<PAGE>
Schedule 14A Information required in proxy statement.
Schedule 14A Information
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. __)
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Preliminary Additional Materials
[ ] Confidential, for Use of the Commission Only (as
permitted by Rule 14a-6(e)(2))
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.149-11(c) or
Section 240.14a-12
Dean Witter Variable Investment Series
- -------------------------------------------------------------------------------
(Name of Registrant(s) Specified in its Charter)
Barry Fink
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (check the appropriate box):
[ X ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules
14a-6(j)(4) and 0-11.
1) Title of each class of securities to which transaction
applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:
------------------------------------------------------------------------
Set forth the amount on which the filing fee is calculated
and state how it was determined.
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
5) Fee previously paid:
------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify
the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
------------------------------------------------------------------------
<PAGE>
DEAN WITTER VARIABLE INVESTMENT SERIES
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 20, 1997
Notice is hereby given that a Special Meeting of Shareholders of DEAN WITTER
VARIABLE INVESTMENT SERIES (the "Fund") will be held in the Career Development
Room, 61st Floor, 2 World Trade Center, New York, New York 10048, on May 20,
1997 (the "Meeting"), at 1:30 p.m., New York City time, for the following
purposes:
1. For each Portfolio, to approve or disapprove a new Investment Management
Agreement between the Fund and Dean Witter InterCapital Inc., a
wholly-owned subsidiary of Dean Witter, Discover & Co. ("DWDC"), in
connection with the proposed merger of Morgan Stanley Group Inc. with
DWDC;
2. To approve or disapprove new Sub-Advisory Agreements between Dean Witter
InterCapital Inc. and Morgan Grenfell Investment Services Limited, in
connection with the proposed merger of Morgan Stanley Group Inc. with
DWDC (TO BE VOTED ON BY SHAREHOLDERS OF EACH OF THE EUROPEAN GROWTH
PORTFOLIO AND THE PACIFIC GROWTH PORTFOLIO ONLY);
3. To elect nine (9) Trustees to serve until their successors shall have
been elected and qualified;
4. To approve or disapprove an amendment to the investment policies of the
Money Market Portfolio to authorize the Board to modify the investment
policies of the Money Market Portfolio (TO BE VOTED ON BY SHAREHOLDERS OF
THE MONEY MARKET PORTFOLIO ONLY);
5. To ratify or reject the selection of Price Waterhouse LLP as the Fund's
independent accountants for its current fiscal year; and
6. To transact such other business as may properly come before the Meeting
or any adjournments thereof.
Shareholders of record as of the close of business on March 12, 1997 are
entitled to notice of and to vote at the Meeting. If you cannot be present in
person, your management would greatly appreciate your filling in, signing and
returning the enclosed proxy promptly in the envelope provided for that purpose.
In the event that the necessary quorum to transact business or the vote
required to approve or reject any proposal is not obtained at the Meeting with
respect to the Fund or, if applicable, one or more Portfolios, the persons named
as proxies may propose one or more adjournments of the Meeting for a total of
not more than 60 days in the aggregate to permit further solicitation of
proxies. Any such adjournment will require the affirmative vote of the holders
of a majority of the Fund's or, if applicable, the concerned Portfolio's shares
present in person or by proxy at the Meeting. The persons named as proxies will
vote in favor of such adjournment those proxies which they are entitled to vote
in favor of Proposal 1 and will vote against any such adjournment those proxies
to be voted against that Proposal.
BARRY FINK
March 19, 1997 SECRETARY
New York, New York
IMPORTANT
YOU CAN HELP AVOID THE NECESSITY AND EXPENSE OF SENDING FOLLOW-UP
LETTERS TO ENSURE A QUORUM BY PROMPTLY RETURNING THE ENCLOSED PROXY. IF YOU
ARE UNABLE TO BE PRESENT IN PERSON, PLEASE FILL IN, SIGN AND RETURN THE
ENCLOSED PROXY IN ORDER THAT THE NECESSARY QUORUM MAY BE REPRESENTED AT THE
MEETING. THE ENCLOSED ENVELOPE REQUIRES NO POSTAGE IF MAILED IN THE UNITED
STATES.
<PAGE>
THE BOARD OF TRUSTEES RECOMMENDS THAT YOU CAST YOUR VOTE:
- FOR approval of the new Investment Management Agreement.
- FOR approval of the new Sub-Advisory Agreements (EUROPEAN GROWTH PORTFOLIO
AND PACIFIC GROWTH PORTFOLIO ONLY).
- FOR the election of all of the Trustees nominated for election.
- FOR approval of the amendment to the investment policies of the Money
Market Portfolio to authorize the Board to modify the investment policies
of the Money Market Portfolio (MONEY MARKET PORTFOLIO ONLY).
- FOR the ratification of the selection of independent public accountants.
YOUR VOTE IS IMPORTANT
2
<PAGE>
DEAN WITTER VARIABLE INVESTMENT SERIES
TWO WORLD TRADE CENTER, NEW YORK, NEW YORK 10048
---------------------
PROXY STATEMENT
---------------------
SPECIAL MEETING OF SHAREHOLDERS
MAY 20, 1997
This statement is furnished in connection with the solicitation of proxies
by the Board of Trustees (the "Board" or "Trustees") of DEAN WITTER VARIABLE
INVESTMENT SERIES (the "Fund") for use at the Special Meeting of Shareholders of
the Fund to be held on May 20, 1997 (the "Meeting"), and at any adjournments
thereof. The first mailing of this Proxy Statement is expected to be made on or
about March 19, 1997.
If the enclosed form of proxy is properly executed and returned in time to
be voted at the Meeting, the proxies named therein will vote the shares
represented by the proxy in accordance with the instructions marked thereon.
Unmarked proxies will be voted for each of the nominees for election as Trustee
and in favor of Proposals 1, 2, 4 and 5 set forth in the attached Notice of
Special Meeting of Shareholders. A proxy may be revoked at any time prior to its
exercise by any of the following: written notice of revocation to the Secretary
of the Fund, execution and delivery of a later dated proxy to the Secretary of
the Fund (if returned and received in time to be voted), or attendance and
voting at the Meeting. Attendance at the Meeting will not in and of itself
revoke a proxy.
The table below sets forth each Proposal and those Shareholders who are
entitled to vote for each such Proposal.
<TABLE>
<CAPTION>
PORTFOLIO OF THE FUND PROPOSAL
<S> <C> <C> <C> <C> <C>
1 2 3 4 5
Money Market Portfolio x x x x
European Growth Portfolio x x x x
Pacific Growth Portfolio x x x x
All other Portfolios x x x
</TABLE>
The holders of shares ("Shareholders") of each Portfolio of the Fund (each,
a "Portfolio") of record as of the close of business on March 12, 1997, the
record date for the determination of Shareholders entitled to notice of and to
vote at the Meeting (the "Record Date"), are entitled to one vote for each share
held and a fractional vote for a fractional share. The table below sets forth
the number of shares outstanding for each Portfolio as of the
3
<PAGE>
Record Date. The percentage ownership of shares of the Fund changes from time to
time depending on purchases and redemptions by Shareholders and the total number
of shares outstanding.
<TABLE>
<CAPTION>
NUMBER OF SHARES
OUTSTANDING AS OF
MARCH 12, 1997
NAME OF PORFOLIO (RECORD DATE)
- ----------------------------------------------------------------------------------------------------- -----------------
<S> <C>
Money Market Portfolio............................................................................... 340,318,435
Quality Income Plus Portfolio........................................................................ 44,651,053
High Yield Portfolio................................................................................. 45,382,814
Utilities Portfolio.................................................................................. 27,413,781
Income Builder Portfolio............................................................................. 817,574
Dividend Growth Portfolio............................................................................ 72,314,190
Capital Growth Portfolio............................................................................. 5,391,298
Global Dividend Growth Portfolio..................................................................... 27,042,083
European Growth Portfolio............................................................................ 14,738,828
Pacific Growth Portfolio............................................................................. 13,878,449
Capital Appreciation Portfolio....................................................................... 837,718
Equity Portfolio..................................................................................... 20,488,318
Strategist Portfolio................................................................................. 31,137,240
</TABLE>
The shares of the Fund are currently sold only to (1) Northbrook Life
Insurance Company ("Northbrook") for allocation to certain separate accounts
established to fund the benefits under certain flexible premium deferred
variable annuity contracts and certain flexible premium variable life insurance
contracts issued by Northbrook, to (2) Allstate Life Insurance Company of New
York ("Allstate New York") for allocation to certain separate accounts
established to fund the benefits under certain flexible premium deferred
variable annuity contracts issued by Allstate New York, to (3) Glenbrook Life
and Annuity Company ("Glenbrook") for allocation to certain separate accounts
established to fund the benefits under certain flexible premium deferred
variable annuity contracts and certain flexible premium variable life insurance
contracts issued by Glenbrook, and to (4) Paragon Life Insurance Company
("Paragon") for allocation to a separate account established to fund the
benefits under certain flexible premium variable life insurance contracts it
issues in connection with an employer-sponsored insurance program offered only
to certain employees of DWDC, the parent company of the Fund's Investment
Manager. The separate accounts are sometimes referred to individually as an
"Account" and collectively as the "Accounts." The variable annuity contracts
issued by Northbrook, Allstate New York and Glenbrook are sometimes referred to
as the "Variable Annuity Contracts." The variable life insurance contracts
issued by Northbrook, Glenbrook and Paragon are sometimes referred to as the
"Variable Life Contracts." The Variable Annuity Contracts and the Variable Life
Contracts are sometimes referred to as the "Contracts."
In accordance with their view of currently applicable law, Northbrook,
Allstate New York and Paragon (which were the only shareholders of the Fund on
the Record Date) will vote the shares of each of the Portfolios held in the
applicable Account based on instructions received from the owners of Contracts
("Contract Owners") having the voting interest in the corresponding Sub-Accounts
of the Account. In connection with the solicitation of such instructions from
such Contract Owners, it is understood and expected that Northbrook, Allstate
New York and Paragon will furnish a copy of this Proxy Statement to Contract
Owners and that Northbrook, Allstate New York and Paragon will furnish to
Contract Owners one or more instruction cards by which the Contract Owners may
provide their instructions to Northbrook, Allstate New York and Paragon. Shares
for which no instructions are received in time to be voted will be voted by
Northbrook, Allstate New York and Paragon in the same proportion as shares for
which instructions have been received in time to be voted.
4
<PAGE>
The cost of soliciting proxies for the Meeting, which consists principally
of printing and mailing expenses and which is expected to be approximately
$106,000, will be allocated as follows: 90% of the cost will be borne by Dean
Witter, Discover & Co. and 10% of the cost will be borne by the Fund. The total
cost of soliciting proxies borne by each Portfolio is estimated to be
approximately $816. The solicitation of proxies will be by mail, which may be
supplemented by solicitation by mail, telephone or otherwise through Trustees
and officers of the Funds and officers and regular employees of certain
affiliates of the Fund, including Dean Witter InterCapital Inc., Dean Witter
Trust Company, Dean Witter Services Company Inc. and/or Dean Witter Reynolds
Inc., without special compensation.
(1) APPROVAL OR DISAPPROVAL OF NEW INVESTMENT
MANAGEMENT AGREEMENT
BACKGROUND
Dean Witter InterCapital Inc. (the "Investment Manager" or "InterCapital")
currently serves as investment manager of the Fund pursuant to an investment
management agreement entered into by the Fund and InterCapital (the "Current
Agreement"), and in that capacity provides investment advisory and certain other
services to each Portfolio of the Fund other than the European Growth Portfolio
and the Pacific Growth Portfolio. Pursuant to the Current Agreement, the Fund
has retained InterCapital to supervise the management of the assets of the
European Growth Portfolio and the Pacific Growth Portfolio. InterCapital is a
wholly-owned subsidiary of Dean Witter, Discover & Co. ("DWDC"). The approval of
a new investment management agreement between the Fund and InterCapital (the
"New Agreement") is being sought in connection with the proposed merger of
Morgan Stanley Group Inc. ("Morgan Stanley") and DWDC (the "Merger").
INFORMATION CONCERNING MORGAN STANLEY
Morgan Stanley and various of its directly or indirectly owned subsidiaries,
including Morgan Stanley & Co. Incorporated ("Morgan Stanley & Co."), a
registered broker-dealer and investment adviser, and Morgan Stanley
International, provide a wide range of financial services on a global basis.
Their principal businesses include securities underwriting, distribution and
trading; merger, acquisition, restructuring, real estate, project finance and
other corporate finance advisory activities; merchant banking and other
principal investment activities; stock brokerage and research services; asset
management; the trading of foreign exchange and commodities on a broad range of
asset categories, rates and indices; and global custody, securities clearance
services and securities lending.
THE MERGER
Pursuant to the terms of the Merger, Morgan Stanley will be merged with and
into DWDC with the surviving corporation to be named Morgan Stanley, Dean
Witter, Discover & Co. Following the Merger, InterCapital will be a direct
wholly-owned subsidiary of Morgan Stanley, Dean Witter, Discover & Co.
Under the terms of the Merger, each share of Morgan Stanley common stock
will be converted into the right to receive 1.65 shares of DWDC common stock and
each issued and outstanding share of DWDC common stock will remain outstanding
and will thereafter represent one share of Morgan Stanley, Dean Witter, Discover
& Co. common stock. Following the Merger, Morgan Stanley's shareholders will own
approximately 45% and DWDC's shareholders will own approximately 55% of the
outstanding shares of common stock of Morgan Stanley, Dean Witter, Discover &
Co.
The Board of Directors of Morgan Stanley, Dean Witter, Discover & Co. will
consist of fourteen members, two of which will be Morgan Stanley insiders and
two of which will be DWDC insiders. The remaining ten
5
<PAGE>
directors will be outside directors, with Morgan Stanley and DWDC each
designating five of the ten. The Chairman and Chief Executive Officer of Morgan
Stanley, Dean Witter, Discover & Co. will be Philip J. Purcell, who is the
current Chairman and Chief Executive Officer of DWDC. The President and Chief
Operating Officer of Morgan Stanley, Dean Witter, Discover & Co. will be John
Mack, who is the current President of Morgan Stanley.
The Merger is expected to be completed in mid-1997 and is subject to certain
closing conditions, including certain regulatory approvals and the approval of
shareholders of both DWDC and Morgan Stanley.
APPROVAL OF NEW INVESTMENT MANAGEMENT AGREEMENT
In order to assure continuity of investment management services to the Fund
after the Merger, the Board of the Fund met in person for the purpose of
considering whether it would be in the best interests of each Portfolio of the
Fund and its Shareholders to enter into a New Agreement between the Fund and the
Investment Manager which would become effective upon the later of Shareholder
approval of the New Agreement or consummation of the Merger. At its meetings,
and for the reasons discussed below (see "The Board's Consideration"), the
Board, including all of the Trustees who are not "interested persons," as
defined in the Investment Company Act of 1940, as amended (the "1940 Act"), of
the Investment Manager (the "Independent Trustees"), unanimously approved the
New Agreement and recommended its approval by Shareholders.
THE TERMS OF THE NEW AGREEMENT, INCLUDING FEES PAYABLE BY THE PORTFOLIOS
THEREUNDER, ARE IDENTICAL, IN ALL MATERIAL RESPECTS, TO THOSE OF THE CURRENT
AGREEMENT, EXCEPT FOR THE DATES OF EFFECTIVENESS AND TERMINATION. The terms of
the Current Agreement are fully described under "The Current Investment
Management Agreement" below. If approved by Shareholders, the New Agreement will
continue in effect for an initial term expiring April 30, 1999. The New
Agreement will be continued in effect from year to year thereafter if each such
continuance with respect to a Portfolio is approved by the Board or by a
majority of the outstanding voting securities (as defined below) of such
Portfolio and, in either event, by the vote cast in person of a majority of the
Independent Trustees. In the event that Shareholders of one or more Portfolios
do not approve the New Agreement, the Current Agreement will remain in effect
with respect to the concerned Portfolio and the Board will take such action, if
any, as it deems to be in the best interests of the concerned Portfolio and its
Shareholders, which may include proposing that Shareholders approve an agreement
in lieu of the New Agreement. In the event that the Merger is not consummated,
the Investment Manager will continue to provide services to the Fund in
accordance with the terms of the Current Agreement for such periods as may be
approved at least annually by the Board, including a majority of the Independent
Trustees.
REQUIRED VOTE
The New Agreement cannot be implemented with respect to a particular
Portfolio unless approved at the Meeting, or any adjournment thereof, by a
majority of the outstanding voting securities of that Portfolio. Such a majority
means the affirmative vote of the holders of (a) 67% or more of the shares of
the Portfolio present, in person or by proxy, at the Meeting, if the holders of
more than 50% of the outstanding shares are so present, or (b) more than 50% of
the outstanding shares of the Portfolio, whichever is less.
THE BOARD UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS OF EACH PORTFOLIO VOTE
FOR APPROVAL OF THE NEW INVESTMENT MANAGEMENT AGREEMENT.
6
<PAGE>
THE BOARD'S CONSIDERATION
At a special meeting of the Committee of the Independent Trustees of the
Fund held on February 20, 1997, at which each of the Independent Trustees of the
Fund was present, and a meeting of the full Board on February 21, 1997, the
Trustees evaluated the New Agreement (the form of which is attached hereto as
Appendix A). Prior to and during the meetings, the Independent Trustees
requested and received all information they deemed necessary to enable them to
determine whether the New Agreement is in the best interests of each Portfolio
of the Fund and its Shareholders. They were assisted in their review and
deliberations by independent legal counsel. In determining whether to approve
the New Agreement, the Trustees assessed the implications of the Merger for the
Investment Manager and its ability to continue to provide services to the Fund
of the same scope and quality as are presently provided. In particular, the
Trustees inquired as to the impact of the Merger on the Investment Manager's
personnel, management, facilities and financial capabilities, and received
assurances in this regard from senior management of DWDC and the Investment
Manager that the Merger would not adversely affect the Investment Manager's
ability to fulfill its obligations under its agreement with the Fund or to
operate its business in a manner consistent with past practices. In addition,
the Trustees considered the effects of the Investment Manager and Morgan Stanley
becoming affiliated persons of each other. Following the Merger, the 1940 Act
will prohibit or impose certain conditions on the ability of the Fund to engage
in certain transactions with Morgan Stanley and its affiliates. For example,
absent exemptive relief, the Fund will be prohibited from purchasing securities
from Morgan Stanley & Co., a wholly-owned broker-dealer subsidiary of Morgan
Stanley, in transactions in which Morgan Stanley & Co. acts as principal, and
the Fund will have to satisfy certain conditions in order to engage in
securities transactions in which Morgan Stanley & Co. acts as broker or to
purchase securities in an underwritten offering in which Morgan Stanley & Co.
acts as an underwriter. In this connection, senior management of the Investment
Manager represented to the Trustees that they do not believe these prohibitions
or conditions will have a material effect on the management or performance of
the Portfolios of the Fund.
The Trustees also considered that the New Agreement is identical, in all
material respects, to the Current Agreement (other than the dates of
effectiveness and termination).
Based upon the Trustees' review and the evaluations of the materials they
received, and after consideration of all factors deemed relevant to them, the
Trustees of the Fund, including all of the Independent Trustees, determined that
the New Agreement is in the best interests of each Portfolio of the Fund and its
Shareholders. ACCORDINGLY, THE BOARD, INCLUDING ALL OF THE INDEPENDENT TRUSTEES,
APPROVED THE NEW AGREEMENT AND VOTED TO RECOMMEND APPROVAL BY SHAREHOLDERS OF
THE FUND.
THE CURRENT INVESTMENT MANAGEMENT AGREEMENT
The Current Agreement provides that, subject to the supervision of the
Board, the Investment Manager shall obtain and evaluate such information and
advice relating to the economy and securities and commodities markets as it
deems necessary or useful to discharge its duties under the Current Agreement,
and that, with respect to each of the Portfolios other than the European Growth
Portfolio and the Pacific Growth Portfolio (in respect of which the Sub-Advisory
Agreements, described in Proposal 2 below, are in effect), it shall continuously
manage the assets of such Portfolios of the Fund in a manner consistent with the
investment objectives and policies of the respective Portfolios. With respect to
the European Growth Portfolio and the Pacific Growth Portfolio (in respect of
which the Sub-Advisory Agreements are in effect), the Current Agreement provides
that the Investment Manager shall supervise the management of the assets of such
Portfolios in a manner consistent with the investment objectives and policies of
the respective Portfolios, and subject to such other limitations and directions
as the Board may, from time to time, prescribe.
7
<PAGE>
The Current Agreement further provides that the Investment Manager shall, at
its own expense, enter into Sub-Advisory Agreements for the European Growth
Portfolio and the Pacific Growth Portfolio. The Investment Manager has entered
into Sub-Advisory Agreements with Morgan Grenfell Investment Services Limited in
respect of these Portfolios, which Agreements are described in Proposal 2 below.
The Investment Manager pays the compensation of the officers of the Fund and
provides the Fund with office space and equipment, and clerical and bookkeeping
services and telephone service, heat, light, power and other utilities. The
Investment Manager also pays for the services of personnel in connection with
the pricing of the Fund's shares and the preparation of prospectuses, statements
of additional information, proxy statements and reports required to be filed
with federal and state securities commissions (except insofar as the
participation or assistance of independent accountants and attorneys is, in the
opinion of the Investment Manager, necessary or desirable). In return for its
services and the expenses the Investment Manager assumes under the Current
Agreement, the Fund pays the Investment Manager compensation which is accrued
daily and payable monthly and which is set forth in the table below.
<TABLE>
<CAPTION>
MANAGEMENT FEE
PAID DURING FISCAL
YEAR ENDED NET ASSETS
NAME OF PORTFOLIO MANAGEMENT FEE RATE 12/31/96 AS OF 12/31/96
- --------------------------------------- --------------------------------------- ------------------ ----------------
<S> <C> <C> <C>
Money Market Portfolio................. 0.50% of daily net assets $ 1,454,423 $ 340,238,041
Quality Income Plus Portfolio.......... 0.50% of daily net assets up to $500 2,407,993 474,660,212
million and 0.45% of daily net assets
over $500 million
High Yield Portfolio................... 0.50% of daily net assets 1,009,452 259,548,541
Utilities Portfolio.................... 0.65% of daily net assets up to $500 2,972,835 440,661,866
million and 0.55% of daily net assets
over $500 million
Income Builder Portfolio............... 0.75% of daily net assets --(1) 10
Dividend Growth Portfolio.............. 0.625% of daily net assets up to $500 5,902,896 1,288,404,427
million, 0.50% of the next $500 million
and 0.475% of daily net assets
exceeding $1 billion
Capital Growth Portfolio............... 0.65% of daily net assets 509,004 86,862,150
Global Dividend Growth Portfolio....... 0.75% of daily net assets 2,005,162 334,820,942
European Growth Portfolio.............. 1.0% of daily net assets (of which 40% 2,332,742 302,422,054
is paid to a Sub-Adviser)
Pacific Growth Portfolio............... 1.0% of daily net assets (of which 40% 1,397,813 144,536,457
is paid to a Sub-Adviser)
Capital Appreciation Portfolio......... 0.75% of daily net assets --(1) 10
Equity Portfolio....................... 0.50% of daily net assets up to $1 2,211,777 521,908,424
billion and 0.475% of daily net assets
over $1 billion
Strategist Portfolio................... 0.50% of daily net assets 1,994,396 423,767,852
</TABLE>
- ------------------------------
(1) The Income Builder Portfolio and the Capital Appreciation Portfolio
commenced operations on January 21, 1997. The Investment Manager has
undertaken to assume all expenses (except for any brokerage fees) of these
Portfolios and to waive the compensation provided for each of these
Portfolios in the Current Agreement, until the earlier of July 21, 1997 or
the attainment by the respective Portfolio of $50 million of net assets.
8
<PAGE>
Under the Current Agreement, the Fund is obligated to bear all of the costs
and expenses of its operation, except those specifically assumed by the
Investment Manager or, with respect to the European Growth Portfolio and the
Pacific Growth Portfolio, the Sub-Adviser. Each Portfolio pays all such expenses
incurred in its operation and a portion of the Fund's general administration
expenses allocated on the basis of the asset size of the respective Portfolios.
Expenses that are borne directly by a Portfolio include, but are not limited to,
charges and expenses of any registrar, custodian or depository appointed by the
Fund for the safekeeping of the Portfolio's cash, portfolio securities and other
property, and any share transfer or dividend agent or agents appointed by the
Fund; brokers' commissions chargeable to the Fund in connection with portfolio
securities transactions to which the Portfolio is a party; 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 pricing services;
interest payable on Portfolio borrowings; certain taxes; and all costs and
expenses in connection with registration and maintenance of registrations of the
Fund and of its shares with the Securities and Exchange Commission and various
states and other jurisdictions (including filing fees and legal fees and
disbursements of counsel). Expenses which are allocated on the basis of size of
the respective Portfolios include, but are not limited to, the costs and expense
of printing, including typesetting, and distributing prospectuses and statements
of additional information of the Fund and supplements thereto to its
Shareholders; all expenses of the 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; charges and expenses of legal counsel and
independent accountants in connection with any matter relating to the Fund (not
including compensation or expenses of attorneys employed by the Investment
Manager); state franchise taxes; membership dues of industry associations;
postage; insurance premiums on property or personnel (including officers and
Trustees) of the Fund which inure to its benefit; and all other charges and
costs of the Fund's operations properly payable by the Fund and allocable on the
basis of the size of the respective Portfolios. Depending on the nature of a
legal claim, liability or lawsuit, litigation costs, payment of legal claims or
liabilities and any indemnification relating thereto may be directly applicable
to the Portfolio or allocated on the basis of the size of the respective
Portfolios. The Trustees have determined that this is an appropriate method of
allocation of expenses.
The administrative services called for under the Current Agreement are
performed by Dean Witter Services Company Inc. ("DWSC"), a wholly-owned
subsidiary of InterCapital.
The Current Agreement was initially approved by the Board of Trustees on
October 30, 1992 and by Northbrook and Allstate New York, pursuant to the
instructions of Contract Owners, on January 13, 1993. The Current Agreement was
approved with respect to the Global Dividend Growth Portfolio and the Pacific
Growth Portfolio by the Board of Trustees on January 28, 1994. The Current
Agreement was approved with respect to the Income Builder Portfolio and the
Capital Appreciation Portfolio by the Board of Trustees on October 25, 1996.
After its initial term, the Current Agreement continues in effect from year
to year thereafter with respect to each Portfolio, provided that each such
continuance with respect to a Portfolio is approved by the vote of a majority,
as defined by the 1940 Act, of the outstanding voting securities of such
Portfolio or by the Trustees, and, in either event, by the vote cast in person
by a majority of the Independent Trustees at a meeting called for the purpose of
voting on such approval. The Current Agreement has been continued in effect from
year to year by action of the Board, including the Independent Trustees. Prior
to the Board's February 21, 1997 meeting, the most recent approval occurred at a
meeting of the Board held on April 17, 1996.
9
<PAGE>
The Current Agreement also provides that it may be terminated at any time by
the Investment Manager, the Trustees or, with respect to a Portfolio, by a vote
of a majority of the outstanding voting securities of such Portfolio, in each
instance without the payment of any penalty, on thirty days' notice, and
provides for its automatic termination in the event of its assignment.
THE INVESTMENT MANAGER
Dean Witter InterCapital Inc. is the Fund's investment manager. InterCapital
maintains its offices at Two World Trade Center, New York, New York 10048.
InterCapital, which was incorporated in July 1992, is a wholly-owned subsidiary
of DWDC, a balanced financial services organization providing a broad range of
nationally marketed credit and investment products.
The Principal Executive Officer and Directors of InterCapital, and their
principal occupations, are:
Philip J. Purcell, Chairman of the Board of Directors and Chief Executive
Officer of DWDC and Dean Witter Reynolds Inc. ("DWR") and Director of
InterCapital, DWSC and Dean Witter Distributors Inc. ("Distributors"); Richard
M. DeMartini, President and Chief Operating Officer of Dean Witter Capital,
Executive Vice President of DWDC and Director of DWR, Distributors,
InterCapital, DWSC and Dean Witter Trust Company ("DWTC"); James F. Higgins,
President and Chief Operating Officer of Dean Witter Financial, Executive Vice
President of DWDC and Director of DWR, Distributors, InterCapital, DWSC and
DWTC; Charles A. Fiumefreddo, Executive Vice President and Director of DWR and
Chairman of the Board of Directors, Chief Executive Officer and Director of
InterCapital, DWSC and Distributors and Chairman of the Board of Directors and
Director of DWTC; Christine A. Edwards, Executive Vice President, Secretary and
General Counsel of DWDC, Executive Vice President, Secretary, General Counsel
and Director of DWR, Executive Vice President, Secretary, Chief Legal Officer
and Director of Distributors, and Director of InterCapital and DWSC; and Thomas
C. Schneider, Executive Vice President and Chief Financial Officer of DWDC and
Executive Vice President, Chief Financial Officer and Director of DWR,
Distributors, InterCapital and DWSC.
The business address of the foregoing Directors and Executive Officer is Two
World Trade Center, New York, New York 10048. DWDC has its offices at Two World
Trade Center, New York, New York 10048.
InterCapital and its wholly-owned subsidiary, DWSC, serve in various
investment management, advisory, management and administrative capacities to
investment companies and pension plans and other institutional and individual
investors. Appendix B lists the investment companies for which InterCapital
provides investment management or investment advisory services and which have
similar investment objectives to those of the Portfolios of the Fund and sets
forth the fees payable to InterCapital by such companies, including the
Portfolios of the Fund, and their net assets as of March 12, 1997. DWSC also has
its offices at Two World Trade Center, New York, New York 10048.
For the fiscal year ended December 31, 1996, each Portfolio other than the
Income Builder Portfolio and the Capital Appreciation Portfolio (which
Portfolios commenced operations on January 21, 1997) accrued to DWTC, the Fund's
Transfer Agent and an affiliate of the Investment Manager, transfer agency fees
of $1,000. Once the Merger is consummated and the New Agreement is approved,
DWTC fully intends to continue to provide the same services to the Fund as are
currently being provided.
10
<PAGE>
The following table sets forth information as to the allocation of brokerage
commissions by the Portfolios in operation during the fiscal year ended December
31, 1996, paid to DWR, which is an affiliated broker of the Fund because DWR and
InterCapital are under the common control of DWDC:
<TABLE>
<CAPTION>
PERCENTAGE OF
AGGREGATE
BROKERAGE COMMISSIONS BROKERAGE COMMISSIONS
PAID TO DWR FOR FISCAL FOR FISCAL YEAR ENDED
NAME OF PORTFOLIO YEAR ENDED 12/31/96 12/31/96
- ------------------------------------------------------------------------ ---------------------- ----------------------
<S> <C> <C>
Money Market Portfolio.................................................. -- --
Quality Income Plus Portfolio........................................... -- --
High Yield Portfolio.................................................... -- --
Utilities Portfolio..................................................... $ 49,500 40.93%
Dividend Growth Portfolio............................................... 181,121 22.73
Capital Growth Portfolio................................................ 38,010 21.50
Global Dividend Growth Portfolio........................................ 35,401 4.64
European Growth Portfolio............................................... -- --
Pacific Growth Portfolio................................................ -- --
Equity Portfolio........................................................ 220,150 12.06
Strategist Portfolio.................................................... 34,525 8.04
</TABLE>
(2) APPROVAL OR DISAPPROVAL OF NEW SUB-ADVISORY AGREEMENTS
BETWEEN THE INVESTMENT MANAGER AND MORGAN GRENFELL INVESTMENT
SERVICES LIMITED
(THIS PROPOSAL APPLIES TO THE EUROPEAN GROWTH PORTFOLIO AND THE PACIFIC GROWTH
PORTFOLIO ONLY)
The Investment Manager has entered into sub-advisory agreements (each, a
"Current Sub-Advisory Agreement" and collectively, the "Current Sub-Advisory
Agreements") with Morgan Grenfell Investment Services Limited (the
"Sub-Adviser") respecting each of the European Growth Portfolio and the Pacific
Growth Portfolio (each, a "Sub-Advised Portfolio" and together, the "Sub-Advised
Portfolios"). Pursuant to each agreement, the Sub-Adviser, subject to the
overall supervision of the Investment Manager and the Trustees, continuously
furnishes investment advice concerning individual security selections, asset
allocations and overall economic trends for the Sub-Advised Portfolios.
At its meeting on February 21, 1997, the Board, including a majority of the
Independent Trustees, unanimously approved new sub-advisory agreements
respecting each of the Sub-Advised Portfolios (each, a "New Sub-Advisory
Agreement" and together, the "New Sub-Advisory Agreements") and recommended that
such agreements be submitted to Shareholders for their approval or disapproval,
to take effect upon the later of Shareholder approval of the New Sub-Advisory
Agreements or consummation of the Merger, for an initial term expiring April 30,
1999. Each New Sub-Advisory Agreement may be continued from year to year
thereafter if each such continuance is approved by the Board or by a majority of
the outstanding voting securities of the respective Sub-Advised Portfolio (as
defined below under "Required Vote") and, in either event, by a vote cast in
person of a majority of the Independent Trustees. EACH NEW SUB-ADVISORY
AGREEMENT IS IDENTICAL, IN ALL MATERIAL RESPECTS, TO THE CORRESPONDING CURRENT
SUB-ADVISORY AGREEMENT, EXCEPT FOR THE DATES OF EFFECTIVENESS AND TERMINATION.
The terms of the Current Sub-Advisory Agreements are fully described under "The
Current Sub-Advisory Agreements" below. A form of the New Sub-Advisory
Agreements is attached hereto as Appendix C.
11
<PAGE>
Each New Sub-Advisory Agreement cannot be implemented unless approved at the
Meeting by a majority of the outstanding voting securities of the respective
Sub-Advised Portfolio (as defined below). In the event that Shareholders of a
Sub-Advised Portfolio do not approve the New Sub-Advisory Agreement applicable
to that Sub-Advised Portfolio, the Current Sub-Advisory Agreement will remain in
effect and the Board will take such action as it deems to be in the best
interests of the concerned Portfolio and its respective Shareholders, which may
include proposing that Shareholders approve an agreement in lieu of the New
Sub-Advisory Agreement. In the event the Merger is not consummated, the
Sub-Adviser will continue to provide services to the Sub-Advised Portfolios in
accordance with the terms of the respective Current Sub-Advisory Agreements for
such periods as may be approved at least annually by the Board, including a
majority of the Independent Trustees. Each New Sub-Advisory Agreement will not
be implemented unless Proposal 1 is also approved by the applicable
Shareholders.
In considering whether to approve each New Sub-Advisory Agreement, the Board
considered all materials and information deemed relevant to such determination.
Among other things, the Board considered the nature and scope of services to be
rendered under each agreement, the quality of the services and personnel of the
Sub-Adviser and the appropriateness of the fees that are paid under each New
Sub-Advisory Agreement. The Board, in particular, noted that THE TERMS OF EACH
NEW SUB-ADVISORY AGREEMENT INCLUDING FEES PAYABLE THEREUNDER ARE IDENTICAL TO
THOSE OF THE CORRESPONDING CURRENT SUB-ADVISORY AGREEMENT, EXCEPT FOR THE DATES
OF EFFECTIVENESS AND EXPIRATION. Based upon its review, the Board, including all
of the Independent Trustees, determined that the approval of each New
Sub-Advisory Agreement was in the best interests of the respective Sub-Advised
Portfolio and its Shareholders.
THE CURRENT SUB-ADVISORY AGREEMENTS
The Current Sub-Advisory Agreements require that the Sub-Adviser provide the
Sub-Advised Portfolios with investment advisory services for their investments.
The investment advisory services that the Sub-Adviser is required to provide
under the Current Sub-Advisory Agreements include, among other things: (i)
obtaining and evaluating such information and advice relating to the economy,
securities markets and securities as the Sub-Adviser deems necessary to
discharge its duties under the respective Current Sub-Advisory Agreements; (ii)
making determinations as to which securities the respective Sub-Advised
Portfolio should purchase or sell or otherwise dispose of (including the timing
of those decisions); and (iii) placing purchase and sale orders on behalf of the
Sub-Advised Portfolios, as the Sub-Adviser deems necessary or appropriate.
Each Current Sub-Advisory Agreement provides that the Sub-Adviser 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 the Current
Sub-Advisory Agreement. The Sub-Adviser also bears other costs of rendering the
investment advisory services performed by it pursuant to each Current
Sub-Advisory Agreement, including such clerical help and bookkeeping services as
it may require.
In return for the services it renders under each Current Sub-Advisory
Agreement, the Sub-Adviser is paid by the Investment Manager monthly
compensation equal to 40% of the Investment Manager's compensation receivable
pursuant to the Current Agreement (see Proposal 1 for more information regarding
the fees payable under the Current Agreement). Any subsequent change in the
Current Agreement which has the effect of raising or lowering the compensation
of the Investment Manager will have the concomitant effect of raising or
lowering the fee payable to the Sub-Adviser. During the Fund's last fiscal year,
the Investment Manager accrued to the Sub-Adviser compensation under each
Current Sub-Advisory Agreement of $933,097 and $559,125 with respect to the
European Growth Portfolio and the Pacific Growth Portfolio, respectively.
12
<PAGE>
The table below sets forth the dates each Current Sub-Advisory Agreement was
first approved by the Board and last approved by the appropriate Shareholders.
<TABLE>
<CAPTION>
DATE CURRENT SUB-ADVISORY
AGREEMENT WAS FIRST DATE OF LAST
APPROVED BY BOARD SHAREHOLDER APPROVAL OF
(INCLUDING A MAJORITY OF CURRENT SUB-ADVISORY
CURRENT SUB-ADVISORY AGREEMENT APPLICABLE TO: THE INDEPENDENT TRUSTEES) AGREEMENT
- -------------------------------------------------------------------- ------------------------- -----------------------
<S> <C> <C>
European Growth Portfolio........................................... October 30, 1992 January 13, 1993
Pacific Growth Portfolio............................................ January 28, 1994 February 8, 1994
</TABLE>
Each Current Sub-Advisory Agreement provides that, after its initial period
of effectiveness, it may be continued in effect from year to year, provided that
such continuance is approved by the vote of a majority of the outstanding voting
securities (as defined below) of the concerned Sub-Advised Portfolio or by the
Trustees and, in either event, by the vote cast in person by a majority of the
Independent Trustees at a meeting called for the purpose of voting on such
approval. Prior to the Board's February 21, 1997 meeting, the most recent
approval of each Current Sub-Advisory Agreement occurred at a meeting of the
Board held on April 17, 1996.
Each Current Sub-Advisory Agreement also provides that it may be terminated
at any time by the Sub-Adviser, the Investment Manager, the Board (including a
majority of the Independent Trustees) or by a vote of the majority of the
outstanding voting securities of each Sub-Advised Portfolio (as defined below),
in each instance without the payment of any penalty, on thirty days' notice.
Each Current Sub-Advisory Agreement also terminates in the event of the
termination of the Current Agreement (as discussed above) or in the event of its
assignment.
REQUIRED VOTE
Each New Sub-Advisory Agreement cannot be implemented unless approved at the
Meeting by a majority of the outstanding voting securities of the applicable
Sub-Advised Portfolio. Such a majority means the affirmative vote of the holders
of (a) 67% or more of the shares of the applicable Sub-Advised Portfolio present
in person or by proxy at the Meeting, if the holders of more than 50% of the
outstanding shares are so present, or (b) more than 50% of the outstanding
shares of the applicable Sub-Advised Portfolio, whichever is less.
THE BOARD UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS OF EACH OF THE EUROPEAN
GROWTH PORTFOLIO AND THE PACIFIC GROWTH PORTFOLIO VOTE FOR APPROVAL OF THE
APPLICABLE NEW SUB-ADVISORY AGREEMENT.
THE SUB-ADVISER
The Sub-Adviser was organized as a limited company incorporated in England
and Wales in 1972 and manages, as of December 31, 1996, assets of approximately
$13.8 billion primarily for U.S. and Canadian corporate and public employee
benefit plans, investment companies, endowments and foundations. The Sub-Adviser
is a wholly-owned subsidiary of London based Morgan Grenfell Asset Management
Limited, whose subsidiaries in total manage, as of December 31, 1996, assets of
over $118.8 billion. Morgan Grenfell Asset Management Limited is itself a
wholly-owned subsidiary of Deutsche Morgan Grenfell Group plc which is wholly-
owned by Deutsche Bank AG, an international commercial and investment banking
group. The Sub-Adviser and Morgan Grenfell Asset Management Limited's principal
offices are located at 20 Finsbury Circus, London, England. Morgan Grenfell
Group plc's principal office is located at 23 Great Winchester Street, London,
England. Deutsche Bank AG's principal office is located at Taunusanlage 12,
Frankfurt, Germany.
Appendix D to this Proxy Statement lists the investment companies for which
the Sub-Adviser serves as an investment adviser and which have investment
objectives similar to that of one or more of the Portfolios, and sets
13
<PAGE>
forth the fees payable to the Sub-Adviser by such companies, including the
Portfolios, and their net assets as of March 12, 1997.
The Principal Executive Officer and Directors of the Sub-Adviser and their
principal occupations are respectively as follows: Michael Bullock, Chairman of
the Board of Directors; Patrick W. W. Disney, Chief Executive Officer and
Director of the Sub-Adviser; Graham D. Bamping, Julian R. Johnston, Ian D.
Kelson, Neil P. Jenkins, Richard L. Lamb, Jeremy G. Lodwick, William G. M.
Thomas, Patrick N. C. Walker, Stephen A. J. Ward and Richard C. Wilson,
Directors of the Sub-Adviser. The business address of the foregoing Directors
and Executive Officer is 20 Finsbury Circus, London, England.
During the fiscal year ended December 31, 1996, the Pacific Growth Portfolio
paid brokerage commissions to Morgan Grenfell Asia and Partners Securities Pte
Limited and Morgan Grenfell Asia Securities (Hong Kong) Limited, which are
affiliated persons of the Sub-Adviser, in the amounts of $2,146 and $14,787,
respectively, which amounts represented 0.24% and 1.68%, respectively, of the
total brokerage commissions paid by the Pacific Growth Portfolio during the
year.
(3) ELECTION OF TRUSTEES
The number of Trustees has been fixed by the Board at nine. There are
presently eight Trustees, all of whom are standing for re-election at the
Meeting for indefinite terms. In addition, the Board has nominated Wayne E.
Hedien for election as Trustee at the Meeting for the first time.
Six of the current eight Trustees (Michael Bozic, Edwin J. Garn, John R.
Haire, Manuel H. Johnson, Michael E. Nugent and John L. Schroeder) are
Independent Trustees. Mr. Hedien, who has been nominated for election at the
Meeting, if elected, also will be an Independent Trustee. The other two current
Trustees, Charles A. Fiumefreddo and Philip J. Purcell, are "interested persons"
(as such term is defined in the 1940 Act) of the Fund and InterCapital and,
thus, are not Independent Trustees. The nominees for election as Trustees have
been proposed by the Trustees now serving or, in the case of the nominees for
positions as Independent Trustees, by the Independent Trustees now serving.
Other than Messrs. Bozic, Purcell and Schroeder, who were elected as Trustees by
the other Trustees of the Fund, all of the members of the Board currently
serving were previously elected at a meeting of Shareholders.
The following information regarding each of the nominees for election as
Trustee includes principal occupations and employment for at least the last five
years, age, positions with the Funds, and directorships (or trusteeships) in
other companies which file periodic reports with the Securities and Exchange
Commission, including the 84 investment companies, including the Fund, for which
InterCapital serves as investment manager or investment adviser (referred to
herein as the "Dean Witter Funds") and the 14 investment companies for which
InterCapital's wholly-owned subsidiary, DWSC, serves as manager and TCW Funds
Management, Inc. serves as investment adviser (referred to herein as the "TCW/DW
Funds"). As of the record date for the Meeting, no Trustee was a Contract Owner
under the Accounts.
The nominees for Trustee to be elected at the Meeting are:
MICHAEL BOZIC, Trustee since April 1994*; age 56; Chairman and Chief
Executive Officer of Levitz Furniture Corporation (since November 1995);
Director or Trustee of the Dean Witter Funds; formerly President and Chief
Executive Officer of Hills Department Stores (May 1991-July 1995); formerly
variously Chairman, Chief Executive Officer, President and Chief Operating
Officer (1987-1991) of the Sears Merchandise Group of
- ------------------------
*This date is the date the Trustee began serving the Dean Witter Funds complex.
14
<PAGE>
Sears, Roebuck and Co. ("Sears"); Director of Eaglemark Financial Services,
Inc., the United Negro College Fund and Weirton Steel Corporation.
CHARLES A. FIUMEFREDDO, Trustee since July 1991*; age 63; Chairman, Chief
Executive Officer and Director of InterCapital, DWSC and Distributors; Executive
Vice President and Director of DWR; Chairman, Director or Trustee, President and
Chief Executive Officer of the Dean Witter Funds; Chairman, Chief Executive
Officer and Trustee of the TCW/DW Funds; Chairman and Director of DWTC; Director
and/or officer of various DWDC subsidiaries; formerly Executive Vice President
and Director of DWDC (until February 1993).
EDWIN JACOB (JAKE) GARN, Trustee since January 1993*; age 64; Director or
Trustee of the Dean Witter Funds; formerly United States Senator (R-Utah)
(1974-1992) and Chairman, Senate Banking Committee (1980-1986); formerly Mayor
of Salt Lake City, Utah (1971-1974); formerly Astronaut, Space Shuttle Discovery
(April 12-19, 1985); Vice Chairman, Huntsman Corporation (since January 1993);
Director of Franklin Quest (time management systems) and John Alden Financial
Corp. (health insurance); member of the board of various civic and charitable
organizations.
JOHN R. HAIRE, Trustee since January 1981*; age 72; Chairman of the Audit
Committee and Chairman of the Committee of the Independent Directors or Trustees
and Director or Trustee of the Dean Witter Funds; Chairman of the Audit
Committee and Chairman of the Committee of the Independent Trustees and Trustee
of the TCW/DW Funds; formerly President, Council for Aid to Education
(1978-1989) and Chairman and Chief Executive Officer of Anchor Corporation, an
investment adviser (1964-1978); Director of Washington National Corporation
(insurance).
WAYNE E. HEDIEN, age 63; Retired; Director of The PMI Group, Inc. (private
mortgage insurance); Trustee and Vice Chairman of The Field Museum of Natural
History; formerly associated with the Allstate Companies (1966-1994), most
recently as Chairman of The Allstate Corporation (March 1993-December 1994) and
Chairman and Chief Executive Officer of its wholly-owned subsidiary, Allstate
Insurance Company (July 1989-December 1994); director of various other business
and charitable organizations.
DR. MANUEL H. JOHNSON, Trustee since July 1991*; age 48; Senior Partner,
Johnson Smick International, Inc., a consulting firm; Co-Chairman and a founder
of the Group of Seven Council (G7C), an international economic commission;
Director or Trustee of the Dean Witter Funds; Trustee of the TCW/DW Funds;
Director of NASDAQ (since June 1995); Director of Greenwich Capital Markets Inc.
(broker-dealer); Trustee of the Financial Accounting Foundation (oversight
organization for the FASB); formerly Vice Chairman of the Board of Governors of
the Federal Reserve System (1986-1990) and Assistant Secretary of the U.S.
Treasury (1982-1986).
MICHAEL E. NUGENT, Trustee since July 1991*; age 60; General Partner,
Triumph Capital, L.P., a private investment partnership; Director or Trustee of
the Dean Witter Funds; Trustee of the TCW/DW Funds; formerly Vice President,
Bankers Trust Company and BT Capital Corporation (1984-1988); Director of
various business organizations.
PHILIP J. PURCELL, Trustee since April 1994*; age 53; Chairman of the Board
of Directors and Chief Executive Officer of DWDC, DWR and Novus Credit Services
Inc.; Director of InterCapital, DWSC and Distributors; Director or Trustee of
the Dean Witter Funds; Director and/or officer of various DWDC subsidiaries.
- ------------------------
*This date is the date the Trustee began serving the Dean Witter Funds complex.
15
<PAGE>
JOHN L. SCHROEDER, Trustee since April 1994*; age 66; Retired; Director or
Trustee of the Dean Witter Funds; Trustee of the TCW/DW Funds; Director of
Citizens Utilities Company; formerly Executive Vice President and Chief
Investment Officer of the Home Insurance Company (1991-1995).
The other executive officers of the Fund are: Barry Fink, Vice President,
Secretary and General Counsel; Robert M. Scanlan, Vice President; Robert S.
Giambrone, Vice President; Joseph J. McAlinden, Vice President; Peter M. Avelar,
Vice President; Mark Bavoso, Vice President; Patricia A. Cuddy, Vice President;
Edward F. Gaylor, Vice President; Peter Hermann, Vice President; Kenton J.
Hinchliffe, Vice President; Michael G. Knox, Vice President; Anita H. Kolleeny,
Vice President; Paula La Costa, Vice President; Jonathan R. Page, Vice
President; Rochelle G. Siegel, Vice President; Paul D. Vance, Vice President;
Ronald J. Worobel, Vice President; Michelle Kaufman, Assistant Vice President;
and Thomas F. Caloia, Treasurer. In addition, Kevin Hurley and Jayne Stevlingson
are Vice Presidents of the Fund and Frank Bruttomesso, Marilyn K. Cranney, Lou
Anne D. McInnis, Carsten Otto and Ruth Rossi serve as Assistant Secretaries of
each Fund.
Mr. Fink is 42 years old and is currently First Vice President (since June
1993), Secretary and General Counsel (since February 1997) of InterCapital and
DWSC and (since August 1996) Assistant Secretary of DWR; he is also First Vice
President, Assistant Secretary and Assistant General Counsel of Distributors
(since February 1997). He was previously Vice President, Assistant Secretary and
Assistant General Counsel of InterCapital and DWSC. Mr. Scanlan is 60 years old
and is currently President and Chief Operating Officer of InterCapital (since
March 1993) and DWSC; he is also Executive Vice President of Distributors and
Executive Vice President and Director of DWTC. He was previously Executive Vice
President of InterCapital (July 1992-March 1993) and prior thereto was Chairman
of Harborview Group, Inc. Mr. Giambrone is 42 years old and is currently Senior
Vice President of InterCapital, DWSC, Distributors and DWTC (since August 1995)
and Director of DWTC (since April 1996). He was formerly a partner of KPMG Peat
Marwick, LLP. Mr. McAlinden is 54 years old and is currently Executive Vice
President of InterCapital (since April 1996); he is also Chief Investment
Officer of InterCapital and Director of DWTC (since April 1996). He was
previously Senior Vice President of InterCapital (June 1995-April 1996) and
prior thereto was a Managing Director of Dillon Reed. Mr. Avelar is 38 years old
and is currently Senior Vice President of InterCapital. Mr. Bavoso is 36 years
old and is currently Senior Vice President of InterCapital (since June 1993). He
was previously Vice President of InterCapital. Ms. Cuddy is 42 years old and is
currently Vice President of InterCapital (since June 1994). She was previously
Senior Vice President of Dreyfus Corporation. Mr. Gaylor is 55 years old and is
currently Senior Vice President of InterCapital. Mr. Hermann is 36 years old and
is currently Vice President of InterCapital (since March 1994). He was
previously a portfolio manager with The Bank of New York (August 1987-February
1994). Mr. Hinchliffe is 52 years old and is currently Senior Vice President of
InterCapital. Mr. Knox is 30 years old and is currently Vice President of
InterCapital (since August 1993). Prior thereto he was with Eagle Asset
Management, Inc. Ms. Kolleeny is 41 years old and is currently Senior Vice
President of InterCapital. Ms. La Costa is 45 years old and is currently Vice
President of InterCapital. Mr. Page is 50 years old and is currently Senior Vice
President of InterCapital. Ms. Siegel is 48 years old and is currently Senior
Vice President of InterCapital. Mr. Vance is 61 years old and is currently
Senior Vice President of InterCapital. Mr. Worobel is 54 years old and is
currently Senior Vice President of InterCapital. He was previously Vice
President of InterCapital (June 1992-June 1993) and prior thereto was Managing
Director at MacKay-Shields Financial Corp. (February 1989-June 1992). Ms.
Kaufman is 32 years old and is currently Assistant Vice President of
InterCapital (since May 1995) and portfolio manager with InterCapital (since
September 1993). She was previously a security analyst with Woodward and
Associates (March-August 1993), JRO and Associates (December 1992) and the First
Manhattan Company (January 1990-November 1992). Mr. Caloia is 51 years old and
is currently First Vice President and Assistant Treasurer of InterCapital and
DWSC. Mr. Hurley is 52
- ------------------------
*This date is the date the Trustee began serving the Dean Witter Funds complex.
16
<PAGE>
years old and is currently Senior Vice President of InterCapital (since February
1995). He was previously a private investor (January 1994-February 1995) and
prior thereto was Managing Director of Ark Asset Management Co., Inc. for five
years. Ms. Stevlingson is 37 years old and is currently Vice President of
InterCapital (since October 1992). She was previously Assistant Vice President
of Bankers Trust New York Corp. Other than Messrs. Scanlan, Giambrone,
McAlinden, Hermann, Knox, Worobel and Hurley and Mses. Cuddy, Kaufman and
Stevlingson, each of the above officers has been an employee of InterCapital or
DWR (formerly the corporate parent of InterCapital) for over five years.
THE BOARD OF TRUSTEES, THE INDEPENDENT TRUSTEES, AND THE COMMITTEES
The Board of Trustees currently consists of eight (8) Trustees. These same
individuals also serve as directors or trustees for all of the Dean Witter
Funds, and are referred to in this section as Trustees. As of the date of this
Proxy Statement, there are a total of 84 Dean Witter Funds, comprised of 127
portfolios. As of February 28, 1997, the Dean Witter Funds had total net assets
of approximately $84.2 billion and more than six million shareholders.
Six Trustees and the new nominee (77% of the total number) have no
affiliation or business connection with InterCapital or any of its affiliated
persons. The other two Trustees (the "Management Trustees") are affiliated with
InterCapital. For a period of at least three years after the consummation of the
Merger, at least 75% of the members of the Board of Trustees of the Fund will
not be "interested persons" (as defined in the 1940 Act) of the Investment
Manager. Four of the six Independent Trustees are also Independent Trustees of
the TCW/DW Funds.
Law and regulation establish both general guidelines and specific duties for
the Independent Trustees. The Dean Witter Funds seek as Independent Trustees
individuals of distinction and experience in business and finance, government
service or academia; these are people whose advice and counsel are in demand by
others and for whom there is often competition. To accept a position on the
Funds' Boards, such individuals may reject other attractive assignments because
the Funds make substantial demands on their time. Indeed, by serving on the
Funds' Boards, certain Trustees who would otherwise be qualified and in demand
to serve on bank boards would be prohibited by law from doing so.
All of the current Independent Trustees serve as members of the Audit
Committee and the Committee of the Independent Trustees. Three of them also
serve as members of the Derivatives Committee. The Committees hold some meetings
at InterCapital's offices and some outside InterCapital. Management Trustees or
officers do not attend these meetings unless they are invited for purposes of
furnishing information or making a report. The Funds do not have any nominating
or compensation committees.
The Committee of the Independent Trustees is charged with recommending to
the full Board approval of management, advisory and administration contracts,
Rule 12b-1 plans and distribution and underwriting agreements; continually
reviewing Fund performance; checking on the pricing of portfolio securities,
brokerage commissions, transfer agent costs and performance, and trading among
Funds in the same complex; and approving fidelity bond and related insurance
coverage and allocations, as well as other matters that arise from time to time.
The Independent Trustees are required to select and nominate individuals to fill
any Independent Trustee vacancy on the Board of any Fund that has a Rule 12b-1
plan of distribution. Most of the Dean Witter Funds have such a plan.
The Audit Committee is charged with recommending to the full Board the
engagement or discharge of the Funds' independent accountants; directing
investigations into matters within the scope of the independent accountants'
duties, including the power to retain outside specialists; reviewing with the
independent accountants the audit plan and results of the auditing engagement;
approving professional services provided by the independent accountants and
other accounting firms prior to the performance of such services; reviewing the
indepen-
17
<PAGE>
dence of the independent accountants; considering the range of audit and
non-audit fees; reviewing the adequacy of the Fund's system of internal
controls; and preparing and submitting Committee meeting minutes to the full
Board.
Finally, the Board of each Fund has formed a Derivatives Committee to
establish parameters for and oversee the activities of the Fund with respect to
derivative investments, if any, made by the Fund.
For the fiscal year ended December 31, 1996, the Board of Trustees of the
Fund held eleven meetings, and the Audit Committee, the Committee of the
Independent Trustees and the Audit Committee held three, ten and three meetings,
respectively. No Trustee attended fewer than 75% of the meetings of the Board,
the Audit Committee, the Committee of the Independent Trustees or the
Derivatives Committee held while he served in such positions.
DUTIES OF CHAIRMAN OF COMMITTEE OF THE INDEPENDENT TRUSTEES AND AUDIT COMMITTEE
The Chairman of the Committee of the Independent Trustees and the Audit
Committee maintains an office at the Funds' headquarters in New York. He is
responsible for keeping abreast of regulatory and industry developments and the
Funds' operations and management. He screens and/or prepares written materials
and identifies critical issues for the Independent Trustees to consider,
develops agendas for Committee meetings, determines the type and amount of
information that the Committees will need to form a judgment on various issues,
and arranges to have that information furnished to Committee members. He also
arranges for the services of independent experts and consults with them in
advance of meetings to help refine reports and to focus on critical issues.
Members of the Committees believe that the person who serves as Chairman of both
Committees and guides their efforts is pivotal to the effective functioning of
the Committees.
The Chairman of the Committees also maintains continuous contact with the
Funds' management, with independent counsel to the Independent Trustees and with
the Funds' independent auditors. He arranges for a series of special meetings
involving the annual review of investment advisory, management and other
operating contracts of the Funds and, on behalf of the Committees, conducts
negotiations with the Investment Manager and other service providers. In effect,
the Chairman of the Committees serves as a combination of chief executive and
support staff of the Independent Trustees.
The Chairman of the Committee of the Independent Trustees and the Audit
Committee is not employed by any other organization and devotes his time
primarily to the services he performs as Committee Chairman and Independent
Trustee of the Dean Witter Funds and as an Independent Trustee and, since July
1, 1996, as Chairman of the Committee of the Independent Trustees and the Audit
Committee of the TCW/DW Funds. The current Committee Chairman has had more than
35 years experience as a senior executive in the investment company industry.
ADVANTAGES OF HAVING SAME INDIVIDUALS AS INDEPENDENT TRUSTEES FOR ALL DEAN
WITTER FUNDS
The Independent Trustees and the Funds' management believe that having the
same Independent Trustees for each of the Dean Witter Funds avoids the
duplication of effort that would arise from having different groups of
individuals serving as Independent Trustees for each of the Funds or even of
sub-groups of Funds. They believe that having the same individuals serve as
Independent Trustees of all the Funds tends to increase their knowledge and
expertise regarding matters which affect the Fund complex generally and enhances
their ability to negotiate on behalf of each Fund with the Fund's service
providers. This arrangement also precludes the possibility of separate groups of
Independent Trustees arriving at conflicting decisions regarding operations and
management of the Funds and avoids the cost and confusion that would likely
ensue. Finally, having the same Independent Trustees serve on all Fund Boards
enhances the ability of each Fund to obtain, at modest cost to each separate
18
<PAGE>
Fund, the services of Independent Trustees, and a Chairman of their Committees,
of the caliber, experience and business acumen of the individuals who serve as
Independent Trustees of the Dean Witter Funds.
SHARE OWNERSHIP BY TRUSTEES
The Trustees have adopted a policy pursuant to which each Trustee and/or his
or her spouse is required to invest at least $25,000 in any of the Funds in the
Dean Witter Funds complex (and, if applicable, in the TCW/DW Funds complex) on
whose boards the Trustee serves. In addition, the policy contemplates that the
Trustees will, over time, increase their aggregate investment in the Funds above
the $25,000 minimum requirement. The Trustees may allocate their investments
among specific Funds in any manner they determine is appropriate based on their
individual investment objectives. As of the date of this Proxy Statement, each
Trustee is in compliance with the policy. Any future Trustee will be given a one
year period following his or her election within which to comply with the
foregoing. As of December 31, 1996, the total value of the investments by the
Trustees and/or their spouses in shares of the Dean Witter Funds (and, if
applicable, the TCW/DW Funds) was approximately $9.8 million.
As of the Record Date, none of the Trustees of the Fund was a Contract Owner
under the Accounts, and the aggregate number of shares of each Portfolio of the
Fund allocated to Contracts owned by the Fund's officers as a group was less
than 1 percent of each Portfolio's outstanding shares.
COMPENSATION OF INDEPENDENT TRUSTEES
The Fund pays each Independent Trustee an annual fee of $1,000 plus a per
meeting fee of $50 for meetings of the Board of Trustees or committees of the
Board attended by the Trustee (the Fund pays the Chairman of the Audit Committee
an annual fee of $750 and pays the Chairman of the Committee of the Independent
Trustees an additional annual fee of $1,200). The Fund also reimburses such
Trustees for travel and other out-of-pocket expenses incurred by them in
connection with attending such meetings. Trustees and officers of the Fund who
are or have been employed by the Investment Manager or an affiliated company
receive no compensation or expense reimbursement from the Fund.
The following table illustrates the compensation paid to the Fund's
Independent Trustees by the Fund for the fiscal year ended December 31, 1996.
FUND COMPENSATION
<TABLE>
<CAPTION>
AGGREGATE
COMPENSATION
NAME OF INDEPENDENT TRUSTEE FROM THE FUND
- ------------------------------------------------------------------------------------- -------------
<S> <C>
Michael Bozic........................................................................ $ 1,800
Edwin J. Garn........................................................................ 1,850
John R. Haire........................................................................ 3,950
Dr. Manuel H. Johnson................................................................ 1,800
Michael E. Nugent.................................................................... 1,800
John L. Schroeder.................................................................... 1,800
</TABLE>
The following table illustrates the compensation paid to the Fund's
Independent Trustees for the calendar year ended December 31, 1996 for services
to the 82 Dean Witter Funds and, in the case of Messrs. Haire, Johnson, Nugent
and Schroeder, the 14 TCW/DW Funds that were in operation at December 31, 1996.
With respect to Messrs. Haire, Johnson, Nugent and Schroeder, the TCW/DW Funds
are included solely because of a limited exchange privilege between those Funds
and five Dean Witter Money Market Funds.
19
<PAGE>
CASH COMPENSATION FROM DEAN WITTER FUNDS AND TCW/DW FUNDS
<TABLE>
<CAPTION>
FOR SERVICE AS FOR SERVICE
CHAIRMAN OF AS TOTAL CASH
COMMITTEES OF CHAIRMAN OF COMPENSATION
FOR SERVICE INDEPENDENT COMMITTEES OF FOR SERVICES
AS DIRECTOR OR DIRECTORS/ INDEPENDENT TO
TRUSTEE AND FOR SERVICE AS TRUSTEES AND TRUSTEES AND 82 DEAN
COMMITTEE MEMBER TRUSTEE AND AUDIT AUDIT WITTER
OF 82 DEAN COMMITTEE MEMBER COMMITTEES OF COMMITTEES OF FUNDS AND
NAME OF WITTER OF 14 TCW/DW 82 DEAN WITTER 14 TCW/DW 14 TCW/DW
INDEPENDENT TRUSTEE FUNDS FUNDS FUNDS FUNDS FUNDS
- --------------------------- ---------------- ---------------- -------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Michael Bozic.............. $138,850 -- -- -- $138,850
Edwin J. Garn.............. 140,900 -- -- -- 140,900
John R. Haire.............. 106,400 $64,283 $195,450 $ 12,187 378,320
Dr. Manuel H. Johnson...... 137,100 66,483 -- -- 203,583
Michael E. Nugent.......... 138,850 64,283 -- -- 203,133
John L. Schroeder.......... 137,150 69,083 -- -- 206,233
</TABLE>
As of the date of this Proxy Statement, 57 of the Dean Witter Funds,
including the Fund, have adopted a retirement program under which an Independent
Trustee who retires after serving for at least five years (or such lesser period
as may be determined by the Board) as an Independent Director or Trustee of any
Dean Witter Fund that has adopted the retirement program (each such Fund
referred to as an "Adopting Fund" and each such Trustee referred to as an
"Eligible Trustee") is entitled to retirement payments upon reaching the
eligible retirement age (normally, after attaining age 72). Annual payments are
based upon length of service. Currently, upon retirement, each Eligible Trustee
is entitled to receive from the Fund, commencing as of his or her retirement
date and continuing for the remainder of his or her life, an annual retirement
benefit (the "Regular Benefit") equal to 25.0% of his or her Eligible
Compensation plus 0.4166666% of such Eligible Compensation for each full month
of service as an Independent Director or Trustee of any Adopting Fund in excess
of five years up to a maximum of 50.0% after ten years of service. The foregoing
percentages may be changed by the Board.(1) "Eligible Compensation" is one-fifth
of the total compensation earned by such Eligible Trustee for service to the
Fund in the five year period prior to the date of the Eligible Trustee's
retirement.
The following table illustrates the retirement benefits accrued to the
Fund's Independent Trustees by the Fund for the fiscal year ended December 31,
1996 and by the 57 Dean Witter Funds (including the Fund) for the year ended
December 31, 1996, and the estimated retirement benefits for the Fund's
Independent Trustees, to commence upon their retirement, from the Fund as of
December 31, 1996 and from the 57 Dean Witter Funds as of December 31, 1996.
- ------------------------
(1) An Eligible Trustee may elect alternative payments of his or her retirement
benefits based upon the combined life expectancy of such Eligible Trustee
and his or her spouse on the date of such Eligible Trustee's retirement. The
amount estimated to be payable under this method, through the remainder of
the later of the lives of such Eligible Trustee and spouse, will be the
actuarial equivalent of the Regular Benefit. In addition, the Eligible
Trustee may elect that the surviving spouse's periodic payment of benefits
will be equal to either 50% or 100% of the previous periodic amount, an
election that, respectively, increases or decreases the previous periodic
amount so that the resulting payments will be the actuarial equivalent to
the Regular Benefit.
20
<PAGE>
RETIREMENT BENEFITS FROM THE FUND AND ALL DEAN WITTER FUNDS
<TABLE>
<CAPTION>
FOR ALL FUNDS RETIREMENT ESTIMATED ANNUAL
------------------------------------- BENEFITS BENEFITS
ESTIMATED ACCRUED AS UPON RETIREMENT(2)
CREDITED YEARS ESTIMATED EXPENSES -------------------------
OF SERVICE AT PERCENTAGE OF --------------------------- FROM
RETIREMENT ELIGIBLE BY THE BY ALL THE FROM ALL
NAME OF INDEPENDENT TRUSTEE (MAXIMUM 10) COMPENSATION FUND ADOPTING FUNDS FUND ADOPTING FUNDS
- ----------------------------------- ------------------- ---------------- ----------- -------------- --------- --------------
<S> <C> <C> <C> <C> <C> <C>
Michael Bozic...................... 10 50.0% $ 381 $ 20,147 950 $ 51,325
Edwin J. Garn...................... 10 50.0 553 27,772 950 51,325
John R. Haire...................... 10 50.0 (271)(3) 46,952 2,335 129,550
Dr. Manuel H. Johnson.............. 10 50.0 231 10,926 950 51,325
Michael E. Nugent.................. 10 50.0 396 19,217 950 51,325
John L. Schroeder.................. 8 41.7 736 38,700 792 42,771
</TABLE>
- ------------------------------
(2) Based on current levels of compensation. Amount of annual benefits also
varies depending on the Trustee's elections described in Footnote (1) above.
(3) This number reflects the effect of the extension of Mr. Haire's term as
Trustee until June 1, 1998.
The persons named as attorneys-in-fact in the enclosed proxy have advised
the Fund that unless a proxy instructs them to withhold authority to vote for
all listed nominees or for any individual nominee, they will vote all validly
executed proxies for the election of the nominees named above. All of the
nominees have consented to being named in this Proxy Statement and to serve, if
elected, and no circumstances now known will prevent any of the nominees from
serving (if elected, Mr. Hedien's term will commence September 1, 1997). If any
nominee should be unable or unwilling to serve, the proxy will be voted for a
substitute nominee proposed by the present Trustees or, in the case of an
Independent Trustee nominee, by the Independent Trustees. The election of each
Trustee requires the approval of a majority of the shares of the Fund
represented and entitled to vote at the Meeting.
THE BOARD UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE ELECTION OF
ALL OF THE TRUSTEES NOMINATED FOR ELECTION.
(4) APPROVAL OR DISAPPROVAL OF AN AMENDMENT TO THE INVESTMENT POLICIES OF THE
MONEY MARKET PORTFOLIO TO AUTHORIZE THE BOARD TO MODIFY THE INVESTMENT POLICIES
OF THE MONEY MARKET PORTFOLIO
(THIS PROPOSAL APPLIES TO THE MONEY MARKET PORTFOLIO ONLY)
The Money Market Portfolio of the Fund has certain investment policies that
are fundamental and are therefore changeable only by a vote of a "majority" (as
defined in the 1940 Act) of the outstanding voting securities of the Portfolio.
With respect to the fundamental investment policies set forth below, the Board
of Trustees considered and approved for submission to the Shareholders of the
Money Market Portfolio a recommendation by InterCapital that such investment
policies be considered non-fundamental. The Board believes that adopting the
proposed amendment to the investment policies would be beneficial to the
Shareholders of the Money Market Portfolio because it will allow the Portfolio
to modify these policies at a later date to respond to changes in regulatory
policies or changes in market conditions without the delay and expense of
seeking Shareholder approval. Changes to non-fundamental investment policies
only require approval of the Fund's Board of Trustees. Any such changes would be
reflected in a revised Prospectus which would be provided to Shareholders.
21
<PAGE>
Under its existing fundamental investment policies, the Money Market
Portfolio may invest in the following instruments:
(i) Obligations issued or guaranteed as to principal and interest by the
United States or its agencies or its instrumentalities, including Treasury
bills, notes and bonds.
(ii) Obligations (including certificates of deposit and bankers'
acceptances) of banks subject to regulation by the U.S. Government and
having total assets of $1 billion or more, and instruments secured by such
obligations, not including obligations of foreign branches of domestic
banks, except to the extent set forth below.
(iii) Eurodollar certificates of deposit issued by foreign branches of
domestic banks having total assets of $1 billion or more.
(iv) Certificates of deposit of savings banks and savings and loan
associations, having total assets of $1 billion or more.
(v) Certificates of deposit of banks and saving institutions, having
total assets of less than $1 billion, if the principal amount of the
obligation is insured by the Federal Deposit Insurance Corporation or the
Federal Savings and Loan Insurance Corporation, limited to $100,000
principal amount per certificate and to 10% or less of the Portfolio's total
assets in all such obligations and in all illiquid assets, in the aggregate.
(vi) Commercial paper rated within the two highest grades by Standard &
Poor's Corporation ("Standard & Poor's") or the highest grade by Moody's
Investors Service, Inc. ("Moody's"), or, if not rated, issued by a company
having an outstanding debt issue rated at least AA by Standard and Poor's or
Aa by Moody's.
(vii) Corporate obligations, rated at least A by Standard & Poor's or
Moody's maturing in one year or less.
At the current time, the Board intends to make two changes to bring the
investment policies of the Money Market Portfolio into conformity with
amendments enacted during the last several years to Rule 2a-7 under the 1940 Act
with respect to taxable money market funds. The first change would modify
references in the Portfolio's investment policies with respect to commercial
paper and corporate obligations by deleting the references to ratings by
Standard & Poor's and Moody's and replacing them with references to ratings by
two nationally recognized statistical rating organizations ("NRSROs"). This
change reflects the current marketplace in which Standard & Poor's and Moody's
are no longer the only NRSROs, and parallels the requirements set forth in Rule
2a-7. The second change would be that no single instrument purchased by the
Money Market Portfolio may have a maturity in excess of thirteen months
(currently the limit is twelve months).
The Board does not presently contemplate any other changes to the Money
Market Portfolio's investment policies, although approval of this proposal will
allow the Board to adopt such changes to the Portfolio's investment policies as
it determines to be appropriate in the future. The Board believes that adoption
of this proposal is in the best interests of Shareholders because it would
afford the Money Market Portfolio greater flexibility to respond promptly to
market or regulatory changes in the future. If the proposed change is not
approved, changes to investment policies could take place only following the
delay of a special Shareholder meeting held at the expense of shareholders of
the Portfolio.
22
<PAGE>
REQUIRED VOTE
To become effective, the proposed changes to the Money Market Portfolio's
investment policies must be approved by the vote of a majority of the
outstanding voting securities of the Portfolio. As indicated earlier, such
majority means the affirmative vote of the holders of (a) 67% or more of the
shares of the Portfolio present, in person or by proxy, at the Meeting, if the
holders of more than 50% of the outstanding shares are so present; or (b) more
than 50% of the outstanding shares of the Portfolio, whichever is less.
THE BOARD UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS OF THE MONEY MARKET
PORTFOLIO VOTE FOR APPROVAL OF THE PROPOSED AMENDMENT TO THE INVESTMENT POLICIES
OF THE MONEY MARKET PORTFOLIO TO AUTHORIZE THE BOARD TO MODIFY THE INVESTMENT
POLICIES OF THE PORTFOLIO.
(5) RATIFICATION OR REJECTION OF SELECTION OF INDEPENDENT ACCOUNTANTS
The Trustees have unanimously selected the firm of Price Waterhouse LLP
("Price Waterhouse") as the Fund's independent accountants for the fiscal year
ending December 31, 1997. The selection of Price Waterhouse is being submitted
for ratification or rejection by Shareholders at the Meeting. Price Waterhouse
has been the independent accountants for the Fund since its inception, and has
no direct or indirect financial interest in the Fund.
A representative of Price Waterhouse is expected to be present at the
Meeting and will be available to make a statement, and to respond to appropriate
questions of Shareholders.
Ratification of the selection of Price Waterhouse requires the approval of a
majority of the shares of the Fund represented and entitled to vote at the
Meeting.
THE BOARD UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS RATIFY THE SELECTION OF
PRICE WATERHOUSE AS THE INDEPENDENT ACCOUNTANTS FOR THE FUND.
ADDITIONAL INFORMATION
In the event that the necessary quorum to transact business or the vote
required to approve or reject any proposal is not obtained at the Meeting with
respect to the Fund or, if applicable, one or more Portfolios, the persons named
as proxies may propose one or more adjournments of the Meeting for a total of
not more than 60 days in the aggregate, to permit further solicitation of
proxies. Any such adjournment will require the affirmative vote of the holders
of a majority of the Fund's or, if applicable, the concerned Portfolio's shares
present in person or by proxy at the Meeting. The persons named as proxies will
vote in favor of such adjournment those proxies which they are entitled to vote
in favor of Proposal 1 and will vote against any such adjournment those proxies
required to be voted against that proposal.
Abstentions and, if applicable, broker "non-votes" will not count as votes
in favor of any of the proposals, and broker "non-votes" will not be deemed to
be present at the meeting for purposes of determining whether a particular
proposal to be voted upon has been approved. Broker "non-votes" are shares held
in street name for which the broker indicates that instructions have not been
received from the beneficial owners or other persons entitled to vote and for
which the broker does not have discretionary voting authority.
23
<PAGE>
SHAREHOLDER PROPOSALS
The Fund does not hold regular shareholders' meetings. Proposals of
Shareholders intended to be presented at the next meeting of Shareholders must
be received a reasonable time prior to the mailing of the proxy materials sent
in connection with the meeting, for inclusion in the proxy statement for that
meeting.
REPORTS TO SHAREHOLDERS
THE FUND'S MOST RECENT ANNUAL REPORT FOR ITS MOST RECENT FISCAL YEAR IS
AVAILABLE WITHOUT CHARGE UPON REQUEST FROM ADRIENNE RYAN-PINTO AT DWTC,
HARBORSIDE FINANCIAL CENTER, PLAZA TWO, JERSEY CITY, NEW JERSEY 07311 (TELEPHONE
1-800-869-NEWS (TOLL FREE)).
INTEREST OF CERTAIN PERSONS
DWDC, DWR, the Investment Manager, DWSC, Distributors and certain of their
respective Directors, officers, and employees, including persons who are
Trustees or officers of the Fund, may be deemed to have an interest in certain
of the proposals described in this Proxy Statement to the extent that certain of
such companies and their affiliates have contractual and other arrangements,
described elsewhere in this Proxy Statement, pursuant to which they are paid
fees by the Fund, and certain of those individuals are compensated for
performing services relating to the Fund and may also own shares of DWDC. Such
companies and persons may thus be deemed to derive benefits from the approvals
by Shareholders of such proposals.
OTHER BUSINESS
The management of the Fund knows of no other matters which may be presented
at the Meeting. However, if any matters not now known properly come before the
Meeting, it is the intention of the persons named in the enclosed form of proxy
to vote all shares that they are entitled to vote on any such matter, utilizing
such proxy in accordance with their best judgment on such matters.
By Order of the Board of
Trustees
BARRY FINK
SECRETARY
24
<PAGE>
APPENDIX A
FORM OF NEW INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT made as of the [ ] day of [ ], 1997, by and between Dean
Witter Variable Investment Series, 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 is authorized to issue shares of beneficial interest in
separate portfolios (the "Portfolios") with each Portfolio representing
interests in a separate portfolio of securities and other assets; and
WHEREAS, The Fund presently offers shares in several Portfolios, such
Portfolios together with all other Portfolios subsequently established by the
Fund with respect to which 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 being collectively referred to as the
"Portfolios"; 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 Portfolios and, subject to the supervision of the Trustees, to
supervise the investment activities of the Portfolios 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; with respect to the
Portfolios other than the European Growth Portfolio and the Pacific Growth
Portfolio, shall continuously manage the assets of the Portfolios in a manner
consistent with the investment objectives and policies of the Portfolios and
shall determine the securities and commodities to be purchased, sold or
otherwise disposed of by the Portfolios and the timing of such purchases, sales
and dispositions; with respect to the European Growth Portfolio and the Pacific
Growth Portfolio, shall supervise the management of the assets of the Portfolio
in a manner consistent with the investment objectives and policies of the
Portfolio and subject to such other limitations and directions as the Trustees
of the Fund may from time to time prescribe; and shall take such further action,
including the placing of purchase and sale orders on behalf of the Portfolios
other than the European Growth Portfolio and the Pacific Growth Portfolio, 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.
In the event the Fund establishes another Portfolio other than the current
Portfolios with respect to which it desires to retain the Investment Manager to
render investment advisory services hereunder, it shall notify the
A-1
<PAGE>
Investment Manager in writing. If the Investment Manager is willing to render
such services, it shall notify the Fund in writing, whereupon such other
Portfolio shall become a Portfolio hereunder.
2. The Investment Manager shall, at its own expense, enter into
Sub-Advisory Agreements in respect of the European Growth Portfolio and the
Pacific Growth Portfolio with a Sub-Adviser or Sub-Advisers to make
determinations as to the securities and commodities to be purchased, sold or
otherwise disposed of by the European Growth Portfolio or the Pacific Growth
Portfolio and the timing of such purchases, sales and dispositions and to take
such further action, including the placing of purchase and sale orders on behalf
of the Portfolio, as the Sub-Adviser, in consultation with the Investment
Manager, shall deem necessary or appropriate; provided that the Investment
Manager shall be responsible for monitoring compliance by such Sub-Adviser with
the investment policies and restrictions of the Portfolio and with such other
limitations or directions as the Trustees of the Fund may from time to time
prescribe.
3. 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.
4. 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.
5. 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.
6. The Fund assumes and shall pay or cause to be paid all other expenses of
the Fund, including without limitation: 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
A-2
<PAGE>
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.
7. For the services to be rendered, the facilities furnished, and the
expenses assumed by the Investment Manager, the various Portfolios of the Fund
shall pay to the Investment Manager monthly compensation determined by applying
the following annual rates to the daily net assets of the respective Portfolios
determined as of the close of each business day: (a) each of the Money Market
Portfolio, the High Yield Portfolio and the Strategist Portfolio -- 0.50% of
daily net assets; (b) the Equity Portfolio -- 0.50% of daily net assets up to $1
billion and 0.475% of daily net assets over $1 billion; (c) the Quality Income
Plus Portfolio -- 0.50% of daily net assets up to $500 million and 0.45% of
daily net assets over $500 million; (d) the Utilities Portfolio -- 0.65% of
daily net assets up to $500 and 0.55% of daily net assets over $500 million; (e)
the Dividend Growth Portfolio -- 0.625% of daily net assets up to $500 million;
0.50% of the next $500 million; and 0.475% of daily net assets over $1 billion;
(f) the Capital Growth Portfolio -- 0.65% of daily net assets; (g) each of the
Income Builder Portfolio, the Global Dividend Growth Portfolio and the Capital
Appreciation Portfolio -- 0.75% of daily net assets; and (h) each of the
European Growth Portfolio and the Pacific Growth Portfolio -- 1.00% of daily net
assets. Except as hereinafter set forth, compensation under this Agreement shall
be calculated and accrued daily and the amounts of the daily accruals shall be
paid monthly. Such calculations shall be made by applying 1/365ths of the annual
rates to the net assets of the respective Portfolios 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 8 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 8
hereof.
8. In the event that the operating expenses of any of the Money Market
Portfolio, the High Yield Portfolio, the Equity Portfolio, the Quality Income
Plus Portfolio, the Strategist Portfolio, the Utilities Portfolio or the
Dividend Growth Portfolio, including amounts payable to the Investment Manager
pursuant to paragraph 7 hereof, for any year ending on a date on which this
Agreement is in effect exceed 1.5% of the average daily net assets of such
Portfolio up to $30 million and 1.0% of the average daily net assets of such
Portfolio in excess of $30 million (the "expense limitation" of these
Portfolios), or in the event that the operating expenses of any of the Capital
Growth Portfolio, the Global Dividend Growth Portfolio, the European Growth
Portfolio or the Pacific Growth Portfolio, including amounts payable to the
Investment Manager pursuant to paragraph 7 hereof, for any year ending on a date
on which this Agreement is in effect exceed 2.5% of the average daily net assets
of such Portfolio up to $30 million, 2.0% of the next $70 million and 1.5% of
the average daily net assets of such Portfolio in excess of $100 million (the
"expense limitation" of these Portfolios), the Investment Manager shall reduce
its management fee in respect of such Portfolio to the extent of such excess and
will reimburse such Portfolio for annual operating expenses in excess of the
applicable expense limitation, up to the amount of the management fee for that
Portfolio which otherwise would be payable for that year; provided, however,
there shall be excluded from such expenses the amount of any interest, taxes,
brokerage commissions and extraordinary expenses (including but not limited to
legal claims and liabilities and litigation costs and any indemnification
related thereto) paid or payable by such Portfolio. Such reduction, if any,
shall be computed and accrued daily, shall be settled on a
A-3
<PAGE>
monthly basis, and shall be based upon the expense limitation applicable to such
Portfolio as at the end of the last business day of the month.
9. 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.
10. 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.
11. This Agreement shall remain in effect until April 30, 1999 and from year
to year thereafter with respect to each Portfolio provided such continuance with
respect to a Portfolio is approved at least annually by the vote of holders of a
majority (as defined in the Act) of the outstanding voting securities of such
Portfolio 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, with respect to
a Portfolio, by the vote of a majority of the outstanding voting securities of
such Portfolio; (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.
Any approval of this Agreement by the holders of a majority of the
outstanding voting securities of any Portfolio shall be effective to continue
this Agreement with respect to such Portfolio notwithstanding (a) that this
Agreement has not been approved by the holders of a majority of the outstanding
voting securities of any other Portfolio or (b) that this Agreement has not been
approved by the vote of a majority of the outstanding voting securities of the
Fund, unless such approval shall be required by any other applicable law or
otherwise.
12. 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.
13. 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.
14. 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
A-4
<PAGE>
Manager or its parent, Morgan Stanley, Dean Witter, Discover & Co., or any
corporate affiliate of the Investment Manager's parent, may use or grant to
others the right to use the name "Dean Witter," or any combination or
abbreviation thereof, as all or a portion of a corporate or business name or for
any commercial purpose, including a grant of such right to any other investment
company, (iv) at the request of the Investment Manager or its parent, the Fund
will take such action as may be required to provide its consent to the use of
the name "Dean Witter," or any combination or abbreviation thereof, by the
Investment Manager or its parent or any corporate affiliate of the Investment
Manager's parent, or by any person to whom the Investment Manager or its parent
or any corporate affiliate of the Investment Manager's parent shall have granted
the right to such use, and (v) upon the termination of any investment advisory
agreement into which the Investment Manager and the Fund may enter, or upon
termination of affiliation of the Investment Manager with its parent, the Fund
shall, upon request by the Investment Manager or its parent, cease to use the
name "Dean Witter" as a component of its name, and shall not use the name, or
any combination or abbreviation thereof, as a part of its name or for any other
commercial purpose, and shall cause its officers, Trustees and shareholders to
take any and all actions which the Investment Manager or its parent may request
to effect the foregoing and to reconvey to the Investment Manager or its parent
any and all rights to such name.
The Declaration of Trust establishing Dean Witter Variable Investment
Series, dated February 24, 1983, 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 Variable
Investment Series 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 Variable Investment Series 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 Variable Investment Series, but
the Trust Estate only shall be liable.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement on the day and year first above written in New York, New York.
DEAN WITTER VARIABLE INVESTMENT SERIES
By
......................................
Attest:
.....................................
DEAN WITTER INTERCAPITAL INC.
By
......................................
Attest:
.....................................
A-5
<PAGE>
APPENDIX B
InterCapital serves as investment manager to the Fund and the other
investment companies listed below which have similar investment objectives to
those of the Money Market Portfolio of the Fund. Set forth below is a chart
showing the net assets of each such investment company as of March 12, 1997 and
the investment management fees rate(s) applicable to such investment company.
<TABLE>
<CAPTION>
CURRENT INVESTMENT
NET ASSETS MANAGEMENT FEE RATE(S)
AS OF 03/12/97 AS A PERCENTAGE OF NET ASSETS
--------------- -----------------------------------
<C> <S> <C> <C>
1. ACTIVE ASSETS CALIFORNIA TAX-FREE TRUST......................... $ 440,611,354 0.50% on assets up to $500 million,
scaled down at various asset levels
to 0.25% on assets over $3 billion
2. ACTIVE ASSETS GOVERNMENT SECURITIES TRUST....................... $ 681,982,027 0.50% on assets up to $500 million,
scaled down at various asset levels
to 0.25% on assets over $3 billion
3. ACTIVE ASSETS MONEY TRUST....................................... $ 8,921,354,553 0.50% on assets up to $500 million,
scaled down at various asset levels
to 0.25% on assets over $3 billion
4. ACTIVE ASSETS TAX-FREE TRUST.................................... $ 1,751,293,513 0.50% on assets up to $500 million,
scaled down at various asset levels
to 0.25% on assets over $3 billion
5. DEAN WITTER CALIFORNIA TAX-FREE DAILY INCOME TRUST.............. 266,303,159
$ 0.50% on assets up to $500 million,
scaled down at various asset levels
to 0.25% on assets over $3 billion
6. DEAN WITTER LIQUID ASSET FUND INC. ............................. $12,519,913,252 0.50% on assets up to $500 million,
scaled down at various asset levels
to 0.248% on assets over $17.5
billion
7. DEAN WITTER NEW YORK MUNICIPAL MONEY MARKET TRUST............... 41,418,939
$ 0.50% on assets up to $500 million,
scaled down at various asset levels
to 0.25% on assets over $3 billion
8. DEAN WITTER TAX-FREE DAILY INCOME TRUST......................... $ 555,640,894 0.50% on assets up to $500 million,
scaled down at various asset levels
to 0.25% on assets over $3 billion
9. DEAN WITTER U.S. GOVERNMENT MONEY MARKET TRUST.................. 933,178,675
$ 0.50% on assets up to $500 million,
scaled down at various asset levels
to 0.25% on assets over $3 billion
10. DEAN WITTER RETIREMENT SERIES:
(A) LIQUID ASSET SERIES......................................... $ 23,818,464 0.50%(1)
(B) U.S. GOVERNMENT MONEY MARKET SERIES......................... $ 7,400,809 0.50%(1)
11. DEAN WITTER SELECT DIMENSIONS INVESTMENT SERIES:*
(A) MONEY MARKET PORTFOLIO...................................... $ 84,905,881 0.50%
12. DEAN WITTER VARIABLE INVESTMENT SERIES:*
(A) MONEY MARKET PORTFOLIO...................................... $ 339,300,697 0.50%
</TABLE>
- ------------------------------
* Open-end investment company offered only to life insurance companies in
connection with variable annuity and/or variable life insurance contracts.
(1) InterCapital has undertaken, until July 31, 1997, to continue to assume all
operating expenses of the Series of Dean Witter Retirement Series (except
for any brokerage fees and a portion of organizational expenses) and to
waive the compensation provided for each Series in its investment management
agreement with that company to the extent that such expenses and
compensation on an annualized basis exceed 1.0% of the daily net assets of
the pertinent Series.
B-1
<PAGE>
InterCapital serves as investment manager to the Fund and the other
investment companies listed below which have similar investment objectives to
those of the Quality Income Plus Portfolio and the High Yield Portfolio of the
Fund. Set forth below is a chart showing the net assets of each such investment
company as of March 1997 and the investment management fee rate(s) applicable to
such investment company.
<TABLE>
<CAPTION>
CURRENT INVESTMENT
NET ASSETS MANAGEMENT FEE RATE(S)
AS OF 03/12/97 AS A PERCENTAGE OF NET ASSETS
-------------- -----------------------------------
<C> <S> <C> <C>
1. DEAN WITTER HIGH YIELD SECURITIES INC.*....................... $472,422,555 0.50% on assets up to $500 million,
scaled down at various asset levels
to 0.30% on assets over $3 billion
2. DEAN WITTER U.S. GOVERNMENT SECURITIES TRUST*................. 6$,138,047,889 0.50% on assets up to $1 billion,
scaled down at various asset levels
to 0.30% on assets over $12.5
billion
3. DEAN WITTER CONVERTIBLE SECURITIES TRUST*..................... $258,071,153 0.60% on assets up to $750 million,
scaled down at various asset levels
to 0.425% on assets over $3 billion
4. DEAN WITTER FEDERAL SECURITIES TRUST*......................... $664,434,512 0.55% on assets up to $1 billion,
scaled down at various asset levels
to 0.35% on assets over $12.5
billion
5. INTERCAPITAL INCOME SECURITIES INC.**......................... $212,194,831 0.50%
6. HIGH INCOME ADVANTAGE TRUST**................................. $151,432,410 0.75% on assets up to $250 million,
scaled down at various asset levels
to 0.30% on assets over $1 billion
7. HIGH INCOME ADVANTAGE TRUST II**.............................. $202,120,811 0.75% on assets up to $250 million,
scaled down at various asset levels
to 0.30% on assets over $1 billion
8. HIGH INCOME ADVANTAGE TRUST III**............................. $ 78,703,844 0.75% on assets up to $250 million,
scaled down at various asset levels
to 0.30% on assets over $1 billion
9. DEAN WITTER INTERMEDIATE INCOME SECURITIES*................... $183,322,983 0.60% on assets up to $500 million,
scaled down at various asset levels
to 0.30% on assets over $1 billion
10. DEAN WITTER WORLD WIDE INCOME TRUST*.......................... $106,393,288 0.75% on assets up to $250 million,
scaled down at various asset levels
to 0.30% on assets over $1 billion
11. DEAN WITTER GOVERNMENT INCOME TRUST**......................... $425,720,030 0.60%
12. DEAN WITTER GLOBAL SHORT-TERM INCOME FUND INC.*............... 76,976,109
$ 0.55% on assets up to $500 million
and 0.50% on assets over $500
million
13. DEAN WITTER PREMIER INCOME TRUST*............................. $ 15,604,354 0.50% (of which 40% is paid to a
Sub-Adviser)
14. DEAN WITTER SHORT-TERM U.S. TREASURY TRUST*................... $255,026,002 0.35%
15. DEAN WITTER DIVERSIFIED INCOME TRUST*......................... $825,332,503 0.40%
16. DEAN WITTER SHORT-TERM BOND FUND*............................. $ 39,265,837 0.70%(1)
17. DEAN WITTER HIGH INCOME SECURITIES*........................... 1$,105,732,108 0.50% on assets up to $500 million
and 0.425% on assets over $500
million.
18. PRIME INCOME TRUST**.......................................... 1$,133,529,314 0.90% on assets up to $500 million
and 0.85% on assets over $500
million
19. DEAN WITTER BALANCED INCOME FUND*............................. $ 50,991,701 0.60%
</TABLE>
B-2
<PAGE>
<TABLE>
<CAPTION>
CURRENT INVESTMENT
NET ASSETS MANAGEMENT FEE RATE(S)
AS OF 03/12/97 AS A PERCENTAGE OF NET ASSETS
-------------- -----------------------------------
<C> <S> <C> <C>
20. DEAN WITTER RETIREMENT SERIES:*
(a) U.S. GOVERNMENT SECURITIES SERIES......................... $ 10,596,158 0.65% (2)
(b) INTERMEDIATE INCOME SECURITIES SERIES..................... $ 2,261,816 0.65% (2)
21. DEAN WITTER VARIABLE INVESTMENT SERIES:***
(a) QUALITY INCOME PLUS PORTFOLIO............................. $459,554,792 0.50% on assets up to $500 million
and 0.45% on assets over $500
million
(b) HIGH YIELD PORTFOLIO...................................... $277,126,804 0.50%
22. DEAN WITTER SELECT DIMENSIONS INVESTMENT SERIES:***
(a) DIVERSIFIED INCOME PORTFOLIO.............................. $ 37,415,339 0.40%
(b)NORTH AMERICAN GOVERNMENT SECURITIES PORTFOLIO............. $ 4,484,769 0.65% (of which 40% is paid to a
Sub-Adviser)
23. DEAN WITTER INTERMEDIATE TERM U.S. TREASURY TRUST*............ 1,962,920
$ 0.35%(3)
</TABLE>
- ------------------------------
* Open-end investment company.
** Closed-end investment company.
*** Open-end investment company offered only to life insurance companies in
connection with variable annuity and/or variable life insurance contracts.
(1) InterCapital has undertaken, from January 1, 1997 through April 30, 1997, to
assume all operating expenses of Dean Witter Short-Term Bond Fund (except
for any brokerage fees) and to waive the compensation provided for in its
investment management agreement with that company.
(2) InterCapital has undertaken, until July 31, 1997, to continue to assume all
operating expenses of the Series of Dean Witter Retirement Series (except
for brokerage fees and a portion of organizational expenses) and to waive
the compensation provided for each Series in its investment management
agreement with that company in respect of each Series to the extent that
such expenses and compensation on an annualized basis exceed 1.0% of the
average daily net assets of the pertinent Series.
(3) InterCapital has undertaken to assume all operating expenses of Dean Witter
Intermediate Term U.S. Treasury Trust (except for any 12b-1 fees and
brokerage expenses) and to waive the compensation provided for in its
investment management agreement with that company until such time as that
company has $50 million of net assets or until March 27, 1997, whichever
occurs first.
B-3
<PAGE>
InterCapital serves as investment manager to the Fund and the other
investment companies listed below which have similar investment objectives to
those of the Utilities Portfolio, the Dividend Growth Portfolio, the Capital
Growth Portfolio, the Global Dividend Growth Portfolio, the European Growth
Portfolio, the Pacific Growth Portfolio, the Capital Appreciation Portfolio, the
Equity Portfolio and the Strategist Portfolio of the Fund. Set forth below is a
chart showing the net assets of each such investment company as of March 12,
1997 and the investment management fee rate(s) applicable to such investment
company.
<TABLE>
<CAPTION>
NET ASSETS AS CURRENT INVESTMENT MANAGEMENT FEE
OF RATE(S)
03/12/97 AS A PERCENTAGE OF NET ASSETS
--------------- -----------------------------------
<C> <S> <C> <C>
1. DEAN WITTER AMERICAN VALUE FUND............................... $ 3,370,632,376 0.625% on assets up to $250
million, scaled down at various
asset levels to 0.475% on assets
over $2.5 billion
2. DEAN WITTER BALANCED GROWTH FUND.............................. $ 125,426,874 0.60%
3. DEAN WITTER CAPITAL APPRECIATION FUND......................... $ 323,927,003 0.75%
4. DEAN WITTER CAPITAL GROWTH SECURITIES......................... $ 505,754,103 0.65% on assets up to $500 million,
scaled down at various asset levels
to 0.475% on assets over $1.5
billion
5. DEAN WITTER DEVELOPING GROWTH SECURITIES TRUST................ 726,490,573
$ 0.50% on assets up to $500 million
and 0.475% on assets over $500
million
6. DEAN WITTER DIVIDEND GROWTH SECURITIES INC.................... $13,188,289,520 0.625% on assets up to $250
million, scaled down at various
asset levels to 0.30% on assets
over $10 billion
7. DEAN WITTER EUROPEAN GROWTH FUND INC.......................... $ 1,509,995,436 1.00% on assets up to $500 million
and 0.95% on assets over $500
million (of which 40% is paid to a
Sub-Adviser)
8. DEAN WITTER FINANCIAL SERVICES TRUST.......................... $ 154,411,700 0.75%
9. DEAN WITTER GLOBAL ASSET ALLOCATION FUND...................... $ 64,921,778 1.00% (of which 60% is paid to two
Sub-Advisers)
10. DEAN WITTER GLOBAL DIVIDEND GROWTH SECURITIES................. 3,065,931,979
$ 0.75% on assets up to $1 billion,
scaled down at various asset levels
to 0.675% on assets over $2.5
billion
11. DEAN WITTER GLOBAL UTILITIES FUND............................. $ 354,011,304 0.65%
12. DEAN WITTER HEALTH SCIENCES TRUST............................. $ 463,792,920 1.00% on assets up to $500 million
and 0.95% on assets over $500
million
13. DEAN WITTER INCOME BUILDER FUND............................... $ 245,689,401 0.75%
14. DEAN WITTER INFORMATION FUND.................................. $ 239,136,659 0.75%
15. DEAN WITTER INTERNATIONAL SMALLCAP FUND....................... $ 109,461,789 1.25% (of which 40% is paid to a
Sub-Adviser)
16. DEAN WITTER JAPAN FUND........................................ $ 193,493,375 1.0% (of which 40% is paid to a
Sub-Adviser)
17. DEAN WITTER MARKET LEADER TRUST............................... $ 100,000 0.75% (1)
18. DEAN WITTER MID-CAP GROWTH FUND............................... $ 409,527,028 0.75%
19. DEAN WITTER NATURAL RESOURCE DEVELOPMENT SECURITIES INC....... 255,182,300
$ 0.625% on assets up to $250 million
and 0.50% on assets over $250
million
</TABLE>
B-4
<PAGE>
<TABLE>
<CAPTION>
CURRENT INVESTMENT MANAGEMENT FEE
NET ASSETS AS RATE(S)
OF AS A PERCENTAGE OF NET ASSETS
03/12/97 -
---------------
<C> <S> <C> <C>
20. DEAN WITTER PACIFIC GROWTH FUND INC........................... $ 1,504,922,981 1.00% on assets up to $1 billion
and 0.95% on assets over $1 billion
(of which 40% is paid to a
Sub-Adviser)
21. DEAN WITTER PRECIOUS METALS AND MINERALS TRUST................ 59,639,235
$ 0.80%
22. DEAN WITTER SPECIAL VALUE FUND................................ $ 246,216,395 0.75%
23. DEAN WITTER STRATEGIST FUND................................... $ 1,435,020,832 0.60% on assets up to $500 million,
scaled down at various asset levels
to 0.475% on assets over $1.5
billion
24. DEAN WITTER UTILITIES FUND.................................... $ 2,517,911,689 0.65% on assets up to $500 million,
scaled down at various asset levels
to 0.425% on assets over $5 billion
25. DEAN WITTER VALUE-ADDED MARKET SERIES......................... $ 1,232,708,381 0.50% on assets up to $500 million,
scaled down at various asset levels
to 0.425% on assets over $1 billion
26. DEAN WITTER WORLD WIDE INVESTMENT TRUST....................... $ 438,134,738 1.0% on assets up to $500 million
and 0.95% on assets over $500
million (of which 40% is paid to a
Sub-Adviser)
27. DEAN WITTER RETIREMENT SERIES:
(A) AMERICAN VALUE SERIES..................................... $ 44,710,329 0.85% (2)
(B) CAPITAL GROWTH SERIES..................................... $ 2,753,853 0.85% (2)
(C) DIVIDEND GROWTH SERIES.................................... $ 92,596,787 0.75% (2)
(D) GLOBAL EQUITY SERIES...................................... $ 16,316,755 1.00% (2)
(E) STRATEGIST SERIES......................................... $ 22,235,461 0.85% (2)
(F) UTILITIES SERIES.......................................... $ 5,890,044 0.75% (2)
(G) VALUE-ADDED MARKET SERIES................................. $ 19,935,888 0.50% (2)
28. DEAN WITTER SELECT DIMENSIONS INVESTMENT SERIES:*
(A) AMERICAN VALUE PORTFOLIO.................................. $ 142,691,109 0.625%
(B) BALANCED PORTFOLIO........................................ $ 46,432,529 0.75% (of which 40% is paid to a
Sub-Adviser)
(C) CORE EQUITY PORTFOLIO..................................... $ 22,871,602 0.85% (of which 40% is paid to a
Sub-Adviser)
(D) DEVELOPING GROWTH PORTFOLIO............................... $ 62,776,199 0.50%
(E) DIVIDEND GROWTH PORTFOLIO................................. $ 313,542,513 0.625%
(F) EMERGING MARKETS PORTFOLIO................................ $ 21,698,779 1.25% (of which 40% is paid to a
Sub-Adviser)
(G) GLOBAL EQUITY PORTFOLIO................................... $ 68,541,265 1.00%
(H) MID-CAP GROWTH PORTFOLIO.................................. $ 3,805,149 0.75% (3)
(I) UTILITIES PORTFOLIO....................................... $ 36,684,324 0.65%
(J) VALUE-ADDED MARKET PORTFOLIO.............................. $ 87,489,055 0.50%
29. DEAN WITTER VARIABLE INVESTMENT SERIES:*
(A) CAPITAL APPRECIATION PORTFOLIO............................ $ 8,143,548 0.75% (4)
(B) CAPITAL GROWTH PORTFOLIO.................................. $ 94,830,181 0.65%
(C) DIVIDEND GROWTH PORTFOLIO................................. $ 1,411,963,686 0.625% on assets up to $500
million, scaled down at various
asset levels to 0.475% on assets
over $1 billion
</TABLE>
B-5
<PAGE>
<TABLE>
<CAPTION>
NET ASSETS AS CURRENT INVESTMENT MANAGEMENT FEE
OF RATE(S)
03/12/97 AS A PERCENTAGE OF NET ASSETS
--------------- -----------------------------------
<C> <S> <C> <C>
(D) EQUITY PORTFOLIO.......................................... $ 582,707,983 0.50% on assets up to $1 billion
and 0.475% on assets over $1
billion
(E) EUROPEAN GROWTH PORTFOLIO................................. $ 327,394,722 1.00% (of which 40% is paid to a
Sub-Adviser)
(F) GLOBAL DIVIDEND GROWTH PORTFOLIO.......................... $ 361,396,602 0.75%
(G) INCOME BUILDER PORTFOLIO.................................. $ 8,047,838 0.75% (4)
(H) PACIFIC GROWTH PORTFOLIO.................................. $ 136,946,030 1.00% (of which 40% is paid to a
Sub-Adviser)
(I) STRATEGIST PORTFOLIO...................................... $ 446,279,938 0.50%
(J) UTILITIES PORTFOLIO....................................... $ 423,303,421 0.65% on assets up to $500 million
and 0.55% on assets over $500
million
</TABLE>
- ------------------------------
* Open-end investment company offered only to life insurance companies in
connection with variable annuity and/or variable life insurance contracts.
(1) InterCapital has undertaken to assume all operating expenses of Dean Witter
Market Leader Trust (except for any 12b-1 fees and brokerage fees) and to
waive the compensation provided for in its investment management agreement
with that company until such time as that company has $50 million of net
assets or until six months from that company's commencement of operations.
Dean Witter Market Leader Trust is expected to commence operations on or
about April 28, 1997.
(2) InterCapital has undertaken, until July 31, 1997, to continue to assume all
operating expenses of the Series of Dean Witter Retirement Series (except
for any brokerage fees and a portion of organizational expenses) and to
waive the compensation provided for each Series in its investment management
agreement with that company to the extent that such expenses and
compensation on an annualized basis exceed 1.0% of the daily net assets of
the pertinent Series.
(3) InterCapital has undertaken, until the earlier of July 21, 1997 or the
attainment by the Portfolio of $50 million of net assets, to assume all
operating expenses (except for any brokerage fees) of the Mid-Cap Growth
Portfolio of Dean Witter Select Dimensions Investment Series and to waive
the compensation provided for that Portfolio in its investment management
agreement with the company.
(4) InterCapital has undertaken, until the earlier of July 21, 1997 or the
attainment by the respective Portfolio of $50 million of net assets, to
assume all operating expenses (except for any brokerage fees) of the Income
Builder Portfolio and the Capital Appreciation Portfolio of Dean Witter
Variable Investment Series and to waive the compensation provided for each
of these Portfolios in its investment management agreement with that
company.
B-6
<PAGE>
APPENDIX C
FORM OF NEW SUB-ADVISORY AGREEMENT
AGREEMENT made as of the [ ] day of [ ],1997 by and between Dean
Witter InterCapital Inc., a Delaware corporation (hereinafter called the
"Investment Manager"), and Morgan Grenfell Investment Services Limited, a
British corporation (hereinafter called the "Sub-Adviser").
WHEREAS, Dean Witter Variable Investment Series (hereinafter called 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 has entered into an Investment Management
Agreement (hereinafter called the "Investment Management Agreement") with the
Fund wherein the Investment Manager has agreed to provide investment management
services to the thirteen current Portfolios of the Fund and may provide such
services to other Portfolios subsequently established by the Fund; and
WHEREAS, the Sub-Adviser is registered as an investment advisor as under the
Investment Advisers Act of 1940 and is a member of the Investment Management
Regulatory Organization (IMRO), and, as such, is regulated by IMRO in the
conduct of its investment business in the U.K., and engages in the business of
acting as an investment adviser; and
WHEREAS, the Investment Manager desires to retain the services of the
Sub-Adviser to render investment advisory services for each of the European
Growth Portfolio and the Pacific Growth Portfolio in the manner and on the terms
and conditions hereinafter set forth (these Portfolios together with all other
Portfolios subsequently established by the Fund with respect to which the Fund
will have retained the Investment Manager to render management and investment
advisory services under the Investment Management Agreement and with respect to
which the Investment Manager desires to retain the Sub-Adviser to render
investment advisory services in the manner and on the terms and conditions
hereinafter set forth being collectively referred to as the "Sub-Advisory
Portfolios"); and
WHEREAS, the Sub-Adviser desires to be retained by the Investment Manager to
perform services on said terms and conditions:
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. Subject to the supervision of the Fund, its officers and Trustees, and
the Investment Manager, and in accordance with the investment objectives,
policies and restrictions set forth in the then current Registration Statement
relating to the Fund, and such investment objectives, policies and restrictions
from time to time prescribed by the Trustees of the Fund and communicated by the
Investment Manager to the Sub-Advisor, the Sub-Adviser agrees to provide the
European Growth Portfolio with investment advisory services with respect to
investments in issuers located in the British Isles, continental Europe and
Scandinavia and, at the discretion of the Investment Manager, provide investment
advisory services to that Portfolio with respect to investments in issuers
located outside of the British Isles, continental Europe and Scandinavia; to
provide the Pacific Growth Portfolio with investment advisory services with
respect to investments in issuers located in Asia, Australia and New Zealand
and, at the direction of the Investment Manager, provide investment advisory
services to that Portfolio with respect to investments in issuers located
outside of Asia, Australia and New Zealand; to obtain and evaluate such
information and advice relating to the economy, securities markets and
securities as it deems necessary or useful to discharge its duties hereunder; to
continuously manage the assets of each Sub-Advisory Portfolio in a
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manner consistent with the investment objective and policies of the Sub-Advisory
Portfolio; to make decisions as to foreign currency matters and make
determinations as to forward foreign exchange contracts and options and futures
contracts in foreign currencies; shall determine the securities to be purchased,
sold or otherwise disposed of by the Sub-Advisory Portfolio and the timing of
such purchases, sales and dispositions; to take such further action, including
the placing of purchase and sale orders on behalf of the Sub-Advisory Portfolio,
as it shall deem necessary or appropriate; to furnish to or place at the
disposal of the Sub-Advisory Portfolio and the Investment Manager such of the
information, evaluations, analyses and opinions formulated or obtained by it in
the discharge of its duties as the Fund and the Investment Manager may, from
time to time, reasonably request. Notwithstanding the foregoing, the Sub-Adviser
must obtain the Investment Manager's prior approval to the initial allocation by
the Sub-Adviser of the assets of the European Growth Portfolio among the British
Isles, continental Europe and Scandinavia and among the particular countries of
those regions; provided, further, that the Sub-Adviser must also obtain the
prior approval of the Investment Manager to: (a) any investment of the assets of
the European Growth Portfolio in the countries in the British Isles, continental
Europe and Scandinavia which countries were not specifically approved of for
investment at the time of the approval of the initial investment; (b) any
investment of the assets of the European Growth Portfolio in any country outside
of the British Isles, continental Europe or Scandinavia; and (c) any subsequent
investment by the Sub-Adviser which would result in the reallocation of in
excess of five (5%) percent of the European Growth Portfolio's total assets; and
the Sub-Adviser must obtain the Investment Manager's prior approval to the
initial allocation by the Sub-Adviser of the assets of the Pacific Growth
Portfolio among the national markets of Asia, Australia and New Zealand;
provided, further, that the Sub-Adviser must also obtain the prior approval of
the Investment Manager to: (a) any investment of the assets of the Pacific
Growth Portfolio in the countries of Asia, Australia and New Zealand, which
countries were not specifically approved of for investment at the time of the
approval of the initial investment; (b) any investment of the assets of the
Pacific Growth Portfolio in any country outside of Asia, Australia and New
Zealand, and (c) any subsequent investment by the Sub-Adviser which would result
in the reallocation of in excess of five (5%) percent of the Pacific Growth
Portfolio's total assets. The Investment Manager and the Sub-Adviser shall each
make its officers and employees available to the other from time to time at
reasonable times to review investment policies of the Sub-Advisory Portfolios
and to consult with each other.
In the event the Fund establishes another Portfolio other than the current
Sub-Advisory Portfolios with respect to which the Investment Manager desires to
retain the Sub-Adviser to render investment advisory services hereunder, the
Investment Manager shall notify the Sub-Adviser in writing, whereupon such
Portfolio shall become a Sub-Advisory Portfolio hereunder.
2. The Sub-Adviser 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 Sub-Adviser shall be deemed to include
persons employed or otherwise retained by the Sub-Adviser 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 Sub-Adviser shall maintain whatever records as may be required to be
maintained by it under the Act. All such records so maintained shall be made
available to the Fund, upon the request of the Investment Manager or the Fund.
3. The Fund will from time to time, furnish or otherwise make available to
the Sub-Adviser such financial reports, proxy statements and other information
relating to the business and affairs of the Sub-Advisory Portfolios as the
Sub-Adviser may reasonably require in order to discharge its duties and
obligations hereunder or to comply
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with any applicable law and regulations and the investment objectives, policies
and restrictions from time to time prescribed by the Trustees of the Fund.
4. The Sub-Adviser shall bear the cost of rendering the investment advisory
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 the Sub-Adviser, and such clerical help and bookkeeping
services as the Sub-Adviser shall reasonably require in performing its duties
hereunder.
5. The Fund, on behalf of each Sub-Advisory Portfolio, assumes and shall
pay or cause to be paid all other expenses of the Sub-Advisory Portfolio,
including, without limitation: any fees paid to the Investment Manager; the
charges and expenses of any registrar, any custodian, sub-custodian or
depository appointed by the Fund for the safekeeping of the Sub-Advisory
Portfolio's cash, portfolio securities and other property, and any stock
transfer or dividend agent or agents appointed by the Fund; brokers' commissions
chargeable to the Sub-Advisory Portfolio in connection with portfolio securities
transactions to which the Sub-Advisory Portfolio is a party; all taxes,
including securities issuance and transfer taxes, and fees payable by the
Sub-Advisory Portfolio to federal, state or other governmental agencies or
pursuant to any foreign laws; the cost and expense of engraving or printing
certificates representing shares of the Sub-Advisory Portfolio; all costs and
expenses in connection with the registration and maintenance of registration of
the Sub-Advisory Portfolio and its shares with the Securities and Exchange
Commission and various states and other jurisdictions or pursuant to any foreign
laws (including filing fees and legal fees and disbursements of counsel); the
cost and expense of printing (including typesetting) and distributing
prospectuses of the Fund and supplements thereto to the Sub-Advisory Portfolio'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 Sub-Adviser; 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 Sub-Advisory Portfolio'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, the Investment
Manager or the Sub-Adviser, and of independent accountants, in connection with
any matter relating to the Portfolio; membership dues of industry associations;
interest payable on Sub-Advisory Portfolio borrowings; postage; insurance
premiums on property or personnel (including officers and Trustees) of the
Sub-Advisory Portfolio 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
Sub-Advisory Portfolio's operation unless otherwise explicitly provided herein.
6. For the services to be rendered, the facilities furnished, and the
expenses assumed by the Sub-Adviser, the Investment Manager shall pay to the
Sub-Adviser monthly compensation equal to 40% of its monthly compensation
receivable pursuant to the Investment Management Agreement in respect of each of
the European Growth Portfolio and the Pacific Growth Portfolio. Any subsequent
change in the Investment Agreement which has the effect of raising or lowering
the compensation of the Investment Manager will have the concomitant effect of
raising or lowering the fee payable to the Sub-Adviser under this Agreement. In
addition, if the Investment Manager has undertaken in the Fund's Registration
Statement as filed under the Act or elsewhere to waive all or part of its fee
under the Investment Management Agreement, the Sub-Adviser's fee payable under
this Agreement will be proportionately waived in whole or in part. The
calculation of the fee payable to the Sub-Adviser pursuant to this Agreement
will be made, each month, at the time designated for the monthly calculation of
the fee payable to the Investment Manager pursuant to the Investment Manager
Agreement. 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 the
part of the month this Agreement is in effect shall be prorated in a manner
consistent with the calculation of the fee as
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set forth above. Subject to the provisions of paragraph 7 hereof, payment of the
Sub-Adviser'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 European Growth Portfolio or
the Pacific Growth Portfolio, including amounts payable to the Investment
Manager pursuant to the Investment Management Agreement in respect of either of
these Sub-Advisory Portfolios, for any fiscal year ending on a date on which
this Agreement is in effect, exceed, with respect to each of these Sub-Advisory
Portfolios, 2.5% of the average daily net assets of the Sub-Advisory Portfolio
up to $30 million, 2.0% of the next $70 million and 1.5% of the average daily
net assets of the Sub-Advisory Portfolio in excess of $100 million (the "expense
limitation"), the Sub-Adviser shall reduce its advisory fee in respect of the
applicable Sub-Advisory Portfolio to the extent of 40% of such excess and will
reimburse the Investment Manager for annual operating expenses in the amount of
40% of such excess of the expense limitation, up to the amount of the
Sub-Adviser's fee which would otherwise be payable in respect of the applicable
Sub-Advisory Portfolio under this Agreement for that year, it being understood
that the Investment Manager has agreed to effect a reduction and reimbursement
of 100% of such excess, up to the amount of its management fee in respect of the
Sub-Advisory Portfolio which otherwise would be payable for that year, in
accordance with the terms of the Investment Management Agreement; provided,
however, there shall be excluded from such expenses the amount of any interest,
taxes, brokerage commissions, 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 Sub-Advisory Portfolio.
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 Sub-Advisory Portfolio as at the end of the last business day of the month.
8. The Sub-Adviser will use its best efforts in the performance of
investment activities on behalf of each Sub-Advisory Portfolio, but in the
absence of willful misfeasance, bad faith, gross negligence or reckless
disregard of its obligations hereunder, the Sub-Adviser shall not be liable to
the Investment Manager or the Fund or any of its investors for any error of
judgment or mistake of law or for any act or omission by the Sub-Adviser or for
any losses sustained by the Sub-Advisory Portfolio or its investors.
9. It is understood that any of the shareholders, Trustees, officers and
employees of the Fund may be a shareholder, director, officer or employee of, or
be otherwise interested in, the Sub-Adviser, and in any person controlled by or
under common control with the Sub-Adviser, and that the Sub-Adviser and any
person controlled by or under common control with the Sub-Adviser may have an
interest in the Fund. It is also understood that the Sub-Adviser and any
affiliated persons thereof or any persons controlled by or under common control
with the Sub-Adviser have and may have advisory, management 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; provided, however, that neither the Sub-Adviser nor any of its
affiliates organized with a corporate name or other name under which it is
performing its business activities which contains the name "Morgan Grenfell,"
with the exception of C.J. Lawrence, Morgan Grenfell, Inc., shall undertake to
act as investment adviser or sub-adviser for any other U.S. registered
investment company, sold primarily as the underlying investment for variable
annuity or variable life contracts, whose investment policy is to invest
primarily in equity securities of issuers located in Europe or in Asia,
Australia and New Zealand and which is sponsored, distributed or managed by a
U.S. registered broker-dealer or one of its affiliates; and further provided,
however, that if the net assets of a Sub-Advisory Portfolio are less than $50
million on the first anniversary of the commencement of the Sub-Advisory
Portfolio's operations, then thereafter the Sub-Adviser and its affiliates shall
not be bound by the foregoing provision.
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10. This Agreement shall remain in effect until April 30, 1999 and from year
to year thereafter with respect to each Sub-Advisory Portfolio, provided such
continuance with respect to a Sub-Advisory Portfolio is approved at least
annually by the vote of holders of a majority, as defined in the Act, of the
outstanding voting securities of the Sub-Advisory Portfolio 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 and the Sub-Adviser,
either by majority vote of the Trustees of the Fund or, with respect to a Sub-
Advisory Portfolio, by the vote of a majority of the outstanding voting
securities of such Sub-Advisory Portfolio; (b) this Agreement shall immediately
terminate in the event of its assignment (within the meaning of the Act) unless
such automatic termination shall be prevented by an exemptive order of the
Securities and Exchange Commission; (c) this Agreement shall immediately
terminate in the event of the termination of the Investment Management
Agreement; (d) the Investment Manager may terminate this Agreement without
payment of penalty on thirty days' written notice to the Fund and the
Sub-Adviser and; (e) the Sub-Adviser may terminate this Agreement without the
payment of penalty on thirty days' written notice to the Fund and the Investment
Manager. 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 Sub-Advisory Portfolio 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,
the Investment Manager nor the Sub-Adviser shall be liable for failing to do so.
12. This Agreement shall be construed in accordance with the law 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,
conflict with the applicable provisions of the Act, the latter shall control.
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IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement on the day and year first above written in New York, New York.
DEAN WITTER INTERCAPITAL INC.
By
--------------------------------------
Attest:
--------------------------------------
MORGAN GRENFELL INVESTMENT
SERVICES LIMITED
By
--------------------------------------
Attest:
--------------------------------------
Accepted and agreed to as of
the day and year first above written:
DEAN WITTER VARIABLE INVESTMENT SERIES
By
- --------------------------------------
Attest:
- --------------------------------------
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APPENDIX D
Morgan Grenfell Investment Services Limited serves as sub-adviser to the
European Growth Portfolio and the Pacific Growth Portfolio of the Fund and as
investment adviser or sub-adviser to the other open-end investment companies
listed below which have similar investment objectives to one or both of the
European Growth Portfolio and the Pacific Growth Portfolio. Set forth below is a
chart showing the net assets of each such investment company as of March 12,
1997 and the investment advisory or sub-advisory fee rate(s) applicable to such
investment company.
<TABLE>
<CAPTION>
CURRENT INVESTMENT ADVISORY
OR
SUB-ADVISORY FEE RATE(S)
NET ASSETS AS AS A PERCENTAGE
OF 03/12/97 OF NET ASSETS
-------------- -----------------------------
<C> <S> <C> <C>
1. DEAN WITTER EUROPEAN GROWTH FUND INC................................. $1,509,995,436 0.40% on assets up to $500
million and 0.38% on assets
over $500 million
2. DEAN WITTER GLOBAL ASSET ALLOCATION FUND............................. $ 64,921,778 0.30%
3. DEAN WITTER INTERNATIONAL SMALLCAP FUND.............................. $ 109,461,789 0.50%
4. DEAN WITTER JAPAN FUND............................................... $ 193,493,375 0.40%
5. DEAN WITTER PACIFIC GROWTH FUND INC.................................. $1,504,922,981 0.40% on assets up to $1
billion and 0.38% on assets
over $1 billion
6. DEAN WITTER VARIABLE INVESTMENT SERIES:*
(A) EUROPEAN GROWTH PORTFOLIO........................................ $ 327,394,722 0.40%
(B) PACIFIC GROWTH PORTFOLIO......................................... $ 136,946,030 0.40%
7. DEAN WITTER WORLD WIDE INVESTMENT TRUST.............................. $ 438,134,738 0.40% on assets up to $500
million and 0.38% on assets
over $500 million
8. MGIS EMERGING MARKETS EQUITY FUND.................................... $ 108,495,462 1.00%
9. MGIS EUROPEAN EQUITY FUND............................................ $ 27,183,147 0.70%
10. MGIS EUROPEAN SMALL CAP EQUITY FUND.................................. $ 10,829,953 1.00%
11. MGIS INTERNATIONAL SMALL CAP EQUITY FUND............................. $ 87,950,216 1.00%
12. MGIS INTERNATIONAL EQUITY FUND....................................... $ 4,865,899 0.70%
13. RSI RETIREMENT FUND**................................................ $ 34,670,981 0.60% on assets up to $50
million and 0.50% on assets
over $50 million
</TABLE>
- ------------------------------
* Open-end investment company offered only to life insurance companies in
connection with variable annuity and/or variable life insurance contracts.
** Open-end investment company offered only to institutional pension funds.
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<PAGE>
BALLOT BALLOT
VOTING INSTRUCTIONS FOR THE SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 20, 1997
OF DEAN WITTER VARIABLE INVESTMENT SERIES
This Instruction Card is solicited by ___________________________ from owners
of variable annuity contracts and/or variable life insurance policies
issued by _________________________ who have specified that a portion of
their investment be allocated to this Portfolio of Dean Witter Variable
Investment Series.
The undersigned contract/policy owner hereby instructs that the votes
attributable to the undersigned's interest with respect to the
above-referenced Portfolio be cast as directed on the reverse side at the
Special Meeting of Shareholders of Dean Witter Variable Investment Series on
May 20, 1997 at 1:30 p.m., New York City time. The undersigned, by completing
this form, does hereby authorize _______________________________ to exercise
its discretion in voting upon such other business as may properly come before
the Meeting.
This Instruction Card, when properly executed, will be voted by
_________________________in the manner directed herein by the undersigned. If
no direction is made, the votes attributable to this Instruction Card will be
voted FOR all proposals listed on the reverse side. Interests in the
Portfolio for which no instructions are received will be voted by
___________________________ in the same proportion as votes for which
instructions are received for the Portfolio.
NOTE: PLEASE SIGN EXACTLY AS YOUR NAME APPEARS ON
THE VOTING INSTRUCTIONS CARD. PLEASE MARK, SIGN,
DATE AND MAIL YOUR VOTING INSTRUCTIONS CARD IN THE
ENCLOSED POSTAGE-PAID ENVELOPE. If joint owners, each
should sign. When signing as executor, trustee, etc.
give full title as such.
____________________________________________________
Signature
____________________________________________________
Signature (if held jointly)
_______________________________________________, 1997.
Date
<PAGE>
THE TRUSTEES RECOMMEND THAT SHAREHOLDERS VOTE FOR THE FOLLOWING PROPOSALS.
Please mark your choices below in blue or black ink. Example: / / Sign the
Ballot on the reverse side and return as soon as possible in the enclosed
envelope.
______________________________________________________________________________
1. Approval of New Investment Management Agreement with Dean Witter
InterCapital Inc. with respect to the Portfolio(s) named below in
connection with proposed merger.
[Portfolio name] FOR AGAINST ABSTAIN
/ / / / / /
______________________________________________________________________________
2. Approval of New Subadvisory Agreement between Dean Witter InterCapital
Inc. and Morgan Grenfell Investment Services Limited with respect to the
Portfolio(s) named below.
[Portfolio name] FOR AGAINST ABSTAIN
/ / / / / /
______________________________________________________________________________
3. Election of Trustees -- If you wish to withhold authority for any
particular nominee, mark the "For All Except" Box and strike a line
through the nominee's name.
Michael Bozic Charles A. Fiumefreddo Edwin J. Garn John R. Haire
Dr. Manuel H. Johnson Michael E. Nugent Philip J. Purcell
John L. Schroeder Wayne E. Hedien
FOR WITHHOLD FOR ALL EXCEPT
/ / / / / /
______________________________________________________________________________
4. Approval of Amendment to Investment Policies of the Money Market
Portfolio to authorize Board of Trustees to modify investment policies of
the Portfolio.
FOR AGAINST ABSTAIN
/ / / / / /
______________________________________________________________________________
5. Ratification of Appointment of Price Waterhouse LLP as Independent
Accountants.
FOR AGAINST ABSTAIN
/ / / / / /
______________________________________________________________________________
