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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
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.149-11(c) or
Section 240.14a-12
DEAN WITTER WORLD WIDE INVESTMENT TRUST . . . . . . . . . . . . . . . . . .
(Name of Registrant as Specified in its Charter)
MARILYN K. CRANNEY. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (check the appropriate box):
[ ] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(j)(1), or 14a-6(j)(2)
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(j)(3)
[ ] 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:
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4) Proposed maximum aggregate value of transaction:
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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Set forth the amount on which the filing fee is calculated and state how it
was determined.
[ ] 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:
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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DEAN WITTER WORLD WIDE INVESTMENT TRUST
---------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD OCTOBER 31, 1995
------------------------
A Special Meeting of Shareholders of DEAN WITTER WORLD WIDE INVESTMENT TRUST
(the "Trust"), an unincorporated business trust organized under the laws of the
Commonwealth of Massachusetts, will be held in the Conference Center,
Forty-Fourth Floor, 2 World Trade Center, New York, New York 10048, on October
31, 1995, at 10:00 a.m., New York City time, for the following purposes:
1. To approve or disapprove a new investment management agreement with
Dean Witter InterCapital Inc. ("InterCapital");
2. To approve or disapprove a sub-advisory agreement between
InterCapital and Morgan Grenfell Investment Services Limited;
3. To approve or disapprove changes in the investment restrictions of
the Trust to permit the Trust to purchase and sell futures contracts and
options; and
4. 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 August 4, 1995 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 at the meeting
or the vote required to approve or reject any proposal is not obtained, 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 Trust'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.
SHELDON CURTIS,
SECRETARY
August 9, 1995
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 A QUORUM MAY BE REPRESENTED AT THE MEETING. THE
ENCLOSED ENVELOPE REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
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DEAN WITTER WORLD WIDE INVESTMENT TRUST
TWO WORLD TRADE CENTER, NEW YORK, NEW YORK 10048
---------------------
PROXY STATEMENT
---------------------
SPECIAL MEETING OF SHAREHOLDERS
OCTOBER 31, 1995
This statement is furnished in connection with the solicitation of proxies
by the Board of Trustees (the "Board") of DEAN WITTER WORLD WIDE INVESTMENT
TRUST (the "Trust"), for use at the Special Meeting of Shareholders of the Trust
to be held on October 31, 1995 (the "Meeting"), and at any adjournments thereof.
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 in favor of Proposals 1, 2 and 3 as 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 Trust, execution and delivery of a later
dated proxy to the Secretary of the Trust, or attendance and voting at the
Meeting.
Shareholders of record as of the close of business on August 4, 1995, the
record date for the determination of shareholders entitled to notice of and to
vote at the Meeting, are entitled to one vote for each share held and a
fractional vote for a fractional share. On August 4, 1995, there were
outstanding 30,824,551 shares of beneficial interest of the Trust, all with $.01
par value. Mellon Bank, N.A., Mutual Funds, P.O. Box 320, Pittsburgh,
Pennsylvania 15230-0320, as trustee of the Dean Witter START Plan and the SPS
Transaction Services, Inc. START Plan (employee benefit plans established by
Dean Witter Reynolds Inc. and its affiliate, SPS Transaction Services, Inc., as
qualified under Section 401(k) of the Internal Revenue Code), owned 1,592,354,
or approximately 5.17%, of the outstanding shares of the Trust on that date. No
other person was known to own as much as 5% of the outstanding shares of the
Trust on that date. The Trustees and officers of the Trust, together, owned less
than 1% of the Trust's outstanding shares on that date. The percentage ownership
of shares of the Trust changes from time to time depending on purchases and
sales by shareholders and the total number of shares outstanding.
The cost of soliciting proxies for the Meeting, consisting principally of
printing and mailing expenses, will be borne by the Trust. 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 Trust and officers
and regular employees of Dean Witter InterCapital Inc. ("InterCapital" or the
"Investment Manager"), without special compensation therefor. The first mailing
of this proxy statement is expected to be made on or about August 9, 1995.
(1) APPROVAL OR DISAPPROVAL OF A NEW INVESTMENT MANAGEMENT AGREEMENT
THE PROPOSAL
The Trust has, since the commencement of its operations, been advised by
three separate investment advisers, InterCapital, Daiwa International Capital
Management Corp. ("Daiwa") and NatWest Investment Management
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Limited ("NatWest") (together, the "Advisers"). Each of these advisers had
exclusive investment responsibility with respect to the Trust's investments in a
particular area of the world. InterCapital was responsible for investing in
North America and South America, Daiwa was responsible for investing in the
Pacific Basin and NatWest was responsible for investing in Europe and all other
areas of the world not covered by InterCapital or Daiwa. Daiwa was assisted in
providing services to the Trust by its parent, Daiwa International Capital
Management Co., Ltd. ("Daiwa Ltd."), pursuant to a sub-advisory agreement
between Daiwa and Daiwa Ltd.
On July 26, 1995, InterCapital recommended to the Board of Trustees of the
Trust, modifications in the management structure of the Trust, intended to
enhance performance of the Trust. Specifically, InterCapital recommended that
responsibility for the overall management of the Trust be vested in a single
investment manager, InterCapital, and responsibility for making international
investments be vested in a single sub-adviser, Morgan Grenfell Investment
Services Limited ("Morgan Grenfell"). InterCapital would retain responsibility
for investments in the United States and for supervising the activities of the
sub-adviser. The investment advisory agreements with Daiwa and NatWest, and the
sub- advisory agreement between Daiwa and Daiwa Ltd., would in turn be
terminated.
InterCapital's recommendation was based on its view that the Trust could be
operated more effectively if responsibility for overseeing the investments of
the Trust were vested in a single entity rather than spread among three separate
organizations. In addition, InterCapital believed, particularly in light of its
favorable experience with Morgan Grenfell as sub-adviser to certain other
investment companies managed by InterCapital ("Dean Witter Funds"), that the
performance of the Trust could be enhanced if Morgan Grenfell were assigned
responsibility for making the non-U.S. investments of the Trust, and that the
proposed changes would have a positive effect on the Trust's prospects for
future growth.
THE BOARD'S CONSIDERATION
SELECTION OF INTERCAPITAL AND MORGAN GRENFELL. At their meeting in person
on July 26, 1995, the Trustees considered InterCapital's recommendations. In
particular, the Trustees considered the performance of certain other Dean Witter
Funds currently sub-advised by Morgan Grenfell as well as the performance of
similar accounts advised by Morgan Grenfell, and the historical performance of
the Trust. The Trustees also considered the quality and extent of the services
proposed to be provided by InterCapital and Morgan Grenfell; and the
organizational depth, reputation and experience of InterCapital in managing
mutual funds, and of Morgan Grenfell in investing internationally. In addition,
the Trustees reviewed material furnished by InterCapital and Morgan Grenfell
regarding their personnel, operations and financial condition. Prior to the
meeting, representatives of InterCapital and Morgan Grenfell reviewed with the
Independent Trustees (that is, the Trustees who are not "interested persons" of
the Trust, as that term is defined in the Investment Company Act of 1940, as
amended (the "Act")) their respective philosophies of management, performance
expectations and methods of operation.
The Board of Trustees found InterCapital's experience in managing mutual
funds and Morgan Grenfell's experience in international investing to be well
suited for the Trust. Based on their consideration of the foregoing and such
other factors as they deemed relevant, the Trustees determined that it would be
in the best interests of the Trust and its shareholders to terminate the
existing agreements and select InterCapital to serve as the investment manager
of the Trust pursuant to the management agreement described below (the "New
Management Agreement") and Morgan Grenfell to serve as sub-adviser with
responsibility for making non-U.S. investments of the Trust pursuant to the
sub-advisory agreement described under Proposal 2 (the "New Sub-Advisory
Agreement").
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APPROVAL OF NEW MANAGEMENT AGREEMENT. In considering whether or not to
approve the New Management Agreement, the Board of Trustees reviewed the terms
of such Agreement and considered all materials and information deemed relevant
to its determination. Among other things, the Board considered the nature and
scope of services to be rendered, the quality of InterCapital's services and
personnel, the appropriateness of the fees to be payable under the New
Management Agreement and the terms and provisions of the New Management
Agreement. In particular, the Board noted that under the New Management
Agreement InterCapital would retain 60% of the aggregate advisory fee payable by
the Trust, whereas under the Management Agreement then in effect InterCapital
retained 55% of such fee. The Board considered the appropriateness of such
increased percentage in light of InterCapital's responsibilities under the New
Management Agreement. The Board also considered benefits to be derived by
InterCapital from its relationship with the Trust, including any benefits from
research or other services received from brokers with whom InterCapital may
place trades for the Trust's portfolio.
Based upon its review, at its July 26 meeting, the Board of Trustees,
including all of the Independent Trustees, determined that the approval of the
New Management Agreement was in the best interests of the Trust and its
shareholders. The Board of Trustees also unanimously voted (i) to terminate,
effective at the close of business on July 31, 1995, the advisory agreements
with Daiwa and NatWest and the sub-advisory agreement between Daiwa and Daiwa
Ltd. (each of Daiwa, Daiwa Ltd. and NatWest agreed to waive the thirty-day
notice period required under its respective agreement); and (ii) to enter into
an interim investment management agreement with InterCapital and an interim
sub-advisory agreement with Morgan Grenfell. Such interim agreements, which are
currently in effect, will terminate on the earlier of November 28, 1995 or
implementation of the New Management Agreement. Pursuant to the Interim
Agreements, InterCapital and Morgan Grenfell receive from the Trust an annual
fee based on daily net assets of 0.55% (0.5225% on assets over $500 million) and
0.45% (0.4275% on assets over $500 million), respectively.
PRIOR ADVISORY AGREEMENTS
TERM OF AGREEMENTS. The investment advisory agreements in effect prior to
July 31, 1995 with InterCapital, Daiwa and NatWest, respectively (the "Prior
Advisory Agreements"), were last approved by the Board of Trustees on April 20,
1995. The Prior Advisory Agreement between the Trust and InterCapital, dated
June 30, 1993, was approved by the shareholders of the Trust at a Meeting of
Shareholders on January 12, 1993. The Prior Advisory Agreements between the
Trust and each of Daiwa and NatWest, and the sub-advisory agreement between
Diawa and Daiwa Ltd., were each dated August 26, 1983 and were last approved by
the shareholders of the Trust on July 16, 1985. Each such Agreement had an
initial term of one year and continued in effect from year to year thereafter
provided such continuance was approved at least annually by vote of a majority,
as defined in the Act, of the outstanding voting securities of the Trust or by
the Trustees of the Trust, 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.
FEES. Under the Prior Advisory Agreements, InterCapital, Daiwa and NatWest
were entitled to receive an annual fee of 0.55%, 0.225% and 0.225% of daily net
assets up to $500 million, respectively, such that the annual aggregate
management and advisory fees payable by the Trust equalled 1.00% of daily net
assets. Pursuant to action by the Board of Trustees, including all of the
Independent Trustees, on April 8, 1994, these rates declined to 0.5225%,
0.21375% and 0.21375%, respectively, on assets over $500 million.
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SERVICES PROVIDED. Under the Prior Advisory Agreements, InterCapital was
responsible for investing the Trust's assets allocated for investment in North
America and South America, Daiwa was responsible for investing the Trust's
assets allocated for investment in the Pacific Basin and NatWest was responsible
for investing the Trust's assets allocated in Europe and all other areas not
covered by InterCapital and Daiwa.
Administrative and business management services required for the Trust's
operations were also provided by InterCapital. These services included preparing
and filing registration statements, proxy statements and other reports required
by law or regulation; maintaining books and records of the Trust; and providing,
at its own expense, such office space, facilities, equipment, clerical help and
certain bookkeeping and legal services as the Trust may reasonably require to
conduct its business, except insofar as InterCapital believed participation or
assistance of independent attorneys and accountants were necessary or desirable.
It also paid the salaries and fees of all officers and Trustees of the Trust who
were employees of InterCapital. In addition, InterCapital arranged for Dean
Witter Services Company Inc. ("DWSC"), its wholly-owned subsidiary, to perform
the administrative and business management services for the Trust pursuant to a
services agreement with InterCapital.
EXPENSES. Expenses not expressly assumed by the Advisers, DWSC, or by Dean
Witter Distributors Inc. ("Distributors"), the distributor of the Trust's
shares, were to be paid by the Trust. The expenses borne by the Trust included,
but were not limited to: fees pursuant to the plan of distribution; charges and
expenses of any registrar, custodian, subcustodian, share transfer and dividend
disbursing agent; brokerage commissions; taxes; engraving and printing of share
certificates; registration costs of the Trust and its shares under federal and
state securities laws; the cost and expense of printing, including typesetting,
and distributing prospectuses and statements of additional information of the
Trust and supplements thereto to the Trust'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 Advisers or any corporate affiliate of any of them; all expenses incident to
any dividend, withdrawal or redemption options; charges and expenses of any
outside service used for pricing of the Trust's shares; fees and expenses of
legal counsel, including counsel to the Trustees who are not interested persons
of the Trust or of the Advisers (not including compensation or expenses of
attorneys who are employees of the Advisers) and independent accountants;
membership dues of industry associations; interest on Trust borrowings; postage;
insurance premiums on property or personnel (including officers and Trustees) of
the Trust which inure to its benefit; extraordinary expenses (including, but not
limited to, legal claims and liabilities and litigation costs and any
indemnification relating thereto); and all other costs of the Trust's operation.
Pursuant to the Prior Advisory Agreements, total operating expenses of the
Trust were subject to applicable limitations under rules and regulations of
states where the Trust is authorized to sell its shares. Therefore, operating
expenses were effectively subject to the most restrictive of such applicable
expense limitations, as amended from time to time. Presently, the most
restrictive limitation applicable to the Trust is as follows: In any fiscal
year, the Trust's total operating expenses, exclusive of taxes, interest,
brokerage fees, distribution fees, extraordinary expenses and certain excludable
expenses (to the extent permitted by applicable state securities laws and
regulations), may not exceed the lower of 2 1/2% of the first $30,000,000 of
average daily net assets, 2% of the next $70,000,000 and 1 1/2% of any excess
over $100,000,000. The Prior Advisory Agreements required the Advisers to
reimburse the Trust for the amount of any excess. In the event reimbursement had
been required, InterCapital was responsible for 55%, Daiwa 22.5% and NatWest
22.5% of such reimbursable amount. The Trust's expenses did not exceed the most
restrictive limitation during the fiscal year ended March 31, 1995.
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TERMINATION PROVISIONS. Each Prior Advisory Agreement provided that it
could be terminated at any time by the respective Adviser, the Trustees of the
Trust or by a vote of a majority of the outstanding shares of the Trust, in each
instance without the payment of any penalty, on thirty days' notice, and that it
would automatically terminate upon any "assignment," as that term is defined in
the Act. Each Agreement also provided that the respective Adviser would not be
liable to the Trust in the absence of willful misfeasance, bad faith, gross
negligence or reckless disregard of its obligations under the Agreement.
THE NEW MANAGEMENT AGREEMENT
COMPARISON OF NEW AGREEMENT TO PRIOR AGREEMENT. The terms of the New
Management Agreement with InterCapital are substantially identical to the Prior
Advisory Agreement with InterCapital except that under the New Agreement (i)
InterCapital will serve as the sole investment manager of the Trust (and have
supervisory authority over one or more sub-advisers) rather than as one of three
co-advisers; (ii) InterCapital will have exclusive investment responsibility for
investment in the U.S. whereas, under the Prior Agreement, InterCapital was
responsible for investment in North America and South America; and (iii)
InterCapital will retain 60% of the aggregate advisory fee paid by the Trust
whereas, under the Prior Agreement, InterCapital retained 55% of such fee. The
overall fees paid by the Trust for investment advisory services will not,
however, be changed. As noted above, the Board of Trustees of the Trust
determined that the additional percentage of the overall fee payable to
InterCapital under the New Management Agreement, reflecting InterCapital's
responsibilities for the overall management of the Trust under that Agreement,
was appropriate. The initial termination date of the New Management Agreement is
April 30, 1997, after which it is subject to the same renewal and termination
provisions as the Prior Advisory Agreements.
SERVICES PROVIDED. Under the New Management Agreement, InterCapital will
manage the Trust's investments in securities of U.S. issuers. InterCapital is
also instructed to retain, at its own expense, one or more sub-advisers to
manage Trust assets invested outside of the U.S. InterCapital has retained
Morgan Grenfell as sub-adviser for non-U.S. investments. (See Proposal 2 for
complete information about Morgan Grenfell and the New Sub-Advisory Agreement.)
InterCapital is responsible for supervising the activities of Morgan Grenfell
including monitoring compliance by the sub-adviser with the investment policies
and restrictions of the Trust and with such other limitations or directions as
the Trustees of the Trust may from time to time prescribe. Geographic allocation
decisions will be made periodically by InterCapital and Morgan Grenfell and, if
they cannot agree, InterCapital will have final responsibility for allocating
the Trust's assets among the various geographic regions for investment.
FEES. Under the New Management Agreement, the Trust will pay to
InterCapital an annual management fee at a rate of 1.00% of daily net assets up
to $500 million and at a rate of 0.95% on assets over $500 million. InterCapital
in turn will pay, out of its fees, a fee to Morgan Grenfell equal on annual
basis to 40% of the fee received by InterCapital.
The Trust accrued to the Advisers under the Prior Advisory Agreements total
compensation of $5,588,682 during the fiscal year ended March 31, 1995, of which
$3,073,775 was paid to InterCapital. If the New Management Agreement had been in
effect during that year the total amount paid by the Trust for investment
management services would have been exactly the same. However, InterCapital's
retained compensation would have been $3,353,209, representing an increase of
9.1%. The net assets of the Trust totalled $512,258,000 at March 31, 1995.
Although the maximum aggregate 1.00% fee, under both the Prior Advisory
Agreements and New Management Agreement, is higher than that paid by most other
investment companies, the fee reflects the specialized nature of the Trust's
investment policies. See Appendix III for a tabular comparison of current and
PRO FORMA fees.
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The form of the New Management Agreement is attached as Exhibit A to this
Proxy Statement. The foregoing summary is qualified in its entirety by Exhibit
A.
DEAN WITTER INTERCAPITAL INC.
InterCapital was incorporated in July, 1992 and is a wholly-owned subsidiary
of Dean Witter, Discover & Co. ("DWDC"), a balanced financial services
organization providing a broad range of nationally marketed credit and
investment products. In an internal reorganization which took place in January,
1993, InterCapital assumed the investment advisory, management and
administrative activities previously performed by the InterCapital Division of
Dean Witter Reynolds Inc. ("DWR").
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 DWR and Director of
InterCapital, DWSC and 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, 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.
Appendix I to this proxy statement lists the investment companies for which
InterCapital provides investment management or investment advisory services and
which have similar investment objectives to that of the Trust, and sets forth
the net assets of and the fees payable to InterCapital by such companies,
including the Trust. InterCapital, DWSC, DWDC and Distributors maintain their
offices at Two World Trade Center, New York, New York 10048.
There are various lawsuits pending against DWDC involving material amounts
which, in the opinion of its management, will be resolved with no material
effect on the consolidated financial position of the company or on the financial
ability of the Investment Manager to fulfill its commitment to the Trust under
the New Management Agreement.
During the fiscal year ended March 31, 1995, the Trust accrued the following
compensation to service providers that are affiliates of the Investment Manager:
(1) to DWTC, the Trust's Transfer Agent, transfer agency fees of $908,753; and
(2) to Distributors, the Trust's principal underwriter, distribution fees of
$5,619,558. All fees paid Distributors were paid pursuant to a plan of
distribution adopted by the Board of Trustees pursuant to Rule 12b-1 under the
Act, and approved by the Trust's shareholders on October 1, 1984. In addition,
Distributors has entered into a selected dealer agreement with DWR, which
through its own sales organization sells shares of the Trust. Each of these
affiliated companies will continue to provide services to the Trust following
shareholder approval of the New Management Agreement.
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Because DWR and InterCapital are under the common control of DWDC, DWR is an
affiliated broker of InterCapital. For the fiscal year ended March 31, 1995, the
Trust paid $89,120 in brokerage commissions to DWR, representing approximately
4.73% of the total brokerage commissions paid by the Trust during the year and
which were paid on account of transactions having a dollar value equal to
approximately 12.22% of the aggregate dollar value of all portfolio transactions
during the year for which commissions were paid.
Brokerage transactions with respect to Pacific Basin equities are often
conducted through affiliates of Daiwa's corporate parent, Daiwa Ltd. For the
fiscal year ended March 31, 1995, the Trust paid $2,667 in brokerage commissions
to affiliates of Daiwa Ltd., representing approximately 0.14% of the total
brokerage commissions paid by the Trust for the year and which were paid on
account of transactions having a dollar value equal to approximately 0.09% of
the aggregate dollar value of all portfolio transactions during the year for
which commissions were paid.
VOTE REQUIRED
Under the Act, approval of the New Management Agreement will require the
affirmative vote of the holders of (a) 67% or more of the shares of the Trust
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 Trust, whichever is less. In the event the
shareholders do not approve the New Management Agreement by the required
majority vote, the Board will take such action as it deems to be in the best
interests of the Trust and its shareholders, which may include calling a special
meeting of shareholders to vote on another new management agreement. Abstentions
and broker "non-votes" will have the same effect as a vote against the proposal.
THE TRUSTEES, INCLUDING ALL OF THE INDEPENDENT TRUSTEES, UNANIMOUSLY
RECOMMEND THAT THE SHAREHOLDERS APPROVE THE NEW MANAGEMENT AGREEMENT.
(2) APPROVAL OR DISAPPROVAL OF THE NEW SUB-ADVISORY AGREEMENT BETWEEN
INTERCAPITAL AND MORGAN GRENFELL
THE PROPOSAL
As discussed under Proposal 1, as part of its proposed modifications in
management structure intended to enhance the performance of the Trust,
InterCapital recommended to the Board of Trustees the selection of Morgan
Grenfell to serve as sub-adviser to the Trust pursuant to the terms of the New
Sub-Advisory Agreement described below.
THE NEW SUB-ADVISORY AGREEMENT
The New Sub-Advisory Agreement requires that Morgan Grenfell provide the
Trust with investment advisory services with respect to investments in issuers
located outside the U.S., and 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 under the New Sub-Advisory Agreement. Morgan
Grenfell is also charged with the responsibility to manage continuously the
assets of the Trust in a manner consistent with the investment objective,
policies and restrictions of the Trust; to make decisions as to foreign currency
matters, and forward foreign exchange contracts and options and futures
contracts in foreign currencies; to determine the securities to be purchased,
sold or otherwise disposed of by the Trust and the timing of such purchases,
sales and dispositions; to furnish or make available to the Trust and the
Investment Manager such information, evaluations, analyses and opinions
formulated or obtained by it in the discharge of its duties as the Trust and the
Investment Manager may reasonably request. All securities transactions are
reviewed periodically by the Investment Manager and are, in every
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<PAGE>
instance, subject to the overall supervision of the Investment Manager. The
Board reviews the Trust's portfolio semi-annually. The Investment Manager and
Morgan Grenfell shall each be obligated to make its respective officers and
employees available to the other from time to time at reasonable times to review
investment policies of the Trust and to consult with each other.
The New Sub-Advisory Agreement provides that Morgan Grenfell 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 New
Sub-Advisory Agreement. Morgan Grenfell also bears other costs of rendering the
investment advisory services performed by it pursuant to the New Sub-Advisory
Agreement, including such clerical help and bookkeeping services as it may
require.
In return for the services it renders under the New Sub-Advisory Agreement,
Morgan Grenfell is to be paid by the Investment Manager monthly compensation
equal to 40% of the Investment Manager's compensation receivable pursuant to the
New Management Agreement. See Appendix III for a tabular comparison of current
and PRO FORMA fees. Any subsequent change in the New Management 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
Morgan Grenfell. In addition, if the Investment Manager undertakes to waive all
or part of its fee under the New Management Agreement, Morgan Grenfell's fee
payable under the New Sub-Advisory Agreement will be waived proportionately, in
whole or in part.
As stated in Proposal 1, the New Management Agreement provides that the
operating expenses of the Trust are subject to applicable limitations under
rules and regulations of states where the Trust is authorized to sell its
shares. In the event the operating expenses of the Trust exceed such expense
limitations, Morgan Grenfell will reduce its sub-advisory fee 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 any expense limitation
that may be applicable.
Morgan Grenfell has agreed, pursuant to the New Sub-Advisory Agreement, that
neither Morgan Grenfell nor any of its affiliates (organized with a corporate
name or other name under which it is performing its business activities which
contains the names "Morgan Grenfell") will undertake to act as investment
adviser or sub-adviser for any other U.S. registered investment company with
similar investment policies which is sold primarily to retail investors, and
which is sponsored, distributed or managed by a U.S. registered broker-dealer or
one of its affiliates.
The New Sub-Advisory Agreement provides that, after its initial period of
effectiveness, which expires on April 30, 1997, it may be continued in effect
from year to year provided that each such continuance is approved by the vote of
a majority, as defined in the Act, of the outstanding voting securities of the
Trust or by the Trustees of the Trust, and, in either event, by the vote cast in
person by a majority of the Independent Trustees who are not parties to the New
Sub-Advisory Agreement or "interested persons" of any such party (as defined in
the Act) at a meeting called for the purpose of voting on such approval.
The New Sub-Advisory Agreement also provides that it may be terminated at
any time by Morgan Grenfell, the Investment Manager or the Board, or by a vote
of the majority of the outstanding voting securities of the Trust, in each
instance without the payment of any penalty, on thirty days' written notice, and
provides for its automatic termination in the event of its "assignment," as
defined in the Act.
The form of the New Sub-Advisory Agreement is attached as Exhibit B to this
Proxy Statement. The foregoing summary is qualified in its entirety by Exhibit
B.
9
<PAGE>
MORGAN GRENFELL INVESTMENT SERVICES LIMITED
Morgan Grenfell was organized as a limited company incorporated in England
and Wales in 1972 and manages, as of March 31, 1995, assets of approximately
$10.4 billion primarily for U.S. and Canadian corporate and public employee
benefit plans, investment companies, endowments and foundations. Morgan Grenfell
is a wholly-owned subsidiary of London-based Morgan Grenfell Asset Management
Limited, whose subsidiaries in total manage, as of March 31, 1995, assets of
over $51 billion. Morgan Grenfell Asset Management Limited is itself a
wholly-owned subsidiary of London-based Morgan Grenfell Group plc (shortly to
change its name to Deutsche Morgan Grenfell Group plc) (which is wholly-owned by
Deutsche Bank AG, an international commercial and investment banking group).
Morgan Grenfell is registered as an investment adviser under the Investment
Advisers Act of 1940. Morgan Grenfell's 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 II to this proxy statement lists the investment companies for which
Morgan Grenfell serves as an investment adviser and which have investment
objectives similar to that of the Trust, and sets forth the net assets of and
the fees payable to Morgan Grenfell by each such company, including the Trust.
The Principal Executive Officer and Directors of Morgan Grenfell 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 Morgan Grenfell; Graham B. Bamping, Martin A. Hall, Julian R.
Johnston, Ian D. Kelson, William G. M. Thomas, Patrick N. C. Walker, Stephen
A.J. Ward and A. Michael Wheatley, Directors of Morgan Grenfell. The business
address of the foregoing Directors and Executive Officer is 20 Finsbury Circus,
London, England.
Following implementation of the New Sub-Advisory Agreement, it is
anticipated that some portion of securities transactions for the Trust will be
executed through brokers affiliated with Morgan Grenfell, including Morgan
Grenfell and Partners Securities Pte Ltd and Morgan Grenfell Asia Securities
(Hong Kong) Limited.
THE BOARD'S CONSIDERATION
In approving InterCapital's recommendation of Morgan Grenfell as
sub-adviser, the Board of Trustees considered the nature, quality and extent of
services proposed to be rendered, historical performance, the proposed
investment strategy, the proposed fee and related arrangements, and the
organizational depth, reputation, expertise and experience of Morgan Grenfell,
including Morgan Grenfell's experience as sub-adviser to six other Dean Witter
Funds and portfolios. In connection with this determination, the Trustees
reviewed materials furnished by Morgan Grenfell relevant to their decision.
Those materials included information regarding Morgan Grenfell and its
personnel, operations and financial condition. Representatives of Morgan
Grenfell reviewed with the Board of Trustees Morgan Grenfell's philosophy of
management, performance, expectations and methods of operation insofar as they
would relate to the Trust.
In addition, the Board of Trustees reviewed and discussed the terms and
provisions of the New Sub-Advisory Agreement. See "The New Sub-Advisory
Agreement" above.
Based upon the Board's review and evaluations of these materials and its
consideration of all factors deemed relevant, the Board determined that the New
Sub-Advisory Agreement is reasonable, fair and in the best interests of the
Trust and its shareholders. Accordingly, the Board, including all of the
Independent Trustees, approved the New Sub-Advisory Agreement and voted to
recommend its approval to the Trust's shareholders.
10
<PAGE>
VOTE REQUIRED
Under the Act, approval of the New Sub-Advisory Agreement will require the
affirmative vote of the holders of (a) 67% or more of the shares of the Trust
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 Trust, whichever is less. In the event the
shareholders do not approve the New Sub- Advisory Agreement by the required
majority vote, the Board will take such action as it deems to be in the best
interests of the Trust and its shareholders, which may include calling a special
meeting of shareholders to vote on another sub-advisory agreement. Abstentions
and broker "non-votes" will have the same effect as a vote against the proposal.
THE TRUSTEES, INCLUDING ALL OF THE INDEPENDENT TRUSTEES, UNANIMOUSLY
RECOMMEND THAT THE SHAREHOLDERS APPROVE THE NEW SUB-ADVISORY AGREEMENT.
(3) APPROVAL OR DISAPPROVAL OF CHANGES IN THE INVESTMENT RESTRICTIONS OF
THE TRUST TO PERMIT THE TRUST TO PURCHASE AND SELL FUTURES CONTRACTS
AND OPTIONS
THE PROPOSAL
The Trustees, at their July 26 meeting, approved the adoption of a new
investment policy for the Trust and certain related changes in the Trust's
fundamental investment restrictions to permit the Trust to purchase and sell
futures contracts and options. Because the current investment restrictions are
fundamental, the proposed changes in investment restrictions are subject to
approval by the Trust's shareholders. Currently, investment restrictions (3),
(5) and (9) in the Trust's Statement of Additional Information either prevent or
are affected by the new policy. Accordingly, the Trustees voted to eliminate
restrictions (3) and (5), which provide that "the Trust may not . . . purchase
or sell commodities or commodity futures contracts . . . [or] write, purchase or
sell puts, calls, or combinations thereof," and to amend restriction (9), which
prohibits the issuance of senior securities, such that it would not apply to the
extent the Trust may be deemed to have issued a senior security by reason of
purchasing or selling futures contracts or options. The new investment policy
adopted by the Trustees cannot be implemented if the shareholders do not approve
amendment or elimination of the restrictions as proposed.
SUMMARY OF THE NEW POLICY
The new investment policy would permit the Trust:
(1) to write and/or purchase put and call options on currencies and
engage in transactions involving currency futures contracts and
options on such contracts, for purposes of hedging against
potential changes in the market value of the currencies in which
its investment (or anticipated investments) are denominated;
(2) to (a) purchase put and call options on securities which it holds
(or has the right to acquire), (b) engage in transactions involving
interest rate futures contracts and bond index futures contracts
and options on such contracts, and (c) engage in transactions
involving stock index futures contracts and options thereon, in
each case for purposes of hedging its investments (or anticipated
investments) against potential changes in the market value; and
(3) to write covered call options and covered put options on eligible
portfolio securities and stock indexes and purchase options of the
same or similar series to effect closing transactions.
11
<PAGE>
If the changes in this Proposal 3 are approved by shareholders, InterCapital
and Morgan Grenfell currently intend to engage in only the hedging transactions
described in subparagraph (1) above but may engage in other types of
transactions in the future. The new policy concerning futures and options, if
implemented, will be non-fundamental and therefore could be changed by the
Trustees in the future without shareholder approval.
A complete description of the techniques covered by the new investment
policy and the risks associated with such techniques is attached as Appendix IV.
THE BOARD'S CONSIDERATION
The Trustees believe that approval of this Proposal 3 is in the best
interest of the Trust and its shareholders. InterCapital has advised the
Trustees that implementation of the new investment policy as proposed would
afford the Trust greater flexibility in pursuing its investment objective and
enhanced opportunities to seek to protect against currency risks associated with
global investing. In addition, although InterCapital and Morgan Grenfell
presently intend to utilize only the currency hedging techniques covered by the
new policy, the Trustees believe approval of the Proposal as presented will be
advantageous in allowing InterCapital and Morgan Grenfell to respond quickly to
changing market conditions without the added time and expense associated with
shareholder meetings that might otherwise be required. Accordingly, the Board
voted to recommend the elimination of restrictions (3) and (5) and the amendment
of restriction (9) as described above.
VOTE REQUIRED
Under the Act, approval of the proposed changes in investment restrictions
will require the affirmative vote of the holders of (a) 67% or more of the
shares of the Trust 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 Trust, whichever is less. In the event
the shareholders do not approve the proposed changes in investment restrictions
by the required majority vote, the Board will take such action as it deems to be
in the best interests of the Trust and its shareholders, which may include
calling another meeting of shareholders to vote on a proposal to change the
Trust's investment restrictions. Abstentions and broker "non-votes" will have
the same effect as a vote against the proposal.
THE TRUSTEES, INCLUDING ALL OF THE INDEPENDENT TRUSTEES, UNANIMOUSLY
RECOMMEND THAT THE SHAREHOLDERS APPROVE THE PROPOSED CHANGES IN THE TRUST'S
INVESTMENT RESTRICTIONS.
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, 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 Trust'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.
SHAREHOLDERS PROPOSALS
The Trust 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.
12
<PAGE>
REPORTS TO SHAREHOLDERS
The Trust's most recent Annual Report, for the fiscal year ended March 31,
1995, is available without charge upon request from Adrienne Ryan at Dean Witter
Trust Company, Harborside Financial Center, Plaza Two, Jersey City, New Jersey
07311 (telephone 1-800-526-3143) (toll-free).
OTHER BUSINESS
The management 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, or their
substitutes, 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
SHELDON CURTIS
SECRETARY
13
<PAGE>
APPENDIX I
InterCapital serves as investment manager to the Trust and the other
open-end investment companies listed below which have similar investment
objectives to that of the Trust, with the net assets shown as of August 4, 1995.
<TABLE>
<CAPTION>
NET ASSETS AS CURRENT INVESTMENT MANAGEMENT
OF 08/04/95 FEE RATE(S)
-------------- -----------------------------
<C> <S> <C> <C>
1. DEAN WITTER AMERICAN VALUE FUND...................................... $1,958,780,324 0.625% on assets up to $250
million and 0.50% on assets
over $250 million
2. DEAN WITTER BALANCED GROWTH FUND..................................... $ 20,951,284 0.60% (1)
3. DEAN WITTER CAPITAL GROWTH SECURITIES................................ $ 482,227,755 0.65% on assets up to $500
million, scaled down at
various asset levels to
0.475% on assets over $1.5
billion
4. DEAN WITTER DEVELOPING GROWTH SECURITIES TRUST....................... $ 461,311,557 0.50% on assets up to $500
million and 0.475% on assets
over $500 million
5. DEAN WITTER DIVIDEND GROWTH SECURITIES INC........................... $8,187,092,144 0.625% on assets up to $250
million, scaled down at
various asset levels to
0.325% on assets over $8
billion
6. DEAN WITTER EUROPEAN GROWTH FUND INC................................. $ 857,692,249 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)
7. DEAN WITTER GLOBAL ASSET ALLOCATION FUND............................. $ 30,744,738 1.00% (2) (of which 60% is
paid to two Sub-Advisers)
8. DEAN WITTER GLOBAL DIVIDEND GROWTH SECURITIES........................ $2,094,605,635 0.75% on assets up to $1
billion, scaled down at
various asset levels to 0.70%
on assets over $1.5 billion
9. DEAN WITTER GLOBAL UTILITIES FUND.................................... $ 358,816,823 0.65%
10. DEAN WITTER HEALTH SCIENCES TRUST.................................... $ 265,333,779 1.00%
11. DEAN WITTER INTERNATIONAL SMALLCAP FUND.............................. $ 100,180,647 1.25% (of which 40% is paid
to a Sub-Adviser)
12. DEAN WITTER MANAGED ASSETS TRUST..................................... $ 406,756,755 0.60% on assets up to $500
million and 0.55% on assets
over $500 million
13. DEAN WITTER MID-CAP GROWTH FUND...................................... $ 143,013,736 0.75%
14. DEAN WITTER NATURAL RESOURCE DEVELOPMENT SECURITIES INC.............. $ 141,606,147 0.625% on assets up to $250
million and 0.50% on assets
over $250 million
15. DEAN WITTER PACIFIC GROWTH FUND INC.................................. $1,516,056,128 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)
16. DEAN WITTER PRECIOUS METALS AND MINERALS TRUST....................... $ 65,767,676 0.80%
17. DEAN WITTER STRATEGIST FUND.......................................... $ 871,086,775 0.60% on assets up to $500
million, scaled down at
various asset levels to 0.50%
on assets over $1 billion
</TABLE>
I-1
<PAGE>
<TABLE>
<CAPTION>
NET ASSETS AS CURRENT INVESTMENT MANAGEMENT
OF 08/04/95 FEE RATE(S)
-------------- -----------------------------
<C> <S> <C> <C>
18. DEAN WITTER UTILITIES FUND........................................... $3,020,756,851 0.65% on assets up to $500
million, scaled down at
various asset levels to 0.45%
on assets over $3.5 billion
19. DEAN WITTER VALUE-ADDED MARKET SERIES................................ $ 677,362,508 0.50% on assets up to $500
million and 0.45% on assets
over $500 million
20. DEAN WITTER WORLD WIDE INVESTMENT TRUST.............................. $ 533,979,818 0.55% on assets up to $500
million and 0.5225% on assets
over $500 million (3)
21. DEAN WITTER RETIREMENT SERIES:
(A) AMERICAN VALUE SERIES............................................ $ 22,158,878 0.85% (4)
(B) CAPITAL GROWTH SERIES............................................ $ 673,778 0.85% (4)
(C) DIVIDEND GROWTH SERIES........................................... $ 35,643,458 0.75% (4)
(D) GLOBAL EQUITY SERIES............................................. $ 7,241,962 1.00% (4)
(E) STRATEGIST SERIES................................................ $ 6,715,395 0.85% (4)
(F) UTILITIES SERIES................................................. $ 5,391,832 0.75% (4)
(G) VALUE-ADDED MARKET SERIES........................................ $ 14,025,861 0.50% (4)
22. DEAN WITTER SELECT DIMENSIONS INVESTMENT SERIES:*
(A) AMERICAN VALUE PORTFOLIO......................................... $ 9,029,690 0.625% (5)
(B) BALANCED PORTFOLIO............................................... $ 6,147,411 0.75% (5) (of which 40% is
paid to a Sub-Adviser)
(C) CORE EQUITY PORTFOLIO............................................ $ 1,391,165 0.85% (5) (of which 40% is
paid to a Sub-Adviser)
(D) DEVELOPING GROWTH PORTFOLIO...................................... $ 3,994,719 0.50% (5)
(E) DIVIDEND GROWTH PORTFOLIO........................................ $ 22,041,851 0.625% (5)
(F) EMERGING MARKETS PORTFOLIO....................................... $ 1,784,671 1.25% (5) (of which 40% is
paid to a Sub-Adviser)
(G) GLOBAL EQUITY PORTFOLIO.......................................... $ 5,682,537 1.00% (5)
(H) UTILITIES PORTFOLIO.............................................. $ 4,633,100 0.65% (5)
(I) VALUE-ADDED MARKET PORTFOLIO..................................... $ 6,094,211 0.50% (5)
23. DEAN WITTER VARIABLE INVESTMENT SERIES:*
(A) CAPITAL GROWTH PORTFOLIO......................................... $ 56,827,360 0.65%
(B) DIVIDEND GROWTH PORTFOLIO........................................ $ 735,408,140 0.625% on assets up to $500
million and 0.50% on assets
over $500 million
(C) EQUITY PORTFOLIO................................................. $ 288,911,643 0.50%
(D) EUROPEAN GROWTH PORTFOLIO........................................ $ 181,502,538 1.00% (of which 40% is paid
to a Sub-Adviser)
(E) GLOBAL DIVIDEND GROWTH PORTFOLIO................................. $ 178,901,282 0.75%
(F) MANAGED ASSETS PORTFOLIO......................................... $ 387,946,498 0.50%
(G) PACIFIC GROWTH PORTFOLIO......................................... $ 90,408,568 1.00% (of which 40% is paid
to a Sub-Adviser)
(H) UTILITIES PORTFOLIO.............................................. $ 426,337,357 0.65% on assets up to $500
million and 0.55% on assets
over $500 million
<FN>
- ------------------------------
* 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 (except for
any brokerage fees) of Dean Witter Balanced Growth Fund 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 September 28, 1995, whichever occurs first.
</TABLE>
I-2
<PAGE>
<TABLE>
<S> <C>
(2) InterCapital has undertaken to assume all operating expenses (except for
any 12b-1 and brokerage fees) of Dean Witter Global Asset Allocation Fund
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 August 23, 1995, whichever occurs first.
(3) Under the proposed New Investment Management Agreement, the investment
management fee for Dean Witter World Wide Investment Trust will be at the
annual rates of 1.0% on assets up to $500 million and 0.95% on assets over
$500 million (of which 40% will be paid to a Sub-Adviser).
(4) InterCapital has undertaken to assume all operating expenses (except for
any brokerage fees and a portion of organizational expenses) of the Series
of Dean Witter Retirement Series and to waive the compensation provided for
in its investment management agreement with that company in respect of each
Series until December 31, 1995.
(5) InterCapital has undertaken to assume all operating expenses (except for
any brokerage fees and a portion of organizational expenses) of the
Portfolios of Dean Witter Select Dimensions Investment Series and to waive
the compensation provided for in its investment management agreement with
that company in respect of each Portfolio until such time as the pertinent
Portfolio has $50 million of net assets or until December 31, 1995,
whichever occurs first.
</TABLE>
I-3
<PAGE>
APPENDIX II
Morgan Grenfell Investment Services Limited serves as investment adviser or
sub-adviser to the Trust and the other open-end investment companies listed
below which have similar investment objectives to that of the Trust, with the
net assets shown as of August 4, 1995.
<TABLE>
<CAPTION>
CURRENT INVESTMENT ADVISORY
NET ASSETS AS OR
OF 08/04/95 SUB-ADVISORY FEE RATE(S)
-------------- -----------------------------
<C> <S> <C> <C>
1. DEAN WITTER EUROPEAN GROWTH FUND INC................................. $ 857,692,249 0.40% on assets up to $500
million and 0.38% on assets
over $500 million
2. DEAN WITTER GLOBAL ASSET ALLOCATION FUND............................. $ 30,744,738 0.30%
3. DEAN WITTER INTERNATIONAL SMALLCAP FUND.............................. $ 100,180,647 0.50%
4. DEAN WITTER PACIFIC GROWTH FUND INC.................................. $1,516,056,128 0.40% on assets up to $1
billion and 0.38% on assets
over $1 billion
5. DEAN WITTER VARIABLE INVESTMENT SERIES:*
(A) EUROPEAN GROWTH PORTFOLIO........................................ $ 181,502,538 0.40%
(B) PACIFIC GROWTH PORTFOLIO......................................... $ 90,408,568 0.40%
6. DEAN WITTER WORLD WIDE INVESTMENT TRUST.............................. $ 533,979,818 0.45% on assets up to $500
million and 0.4275% on assets
over $500 million (1)
7. MGIS EMERGING MARKETS EQUITY FUND.................................... $ 70,749,821 1.00%
8. MGIS EUROPEAN SMALL CAP EQUITY FUND.................................. $ 9,298,530 1.00%
9. MGIS INTERNATIONAL GROUP TRUST -- EUROPEAN FUND...................... $ 13,190,355 0.70%
10. MGIS INTERNATIONAL SMALL CAP EQUITY FUND............................. $ 68,315,427 1.00%
11. MGIS INTERNATIONAL EQUITY FUND....................................... $ 2,722,581 0.70%
12. RSI RETIREMENT FUND**................................................ $ 30,922,090 0.60% on assets up to $50
million and 0.50% on assets
over $50 million
13. SEI EUROPEAN PORTFOLIO COLLECTIVE TRUST**............................ $ 149,370,239 0.40% on assets up to $100
million, scaled down at
various asset levels to 0.20%
on assets over $150 million
14. SEI EUROPEAN PORTFOLIO MUTUAL FUND**................................. $ 53,217,778 0.325%
<FN>
- ------------------------------
* 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.
(1) Under the proposed New Sub-Advisory Agreement, the sub-advisory fee for
Dean Witter World Wide Investment Trust will be at the annual rates of
0.40% on assets up to $500 million and 0.38% on assets over $500 million.
</TABLE>
II-1
<PAGE>
APPENDIX III
<TABLE>
<CAPTION>
PRO FORMA COMPENSATION UNDER NEW
COMPENSATION UNDER MANAGEMENT AND CO- MANAGEMENT AND SUB-ADVISORY % CHANGE IN $
ADVISORY AGREEMENTS AGREEMENTS (1) AMOUNT
----------------------------------------- --------------------------------------- --------------
RATE UP TO RATE OVER AMOUNT FOR FY RATE UP TO RATE OVER AMOUNT FOR FY
ADVISER $500MM $500MM '95 $500MM $500MM '95
- -------------------- ---------- ----------- -------------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
InterCapital........ 0.55% 0.5225% $3,073,775 0.60% 0.57% $3,353,209 9.1
Daiwa............... 0.225% 0.21375% $1,257,453 -- -- -- (100)
NatWest............. 0.225% 0.21375% $1,257,453 -- -- -- (100)
Morgan Grenfell..... -- -- -- 0.40% 0.38% $2,235,473 100
---------- ----------- -------------- --- --- ------------- ---
TOTAL............. 1.00% 0.95% $5,588,682(2) 1.00% 0.95% $5,588,682(2) 0
--- --- ----------- ---- ---- ----------- ----
--- --- ------------ ---- ---- ------------ --------
<FN>
- ------------------------
(1) Dollar amounts under New Management and Sub-Advisory Agreements are
hypothetical and represent amounts that would have been paid had those
Agreements been in effect during the Trust's fiscal year ended March 31,
1995. The PRO FORMA rates and amounts reflect that, pursuant to the New
Sub-Advisory Agreement, InterCapital will pay 40% of its compensation
received as Investment Manager to Morgan Grenfell for services rendered as
sub-adviser.
(2) All dollar amounts reflect the actual effective rate paid during the year
ended March 31, 1995, which was less than 1.00% based on a combination of
the maximum rate and the rate on assets over $500 million.
Note: None of the other expenses of the Trust is expected to change as a
result of the actions recommended in this proxy statement.
</TABLE>
III-1
<PAGE>
APPENDIX IV
PROPOSED NEW INVESTMENT POLICY
OPTIONS AND FUTURES TRANSACTIONS
The Trust shall have the ability to write (sell) covered call options and
covered put options on eligible portfolio securities (and the currencies in
which they are denominated) and stock indexes to hedge against potential changes
in the market value of its investments (or anticipated investments) and to aid
in achieving its investment objective. For hedging (including anticipatory
hedging) purposes, the Trust shall also have the ability to purchase put and
call options on eligible portfolio securities (and the currencies in which they
are denominated) and to purchase or sell financial futures contracts and options
on such contracts.
OPTIONS. Call and put options are listed on several U.S. and foreign
securities exchanges and are written in over-the-counter transactions ("OTC
options"). Listed options are issued or guaranteed by the exchange on which they
trade or by a clearing corporation such as the Options Clearing Corporation
("OCC"). Ownership of a listed call option gives the Trust the right to buy from
the OCC (in the U.S.) or other clearing corporation or exchange, the underlying
security or currency covered by the option at the stated exercise price (the
price per unit of the underlying security or currency) by filing an exercise
notice prior to the expiration date of the option. The writer (seller) of the
option would then have the obligation to sell, to the OCC (in the U.S.) or other
clearing corporation or exchange, the underlying security or currency at that
exercise price prior to the expiration date of the option, regardless of its
then current market price. Ownership of a listed put option would give the Trust
the right to sell the underlying security or currency to the OCC (in the U.S.)
or other clearing corporation or exchange at the stated exercise price. Upon
notice of exercise of the put option, the writer of the option would have the
obligation to purchase the underlying security or currency from the OCC (in the
U.S.) or other clearing corporation or exchange at the exercise price.
OTC options are purchased from or sold (written) to dealers or financial
institutions which have entered into direct agreements with the Trust. With OTC
options, such variables as expiration date, exercise price and premium will be
agreed upon between the Trust and the transacting dealer, without the
intermediation of a third party such as the OCC. If the transacting dealer fails
to make or take delivery of the securities or amount of foreign currency
underlying an option it has written, in accordance with the terms of the option,
the Trust would lose the premium paid for the option as well as any anticipated
benefit of the transaction. The Trust will engage in OTC option transactions
only with member banks of the Federal Reserve System or primary dealers in U.S.
Government securities or with affiliates of such banks or dealers which have
capital of at least $50 million or whose obligations are guaranteed by an entity
having capital of at least $50 million.
OPTIONS ON FOREIGN CURRENCIES. The Trust shall have the ability to purchase
and write options on foreign currencies for purposes similar to those involved
with investing in forward foreign currency exchange contracts. For example, in
order to protect against declines in the dollar value of portfolio securities
which are denominated in a foreign currency, the Trust may purchase put options
on an amount of such foreign currency equivalent to the current value of the
portfolio securities involved. As a result, the Trust would be enabled to sell
the foreign currency for a fixed amount of U.S. dollars, thereby "locking in"
the dollar value of the portfolio securities (less the amount of the premiums
paid for the options). Conversely, the Trust shall have the ability to purchase
call options on foreign currencies in which securities it anticipates purchasing
are denominated to secure a set U.S. dollar price for such securities and
protect against a decline in the value of the U.S. dollar against such foreign
currency. The Trust shall also be able to purchase call and put options to close
out written option positions.
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The Trust shall also be able to write call options on foreign currencies to
protect against potential declines in its portfolio securities which are
denominated in foreign currencies. If the U.S. dollar value of the portfolio
securities falls as a result of a decline in the exchange rate between the
foreign currency in which it is denominated and the U.S. dollar, then a loss to
the Trust occasioned by such value decline would be ameliorated by receipt of
the premium on the option sold. At the same time, however, the Trust gives up
the benefit of any rise in value of the relevant portfolio securities above the
exercise price of the option and, in fact, only receives a benefit from the
writing of the option to the extent that the value of the portfolio securities
falls below the price of the premium received. The Trust shall also be able to
write options to close out long call option positions.
Options on foreign currencies are affected by all of those factors which
influence foreign exchange rates and investments generally. Since the value of a
foreign currency option depends upon the value of the underlying currency
relative to the U.S. dollar, the price of an option position may vary with
changes in the value of the currencies and have no relationship to the
investment merits of a foreign security, including foreign securities held in a
"hedged" investment portfolio. In addition, because foreign currency
transactions occurring in the interbank market involve substantially larger
amounts than those that may be involved in the use of foreign currency options,
the Trust may be disadvantaged by having to deal in an odd lot market (generally
consisting of transactions of less than $1 million) for the underlying foreign
currencies at prices that are less favorable than for round lots.
There is no systematic reporting of last sale information for foreign
currencies or any regulatory requirement that quotations available through
dealers or other market sources be firm or revised on a timely basis. Quotation
information available is generally representative of very large transactions in
the interbank market and thus may not reflect relatively smaller transactions
where rates may be less favorable.
COVERED CALL WRITING. The Trust shall be permitted to write covered call
options on portfolio securities, stock indexes and on the U.S. dollar and
foreign currencies, without limit, in order to aid in achieving its investment
objective. Generally, a call option is "covered" if the Trust owns, or has the
right to acquire, without additional cash consideration (or for additional cash
consideration held for the Trust by its Custodian in a segregated account) the
underlying security (currency) subject to the option except that in the case of
call options on U.S. Treasury Bills, the Trust might own U.S. Treasury Bills of
a different series from those underlying the call option, but with a principal
amount and value corresponding to the exercise price and a maturity date no
later than that of the security (currency) deliverable under the call option. A
call option is also covered if the Trust holds a call on the same security as
the underlying security (currency) of the written option, where the exercise
price of the call used for coverage is equal to or less than the exercise price
of the call written or greater than the exercise price of the call written if
the mark to market difference is maintained by the Trust in cash, U.S.
Government securities or other high grade debt obligations held in a segregated
account maintained with its Custodian.
The Trust will receive from the purchaser, in return for a call it has
written, a "premium"; i.e., the price of the option. Receipt of these premiums
may better enable the Trust to earn a higher level of current income than it
would earn from holding the underlying securities (currencies) alone. Moreover,
the premium received will offset a portion of the potential loss incurred by the
Trust if the securities (currencies) underlying the option are ultimately sold
(exchanged) by the Trust at a loss. The premium received will fluctuate with
varying economic market conditions.
As regards listed options and certain OTC options, during the option period,
the Trust may be required, at any time, to deliver the underlying security
(currency) against payment of the exercise price on any calls it has written
(exercise of certain listed and OTC options may be limited to specific
expiration dates). This obligation is
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terminated upon the expiration of the option period or at such earlier time when
the writer effects a closing purchase transaction. A closing purchase
transaction is accomplished by purchasing an option of the same series as the
option previously written.
Closing purchase transactions are ordinarily effected to realize a profit on
an outstanding call option, to prevent an underlying security (currency) from
being called, to permit the sale of an underlying security (or the exchange of
the underlying currency) or to enable the Trust to write another call option on
the underlying security (currency) with either a different exercise price or
expiration date or both. The Trust may realize a net gain or loss from a closing
purchase transaction depending upon whether the amount of the premium received
on the call option is more or less than the cost of effecting the closing
purchase transaction. Any loss incurred in a closing purchase transaction may be
wholly or partially offset by unrealized appreciation in the market value of the
underlying security (currency). Conversely, a gain resulting from a closing
purchase transaction could be offset in whole or in part or exceeded by a
decline in the market value of the underlying security (currency).
If a call option expires unexercised, the Trust realizes a gain in the
amount of the premium on the option less the commission paid. Such a gain,
however, may be offset by depreciation in the market value of the underlying
security (currency) during the option period. If a call option is exercised, the
Trust realizes a gain or loss from the sale of the underlying security
(currency) equal to the difference between the purchase price of the underlying
security (currency) and the proceeds of the sale of the security (currency) plus
the premium received for the option less the commission paid.
Options written by the Trust will normally have expiration dates of up to
eighteen months from the date written. The exercise price of a call option may
be below, equal to or above the current market value of the underlying security
at the time the option is written. See "Risks of Options Transactions," below.
COVERED PUT WRITING. As a writer of a covered put option, the Trust incurs
an obligation to buy the security underlying the option from the purchaser of
the put, at the option's exercise price at any time during the option period, at
the purchaser's election (certain listed and OTC put options written by the
Trust will be exercisable by the purchaser only on a specific date). A put is
"covered" if, at all times, the Trust maintains, in a segregated account
maintained on its behalf at the Trust's Custodian, cash, U.S. Government
securities or other high grade obligations in an amount equal to at least the
exercise price of the option, at all times during the option period. Similarly,
a short put position could be covered by the Trust by its purchase of a put
option on the same security as the underlying security of the written option,
where the exercise price of the purchased option is equal to or more than the
exercise price of the put written or less than the exercise price of the put
written if the mark to market difference is maintained by the Trust in cash,
U.S. Government securities or other high grade debt obligations which the Trust
holds in a segregated account maintained at its Custodian. In the case of listed
options, during the option period, the Trust may be required, at any time, to
make payment of the exercise price against delivery of the underlying security.
The operation of and limitations on covered put options in other respects are
substantially identical to those of call options.
The Trust shall be able to write put options for two purposes: (1) to
receive the income derived from the premiums paid by purchasers; and (2) when
the Investment Manager and/or the Sub-Adviser wishes to purchase the security
underlying the option at a price lower than its current market price, in which
case it will write the covered put at an exercise price reflecting the lower
purchase price sought. The potential gain on a covered put option is limited to
the premium received on the option (less the commissions paid on the
transaction) while the
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potential loss equals the difference between the exercise price of the option
and the current market price of the underlying securities when the put is
exercised, offset by the premium received (less the commissions paid on the
transaction).
PURCHASING CALL AND PUT OPTIONS. The Trust shall be able to purchase listed
and OTC call and put options in amounts equalling up to 5% of its total assets.
The Trust may purchase a call option in order to close out a covered call
position (see "Covered Call Writing" above), to protect against an increase in
price of a security it anticipates purchasing or, in the case of a call option
on foreign currency, to hedge against an adverse exchange rate move of the
currency in which the security it anticipates purchasing is denominated
vis-a-vis the currency in which the exercise price is denominated. A call option
purchased to effect a closing transaction on a call written over-the-counter may
be a listed or an OTC option. In either case, the call purchased is likely to be
on the same securities (currencies) and have the same terms as the written
option. If purchased over-the-counter, the option would generally be acquired
from the dealer or financial institution which purchased the call written by the
Trust.
The Trust shall be able to purchase put options on securities (currencies)
which it holds in its portfolio only to protect itself against a decline in the
value of the security. If the value of the underlying security (currency) were
to fall below the exercise price of the put purchased in an amount greater than
the premium paid for the option, the Trust would incur no additional loss. The
Trust shall also be able to purchase put options to close out written put
positions in a manner similar to call options closing purchase transactions. In
addition, the Trust may sell a put option which it has previously purchased
prior to the sale of the securities (currencies) underlying such option. Such a
sale would result in a net gain or loss depending on whether the amount received
on the sale is more or less than the premium and other transaction costs paid on
the put option sold. Such gain or loss could be offset in whole or in part by a
change in the market value of the underlying security (currency). If a put
option purchased by the Trust expires without being sold or exercised, the
premium would be lost.
RISKS OF OPTIONS TRANSACTIONS. The successful use of options depends on the
ability of the Investment Manager and/or the Sub-Adviser to forecast correctly
interest rates and market movements. If the market value of the portfolio
securities (or the currencies in which they are denominated) upon which call
options have been written increases, the Trust may receive a lower total return
from the portion of its portfolio upon which calls have been written than it
would have had such calls not been written. In writing puts, the Trust assumes
the risk of loss should the market value of the underlying securities (or the
currencies in which they are denominated) decline below the exercise price of
the option (any loss being decreased by the receipt of the premium on the option
written). The writer has no control over the time when it may be required to
fulfill its obligation as a writer of the option. Once an option writer has
received an exercise notice, it cannot effect a closing purchase transaction in
order to terminate its obligation under the option and must deliver or receive
the underlying securities at the exercise price.
Prior to exercise or expiration, an option position can only be terminated
by entering into a closing purchase or sale transaction. If the Trust, as a
covered option writer, is not able to either enter into a closing purchase
transaction (or purchase an offsetting OTC position, which does not close out
the original position but constitutes an asset of equal value to the obligation
under the option written), it will be required to maintain the securities
subject to the call, or the collateral underlying the put, even though it might
not be advantageous to do so, until a closing transaction can be entered into
(or the option is exercised or expires).
The markets in foreign currency options are relatively new and the Trust's
ability to establish and close out positions on such options is subject to the
maintenance of a liquid secondary market. Although the Trust will not purchase
or write such options unless and until, in the opinion of the management of the
Trust, the market for
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them has developed sufficiently to ensure that the risks in connection with such
options are not greater than the risks in connection with the underlying
currency, there can be no assurance that a liquid secondary market will exist
for a particular option at any specific time. Among the possible reasons for the
absence of a liquid secondary market on exchanges where listed options are
traded or in the OTC market (an "Exchange") are: (i) insufficient trading
interest in certain options; (ii) restrictions on transactions imposed by an
Exchange; (iii) trading halts, suspensions or other restrictions imposed with
respect to particular classes or series of options or underlying securities;
(iv) interruption of the normal operations on an Exchange; (v) inadequacy of the
facilities of an Exchange or the OCC to handle current trading volume; or (vi) a
decision by one or more Exchanges to discontinue the trading of options (or a
particular class or series of options), in which event the secondary market on
that Exchange (or in that class or series of options) would cease to exist,
although outstanding options on that Exchange that had been issued by the OCC as
a result of trades on that Exchange would generally continue to be exercisable
in accordance with their terms.
In the event of the bankruptcy of a broker through which the Trust engages
in transactions in options, the Trust could experience delays and/or losses in
liquidating open positions purchased or sold through the broker and/or incur a
loss of all or part of its margin deposits with the broker. Similarly, in the
event of the bankruptcy of the writer of an OTC option purchased by the Trust,
the Trust could experience a loss of all or part of the value of the option.
Transactions are entered into by the Trust only with brokers or financial
institutions deemed creditworthy by the Trust's management.
Each of the Exchanges has established limitations governing the maximum
number of options on the same underlying security or futures contract (whether
or not covered) which may be written by a single investor, whether acting alone
or in concert with others (regardless of whether such options are written on the
same or different Exchanges or are held or written on one or more accounts or
through one or more brokers). An Exchange may order the liquidation of positions
found to be in violation of these limits and it may impose other sanctions or
restrictions. These position limits may restrict the number of listed options
which the Trust may write.
The hours of trading for options may not conform to the hours during which
the underlying securities (currencies) are traded. To the extent that the option
markets close before the markets for the underlying securities (currencies),
significant price and rate movements can take place in the underlying markets
that are not reflected in the option markets.
The extent to which the Trust may enter into transactions involving options
may be limited by the Internal Revenue Code's requirements for qualification as
a regulated investment company and the Trust's intention to qualify as such.
STOCK INDEX OPTIONS. Options on stock indexes are similar to options on
stock except that, rather than the right to take or make delivery of stock at a
specified price, an option on a stock index gives the holder the right to
receive, upon exercise of the option, an amount of cash if the closing level of
the stock index upon which the option is based is greater than, in the case of a
call, or less than, in the case of a put, the exercise price of the option. This
amount of cash is equal to such difference between the closing price of the
index and the exercise price of the option expressed in dollars times a
specified multiple (the "multipler"). The multiplier for an index option
performs a function similar to the unit of trading for a stock option. It
determines the total dollar value per contract of each point in the difference
between the exercise price of an option and the current level of the underlying
index. A multiplier of 100 means that a one-point difference will yield $100.
Options on different indexes may have different multipliers. The writer of the
option is obligated, in return for the premium received, to make delivery of
this amount. Unlike stock options, all settlements are in cash and a gain or
loss depends on price
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movements in the stock market generally (or in a particular segment of the
market) rather than the price movements in individual stocks. Currently, options
are traded on the Standard & Poor's 100 Index and the Standard & Poor's 500
Index on the Chicago Board Options Exchange, the Major Market Index and the
Computer Technology Index, Oil Index and Institutional Index on the American
Stock Exchange and the NYSE Index and NYSE Beta Index on the New York Stock
Exchange, The Financial News Composite Index on the Pacific Stock Exchange and
the Value Line Index, National O-T-C Index and Utilities Index on the
Philadelphia Stock Exchange, each of which and any similar index on which
options are traded in the future which include stocks that are not limited to
any particular industry or segment of the market is referred to as a "broadly
based stock market index." Options on stock indexes may provide the Trust with a
means of protecting against the risk of market wide price movements. If the
Investment Manager and/or the Sub-Adviser anticipates a market decline, the
Trust would be able to purchase a stock index put option. If the expected market
decline materialized, the resulting decrease in the value of the Trust's
portfolio would be offset to the extent of the increase in the value of the put
option. If the Investment Manager and/or the Sub-Adviser anticipates a market
rise, the Trust would be able to purchase a stock index call option to enable
the Trust to particpate in such rise until completion of anticipated common
stock purchases by the Trust. Purchases and sales of stock index options also
enable the Investment Manager and/or the Sub-Adviser to more speedily achieve
changes in the Trust's equity positions.
The Trust will be able to write put options on stock indexes only if such
positions are covered by cash, U.S. Government securities or other high grade
debt obligations equal to the aggregate exercise price of the puts, which cover
is held for the Trust in a segregated account maintained for it by the Trust's
Custodian. All call options on stock indexes written by the Trust will be
covered either by a portfolio of stocks substantially replicating the movement
of the index underlying the call option or by holding a separate call option on
the same stock index with a strike price no higher than the strike price of the
call option sold by the Trust.
RISK OF INDEX OPTIONS. Because exercises of stock index options are settled
in cash, the Trust, as a call writer, would not be able to provide in advance
for potential settlement obligations by acquiring and holding the underlying
securities. A call writer can offset some of the risk of its writing position by
holding a diversified portfolio of stocks similar to those on which the
underlying index is based. However, most investors cannot, as a practical
matter, acquire and hold a portfolio containing exactly the same stocks as the
underlying index, and, as a result, bear a risk that the value of the securities
held will vary from the value of the index. Even if an index call writer could
assemble a stock portfolio that exactly reproduced the composition of the
underlying index, the writer still would not be fully covered from a risk
standpoint because of the "timing risk" inherent in writing index options. When
an index option is exercised, the amount of cash that the holder is entitled to
receive is determined by the difference between the exercise price and the
closing index level on the date when the option is exercised. As with other
kinds of options, the writer will not learn that it has been assigned until the
next business day, at the earliest. The time lag between exercise and notice of
assignment poses no risk for the writer of a covered call on a specific
underlying security, such as a common stock, because there the writer's
obligation is to deliver the underlying security, not to pay its value as of a
fixed time in the past. So long as the writer already owns the underlying
security, it can satisfy its settlement obligations by simply delivering it, and
the risk that its value may have declined since the exercise date is borne by
the exercising holder. In contrast, even if the writer of an index call holds
stocks that exactly match the composition of the underlying index, it will not
be able to satisfy its assignment obligations by delivering those stocks against
payment of the exercise price. Instead, it will be required to pay cash in an
amount based on the closing index value on the exercise date; and by the time it
learns that it has been assigned, the index may have declined, with a
correponding decrease in the value of its stock portfolio. This "timing risk" is
an inherent limitation on the ability of index call writers to cover their risk
exposure by holding stock positions.
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A holder of an index option who exercises it before the closing index value
for that day is available runs the risk that the level of the underlying index
may subsequently change. If such a change causes the exercised option to fall
out-of-the-money, the exercising holder will be required to pay the difference
between the closing index value and the exercise price of the option (times the
applicable multiplier) to the assigned writer.
If dissemination of the current level of an underlying index is interrupted,
or if trading is interrupted in stocks accounting for a substantial portion of
the value of an index, the trading of options on that index will ordinarily be
halted. If the trading of options on an underlying index is halted, an exchange
may impose restrictions prohibiting the exercise of such options.
FUTURES CONTRACTS. The Trust shall not purchase or sell commodities or
commodity futures contracts, except that the Trust may purchase and sell
financial futures contracts and related options as described herein. The Trust
shall be able to purchase and sell interest rate, currency, and index futures
contracts ("futures contracts"), that are traded on U.S. and foreign commodity
exchanges, on such underlying securities as U.S. Treasury bonds, notes and bills
and/or any foreign government fixed-income security ("interest rate futures"),
on various currencies ("currency futures") and on such indexes of U.S. and
foreign securities as may exist or come into being ("index futures").
The Trust will purchase or sell interest rate futures contracts and bond
index futures contracts for the purpose of hedging some or all of the value of
its fixed-income portfolio securities (or anticipated portfolio securities)
against changes in prevailing interest rates. If the Investment Manager and/or
the Sub-Adviser anticipates that interest rates may rise and, concomitantly, the
price of fixed-income securities fall, the Trust may sell an interest rate
futures contract or a bond index futures contract. If declining interest rates
are anticipated, the Trust may purchase an interest rate futures contract to
protect against a potential increase in the price of securities the Trust
intends to purchase. Subsequently, appropriate securities may be purchased by
the Trust in an orderly fashion; as securities are purchased, corresponding
futures positions would be terminated by offsetting sales of contracts.
The Trust will purchase or sell stock index futures contracts for the
purpose of hedging some or all of its equity portfolio (or anticipated
portfolio) securities against changes in their prices. If the Investment Manager
and/or the Sub-Adviser anticipates that the prices of stock held by the Trust
may fall, the Trust may sell a stock index futures contract. Conversely, if the
Investment Manager and/or the Sub-Adviser wishes to hedge against anticipated
price rises in those stocks which the Trust intends to purchase, the Trust may
purchase stock index futures contracts.
The Trust will purchase or sell futures contracts on the U.S. dollar and on
foreign currencies to hedge against an anticipated rise or decline in the value
of the U.S. dollar or foreign currency in which a portfolio security of the
Trust is denominated vis-a-vis another currency.
In addition to the above, interest rate, index and currency futures will be
bought or sold in order to close out a short or long position maintained by the
Trust in a corresponding futures contract.
Although most interest rate futures contracts call for actual delivery or
acceptance of securities, the contracts usually are closed out before the
settlement date without the making or taking of delivery. A futures contract
sale is closed out by effecting a futures contract purchase for the same
aggregate amount of the specific type of security (currency) and the same
delivery date. If the sale price exceeds the offsetting purchase price, the
seller would be paid the difference and would realize a gain. If the offsetting
purchase price exceeds the sale price, the seller would pay the difference and
would realize a loss. Similarly, a futures contract purchase is closed out by
effecting a futures contract sale for the same aggregate amount of the specific
type of security (currency) and the same
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delivery date. If the offsetting sale price exceeds the purchase price, the
purchaser would realize a gain, whereas if the purchase price exceeds the
offsetting sale price, the purchaser would realize a loss. There is no assurance
that the Trust will be able to enter into a closing transaction.
INTEREST RATE FUTURES. When the Trust enters into an interest rate futures
contract, it is initially required to deposit with the Trust's Custodian, in a
segregated account in the name of the broker performing the transaction, an
"initial margin" of cash or U.S. Government securities or other high grade
short-term obligations equal to approximately 3% of the contract amount. Initial
margin requirements are established by the Exchanges on which futures contracts
trade and may, from time to time, change. In addition, brokers may establish
margin deposit requirements in excess of those required by the Exchanges.
Initial margin in futures transactions is different from margin in
securities transactions in that initial margin does not involve the borrowing of
funds by a broker's client but is, rather, a good faith deposit on the futures
contract which will be returned to the Trust upon the proper termination of the
futures contract. The margin deposits made are marked to market daily and the
Trust may be required to make subsequent deposits of cash or U.S. Government
securities (called "variation margin") with the Trust's futures contract
clearing broker, which are reflective of price fluctuations in the futures
contract. Currently, interest rate futures contracts can be purchased on debt
securities such as U.S. Treasury bills and bonds, U.S. Treasury notes with
maturities between 6 1/2 and 10 years, GNMA certificates and bank certificates
of deposit.
CURRENCY FUTURES. Generally, foreign currency futures provide for the
delivery of a specified amount of a given currency, on the delivery date, for a
set exercise price denominated in U.S. dollars or other currency. Foreign
currency futures contracts would be entered into for the same reason and under
the same circumstances as forward foreign currency exchange contracts, as
described in the Trust's Prospectus and Statement of Additional Information. The
Investment Manager and/or the Sub-Adviser will assess such factors as cost
spreads, liquidity and transaction costs in determining whether to utilize
futures contracts or forward contracts in its foreign currency transactions and
hedging strategy. Currently, currency futures exist for, among other foreign
currencies, the Japanese yen, German mark, Canadian dollar, British pound, Swiss
franc and European currency unit.
Purchasers and sellers of foreign currency futures contracts are subject to
the same risks that apply to the buying and selling of futures generally. In
addition, there are risks associated with foreign currency futures contracts and
their use as a hedging device similar to those associated with options on
foreign currencies described above. Further, settlement of a currency futures
contract must occur within the country issuing the underlying currency. Thus,
the Trust must accept or make delivery of the underlying foreign currency in
accordance with any U.S. or foreign restrictions or regulation regarding the
maintenance of foreign banking arrangements by U.S. residents and may be
required to pay any fees, taxes or charges associated with such delivery which
are assessed in the issuing country.
Options on currency futures contracts may involve certain additional risks.
Trading options on currency futures contracts is relatively new. The ability to
establish and close out positions on such options is subject to the maintenance
of a liquid secondary market. To reduce this risk, the Trust will not purchase
or write options on currency futures contracts unless and until, in the
Investment Manager's opinion, the market for such options has developed
sufficiently that the risks in connection with such options are not greater than
the risks in connection with transactions in the underlying foreign currency.
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INDEX FUTURES. The Trust shall be able to invest in index futures
contracts. Index futures contracts do not require the physical delivery of
securities, but provide for a final cash settlement on the expiration date which
reflects accumulated profits and losses credited or debited to each party's
account based on movements in the relevant index during the term of the
contract.
The Trust is required to maintain margin deposits with brokerage firms
through which it effects index futures contracts in a manner similar to that
described above for interest rate futures contracts. Currently, the initial
margin requirements range from 3% to 10% of the contract amount for index
futures. In addition, current industry practice requires daily variations in
gains and losses to be reflected in variation margin payments.
At any time prior to expiration of the futures contract, the Trust may close
the position by taking an opposite position. A final determination of variation
margin is then made, additional cash is required to be paid by or released to
the Trust and the Trust realizes a loss or gain.
Currently, index futures contracts can be purchased or sold with respect to,
among others, the Standard & Poor's 500 Stock Price Index and the Standard &
Poor's 100 Stock Price Index on the Chicago Mercantile Exchange, the New York
Stock Exchange Composite Index on the New York Futures Exchange, the Major
Market Index on the American Stock Exchange, the Moody's Investment-Grade
Corporate Bond Index on the Chicago Board of Trade and the Value Line Stock
Index on the Kansas City Board of Trade.
OPTIONS ON FUTURES CONTRACTS. The Trust may purchase and write call and put
options on futures contracts which are traded on an exchange and enter into
closing transactions with respect to such options to terminate an existing
position. An option on a futures contract gives the purchaser the right (in
return for the premium paid) to assume a position in a futures contract (a long
position if the option is a call and a short position if the option is a put) at
a specified exercise price at any time during the term of the option. Upon
exercise of the option, the delivery of the futures position by the writer of
the option to the holder of the option is accompanied by delivery of the
accumulated balance in the writer's futures margin account, which represents the
amount by which the market price of the futures contract at the time of exercise
exceeds, in the case of a call, or is less than, in the case of a put, the
exercise price of the option on the futures contract. The writer of an option on
a futures contract is required to deposit initial and variation margin pursuant
to requirements similar to those applicable to futures contracts. Premiums
received from the writing of an option on a futures contract are included in
initial margin deposits.
The Trust will purchase and write options on futures contracts for identical
purposes to those set forth above for the purchase of a futures contract
(purchase of a call option or sale of a put option) and the sale of a futures
contract (purchase of a put option or sale of a call option), or to close out a
long or short position in futures contracts. If, for example, the Trust's
management wished to protect against an increase in interest rates and the
resulting negative impact on the value of a portion of its fixed-income
portfolio, the Trust might write a call option on an interest rate futures
contract, the underlying security of which correlates with the portion of the
portfolio the Trust seeks to hedge. Any premiums received in the writing of
options on futures contracts may, of course, provide a further hedge against
losses resulting from price declines in portions of the Trust's portfolio.
LIMITATIONS ON FUTURES CONTRACTS AND OPTIONS ON FUTURES. The Trust may not
enter futures contracts or purchase related options thereon if, immediately
thereafter, the amount committed to margin plus the amount paid for premiums for
unexpired options on futures contracts exceeds 5% of the value of the Trust's
total assets, after taking into account unrealized gains and unrealized losses
on such contracts it has entered into, provided, however, that in the case of an
option that is in-the-money (the exercise price of the call (put) option is less
(more) than the market price of the underlying security) at the time of
purchase, the in-the-money amount may be excluded in calculating the 5%.
However, there is no overall limitation on the percentage of the Trust's assets
IV-9
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which may be subject to a hedge position. In addition, in accordance with the
regulations of the Commodity Futures Trading Commission ("CFTC") under which the
Trust is exempted from registration as a commodity pool operator, the Trust may
only enter into futures contracts and options on futures contracts transactions
for purposes of hedging a part or all of its portfolio. If the CFTC changes its
regulations so that the Trust would be permitted to write options on futures
contracts for purposes other than hedging the Trust's investments without CFTC
registration, the Trust may engage in such transactions for those purposes.
Except as described above, there are no other limitations on the use of futures
and options thereon by the Trust.
RISKS OF TRANSACTIONS IN FUTURES CONTRACTS AND RELATED OPTIONS. The
successful use of futures and related options depends on the ability of the
Investment Manager and/or the Sub-Adviser to accurately predict market, interest
rate and currency movements. While the futures contracts and related options
transactions to be engaged in by the Trust for the purpose of hedging the
Trust's portfolio securities are not speculative in nature, there are risks
inherent in the use of such instruments. One such risk which may arise in
employing futures contracts to protect against the price volatility of portfolio
securities (and the currencies in which they are denominated) is that the prices
of securities and indexes subject to futures contracts (and thereby the futures
contract prices) may correlate imperfectly with the behavior of prices of the
Trust's portfolio securities (and the currencies in which they are denominated).
Another such risk is that prices of interest rate futures contracts may not move
in tandem with the changes in prevailing interest rates against which the Trust
seeks a hedge.
A correlation may also be distorted (a) temporarily, by short-term traders
seeking to profit from the difference between a contract or security price
objective and their cost of borrowed funds; (b) by investors in futures
contracts electing to close out their contracts through offsetting transactions
rather than meet margin deposit requirements; (c) by investors in futures
contracts opting to make or take delivery of underlying securities rather than
engage in closing transactions, thereby reducing liquidity of the futures
market; and (d) temporarily, by speculators who view the deposit requirements in
the futures markets as less onerous than margin requirements in the cash market.
Due to the possibility of price distortions in the futures market and because of
the imperfect correlation between movements in the prices of securities and
movements in the prices of futures contracts, a correct forecast of interest
rate trends or prices may still not result in a successful hedging transaction.
The Trust shall have the ability to sell a futures contract to protect
against the decline in the value of securities held by the Trust (or the
currency in which such securities are denominated). However, it is possible that
the futures market may advance and the value of securities (or the currency in
which they are denominated) held in the portfolio of the Trust may decline. If
this occurred, the Trust would lose money on the futures contract and also
experience a decline in value of its portfolio securities. However, while this
could occur for a very brief period or to a very small degree, over time the
value of a diversified portfolio will tend to move in the same direction as the
futures contracts.
If the Trust purchases a futures contract to hedge against the increase in
value of securities it intends to buy (or the currency in which such securities
are denominated), and the value of such securities (currencies) decreases, then
the Trust may determine not to invest in the securities as planned and will
realize a loss on the futures contract that is not offset by a reduction in the
price of the securities.
Futures contracts and options thereon which are purchased or sold on foreign
commodities exchanges may have greater price volatility than their U.S.
counterparts. Furthermore, foreign commodities exchanges may be less regulated
and under less governmental scrutiny than U.S. exchanges. Brokerage commissions,
clearing costs and other transaction costs may be higher on foreign exchanges.
Greater margin requirements may limit the
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Trust's ability to enter into certain commodity transactions on foreign
exchanges. Moreover, differences in clearance and delivery requirements on
foreign exchanges may occasion delays in the settlement of the Trust's
transactions effected on foreign exchanges.
In the event of the bankruptcy of a broker through which the Trust engages
in transactions in futures or options thereon, the Trust could experience delays
and/or losses in liquidating open positions purchased or sold through the broker
and/or incur a loss of all or part of its margin deposits with the broker.
Similarly, in the event of the bankruptcy of the writer of an OTC option
purchased by the Trust, the Trust could experience a loss of all or part of the
value of the option. Transactions are entered into by the Trust only with
brokers or financial institutions deemed creditworthy by the Trust's management.
There is no assurance that a liquid secondary market will exist for futures
contracts and related options in which the Trust may invest. In the event a
liquid market does not exist, it may not be possible to close out a futures
position, and in the event of adverse price movements, the Trust would continue
to be required to make daily cash payments of variation margin. In addition,
limitations imposed by an exchange or board of trade on which futures contracts
are traded may compel or prevent the Trust from closing out a contract which may
result in reduced gain or increased loss to the Trust. The absence of a liquid
market in futures contracts might cause the Trust to make or take delivery of
the underlying securities (currencies) at a time when it may be disadvantageous
to do so.
The extent to which the Trust may enter into futures contracts and options
thereon may be limited by Internal Revenue Code's requirements for qualification
as a regulated investment company and the Trust's intention to qualify as such.
Compared to the purchase or sale of futures contracts, the purchase of call
or put options on futures contracts involves less potential risk to the Trust
because the maximum amount at risk is the premium paid for the options (plus
transaction costs). However, there may be circumstances when the purchase of a
call or put option on a futures contract would result in a loss to the Trust
notwithstanding that the purchase or sale of a futures contract would not result
in a loss, as in the instance where there is no movement in the prices of the
futures contract or underlying securities (currencies).
NEW INTRUMENTS. New futures contracts, options and other financial products
and various combinations thereof continue to be developed. The Trust may invest
in any such futures, options or products as may be developed, to the extent
consistent with its investment objective and applicable regulatory requirements.
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EXHIBIT A
INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT made as of the day of , 1995 by and between World Wide
Investment Trust, an unincorporated business trust organized under the laws of
the Commonwealth of Massachusetts (hereinafter called the "Fund"), and Dean
Witter InterCapital Inc., a Delaware corporation (hereinafter called the
"Investment Manager"):
Whereas, The Fund is engaged in business as an open-end management
investment company and is registered as such under the Investment Company Act of
1940, as amended (the "Act"); and
Whereas, The Investment Manager is registered as an investment adviser under
the Investment Advisers Act of 1940, and engages in the business of acting as
investment adviser; and
Whereas, The Fund desires to retain the Investment Manager to render
management and investment advisory services in the manner and on the terms and
conditions hereinafter set forth; and
Whereas, The Investment Manager desires to be retained to perform services
on said terms and conditions:
Now, Therefore, this Agreement
W I T N E S S E T H:
that in consideration of the premises and the mutual covenants hereinafter
contained, the Fund and the Investment Manager agree as follows:
1. The Fund hereby retains the Investment Manager to act as investment
manager of the Fund and, subject to the supervision of the Trustees, to
supervise the investment activities of the Fund as hereinafter set forth.
Without limiting the generality of the foregoing, the Investment Manager shall
obtain and evaluate such information and advice relating to the economy,
securities and commodities markets and securities and commodities as it deems
necessary or useful to discharge its duties hereunder; shall continuously manage
the assets of the Fund in a manner consistent with the investment objectives and
policies of the Fund; shall determine the securities and commodities to be
purchased, sold or otherwise disposed of by the Fund and the timing of such
purchases, sales and dispositions; and shall take such further action, including
the placing of purchase and sale orders on behalf of the Fund, as the Investment
Manager shall deem necessary or appropriate. The Investment Manager shall also
furnish to or place at the disposal of the Fund such of the information,
evaluations, analyses and opinions formulated or obtained by the Investment
Manager in the discharge of its duties as the Fund may, from time to time,
reasonably request.
2. The Investment Manager shall, at its own expense, enter into a
Sub-Advisory Agreement (or Agreements) with a Sub-Adviser (or Sub-Advisers) to
make determinations as to certain of the securities and commodities to be
purchased, sold or otherwise disposed of by the Fund and the timing of such
purchases, sales and dispositions, and to take such further action, including
the placing of purchase and sale orders on behalf of the Fund, as the
Sub-Adviser(s), 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(s) with the investment
policies and restrictions of the Fund 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
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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: fees pursuant to any plan of
distribution that the Fund may adopt; the charges and expenses of any registrar,
any custodian or depository appointed by the Fund for the safekeeping of its
cash, portfolio securities or commodities and other property, and any stock
transfer or dividend agent or agents appointed by the Fund; brokers' commissions
chargeable to the Fund in connection with portfolio transactions to which the
Fund is a party; all taxes, including securities or commodities issuance and
transfer taxes, and fees payable by the Fund to federal, state or other
governmental agencies; the cost and expense of engraving or printing
certificates representing shares of the Fund; all costs and expenses in
connection with the registration and maintenance of registration of the Fund and
its shares with the Securities and Exchange Commission and various states and
other jurisdictions (including filing fees and legal fees and disbursements of
counsel); the cost and expense of printing, including typesetting, and
distributing prospectuses and statements of additional information of the Fund
and supplements thereto to the Fund's shareholders; all expenses of
shareholders' and Trustees' meetings and of preparing, printing and mailing
proxy statements and reports to shareholders; fees and travel expenses of
Trustees or members of any advisory board or committee who are not employees of
the Investment Manager or any corporate affiliate of the Investment Manager; all
expenses incident to the payment of any dividend, distribution, withdrawal or
redemption, whether in shares or in cash; charges and expenses of any outside
service used for pricing of the Fund's shares; charges and expenses of legal
counsel, including counsel to the Trustees of the Fund who are not interested
persons (as defined in the Act) of the Fund or the Investment Manager, and of
independent accountants, in connection with any matter relating to the Fund;
membership dues of industry associations; interest payable on Fund borrowings;
postage; insurance premiums on property or personnel (including officers and
Trustees) of the Fund which inure to its benefit; extraordinary expenses
(including but not limited to, legal claims and liabilities and litigation costs
and any indemnification related thereto); and all other charges and costs of the
Fund's operation unless otherwise explicitly provided herein.
7. For the services to be rendered, the facilities furnished, and the
expenses assumed by the Investment Manager, the Fund shall pay to the Investment
Manager monthly compensation determined by applying the following annual rates
to the Fund's daily net assets: 1.0% of daily net assets up to $500 million and
0.95% of daily net assets over $500 million. Except as hereinafter set forth,
compensation under this Agreement shall be calculated
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and accrued daily and the amounts of the daily accruals shall be paid monthly.
Such calculations shall be made by applying 1/365ths of the annual rates to the
Fund's net assets each day determined as of the close of business on that day or
the last previous business day. If this Agreement becomes effective subsequent
to the first day of a month or shall terminate before the last day of a month,
compensation for that part of the month this Agreement is in effect shall be
prorated in a manner consistent with the calculation of the fees as set forth
above.
Subject to the provisions of paragraph 7 hereof, payment of the Investment
Manager's compensation for the preceding month shall be made as promptly as
possible after completion of the computations contemplated by paragraph 7
hereof.
8. In the event the operating expenses of the Fund, including amounts
payable to the Investment Manager pursuant to paragraph 6 hereof, for any fiscal
year ending on a date on which this Agreement is in effect, exceed the expense
limitations applicable to the Fund imposed by state securities laws or
regulations thereunder, as such limitations may be raised or lowered from time
to time, the Investment Manager shall reduce its management fee to the extent of
such excess and, if required, pursuant to any such laws or regulations, will
reimburse the Fund for annual operating expenses in excess of any expense
limitation that may be applicable; provided, however, there shall be excluded
from such expenses the amount of any interest, taxes, brokerage commissions,
distribution fees and extraordinary expenses (including but not limited to legal
claims and liabilities and litigation costs and any indemnification related
thereto) paid or payable by the Fund. Such reduction, if any, shall be computed
and accrued daily, shall be settled on a monthly basis, and shall be based upon
the expense limitation applicable to the Fund as at the end of the last business
day of the month. Should two or more such expense limitations be applicable as
at the end of the last business day of the month, that expense limitation which
results in the largest reduction in the Investment Manager's fee shall be
applicable.
For purposes of this provision, should any applicable expense limitation be
based upon the gross income of the Fund, such gross income shall include, but
not be limited to, interest on debt securities in the Fund's portfolio accrued
to and including the last day of the Fund's fiscal year, and dividends declared
on equity securities in the Fund's portfolio, the record dates for which fall on
or prior to the last day of such fiscal year, but shall not include gains from
the sale of securities.
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, 1997 and from
year to year thereafter provided such continuance is approved at least annually
by the vote of holders of a majority, as defined in the Act, of the outstanding
voting securities of the Fund or by the Trustees of the Fund; provided that in
either event such continuance is also approved annually by the vote of a
majority of the Trustees of the Fund who are not parties to this Agreement or
"interested persons" (as defined in the Act) of any such party, which vote must
be cast in person
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at a meeting called for the purpose of voting on such approval; provided,
however, that (a) the Fund may, at any time and without the payment of any
penalty, terminate this Agreement upon thirty days' written notice to the
Investment Manager, either by majority vote of the Trustees of the Fund or by
the vote of a majority of the outstanding voting securities of the Fund; (b)
this Agreement shall immediately terminate in the event of its assignment (to
the extent required by the Act and the rules thereunder) unless such automatic
terminations shall be prevented by an exemptive order of the Securities and
Exchange Commission; and (c) the Investment Manager may terminate this Agreement
without payment of penalty on thirty days' written notice to the Fund. Any
notice under this Agreement shall be given in writing, addressed and delivered,
or mailed post-paid, to the other party at the principal office of such party.
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 Manager or its parent, 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.
15. The Declaration of Trust establishing Dean Witter World Wide Investment
Trust, dated July 7, 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 World Wide
Investment Trust refers to the Trustees under the Declaration collectively as
Trustees, but not as individuals or personally; and no Trustee, shareholder,
officer, employee or agent of Dean Witter World Wide Investment Trust shall be
held to any personal liability, nor shall resort be had to their private
property for the satisfaction of any obligation or claim or otherwise, in
connection with the affairs of said Dean Witter World Wide Investment Trust, but
the Trust Estate only shall be liable.
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<PAGE>
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 WORLD WIDE INVESTMENT
TRUST
By:...................................
Attest:...............................
DEAN WITTER INTERCAPITAL INC.
By:...................................
Attest:...............................
A-5
<PAGE>
EXHIBIT B
SUB-ADVISORY AGREEMENT
AGREEMENT made as of the day of , 1995 by and between Dean
Witter InterCapital Inc., a Delaware corporation (herein referred to as the
"Investment Manager"), and Morgan Grenfell Investment Services Limited, a
British corporation (herein referred to as the "Sub-Adviser").
WHEREAS, Dean Witter World Wide Investment Trust (herein referred to as 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 with the Fund (the "Investment Management Agreement") wherein the
Investment Manager has agreed to provide investment management services to 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 the Fund in the manner
and on the terms and conditions hereinafter set forth; 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 objective,
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-Adviser, the Sub-Adviser agrees to provide the
Fund with investment advisory services with respect to the Fund's investments in
all areas of the world except the United States of America; 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 the Fund in a manner consistent
with the investment objective and policies of the Fund; 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; to determine
the securities to be purchased, sold or otherwise disposed of by the Fund 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 Fund,
as it shall deem necessary or appropriate; and to furnish to or place at the
disposal of the Fund 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. 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 Fund and to consult with
each other.
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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 Fund as the Sub-Adviser may
reasonably require in order to discharge its duties and obligations hereunder or
to comply 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 assumes and shall pay or cause to be paid all other expenses of
the Fund, including, without limitation: any fees paid to the Investment
Manager; fees pursuant to any plan of distribution that the Fund may adopt; the
charges and expenses of any registrar, any custodian, sub-custodian or
depository appointed by the Fund for the safekeeping of its cash, portfolio
securities 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 securities transactions to which the Fund is a party;
all taxes, including securities issuance and transfer taxes, and fees payable by
the Fund 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 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 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 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
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 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, the Investment Manager
or the Sub-Adviser, 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.
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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. Any subsequent
change in the Investment Management 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 (the "Registration Statement") 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 Management 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 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 Fund, including amounts
payable to the Investment Manager pursuant to the Investment Management
Agreement, for any fiscal year ending on a date on which this Agreement is in
effect, exceed the expense limitations applicable to the Fund imposed by state
securities laws or regulations thereunder, as such limitations may be raised or
lowered from time to time, the Sub-Adviser shall reduce its advisory fee to the
extent of 40% of such excess and, if required, pursuant to any such laws or
regulations, will reimburse the Investment Manager for annual operating expenses
in the amount of 40% of such excess of any expense limitation that may be
applicable, it being understood that the Investment Manager has agreed to effect
a reduction and reimbursement of 100% of such excess 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, distribution fees and extraordinary expenses (including but not
limited to legal claims and liabilities and litigation costs and any
indemnification related thereto) paid or payable by the Fund. Such reduction, if
any, shall be computed and accrued daily, shall be settled on a monthly basis,
and shall be based upon the expense limitation applicable to the Fund as at the
end of the last business day of the month. Should two or more such expense
limitations be applicable as at the end of the last business day of the month,
that expense limitation which results in the largest reduction in the Investment
Manager's fee or the largest expense reimbursement shall be applicable.
For purposes of this provision, should any applicable expense limitation be
based upon the gross income of the Fund, such gross income shall include, but
not be limited to, interest on debt securities in the Fund's portfolio accrued
to and including the last day of the Fund's fiscal year, and dividends declared
on equity securities in the Fund's portfolio, the record dates for which fall on
or prior to the last day of such fiscal year, but shall not include gains from
the sale of securities.
8. The Sub-Adviser will use its best efforts in the performance of
investment activities on behalf of the Fund, 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 Fund 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
B-3
<PAGE>
controlled by or under common control with the Sub-Adviser, and that the
Sub-Advisor 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 names "Morgan
Grenfell" shall undertake to act as investment adviser or sub-adviser for any
other U.S. registered investment company with similar investment policies which
is sold primarily to retail investors, and which is sponsored, distributed or
managed by a U.S. registered broker-dealer or one of its affiliates.
10. This Agreement shall remain in effect until April 30, 1997 and from year
to year thereafter provided such continuance is approved at least annually by
the vote of holders of a majority, as defined in the Act, of the outstanding
voting securities of the Fund or by the Trustees of the Fund; provided, that in
either event such continuance is also approved annually by the vote of a
majority of the Trustees of the Fund who are not parties to this Agreement or
"interested persons" (as defined in the Act) of any such party, which vote must
be cast in person at a meeting called for the purpose of voting on such
approval; provided, however, that (a) the Fund may, at any time and without the
payment of any penalty, terminate this Agreement upon thirty days' written
notice to the Investment Manager and the Sub-Adviser, either by majority vote of
the Trustees of the Fund or by the vote of a majority of the outstanding voting
securities of the Fund; (b) this Agreement shall immediately terminate in the
event of its assignment (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-Advisor 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 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 none of the Fund, the Investment Manager or 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,
conflicts with the applicable provisions of the Act, the latter shall control.
B-4
<PAGE>
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 WORLD WIDE INVESTMENT TRUST
By:.......................................
Attest:...................................
B-5
<PAGE>
DEAN WITTER WORLD WIDE INVESTMENT TRUST
SPECIAL MEETING OF SHAREHOLDERS -- OCTOBER 31, 1995
PROXY
The undersigned hereby appoints EDMUND C. PUCKHABER, SHELDON CURTIS, ROBERT
M. SCANLAN or any of them, proxies, each with the power of substitution, to vote
on behalf of the undersigned at the Special Meeting of Shareholders of DEAN
WITTER WORLD WIDE INVESTMENT TRUST on October 31, 1995 at 10:00 a.m., New York
City time, and at any adjournment thereof, on the proposals set forth in the
Notice of meeting dated August 9, 1995 as follows:
THIS PROXY IS SOLICITED BY THE TRUSTEES. IF NO SPECIFICATION IS MADE ON THE
REVERSE SIDE, THIS PROXY WILL BE VOTED FOR THE PROPOSALS.
IMPORTANT: PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD IN THE ENCLOSED
ENVELOPE.
(Continued, and to be dated and signed on reverse side.)
<PAGE>
PLEASE MARK BOXES / / OR /X/ IN BLUE OR BLACK INK.
1. APPROVAL OF NEW INVESTMENT MANAGEMENT AGREEMENT:
/ / FOR / / AGAINST / / ABSTAIN
2. APPROVAL OF NEW SUB-ADVISORY AGREEMENT:
/ / FOR / / AGAINST / / ABSTAIN
3. APPROVAL OF CHANGES IN THE INVESTMENT RESTRICTIONS:
/ / FOR / / AGAINST / / ABSTAIN
and in their discretion in the transaction of any other business which may
properly come before the meeting.
042
Please sign personally. If the
share is registered in more
than one name, each joint owner
or each fiduciary should sign
personally. Only authorized
officers should sign for
Incorporations.
Dated
-------------------------------
-------------------------------
Signature
-------------------------------
Signature
