200
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 42,781,484
<NET-ASSETS> 340,168,984
<DIVIDEND-INCOME> 905,624
<INTEREST-INCOME> 486,977
<OTHER-INCOME> 0
<EXPENSES-NET> 5,386,134
<NET-INVESTMENT-INCOME> (3,993,533)
<REALIZED-GAINS-CURRENT> 3,682,165
<APPREC-INCREASE-CURRENT> (27,082,586)
<NET-CHANGE-FROM-OPS> (27,393,954)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (16,359,904)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 18,140,578
<NUMBER-OF-SHARES-REDEEMED> (11,367,004)
<SHARES-REINVESTED> 876,511
<NET-CHANGE-IN-ASSETS> 99,780,171
<ACCUMULATED-NII-PRIOR> (6,180,542)
<ACCUMULATED-GAINS-PRIOR> 15,287,523
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,515,547
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 5,386,134
<AVERAGE-NET-ASSETS> 303,109,309
<PER-SHARE-NAV-BEGIN> 20.50
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> (1.82)
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (1.13)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 17.55
<EXPENSE-RATIO> 1.78
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of JACK F. BENNETT,
EDWIN J. GARN, JOHN R. HAIRE, JOHN E. JEUCK, MANUEL H. JOHNSON,
PAUL KOLTON and MICHAEL E. NUGENT, whose signatures appear below,
constitutes and appoints David M. Butowsky, Ronald Feiman and
Stuart Strauss, or any of them, his true and lawful attorneys-in-
fact and agents, with full power of substitution among himself and
each of the persons appointed herein, for him and in his name,
place and stead, in any and all capacities, to sign any amendments
to any registration statement of ANY OF THE DEAN WITTER FUNDS SET
FORTH ON SCHEDULE A ATTACHED HERETO, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with
the Securities and Exchange Commission, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of
them, may lawfully do or cause to be done by virtue hereof.
Dated: May 10, 1994
/s/ Jack F. Bennett /s/ Manuel H. Johnson
Jack F. Bennett Manuel H. Johnson
/s/ Edwin J. Garn /s/ Paul Kolton
Edwin J. Garn Paul Kolton
/s/ John R. Haire /s/ Michael E. Nugent
John R. Haire Michael E. Nugent
/s/ John E. Jeuck
John E. Jeuck
<PAGE>
DEAN WITTER FUNDS
MONEY MARKET
1. Dean Witter Liquid Asset Fund Inc.
2. Active Assets Money Trust
3. Active Assets Tax-Free Trust
4. Active Assets California Tax-Free Trust
5. Active Assets Government Securities Trust
6. Dean Witter Tax-Free Daily Income Trust
7. Dean Witter U.S. Government Money Market Trust
8. Dean Witter California Tax-Free Daily Income Trust
9. Dean Witter New York Municipal Money Market Trust
EQUITY FUNDS
10. Dean Witter American Value Fund
11. Dean Witter Dividend Growth Securities Inc.
12. Dean Witter Capital Growth Securities
13. Dean Witter Natural Resource Development Securities Inc.
14. Dean Witter Precious Metals & Minerals Trust
15. Dean Witter Developing Growth Securities Trust
16. Dean Witter World Wide Investment Trust
17. Dean Witter Value-Added Market Series
18. Dean Witter European Growth Fund Inc.
19. Dean Witter Pacific Growth Fund Inc.
20. Dean Witter Equity Income Trust
21. Dean Witter Utilities Fund
22. Dean Witter Health Sciences Trust
23. Dean Witter Global Dividend Growth Securities
ASSET ALLOCATION FUNDS
24. Dean Witter Managed Assets Trust
25. Dean Witter Strategist Fund
FIXED-INCOME FUNDS
26. Dean Witter High Yield Securities Inc.
27. Dean Witter Convertible Securities Trust
28. Dean Witter Intermediate Income Securities
29. Dean Witter World Wide Income Trust
30. Dean Witter Global Short-Term Income Fund Inc.
31. Dean Witter Diversified Income Trust
32. Dean Witter Premier Income Trust
33. Dean Witter U.S. Government Securities Trust
<PAGE>
34. Dean Witter Federal Securities Trust
35. Dean Witter Short-Term U.S. Treasury Trust
36. Dean Witter Tax-Exempt Securities Trust
37. Dean Witter California Tax-Free Income Fund
38. Dean Witter New York Tax-Free Income Fund
39. Dean Witter Multi-State Municipal Series Trust
Arizona Series
California Series
Florida Series
Massachusetts Series
Michigan Series
Minnesota Series
New Jersey Series
New York Series
Ohio Series
Pennsylvania Series
40. Dean Witter Select Municipal Reinvestment Fund
41. Dean Witter Limited Term Municipal Trust
SPECIAL PURPOSE FUNDS
42. Dean Witter Variable Investment Series
Money Market Portfolio
Quality Income Plus Portfolio
High Yield Portfolio
Utilities Portfolio
Dividend Growth Portfolio
Capital Growth Portfolio
European Growth Portfolio
Equity Portfolio
Managed Assets Portfolio
43. Dean Witter Retirement Series
Liquid Asset Series
U.S. Government Money Market Series
U.S. Government Securities Series
Intermediate Income Securities Series
American Value Series
Capital Growth Series
Dividend Growth Series
Strategist Series
Utilities Series
Value-Added Market Series
Global Equity Series
<PAGE>
CLOSED-END FUNDS
44. High Income Advantage Trust
45. High Income Advantage Trust II
46. High Income Advantage Trust III
47. InterCapital Income Securities Inc.
48. Dean Witter Government Income Trust
49. InterCapital Insured Municipal Bond Trust
50. InterCapital Insured Municipal Trust
51. InterCapital Quality Municipal Investment Trust
52. InterCapital Quality Municipal Income Trust
53. Municipal Income Trust
54. Municipal Income Trust II
55. Municipal Income Trust III
56. Municipal Income Opportunities Trust
57. Municipal Income Opportunities Trust II
58. Municipal Income Opportunities Trust III
59. Municipal Premium Income Trust
60. Prime Income Trust
61. InterCapital Insured Municipal Income Trust
62. InterCapital California Insured Municipal Income Trust
63. InterCapital Quality Municipal Securities
64. InterCapital California Quality Municipal Securities
65. InterCapital New York Quality Municipal Securities
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of CHARLES A.
FIUMEFREDDO and EDWARD R. TELLING, whose signatures appear below,
constitutes and appoints Sheldon Curtis, Marilyn K. Cranney and
Barry Fink, or any of them, his true and lawful attorneys-in-fact
and agent, with full power of substitution among himself and each
of the persons appointed herein, for him and in his name, place and
stead, in any and all capacities, to sign any amendments to any
registration statement of ANY OF THE DEAN WITTER FUNDS SET FORTH ON
SCHEDULE A ATTACHED HERETO, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of
them, may lawfully do or cause to be done by virtue hereof.
Dated: May 10, 1994
/s/ Charles A. Fiumefreddo /s/ Edward R. Telling
Charles A. Fiumefreddo Edward R. Telling
<PAGE>
DEAN WITTER FUNDS
MONEY MARKET
1. Dean Witter Liquid Asset Fund Inc.
2. Active Assets Money Trust
3. Active Assets Tax-Free Trust
4. Active Assets California Tax-Free Trust
5. Active Assets Government Securities Trust
6. Dean Witter Tax-Free Daily Income Trust
7. Dean Witter U.S. Government Money Market Trust
8. Dean Witter California Tax-Free Daily Income Trust
9. Dean Witter New York Municipal Money Market Trust
EQUITY FUNDS
10. Dean Witter American Value Fund
11. Dean Witter Dividend Growth Securities Inc.
12. Dean Witter Capital Growth Securities
13. Dean Witter Natural Resource Development Securities Inc.
14. Dean Witter Precious Metals & Minerals Trust
15. Dean Witter Developing Growth Securities Trust
16. Dean Witter World Wide Investment Trust
17. Dean Witter Value-Added Market Series
18. Dean Witter European Growth Fund Inc.
19. Dean Witter Pacific Growth Fund Inc.
20. Dean Witter Equity Income Trust
21. Dean Witter Utilities Fund
22. Dean Witter Health Sciences Trust
23. Dean Witter Global Dividend Growth Securities
ASSET ALLOCATION FUNDS
24. Dean Witter Managed Assets Trust
25. Dean Witter Strategist Fund
FIXED-INCOME FUNDS
26. Dean Witter High Yield Securities Inc.
27. Dean Witter Convertible Securities Trust
28. Dean Witter Intermediate Income Securities
29. Dean Witter World Wide Income Trust
30. Dean Witter Global Short-Term Income Fund Inc.
31. Dean Witter Diversified Income Trust
32. Dean Witter Premier Income Trust
33. Dean Witter U.S. Government Securities Trust
<PAGE>
34. Dean Witter Federal Securities Trust
35. Dean Witter Short-Term U.S. Treasury Trust
36. Dean Witter Tax-Exempt Securities Trust
37. Dean Witter California Tax-Free Income Fund
38. Dean Witter New York Tax-Free Income Fund
39. Dean Witter Multi-State Municipal Series Trust
Arizona Series
California Series
Florida Series
Massachusetts Series
Michigan Series
Minnesota Series
New Jersey Series
New York Series
Ohio Series
Pennsylvania Series
40. Dean Witter Select Municipal Reinvestment Fund
41. Dean Witter Limited Term Municipal Trust
SPECIAL PURPOSE FUNDS
42. Dean Witter Variable Investment Series
Money Market Portfolio
Quality Income Plus Portfolio
High Yield Portfolio
Utilities Portfolio
Dividend Growth Portfolio
Capital Growth Portfolio
European Growth Portfolio
Equity Portfolio
Managed Assets Portfolio
43. Dean Witter Retirement Series
Liquid Asset Series
U.S. Government Money Market Series
U.S. Government Securities Series
Intermediate Income Securities Series
American Value Series
Capital Growth Series
Dividend Growth Series
Strategist Series
Utilities Series
Value-Added Market Series
Global Equity Series
<PAGE>
CLOSED-END FUNDS
44. High Income Advantage Trust
45. High Income Advantage Trust II
46. High Income Advantage Trust III
47. InterCapital Income Securities Inc.
48. Dean Witter Government Income Trust
49. InterCapital Insured Municipal Bond Trust
50. InterCapital Insured Municipal Trust
51. InterCapital Quality Municipal Investment Trust
52. InterCapital Quality Municipal Income Trust
53. Municipal Income Trust
54. Municipal Income Trust II
55. Municipal Income Trust III
56. Municipal Income Opportunities Trust
57. Municipal Income Opportunities Trust II
58. Municipal Income Opportunities Trust III
59. Municipal Premium Income Trust
60. Prime Income Trust
61. InterCapital Insured Municipal Income Trust
62. InterCapital California Insured Municipal Income Trust
63. InterCapital Quality Municipal Securities
64. InterCapital California Quality Municipal Securities
65. InterCapital New York Quality Municipal Securities
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that MICHAEL BOZIC, whose signature
appears below, constitues and appoints David M. Butowsky, Ronald Feiman and
Stuart Strauss, or any of them, his true and lawful attorneys-in-fact and
agents, with full power of substitution among himself and each of the persons
appointed herein, for him and in his name, place and stead, in any and all
capacities, to sign any amendments to any registration statement of ANY OF THE
DEAN WITTER FUNDS SET FORTH ON SCHEDULE A ATTACHED HERETO, and to file the
same, with all exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, or any of them, may lawfully do or
cause to be done by virtue hereof.
Dated: April 15, 1994
/s/ Michael Bozic
- ------------------------
Michael Bozic
<PAGE>
DEAN WITTER FUNDS
MONEY MARKET
1. Dean Witter Liquid Asset Fund Inc.
2. Active Assets Money Trust
3. Active Assets Tax-Free Trust
4. Active Assets California Tax-Free Trust
5. Active Assets Government Securities Trust
6. Dean Witter Tax-Free Daily Income Trust
7. Dean Witter U.S. Government Money Market Trust
8. Dean Witter California Tax-Free Daily Income Trust
9. Dean Witter New York Municipal Money Market Trust
EQUITY FUNDS
10. Dean Witter American Value Fund
11. Dean Witter Dividend Growth Securities Inc.
12. Dean Witter Capital Growth Securities
13. Dean Witter Natural Resource Development Securities Inc.
14. Dean Witter Precious Metals & Minerals Trust
15. Dean Witter Developing Growth Securities Trust
16. Dean Witter World Wide Investment Trust
17. Dean Witter Value-Added Market Series
18. Dean Witter European Growth Fund Inc.
19. Dean Witter Pacific Growth Fund Inc.
20. Dean Witter Equity Income Trust
21. Dean Witter Utilities Fund
22. Dean Witter Health Sciences Trust
23. Dean Witter Global Dividend Growth Securities
24. Dean Witter Global Utilities Fund
ASSET ALLOCATION FUNDS
25. Dean Witter Managed Assets Trust
26. Dean Witter Strategist Fund
FIXED-INCOME FUNDS
27. Dean Witter High Yield Securities Inc.
28. Dean Witter Convertible Securities Trust
29. Dean Witter Intermediate Income Securities
30. Dean Witter World Wide Income Trust
31. Dean Witter Global Short-Term Income Fund Inc.
32. Dean Witter Diversified Income Trust
33. Dean Witter Premier Income Trust
34. Dean Witter U.S. Government Securities Trust
35. Dean Witter Federal Securities Trust
36. Dean Witter Short-Term U.S. Treasury Trust
37. Dean Witter Tax-Exempt Securities Trust
38. Dean Witter California Tax-Free Income Fund
39. Dean Witter New York Tax-Free Income Fund
40. Dean Witter Multi-State Municipal Series Trust
Arizona Series
California Series
Florida Series
Massachusetts Series
Michigan Series
Minnesota Series
New Jersey Series
New York Series
Ohio Series
Pennsylvania Series
41. Dean Witter Select Municipal Reinvestment Fund
42. Dean Witter Limited Term Municipal Trust
43. Dean Witter Short-Term Bond Fund
SPECIAL PURPOSE FUNDS
44. Dean Witter Variable Investment Series
Money Market Portfolio
Quality Income Plus Portfolio
High Yield Portfolio
Utilities Portfolio
Dividend Growth Portfolio
Capital Growth Portfolio
European Growth Portfolio
Equity Portfolio
Managed Assets Portfolio
45. Dean Witter Retirement Series
Liquid Asset Series
U.S. Government Money Market Series
U.S. Government Securities Series
Intermediate Income Securities Series
American Value Series
Capital Growth Series
Dividend Growth Series
Strategist Series
Utilities Series
Value-Added Market Series
Global Equity Series
CLOSED-END FUNDS
46. High Income Advantage Trust
47. High Income Advantage Trust II
48. High Income Advantage Trust III
49. InterCapital Income Securities Inc.
50. Dean Witter Government Income Trust
51. InterCapital Insured Municipal Bond Trust
52. InterCapital Insured Municipal Trust
53. InterCapital Quality Municipal Investment Trust
<PAGE>
54. InterCapital Quality Municipal Income Trust
55. Municipal Income Trust
56. Municipal Income Trust II
57. Municipal Income Trust III
58. Municipal Income Opportunities Trust
59. Municipal Income Opportunities Trust II
60. Municipal Income Opportunities Trust III
61. Municipal Premium Income Trust
62. Prime Income Trust
63. InterCapital Insured Municipal Income Trust
64. InterCapital California Insured Municipal Income Trust
65. InterCapital Quality Municipal Securities
66. InterCapital California Quality Municipal Securities
67. InterCapital New York Quality Municipal Securities
68. InterCapital California Insured Municipal Securities
69. InterCapital Insured Municipal Securities
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that JOHN L. SCHROEDER, whose signature
appears below, constitues and appoints David M. Butowsky, Ronald Feiman and
Stuart Strauss, or any of them, his true and lawful attorneys-in-fact and
agents, with full power of substitution among himself and each of the persons
appointed herein, for him and in his name, place and stead, in any and all
capacities, to sign any amendments to any registration statement of ANY OF THE
DEAN WITTER FUNDS SET FORTH ON SCHEDULE A ATTACHED HERETO, and to file the
same, with all exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, or any of them, may lawfully do or
cause to be done by virtue hereof.
Dated: April 13, 1994
/s/ John L. Schroeder
- ------------------------
John L. Schroeder
<PAGE>
DEAN WITTER FUNDS
MONEY MARKET
1. Dean Witter Liquid Asset Fund Inc.
2. Active Assets Money Trust
3. Active Assets Tax-Free Trust
4. Active Assets California Tax-Free Trust
5. Active Assets Government Securities Trust
6. Dean Witter Tax-Free Daily Income Trust
7. Dean Witter U.S. Government Money Market Trust
8. Dean Witter California Tax-Free Daily Income Trust
9. Dean Witter New York Municipal Money Market Trust
EQUITY FUNDS
10. Dean Witter American Value Fund
11. Dean Witter Dividend Growth Securities Inc.
12. Dean Witter Capital Growth Securities
13. Dean Witter Natural Resource Development Securities Inc.
14. Dean Witter Precious Metals & Minerals Trust
15. Dean Witter Developing Growth Securities Trust
16. Dean Witter World Wide Investment Trust
17. Dean Witter Value-Added Market Series
18. Dean Witter European Growth Fund Inc.
19. Dean Witter Pacific Growth Fund Inc.
20. Dean Witter Equity Income Trust
21. Dean Witter Utilities Fund
22. Dean Witter Health Sciences Trust
23. Dean Witter Global Dividend Growth Securities
24. Dean Witter Global Utilities Fund
ASSET ALLOCATION FUNDS
25. Dean Witter Managed Assets Trust
26. Dean Witter Strategist Fund
FIXED-INCOME FUNDS
27. Dean Witter High Yield Securities Inc.
28. Dean Witter Convertible Securities Trust
29. Dean Witter Intermediate Income Securities
30. Dean Witter World Wide Income Trust
31. Dean Witter Global Short-Term Income Fund Inc.
32. Dean Witter Diversified Income Trust
33. Dean Witter Premier Income Trust
34. Dean Witter U.S. Government Securities Trust
35. Dean Witter Federal Securities Trust
36. Dean Witter Short-Term U.S. Treasury Trust
37. Dean Witter Tax-Exempt Securities Trust
38. Dean Witter California Tax-Free Income Fund
39. Dean Witter New York Tax-Free Income Fund
40. Dean Witter Multi-State Municipal Series Trust
Arizona Series
California Series
Florida Series
Massachusetts Series
Michigan Series
Minnesota Series
New Jersey Series
New York Series
Ohio Series
Pennsylvania Series
41. Dean Witter Select Municipal Reinvestment Fund
42. Dean Witter Limited Term Municipal Trust
43. Dean Witter Short-Term Bond Fund
SPECIAL PURPOSE FUNDS
44. Dean Witter Variable Investment Series
Money Market Portfolio
Quality Income Plus Portfolio
High Yield Portfolio
Utilities Portfolio
Dividend Growth Portfolio
Capital Growth Portfolio
European Growth Portfolio
Equity Portfolio
Managed Assets Portfolio
45. Dean Witter Retirement Series
Liquid Asset Series
U.S. Government Money Market Series
U.S. Government Securities Series
Intermediate Income Securities Series
American Value Series
Capital Growth Series
Dividend Growth Series
Strategist Series
Utilities Series
Value-Added Market Series
Global Equity Series
CLOSED-END FUNDS
46. High Income Advantage Trust
47. High Income Advantage Trust II
48. High Income Advantage Trust III
49. InterCapital Income Securities Inc.
50. Dean Witter Government Income Trust
51. InterCapital Insured Municipal Bond Trust
52. InterCapital Insured Municipal Trust
<PAGE>
53. InterCapital Quality Municipal Investment Trust
54. InterCapital Quality Municipal Income Trust
55. Municipal Income Trust
56. Municipal Income Trust II
57. Municipal Income Trust III
58. Municipal Income Opportunities Trust
59. Municipal Income Opportunities Trust II
60. Municipal Income Opportunities Trust III
61. Municipal Premium Income Trust
62. Prime Income Trust
63. InterCapital Insured Municipal Income Trust
64. InterCapital California Insured Municipal Income Trust
65. InterCapital Quality Municipal Securities
66. InterCapital California Quality Municipal Securities
67. InterCapital New York Quality Municipal Securities
68. InterCapital California Insured Municipal Securities
69. InterCapital Insured Municipal Securities
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that PHILIP J. PURCELL, whose signature
appears below, constitutes and appoints Sheldon Curtis, Marilyn K. Cranney and
Barry Fink, or any of them, his true and lawful attorneys-in-fact and agents,
with full power of substitution among himself and each of the persons appointed
herein, for him and in his name, place and stead, in any and all capacities, to
sign any amendments to any registration statement OF ANY OF THE DEAN WITTER
FUNDS SET FORTH ON SCHEDULE A ATTACHED HERETO, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, may lawfully do or cause to be
done by virtue hereof.
Dated: April 8, 1994
/s/ Philip J. Purcell
- -------------------------------
Philip J. Purcell
<PAGE>
DEAN WITTER FUNDS
MONEY MARKET
1. Dean Witter Liquid Asset Fund Inc.
2. Active Assets Money Trust
3. Active Assets Tax-Free Trust
4. Active Assets California Tax-Free Trust
5. Active Assets Government Securities Trust
6. Dean Witter Tax-Free Daily Income Trust
7. Dean Witter U.S. Government Money Market Trust
8. Dean Witter California Tax-Free Daily Income Trust
9. Dean Witter New York Municipal Money Market Trust
EQUITY FUNDS
10. Dean Witter American Value Fund
11. Dean Witter Dividend Growth Securities Inc.
12. Dean Witter Capital Growth Securities
13. Dean Witter Natural Resource Development Securities Inc.
14. Dean Witter Precious Metals & Minerals Trust
15. Dean Witter Developing Growth Securities Trust
16. Dean Witter World Wide Investment Trust
17. Dean Witter Value-Added Market Series
18. Dean Witter European Growth Fund Inc.
19. Dean Witter Pacific Growth Fund Inc.
20. Dean Witter Equity Income Trust
21. Dean Witter Utilities Fund
22. Dean Witter Health Sciences Trust
23. Dean Witter Global Dividend Growth Securities
24. Dean Witter Global Utilities Fund
ASSET ALLOCATION FUNDS
25. Dean Witter Managed Assets Trust
26. Dean Witter Strategist Fund
FIXED-INCOME FUNDS
27. Dean Witter High Yield Securities Inc.
28. Dean Witter Convertible Securities Trust
29. Dean Witter Intermediate Income Securities
30. Dean Witter World Wide Income Trust
31. Dean Witter Global Short-Term Income Fund Inc.
32. Dean Witter Diversified Income Trust
33. Dean Witter Premier Income Trust
34. Dean Witter U.S. Government Securities Trust
35. Dean Witter Federal Securities Trust
36. Dean Witter Short-Term U.S. Treasury Trust
37. Dean Witter Tax-Exempt Securities Trust
38. Dean Witter California Tax-Free Income Fund
39. Dean Witter New York Tax-Free Income Fund
40. Dean Witter Multi-State Municipal Series Trust
Arizona Series
California Series
Florida Series
Massachusetts Series
Michigan Series
Minnesota Series
New Jersey Series
New York Series
Ohio Series
Pennsylvania Series
41. Dean Witter Select Municipal Reinvestment Fund
42. Dean Witter Limited Term Municipal Trust
43. Dean Witter Short-Term Bond Fund
SPECIAL PURPOSE FUNDS
44. Dean Witter Variable Investment Series
Money Market Portfolio
Quality Income Plus Portfolio
High Yield Portfolio
Utilities Portfolio
Dividend Growth Portfolio
Capital Growth Portfolio
European Growth Portfolio
Equity Portfolio
Managed Assets Portfolio
45. Dean Witter Retirement Series
Liquid Asset Series
U.S. Government Money Market Series
U.S. Government Securities Series
Intermediate Income Securities Series
American Value Series
Capital Growth Series
Dividend Growth Series
Strategist Series
Utilities Series
Value-Added Market Series
Global Equity Series
CLOSED-END FUNDS
46. High Income Advantage Trust
47. High Income Advantage Trust II
48. High Income Advantage Trust III
49. InterCapital Income Securities Inc.
50. Dean Witter Government Income Trust
51. InterCapital Insured Municipal Bond Trust
52. InterCapital Insured Municipal Trust
53. InterCapital Quality Municipal Investment Trust
54. InterCapital Quality Municipal Income Trust
<PAGE>
55. Municipal Income Trust
56. Municipal Income Trust II
57. Municipal Income Trust III
58. Municipal Income Opportunities Trust
59. Municipal Income Opportunities Trust II
60. Municipal Income Opportunities Trust III
61. Municipal Premium Income Trust
62. Prime Income Trust
63. InterCapital Insured Municipal Income Trust
64. InterCapital California Insured Municipal Income Trust
65. InterCapital Quality Municipal Securities
66. InterCapital California Quality Municipal Securities
67. InterCapital New York Quality Municipal Securities
68. InterCapital California Insured Municipal Securities
69. InterCapital Insured Municipal Securities
